Mar 31, 2023
The Directors are pleased to present their Report on the business and operations of your Company along with the Audited Financial Statements (Standalone and Consolidated) for the Financial Year (''FY'') ended March 31, 2023.
Financial Results
(Rs. in Million* except per share data) |
||||
Particulars |
Retained Business** |
|||
Standalone |
Consolidated |
|||
FY 2023 |
FY 2022 |
FY 2023 |
FY 2022 |
|
Revenues from Operations |
13,233 |
12,501 |
45,052 |
42,734 |
Other Income |
3,982 |
1,730 |
5,015 |
2,055 |
Total Income |
17,215 |
14,231 |
50,067 |
44,789 |
Operating Expenses |
12,850 |
12,235 |
42,610 |
40,101 |
Finance Cost |
1,008 |
1,254 |
1,373 |
1,568 |
Depreciation |
2,327 |
2,215 |
4,554 |
3,446 |
Total Expenses |
16,185 |
15,704 |
48,537 |
45,115 |
Profit Before Exceptional Items & Tax |
1,030 |
(1,473) |
1,530 |
(326) |
Exceptional Items |
- |
- |
(329) |
773 |
Provision for Taxes |
(1,386) |
(621) |
(1,022) |
709 |
Profit After Tax for the Period |
2,416 |
(852) |
2,881 |
(390) |
Share Capital |
525 |
418 |
525 |
418 |
Earnings Per Share in R |
||||
Basic |
45.99 |
(16.23) |
54.86 |
(7.43) |
Diluted |
45.99 |
(16.23) |
54.86 |
(7.43) |
(Rs. in Million* except per share data) |
||||
Particulars |
Discontinued Operations** |
|||
Standalone |
Consolidated |
|||
FY 2023 |
FY 2022 |
FY 2023 |
FY 2022 |
|
Revenues from Operations |
- |
15,286 |
- |
25,322 |
Other Income |
1,152 |
29,845 |
1,152 |
66,783 |
Total Income |
1,152 |
45,131 |
1,152 |
92,105 |
Operating Expenses |
7 |
10,771 |
1,113 |
19,081 |
Finance Cost |
- |
329 |
- |
384 |
Depreciation |
- |
1,052 |
- |
1,465 |
Total Expenses |
7 |
12,152 |
1,113 |
20,930 |
Profit Before Exceptional Items & Tax |
1,145 |
32,979 |
39 |
71,175 |
Exceptional Items |
- |
- |
- |
- |
Provision for Taxes |
260 |
8,662 |
(423) |
10,171 |
Profit After Tax for the Period |
885 |
24,317 |
462 |
61,004 |
Earnings Per Share in R |
||||
Basic |
16.85 |
463.42 |
8.80 |
1,162.57 |
Diluted |
16.85 |
463.42 |
8.80 |
1,162.57 |
* (1 million = R 10 lakhs)
** The Board of Directors of your company, in its meeting held on August 9, 2021, had approved the sale of its healthcare services business (âHS Businessâ) and the transaction has been consummated on January 5, 2022. Further, as on March 31, 2020, the Investment and Treasury segment operation of the Media & Communication segment was classified as discontinued operation. During the year ended March 31,2022, the company has sold its investments classified as Fair Value through P&L and investments classified as Fair Value through OCI.
The Standalone and Consolidated Financial Statements for the year ended March 31, 2023, have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016, as amended, (''Ind AS''), as prescribed under Section 133 of the Companies Act, 2013 (''the Act'') and other recognized accounting practices and policies to the extent applicable.
The financials for FY 2023 are not comparable to FY 2022 due to the following reasons:
i. Acquisition of Teklink International Inc.
On December 7, 2022, HGS CX Technologies Inc., a wholly owned subsidiary of HGS International Mauritius, entered into definitive agreements for acquisition of Teklink International Inc., USA (Teklink). The transaction was completed effective February 28, 2023.
ii. Increase in Share Capital
⢠Issued and allotted 10,689,403 Equity Shares of R10/- each to the Shareholders of NXTDIGITAL Limited pursuant to Scheme of Arrangement between NXTDIGITAL Limited and Hinduja Global Solutions Limited and their respective shareholders to the eligible Members whose names appeared in the Registrar of Members / List of Beneficial Owners as on November 23, 2022, i.e. Record Date fixed by NDL [20 equity share of R10/- each fully paid-up of HGSL for every 63 equity shares of R10/- each fully paid-up held by the shareholders of NDL]; and
⢠Issued/ allotted 35,750 Equity shares of R10/-each under ESOP Schemes (i.e., ESOP 2008 and ESOP 2011), pursuant to exercise of stock options by eligible employees.
Operating Performance
On a Consolidated basis, your Company''s business registered a strong performance during the financial year ended March 31, 2023. As compared to the previous financial year, Operating Revenues of the Business grew 5.4% to R 45,052 million from R 42,734 million. Operating Revenues of BPM Business grew 9.4% from R 32,637 million to R 35,689 million and Media Business operating revenues dropped 7.3% from R 10,105 million to R 9,371 million.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) including Other Income grew 59% from R 4,689 million to R 7,457 million.
Other Income during FY 2023 increased from R 2,055 million to R 5,015 million. This sharp increase is primarily due to profits from the sale of property and forex gain.
PAT (Profit After Tax) from continuing operations for FY 2023 increased from a loss of ? 390 million to ? 2,881 million.This increase is due to improved operating performance, increase in other income and reduction in provision for taxes.
Standalone financials comprise of the financials of the Company (BPM, HRO & Digital Media) in India and its branch in Philippines.
On a standalone basis, your Company''s business registered a strong performance during the financial year ended March 31,2023. As compared to the previous financial year, Operating Revenues of the Business grew 5.9% to ? 13,233 million from ? 12,501 million. Operating Revenues of BPM Business grew 27.2% from ? 6,183 million to ? 7,864 million and Media Business operating revenues dropped 15% from ? 6,324 million to ? 5,374 million.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) including Other Income grew 118.7% from ? 1,996 million to ? 4,365 million.
Other Income during FY 2023 increased from ? 1,730 million to ? 3,982 million. This sharp increase is primarily due to interest income and forex gain.
PAT (Profit After Tax) from continuing operations for FY 2023 increased from a loss of ? 852 million to ? 2,416 million. This increase is due to improved operating performance, increase in other income and reduction in provision for taxes.
A review of the Financial and Operating Performance of your Company and its key subsidiaries have also been given in the ''Directors Report'' and ''Management Discussion and Analysis'' section, which forms part of this report .
Other Financial Highlights
⢠Consolidated Cash flow from operations and after working capital changes: ? 5,034 million in FY 2022 to ? 1,243 million in FY 2023;
⢠CAPEX: ? 2,947 million in FY 2023 as compared to ? 4,984 million in FY 2022;
⢠Gross Debt (exclusive of finance lease liability) of ? 3,208 million as at March 31,2023 as compared to ? 8,192 million as at March 31,2022, i.e., a decrease of ? 4,984 million during the year. This reduction is due to scheduled repayments as well as accelerated loan repayments from the proceeds of the healthcare business;
⢠Net Worth: ?87,023 million as at March 31, 2023 as compared to ? 82,297 million as at March 31, 2022, an increase of 5.7%; 3
⢠Standalone EPS for continuing operations (on post bonus share capital and allotment of equity shares pursuant to the Scheme) has increased from a loss of ? 16.23 in FY 2022 to positive ? 45.99 in FY 2023.
Revenue Summary
⢠Revenue by origination Geography - US & Canada: 44.7%, UK & Europe: 21.0%, India: 28.4% and others: 5.9% .
⢠Revenue by Verticals - Media: 31.5%, Consumer: 19.9%, Banking and Financial Services: 15.5%, Telecom and Technology: 11.8%, Public Sector: 11.8% and Others: 9.6%.
Business Highlights
⢠Clientele: HGSL had 292 Business Process Management (BPM) clients across its consumer engagement solutions and digital businesses and 762 HRO/ Payroll processing clients. Digital Media business (has a customer base of more than 5 million).
⢠Delivery Centres: 35 global delivery centres across nine countries at the end of FY 2023.
⢠Employee Headcount: 20,683 on March 31, 2023.
Focus on Consumer Engagement Services (CES) and Digital Media Business
Post sale of the Healthcare Business in FY 2022, your Company is focused on strengthening its Consumer Engagement Solutions (CES), Technology Solutions and HRO/ Payroll businesses that support several top global brands across its nine verticals. The Company is looking at further enhancing its Digital Media Services (NXTDIGITAL) business in India, that was acquired in FY2023 through the Scheme of Arrangement with NXTDIGITAL.
Your Company is continuously exploring ways to strategically invest in building its technology capabilities and make relevant acquisitions for the future growth of the organization.
Your Directors are pleased to recommend a final Dividend of ?2.50 per equity share (25% on face value of ?10/-each) for FY 2022-23, subject to your approval at the ensuing Annual General Meeting (''AGM''). This is in addition to three Interim Dividends aggregating to ?12.50 per equity share of ?10/- each for FY 2022-23 which were declared by the Board of Directors (''the Board'') on August 12, 2022, November 14, 2022 and February 13, 2023, and have been duly paid. Thus, the total dividend for the financial year ended March 31, 2023 is ?15 per equity share (150% on face value of ?10/- each).
In view of changes made under the Income Tax Act, 1961, by Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Members. Your Company shall, accordingly, make the payment of the final Dividend after deduction at source, as applicable.
Pursuant to the requirements stipulated under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, (''SEBI Listing Regulations''), Dividend Distribution Policy has been hosted on the website of the Company at https://has.cx/investors/corporate-policies/
During the financial year, your Company has issued/ allotted:
i. 35,750 Equity Shares of ?10/- each under ESOP Schemes (i.e. ESOP 2008 and ESOP 2011), pursuant to exercise of stock options by eligible employees on December 21, 2022; and
ii. 1,06,89,403 Equity Shares of ?10/- each to the Shareholders of NXTDIGITAL Limited pursuant to Scheme of Arrangement between NXTDIGITAL Limited (''Demerged Company'', or NDL) and Hinduja Global Solutions Limited (''Resulting Company'' or the Company'', or ''HGSL'') and their respective shareholders to the eligible Members whose names appeared in the Registrar of Members /List of Beneficial Owners as on November 23, 2022, i.e. Record Date fixed by NDL.
Consequently, the issued, subscribed and paid-up capital of your Company has increased from 4,17,95,132 equity shares on March 31, 2022 to 5,25,20,285 equity shares of ?10/- each, aggregating to ?525.20 Million as on March 31, 2023.
During the financial year, your Company has not issued shares with differential voting rights and sweat equity shares. The Company does not have any scheme to fund its employees to purchase the shares of the Company. Further, no shares have been issued to employees of the Company except under the ESOP Schemes and as mentioned above.
During the year under review, no amount was proposed to be transferred to the General Reserves of your Company out of the profits for the year.
Your Company is a global leader in optimizing the customer experience lifecycle, digital transformation, business process management, and digital media ecosystem. Your Company is helping its clients to become more competitive every day. HGS'' core BPM business combines automation, analytics, and artificial intelligence with deep domain expertise focusing on digital customer experiences, back-office processing, contact centers, and HRO solutions. Your Company''s expertise spans healthcare, telecommunications media, technology, insurance, banking, consumer electronics, packaged goods, retail and public sector verticals. HGS'' digital media business, NXTDIGITAL is India''s premier
integrated Digital Delivery Platforms Company delivering services via satellite, digital cable and broadband to over 5 million customers across 1,500 cities and towns.
Part of the multi-billion-dollar conglomerate Hinduja Group, HGS takes a âglobally localâ approach. HGS has 20,683 employees across 35 delivery centers globally as of March 31, 2023, making a difference to some of the world''s leading brands. HGS has a strong delivery presence in India, the Philippines, the UK, the US, Canada, Jamaica and Colombia, and marketing offices in Australia and the Middle East. Detailed information pertaining/ relating to Business Review has been provided in the ''Management Discussion and Analysis'' section, which forms part of this Report as Annexure âD''.
Completion of acquisition of digital, media and communication business undertaking of NXTDIGITAL Limited
The Board of Directors of your Company, subject to requisite approvals/ consents, had approved the Scheme of Arrangement between NXTDIGITAL Limited (''Demerged Company'' or ''NDL'') and Hinduja Global Solutions Limited (''Resulting Company'' or ''the Company'') and their respective shareholders (''Scheme'') under Sections 230-232 and other applicable provisions, if any, of the Companies Act, 2013. Based on the Valuation Reports of two reputed Independent Valuers, equity share entitlement ratio arrived at 20:63 [i.e. Twenty (20 Only) Equity Shares of HGSL of ?10/- each fully paid up (i.e. post issue of bonus equity shares by HGSL) for every Sixty Three (63 only) Equity Shares of NDL of ?10/- each fully paid up.]
Post receipt of Observation Letters from BSE and NSE, both dated May 31, 2022, conveying no adverse objection to the Scheme of Arrangement, the Scheme of Arrangement was filed with Hon''ble NCLT, Mumbai Bench on June 09, 2022.
Hon''ble NCLT vide order dated July 29, 2022 directed the Company to convene the meeting of Equity Shareholders of the Company. Accordingly, the approval of the Shareholders of the Company (other than the promoters) was sought for the Scheme on September 2, 2022 which was approved with overwhelming majority. Post sanction of the Scheme by Hon''ble NCLT, Mumbai Bench vide Order dated November 11,2022, the Board of Directors of the Company has issued/ allotted 1,06,89,403 equity shares of ?10 each to the eligible Members/ Shareholders of NDL whose name appeared in the Register of Members/ Beneficial Ownership of NDL as on Record date i.e. November 23, 2022. These equity shares were available for trading effective December 14, 2022.
On December 7, 2022, the Board of Directors of HGS CX Technologies Inc., USA, a step down subsidiary of your Company, approved acquisition of 100% equity stake in Teklink International Inc., USA (''Teklink''). Further, the Board of your Company had also on December 7, 2022 approved to enter into Business Transfer Agreement to acquire certain assets/ contracts on going concern basis including employees from Teklink Software India Private Limited, a subsidiary of Teklink. The acquisition was at upfront cash consideration of USD 58.49 million on a cash-free debt-free basis and to be finalised for closing adjustments. In addition, earn-out based additional consideration is payable based on financial performance during the Calendar Year 2023 and 2024. In India, the Company took on its rolls around 210 employees and acquire certain assets/ contracts on going concern basis from Teklink Software India Private Limited, through Business Transfer Agreement, for a consideration of ?2.58 crore. The acquisition has been completed effective on February 28, 2023.
Teklink International Inc. was founded in 2003. Teklink is based out of Chicago, Illinois and operates in USA, Europe and India. Effective June 1, 2023, Teklink International Inc. has been converted into Teklink International LLC.
TekLink, is a full-service financial planning and analytics service provider, including design, implementation, and application management services. TekLink has built technical and functional expertise across multiple industries, including consumer products, retail, pharmaceuticals, manufacturing & distribution, utilities, and high tech. Teklink supports over 60 clients, including one of the world''s leading food manufacturers, an American multinational confectionery, a global beverages giant, etc. TekLink is headquartered in Warrenville, IL, US, with presence in Europe and delivery centers in Hyderabad and Indore in India. Teklink has strong credentials in the industry, with established partnerships with Microsoft, SAP, Anaplan, etc. TekLink has recently been named a 2022 Gartner® Peer Insights⢠Customers'' Choice for Data & Analytics Service Providers. The acquisition will strengthen HGS'' digital solutions business by adding enhanced expertise in building data platforms, analytics, and financial planning. It will also add complementary digital workforce bench strength, with 275 seasoned technology and implementation professionals joining HGS as part of the transaction.
Commencement of operations in Colombia
During the year under review, your Company launched global customer experience hub in Barranquilla, Colombia to support multilingual customer experience needs with English, Spanish, and Portuguese CX requirements. Colombia CX hub will support clients in the logistics and consumer industries and add other clients subsequently. Colombia has been growing steadily as an attractive nearshore destination for CX services. New hub in Barranquilla will act as a catalyst to significantly scale CX capabilities for expanding multilingual client base globally. By aligning marketing, IT, and customer experience teams, your Company addresses some of today''s biggest
business challenges to competitiveness and growth -labor, productivity, and technology - across industries. The operations in Colombia are being carried by subsidiary company, HGS Colombia S.A.S.
Buyback of Equity Shares
On December 19, 2022, the Board of Directors of your Company announced Buyback of fully paid up equity shares of the Company having a face value of ?10 each from all shareholders/ beneficial owners of the Equity Shares of the Company, on a proportionate basis, through the tender offer route, using mechanism for acquisition of shares through stock exchange as prescribed under Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018, (''SEBI Buyback Regulations'') as amended, and such other circulars or notifications issued by the Securities and Exchange Board of India and the Act, and rules made thereunder, as amended, at a buyback price not exceeding ?1,700 per equity shares (Maximum Buyback Price) for an aggregate amount of up to ?1020 crore, excluding any expenses incurred or to be incurred for the Buyback viz. brokerage, costs, fees, turnover charges, taxes such as buyback tax, securities transaction tax and goods and services tax (if any), stamp duty, advisors fees, filing fees, printing and dispatch expenses and other incidental and related expenses and charges (Buyback Size). The maximum number of equity shares to be bought back were 60,00,000 (Sixty Lakhs) Equity Shares.
The Buyback represented 14.36% and 11.43% of the total paid up equity shares of the Company as on September 30, 2022 and December 17, 2022, respectively. Further, the Buyback Size represented 24.15% and 13.19% of the aggregate of the Company''s fully paid-up equity share capital and free reserves as per the special purpose condensed standalone and consolidated audited financial statements of the Company for the period ended September 30, 2022, which was within 25% of the aggregate of the total paid-up capital and free reserves of the Company in accordance with Regulation 4(i) of the SEBI Buyback Regulations.
The Board has constituted a Committee named ''Buyback Committee'' comprising of Mr. Anil Harish, Chairman (Independent Director), Mr. Sudhanshu Tripathi, Member (Non-executive Director) and Ms. Bhumika Batra, Member (Independent Director) and delegated its powers to do such acts, deeds, matters, and things as it may, in its absolute discretion, deem necessary, expedient, usual or proper in relation to the proposed Buyback.
Post receiving approval of the Shareholders for the proposal of Buyback through Postal Ballot on January 25, 2023, the public announcement of Buyback appeared in the following newspapers on January 31, 2023:
⢠Business Standard (English) - All Editions
⢠Business Standard (Hindi) - All Editions
⢠Sakal (Marathi) - Mumbai Edition
Draft Letter of Offer (''DLOF'') was filed with Securities and Exchange Board of India (''SEBI'') on February 7, 2023. The Record Date to determine the eligibility of Shareholders of the Company for Buyback was March 6, 2023. Post receiving the final observation on DLOF, the Letter of Offer (''LOF'') was sent to the Shareholders and the tendering period for the Buyback opened on Monday, May 22, 2023 and closed on Friday, June 02, 2023.
In terms of LOF, your Company had bought back 60 lakhs equity shares, at a price of ? 1,700/- per equity share and total amount utilized in the Buyback was ? 1,020 Crore, excluding Transaction Costs. The settlement of the equity shares tendered in the Buyback was June 9, 2023. The entire process of Buyback is complete and Buyback Committee cease to exist.
Post extinguishment of said 60 lakhs equity shares, the shareholding pattern of the Company, pre and post Buyback, is as under:
Category |
Pre-Buyback |
Post-Buyback |
||
Number of Equity Shares |
% to the Existing Equity Share Capital |
Number of Equity Shares |
% to the postBuyback Equity Share Capital |
|
Promoter and Promoter Group |
3,49,71,750 |
66.59 |
3,14,99,154 |
67.71 |
Domestic Institutional Investors |
1,58,256 |
0.30 |
||
Foreign Investors, including Foreign Institutional Investors |
67,97,846 |
12.94 |
1,50,21,131 |
32.29 |
Non-Institutional Investors |
1,05,92,433 |
20.17 |
||
Total |
5,25,20,285 |
100.00 |
4,65,20,285 |
100.00 |
HGS International, Mauritius, a wholly-owned subsidiary of your Company, is primarily engaged in investment activity. HGS International owns 100% of the share capital of HGS CX Technologies Inc. (incorporated on December 6, 2021), C-Cubed N.V., Curacao, Hinduja Global Solutions UK Ltd., HGS St. Lucia Ltd., Saint Lucia, Hinduja Global Solutions MENA FZ-LLC, Dubai and Diversify Offshore Staffing Solutions Pty Ltd., Australia.
HGS (USA), LLC, a wholly-owned subsidiary of Hinduja Global Solutions LLC, USA, operates in four cities in the US. It partners with Fortune 1,000 companies and Government agencies to provide comprehensive CRM programs in the verticals of consumer goods and services, e-commerce, telecom, media and travel & logistics. HGS (USA), LLC also subcontracts work to HGS India, its branch in the Philippines and to Team HGS in Jamaica.
For FY 2023, it recorded revenue of US$ 130.37 million as compared to US$ 129.58 million in FY 2022.
HGS Canada Inc., a wholly-owned subsidiary of HGS Canada Holding LLC (Step down subsidiary of Hinduja Global Solutions LLC), is a Canadian Contact Center service provider, servicing marquee customers across verticals such as Media, Telecom, Technology and Logistics. HGS Canada offers technical support, inbound and outbound sales, customer care and customer retention in English and French languages.
For FY 2023, it recorded revenue of CAD 101.19 million as compared to CAD 99.33 million in FY 2022.
Hinduja global Solutions UK Ltd. is a leading contact center company with centers in Chiswick, Preston, Liverpool, Caerphilly (Wales) and Selkirk (Scotland). It offers a range of services for inbound and outbound interactions to marquee customers across verticals such as Government, FMCG, financial services and retail.
For FY 2023, it recorded revenue of GBP 98.15 million as compared to GBP 114.20 million in FY 2022.
Team HGS Ltd., Jamaica, began call center operations in FY 2013 at Kingston. It services local Jamaican clients as well as US clients.
For FY 2023, it recorded revenue of Jamaican Dollars 3,740.23 million compared to Jamaican Dollars 8,885.6 million in FY 2022.
HGS Digital LLC, is a wholly-owned subsidiary of Hinduja Global Solutions UK Ltd. HGS Digital LLC is engaged in providing digital marketing services, digital consulting services as well as cloud migration and cloud monitoring services.
For FY 2023, it recorded revenue of US$ 59.44 million as compared to US$ 36.4 million in FY 2022 i.e. a growth of around 63.3%.
HGS Colombia S.A.S, incorporated in September 2022, is a wholly owned subsidiary of Hinduja Global Solutions UK Limited. Operating in Colombia, HGS provides customer, product, and technical support, non-voice, and back-office services in English and Spanish. Clients include companies in the banking and finance, retail, telecom, and consumer electronics industries in the US and domestically in Colombia.
Teklink International Inc., is an USA enterprise, providing full-service financial planning and analytics service provider, with presence in Europe and delivery centers in Hyderabad and Indore in India. It provides a full-service financial planning and analytics service provider to over 60 clients across multiple industries, including consumer products, retail, pharmaceuticals, manufacturing & distribution, utilities, and high tech. Effective February 28, 2023, the Company has acquired Teklink International Inc., USA for an aggregate consideration of $ 7,134.23 million.
IndusInd Media & Communications Limited (âIMCL''),
business consists of Passive infrastructure (owned real estate property being rented to Group and other companies). Technical division providing technical services to its subsidiaries and Holding of investments in subsidiaries who are Multi System Operators (''MSOs''). The subsidiaries of IMCL are all MSOs who are in the Cable TV industry, providing a platform for transmitting TV signals through cable operators to end consumers.
For FY 2022-23, it recorded revenue from operations of ? 259.92 million as compared to ?512.68 million in FY 2022.
ONEOTT Intertainment Limited (âONEOTT''), an
Internet Service Provider (''ISP'') which provides its services to Retail consumers directly, through Local Cable TV operators, networks enterprises consisting of small and medium sized enterprises & provision of bulk bandwidth to other ISP''s. The Company also provides network operations services using fibre and related network equipment to customers in India. ONEOTT is also engaged in downlinking of TV channels.
For FY 2022-23, it recorded revenue from operations of ? 3,220.90 million as compared to ? 2,552.12 million in FY 2022.
Bhima Riddhi Infotainment Private Limited (âBhima Riddhi''), is a subsidiary of IMCL. Bhima Riddhi is a Multi System Operator (MSO), engaged primarily in the operation and distribution of Television Channels through the medium Analogue, Digital and Terrestrial Satellite cable Transmission and Distribution network in India.
For FY 2022-23, it recorded revenue from operations of ? 748.08 million as compared to ? 695.73 million in FY 2022.
IN Entertainment (India) Limited (âIN Entertainment'')
is a subsidiary of ONEOTT. IN Entertainment is in the business of Content Distribution and Tele-Shopping, Vouchers and also operates cable channels. The Company has access to cable rights of various Hindi movies and licenses the same to national MSO''s and Local Cable Operators. IN Entertainment has a dedicated movie channel, ''CVO Movies'' and a shopping channel ''Shop24Seven M-Plex''.
For FY 2022-23, it recorded revenue from operations of ? 1,422.94 million as compared to ? 775.09 million in FY 2022.
As on March 31, 2023, the Company has total 43 Subsidiaries.During the year under review, the Company does not have any joint venture or associate company.
During FY 2022-23, Indusind Media & Communications Limited, ONEOTT Intertainment Limited, Bhima Riddhi Infotainment Private Limited, Darpita Trading Company Private Limited, Sainath In Entertainment Private Limited, Sangli Media Services Private Limited, Vinsat Digital
Private Limited, Ajanta Sky Darshan Private Limited, Apna Incable Broadband Service Private Limited, Goldstar Infotainment Private Limited, Goldstar Noida Network Private Limited, RBL Digital Cable Network Private Limited, Sunny Infotainment Private Limited, United Mysore Network Private Limited, USN Networks Private Limited, Vistaar Telecommunication & Infrastructure Private Limited, IN Entertainment (India) Limited, Onemahanet Intertainment Private Limited, Teklink International LLC, Teklink International AG and HGS Colombia S.A.S became the subsidiaries of the Company.
All these companies (except Teklink International LLC, Teklink International AG, HGS Colombia S.A.S) became Subsidiaries of your Company pursuant to the Scheme of Arrangement.
Hinduja Global Solutions Europe Limited ceased to be subsidiary of the Company effective from August 30, 2022.
Pursuant to Section 129(3) of the Act, a statement containing the salient features of financial statements of your Company''s subsidiaries in Form AOC-1 is attached to the financial statements of your Company.
Further, pursuant to Section 136 of the Act, the financial statements of your Company, consolidated financial statements along with relevant documents, and separate audited accounts with respect to subsidiaries, as applicable, are available on the website of Company www.hgs.cx
Particulars of Loans, Guarantees and Investments
Particulars of Loans, Guarantees and Investments as per Section 186 of the Act have been disclosed in this Annual Report as part of the Notes to the financial statements.
Credit Rating
During the year, CRISIL has reaffirmed your Company''s long term rating as CRISIL A /Stable and short term rating of CRISIL A1 .
Investor Education and Protection Fund (âIEPF'')
The detailed information pertaining to IEPF has been provided in the ''Report on Corporate Governance'', which forms part of this report as Annexure âC''.
Communications and Public Relations
HGS doubled its effort on furthering brand awareness in FY 2023 with a strong messaging relaunch centered on the theme: Champion Every Moment. Brands are built over time, but they are made in moments that HGS get the opportunity to be part of everyday. The new messaging is rooted in being a digital customer experience leader with the talent and technologies needed to champion every moment. As such, your Company was recognized with several elite distinctions in FY2023, many of them for being recognized consecutively year after year. HGS has established itself as an industry thought leader through successful earned media coverage, with an 9.15% media Share of Voice (SOV) in North America and a 23% SOV in India.
With the continuation and expansive messaging relaunch, HGS continued to focus on expanding thought leadership in digital customer experiences (''CX'') in addition to the agency of agencies, HGS Interactive. Key messaging around CX, EX, Chatbots, Autonomous CX and Leadership in Innovation supported our efforts in brand awareness and differentiation. Notable coverage stemming from our Teklink acquisition, Axle, Colombia office opening, and the Digital CX Survey supported our brand positioning throughout the year in key outlets such as: Forbes, Authority Magazine, Information Today, ZDNet, CMSWire, MediaPost, and more. These publications showcased HGS subject matter experts and leadership prominently through contributed content, feature stories, and quotes providing context and insights to issues affecting business leaders today.
In India, HGS continued to leverage media opportunities, social media, webinars, and events to enhance visibility and thought leadership among key stakeholders like investors, employees, and government officials. HGS has shared information about its business growth, digital transformation, mergers and acquisitions, digital media services, HR activities, and community programs in key general, business and trade publications like The Economic Times, Moneycontrol, Times of India, Business Standard, People Matters, etc.
With hybrid working continuing at HGS, your Company remained focused on driving a combined model of virtual and in-office employee engagement through specific campaigns on varied topics across internal communications, events and social media channels.
Corporate Social Responsibility (âCSR'')
As a socially responsible organisation, your Company is committed to contribute to the overall development of the society. Your Company''s CSR initiatives have a significant focus on empowering economically and socially disadvantaged communities. To achieve goals, your Company concentrates CSR efforts in the following core areas: healthcare, education, skill development, water, rural development, and support for persons with disabilities. CSR projects are designed to hone vocational skills of youth and persons with disabilities with the objective of enhancing their employment opportunities and livelihood. Through these initiatives, your Company strive to create positive social impact and promote sustainable development.
Your Company continues to carry out CSR activities in the aforementioned areas and continues to undertake CSR activities as specified in Schedule VII to the Act.
The Corporate Social Responsibility Committee (''CSR Committee'') of your Company as at March 31, 2023, consists of following Members:
⢠Mr. Anil Harish (DIN: 00001685), Independent Director - Chairman
⢠Mr. Paul Abraham (DIN: 01627449), Non-Executive Non-Independent Director - Member
⢠Mr. Partha DeSarkar (DIN: 00761144), Whole-time Director - Member
During FY 2022-23, one meeting of CSR Committee was held on March 29, 2023.
The CSR Policy of your Company is guided by a structured process. The CSR Forum, comprising senior employees, is responsible for identifying and evaluating potential CSR projects and initiatives. The recommendations are then forwarded to the CSR Committee, which reviews the proposals and assesses the associated costs in accordance with the relevant laws and regulations. Upon completing its review, the CSR Committee recommends approved projects to the Board for approval. Once approved, the CSR Forum oversees the implementation of the projects and provides regular updates to the CSR Committee and Board on the status of progress, expenses, and beneficiaries. Through this well-defined process, your Company ensures that our CSR initiatives are thoroughly evaluated, aligned with mission and values, and ultimately contribute for the betterment of the society.
The Report on CSR activities, in the format as required under the Companies (Corporate Social Responsibility) Rules, 2014, as amended from time to time, is set out in Annexure âE'' forming part of this report. The CSR Policy of the Company is also available on the website of your Company at https://hgs.cx/investors/corporate-policies/
Directors'' Responsibility Statement
The financial statements are prepared in accordance with Ind AS to the extent applicable, as prescribed under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Rules, 2016, as amended thereof.
As stipulated under the provisions contained in Section 134(3)(c) read with Section 134(5) of the Act, the Directors, based upon the information and explanations obtained by them as also documents made available to them and to the best of their knowledge and belief, state that:
a) in preparation of the Annual Accounts for the financial year ended March 31,2023, the applicable accounting standards have been followed and there have been no material departures in the adoption and application thereof;
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the Profit and Loss of the Company for that period;
c) they have taken proper and sufficient care towards the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
d) they have prepared the Annual Accounts on a going concern basis.
e) they have laid down adequate internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively.
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.
Your Company has in place internal financial controls framework which, inter-alia, consist of function wise Status of Testing (Risk and Control Matrix, Test of Design, Test of Operating Effectiveness), Summary of Controls (Key and Non-Key), Process level controls (Process/ Function wise), IT General controls (Application wise and Process wise) and Summary of Gaps in Process Level Controls, IT General Controls, etc. Total number of controls including automated controls in FY 2022-23 has marginally decreased due to streamlining in processes and change in business conditions. Such framework is periodically tested internally, as well as reviewed and tested by the external consultant. Based upon the said framework and the compliance systems established and maintained by the Company, work performed by the statutory, internal and secretarial auditors, including audit of internal financial controls over financial reporting, the reviews carried on by the Management, confirmations provided by the external consultants and update on such ''Framework'' presented to the Audit Committee and to the Board, the Board is of the opinion that your Company''s internal financial controls were adequate and effective during FY 2022-23.
Number of Meetings of the Board
During FY ended March 31, 2023, Twelve (12) Board Meetings were held on May 26, 2022, May 29, 2022, August 12, 2022 (two meetings), August 25, 2022, November 12, 2022, November 14, 2022, November 25, 2022, December 07, 2022, December 19, 2022, February 13, 2023 and March 27, 2023. The Company has complied with time gap requirement between any two meetings provided under the provisions of the Act and SEBI Listing Regulations. Further details in this regard are given in the Corporate Governance Report, which forms part of this report as Annexure âC''.
Declaration by Independent Directors
Pursuant to the requirement of Section 149(7) of the Act, all the Independent Directors on the Board have given declaration of their independence, confirming that they meet the criteria of independence laid down in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board, Independent Directors fulfill the conditions of independence as specified in the Act and the SEBI Listing Regulations and are independent of the management.
In terms of Regulation 25(8) of the SEBI Listing Regulation, the Independent Directors have confirmed that they are not aware of any circumstances or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.
Familiarization Program for Independent Directors
The details of familiarization program imparted to the Directors during the financial year ended March 31,2023, has been made available on your Company''s website at https://hgs.cx/investors/investors-familiarisation-programme-for-directors/
Board Evaluation
Pursuant to Section 134 and 178 of the Act and applicable regulations of the SEBI Listing Regulations, the Board Effectiveness Evaluation (interaction based) has been carried out.
As in the past, it consists of three components:
1. Independent Directors meeting
2. Board and Committee effectiveness evaluation
3. Individual Directors effectiveness evaluation.
At the separate meeting of Independent Directors held during the financial year ended March 31,2023 (without the attendance of Non-Independent Directors and the Members of the Management), performance evaluation of Non-Independent Directors, the Chairman of your Company and the Board as a whole was carried out for FY 2022-23. The Independent Directors also assessed the quality, quantity and timeliness of the flow of information between your Company''s Management and the Board.
In terms of the provisions of the Act and the Articles of Association of the Company, Mr. Partha DeSarkar (DIN: 00761144), Whole-Time Director is liable to retire by rotation at the ensuing 28th AGM and being eligible, offers himself for re-appointment.
The Nomination and Remuneration Committee and the Board of Directors at their meetings held on August 8, 2023 and August 9, 2023, respectively, have
approved and recommended the re-appointment of Mr. Partha DeSarkar as Director liable to retire by rotation. Accordingly, a proposal for re-appointment of Mr. Partha DeSarkar is placed for the approval of the Members by way of an Ordinary Resolution at the ensuing AGM.
During FY 2022-23, as recommended by the Nomination and Remuneration Committee, the Board of Directors have approved the appointment of:
⢠Mr. Ashok P. Hinduja (DIN: 00123180), as an Additional Director designated as Chairman, NonExecutive Non-Independent Director with effect from December 19, 2022;
⢠Mr. Munesh Khanna (DIN: 00202521), as an Additional Director designated as an Independent Director for a period of 5 years with effect from December 19, 2022;
⢠Mr. Vynsley Fernandes (DIN: 02987818) as an Additional Director designated as Whole-time Director with effect from November 14, 2022.
⢠Mr. Pradeep Udhas (DIN: 02207112) as an Additional Director designated as Non-Executive Independent Director with effect from August 25, 2022; and
⢠Mr. Paul Abraham (DIN: 01627449), as an Additional Director designated as Non-Executive NonIndependent Director with effect from August 25, 2022, liable to retire by rotation.
Thereafter, the Shareholders of the Company have approved the appointment of:
⢠Mr. Ashok P Hinduja as Chairman, Non-Executive Non-Independent Director, Mr. Munesh Khanna as an Independent Director and Mr. Vynsley Fernandes as a Whole-time Director, through postal ballot on January 25, 2023; and
⢠Mr. Pradeep Udhas as an Independent Director and Mr. Paul Abraham as Non-Executive NonIndependent Director at the 27th AGM of the Company held on September 28, 2022.
During the financial year, Mr. Yashodhan Madhusudan Kale (DIN: 00013782) had renounced his directorship and consequently as the Chairman of the Board with effect from December 19, 2022. Mr. Y.M. Kale provided sterling leadership and oversight over the last 4 years. He steered the Company through this period marked with important value accretive milestone of divestment, demerger, and several acquisitions.
None of the Directors of the Company are disqualified for appointment / to continue to act as Director under Section 164 of the Act. Further, they are not debarred from holding the office of Director pursuant to order of SEBI or any other authority.
Details relating to the composition of the Board, meetings of the Board held during financial year ended March 31, 2023, attendance of the Directors have been provided in the Report on Corporate Governance which forms part
of this report as Annexure âC''.
Registration in Independent Directors'' Databank
Pursuant to a notification dated October 22, 2019, issued by the Ministry of Corporate Affairs, the Independent Directors of the Company, to the extent applicable, have confirmed that their registration with the databank of Independent Directors maintained by the Indian Institute of Corporate Affairs is in compliance with the requirements of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
Pursuant to the provisions of Section 177 of the Act and Regulation 18 of SEBI Listing Regulations, the Audit Committee of the Board as on March 31,2023, comprises of following Members:
⢠Mr. Anil Harish, Independent Director - Chairman
⢠Ms. Bhumika Batra, Independent Director - Member
⢠Dr. Ganesh Natarajan, Independent Director -Member
⢠Mr. Sudhanshu Tripathi, Non-Executive NonIndependent Director - Member; and
⢠Mr. Pradeep Udhas, Independent Director- Member
Further, as per the requirements of the Act, and the SEBI Listing Regulations, the Board had also constituted following Committees of the Board:
⢠Nomination and Remuneration Committee
⢠Corporate Social Responsibility Committee
⢠Stakeholders Relationship and Share Allotment Committee
⢠Risk Management Committee
⢠Buyback Committee
⢠Committee of Directors
Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this report as Annexure âC''. Further, there have been no instances where the Board did not accept the recommendations of its committees, including the Audit Committee.
Key Managerial Personnel
Pursuant to the provision of Section 203 of the Act, the Company has the following Key Managerial Personnel as on March 31, 2023:
a. Mr. Partha DeSarkar - Whole-time Director & Group CEO
b. Mr. Vynsley Fernandes - Whole-time Director
c. Mr. Srinivas Palakodeti - Global Chief Financial Officer
d. Mr. Narendra Singh - Company Secretary
Affirmation of Code of Conduct
Your Company has a Code of Conduct for Board and Senior Management Personnel that reflects its high standards of integrity and ethics. The Directors and Senior management of the Company have affirmed their adherence to this Code of Conduct for FY 2022-23. A declaration to this effect, duly signed by Whole-time Director''s and Chief Executive Officer forms part of this report as Annexure âA''. This Code of Conduct is available on the Company''s website and can be accessed at https://hgs.cx/wp-content/uploads/2022/08/HGS-Code-of-Conduct-for-Board-Members-Sr-Mgt-Personnel.pdf
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended, forms part of this report as Annexure âB''.
Report on Corporate Governance
As required under Schedule V of the SEBI Listing Regulations, a detailed report on Corporate Governance forms part of this report as Annexure âC''.
Ms. Amrita D. C. Nautiyal, Practicing Company Secretary, Mumbai, (Membership No.: FCS 5079 and C. P. No. 7989) of M/s. Amrita Nautiyal & Associates, Secretarial Auditor of your Company has examined the compliance of conditions of Corporate Governance as stipulated in Schedule V (C) of the SEBI Listing Regulations and the certificate forms part of Annexure âC'' to this report.
Report on Management Discussion and Analysis
In compliance with Regulation 34 of the SEBI Listing Regulations, a separate report on Management Discussion and Analysis which includes details on the state of affairs of the company is annexed to this report as Annexure âD''.
Employees Stock Options Plan (âESOP'')
Two ESOP Schemes, viz. ''Hinduja Global Solutions Limited Employees Stock Options Plan 2008'' and ''Hinduja Global Solutions Limited Employees Stock Options Plan 2011'' have been in operation during FY 2022-23. These ESOP Schemes are in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended. As on date, there are no outstanding stock options pending for vesting/ exercise. The particulars of aforesaid ESOP Schemes are available on your Company''s website at https://hgs.cx/investors/ other-reports/#toggle-id-3
Pursuant to Section 92(3) and 134(3)(a) of the Act, an Annual Return as on March 31, 2023, in the prescribed format, is available on your Company''s website at https:// hgs.cx/investors/other-reports/.
Related Party Transactions
All contracts/ arrangements/ transactions entered into with the related parties during FY 2022-23 are in the ordinary course of business and at arm''s length basis and therefore, outside the purview of Section 188(1) of the Act and same are disclosed in the financial statements of your Company. The Company has formulated a Policy on Related Party Transactions for identification and monitoring of such transaction as recommended by the Audit Committee and adopted by the Board is available on the Company''s website at https://hgs.cx/investors/ corporate-policies/.
Information on related party transactions pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, as amended, is given in Form AOC-2 and the same forms part of this report as Annexure âF''.
Policy on Directors'' Appointment and Remuneration
Policy on Directors'' Appointment and Remuneration and other matters provided in Section 178(3) of the Act have been disclosed in the Report on Corporate Governance, which forms part of this report as Annexure âC''.
Policies framed under the Companies Act, 2013 and SEBI Listing Regulations, as applicable, have been uploaded on the website of the Company at https://hgs.cx/investors/ corporate-policies/.
Whistle Blower Policy and Vigil Mechanism
According to Section 177 of the Act, and Regulation 22 of the SEBI Listing Regulations, the Company has a Whistle Blower Policy and Vigil Mechanism in place and is available on the website of your Company at https://hgs.cx/investors/corporate-policies/ . There was one complaint which was in progress of closure as on March 31, 2022, has been closed during FY 2022-23. No complaint was received under the Policy during the year ended March 31, 2023.
The details of the Policy are disclosed in the Report on Corporate Governance, which forms part of this report as Annexure âC''.
Internal Complaints Committee (âICC'')
Pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place an Internal Complaints Committee (ICC) and also Policy on appropriate social conduct at workplace. The Policy is applicable to all employees of your Company at all locations. Employees, for the purpose of this policy, shall include all persons engaged in the business and operations of your Company and includes permanent, temporary and part-time employees. In addition, this
Risk Management Policy
Your Company has formulated Risk Management Policy & Procedures, which, inter-alia, identify risks, taking into consideration the business and operations of the Company and adoption of mitigation measures. The details of the Policy & Procedures are given in the Management Discussion and Analysis Report (MDA) annexed to this report as Annexure âD''.
The Risk Management Committee of the Board (''RMC'') comprises of (i) Two Independent Directors (ii) a Non-Executive, Non-Independent Director and (iii) Whole-time Director.
The RMC met twice during the year and reviewed Enterprise Risk Management framework, the risks that matter and updated the policy and procedures as appropriate. The RMC updated the Audit Committee and the Board on the matters relating to risk.
Fixed Deposits
The Company has not accepted any Deposits under Chapter V of the Act during the year and hence no amount of principal or interest was outstanding on the date of Balance Sheet.
Statutory Auditors and Auditors'' Report
M/s. Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration Number: 103523W/W100048) appointed as the Statutory Auditors of the Company by the Members at the 27th Annual General Meeting held on September 28, 2022 to hold office upto the conclusion of 32nd Annual General Meeting to be held in the year 2027.
policy shall also be applicable to all third parties such as visitors, clients, customers, contractors, service providers and any other person authorized to be present within the premises/ workplace of your Company. Your Company''s workplace includes Company''s premises, as well as the premises of other third parties, vendors and associates of your company where the employees of your Company are required to perform work or that are visited by the employees of your Company arising out of or during the course of employment.
The Reports of the ICC are periodically placed before the Board for review and suggestions as an ongoing process, and initiatives are taken by the Management to make the workplace safer for the employees. The status of complaints received, disposed of by the ICC and pending as at March 31,2023 is as under:
Number of complaints pending as on March 31,2022 |
Nil |
Number of complaints received during the year |
Nil |
Number of complaints disposed of during the year |
Nil |
Number of complaints withdrawn during the year |
Nil |
Number of complaints pending as on March 31,2023 |
Nil |
M/s. Haribhakti & Co. LLP, Chartered Accountants have under sections 139 and 141 of the Act and Rules framed thereunder confirmed that they are not disqualified from continuing as Statutory Auditors of the Company and furnished a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India as required under Regulation 33 of the SEBI Listing Regulations.
The reports of the Statutory Auditors on Standalone and Consolidated Ind AS Financial Statements forms part of this Annual Report. The Auditors'' Report contains ''Unmodified Opinion'' on the financial statements (standalone and consolidated) of the Company, for the year ended March 31,2023 and there are no qualifications in their report.
Secretarial Audit and Compliance with Secretarial Standards
Pursuant to the provisions of Section 204 of the Act, the Board had appointed Ms. Amrita D. C. Nautiyal, Practicing Company Secretary, Mumbai, (Membership No.: FCS 5079 and C. P. No. 7989) of M/s. Amrita Nautiyal & Associates, as the Secretarial Auditor to carry out the Secretarial Audit for FY 2022-23.
The Secretarial Audit Report for FY 2022-23 forms part of this report as Annexure âG''. The Report does not contain any qualifications, reservations or adverse remarks.
During the year, your Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Appointment of Cost Auditor and Maintenance of Cost Records
In terms of section 148(1) of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company has appointed M/s. ABK & Associates, Cost Accountants, (Firm Registration No. 000036) as Cost Auditor for the audit of the cost records of ''Telecommunication Activity'' for the Financial Year 2023-24.
Proceeding under Insolvency and Bankruptcy Code, 2016
There are no proceedings, either filed by the Company or filed against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before National Company Law Tribunal or other courts during FY 2022-23. The disclosure as per rule 8(5)(xi) and 8(5) (xii) of the Companies (Accounts) Rules, 2014 are not applicable.
Reporting of Fraud
During the year under review, there were no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013.
Disclosures 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 and amendments thereto are given in Annexure âH'' to this Report.
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, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annual Report.
Having regard to the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members. The said information is available for inspection at the Registered Office of the Company and any member interested in obtaining such information may write to the Company Secretary and the same shall be furnished without any fee.
In accordance with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, details of foreign employees, excluding Directors and their relatives, have not been included in the Annual Report. Members interested in obtaining the said information may write to the Company Secretary at the Registered Office and the same shall be furnished without any fee.
Business Responsibility and Sustainability Report (âBRSR'')
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, with effect from the financial year 202223, the top one thousand listed entities based on market capitilisation are required to submit a Business Responsibility and Sustainability Report (''BRSR''). Accordingly, the BRSR describing the initiatives taken by the Company from ESG perspective as required in terms of the above provisions separately forms part of this report as Annexure âI''.
Significant and Material Orders
There are no significant and material orders passed by the Regulators or Courts or Tribunals that would impact the going concern status and your Company''s operations in the future.
Internal Financial Controls and its Adequacy
The Company has adopted policies and procedures for ensuing the orderly and efficient conduct of its business, including Internal Financial Controls (including Internal Financial Controls over Financial Reporting) and their adequacy are included under the heading ''Internal Controls'' in the Management Discussion and Analysis section, which forms part of this report as Annexure âD''.
Material Changes and Commitments Affecting the Financial Position of the Company between the end of the Financial Year and Date of the Report
Post March 31, 2023, the Company has bought 60 lakhs equity shares through tender offer route at a price of $1,700 per share aggregating to $1,020 crore (excluding other transactions). The entire process of Buyback including extinguishment of these 60 lakhs shares and payment of taxes on Buyback are complete. Other details of buyback are given above under the heading ''Buyback of Equity Shares''
Further, subsequent to the approval of consolidated financial results as of and for the year ended March 31, 2023 by the Board of Directors at its meeting held on May 26, 2023, the Group identified that an amount presented under the head âOther Incomeâ had an inadvertent error, in working out gain on sale of a property held by HGS International, Mauritius. The annual financial results (as amended) of the HGS International, Mauritius for the year ended March 31, 2023 were approved by the Board of Directors of HGS International, Mauritius on August 8, 2023.
Consequently, previously issued consolidated annual financial results have been amended by the Group to incorporate the changes. The impact of this is reflected in decrease to the tune of $1,649.85 Lakhs in Other Income, $1,641.83 Lakhs in Profit After Tax & Retained Earnings and increase in Other Liabilities by $1,673.40 Lakhs. The basic and diluted earnings per share for the year ended March 31, 2023 has decreased by $3.13 per share in this regard. Further, consequential changes have been made in consolidated cash flow statements and group operating segments.
The amendment to the consolidated financial results have been carried out solely for the impact of above error and no other changes/ adjustments have been carried out for any other events occurring after May 26, 2023 (being the date when the consolidated financial results were first approved by the Board of Directors of the Company).
These consolidated annual financial results (as amended), which have been reviewed by the Audit Committee and then approved by the Board of Directors at their respective meetings held on August 9, 2023 and supersedes the previously issued consolidated annual financial results that were reviewed by the Audit Committee and then approved by the Board of Directors respectively on May 26, 2023. The statutory auditors have issued unmodified amended report dated August 9, 2023 on the aforesaid consolidated annual financial results (as amended). Copy of amended consolidated financial results for the year ended March 31, 2023 along with the Statutory Auditors reports were submitted to the Stock Exchanges.
There was no change in the standalone financial results for the year ended March 31, 2023.
There are no other material changes and commitments between the end of the financial year of the Company and as on the date of this report which can affect the financial position of the Company.
Your Directors'' express their grateful appreciation for the co-operation and support received from the customers, vendors, business associates, investors, financial institutions, bankers, the Government of India, State Governments, Governments of various countries in which your company operates, regulatory authorities and the society at large. Your Directors place on record
their sincere appreciation for the dedicated efforts, commitments and contribution of employees at all levels of your Company, which has enabled your Company to achieve consistent growth in a challenging business environment.
For and on behalf of the Board of DirectorsAshok P. Hinduja Chairman DIN:00123180
Place: Dubai Date: August 9, 2023
(1 million = R 10 lakhs)
The Board of Directors of the Company, at its meeting held on February 17, 2022 had considered and approved the Scheme of Arrangement between Hinduja Global Solutions Limited (the ''Resulting Company'' or ''the Company'') and NXTDIGITAL Limited (the ''Demerged Undertaking'') for the demerger of Digital, Media & Communications Business Undertaking along with the investments in subsidiaries of NXTDIGITAL Limited into Hinduja Global Solutions Limited (''Scheme'')and had recommended the swap ratio of 20 equity share of R10/- each fully paid-up of Hinduja Global Solutions Limited for every 63 equity shares of R10/- each fully paid-up held by the shareholders of NXTDIGITAL Limited. The Mumbai Bench of the Honourable National Company Law Tribunal (NCLT), vide its order dated November 11, 2022 has approved the scheme with the appointed date of the merger being February 01, 2022. The effect of the scheme has been incorporated in the above results as per the requirements of Appendix C to Ind AS 103 âBusiness Combinationâ. Further, the comparative financial figures have therefore been restated to include the impact of the demerger. Accordingly, financial information for year ended March 31, 2022 has been derived from audited financial information of the Company and reviewed financial information of demerged undertaking of NXTDIGITAL Limited.
Subsequent to the demerger of Digital, Media & Communications Business Undertaking along with the investments in subsidiaries of NXTDIGITAL Limited with the Company with effect from February 01, 2022, the Company has reassessed its provision for current taxes and deferred taxes and has written back an amount of R 14,890.40 lakhs relating to previous year.
As per the swap ratio approved in the Scheme, the shareholders of NXTDIGITAL Limited holding 3,36,71,621 equity shares (of NDL) were allotted 1,06,89,403 equity shares of Hinduja Global Solutions Limited having face value of R10 each. Pursuant to the Scheme of Arrangement, shares of Hinduja Global Solutions Limited are issued to the shareholders of NXTDIGITAL Limited. Earning per share and Diluted Earning per share have also been restated for comparative periods considering the shares issued to shareholders of NXTDIGITAL Limited.
Consolidated EPS for continuing operations (on post bonus share capital and allotment of equity shares pursuant to the Scheme) has increased from a loss of ? 7.43 in FY 2022 to a positive ? 54.86 in FY 2023;
Mar 31, 2022
Your Directors are pleased to present their Report on the business and operations of your Company along with the Audited Financial Statements (Standalone and Consolidated) for the Financial Year (''FY'') ended March 31,2022.
(R in million* except per share data) |
||||||||
Particulars |
Standalone FY 2022 |
FY2021 |
Consolidated FY 2022 |
FY2021 |
||||
Retained Business |
Divested Healthcare Business |
Overall |
Overall |
Retained Business |
Divested Healthcare Business |
Overall |
Overall |
|
Revenues from Operations |
6,183 |
15,286 |
21,469 |
23,629 |
32,637 |
25,322 |
57,959 |
55,889 |
Other Income |
1,276 |
29,845 |
31,121 |
549 |
1,498 |
66,783 |
68,281 |
816 |
Total Income |
7,459 |
45,131 |
52,590 |
24,178 |
34,135 |
92,105 |
1,26,240 |
56,705 |
Operating Expenses |
6,852 |
10,769 |
17,622 |
18,460 |
31,503 |
19,080 |
50,583 |
47,215 |
Finance Cost |
142 |
329 |
471 |
615 |
276 |
384 |
661 |
883 |
Depreciation |
452 |
1,052 |
1,504 |
1,873 |
1,209 |
1,465 |
2,674 |
3,075 |
Total Expenses |
7,446 |
12,151 |
19,597 |
20,948 |
32,988 |
20,929 |
53,918 |
51,173 |
Profit Before Exceptional Items & Tax |
13 |
32,980 |
32,994 |
3,230 |
1,146 |
71,176 |
72,322 |
5,532 |
Exceptional Items |
- |
- |
- |
- |
773 |
- |
773 |
1,092 |
Provision for Taxes |
19 |
8,662 |
8,681 |
1,156 |
343 |
10,171 |
10,513 |
1,079 |
Profit After Tax for the Period |
-6 |
24,318 |
24,312 |
2,074 |
31 |
61,005 |
61,036 |
3,361 |
Share Capital** |
418 |
209 |
418 |
209 |
||||
Earnings Per Share in R*** |
||||||||
Basic |
581.86 |
49.64 |
1460.74 |
80.45 |
||||
Diluted |
581.25 |
49.59 |
1459.21 |
80.37 |
*(1 million = R 10 lakhs)
**During FY 2022, the Company''s equity share capital increased primarily on account of 1:1 Bonus Issue of Equity Shares.
*** Earnings Per Share for FY 21 has been computed on post bonus share capital of 41.79 million shares of R10 each.
(The Standalone and Consolidated Financial Statements for the year ended March 31, 2022, have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016, as amended, (''Ind AS''), as prescribed under Section 133 of the Companies Act, 2013 (''the Act'') and other recognized accounting practices and policies to the extent applicable).
The financials for FY 2022 are not comparable to FY 2021 due to the following reasons:
⢠Sale of Healthcare Business
On August 9, 2021, your Company entered into a definitive agreement for the sale of its Healthcare Services Business (accounting for around 55% of the revenues of FY 2021) to wholly owned subsidiaries of Betaine BV (''Investor''), which is owned by funds affiliated with Baring Private Equity Asia.
The transaction has been concluded and your Company ceased to have ownership of the Healthcare Services Business at close of business hours on January 5, 2022. The transaction was based on an enterprise value of US$ 1,200 million, subject to closing adjustments, and resulted in inflows of US$ 1,088 million in the Company and some of its subsidiaries.
As part of the divestment, your Company has transferred all client contracts, employees, and assets, including infrastructure related to the healthcare services business, to the Investor effective January 6, 2022. Further, as
per the Transition Services Agreement, the new healthcare organization will operate under the name âHGS Healthcareâ for a period of up to 12 months from closing.
⢠Acquisition of Diversify Offshore Solutions Pty Ltd.
On January 28, 2022 , HGS International Mauritius, a wholly owned subsidiary of the Company, entered into definitive agreements for acquisition of Diversify Offshore Staffing Solutions Pty Ltd., Australia. The transaction was completed effective February 25, 2022.
⢠Increase in Share Capital
During the financial year, your Company has:
i. issued/ allotted 20,311 Equity shares of ?10/-each under ESOP Schemes (i.e., ESOP 2008 and ESOP 2011), pursuant to exercise of stock options by eligible employees; and
ii. issued and allotted Bonus Equity shares in the ratio of 1:1, 2,08,97,566 equity shares of ? 10 each (fully paid up) on February 25, 2022.
Operating Performance
On a Consolidated basis, your Company''s retained business registered a strong performance during the financial year ended March 31, 2022. As compared to the previous financial year, Operating Revenues of the Retained Business grew 25.4% to ? 32,637 million from ? 26,018 million. The Company saw strong growth in the revenues of its UK business especially from UK public sector.
Overall revenues grew 3.7% from ? 55,889 million to ? 57,959 million. The Overall revenue growth was muted due to the sale of the Healthcare business effective January 6, 2022.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) excluding Other Income for the retained business grew 46.1% from ? 776 million to ? 1,134 million. Overall EBITDA fell from ? 8,674 million to ? 7,376 million due to the sale of the Healthcare Business.
Other Income during FY 2022 increased from ? 816 million to ? 68,280 million. This sharp increase was primarily due to profits from the sale of the Healthcare Business.
PAT (Profit After Tax) for FY 2022 increased from ? 3,361 million to ? 61,036 million. This sharp increase is primarily due to gains from the sale of the Healthcare business of ? 57,536 million (after providing for taxes of ? 8,007 million).
Standalone financials comprise of the financials of the Company in India and its branch in Philippines.
On a Standalone basis, in FY 2022, revenues from operations of the Retained Business grew 17.05% over FY 2021 to ? 6,183 million. Overall standalone revenues decreased by 9.1 % from ? 23,629 million to
? 21,469 million, primarily on account of the sale of the Healthcare Business.
Profit After Tax increased from ? 2,074 million in FY 2021 to ? 24,312 million in FY 2022. This sharp increase in Profit After Tax is primarily due to gains from the sale of the healthcare business of ? 21,485 million (after providing for taxes of ? 7,236 million). Profit After Tax also increased due to Other Income which included interest income on the sale proceeds of the healthcare business.
A review of the Financial and Operating Performance of your Company and its key subsidiaries have also been given in the ''Management Discussion and Analysis'' section, and forms part of this report as Annexure âD''.
Other financial highlights:
⢠Consolidated Cash flow from operations and after working capital changes: ?6,916 million in FY 2021 to ?5,895 million in FY 2022, primarily due to the sale of the healthcare business;
⢠CAPEX: ? 2,372 million in FY 2022 as compared to ?1,581 million in FY 2021;
⢠Gross Debt (exclusive of finance lease liability) of ? 35 million as at March 31, 2022 as compared to ? 3,936 million as at March 31,2021, i.e., a decrease of ? 3,901 million during the year. This reduction is due to scheduled repayments as well as accelerated loan repayments from the proceeds of the healthcare business;
⢠Net Worth: ?78,084 million as at March 31, 2022 as compared to ? 20,849 million as at March 31,2021, an increase of 274% , primarily due to gains from the sale of the healthcare business;
⢠Consolidated EPS (on post bonus share capital) has increased from ? 80.45 in FY 2021 to ? 1,460.74 in FY 2022;
⢠Standalone EPS (on post bonus share capital) has increased from ?49.65 in FY 2021 to ?581.86 in FY 2022.
⢠Revenue by origination Geography - US & Canada: 76.3% , UK & Europe: 16.9%, India: 5.6% and others 1.3% .
⢠Revenue by Verticals - Healthcare: 45.3%, Telecom and Technology: 10.8%, Consumer: 10.2%, Banking and Financial Services: 10.1% and Others: 23.6%.
Business Highlights:
⢠Clientele: HGS had 207 Business Process Management (BPM) clients across its consumer engagement solutions and digital businesses and 736 HRO/Payroll processing clients.
⢠Active Clients: 200 core BPM clients and 730 Payroll processing, HRO and F&A clients.
⢠Delivery Centres: 38 global delivery centres across seven countries at the end of FY 2022. Employee Headcount: 21,608 as on March 31, 2022; of which India: 40.2%., Philippines: 14.3%, Jamaica: 7.7%, US: 9.4%, UK: 16.8%, Canada: 11.6%
Focus on Consumer Engagement Services (CES) and Digital Business
Post sale of the Healthcare Business, your Company focus on strengthening its Consumer Engagement Solutions (CES), HGS Digital and HRO/ Payroll businesses that support several top global brands across its nine verticals. Services to healthcare clients delivered by HGS Digital and HRO/ Payroll businesses will continue to be part of HGS'' portfolio.
The Company will use the funds generated from the divestment to strategically invest in building its technology capabilities for the future growth of the organization and would also explore several acquisition candidates for the inorganic growth of its business.
Your Directors are pleased to recommend a Final Dividend of ?25 per equity share (250% on face value of ?10/- each) for FY 2021-22, subject to your approval at the ensuing Annual General Meeting (''AGM''). This is in addition to four Interim Dividends aggregating to ?195 per equity share of ?10/- each for FY 2021-22 which were declared by the Board of Directors (''the Board'') on August 09, 2021, November 12, 2021, January 06, 2022 and February 12, 2022, and have been duly paid. Thus, the total dividend for the financial year ended March 31, 2022 is ? 245 per equity share (2450% on face value of ?10/- each), if approved by the Members, on pre bonus basis.
Pursuant to the requirements stipulated under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, (''SEBI Listing Regulations''), Dividend Distribution Policy has been hosted on the website of the Company at https://www.teamhgs.com/investors/ corporate-policies
Your Company is a global leader in (BPM), services and optimizing the customer experience lifecycle. Your Company''s mission is to help transform its clients'' operations, thereby making them more competitive in the global market place. Your Company combines technology-powered services in automation, analytics and digital with domain expertise focusing on back office processing, contact centres, and HRO/ Payroll solutions to deliver transformational impact to clients. By applying analytics, automation, and interaction expertise to deliver innovation and thought leadership, your Company increases revenue, improves operating efficiencies and helps clients
retain valuable customers. Your Company''s expertise spans the healthcare, telecommunications, media, insurance, banking, consumer electronics, packaged goods industries, retail, technology and public sector verticals. Post the sale of the healthcare business, your Company operates on a global landscape with around 21,600 employees at the end of FY 2022, with 38 delivery centres worldwide, delivering localized solutions. As on March 31, 2022, your Company has delivery centres in India, Philippines, UK, US, Canada, Jamaica and marketing office in Australia. Detailed information pertaining/ relating to Business Review has been provided in the ''Management Discussion and Analysis'' section, which forms part of this Report as Annexure âD''.
Acquisition of digital, media and communication business undertaking of NXTDigital Limited
The Board of Directors at its meeting held on January 14, 2022 has agreed in-principle to acquire digital, media and communication business undertaking of NXTDIGITAL Limited (''NDL''), a related party, through issuance of shares in order to build the Company''s Digital Customer Experience Transformation Practice, focus on the triple A''s of Automation, Analytics, and Artificial Intelligence and to create industry-specific solutions for the top global brands that Company services. Thereafter, the Audit Committee and the Board of Directors at its meeting held on February 17, 2022 have approved, inter-alia, the following:
⢠Valuation reports
⢠Share Entitlement Ratio of 20 : 63
Twenty (20 Only) Equity Shares of HGSL of \10/-each fully paid up (i.e. Post issue of bonus equity shares by HGSL) for every Sixty Three (63 Only) Equity Shares of NDL of \10/- each fully paid up.
⢠Scheme of Arrangement under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, and rules thereunder amongst NXTDigital Limited (''Demerged company''), and Hinduja Global Solutions Limited (''Resulting company'') and their respective shareholders (''Scheme'').
On June 9, 2022, the Company has filed the requisite petition (post receiving the Observation Letters from the Stock Exchanges) with the Hon''ble National Company Law Tribunal (''NCLT''), Mumbai Bench. Hon''ble NCLT vide Order dated July 29, 2022 directed the Company to convene the Meeting of Equity Shareholders for approval of the Scheme on September 2, 2022. Accordingly, the Company has sent the Notice convening meeting of Equity Shareholders on July 30, 2022. The notices has also been served to other Regulatory authorities in terms of Section 230(5) of the Companies Act, 2013.
NDL is the media vertical of the global Hinduja Group.
The media and communications company is India''s premier integrated Digital Delivery Platforms Company - delivering services via satellite, digital cable and broadband. With a pan-India reach, NXTDIGITAL delivers television services through a dual delivery platform consisting of digital cable and the country''s only Headend-In-The-Sky (HITS) satellite platform, under the brand names INDigital and NXTDIGITAL respectively. The Company''s Digital Cable television platform delivers 750 channels across 100 cities and towns whilst the HITS service is available in more in over 1500 cities and towns covering more than 4400 Pin Codes - with a significant presence in the fastest-growing demographics of semi-urban, semirural and rural India. The company is well established nationally through a franchisee base of nearly 10,000 Last Mile Owners; delivering digital services to millions of customers across the length and breadth of the country.
NDL has grown into one of India''s largest integrated digital, media and communications companies. In 2020, as a step towards consolidation of media and communications business, the digital, media and communications business was transferred by Indusind Media and Communications Limited (a Hinduja Group Company), to NDL pursuant to scheme of arrangement approved by National Company Law Tribunal. Recognizing the growth potential of the ''Digital (Media, Communication & Broadband) business including HITS platform & licenses'' to evolve and grow the digital market, your Company is proposing to acquire ''Digital, Media and Communications Business Undertaking'' of NDL through Scheme of Arrangement with the Company. With the Company''s strategy focusing on delivering value through deep B2B and B2C domain expertise in Telecom, Media and Technology (TMT) vertical, this merger will help HGSL leverage its experience, talent, expertise and credentials to grow faster and expand further.
The acquisition of NDL will not entail cash outflow from the Company as the proposed merger will be carried out on share exchange on arm''s length basis and shall be subject to all applicable regulatory approvals and other requisite approvals.
Key Subsidiaries
HGS International, Mauritius, a wholly-owned subsidiary of your Company, is primarily engaged in investment activity. HGS International owns 100% of the share capital of HGS CX Technologies Inc. (incorporated on December 6, 2021), C-Cubed N.V., Curacao, Hinduja Global Solutions Europe Ltd., UK, HGS St. Lucia Ltd., Saint Lucia, Hinduja Global Solutions MENA FZ- LLC, Dubai and Diversify Offshore Staffing Solutions Pty Ltd. Australia.
HGS International, jointly with Hinduja Global Solutions
UK Limited, owns 100% of the share capital of Falcon PR Holdings, Puerto Rico.
HGS International holds 76% of share capital of Hinduja Global Solutions UK Ltd. while the balance 24% is held by Hinduja Global Solutions Europe Ltd., UK.
During FY 2022, HGS International acquired 100% equity stake of Diversify Offshore Staffing Solutions Pty Ltd, Australia. Diversify Offshore Staffing Solutions Pty Ltd (''Diversify'') is an Australian owned BPM company with operations in Philippines. The Head office of Diversify is located in Brisbane, Australia and it has service delivery locations in Metro Manila and Cebu, Philippines. Diversify provides BPM services in the nature of financial & accounting, marketing, legal, HR and IT support to 50 clients from sectors such as BFSI, Technology, Retail, Logistics etc. and primarily based in Australia.
The acquisition of Diversify open up Australia New Zealand (ANZ) as a new market for HGS Philippines, with the addition of a significant number of clients from that region. It will also supplement the company''s portfolio in the US. HGS Philippines will gain a large number of experienced domain experts in verticals such as professional services, retail, and telecommunications across 4 new delivery centers in the Philippines. While most of its current offshore footprint is in the Philippines, this will open up more avenues for ANZ offshoring to HGS'' Indian operations, while bolstering HGS'' portfolio of back-office and non-voice business in domains like Digital Marketing, Finance & Accounts, IT services, etc. The acquisition also opens up a significant opportunity for HGS Philippines to offer its digital solutions across automation, analytics, AI and cloud to Australian companies, who are increasingly looking to digitalize their operations.
Accordingly, Diversify Offshore Staffing Solutions Pty Ltd and its subsidiaries namely Diversify Intelligent Staffing Solutions Inc, Philippines, Diversify ISS BGC Inc. Philippines and Diversify Offshore Solutions Cebu Inc, Philippines became the step down-subsidiaries of the Company effective February 25, 2022.
Revenue for FY 2022 was US$ 38.4 million as compared to US$ 2.2 million for FY 2021.
Hinduja Global Solutions LLC., USA (HGS LLC), a wholly-owned subsidiary of HGS CX Technologies Inc. specializes in marketing and providing voice and non-voice related Customer Contact and Business Process Outsourcing services to its clients. Its wholly-owned subsidiaries are HGS (USA) LLC, HGS Canada Holdings LLC, USA and HGS Properties LLC, USA, HGS Canada Inc., and Affina Company Canada.
The consolidated revenue was US$ 542.34 million for FY 2022 as compared to US$ 595.2 million in FY 2021, the drop in revenue is primarily due to the sale of healthcare business entities HGS Healthcare LLC,
HGS EBOS LLC and HGS Colibrium LLC.
HGS (USA), LLC, a wholly-owned subsidiary of HGS LLC, USA, operates in four cities in the US. It partners with Fortune 1,000 companies and Government agencies to provide comprehensive CRM programs in the verticals of consumer goods and services, e-commerce, telecom, media and travel & logistics. HGS (USA), LLC also subcontracts work to HGS India, its branch in the Philippines and to Team HGS in Jamaica.
For FY 2022, it recorded revenue of US$ 129.68 million as compared to US$ 117.0 million in FY 2021.
HGS Canada Inc., a wholly-owned subsidiary of HGS LLC, USA, is a Canadian Contact Center service provider, servicing marquee customers across verticals such as Media, Telecom, Technology and Logistics. HGS Canada offers technical support, inbound and outbound sales, customer care and customer retention in English and French languages.
For FY 2022, it recorded revenue of CAD 99.33 million as compared to CAD 113.5 million in FY 2021.
Hinduja Global Solutions Europe Ltd. is the UK-
based wholly-owned subsidiary of HGS International, Mauritius, focusing on providing consulting services for BPM, call center services and offshoring services to UK-based clients. It owns 24% stake in Hinduja Global Solutions UK Ltd and it is currently under the process of liquidation.
Hinduja Global Solutions UK Ltd. is a leading contact center company with centers in Chiswick, Preston, Liverpool, Caerphilly (Wales) and Selkirk (Scotland). It offers a range of services for inbound and outbound interactions to marquee customers across verticals such as Government, FMCG, financial services and retail.
For FY 2022, it recorded turnover of GBP 114.20 million as compared to GBP 66.2 million in FY 2021 i.e. an increase of 72.50%.
HGS St. Lucia Ltd., Saint Lucia, is the holding company of Team HGS Ltd., Jamaica.
Team HGS Ltd., Jamaica, began call center operations in FY 2013 at Kingston and continues to show strong performance. It services local Jamaican clients as well as US clients from healthcare and other verticals.
Revenue for FY 2022, was Jamaican Dollars 8,885.6 million compared to Jamaican Dollars 7,144.3 million in FY 2021, an increase of around 24.4%.
Hinduja Global Solutions MENA FZ-LLC: It has an
office in Dubai Internet City with the objective to build sales pipeline and provide technology-based support services to other HGS entities.
In FY 2022, it recorded revenue of AED 2.2 million as
compared to AED 5.6 million in FY 2021.
HGS Digital LLC (formerly known as Element Solutions LLC):
HGS Digital LLC, USA is a wholly-owned subsidiary of Hinduja Global Solutions UK Ltd. The Company is engaged in providing digital marketing services, digital consulting services as well as cloud migration and cloud monitoring services.
For FY 2022, it recorded revenue of US$ 36.4 million as compared to US$ 22.9 million in FY 2021 i.e. a growth of around 58.9%.
As on March 31, 2022, the Company has total 23 Subsidiaries. However, during the year under review, the Company does not have any joint venture or associate company.
During FY 2022, Diversify Offshore Staffing Solutions Pty Ltd, Australia , Diversify Intelligent Staffing Solutions Inc. Philippines, Diversify ISS BGC Inc. Philippines, Diversify Offshore Solutions Cebu Inc. Philippines and HGS CX Technologies Inc. USA, became the subsidiaries of the Company.
Also, during FY 2022, HGS Healthcare LLC, HGS EBOS LLC, U.S.A., HGS Colibrium LLC and HGS Axis Point Health LLC ceased to be subsidiaries of the Company effective January 6, 2022 due to sale of healthcare business of the Company.
Pursuant to Section 129(3) of the Act, a statement containing the salient features of financial statements of your Company''s subsidiaries in Form AOC-1 is attached to the financial statements of your Company.
Further, pursuant to Section 136 of the Act, the financial statements of your Company, consolidated financial statements along with relevant documents, and separate audited accounts with respect to subsidiaries, as may be applicable, are available on the website of Company www.hgs.cx
Particulars of Loans, Guarantees and Investments
Particulars of Loans, Guarantees and Investments as per Section 186 of the Act have been disclosed in this Annual Report as part of the Notes to the financial statements.
During the financial year, Authorized Share Capital of the Company increased from ?27,65,00,000/-divided into 2,75,00,000 Equity shares of ?10/- each and 1,50,000 1% Participatory Redeemable NonCumulative Preference Shares of ?10/- each to ? 80,00,00,000/- (Rupees Eighty Crores) divided into 7,98,50,000 (Seven Crores Ninety-Eight Lakhs and Fifty Thousand) equity shares of ?10/- (Rupees Ten) each and 1,50,000 (One Lakh Fifty Thousand) 1% Participatory Redeemable Non-Cumulative Preference Shares of ?10/- (Rupees Ten) each pursuant to
Resolution passed by shareholders of the Company through Postal Ballot. The deemed date of passing of resolution is the last date specified for receipt of duly completed e-voting i.e. February 11, 2022.
During the financial year, your Company has:
i. issued/ allotted 20,311 Equity shares of ?10/- each under ESOP Schemes (i.e., ESOP 2008 and ESOP 2011), pursuant to exercise of stock options by eligible employees.
ii. issued and allotted on February 25, 2022, Bonus shares in the ratio of 1:1,2,08,97,566 equity shares of ? 10 each (fully paid up) to the eligible Members whose names appeared in the Register of Members/ List of Beneficial Owners as on February 23, 2022, i.e. Record Date.
Consequently, the issued, subscribed and paid-up capital of your Company has increased from 2,08,77,255 equity shares on March 31, 2021 to 4,17,95,132 equity shares of ?10/- each, aggregating to ?417.95 Million as on March 31, 2022.
During the financial year, your Company has not issued shares with differential voting rights and sweat equity shares. The Company does not have any scheme to fund its employees to purchase the shares of the Company. Further, no shares have been issued to employees of the Company except under the ESOP Schemes and Bonus Issue as mentioned above.
Further, no amount is proposed to be transferred to the General Reserves of your Company out of the profits for the year.
Credit Rating
As on July 20, 2022, your Company has a long- term rating of CRISIL A / Watch Developing (Continues on ''Rating Watch with Developing Implications'') and short-term rating of CRISIL A1 /Watch Developing (Continues on ''Rating Watch with Developing Implications'') .
Investor Education and Protection Fund (IEPF)
The detailed information pertaining to IEPF has been provided in the ''Report on Corporate Governance'', which forms part of this report as Annexure âC''.
Communications and Public Relations
HGS continued to grow its brand position in the global market during FY2022. In March 2022, Gartner named HGS as a Leader in Customer Service BPO in the Magic Quadrant for the second year in a row.
HGS has established itself as an industry thought leader through successful earned media coverage, with an 8.32% media share of voice in North America and a 26% SOV in India.
After the new brand launch in December 2021, HGS focused on expanding thought leadership in digital customer experiences (CX). Key messaging around industry trends, challenging the status quo, and solutions reached decision makers such as CIOs, CXOs, CDOs and CMOs. HGS appeared in key outlets such as Forbes, VentureBeat, Retail Customer Experience, DestinationCRM, Toolbox, Total Retail, Authority Magazine, Call Center Times, TMC, and more. These publications showcased HGS subject matter experts prominently through contributed content, feature stories, and quotes providing context and insights to issues affecting business leaders today.
In India, HGS continued to leverage media opportunities, social media, webinars, and events to enhance visibility and thought leadership among key stakeholders like investors, employees, and government officials. HGS has shared information about its business growth, digital transformation, HR activities, and community programs in key publications like The Economic Times, Moneycontrol, Times of India, Business Standard, People Matters, etc.
During this period of continued uncertainty when most of our employees have been primarily based out of home, your Company focused on driving virtual employee engagement through specific campaigns on varied topics across internal communications and social media channels.
Corporate Social Responsibility (CSR)
As a socially responsible corporate entity, the CSR initiatives of your Company continue to aim at the overall development of the society, with a major thrust on upliftment of the economically and socially weaker communities. Towards achieving such objectives, CSR initiatives/ activities undertaken by your Company essentially focus on following core areas: Healthcare, Education, Skilling, Water, Persons with Disability and Community Development. CSR projects for honing the vocational skills of the youth and the differently abled are specifically undertaken with the objective of enhancing their employment opportunities and livelihood.
Your Company continues to carry out CSR activities in the aforementioned areas and will undertake CSR activities as specified in Schedule VII to the Act.
The Corporate Social Responsibility Committee (''CSR Committee'') of your Company as at March 31, 2022, consists of following Members:
⢠Mr. Anil Harish (DIN: 00001685), Independent Director - Chairman
⢠Mr. Sudhanshu Tripathi (DIN: 06431686), NonExecutive Director - Member
⢠Mr. Partha DeSarkar (DIN: 00761144), Whole-time Director - Member
During FY 2021-22, one meeting of CSR Committee was held on March 28, 2022.
In terms of the CSR Policy of the Company, the CSR Forum, consisting of senior employees of your Company, identifies and evaluates CSR projects/ initiatives and recommends the same for the consideration of the CSR Committee. The CSR Committee reviews the recommended projects/ initiatives and the expenditure to be incurred as per the provisions of the Act and the Rules made thereunder. The CSR Committee post review, recommends CSR projects/ initiatives to the Board for approval. The Board reviews and approves the CSR Projects/ initiatives recommended by the CSR Committee.
The CSR Forum monitors the progress of the approved CSR Projects/ initiatives and provides periodical updates on status of implementation, expenditure incurred/ to be incurred and beneficiaries of such projects to the CSR Committee and the Board.
The Report on CSR activities, in the format as required under the Companies (Corporate Social Responsibility) Rules, 2014, as amended from time to time, is set out in Annexure âE'' forming part of this report. The CSR Policy of the Company is also available on the website of your Company at https;//www.teamhgs. com/investors/corporate-policies
Directors'' Responsibility Statement
The financial statements are prepared in accordance with Ind AS to the extent applicable, as prescribed under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Rules, 2016, as amended thereof.
As stipulated under the provisions contained in Section 134(3)(c) read with Section 134(5) of the Act, the Directors, based upon the information and explanations obtained by them as also documents made available to them and to the best of their knowledge and belief, state that:
a) in preparation of the Annual Accounts for the financial year ended March 31,2022, the applicable accounting standards have been followed and there have been no material departures in the adoption and application thereof;
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit and Loss of the Company for that period;
c) they have taken proper and sufficient care towards the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
d) they have prepared the Annual Accounts on a going concern basis.
e) they have laid down adequate internal financial controls to be followed by the Company and that they are adequate and operating effectively.
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.
The internal control systems have been strengthened keeping in view the work from home environment due to Covid 19 pandemic. A number of technology solutions have been implemented to offer increased and robust IT controls.
Your Company has in place internal financial controls framework which, inter-alia, consist of function wise Status of Testing (Risk and Control Matrix, Test of Design, Test of Operating Effectiveness), Summary of Controls (Key and Non-Key), Process level controls (Process/ Function wise), IT General controls (Application wise and Process wise) and Summary of Gaps in Process Level Controls, IT General Controls, etc. Total number of controls including automated controls in FY 2021-22 has marginally decreased due to streamlining in processes and change in business conditions. Such framework is periodically tested internally, as well as reviewed and tested by the external consultant. Based upon the said framework and the compliance systems established and maintained by the Company, work performed by the statutory, internal and secretarial auditors, including audit of internal financial controls over financial reporting, the reviews carried on by the Management, confirmations provided by the external consultants and update on such ''Framework'' presented to the Audit Committee and to the Board, the Board is of the opinion that your Company''s internal financial controls were adequate and effective during FY 2021-22.
Number of Meetings of the Board
During FY ended March 31, 2022, fifteen (15) Board Meetings were held on May 22, 2021, June 18, 2021, August 09, 2021, August 18, 2021, October 29 2021, November 12, 2021, December 10, 2021, January 03, 2022, January 06, 2022 (2 meetings), January 14, 2022 (2 meetings), February 12, 2022, February 17, 2022 and February 25, 2022. The Company has complied with time gap requirement between any two meetings provided under the provisions of the Act and SEBI Listing Regulations. Further details in this regard are given in the Corporate Governance Report, which forms part of this report as Annexure âC''.
Declaration by Independent Directors
As required under Section 149(7) of the Act, all the Independent Directors on the Board have given declaration of their independence, confirming that they
meet the criteria of independence laid down in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the SEBI Listing Regulations and are independent of the management.
Familiarization Program for Independent Directors
The details of familiarization program imparted to Independent Directors during the Financial Year ended March 31, 2022 has been made available on your Company''s website at https://www.teamhgs. com/investors/corporate-governance/familiarization-programme-for-directors
Pursuant to Sections 134, 178 of the Act and applicable regulations of the SEBI Listing Regulations, the Board Effectiveness Evaluation has been carried out. As in the past, it consists of three components:
1. Independent Directors meeting
2. Board and committee effectiveness evaluation
3. Individual Directors effectiveness evaluation.
At the separate meeting of Independent Directors held during the Financial Year ended March 31, 2022 (without the attendance of Non-Independent Directors and the Members of the Management), performance evaluation of Non-Independent Directors, the Chairman of your Company and the Board as a whole was carried out for FY 2021-22. The Independent Directors also assessed the quality, quantity and timeliness of the flow of information between your Company''s Management and the Board.
In terms of the provisions of the Act and the Articles of Association of the Company, Mr. Sudhanshu Kumar Tripathi (DIN: 06431686), Non-Executive Director is liable to retire by rotation at the ensuing 27th AGM and being eligible, offers himself for re-appointment.
The Nomination and Remuneration Committee and the Board of Directors at their meetings held on August 8, 2022 and August 12, 2022 respectively have approved and recommended the re-appointment of Mr. Sudhanshu Tripathi and his continuation as Non-executive Non-Independent Director. Accordingly, a proposal for re-appointment of Mr. Sudhanshu Tripathi and his continuation as Non-Executive Non-Independent Director is placed for the approval of the Members by way of an Ordinary Resolution at the ensuing AGM.
Further, the Nomination and Remuneration Committee and the Board of Directors at their meetings held on August 25, 2022 have appointed:
i. Mr. Pradeep Udhas (DIN: 02207112) as an Additional Director designated as an Independent Director for a period of 5 (five) consecutive years with effect from August 25, 2022.
ii. Mr. Paul Abraham (DIN: 01627449), as an Additional Director designated as Non-Executive Non-Independent Director with effect from August 25, 2022, liable to retire by rotation.
Accordingly, proposals for appointment of Mr. Pradeep Udhas as an Independent Director and Mr. Paul Abraham as Non-Executive Non-Independent Director are placed for the approval of the Members by way of Special Resolution and an Ordinary Resolution respectively, at the ensuing AGM.
None of the Directors of the Company are disqualified for appointment/ to continue to act as Director under Section 164 of the Act. Further, they are not debarred from holding the office of Director pursuant to order of SEBI or any other authority.
Details relating to the composition of the Board, meetings of the Board held during financial year ended March 31, 2022, attendance of the Directors have been provided in the Report on Corporate Governance which forms part of this report as Annexure âC''.
Registration in Independent Directors'' Databank
Pursuant to a notification dated October 22, 2019 issued by the Ministry of Corporate Affairs, the Independent Directors of the Company, to the extent applicable, have completed the registration with the Independent Directors'' Databank.
Audit Committee
Pursuant to the provisions of Section 177 of the Act and Regulation 18 of SEBI Listing Regulations, the Audit Committee of the Board as at March 31, 2022, comprises of following Members:
⢠Mr. Anil Harish, Independent Director - Chairman
⢠Mr. Yashodhan Madhusudan Kale, Non-Executive Director - Member
⢠Ms. Bhumika Batra, Independent Director - Member and
⢠Dr. Ganesh Natarajan, Independent Director -Member
Recommendations made by the Audit Committee, during the year under review, have been accepted by the Board.
Further details pertaining to the Audit Committee are included in the Report on Corporate Governance, which forms part of this report as Annexure âC''.
Key Managerial Personnel
In terms of Section 203 of the Act, your Company has the following Key Managerial Personnel:
Mr, Partha DeSarkar, Whole-time Director; Mr, Srinivas Palakodeti, Chief Financial Officer and Mr. Narendra Singh, Company Secretary,
Affirmation of Code of Conduct
The Whole-time Director and Chief Executive Officer''s confirmation to the effect that all members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct for the year ended March 31, 2022 and forms part of this report as Annexure âA'',
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134(3) (m) of the Act, read with the Companies (Accounts) Rules, 2014, as amended, relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo forms part of this report as Annexure âB'',
Report on Corporate Governance
As required under Schedule V of the SEBI Listing Regulations, a detailed report on Corporate Governance forms part of this report as Annexure âC'',
Ms, Amrita D, C, Nautiyal, Practicing Company Secretary, Mumbai, (Membership No,: FCS 5079 and C, P No, 7989) of M/s. Amrita Nautiyal & Associates, Secretarial Auditor of your Company has examined the compliance of conditions of Corporate Governance as stipulated in Schedule V (C) of the SEBI Listing Regulations and the certificate forms part of Annexure âC'' to this report,
Report on Management Discussion and Analysis
In terms of the provisions of Regulation 34 of the SEBI Listing Regulations, a separate report on Management Discussion and Analysis is annexed to this report as Annexure âD'',
Employees Stock Options Plan (âESOP'')
Two ESOP Schemes, viz, ''Hinduja Global Solutions Limited Employees Stock Options Plan 2008'' and ''Hinduja Global Solutions Limited Employees Stock Options Plan 2011'' have been in operation during FY 2021-22, These ESOP Schemes are in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended, Post March 31, 2022, the Nomination and Remuneration Committee had granted additional stock options to adjust the impact of Bonus Issue of Equity Shares, No, of un-exercised Options after adjustment as above stands to 40,750 stock options, The particulars of aforesaid ESOP Schemes are available on your Company''s website at https://www.teamhgs, com/investors/other-reports
Pursuant to Section 92(3) and 134(3)(a) of the Act,
an Annual Return as on Financial Year ended March 31, 2022, in the prescribed format, is available on your Company''s website https://www,teamhgs,com/ investors/other-reports
Related Party Transactions
All contracts/ arrangements/ transactions entered into with the related parties during FY 2021-22 are in the ordinary course of business and at arm''s length basis and therefore, outside the purview of Section 188(1) of the Act and same are disclosed in the financial statements of your Company, Policy on Related Party Transactions as recommended by the Audit Committee and adopted by the Board is available on the Company''s website at https://www,teamhgs,com/ investors/corporate-policies, Information on related party transactions pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, as amended, is given in Form AOC-2 and the same forms part of this report as Annexure âF'',
Policy on Directors'' Appointment and Remuneration
Policy on Directors'' Appointment and Remuneration and other matters provided in Section 178(3) of the Act have been disclosed in the Report on Corporate Governance, which forms part of this report as Annexure âC'' and available on your Company''s website at www.teamhgs,com/investors/corporate-policies,
The policies framed under the Companies Act, 2013 and SEBI LODR were uploaded on the website of the Company at link https://www,teamhgs,com/investors/ corporate-policies
Whistle Blower Policy and Vigil Mechanism
The Company has a Whistle Blower Policy and Vigil Mechanism in place and is available on the website of your Company at https://www,teamhgs,com/investors/ corporate-policies, During the year, one complaint was received and the same was is in progress of closure,
The details of the Policy are disclosed in the Report on Corporate Governance, which forms part of this report as Annexure âC'',
Internal Complaints Committee
Pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place an Internal Complaints Committee (ICC) and also Policy on appropriate social conduct at workplace, The Policy is applicable to all employees of your Company at all locations, Employees, for the purpose of this policy, shall include all persons engaged in the business and operations of your Company and includes permanent, temporary and part-time employees, In addition, this Policy shall also be applicable to all third parties such as visitors, clients, customers, contractors, service
providers and any other person authorized to be present within the premises/ workplace of your Company, Your Company''s workplace includes Company''s premises, as well as the premises of other third parties, vendors and associates of your company where the employees of your Company are required to perform work or that are visited by the employees of your Company arising out of or during the course of employment,
The Reports of the ICC are periodically placed before the Board for review and suggestions as an ongoing process, and initiatives are taken by the Management to make the workplace safer for the employees, The status of complaints received, disposed of by the ICC and pending as at March 31, 2022 is as under:
Number of complaints pending as at March 31, 2021 |
- |
Number of complaints received |
- |
Number of complaints disposed of |
- |
Number of complaints withdrawn |
- |
Number of complaints pending as at March 31, 2022 |
- |
Your Company has formulated Risk Management Policy & Procedures, which, inter-alia, identify risks, taking into consideration the business and operations of the Company and adoption of mitigation measures, The details of the Policy & Procedures are given in the Management Discussion and Analysis Report (MDA) annexed to this report as Annexure âD'',
During the year under review, the Risk Management Committee of the Board (''RMC'') comprises of (i) an Independent Director (ii) a Non-Executive, Non-Independent Director and (iii) Whole-time Director was constituted,
The RMC met twice during the year and reviewed Enterprise Risk Management framework, the risks that matter and updated the policy and procedures as appropriate, The RMC updated the Audit Committee and the Board on the matters relating to risk,
Further details pertaining to the RMC are included in the Report on Corporate Governance, which forms part of this report as Annexure âC'',
Fixed Deposits
Your Company has not accepted any fixed deposits from the public during the year under review, and as such, no amount on account of principal or interest on fixed deposits was outstanding as on the Balance Sheet date,
Statutory Auditors and Auditors'' Report
At the 22nd AGM of your Company held on September 28, 2017, M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No, 117366W/W-100018) were appointed as the Statutory Auditors of your Company for a period of five consecutive years, i.e.,
from the conclusion of the 22nd AGM till the conclusion of the 27th AGM. The term of office of M/s Deloitte Haskins & Sells LLP, as Statutory Auditors of the Company concludes at the forthcoming AGM of the Company,
In view of the above and pursuant to Section 139 and other applicable provision of the Act, based on the recommendation of the Audit Committee, the Board of Directors at its meeting held on August 25, 2022 recommended the resolution for appointment of M/s, Haribhakti & Co, LLP, Chartered Accountants (ICAI Firm Registration Number: 103523W/W100048) as the Statutory Auditors of the Company to hold office for a term of 5 years i.e. from the conclusion of 27th AGM till the conclusion of 32nd AGM (to be held during calendar year 2027) for the approval of Members of the Company at the ensuing AGM, M/s, Haribhakti & Co, LLP has provided a written consent and confirmed that they are eligible to act as Statutory Auditor of the Company,
The reports of the Statutory Auditors on Standalone and Consolidated Ind AS Financial Statements forms part of this Annual Report, The Auditors'' Report contains ''Unmodified Opinion'' on the financial statements (standalone and consolidated) of the Company, for the year ended March 31, 2022 and there are no qualifications in their report.
During the year under review, there were no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013,
Secretarial Audit and Compliance with Secretarial Standards
Pursuant to the provisions of Section 204 of the Act, the Board had appointed Ms, Amrita D, C, Nautiyal, Practicing Company Secretary, Mumbai, (Membership No,: FCS 5079 and C, P No, 7989) of M/s, Amrita Nautiyal & Associates, as the Secretarial Auditor to carry out the Secretarial Audit for FY 2021-22,
The Secretarial Audit Report for FY 2021-22, forms part of this report as Annexure âG'', The Report does not contain any qualifications, reservations or adverse remarks.
During the year, your Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India,
There are no proceedings, either filed by the Company or filed against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before National Company Law Tribunal or other courts during the FY 2022, The disclosure as per rule 8(5)(xi) and 8(5)(xii) of the Companies (Accounts) Rules, 2014 are not applicable,
Maintenance of Cost Records and Appointment of Cost Auditor
Your Company provides BPM Services, Hence, the Company is not required to maintain cost records pursuant to Section 148 of the Act and therefore appointment of a Cost Auditor is not applicable,
Disclosures 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 and amendments thereto are given in Annexure âH'' to this Report.
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, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annual Report.
Having regard to the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members. The said information is available for inspection at the Registered Office of the Company and any member interested in obtaining such information may write to the Company Secretary and the same shall be furnished without any fee.
In accordance with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, details of foreign employees, excluding Directors and their relatives, have not been included in the Annual Report. Members interested in obtaining the said information may write to the Company Secretary at the Registered Office and the same shall be furnished without any fee.
Business Responsibility Report (BRR)
Regulation 34(2)(f) of the SEBI Listing Regulations, mandates inclusion of the BRR as part of the report of your Company. In compliance with the said regulation, BRR forms part of this report as Annexure âI''.
Significant and Material Orders
There are no significant and material orders passed by the Regulators or Courts or Tribunals that would impact the going concern status and your Company''s operations in the future.
Internal Financial Controls and its Adequacy
The Company has adopted policies and procedures for ensuing the orderly and efficient conduct of its business, including Internal Financial Controls (including Internal Financial Controls over Financial Reporting) and their adequacy are included under the heading ''Internal Controls'' in the Management Discussion and Analysis section, which forms part of this report as Annexure âD''.
Material Changes and Commitments Affecting the Financial Position of the Company between the end of the Financial Year and Date of the Report
There are no material changes and commitments between the end of the financial year of the Company and as on the date of this report which can affect the financial position of the Company.
Further, Hon''ble NCLT vide order dated July 29, 2022, directed the company to convene the Meeting of Equity Shareholders for approval of the Scheme of Arrangement on September 2, 2022. The details of Scheme is provided under ''Acquisition of digital, media and communication business undertaking of NXTDigital Limited'' appearing elsewhere in this report.
Acknowledgements
Your Directors express their grateful appreciation for the co-operation and support received from the customers, vendors, business associates, investors, financial institutions, bankers, the Government of India, State Governments, Governments of various countries in which your company operates, regulatory authorities and the society at large. Your Directors place on record their sincere appreciation for the dedicated efforts, commitments and contribution of employees at all levels of your Company, which has enabled your Company to achieve consistent growth in a challenging business environment.
For and on behalf of the Board of DirectorsYashodhan Madhusudan Kale
Place : Mumbai Chairman
Date : August 25, 2022 DIN: 00013782
Mar 31, 2018
DIRECTORSâ REPORT_
To
The Members,
The Directors are pleased to present their Report on the business and operations of your Company along with the Audited Financial Statements (Standalone and Consolidated) for the financial year ended March 31, 2018.
Financial Results
(R in million* except per share data)
Standalone |
Consolidated |
|||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Operating Income |
16,699 |
15,975 |
38,494 |
37,110 |
Other Income |
400 |
273 |
363 |
228 |
Total Income |
17,100 |
16,248 |
38,857 |
37,338 |
Operating Expenses |
14,588 |
13,749 |
34,433 |
32,930 |
Depreciation and Amortization |
747 |
783 |
1,413 |
1,432 |
Financial Expenses |
95 |
156 |
347 |
429 |
Profit Before Tax and Exceptional items |
1,669 |
1,560 |
2,664 |
2,547 |
Exceptional item |
- |
- |
120 |
- |
Profit Before Tax |
1,669 |
1,560 |
2,544 |
2,547 |
Provision for tax (incl. deferred tax) |
248 |
545 |
623 |
755 |
Profit After Tax |
1,422 |
1,015 |
1,921 |
1,792 |
Less: Non-controlling Interest |
- |
(15) |
(3) |
|
Add: Balance brought forward from Previous year |
4,551 |
3,724 |
5,063 |
3,486 |
Profit Available for Appropriation |
5,972 |
4,739 |
6,999 |
5,281 |
Less: Adjustments and Appropriation |
||||
- Dividend |
208 |
182 |
208 |
182 |
- Dividend Tax |
- |
6 |
42 |
36 |
Balance Carried Forward |
5,764 |
4,551 |
6,749 |
5,063 |
Earnings per share (R) |
||||
- Basic |
68.42 |
48.96 |
93.18 |
86.58 |
- Diluted |
68.24 |
48.88 |
92.94 |
86.44 |
*(1 million = R 10 lakhs)
The Standalone and Consolidated Financial Statements for the year ended March 31, 2018, have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (IndAS) and Companies (Indian Accounting Standards) Amendment Rules, 2016 prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable.
Operating Performance
On a Consolidated basis, your Company registered a satisfactory performance during the financial year ended March 31, 2018. Compared to the previous financial year, the Operating Income increased by 3.7% from R37,110 million to R 38,494 million. While there was strong growth in various verticals, especially the healthcare vertical, the strengthening of the Indian Rupee vis-a-vis the US Dollars, softened revenue growth in rupee terms.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) declined by 8.2% from R4,424 million to R4,061 million, due to drop in profitability of the UK business, pressure on margins of the India domestic CRM business on account of drop in volumes from telecom clients, increase in manpower cost due to provision made for steep increase in minimum wages in the state of Karnataka and increase in other operating expenses.
EBITDA for FY2018 has been computed on the same basis as used for computing EBITDA for FY2017 (i.e. excluding gains and losses on account of fluctuations in foreign exchange currencies).
PAT (Profit after Tax) increased from R1,792 million to R1,921 million, a growth of 7.2% due to increase in other income (on account of interest on tax refunds received), lower depreciation, lower interest costs on account debt reduction and overall lower tax costs. The PAT of R1,921 million was achieved after factoring an exceptional item charge of R120 million on account of impairment of goodwill in respect of the UK Business.
On a Standalone basis, Operating Income was R16,699 million for the financial year ended March 31, 2018, compared to R15,975 million in the previous financial year, an increase of 4.5%. EBITDA decreased by 12.3% from R2,407 million to R2,111 million. PAT increased by 40% from R1,015 million to R1,422 million.
A review of the Financial and Operational Performance of the Company and its key subsidiaries has been given in the ''Management Discussion and Analysis'' section which forms part of this Report as Annexure âE''.
Other financial highlights:
- Cash flow from operations and after working capital changes: R3,415 million as compared to R4,092 million in FY2017, a decrease of 19.8%;
- CAPEX: R1,214 million as compared to R1,806 million in FY2017, a decrease of 33%;
- Gross Debt of R5,854 million as at March 31, 2018 as compared to R6,616 million as at March 31, 2017,
i.e. a reduction of R762 million (12%) during the year;
- Net Worth: R14,823 million as at March 31, 2018 as compared to R13,368 million as at March 31, 2017, an increase of 11%.
Revenue Summary:
- Revenue by Geography - US: 68%; Canada: 10%; UK & Europe: 7% and India: 15%
- Revenue by Vertical - Healthcare: 49.2%; Telecom and Technology: 19.9%; Consumer: 12.9%; Banking and Financial Services: 8.0% and Others: 10.0%
Business Highlights:
- Client Wins: 29 new clients across BPM and HRO.
- Active Clients: 190 core BPM clients and 636 Payroll processing, HRO and F&A clients.
- Delivery Centres: 70 global delivery centres across seven countries at the end of the year FY2018. During the year, six new centres were opened.
- Employee Headcount: 44,265 as on March 31, 2018; India: 62% (India offshore: 20% and India Domestic: 42%), Philippines: 19%, USA: 10%, Canada: 6% and Europe: 3%.
Dividend
Your Directors are pleased to recommend a Final Dividend of R2.50 per equity share (25% on face value of R10/- each) for the year ended March 31, 2018, subject to your approval. This is in addition to the three Interim Dividends aggregating to R7.50 per equity share of R10 each for the financial year 2017-18 declared by the Board of Directors on August 11, 2017, November 8, 2017 and February 8, 2018, respectively and have been duly paid. The total dividend for the financial year ended March 31, 2018 would be R10 per equity share (100% on face value of R10/- each), if approved by the Members.
Business Review
The world is witnessing rapid changes led by consumer preferences, disruptive technologies and competitive forces and concerns over data privacy. Businesses are constantly looking for solutions to enhance customer experience, increase sales, add customers and reduce costs. To meet the changing needs of businesses, Business Process Management (BPM) players are combining analytics, automation and digital technologies to offer new business models and alternate delivery channels.
The Global BPM spend continues to be moderate, growing by 3.4% in 2017 to touch USD189 billion. The share of India continues to grow and is estimated at 15% of the global spend in 2017. As per NASSCOM, the growth of the Indian BPM industry remains steady, reaching an estimated USD 32.5 billion in revenue for FY2018, a 7.9% increase on year-on-year basis. Exports accounted for USD 28.4 billion while the domestic market revenue stood at USD 4.1 billion.
Philippines BPM business continues to grow and is estimated to have reached USD 23 billion in 2017 and was the highest job generator in the year in Philippines.
Detailed information pertaining/relating to Business Review has been provided in the ''Management Discussion and Analysis'' section which forms part of this Report as Annexure âE''.
Key Subsidiaries
HGS International, Mauritius, a wholly-owned subsidiary of your Company, is primarily engaged in investment activity. HGS International owns 100% of the share capital of Hinduja Global Solutions Inc., USA, C-Cubed N.V., Curacao, Hinduja Global Solutions Europe Ltd., UK, HGS St. Lucia Ltd., Saint Lucia and Hinduja Global Solutions MENA FZ- LLC, Dubai. HGS International owns 100% of HGS Axis Point Health LLC jointly with HGS UK Limited.
HGS International owns 95.2% of the common shares of HGS Colibrium Inc., with one of the founders of Colibrium owning the balance share capital. HGS International owns 76% of Hinduja Global Solutions UK Ltd while the balance is held by Hinduja Global Solutions Europe Ltd., UK.
Revenue for FY2018 was USD 4.5 million as against USD 3.4 million for FY2017.
Hinduja Global Solutions Inc., USA (HGS Inc.), a wholly-owned subsidiary of HGS International, Mauritius, specializes in marketing and provision of both voice and non-voice related Customer Contact and Business Process Outsourcing services to its clientele. Its key subsidiaries are HGS (USA) LLC, HGS Canada Inc., HGS EBOS LLC and HGS Healthcare LLC.
The Consolidated Revenue was USD 431.8 million for FY2018 as compared to USD 398.8 million in FY2017.
HGS (USA), LLC, a wholly-owned subsidiary of HGS Inc., USA, operates in three cities in the US. It partners with Fortune 1000 companies and Government agencies to provide comprehensive Customer Relationship Management programs in the verticals of consumer goods and services, e-commerce, telecom and media. HGS (USA), LLC also sub contracts work to HGS entities in India, Philippines and Jamaica. For FY2018, it recorded total revenue of USD 86.7 million as against total revenue of USD 313.9 million in FY2017. Until March 31, 2017, HGS (USA), LLC had clients in healthcare as well as other sectors. Effective April 1, 2017, the healthcare business was transferred to its wholly-owned subsidiary - HGS Healthcare LLC, and hence all revenues and costs of healthcare clients are accounted for by HGS Healthcare. In view of this, there is a drop in revenues of HGS (USA), LLC as compared to FY2017.
HGS Healthcare, LLC is a wholly-owned subsidiary of HGS (USA), LLC, and renders business process management services to healthcare clients, primarily in the Payer segment. HGS Healthcare renders services from three cities in the US as well as sub contracts work to HGS entities in India, Philippines and Jamaica. For FY2018, it recorded total revenues of USD 251.9 million.
HGS Canada Inc., a wholly-owned step-down subsidiary of HGS Inc., USA, is a Canadian contact center service provider servicing marquee customers across verticals such as Media, Telecom, Technology and Banking and Financial Services. HGS Canada offers technical support, inbound and outbound sales, customer care and customer retention in English and French languages, and has a team size of 2,709 associates at 10 centers in Canada. For FY2018, it recorded revenue of CAD 77.2 million, a slight increase compared to revenue of FY2017.
Hinduja Global Solutions Europe Ltd. is the UK-based subsidiary, focusing on providing consulting services for BPM, call center services and offshoring services to UK-based clients. It owns 24% stake in Hinduja Global Solutions UK Ltd. and 100% stake in HGS France SARL, France. HGS Italy, SRL, its erstwhile wholly-owned subsidiary, was liquidated during FY2018, since inoperative.
For FY2018, it recorded standalone revenue of GBP 1.6 million as compared to GBP 1.3 million in FY2017.
Hinduja Global Solutions UK Ltd. is a leading contact center company with 1,214 employees in London, Preston and Selkirk (Scotland). It offers a range of services for inbound and outbound interactions to marquee customers across verticals such as Government, FMCG, Financial Services, Automobiles and Retail. Its inoperative branch in Rotterdam (Netherlands) was wound up in FY2018 while the other inoperative branch in Hamburg (Germany) is in the process of being wound up.
For FY2018, it reported revenue of GBP 33.1 million as compared to GBP 36.3 million in FY2017.
HGS St. Lucia Ltd., Saint Lucia is the holding company of Team HGS Ltd., Jamaica. Team HGS Ltd, Jamaica, began call center operations in FY2013 at Kingston, Jamaica and continues to show strong performance. Revenue for FY2018 was Jamaican Dollars 3,586.7 million compared to Jamaican Dollars 2,386.2 million in FY2017.
Hinduja Global Solutions MENA FZ-LLC (previously known as HGS MENA FZ-LLC) has a marketing office in Dubai Internet City with the objective to build sales pipeline. In FY2018, it recorded revenues of AED 2.0 million as compared to AED 7.1 million in FY2017.
As reported last year, HGS Extensya Cayman Limited, Extensya Investment Holdings Limited and HGS Extensya Holdings Limited, which were its wholly- owned subsidiaries, were closed and struck-off from the Registrar of Companies on July 1, 2017.
HGS Colibrium Inc., USA: Revenue for FY2018 was USD 4.9 million as compared to USD 12.2 million for FY2017.
HGS International Services Private Limited, India (HGSISPL): HGSISPL, a wholly-owned subsidiary of the Company, recorded revenue of R4,019.3 million in FY2018 as compared to R3,649.3 million in FY2017, a growth of 10.1%. The SEZ division of HGSISPL is presently operating in five units viz. a) Global Village SEZ, Bangalore; b) DLF Towers SEZ, Hyderabad; c) Pritech I Park SEZ, Bangalore; d) DLF Cybercity, SEZ Hyderabad; and e) Pritech II Park SEZ, Bangalore.
Human Resource Outsourcing (HRO) business of HGSISPL services marquee customers in Banking, Financial Services, Insurance and other industry verticals in India and abroad.
Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of financial statements of the Company''s subsidiaries in Form AOC -1 is attached to the financial statements of the Company.
Further, pursuant to Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate accounts in respect of subsidiaries, as may be applicable, are available on the website of the Company at www. teamhgs.com.
Scheme of Amalgamation of HGS International Services Private Limited (HGSISPL) with the Company
During the year under review, a Scheme of Amalgamation of HGSISPL (Transferor Company), a wholly owned subsidiary of the Company with the Company (Transferee Company) and their respective Shareholders (âthe Schemeâ), pursuant to the provisions of Sections 230 to 232 of the Companies Act, 2013 (âthe Actâ) and all other applicable provisions of the Act, if any, was approved by the Board of Directors of your Company and the Board of Directors of HGSISPL. The National Company Law Tribunal, Mumbai Bench (âNCLTâ) sanctioned the Scheme on June 20, 2018. The Scheme became effective from August 1, 2018, being the date on which the certified copy of the Order of the NCLT was filed by both the Companies with the Registrar of Companies, Mumbai, Maharashtra. A copy of the Scheme and the NCLT Order are uploaded on the website of the Company at www.teamhgs.com
The Appointed Date of the Scheme is April 1, 2017. On the Effective Date i.e. on August 1, 2018, HGSISPL stands amalgamated with the Company and dissolved without winding up. In terms of the Scheme with effect from the Appointed Date, the entire business and whole of the undertaking of HGSISPL stands transferred to and vested in the Company, on a going concern basis, without any further deed or act.
On the Effective Date, the Authorized Share Capital of HGSISPL stands consolidated with the Authorized Share Capital of the Company pursuant to the approval of the Members of the Company received via Postal Ballot process on June 7, 2018 and pursuant to the provisions of the Scheme. The entire issued and paid up capital of HGSISPL, since held by the Company, stands cancelled and since no shares are required to be allotted by the Company to the Members of HGSISPL in terms of the Scheme, there is no increase in the issued and paid up equity share capital of the Company.
Acquisitions through subsidiaries
a) CMH Services Subsidiary LLC, USA : Trade Name
- AxisPoint Health
In April 2018, your Company through its step down subsidiary, HGS Population Health LLC, USA, acquired 100% of CMH Services Subsidiary LLC, USA, operating under the trade name of AxisPoint Health, a leading population health management company.
In July 2018, HGS Population Health LLC, USA merged into CMH Services Subsidiary LLC, USA. Thereafter, the name of CMH Services Subsidiary LLC, USA was changed to HGS AxisPoint Health LLC.
b) Element Solutions LLC, USA
Your Company through its step down subsidiary Hinduja Global Solutions UK Limited, acquired 57% stake in Element Solutions LLC, USA, a digital consulting services company in April 2018. The Indian operations of Element Solutions LLC, USA are exclusively carried out by Elements115 Computech Private Limited from its offices (delivery centers) located in Vishakhapatnam and Chennai. As a part of the acquisition, your Company acquired the assets of Elements115 Computech Private Limited and employees of the said company based in India joined the Company as new employees on closing of the transaction.
Particulars of Loans, Guarantees and Investments
Loans, Guarantees and Investments as per Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.
Communications and Public Relations
HGS is evolving its positioning in the market place to emphasize the unique ways the Company creates value for its clients by putting the customer first, being excellent at the basics, leveraging its deep domain expertise and intelligently innovating to support its clients'' business process optimization and digital transformation. HGS helps consumers get the right answer fast while delivering great customer experiences and operational efficiencies that reduce costs. This messaging is resonating among its key stakeholders, through media such as Forbes.com, Healthcare Call Center Times and Becker''s Hospital Review. In an independent report by Apollo Research (February 2018) measuring market share of voice in select media, among the top 30 BPO competitors, HGS ranked in the top 5 across North America and the UK on key topics relevant to its industry.
In India, HGS continues to leverage media as a key channel to enhance visibility and thought leadership amongst key stakeholders including investors, clients, employees and government. The annual Investor Meet has helped increase awareness and engagement with investors and communicate HGS'' perspectives to the market.
HGS has redesigned its website to make it more accessible and engaging for all site visitors. Our design team focused on making the web experience more fluid, device agnostic and more intuitive to the buyer journey -with quick access to key thought leadership, case study and service line content. HGS also incorporated new messaging and robust content that offers transformative solution alternatives for customers and prospects in all key business sectors. HGS also enhanced its digital and social media presence to engage its target audiences around the globe.
In FY2018, HGS has been recognized by industry analysts and third-party organizations. HGS won a record 14 awards including:
- Leader: The Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP), for the 8th consecutive year.
- Stevie Awards for Customer Service Department of the Year and Business-to-Business Services Innovation.
- Contact Center World''s Best Outsourcing Partnership and Best Self-Service Technology.
- Golden Bridge Award for Customer Service Team of the Year.
- NASSCOM Customer Service Excellence Award 2017 in the Transformation Category.
- Best in the Omnichannel Social CRM category at the APAC Customer Engagement Forum (ACEF), Mumbai.
HGS was also included in 14 industry analyst ratings and recognized with four leadership positions:
- NelsonHall''s Digital Marketing NEAT and MultiChannel CMS NEAT for Self-service Enablement Focus and CX Improvement Focus.
- HfS Blueprint for Healthcare Business Operations.
- ISG''s Provider Lens for Contact Center Customer Experience for the buyer segments of Digital Enthusiast and Automation Seeker.
HGS has leveraged these distinctions as credentials to reach industry influencers, analysts, advisers, potential customers and potential employees.
HGS is working continuously to create an inclusive environment at the workplace. HGS leverages different communication tools and the company intranet to share information in an interactive and highly engaging way.
Corporate Social Responsibility (CSR)
Your Company is a socially-responsible corporate entity and has been involved in CSR activities aimed at the upliftment of the economically and socially disadvantaged communities since many years. The prioritized areas of focus for CSR activities include Education, Sustainable Development and Healthcare, amongst other activities. Your Company is also making efforts to maximize employee participation in CSR activities, through the ''CSR Volunteering Portal - Work to Give'' launched during the year by the CSR Forum set up by the Management. The ''Volunteering Portal'' covers CSR activities and volunteer details across all locations in India.
During the year, your Company was recognized at the ET Now - CSR Leadership Awards 2018 in two categories -Community Development and Concern for Health.
The Corporate Social Responsibility Committee (âCSR Committeeâ) of the Company consists of following Members:
Mr. Anil Harish (Independent Director) - Chairman, Mr. Ramkrishan P. Hinduja (Non-Executive, NonIndependent Director), Ms. Vinoo S. Hinduja (NonExecutive, Non-Independent Director), Mr. Rajendra P. Chitale (Independent Director) and Mr. Rangan Mohan (Independent Director).
During the Financial Year 2017-18, one Meeting of CSR Committee was held on February 22, 2018.
In terms of the CSR Policy, the CSR Forum, consisting of employees of the Company, identify and evaluate CSR projects/ initiatives and recommend the same for the consideration of the CSR Committee. The CSR Committee reviews the recommended projects/ initiatives and the expenditure to be incurred as per the provisions of the Companies Act, 2013 and the Rules made thereunder. After review, the CSR Committee recommends such projects/ initiatives as it deems fit to the Board for its approval. The Board reviews and approves the CSR Projects/ initiatives recommended by the CSR Committee. The CSR Forum also monitors the progress of the approved CSR Projects and provides periodical status updates to the CSR Committee and thereafter, to the Board.
The Report on CSR activities, in the format as required under Companies (Corporate Social Responsibility) Rules, 2014, is set out in Annexure âG'' forming part of this Report. The CSR Policy is available on the website of the Company at www.teamhgs.com
Directors'' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors, based upon the information and documents made available to them and to the best of their knowledge, confirm that:
- In preparation of the Annual Accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed and there have been no material departures in the adoption and application thereof;
- They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for that period;
- They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- They have prepared the Annual Accounts on a going concern basis;
- They have laid down adequate internal financial controls to be followed by the Company and they are operating effectively;
- They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.
The Company has in place internal financial controls framework which inter alia consist of Function wise Status of Testing (Risk and Control Matrix, Test of Design, Test of Operating Effectiveness), Summary of Controls (Key and Non-Key), Process level controls (Process/ Function wise), IT General controls (Application wise and Process wise) and Summary of Gaps in Process Level Controls ad IT General Controls, etc. The controls in FY2017-18 have been increased to include GST controls and change in payroll process. Such framework is periodically, internally tested as well as reviewed and tested by the external consultant. Based upon the said framework and the compliance systems established and maintained by the Company, work performed by the statutory, internal and secretarial auditors, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by Management, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY2017-18.
Number of Meetings of the Board
Seven meetings of the Board were held during the year. The time gap between any two meetings did not exceed one hundred and twenty days. Further details in this regard are given in the Corporate Governance Report, which forms part of this Report as Annexure âC''.
Declaration by Independent Directors
Pursuant to the Companies (Amendment) Act, 2017, the definition of ''Independent Directors'' has been widened and made more inclusive. As required under Section 149(7) of the Companies Act, 2013, the Company has received the declaration (including additional declaration) from each of the Independent Directors of the Company confirming that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and amendment thereto and in Regulation 16(1 )(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [âSEBI (LODR) Regulationsâ].
Board Evaluation
Pursuant to Section 134, 178 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations, the Nomination and Remuneration Committee (NRC) and the Board of Directors carried out the performance evaluation during the Financial Year ended March 31, 2018 of the Individual Directors (Independent, Non-Independent Directors and the Chairman), the Board as a whole and its Committees, for the Financial Year 2017-18. The evaluation was carried out through ''Rating Documents'' which contain criteria/ parameters on which the evaluation has been carried out.
The performance of the Individual Directors was inter alia evaluated on criteria such as: Exercise of independent judgment, offering constructive contribution to the Board''s discussions and deliberations based on his/ her expertise and domain knowledge; non-partisan appraisal of issues, etc.
Evaluation of the performance of the Board as a whole and Committees was inter alia based on the following criteria: structure of the Board/ Committees, frequency, regularity and discussions at the meetings of the Board/ Committees, functioning of the Board/ Committees, mandate and composition of the Board/ Committees, effectiveness of the Committees, contribution of the Committees to the decisions of the Board, etc.
At the separate meeting of Independent Directors held during the Financial Year ended March 31, 2018, performance evaluation of Non-Independent Directors, the Chairman of the Company and the Board as a whole was carried out for the Financial Year 2017-18 on the basis of aforementioned criteria. The Independent Directors also assessed the quality, quantity and timeliness of the flow of information between the Company''s Management and the Board.
The NRC, the Board and the Independent Directors, having regards to the âRating Documentsâ and the aforementioned criteria, concluded that overall performance of each of the Directors, including the Chairman of the Company, is more than satisfactory and there has been constructive contribution from each of the Directors and they contribute a lot to the Board. The Committees and the Board as a whole are performing well, contribute to the well-being of the Company and aimed at enhan
enhancing the performance of the Company. The Management is proactive in providing detailed and requisite information on a timely basis, which enables fruitful discussions at the Meetings of the Committees and the Board.
Directors
Mr. Yashodhan Madhusudan Kale, Director (DIN 00013782), is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
Audit Committee
The Board has constituted an Audit Committee pursuant to the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI LODR Regulations. The Committee comprises the following Members: Mr. Anil Harish (Independent Director) - Chairman, Mr. Ramkrishan P. Hinduja (Non-Executive, NonIndependent Director), Mr. Rajendra P. Chitale (Independent Director) and Mr. Rangan Mohan (Independent Director).
Further details pertaining to the Audit Committee are included in the Corporate Governance Report, which forms part of this Report as Annexure âC''.
Key Managerial Personnel
Pursuant to Section 203 of the Companies Act, 2013, the Company has recognized/ noted Mr. Partha DeSarkar, (Manager and Chief Executive Officer); Mr. Srinivas
Palakodeti (Chief Financial Officer) and Mr. Makarand D. Dewal (Company Secretary) as the Key Managerial Personnel of the Company.
There was no change in the Key Managerial Personnel during the Financial Year 2017-18.
Manager and Chief Executive Officer''s Certification
The Manager and Chief Executive Officer''s declaration affirming compliance with the Code of Conduct by the Board and Senior Management is forming part of this Report as Annexure âA''.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The prescribed particulars as required under Section134(3) (m) of the Companies Act, 2013 relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are furnished as Annexure âB'' to this Report.
Corporate Governance
As required under Schedule V of the SEBI (LODR) Regulations, a detailed report on Corporate Governance is furnished as Annexure âC'' to this Report.
The Statutory Auditors of the Company have examined the compliance of conditions of Corporate Governance as stipulated in Schedule V (C) of the SEBI (LODR) Regulations and have certified compliance thereof. The certificate is attached as Annexure âD'' to this Report.
Management Discussion and Analysis
A separate report on Management Discussion and Analysis is annexed as Annexure âE'' to this Report.
ESOP Disclosure
The two ESOP Schemes, viz. Hinduja Global Solutions Limited Employees Stock Options Plan, 2008 and Hinduja Global Solutions Limited Employees Stock Options Plan, 2011 were in operation during the Financial Year 201718. These ESOP Schemes are in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014. Particulars of aforesaid ESOP Schemes are available on the Company''s website https:// www.teamhgs.com/investors/other-reports. There were no changes made to the aforesaid ESOP Schemes during the Financial Year 2017-18.
Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act, 2013, an Extract of Annual Return as on Financial Year ended March 31, 2018, in the prescribed format, is annexed as Annexure âF'' to this Report.
Related Party Transactions
Transactions entered into/ with the related parties during the Financial Year 2017-18 are in the ordinary course of business and at arm''s length basis and therefore, outside the purview of Section 188(1) of the Companies Act, 2013. Information on related party transactions pursuant to Section 134(3)(h) of the Companies Act, 2013 read
with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given in Form AOC-2 as Annexure âH'' and the same forms part of this Report.
Material changes and commitments affecting the financial position of the Company between the end of the financial year and date of the report
There were no material changes and commitments affecting the financial position of the Company between the end of the Financial Year and date of the Report.
Policy on Directors'' Appointment and Remuneration
Policy on Directors'' Appointment and Remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 have been disclosed in the Corporate Governance Report, which forms part of this Report as Annexure âC''.
Whistle Blower Policy
The Company has a Whistle Blower Policy and Vigil Mechanism in place and is available on the Company''s website at www.teamhgs.com. This matter is covered in the Corporate Governance Report, which forms part of this Report as Annexure âC''.
Under the Whistle Blower Policy and Vigil Mechanism, no complaints were received during the Financial Year 2017-18. One complaint was received after year ended March 31, 2018. It was investigated and action taken as deemed appropriate.
Constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place an Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and thus, has complied with the provisions of the said Act.
Risk Management Policy
Your Company has formulated Risk Management Policy & Procedures which inter alia identifies risks, taking into consideration the business and operations of the Company and adoption of mitigation measures. The Policy & Procedures identify elements of risks which in the opinion of the Board may threaten the existence of the Company. The details of the Policy & Procedures are given in the Management Discussion and Analysis Report, which forms part of this Report as Annexure âE''.
The Risk Management Committee consisting of the Chief Executive Officer, Chief Financial Officer and Executive Vice President - Legal Compliance and Risk Management, periodically review the Enterprise Risk Management Framework, as well as the risks that matter and update on the same is provided to the Members of the Audit Committee and the Board. The Risk Management Committee met six times during the year to review and update the Company''s Enterprise Risk Management Framework. The Company is not required to constitute a Risk Management Committee consisting of Directors.
Fixed Deposits from Public
The Company has not accepted any fixed deposits from the public and, as such, no amount of principal or interest was outstanding as on the Balance Sheet date.
Statutory Auditors
At the 22nd Annual General Meeting (AGM) of the Company held on September 28, 2017, M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) were appointed as the Statutory Auditors of the Company for a period of five consecutive years, i.e. from the conclusion of the 22nd AGM up to the conclusion of the 27th AGM of the Company, subject to the ratification of their appointment by the Members at every AGM held after the 22nd AGM.
Pursuant to the Companies (Amendment) Act, 2017, notified on May 7, 2018, ratification of appointment of Auditors at every subsequent AGM after their appointment is not required. However, the Company has taken on record confirmation from the said Statutory Auditors confirming that they are eligible to continue to act as Statutory Auditors of your Company.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed Ms. Rupal D. Jhaveri, Practicing Company Secretary, as the Secretarial Auditor to carry out the Secretarial Audit for the Financial Year 2017-18.
The Secretarial Audit Report in the prescribed format, for the Financial Year 2017-18, forms part of this Report as Annexure âI''. The Report does not contain any qualifications, reservations or adverse remarks.
Maintenance of Cost Records and Appointment of Cost Auditor
The Company is not required to maintain cost records pursuant to Section 148 of the Companies Act, 2013 and thus not required to appoint a Cost Auditor.
Employees'' Particulars
Disclosures as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendments thereto are given in Annexure âJ'' to this Report.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annual Report.
Having regard to the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours (i.e. 10:00 am to 6:00 pm) and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.
In accordance with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, details of foreign employees, excluding directors and their relatives, have not been included in the Annual Report. Members interested in obtaining the said information may write to the Company Secretary at the Registered Office of the Company and the requested information shall be furnished to such member.
Significant and Material Orders
There are no significant and material orders passed by the Regulators or Courts or Tribunals that would impact the going concern status and your Company''s operations in the future.
Internal Financial Controls
Internal Financial Controls (including Internal Controls over Financial Reporting) and their adequacy are included under the heading ''Internal Controls'' in the Management Discussion and Analysis section, which forms part of this Report as Annexure âE''.
Acknowledgements
Your Directors take this opportunity to thank the customers, vendors, collaborators, business partners, investors, financial institutions, bankers, the Government of India, State Governments, governments of various countries and regulatory authorities and agencies and the society at large, for their co-operation and support. Your Directors place on record their sincere appreciation to employees at all levels of the Company and its subsidiary companies for their hard work, commitment and dedication. Their efforts and competence have enabled the Company to achieve its goals.
For and on behalf of the Board of Directors
Place: Mumbai Ramkrishan P. Hinduja
Date : August 24, 2018 Chairman
(DIN: 00278711)
Mar 31, 2017
To
The Members,
The Directors are pleased to present their Report on the business and operations of your Company along with the Audited Financial Statements (Standalone and Consolidated) for the financial year ended March 31, 2017.
Financial Results
(Rs. in million* except per share data)
Standalone |
Consolidated |
|||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
Operating Income |
15,975 |
13,757 |
37,110 |
33,210 |
Other Income |
273 |
312 |
228 |
264 |
Total Income |
16,248 |
14,069 |
37,338 |
33,474 |
Operating Expenses |
13,749 |
11,356 |
32,930 |
30,104 |
Depreciation and Amortization |
783 |
818 |
1,432 |
1,364 |
Financial Expenses |
156 |
150 |
429 |
404 |
Profit Before Tax |
1,560 |
1,745 |
2,547 |
1,602 |
Provision for tax (incl. deferred tax) |
545 |
521 |
755 |
598 |
Profit After Tax |
1,015 |
1,224 |
1,792 |
1,004 |
Less: Non-controlling Interest |
- |
- |
(3) |
(5) |
Add: Balance brought forward from Previous year |
3,648 |
2,940 |
3,406 |
2,945 |
Profit Available for Appropriation |
4,663 |
4,164 |
5,201 |
3,954 |
Less: Adjustments and Appropriation |
||||
- Re-measurements of post-employment benefit obligation (net of tax) |
71 |
75 |
74 |
80 |
- Dividend |
182 |
389 |
182 |
389 |
- Dividend Tax |
6 |
52 |
36 |
79 |
Balance Carried Forward |
4,404 |
3,648 |
4,909 |
3,406 |
Earnings per share (Rs.) |
||||
- Basic |
48.96 |
59.07 |
86.58 |
48.67 |
- Diluted |
48.88 |
58.99 |
86.44 |
48.61 |
*(1 million = RS.10 lakhs)
The financial statements have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable. Beginning April 1, 2016, Hinduja Global Solutions Limited and its subsidiaries (âthe Groupâ) have for the first time adopted Ind AS with a transition date of April 1, 2015. In preparing its opening Ind AS balance sheet as at April 1, 2015, the group has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the groupâs financial position, financial performance and cash flows is set out in the Notes to the Consolidated financial statements.
Operating Performance
On a Consolidated basis, your Company registered strong performance during the financial year ended March 31, 2017. Compared to the previous financial year, the Operating Income increased by 11.7% from RS.33,210 million to RS.37,110 million. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) went up from RS.3,107 million to RS.4,424 million, a growth of 42.4%. EBITDA for FYâ17 has been computed on the same basis used for computing EBITDA for FYâ16. PAT (Profit after Tax) has increased from RS.1,004 million to RS.1,792 million, a growth of 78.5%.
The robust performance was driven by strong growth in the healthcare and telecom verticals, and an improved performance by the Canada, Jamaica and India domestic CRM businesses in the fourth quarter of FYâ17. The strong operational performance coupled with cost management helped your Company record its highest-ever PAT. This was achieved in the face of the Rupee strengthening significantly during the last quarter of the financial year.
On a Standalone basis, Operating Income was RS.15,975 million for the financial year ended March 31, 2017, compared to RS.13,757 million in the previous financial year, an increase of 16.1%. EBITDA increased marginally by 0.27% from RS.2,401 million to RS.2,407 million. PAT decreased by 17.1% from RS.1,224 million to RS.1,015 million, mainly on account of increase in the Operating Expenses, which includes FOREX losses.
A review of the Financial and Operational Performance of the Company and its key subsidiaries has been given in the âManagement Discussion and Analysisâ, which forms part of this Report as Annexure âEâ.
Other financial highlights of the year:
- Cash flow from operations and after working capital changes: RS.4,076 million as compared to RS.1,459 million in FY 16, an increase of 179%;
- CAPEX and Investment : RS.1,774 million as compared to RS.2,686 million in FY 16;
- Gross Debt of RS.6,547 million as at March 31, 2017 as compared to RS.8,370 million as at March 31, 2016, i.e. a reduction of RS.1,823 million during the year;
- Net Debt : RS.2,897 million, and Net Worth : RS.13,368 million;
- Net debt/ equity as on March 31, 2017: 0.22x as against 0.39x as of March 31, 2016.
Revenue Summary of the year:
- Revenue by Geography - US: 68.2%; Canada: 9.7%; UK & Europe: 7.1%; and India: 15%
- Revenue by Vertical - Healthcare: 48%; Telecom and Technology: 22%; Consumer: 13%; Banking and Financial Services: 7% and Others: 10%
Business Highlights of the year:
- Client Wins: 15 new clients, who accounted foRs.2.7% of overall revenue.
- Active Clients: 183 core BPM clients and 614 Payroll processing and HRO clients.
- Delivery Centres: 68 global delivery centres across seven countries currently. During the year, seven new centres were opened: Jamaica (2), Philippines (1) and India (4 - one each in Chennai and Raipur, and two in Bangalore).
- Creation of North America region: Sales, Operations and Shared Services of HGS USA and HGS Canada were brought under a unified North America structure, which has helped streamline decision making and optimize operations to make your Companyâs clients more competitive.
- Employee Headcount: 44,237 as on March 31, 2017; India: 67% (India offshore: 21% and India Domestic: 46%), Philippines: 16%, USA: 9%, Canada: 5% and Europe: 3%.
- New Solutions and Innovation:
- Launched new service offerings - The Automated Enterprise: DigiWEB, DigiSOCIAL, DigiTEXT, DigiCHAT, DigiMESSAGING, DigiINSIGHT, DigiBOT and DigiAMBASSADOR (all under the DigiCX suite of solutions).
- Robotics Process Automation (RPA) solution gaining traction - HGSâ Automation Centre of Excellence currently delivering to eight client engagements in Healthcare and BFSI.
Dividend
Your Directors are pleased to recommend a Final Dividend of RS.2.50 per equity share (25% on face value of RS.10/each) for the year ended March 31, 2017 subject to your approval. This is in addition to the three Interim Dividends aggregating to RS.7.50 per equity share of RS.10 each for the financial Year 2016-17 declared by the Board of Directors on August 11, 2016, November 9, 2016 and February 8, 2017, respectively and were duly paid. The total dividend for the financial year ended March 31, 2017 would be RS.10 per equity share (100% on face value of RS.10/- each), if approved/ confirmed by the Members.
Business Review
Some 17 years into the 21st Century, the world has changed as never before. Tremendous forces such as globalization, consumerization, technology and digital disruption are creating major shifts in the way the world behaves and works. Since business is highly intermingled with socio-political and technology trends, it is a tough ask for todayâs enterprises to continue to deliver expected returns through existing business models. Having exhausted several of the traditional levers and facing increasing expectations from stakeholders, enterprises are reassessing their capabilities and identifying new opportunities for growth. With Business Process Management (BPM) evolving from a cost-based to a value-based proposition, it is increasingly being seen as a key model that can drive transformation, focused on digitization and customer experiences.
According to NASSCOMâs IT-BPM Strategic Review 2017, the global BPM spend grew by 4% to reach US$183 billion in 2016. Over the last decade, the Indian BPM industry has significantly evolved not only in terms of scale but also in terms of services, verticals served and delivery models. The industry recorded a revenue of US$30 billion in FYâ17, thus increasing Indiaâs share in the overall BPM sourcing market from 35% in 2012 to 37% in 2016. Some trends driving growth are a fundamental shift towards value-based services, new technology levers around process transformation, analytics and automation, and emergence of new business models. In terms of verticals, BFSI, healthcare, retail and telecom continue to dominate the industry.
The India domestic BPM market saw a growth of 6.9% in FY2017 to touch US$3.8 billion. BFSI and telecom, which constitute two-thirds of the market, have been instrumental in driving demand. Going forward, the Digital India initiative of the government and emerging sectors such as eCommerce, consumer durables, automobiles and travel & leisure will drive growth along with traditional verticals.
More detailed information pertaining/relating to Business Review has been provided in the âManagement Discussion and Analysisâ, which forms part of this Report as Annexure âEâ.
Key Subsidiaries
HGS International, Mauritius, a wholly-owned subsidiary of your Company, is primarily engaged in investment activity. HGS International owns 100% of the share capital of Hinduja Global Solutions Inc., USA, C-Cubed N.V., Curacao, Hinduja Global Solutions Europe Ltd., UK, HGS St. Lucia Ltd., Saint Lucia and HGS MENA FZ- LLC, Dubai. HGS International owns 95.2% of the share capital of HGS Colibrium Inc. and the balance share capital is owned by the founders of Colibrium.
Revenue for FYâ17 was US$ 3.4 milion as against US$ 3.9 milion for FYâ16.
Hinduja Global Solutions Inc., USA (HGS Inc.), a wholly-owned subsidiary of HGS International, Mauritius, specializes in marketing and provision of both voice and non-voice related Customer Contact and Business Process Outsourcing services to its clientele. Its key subsidiaries are HGS (USA) LLC, HGS Canada Inc., HGS EBOS LLC and HGS Healthcare LLC.
The Consolidated Revenue was US$ 340.6 million for FYâ17 as compared to US$ 369.4 million in FY â16.
HGS (USA), LLC, a wholly-owned subsidiary of HGS Inc., USA, operates in five cities in USA. It partners with Fortune 1000 companies and Government agencies to provide comprehensive Customer Relationship Management programs. For FYâ17, it recorded total revenue of US$ 313.9 million as compared to US$ 287.2 million in FYâ16. HGS (USA), LLC and its US subsidiaries have Over2,000 employees who are engaged in customer services, fulfillment services, sales, marketing and account management.
HGS Canada Inc., a wholly-owned step down subsidiary of HGS Inc., USA, is a Canadian contact center service provider servicing marquee customers across verticals such as media, telecom, technology and BFS. HGS Canada offers technical support, inbound and outbound sales, customer care and customer retention in English and French languages, and has a team size of around 2,300 associates at 12 centers in Canada. For FYâ17, it recorded revenue of CAD 77.0 million as compared to CAD 84.5 million in FYâ16.
Hinduja Global Solutions Europe Ltd. is the UK-based subsidiary focusing on providing consulting services for BPM, call center services and offshoring services to UK-based clients. It owns 100% stake in Hinduja Global Solutions UK Ltd. and HGS France SARL, France. Its subsidiary in Italy called HGS Italy, SRL is under liquidation, since inoperative. For FYâ17, it recorded standalone revenue of GBP 1.3 million as compared to GBP 1.2 million in FYâ16.
Hinduja Global Solutions UK Ltd. is a leading contact center company with Over1,000 employees in London, Preston and Selkirk (Scotland). It offers a range of services for inbound and outbound interactions to Over15 marquee customers across verticals such as Government, FMCG, Financial Services, Automobiles and Retail. It has branches in Rotterdam (Netherlands) and Hamburg (Germany) which are in the process of being wound up. For FYâ17, it reported revenue of GBP 36.3 million as compared to GbP 34.9 million in FYâ16.
HGS St. Lucia Ltd., Saint Lucia is the holding company of Team HGS Ltd., Jamaica. Team HGS Ltd., Jamaica began call center operations in FYâ13 at Kingston, Jamaica and continues to show strong performance. Revenue for FYâ17 was 2,386.2 million Jamaican Dollars as compared to 804.9 million Jamaican Dollars in FYâ16.
HGS MENA FZ-LLC has established a marketing office in Dubai Internet City with the objective to build sales pipeline. The demand trend for call center services from MENA region is encouraging. In FYâ17, it recorded revenue of AED 7.1 million as compared to AED 5.1 million in FYâ16. HGS Extensya Cayman Limited, Extensya Investment Holdings Limited and HGS Extensya Holdings Limited, which were its wholly owned subsidiaries, since inoperative, were closed and struck-off from the Registrar of Companies on July 1, 2017.
HGS Colibrium Inc., USA : Revenue for FYâ17 was US$ 12.2 million as compared to US$ 14.7 million for FYâ16.
HGS International Services Private Limited (HGSISPL)
HGSISPL, a wholly owned subsidiary of the Company, recorded revenue of RS.3,649.3 million in FYâ17 as compared to RS.2,542.9 million in FYâ16, a growth of 43.5%. The SEZ division of HGSISPL is presently operating in five units namely, a) Global Village SEZ, Bangalore; b) DLF Towers SEZ, Hyderabad; c) Pritech I Park SEZ, Bangalore; d) DLF Cybercity, SEZ Hyderabad; and e) Pritech II Park SEZ, Bangalore. Human Resource Outsourcing (HRO) business of HGSISPL services marquee customers in Banking, Financial Services, Insurance and other industry verticals in India and abroad.
Pursuant to Section 129(3) of the Companies Act, 2013 (âthe Actâ), a statement containing the salient features of financial statements of the Companyâs subsidiaries in Form AOC - 1 is attached to the financial statements of the Company.
Further, pursuant to Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, as may be applicable, are available on the website of the Company.
Particulars of loans, guarantees and investments
Loans, guarantees and investments as per Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.
Communications and Public Relations
Your Company has evolved its storyline to customers, industry analysts, advisors and other influencers regarding digital transformation and our ability to create value for our clients by helping consumers to get the right answer fast; balancing great customer experience with the operational ability to reduce costs of an organization. The message to the market and the media is resonating and getting continued mindshare. In an independent report published by Apollo Research in February, 2017, of the top 30 BPO competitors measuring share of voice in the media for key competitive topics such as the unified customer experience and customer satisfaction, your Company was ranked in the top 5 across North America and the UK.
In India, HGS continues to leverage media as a key channel to enhance visibility and thought leadership amongst key stakeholders including investors, clients, employees and government. Your company is consistently ranked in the top 3 in terms of share of voice in media coverage amongst its BPO peers. HGS is also using news media and social media to reach out to prospective employees and establish itself as an âEmployer of Choiceâ. The annual Investor Meet has helped increase awareness and engagement with investors and communicate HGSâ perspectives to the market.
HGS continues to enhance its website by making it educational and engaging with visual and video content. In the past year, the team has invested efforts in making the experience more fluid for PC and mobile browsers as well as more intuitive with fewer clicks to access key thought leadership, case study and service line content. Key vertical messages have been refined to continue to keep the HGS message relevant in all the markets to build new pipelines and prospective new customer activity. Our new content is aimed at educating and offer transformative solution alternatives. Another aspect is the focus to build the social media presence (e.g. LinkedIn, Twitter, Blog) that reaches a targeted audience across the globe.
In FY2017, HGS was named a âTop 100 Global Outsourcerâ by the International Association of Outsourcing Professionals (IAOP), and brought home Stevie Awards for Customer Service Department of the Year, Best Use of Technology in Customer Service and Sales Support Practice of the Year as well as Contact Center World recognitions for Outsourcing Partnership of the year and Best Self-Service Technology of the Year. HGS was included in NASSCOMâs Top 20 IT-BPO Employers in India and Top 10 BPM exporters in India while also being recognized as the Best Champion Employer foRs.2016-17 under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) program by the Indian Governmentâs Ministry of Rural Development. Your Company was able to leverage these distinctions as credentials to reach industry influencers, analysts, advisers, potential customers and, importantly, potential employees.
Anirban Lahiri, Indiaâs No.1 Golfer and HGS brand ambassador participated in client and employee events. Anirban has the same vision and passion that HGS shares, to be great and to win with integrity. As the first BPM company to have a brand ambassador in the international market, HGSâ relationship with Lahiri is helping build the brand, facilitating business growth, increasing brand recall with potential and existing customers, and continues to create new opportunities tied to the worldâs golf calendar.
Your company continues to work towards creating an inclusive and transparent culture at the workplace. Different platforms - e-mailers, newsletters, blogs and articles are leveraged to share views and news with our employees around the world. The Company intranet -HGS Connect, is an integrated, two-way communication platform which serves as a one-stop solution across the globe. This internal portal also serves as a time-out for employees offering various business and fun elements to enable them get empowered with business knowledge and interact with each other on a common platform. Additionally, various other digital and non-digital channels are being used to engage HGS employees globally.
HGS is strengthening its communication channels across the board to create a more connected organization with focus on internal and external stakeholders.
Corporate Social Responsibility (CSR)
Pursuant to Section 135 of the Companies Act, 2013, the Corporate Social Responsibility Committee (âCSR Committeeâ) consists of following Members:
Mr. Anil Harish (Independent Director) - Chairman, Mr. Ramkrishan P. Hinduja (Non-Executive, Non-Independent Director), Ms. Vinoo S. Hinduja (Non-Executive, Non-Independent Director), Mr. Rajendra P. Chitale (Independent Director) and Mr. Rangan Mohan (Independent Director).
During the financial Year 2016-17, one Meeting of CSR Committee was held on March 14, 2017.
In terms of the CSR Policy, the Management has set up a CSR Forum whose role and functions involve: identification and evaluation of CSR projects/ initiatives for recommendation to the CSR Committee, reviewing and monitoring the approved CSR projects and providing periodical status updates to the CSR Committee. The CSR Committee reviews the CSR projects/ initiatives as recommended by the CSR Forum and the expenditure to be incurred thereon as per the provisions of the Companies Act, 2013 and the Rules made thereunder. Also, the CSR Committee reviews and monitors reports submitted by CSR Forum relating to implementation of the project(s) and its financial/ operational monitoring. The Board of Directors reviews and approves CSR projects/ initiatives as recommended by the CSR Committee and evaluates reports relating to implementation of the approved CSR projects.
In addition to compliance with statutory provisions, the Company and its employees, across geographies in which the Company operates, voluntarily initiates and participates in various programs aimed at improving the quality of life of the society at large.
The Report on CSR activities in the format as required under Companies (Corporate Social Responsibility) Rules, 2014, is set out in Annexure âGâ forming part of this Report. The CSR Policy is available on the website of the Company.
Directorsâ Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors, based upon the information and documents made available to them and to the best of their knowledge, confirm that:
- In preparation of the Annual Accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed and there have been no material departures in the adoption and application thereof;
- They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit and Loss of the Company for that period;
- They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- They have prepared the Annual Accounts on a going concern basis;
- They have laid down adequate internal financial controls to be followed by the Company and they are operating effectively;
- They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.
The Company has in place internal financial controls framework which inter alia consist of Function wise Status of Documentation and Testing (Risk and Control Matrix, Test of Design, Test of Operative Effectiveness), Process level controls (Process/ Function wise), IT General controls (Application wise and Process wise), etc. Such framework is periodically, internally tested as well as reviewed and tested by the external consultant. Based upon the said framework and the compliance systems established and maintained by the Company, work performed by the statutory, internal and secretarial auditors, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by Management, the Board is of the opinion that the Companyâs internal financial controls were adequate and effective during FY 2016-17.
Number of Meetings of the Board
Nine meetings of the Board were held during the year. The time gap between any two meetings did not exceed one hundred and twenty days. Further details in this regard are given in the Corporate Governance Report, which forms part of this Report.
Declaration by Independent Directors
As required under Section 149(7) of the Companies Act, 2013, the Company has received the declaration from each of the Independent Directors of the Company confirming that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [âSEBI (LODR) Regulationsâ].
Board Evaluation
Pursuant to Section 134, 178 of the Companies Act, 2013 and Regulation 17 of the SEBI (LODR) Regulations, the Nomination and Remuneration Committee (NRC) and the Board of Directors carried out the performance evaluation of the Individual Directors (Independent, Non-Independent Directors and the Chairman), the Board as a whole and its Committees, for the Financial Year 2016-17.
The performance evaluation of Individual Directors was carried out by the NRC and Board on the basis of criteria contained in the âRating Documentâ, which inter-alia includes: Exercise of independent judgment, Offering constructive contribution to the Boardâs discussions and deliberations based on his/ her expertise and domain knowledge; Non-partisan appraisal of issues, etc. Performance evaluation of Independent Directors was carried out by the entire Board of Directors, except the Independent Director being evaluated.
The Board also carried out evaluation of its own performance and that of its committees, based upon criteria which inter alia includes: structure of the Board, frequency, regularity and discussions at the meetings of the Board, functioning of the Board, mandate and composition of the Committees, effectiveness of the Committees, contribution of the Committees to the decisions of the Board, etc.
At the separate meeting of Independent Directors held during the Financial Year ended March 31, 2017, performance evaluation of Non-Independent Directors, the Chairman of the Company and the Board as a whole was carried out on the basis of aforementioned criteria. The Independent Directors also assessed the quality, quantity and timeliness of the flow of information between the Companyâs Management and the Board.
The NRC, the Board and the Independent Directors, having regards to the âRating Documentsâ and the aforementioned criteria, concluded that overall performance of each of the Directors, including the Chairman of the Company, is conducive to the wellbeing and in the best interest of the Company and aimed at enhancing the performance of the Company. The overall performance of the Board as a whole and its Committees is satisfactory. Also, the Management is proactive in providing requisite information to the Board on a timely basis.
Directors
Mr. Yashodhan Madhusudan Kale (DIN 00013782) was appointed at the 21st Annual General Meeting of the Company held on September21, 2016 as a NonExecutive Director of the Company, liable to retire by rotation.
Mr. Pradeep Mukerjee (DIN 02287773) was appointed as an Independent Director of the Company at the 21st Annual General Meeting of the Company held on September21, 2016, for a term of five years effective from the said date.
Ms. Vinoo S. Hinduja, Director (DIN 00493148), is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.
Audit Committee
The Board has constituted an Audit Committee pursuant to the provisions of Section 177 of the Companies Act, 2013. The Committee comprises the following Members: Mr. Anil Harish (Independent Director), Chairman, Mr. Ramkrishan P. Hinduja (Non-Executive, Non-Independent Director), Mr. Rajendra P. Chitale (Independent Director) and Mr. Rangan Mohan (Independent Director).
Further details pertaining to the Audit Committee are included in the Corporate Governance Report, which forms part of this Report as Annexure âCâ.
Key Managerial Personnel
Pursuant to Section 203 of the Companies Act, 2013, the Company has recognized/ noted Mr. Partha DeSarkar, Manager (Chief Executive Officer); Mr. Srinivas Palakodeti (Chief Financial Officer) and Mr. Makarand D. Dewal (Company Secretary) as the Key Managerial Personnel of the Company.
Chief Executive Officerâs Certification
The Chief Executive Officerâs declaration affirming compliance with the Code of Conduct by the Board and Senior Management is furnished as Annexure âAâ to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The prescribed particulars as required under Section 134(3)(m) of the Companies Act, 2013 relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are furnished as Annexure âBâ to this Report.
Corporate Governance
As required under Schedule V of the SEBI (LODR) Regulations, a detailed report on Corporate Governance is furnished as Annexure âCâ to this Report.
The Statutory Auditors of the Company have examined the compliance of conditions of Corporate Governance as stipulated in Schedule V (C) of the SEBI (LODR) Regulations and have certified compliance thereof. The certificate is attached as Annexure âDâ to this Report.
Management Discussion and Analysis
A separate report on Management Discussion and Analysis is annexed as Annexure âEâ to this Report.
ESOP Disclosure and ESAR Plan
The two ESOP Schemes, viz. Hinduja Global Solutions Limited Employees Stock Options Plan 2008, and Hinduja Global Solutions Limited Employees Stock Options Plan 2011 were in operation during the Financial Year 201617. These ESOP Schemes are in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014. Particulars of aforesaid ESOP Schemes are available on the Companyâs website http:// www.teamhgs.com/investors/other-reports. There were no changes made to the aforesaid ESOP Schemes during the Financial Year 2016-17.
The approval of the Members to the Special Resolutions relating to the Hinduja Global Solutions Limited Employee Stock Appreciation Rights Plan 2017 for grant of Employee Stock Appreciation Rights to employees of the Company and that of its subsidiary companies was sought via Postal Ballot process (Postal Ballot Notice dated May 22, 2017). The result of the Postal Ballot was declared on July 13, 2017. As per the said Result, the Special Resolutions were not approved by the Members.
Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act, 2013, an Extract of Annual Return as on Financial Year ended March 31, 2017, in the prescribed format, is appended as Annexure âFâ to this Report.
Related Party Transactions
Transactions entered into with the related parties during the Financial Year 2016-17 are in the ordinary course of business and at armâs length basis and therefore, outside the purview of Section 188(1) of the Companies Act, 2013. Information on related party transactions pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given in Form AOC-2 as Annexure âHâ and the same forms part of this Report.
Material changes and commitments affecting the financial position of the Company between the end of the financial year and date of the report
There were no material changes and commitments affecting the financial position of the Company between the end of the Financial Year and date of the Report.
Policy on Directorsâ Appointment and Remuneration
Policy on Directorsâ Appointment and Remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 have been disclosed in the Corporate Governance Report which forms part of this Report.
Whistle Blower Policy
The Company has a Whistle Blower Policy and Vigil Mechanism to report and redress genuine concerns and grievances. The Policy is available on the Companyâs website. This matter is covered in the Corporate Governance Report which forms part of this Report.
Under the Whistle Blower Policy and Vigil Mechanism, no complaints were received during the Financial Year 2016-17.
Risk Management Policy
Your Company has formulated Risk Management Policy which inter alia identifies risks taking into consideration the business and operations of the Company and adoption of mitigation measures. The Policy identifies elements of risks which in the opinion of the Board may threaten the existence of the Company. The details of the Policy are given in the Management Discussion and Analysis Report attached to this Report.
The Risk Management Committee consisting of the Chief Executive Officer, Chief Financial Officer and Executive Vice President - Legal Compliance and Risk Management, periodically review the Enterprise Risk Management framework and the update on such framework is provided to the Members of the Audit Committee and the Board. The Risk Management Committee met six times to review and update Enterprise Risk Management Systems. The Company is not required to constitute a Risk Management Committee consisting of Directors.
Fixed Deposits from Public
The Company has not accepted any fixed deposits from the public and, as such, no amount of principal or interest was outstanding as on the Balance Sheet date.
Statutory Auditors
At the 21st Annual General Meeting of the Company held on September21, 2016, M/s. Price Waterhouse, Chartered Accountants (Firm Registration No.301112E), were appointed as Statutory Auditors of your Company till the conclusion of the next Annual General Meeting.
The Auditorsâ Reports (for Standalone and Consolidated financial statements) for the Financial Year ended March 31, 2017 are unmodified/ unqualified. Pursuant to Section 139 of the Companies Act, 2013 (âthe Actâ), the term of the existing Statutory Auditors, viz. M/s. Price Waterhouse, Chartered Accountants, will end at the conclusion of the ensuing 22nd Annual General Meeting (âAGMâ). In compliance with the provisions of Sections 139, 142 and other applicable provisions, if any, of the Act and the Rules framed thereunder, based on the recommendation of the Audit Committee, your directors proposed to appoint M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) to hold office for a term of five years from the conclusion of the 22nd AGM until the conclusion of the 27th AGM of the Company, subject to ratification of their appointment by the Members at every AGM held after the 22nd AGM. The proposed new Statutory Auditors have submitted their consent and requisite declarations as to their eligibility to act as Auditors of the Company, if appointed. The proposal for their appointment is being put up for approval by the Members, at the ensuing AGM.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed Ms. Rupal D. Jhaveri, Practicing Company Secretary, as the Secretarial Auditor to carry out the Secretarial Audit for the Financial Year 2016-17.
The Secretarial Audit Report in the prescribed format, for the Financial Year 2016-17, forms part of this Report as Annexure âIâ. The Report does not contain any qualifications, reservations or adverse remarks.
Employeesâ Particulars
Pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, it is necessary to disclose the ratio of remuneration of each director to the median employeesâ remuneration. At present, the Directors are paid fees for attending the meetings of the Board of Directors and of the Committees of which they are members. This remuneration, by way of fees, is not related to the performance or profit of the Company (like payment of commission is related to the profits of the Company). In view of this, the ratio of remuneration of each director to the median employeesâ remuneration is not computed.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure forming part of the Annual Report.
Having regard to the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours (i.e. 10:00 am to 6:00 pm) and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.
In accordance with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, details of foreign employees, excluding directors and their relatives, have not been included in the Annexure. Members interested in obtaining the said information may write to the Company Secretary at the Registered Office of the Company and the requested information shall be furnished to such member.
Significant and Material Orders
There are no significant and material orders passed by the Regulators or Courts or Tribunals that would impact the going concern status and your Companyâs operations in the future.
Internal Financial Controls
Internal Financial Controls (including Internal Financial Controls over Financial Reporting) and their adequacy are included under the heading âInternal Controlsâ in the Management Discussion and Analysis which forms part of this Report.
Acknowledgements
Your Directors place on record their appreciation for the co-operation and support received from customers, vendors, collaborators, business partners, investors, financial institutions, bankers, the Government of India, State Governments, governments of various countries and regulatory authorities and agencies and the society at large, and look forward to their continued encouragement. Your Directors are grateful for the dedicated efforts and commitment of the employees at all levels and their contribution in achieving the growth of the Company.
For and on behalf of the Board of Directors
Place : Mumbai Ramkrishan P. Hinduja
Date : August 24, 2017 Chairman
Mar 31, 2016
The Directors are pleased to present their Report on the business and
operations of your Company along with the Audited Financial Statements
(Standalone and Consolidated) for the Financial Year ended March 31,
2016.
Financial Results
(Rs,in million* except per share data)
Standalone Consolidated
2015-16 2014-15 2015-16 2014-15
Operating Income 13,829 10,704 33,282 28,076
Other Income 245 278 194 245
Total Income 14,074 10,982 33,476 28,321
Operating Expenses 11,403 8,609 30,152 24,949
Depreciation
and Amortization 819 606 1,364 1,052
Financial Expenses 149 158 401 386
Profit Before tax 1,703 1,609 1,559 1,934
Provision for Tax
(incl. deferred tax) 520 484 549 284
Profit after tax 1,183 1,125 1,010 1,650
Add: Balance
brought forward
from Previous year 2,528 2,020 1,267 4,410
Profit Available
for Appropriation 3,711 3,145 2,277 6,060
Dividend
- Adjustment on
account of Depreciation - 161 - 162
- Interim Dividend 285 310 285 310
- Final (Proposed) 26 104 26 104
- Dividend Tax 36 42 63 80
Adjustment on
Amalgamation - - - 4,136
transferred to
Capital Redemption
Reserve - - - 1
Balance Carried
Forward 3,364 2,528 1,903 1,267
Earnings per
share (Rs,)
- Basic 57.06 54.49 48.73 79.88
- Diluted 56.98 54.21 48.66 79.46
*(Rs, 1 million
=^10 lakhs)
Operating Performance
On a Consolidated basis, Operating Income for FY''16 was Rs, 33,282
million compared to Rs, 28,076 million of FY''15. This growth was led by
existing and new client wins especially in Healthcare and Consumer
Product verticals, revenue from recently acquired companies like HGS
Colibrium Inc. and India CRM (Customer Relationship Management)
portfolio and turnaround in Canadian operations. EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization) for FY''16 was
Rs,3,130 million against Rs,3,172 million of FY''15, a marginal decline of
1.3%. Profit After Tax (PAT) for FY''16 was Rs,1,010 million as against
Rs,1,650 million for FY''15, a decrease of 38.8%. The Profitability was
impacted due to lower operating Profit and unfavorable foreign exchange
variations. However, the numbers are not strictly comparable as FY''15
also had a tax benefit of Rs, 248 million arising out of recognition of
some deferred tax assets.
On a Standalone basis, Operating Income for FY''16 was Rs,13,829 million
compared to Rs,10,704 million for FY''15, an increase of 29.2%. The
Philippines branch of your Company continues to be a major contributor
to the growth. EBITDA increased by 15.8% from Rs,2,095 million in FY''15
toRs,2,426 million in FY''16. PAT increased by 5.1% from Rs,1,125 million in
FY''15 to Rs,1,183 million in FY''16.
Review of Financial and Operational Performance of the Company and its
key subsidiaries has been given in the ''Management Discussion and
Analysis Report which forms part of this Report as Annexure ''E''.
Business highlights - FY 2016:
- Client wins: HGS added 20 new clients.
- Active Clients: 190 core BPM clients and 600 HRO and F&A clients.
- Delivery Infrastructure: Currently have 67 global delivery centers
across 11 countries. Opened six new centers: Jamaica (1), Philippines
(1), and India (4 - Bangalore, Hyderabad and two in Mumbai), and
acquired seven centers across 6 cities in India (two in Bangalore and
one each in Noida, Pune, Mangalore, Raipur and Indore).
- Employee Headcount at year end: FY''16 - 39,834 (FY''15 - 28,435)
- Acquisitions: Acquisition of India domestic CRM business from Mphasis
Limited and MsourceE India Private Limited was completed in September,
2015.
Dividend
Your Directors are pleased to recommend a Final Dividend ofRs, 1.25 per
equity share (12.5% on face value of Rs, 10/- each) for the Financial
Year ended March 31, 2016, subject to your approval. This is in
addition to the three Interim Dividends aggregating to Rs,13.75 per share
for the Financial Year 2015-16 declared by the Board of Directors on
August 12, 2015, November 6, 2015 and February 9, 2016 respectively and
were duly paid. The total dividend for the Financial Year ended March
31, 2016 would be Rs, 15 per equity share (150% on face value of Rs, 10/-
each), if approved/ confirmed by the Members.
Business Review
The business environment across the globe is undergoing a
transformation in every aspect of its operations, which resulted in
increased use of analytics, digital technologies and automation in the
Business Process Management (BPM) industry. Over the coming years, the
industry will be dominated by digital technologies.
Globally, the BPM spend experienced a moderate growth of 3% compared to
2014 to reach US$186 billion. The growth was primarily driven by
increasing demand for analytics services. The customers in general are
gradually starting to expect analytics as part of the bundled BPM
services.
The Indian BPM industry has grown over 1.7 times in the past five years
to reach US$28 billion in FY2016. Around 86% of the total BPM market is
estimated to have come from exports and the remaining 14% from the
domestic business. The growth momentum is expected to reach US$41
billion by FY2020.
Further information pertaining to Business Review has been provided in
the Management Discussion and Analysis Report which forms part of this
Report.
Key Subsidiaries
HGS International, Mauritius, a wholly-owned subsidiary of your
Company, is primarily engaged in investment activity. HGS International
owns 100% of the share capital of Hinduja Global Solutions Inc., USA;
C-Cubed N.V., Curacao; Hinduja Global Solutions Europe Ltd., UK; HGS
St. Lucia Ltd., Saint Lucia and HGS MENA FZ-LLC, Dubai. The holding of
HGS International in HGS Colibrium Inc. was recently increased from
89.8% to 95.2%.
Revenue for FY''16 was US$ 3.9 million as against US$ 4.7 million for
FY''15.
hinduja Global Solutions Inc., USa (hGS Inc.), a
wholly-owned subsidiary of HGS International, Mauritius, specializes in
marketing and provision of both voice and non-voice related Customer
Contact and Business Process Outsourcing services to its clientele. The
Company engages in several programme expansions of clients. Its key
subsidiaries are HGS (USA), LLC; HGS Canada Inc., Canada; HGS EBOS, LLC
and HGS Healthcare LLC (formerly known as RMT LLC, USA).
In FY''16, HGS Inc. reported consolidated revenues of US$ 369.4 million
as compared to US$ 348.9 million in FY''15.
HGS (USA), LLC, USA, a wholly-owned subsidiary of HGS Inc., USA,
operates in six cities in USA and Canada. It partners with Fortune 1000
companies and Government agencies to provide comprehensive Customer
Relationship Management programs. For FY''16, HGS (USA), LLC recorded
total revenue of US$ 287.2 million as compared to US$ 252.8 million in
FY''15. HGS (USA), LLC and its US subsidiaries namely HGS Healthcare LLC
and Affna Company Canada are engaged in providing customer services,
fulfillment services, sales, marketing and account management.
hGS Canada Inc., Canada, a wholly-owned step down subsidiary of HGS
Inc., USA, is a Canadian contact center service provider servicing
marquee customers across verticals such as media, telecom, technology
and Banking and Financial Services (BFS). The Company offers technical
support, inbound and outbound sales, customer care and customer
retention in English and French languages. For FY''16, the Company
recorded revenue of CAD 84.5 million as compared to CAD 97.2 million in
FY''15.
hinduja Global Solutions europe Ltd., UK, a wholly owned subsidiary of
HGS International, Mauritius, focuses on consulting services for BPM,
call center services and markets off shoring services to UK based
clients. Its wholly owned subsidiaries include Hinduja Global Solutions
UK Ltd., UK, HGS France, SARL, France and HGS Italy, SRL. For FY''16,
the Company recorded standalone revenue of GBP 1.2 million as compared
to GBP 1.3 million in FY''15.
hinduja Global Solutions UK Ltd., UK, a wholly owned subsidiary of
Hinduja Global Solutions Europe Limited, UK, is a leading contact
center company in London, Preston and Selkirk (Scotland). It offers a
range of services for inbound and outbound interactions to around 20
marquee customers across verticals such as Government, FMCG, Financial
Services, Automobiles and Retail. It has branches in Rotterdam
(Netherlands) and Hamburg (Germany). For FY''16, the Company reported
revenue of GBP 34.9 million as compared to GBP 29.6 million in FY''15.
HGS St. Lucia Ltd., Saint Lucia is the holding company of Team HGS
Ltd., Jamaica.
team hGS Ltd., Jamaica commenced green field operations in FY''13 and
has grown rapidly. Revenue for FY''16 was Jamaican Dollars 806 million
compared to Jamaican Dollars 368 million in FY''15.
hGS mena FZ-LLC, Dubai, a wholly-owned subsidiary of HGS International,
Mauritius, has a marketing office established in the Dubai Internet
City with the objective to build sales pipeline. Demand trend from MENA
(Middle East and North Africa) region is encouraging and has started
adding new clients. Effective November 25, 2015, Extensya Investment
Holdings Limited, HGS Extensya Cayman Limited and HGS Extensya Holdings
Limited became wholly owned subsidiaries of HGS MENA FZ- LLC. In FY''16,
it recorded revenue of AED 5.1 million as compared to AED 2.1 million
in FY''15.
hGS Colibrium Inc., USa: As on March 31, 2016, holding of HGS
International, Mauritius was 89.8% which was increased to 95.2% in
June, 2016 on acquisition of shares from one of the founder members.
The remaining stake is held by the other founder member. In its first
year of operations (FY''16), the Company recorded revenue of US$ 14.7
million.
hGS International Services Pvt. Ltd. (hGSISPL) is the wholly owned
Indian subsidiary of the Company. The Company achieved turnover of
r2,542.9 million in FY''16 as against r1,729.2 million of FY''15, a
substantial growth of 47.1%. The SEZ division of HGSISPL continues to
operate in four units namely, a) Global Village SEZ, Bangalore; b) DLF
Towers SEZ, Hyderabad; c) Pritech Park SEZ, Bangalore; and d) DLF
Cybercity, SEZ Hyderabad, while the Human Resource Outsourcing (HRO)
business division of HGSISPL continues to successfully service marquee
customers in Banking, Financial Services, Insurance and other industry
verticals in India and abroad.
Particulars of loans, guarantees or investments
Loans, guarantees and investments as per Section 186 of the Companies
Act, 2013 form part of the Notes to the financial statements provided
in this Annual Report.
Communications and Public Relations
In the last year, your Company has continued to tell success stories of
digital transformation to potential customers, industry analysts, other
influencers and advisors to evolve the reputation and global perception
of HGS.
HGS has enhanced its website by making it educational and engaging with
visual and video content, which is relevant for both - the industry
veteran and the casual observer. Our new content is targeted to
challenge status quo thinking and offer transformative solution
alternatives. This is given extra life with an ongoing social media
effort (e.g. LinkedIn, Twitter, Blog) that reaches a targeted audience
across the globe.
In FY''16, HGS was named a "Top 100 Global Outsourcer" by the
International Association of Outsourcing Professionals (IAOP), and also
brought home a Gold Stevie Award for Best Use of Technology in Customer
Service and a Bronze Stevie Award for Sales Consulting Practice of the
Year. Your Company was able to then turn these distinctions into news
that was used to reach potential customers and importantly, potential
employees.
By creating more frequent and more compelling content, your Company is
earning consistent coverage in industry and general new publications,
reaching both domestic and international audiences. In an independent
report published by Apollo Research in April 2016, HGS'' overall global
ranking for calendar year 2015 for share of voice in the media across
the US, UK and Canada was number 2 of 28 companies that were
benchmarked. HGS ranked well ahead of the industry for stories
pertaining to customer satisfaction. This prestigious top 2 ranking is
a jump from 11th place in 2014, showing a very positive trend of HGS
being recognized by the media as a public thought leader to be quoted
and published. In India, HGS continues to be perceived as a key
industry player and is represented in all important industry and
opinion articles.
Your company also signed India''s No.1 Golfer, Anirban Lahiri as its
brand ambassador. As the first BPM company to have a brand ambassador
in the international market, HGS'' relationship with Lahiri will build
the brand, facilitate business growth, increase brand recall with
potential and existing customers and continue to create new
opportunities tied to the world''s golf calendar.
In our endeavor to propagate an inclusive and transparent culture, your
Company leveraged different formats and channels such as e-mailers,
newsletters, blogs and articles to share views and news with its
employees around the world.
The Company developed a new intranet called "HGS Connect", an
integrated, internal two-way communication platform, which serves as a
one-stop solution for all communication across the globe. This internal
portal serves as a time-out for employees offering various fun elements
and also enables them to interact with each other on a common channel.
This year, your Company launched a world-wide campaign "GQ SPICE -
Living the HGS Values" - a simple and easy to remember acronym of our
seven values to reiterate what we stand for as an organization.
Employees across the globe connected through different forms of
engagement displaying values being the fundamental building blocks of
the company. Your Company has also initiated consistent and colorful
branding across all locations that will drive pride in the workplace
and association with the business and initiatives in the organization.
HGS will sustain its focus on communications engagement. In the year
ahead, your Company will continue to relay its best stories to all its
important stakeholders, including launches of new service offerings and
industry-specific applications in the market.
new Corporate office
The Corporate Office of the Company has been shifted from HGS House,
No. 614, Vajpayee Nagar, Bommanahalli, Hosur Road, Bangalore - 560 068
to 1st Floor, Gold Hill Square Software Park, No. 690, Bommanahalli,
Hosur Road, Bangalore - 560 068 with effect from June 27, 2016.
Change in Registrar and Share transfer agent
In view of the SEBI Order No. WTM/RKA/MIRSD2/41/2016 dated March 22,
2016, the Company did not renew the agreement with Sharepro Services
(India) Pvt. Ltd. (erstwhile Registrar and Share Transfer Agent) which
expired on March 31, 2016. The Company has appointed M/s. Karvy
Computershare Private Limited (Karvy), having its Registered Office at
"Karvy House" 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad -
500 034, as its Registrar and Share Transfer Agent with effect from May
16, 2016. The Agreement with Karvy has been formalized effective June
1, 2016.
Corporate Social Responsibility (CSR)
Pursuant to Section 135 of the Companies Act, 2013 ("the Act"), the
Corporate Social Responsibility Committee ("CSR Committee") was
constituted and consists of following Members:
Mr. Anil Harish (Independent Director) - Chairman, Mr. Ramkrishan P.
Hinduja (Non-Executive, Non- Independent Director), Mr. Rajendra P.
Chitale (Independent Director), Mr. Rangan Mohan (Independent Director)
and Ms. Vinoo S. Hinduja (Non-Executive, Non- Independent Director).
During the Financial Year 2015-16, two Meetings of CSR Committee were
held as follows: February 8, 2016 and March 30, 2016.
Corporate Social Responsibility Policy ("CSR Policy") was formulated by
the CSR Committee and recommended to and approved by the Board of
Directors ("the Board"). Such policy inter-alia covers the CSR
activities to be undertaken as specified in Schedule VII to the Act.
In terms of the CSR Policy, Management has set up a CSR Forum whose
role and functions involve: identification and evaluation of CSR
projects/ initiatives for recommendation to the CSR Committee,
reviewing and monitoring the approved CSR projects and providing
periodical status updates to the CSR Committee. The CSR Committee
reviews the CSR projects/ initiatives as recommended by the CSR Forum
and the expenditure to be incurred thereon as per the provisions of the
Act and the Rules made there under. Also, the CSR Committee reviews and
monitors reports submitted by CSR Forum relating to implementation of
the project(s) and its financial/ operational monitoring. The Board
reviews and approves CSR projects/ initiatives as recommended by the
CSR Committee and evaluates reports relating to implementation of the
approved CSR projects.
The Report on CSR activities in the format as required under Companies
(Corporate Social Responsibility) Rules, 2014, is set out in Annexure
''G'' forming part this Report. The CSR Policy is available on the
website of the Company.
Directors'' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors,
based upon the information and documents made available to them and to
the best of their knowledge, confirm that:
- In preparation of the Annual Accounts for the Financial Year ended
March 31, 2016, the applicable accounting standards have been followed
and there have been no material departures in the adoption and
application thereof;
- They have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the Financial Year and of the Profit of the
Company for that period;
- They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- They have prepared the Annual Accounts on a going concern basis;
- They have laid down adequate internal financial controls to be
followed by the Company and they are operating effectively;
- They have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate
and are operating effectively.
Based on the framework of internal financial controls and compliance
systems established and maintained by the Company, work performed by
the Statutory, Internal and Secretarial Auditors, including audit of
internal financial controls over financial reporting by the Statutory
Auditors, and the reviews performed by Management, the Board is of the
opinion that the Company''s internal financial controls were adequate
and effective during FY 2015-16.
number of meetings of the Board
Nine meetings of the Board were held during the year. The time gap
between any two meetings did not exceed one hundred and twenty days.
Further details in this regard are given in the Corporate Governance
Report, which forms part of this Report.
Declaration by Independent Directors
As required under Section 149(7) of the Companies Act, 2013, the
Company has received the declaration from each of the Independent
Directors of the Company confirming that they meet the criteria of
independence laid down in Section 149(6) of the Companies Act, 2013 and
Regulation 16(1) (b) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
Board evaluation
Pursuant to Sections 134, 178 of the Companies Act, 2013 and Regulation
17 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ["SEBI (LODR) Regulations"], the performance
evaluation of the individual Directors (Independent, Non-Independent
Directors and the Chairman), the Board as a whole and its Committees,
for the Financial Year 2015-16 was carried out.
The Nomination and Remuneration Committee (NRC) and the Board carried
out the performance evaluation of individual directors, including the
Chairman, on the basis of criteria such as exercise of independent
judgment, contribution to the deliberations and providing inputs and
guidance at the meetings, commitment to role and fiduciary
responsibilities, non-partisan appraisal of issues, expertise and
domain knowledge, etc.
The Board also carried out annual evaluation of its own performance and
its committees based upon the inputs received from the directors and
criteria such as Board/ Committee composition and structure,
deliberations ensued thereat on critical matters, effectiveness of the
Board/ Committee processes, etc.
As required under Schedule IV of the Companies Act, 2013 and Regulation
25 of the SEBI (LODR) Regulations, a separate meeting of the
Independent Directors was held during the year. At the said meeting,
the performance evaluation of the Non-Independent Directors, including
the Chairman was carried out on the basis of criteria such as
commitment, inputs and guidance provided, expertise and knowledge,
initiatives taken in bringing forth the critical issues and resolutions
thereof, etc. At the said meeting, the performance evaluation of the
Board as a whole was carried out on the basis of depth and quality of
discussions at the meetings, advice and guidance provided to the
Management on critical issues relating to business and operations of
the Company, etc. Also, assessment of the quality, quantity and
timeliness of the fow of information between the Company''s Management
and the Board was carried out.
Directors
Mr. Anil Harish (DIN 00001685) who was appointed as an Independent
Director at the 19th Annual General Meeting ("AGM") of the Company held
on July 3, 2014 resigned as such with effect from May 19, 2015.
Proposal for appointment of Mr. Anil Harish as an Independent Director
of the Company was put up before the Members at the last AGM held on
September 29, 2015 for approval, based upon the Notice received from a
Member proposing his candidature. Since Mr. Anil Harish fulfilled the
criteria of ''independence'', and also in the opinion of the Board, he is
a person of integrity and possesses relevant expertise and experience,
the Board recommended his appointment. His appointment as an
Independent Director of the Company was approved by the Members at the
20th AGM of the Company held on September 29, 2015, for a term of five
years effective from the said date.
Ms. Shanu S. P. Hinduja, Director (DIN 06512872) and Co-Chairperson of
your Company, is liable to retire by rotation at the ensuing Annual
General Meeting and being eligible, offers herself for re-appointment.
A brief profile of Ms. Shanu S. P. Hinduja is annexed to the Notice of
the 21st Annual General Meeting to be held on September 21, 2016.
Mr. B. L. Taparia (DIN 00016551), who was appointed as an Independent
Director, effective August 12, 2015, in the casual vacancy caused by
the resignation of Mr. Anil Harish, resigned as a Member of the Board
with effect from August 31, 2015. The Board placed on record its
appreciation for the guidance and advice provided by Mr. Taparia.
audit Committee
The Board has constituted an Audit Committee pursuant to the provisions
of Section 177 of the Companies Act, 2013. The Committee comprises of
the following Members: Mr. Anil Harish (Independent Director),
Chairman, Mr. Ramkrishan P. Hinduja (Non-Executive, Non-Independent
Director), Mr. Rajendra P. Chitale (Independent Director) and Mr.
Rangan Mohan (Independent Director).
Further details pertaining to the Audit Committee are included in the
Corporate Governance Report, which forms part of this Report.
Key managerial Personnel
Pursuant to Section 203 of the Companies Act, 2013, the Company has
recognized/ noted Mr. Partha DeSarkar, Manager (designated as Chief
Executive Officer); Mr. Srinivas Palakodeti, Chief Financial Officer
and Mr. Makarand D. Dewal, Company Secretary as Key Managerial
Personnel of the Company.
Chief executive officer Certification
The Chief Executive Officer''s declaration affirming compliance with the
Code of Conduct by the Board and Senior Management is furnished in
Annexure ''A'' to this Report.
Conservation of Energy, technology absorption and Foreign exchange
earnings and outgo
The prescribed particulars as required under Section 134(3)(m) of the
Companies Act, 2013 relating to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo are furnished in
Annexure ''B'' to this Report.
Corporate Governance
As required under Schedule V of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ["SEBI (LODR) Regulations"],
a detailed report on Corporate Governance is furnished as Annexure ''C
to this Report.
The Statutory Auditors of the Company have examined the compliance of
conditions of Corporate Governance as stipulated in Schedule V (C) of
the SEBI (LODR) Regulations and have certified compliance thereof. The
certificate is attached as Annexure ''D'' to this Report.
management Discussion and analysis Report
A separate report on Management Discussion and Analysis is annexed as
Annexure ''E'' to this Report.
ESOP Disclosure
The two ESOP Schemes, viz. "Hinduja Global Solutions Limited Employees
Stock Option Plan, 2008" and "Hinduja Global Solutions Limited
Employees Stock Option Plan, 2011" were in operation during the
Financial Year 2015-16. These ESOP Schemes are in compliance with the
provisions of SEBI (Share Based Employee Benefits) Regulations, 2014.
Particulars of aforesaid ESOP Schemes are available on the Company''s
website at http://www.teamhgs.com/investors/other-reports. There were
no material changes made to the aforesaid ESOP Schemes during the
Financial Year 2015-16.
Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act, 2013, an extract of
Annual Return as on Financial Year ended March 31, 2016 in the
prescribed format, is furnished in annexure ''F'' to this Report.
Related Party transactions
Transactions entered into with related parties during the Financial
Year 2015-16 are in the ordinary course of business and at arm''s length
basis and therefore, outside the purview of Section 188(1) of the
Companies Act, 2013. Information on related party transactions pursuant
to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of
the Companies (Accounts) Rules, 2014 is given in the prescribed format
in Annexure ''H'' forming part of this Report. material changes and
commitments affecting the financial position of the Company between the
end of the Financial Year and date of the Report
There were no material changes and commitments affecting the financial
position of the Company between the end of the Financial Year and date
of the Report.
Policy on Directors'' appointment and Remuneration
Policy on Directors'' Appointment and Remuneration and other matters
provided in Section 178(3) of the Companies Act, 2013 have been
disclosed in the Corporate Governance Report which forms part of this
Report.
whistle Blower Policy
The Company has a Whistle Blower Policy and Vigil Mechanism to report
and redress genuine concerns and grievances. The Policy is available on
the Company''s website at http://www.teamhgs.com/investors/corporate-
policies. This matter is covered in the Corporate Governance Report
which forms part of this Report.
Under the Whistle Blower Policy and Vigil Mechanism, no complaints were
received during the Financial Year 2015-16.
Risk management Policy
Your Company''s Risk Management Policy inter alia identifies risks
taking into consideration the business and operations of the Company
and adoption of mitigation measures.
Its robust Enterprise Risk Management (ERM) framework comprises of
practices related to identification, assessment, monitoring and
mitigation of risks to its business. The details of the
Policy/Framework are given in the Management Discussion and Analysis
Report attached to this Report.
Fixed Deposits from Public
The Company has not accepted any fixed deposits from the public and, as
such, no amount of principal or interest was outstanding as on the
Balance Sheet date.
Statutory auditors
At the 20th Annual General Meeting of the Company held on September 29,
2015, M/s. Price Waterhouse, Chartered Accountants (Registration No.
301112E), were appointed as Statutory Auditors of your Company till the
conclusion of the next Annual General Meeting. The said Auditors have
submitted requisite declarations as to their eligibility to act as
Auditors of the Company, if appointed. Accordingly, it is proposed to
re-appoint
M/s. Price Waterhouse, Chartered Accountants as Statutory Auditors of
the Company from the conclusion of the ensuing Annual General Meeting
till the conclusion of the next Annual General Meeting. The Board
recommends the re-appointment of the Auditors.
The Auditors'' Report (for Standalone and Consolidated financial
statements) for the Financial Year ended March 31, 2016 is unmodified/
unqualified.
Secretarial auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013,
the Board of Directors had appointed Ms. Rupal D. Jhaveri, Practicing
Company Secretary (FCS No. 5441; CP No. 4225), as the Secretarial
Auditor to carry out the Secretarial Audit for the Financial Year
2015-16.
The Secretarial Audit Report in the prescribed format, for the
Financial Year 2015-16, forms part of this Report as Annexure ''I''. The
Report does not contain any qualifications, reservations or adverse
remarks.
employees'' Particulars
Pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, it is necessary to disclose the ratio of
remuneration of each director to the median employees'' remuneration.
At present, the Directors are paid fees for attending the meetings of
the Board of Directors and of the Committees of which they are members.
This remuneration, by way of fees, is not related to the performance or
Profit of the Company (like payment of commission is related to the
Profits of the Company). In view of this, the ratio of remuneration of
each director to the median employees'' remuneration is not computed. At
the last Annual General Meeting, the Members had approved the proposal
for payment of commission for a period of five years commencing from
April 1, 2015 up to a limit as per the provisions of the Companies Act,
2013. The Board of Directors have not recommended/ approved payment of
commission to Directors for the Financial Year 2015-16.
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 as amended from time
to time, a statement showing the names and other particulars of the
employees drawing remuneration in excess of the limits set out in the
said Rules are provided in the Annexure forming part of the Annual
Report. Disclosures pertaining to remuneration and other details as
required under Section 197(12) of the Companies Act, 2013 read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are provided in the Annexure forming part of the
Annual Report.
Having regard to the first proviso to Section 136(1) of the Companies
Act, 2013, the Annual Report excluding the aforesaid information is
being sent to the Members of the Company. The said information is
available for inspection at the Registered Office of the Company
between 11:00 a.m. to 1:00 p.m. on any working day till the date of the
Annual General Meeting and any Member interested in obtaining such
information may write to the Company Secretary and the same will be
furnished free of cost.
In accordance with Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 as amended from time
to time, details of foreign employees, excluding directors and their
relatives, have not been included in the Annexure. Members interested
in obtaining the said information may write to the Company Secretary at
the Registered Office of the Company and the requested information
shall be furnished to such Member, free of cost.
Significant and material orders
There are no significant and material orders passed by the Regulators
or Courts or Tribunals that would impact the going concern status and
your Company''s operations in the future.
Internal Financial Controls
Internal Financial Controls (including Internal Financial Controls over
Financial Reporting) and their adequacy are included under the heading
''Internal Controls'' in the Management Discussion and Analysis which
forms part of this Report as Annexure ''E''.
acknowledgements
Your Directors thank the Government of India, State Governments,
Government of various countries and regulatory authorities and agencies
for their co-operation and support, and look forward to their continued
encouragement. Your Directors are grateful to the customers, vendors,
collaborators, business partners, investors, financial institutions,
bankers and the society at large for their continued support. The
Directors place on record their appreciation of the commitment and
contribution of the employees, at all levels for achieving the growth
of the Company in this challenging environment.
For and on behalf of the Board of Directors
Place : Mumbai Ramkrishan P. hinduja
Date : August 11, 2016 Chairman
Mar 31, 2015
To
The Members,
The Directors are pleased to present their Report on the business and
operations of your Company along with the Audited Financial Statements
(Standalone and Consolidated) for the financial year ended March 31,
2015.
Financial Results
(Rs. in millions except per share data)
For the year ended 31st
March Standalone Consolidated
2015 2014 2015 2014
Operating Income 10,704.0 8,663.5 28,075.8 25,048.5
Other Income 278.2 658.4 245.5 340.0
Total Income 10,982.2 9,321.9 28,321.3 25,388.5
Operating Expenses 8,609.4 6,875.1 24,948.2 21,829.6
Depreciation and
Amortization 605.6 420.4 1,052.4 862.0
Financial Expenses 157.5 176.7 386.4 387.5
Profit Before Tax 1,609.7 1,849.7 1,934.3 2,309.4
Provision for Tax (incl.
deferred tax) 483.9 504.2 284.1 613.9
Profit After Tax 1,125.8 1,345.5 1,650.2 1,695.5
Add: Balance brought forward
from Previous year 2,020.3 1,201.9 4,410.4 3,338.4
Profit Available for
Appropriation 3,146.1 2,547.4 6,060.6 5,033.9
Dividend
- Adjustment on account of
Depreciation 161.2 - 162.3 -
- Interim Dividend 310.3 206.0 310.3 206.0
- Final (Proposed) 103.6 206.2 103.6 206.2
- Dividend Tax 42.4 (19.7) 80.0 (12.1)
Adjustment on Amalgamation - - 4,136.4 46.4
Transferred to General
Reserve - 134.6 - 177.0
Transferred to Capital
Redemption Reserve - - 1.2 -
Balance Carried Forward 2,528.6 2,020.3 1,266.8 4,410.4
Earnings per share (Rs.)
- Basic 54.49 65.33 79.88 82.33
- Diluted 54.21 65.07 79.46 82.00
* (Rs. 1 million = Rs. 10 lakhs)
Operating Performance
On a Consolidated basis, Operating Income for FY'15 was Rs. 28,075.8
million compared to Rs. 25,048.5 million in FY'14, a growth of 12.1%
mainly due to increased contribution from the Healthcare vertical.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
for FY'15 was Rs.3,172.1 million compared to Rs. 3,219.0 million in FY'14,
a decline of 1.5% due to lower volumes in certain geographies in the
fourth quarter coupled with ongoing ramp-up activities across various
operations. Profit After Tax (PAT) for FY'15 was Rs. 1,650.2 million
compared to Rs. 1,695.5 million in FY'14, a decline of 2.7% mainly due to
higher depreciation charge as per the provisions of the new Companies
Act, 2013.
In view of amalgamation of Canadian subsidiaries as well as merger of
subsidiaries of HGS Colibrium Inc., figures for the FY'15 are not
comparable with that of FY'14.
On a Standalone basis, Operating Income was Rs.10,704.0 million in FY'15,
compared to Rs. 8,663.5 million in FY'14, an increase of 23.6%. EBITDA
increased by 17.1% from Rs. 1,788.5 million in FY'14 to Rs. 2,094.7 million
in FY'15. PAT decreased by 16.3% from Rs.' 1,345.6 million in FY'14 to
Rs. 1,125.8 million in FY'15 mainly on account of decrease in other income.
Key highlights for the year were:
Growth in revenues: Consolidated revenue up 12.1%; Standalone revenue
up 23.6%.
Opening of 3 new centers at - El Paso (the US), Windsor (Canada), and
Alabang (Philippines). Total number of centers: 60;
Addition of 32 new customers during the year. As of March 31, 2015,
your Company has 171 clients (excluding the payroll processing
clients);
Acquisition and merger of Colibrium Partners LLC and Colibrium Direct
LLC into HGS Colibrium Inc., USA, step down subsidiary of the Company;
Amalgamation of Canadian subsidiaries;
As of March 31,2015, your Company had a Net Worth ofRs. 10,742.3 million
translating into a Book Value of Rs. 518.46 per share;
Employee headcount at year-end: FY'15 - 28,435 (FY'14 - 26,036).
Dividend
Your Directors are pleased to recommend final dividend of Rs. 5 per equity
share (50% on face value of Rs. 10 each) for the year ended March 31, 2015
subject to your approval. This is in addition to the three Interim
Dividends of Rs. 5 per share for the Financial Year 2014-15 declared by
the Board of Directors on August 12, 2014, November 12, 2014 and
February 5, 2015 respectively and were paid. The total dividend for
the financial year ended March 31, 2015 would be Rs. 20 per equity share
(200% on face value of Rs. 10 each).
Business Review
The global Business Process Management (BPM) sector is changing its
focus on growth rather than the cost containment. Traditionally, the
BPM industry is known to provide services that transform clients'
businesses and deliver higher levels of performance and results, as
well as reduce costs. In addition to this, the industry has also been
providing a range of services providing operational excellence and
driving additional business value for customers. This change in the
outlook represents a strong future growth potential for the BPM
industry.
The Indian BPM industry continues to remain the premier sourcing
destination in the world and recorded a steady double digit growth
supported by its flexibility to adjust to difficult economic
conditions.
India's BPM revenue for FY'15 is estimated to be $26 billion, an
increase of around 13% compared to the last year. (Source: NASSCOM)
Further information pertaining to Business Review has been provided in
the 'Management Discussion and Analysis Report' which form part of this
Report.
Key Subsidiaries
HGS International, Mauritius, a wholly-owned subsidiary of your
Company, is primarily engaged in investment activity. HGS International
owns 100% of the share capital of Hinduja Global Solutions Inc., USA,
C-Cubed N.V., Curacao, Hinduja Global Solutions Europe Ltd., UK, HGS
St. Lucia Ltd., Saint Lucia and HGS MENA FZ- LLC, UAE and HGS Colibrium
Inc., USA. All the subsidiaries are 100% owned by HGS International
except for HGS Colibrium Inc, in which HGS International owns 89.9% and
the balance is owned by the founders of Colibrium.
During the year under review, Total Income of HGS International was US$
4.7 million as compared to US$ 4.9 million in the previous year.
Hinduja Global Solutions Inc., USA (HGS Inc.), a wholly-owned subsidiary
of HGS International, Mauritius, specialises in marketing and provision
of both voice and non-voice related Customer Contact and Business
Process Outsourcing services to its clientele. Its key subsidaries are
HGS (USA), LLC, HGS Canada Inc., Canada and HGS EBOS, LLC.
For FY'15, HGS Inc. reported consolidated revenues of US$ 348.9 million
as compared to US$ 323.8 million in FY'14.
HGS (USA), LLC, a wholly-owned subsidiary of HGS Inc., USA, operates in
five cities in USAand Canada. It partners with Fortune 1000 companies
and Government agencies to provide comprehensive Customer Relationship
Management programs. For FY'15, HGS (USA), LLC recorded total revenue
of US$254.2 million. HGS (USA), LLC and its US subsidiaries have
over2,400 employees who are engaged in customer services, fulfillment
services, sales, marketing and account management.
HGS Canada Inc., a wholly-owned step-down subsidiary of HGS Inc., USA
is a Canadian Contact Center service provider servicing marquee
customers across verticals such as media, telecom, technology and BFS.
HGS Canada offers technical support, inbound and outbound sales,
customer care and customer retention in English and French languages,
and has a team size of around 2,800 associates at 12 centers in Canada.
On March 31, 2015, HGS Canada Inc. and 101867 P.E.I. Inc. (both
wholly-owned subsidiaries of HGS Canada Holdings LLC) were amalgamated
into HGS Canada Inc. For FY'15, HGS Canada recorded total revenue of
CAD 96.9 million as compared CAD 98.2 million in FY'14.
Hinduja Global Solutions Europe Ltd. is the UK-based subsidiary
focusing on consulting services for Business Process Management (BPM),
call center services and markets off shoring services to UK-based
clients. It owns 100% stake in Hinduja Global Solutions UK Ltd. and HGS
France SARL, France. It also has a subsidiary in Italy called HGS
Italy, SRL. For FY'15, Hinduja Global Solutions Europe Limited recorded
consolidated revenue of GBP 30.3 million as compared to GBP 25.5
million in FY'14.
Hinduja Global Solutions UK Ltd. is a leading contact center company
with over 1,000 employees in London, Preston and Selkirk (Scotland). It
offers a range of services for inbound and outbound interactions to
over 20 marquee customers across verticals such as Government, FMCG,
Financial Services, Automobiles and Retail. It has branches in
Rotterdam (Netherlands) and Hamburg (Germany). For FY'15, Hinduja
Global Solutions UK Ltd. reported revenue of GBP 29.6 million as
compared to GBP 24.7 million in FY'14.
HGS St. Lucia Ltd., Saint Lucia is the holding company of Team HGS
Ltd., Jamaica.
Team HGS Ltd., Jamaica is operating a call center since FY'13 at
Kingston, Jamaica and receiving good response from North American as
well as local clients. Revenue for FY'15 was Jamaican Dollars 368
million as compared to Jamaican Dollars 200 million in FY'14.
HGS International Services Pvt. Ltd. (HGSISPL)
HGSISPL recorded revenue of Rs. 1,729.2 million in FY'15 as compared to
Rs.1,413.8 million in FY'14, a growth of 22.3%. The SEZ division of
HGSISPL is presently operating in three units namely, a) Global Village
SEZ, Bangalore, b) DLF Towers SEZ, Hyderabad and c) Pritech Park SEZ,
Bangalore and a fourth unit at DLF Cybercity, SEZ Hyderabad is expected
to be commissioned shortly. Human Resource Outsourcing (HRO) business
of HGSISPL services marquee customers in Banking, Financial Services,
Insurance and other industry verticals in India and abroad.
HGS MENA FZ-LLC a wholly-owned subsidiary of HGS International,
Mauritius, has established a marketing office in Dubai Internet City
with the objective to build sales pipeline. Demand trend from MENA
region is encouraging and this subsidiary has started adding new
clients. In FY'15, it recorded revenue of AED 2.1 million.
HGS Colibrium Inc, USA is a subsidiary of HGS International, Mauritius.
On March 27, 2015, HGS Colibrium acquired 89.98% share in Colibrium
Partners LLC and Colibrium Direct LLC at a consideration of USD 14.2
million approximately plus debt funding of USD 1.7 million
approximately. On March 31, 2015, Colibrium Partners LLC and Colibrium
Direct LLC (subsidiaries of HGS Colibrium Inc., USA) were merged into
HGS Colibrium Inc., USA.
This acquisition brings complementary platform and servicing capability
in the sales and enrollment area for US and global health insurers.
Colibrium is an innovation leader in delivering sales, service and
wellness automation to health plans. This acquisition in the US market
enhances the Company's already strong healthcare Payer servicing
capabilities and will further contribute to the growth of the vertical
in the coming years.
Particulars of loans, guarantees or investments
Loans, guarantees and investments as per Section 186 of the Companies
Act, 2013 form part of the Notes to the financial statements provided
in this Annual Report.
Communications and Public Relations
In the last one year, your Company (HGS) has initiated efforts on
multiple levels to significantly revamp how your Company is represented
externally. Your Company is communicating in a new and improved way,
whether it is through the website or the external brandings of the
Company and this is reflected in all locations across HGS including its
subsidiaries.
In a significant step, your Company launched a completely new version
of its public web presence, which is mobile enabled and designed to
better serve browsers across various devices, and most importantly,
tell the HGS story in a more compelling way with videos, packaged
solutions and case studies. HGS' digital presence has also been
enhanced to align website and social media (e.g. LinkedIn, Twitter, and
Blog). Your Company has been significantly leveraging social media
platforms to tell the HGS story and reach out to a larger audience
across the globe.
This year, HGS made significant progress with the analyst and advisor
community and has been recognized by them as a leading player in the
Business Process Management industry. HGS also participated in external
events, keynote thought leadership presentations and industry panel
discussions that have raised the Company profile globally. Several
channels of communication have been utilized to create a 360°
engagement with our stakeholders and the media, including the Company
intranet, the website, media outreach programs, social media platforms,
participation in industry events, newsletters - internal as well as
external, commemoration of important milestones, leadership blogs and
winning business awards.
HGS effectively leveraged Public Relations (PR) to educate and inform
various stakeholders-including the media, the analysts, advisors, our
clients, future prospects, employees and our investors - about the
latest Company updates that include the financial results, new wins,
awards and accolades, recognition by the analyst community and
community activities. As a result, your Company achieved unprecedented
media coverage this year, both domestically and internationally across
leading publications.
In our endeavor to propagate an inclusive and transparent culture, HGS
continued to ensure regular and consistent internal communication to
employees. Your Company leveraged different formats and channels such
as e-mailers, newsletters, blogs and articles to share views and news.
The Company's internal portal Ozone serves as a time-out zone for
employees, offering various fun elements including exciting contests
like Predictor contests held during the Football and Cricket World Cups
and engagement activities during the holiday season. This year, your
Company also conducted an infotainment campaign called 'Know Your HGS',
which leveraged different activities like quiz, photo and poster
contests and crowd sourcing of trivia across locations and businesses to
help employees learn more about the organization. HGS also communicates
about its capabilities and achievements through colorful internal
branding across the centers.
HGS will continue to focus on gaining even wider public interest in,
and visibility of, its achievements. In FY 2015- 2016, your Company
will continue the momentum with more analyst engagements, launch of new
solutions and aggressive digital presence expansion. Many of this
year's accomplishments and highlights arose from the work that was
initiated in the previous years. Communication is a continuum and HGS
is confident about leveraging the gains in the past to gain even more
in the future.
Corporate Social Responsibility (CSR)
As per the provisions of Section 135 of the Companies Act, 2013, the
Board has constituted a Corporate Social Responsibility (CSR) Committee
to carry out functions as stipulated in the said Section. The CSR
Committee presently comprises of Mr. Rajendra P. Chitale, Chairman, Mr.
Rangan Mohan, Mr. Ramkrishan P. Hinduja and Ms. Vinoo S. Hinduja.
On the recommendation of the CSR Committee, the Board has formulated a
CSR Policy. Company's CSR initiatives focus on education, healthcare and
sustainable development of the disadvantaged. The Report on CSR
activities in the format as required under Companies (Corporate Social
Responsibility) Rules, 2014, is set out in Annexure 'G' forming part of
this Report. The CSR Policy is available on the website of the Company.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors,
based upon the information and documents made available to them and to
the best of their knowledge, confirm that:
In the preparation of the Annual Accounts for the Financial Year ended
March 31, 2015, the applicable accounting standards have been followed
and there have been no material departures in the adoption and
application thereof;
They have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the Profit of the
Company for that period;
They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
They have prepared the Annual Accounts on a going concern basis;
They have laid down adequate internal financial controls to be followed
by the Company and they are operating effectively;
They have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate
and are operating effectively.
The Company has fair number of processes (including checks and
balances), certifications, compliance systems, authority matrix, etc.
which form framework of internal financial controls. The Internal
Auditors carry out audits of various functions as an on-going process
and Statutory Auditors and External Consultants perform work in the
critical areas. Periodical reviews of the same have been taken up by
the Management and the Board Committees for corrective action, if any.
Based upon the aforesaid, the Board is of the opinion that during the
Financial Year 2014-15, the Company's internal financial controls were
adequate and effective.
Number of Meetings of the Board
Seven meetings of the Board were held during the year. The time gap
between any two meetings did not exceed 120 days. Further details in
this regard are given in the Corporate Governance Report, which forms
part of this Report.
Declaration by Independent Directors
As required under Section 149(7) of the Companies Act, 2013, the
Company has received the declaration from each of the Independent
Directors of the Company confirming that they meet the criteria of
independence laid down in Section 149(6) of the Companies Act, 2013 and
Clause 49 of the Listing Agreement.
Board Evaluation
As required under Section 178 of the Companies Act, 2013 and Clause 49
of the Listing Agreement, the performance evaluation of the individual
Directors (Independent and Non-Independent Directors, the Chairman),
the Board and its Committees, for the Financial Year 2014-15 was
carried out.
The Nomination and Remuneration Committee and the Board carried out the
performance evaluation of individual Directors including the Chairman
on the basis of criteria such as preparedness for the matters to be
discussed at the meetings of the Board and the Committees, constructive
contribution to the discussions and deliberations and inputs at the
meetings, non-partisan appraisal of issues and commitment to the role
and fiduciary responsibilities, etc.
The Board also carried out annual evaluation of its own performance and
its Committees based upon the inputs received from the Directors on
criteria such as Board/ Committees composition and structure,
effectiveness of the Board/Committees processes and the deliberations
ensued thereat, etc.
At the separate meeting of the Independent Directors held during the
year, the performance evaluation of the Non-independent Directors
including the Chairman was carried out on the basis of criteria such as
commitment and guidance, advice, inputs, expertise and knowledge. They
also assessed the performance of the Board as a whole and the quality,
quantity and timeliness of flow of information between the Company's
Management and the Board.
Directors
Mr. Anil Harish (DIN 00001685), Mr. Rajendra P. Chitale (DIN 00015986),
and Mr. Rangan Mohan (DIN 01116821), were appointed as Independent
Directors for a term of five years at the Annual General Meeting of the
Company held on July 3, 2014.
Mr. Anil Harish, an Independent Director of your Company resigned as a
Member of the Board with effect from May 19,2015.
Mr. Anil Harish was a Director of the Company since March 2007. The
Board wishes to place on record its deepest gratitude and appreciation
for the outstanding contribution made by Mr. Anil Harish during his
long association with the Company as a Director and Member of the Board
Committees.
Ms. Vinoo S. Hinduja, Director (DIN 00493148) of your Company, is
liable to retire by rotation at the ensuing Annual General Meeting and
being eligible, offers herself for re-appointment.
Mr. B.L. Taparia (DIN 00016551) was appointed as an Independent
Director with effect from August 12, 2015 at the meeting of the Board
of Directors held on August 12, 2015 in the casual vacancy caused by
the resignation of Mr. Anil Harish.
Audit Committee
The Board has constituted an Audit Committee pursuant to the provisions
of Section 177 of the Companies Act, 2013. The Committee presently
comprises of the following Members: Mr. Rajendra P. Chitale - Chairman,
Mr. Ramkrishan P. Hinduja, Mr. Rangan Mohan and Mr. B.L. Taparia.
Further details pertaining to the Audit Committee are included in the
Corporate Governance Report, which form part of this Report.
Key Managerial Personnel
Pursuant to Section 203 of the Companies Act, 2013, the Company has
recognized/ noted Mr. Partha DeSarkar, Manager (designated as Chief
Executive Officer), Mr. Srinivas Palakodeti, Chief Financial Officer
and Mr. Makarand D. Dewal, Company Secretary (appointed during the
year) as the Key Managerial Personnel of the Company.
During the year, Mr. Kanti Mohan Rustagi resigned as the Company
Secretary of your Company.
Chief Executive Officer (CEO) Certification
The Chief Executive Officer's declaration affirming compliance with the
Code of Conduct by the Board and Senior Management is furnished as
Annexure 'A' to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The prescribed particulars as required under Section 134(3)(m) of the
Companies Act, 2013 relating to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo are furnished as
Annexure 'B' to this Report.
Corporate Governance
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, a detailed report on Corporate Governance is furnished as
Annexure 'C to this Report.
The Statutory Auditors of the Company have examined the compliance of
conditions of Corporate Governance as stipulated in Clause 49 of the
Listing Agreement with the Stock Exchanges by your Company and have
certified compliance thereof. The certificate is attached as Annexure
'D' to this Report.
Management Discussion and Analysis Report
A separate report on Management Discussion and Analysis is annexed as
Annexure 'E' to this Report.
ESOP Disclosure
The two ESOP Schemes viz. Hinduja Global Solutions Limited Employees
Stock Option Plan 2008 and Hinduja Global Solutions Employees Stock
Option Plan 2011 were in operation during the Financial Year 2014-15.
These ESOP Schemes are in compliance with the provisions of SEBI (Share
Based Employee Benefits) Regulations, 2014. Particulars of aforesaid
ESOP Schemes are available on the Company's website http://www.teamhgs.
com/investors/other-reports. There were no material changes made to the
aforesaid ESOP Schemes during the Financial Year 2014-15.
Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act, 2013, an extract of
Annual Return as on the financial year ended March 31, 2015 in the
prescribed format, is appended as Annexure 'F' to this Report.
Related Party Transactions
Transactions entered into with the related parties during the Financial
Year 2014-15 are in the ordinary course of business and at arm's length
basis and therefore, outside the purview of Section 188(1) of the
Companies Act, 2013. Information on related party transactions
pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule
8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 as
Annexure 'H' and the same form part of this Report.
Material changes and commitments affecting the financial position of the
Company between the end of the financial year and date of the report
Acquisition of Domestic BPM business of Mphasis:
Your Company on June 30, 2015 has entered into definitive agreements
with Mphasis Limited and its wholly owned subsidiary MsourcE India
Private Limited for acquisition of significant portion of their
domestic BPM business for a consideration of Rs. 17 crores ("the
Transaction"). The closing of the transaction is subject to fulfillment
of conditions stipulated in the agreements and regulatory approvals as
may be required.
Upon completion of the transaction, the acquisition will strengthen the
Company's presence in India by adding newer service capabilities and
marquee clients in the Telecom, Banking and Financial Services
verticals while bringing over 7,000 customer experience professionals.
The acquisition will also add to the Company's delivery capabilities in
Raipur, Indore, NOIDA, Mangalore, Pune and Bangalore.
Policy on Directors' Appointment and Remuneration
Policy on Directors' Appointment and Remuneration and other matters
provided in Section 178(3) of the Companies Act, 2013 have been
disclosed in the Corporate Governance Report which form part of this
Report.
Whistle Blower Policy
The Company has a Whistle Blower Policy and Vigil Mechanism to report
and redress genuine concerns and grievances and the Policy is available
on the Company's website. This matter is covered in the Corporate
Governance Report which form part of this Report.
Under the Whistle Blower Policy and Vigil Mechanism, no complaints were
received during the Financial Year 2014-15.
Risk Management Policy
Your Company has formulated Risk Management Policy which inter alia
identifies risks taking into consideration the business and operations
of the Company and adoption of mitigation measures. The Policy
identifies elements of risks which in the opinion of the Board may
threaten the existence of the Company. The details of the Policy are
given in the Management Discussion and Analysis Report attached to this
Report.
Fixed Deposits from Public
The Company has not accepted any fixed deposits from the public and, as
such, no amount of principal or interest was outstanding as on the
Balance Sheet date.
Statutory Auditors
At the 19th Annual General Meeting of the Company held on July 3, 2014,
M/s. Price Waterhouse, Chartered Accountants, were appointed as
Statutory Auditors of your Company till the conclusion of the next
Annual General Meeting. The said Auditors have submitted requisite
declarations as to their eligibility to act as Auditors of the Company,
if appointed. Accordingly, it is proposed to re-appoint M/s. Price
Waterhouse, Chartered Accountants as Statutory Auditors of the Company
from the conclusion of the ensuing Annual General Meeting till the
conclusion of the next Annual General Meeting. The Board recommends the
re-appointment of the Auditors.
The Auditors' Reports (for Standalone and Consolidated financial
statements) for the Financial Year ended March 31, 2015 do not have any
qualifications, reservations or adverse remarks in their Reports.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013,
the Board of Directors had appointed Ms. Rupal D. Jhaveri, Practicing
Company Secretary, as the Secretarial Auditor to carry out the
Secretarial Audit for the Financial Year 2014-15.
The Secretarial Audit Report in the prescribed format, for the
Financial Year 2014-15, forms part of this Report as Annexure 'I'. The
Report does not contain any qualifications, reservations or adverse
remarks.
Employees' Particulars
Pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, it is necessary to disclose the ratio of
remuneration of each director to the median employees' remuneration.
At present, the Directors are paid fees for attending the meetings of
the Board of Directors and of the Committees of which they are members.
This remuneration, by way of fees, is not related to the performance or
profit of the Company (like payment of commission is related to the
profits of the Company). In view of this, the ratio of remuneration of
each director to the median employees' remuneration is not computed.
In terms of the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, a statement showing
the names and other particulars of the employees drawing remuneration
in excess of the limits set out in the said Rules are provided in the
Annexure forming part of the Annual Report. Disclosures pertaining to
remuneration and other details as required under Section 197(12) of the
Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 are provided in
the Annexure forming part of the Annual Report.
Having regard to the first proviso to Section 136(1) of the Companies
Act, 2013, the Annual Report excluding the aforesaid information is
being sent to the Members of the Company. The said information is
available for inspection at the Registered Office of the Company during
working hours (i.e. 10:00 am to 6:00 pm) and any member interested in
obtaining such information may write to the Company Secretary and the
same will be furnished without any fee and free of cost.
In accordance with Rule 5 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, details of foreign
employees, excluding directors and their relatives, have not been
included in the Annexure. Members interested in obtaining the said
information may write to the Company Secretary at the Registered Office
of the Company and the requested information shall be furnished to such
Member.
Significant and Material Orders
There are no significant and material orders passed by the regulators
or courts or tribunals that would impact the going concern status and
your Company's operations in the future.
Internal Financial Controls
Internal Financial Controls and their adequacy are included under the
heading 'Internal Controls' in the Management Discussion and Analysis
which form part of this Report.
Acknowledgement
The Directors thank the customers, vendors, business partners,
investors and bankers for the faith reposed in the Company and their
continued support. The Directors also thank the Government of India,
State Governments, Governments of various countries and regulatory
authorities and agencies, for their cooperation and support, and look
forward to their continued encouragement. The Directors place on record
their sincere appreciation of the contribution of your Company's most
important asset, viz. the One HGS family i.e, employees.
For and on behalf of the Board of Directors
Place : Mumbai Ramkrishan P. Hinduja
Date : August 12, 2015 Chairman
Mar 31, 2014
The Directors are pleased to present their Report on the business and
operations of your Company for the financial year ended March 31, 2014.
Financial Results
(Rs. in millions except per share data)
For the year ended March 31st Standalone Consolidated
2014 2013 2014 2013
Operating Income 8,663.5 7,034.1 25,048.5 19,834.3
Other Income 658.4 175.0 340.0 332.8
Total Income 9,321.9 7,209.1 25,388.5 20,167.1
Operating Expenses 6,875.1 5,874.8 21,829.6 17,650.0
Depreciation and
Amortization 420.4 386.0 862.0 772.5
Financial Expenses 176.7 173.1 387.5 436.6
Profit Before Tax 1,849.7 775.2 2,309.4 1,308.0
Provision for tax (incl.
deferred tax) 504.2 235.1 613.9 402.3
Profit After Tax 1,345.5 540.1 1,695.5 905.7
Add: Balance brought
forward from Previous year 1,201.9 1,196.0 3,338.4 2,989.7
Profit Available for
Appropriation 2,547.4 1,736.1 5,033.9 3,895.4
Dividend
- Interim Dividend 206.0 - 206.0 -
- Final (Proposed) 206.2 411.8 206.2 411.8
- Dividend Tax (19.7) 68.4 (12.1) 70.0
Adjustment on Amalgamation - - 46.4 -
Transferred to General
Reserve 134.6 54.0 177.0 75.2
Balance Carried Forward 2,020.3 1,201.9 4,410.4 3,338.4
Earnings per share (Rs.)
- Basic 65.33 26.23 82.33 43.99
- Diluted 65.07 26.23 82.00 43.99
Operating Expenses (Standalone as well as Consolidated) for the year
ended March 31, 2013 include exceptional expense ofRs.52.9 million.
Review of Financials
On a Consolidated basis (covering global operations in India, USA,
Canada, Europe, Philippines, Jamaica and UAE), Operating Income for FY
''14 was a 25,048.5 million higher by 26.3% compared to the Operating
Income of a19,834.3 million in FY ''13. EBITDA (Earnings before
Interest, Taxes, Depreciation & Amortization) was a 3,218.9 million and
grew by 43.9% over the EBITDA of a 2,237.1 million in FY ''13 (excluding
exceptional expense).
On a Standalone basis (for India and overseas branch offices),
Operating Income was r 8,663.5 million in FY ''14, an increase of 23.2%
over the Operating Income of r 7,034.1 million in FY ''13. EBITDA
increased by 47.5% from r1,212.2 million (excluding exceptional
expense) in FY ''13 to a 1,788.4 million in FY ''14. PAT increased by
149.1% from a 540.1 million in FY ''13 to r1,345.5 million in FY ''14.
Key highlights for the year were:
Growth of operating revenues by 26.3%;
Opening of 5 new centers at - Princeton (US), Barrie (Canada),
Bengaluru SEZ (India) and 2 centers in Alabang (Philippines); Total
number of centers now stand at 58;
Employee headcount at 26,036 (Previous Year-end 23,100);
Addition of 119 new customers during the year including addition of 105
customers from Payroll business. As of March 31, 2014, your Company has
139 clients (excluding the payroll processing clients);
As of March 31, 2014, your Company had a Net Worth of r14,520.6 million
translating into a Book Value of r 704.32 per share.
Dividend
Your Directors are pleased to recommend final dividend of r10 per
equity share (100% on face value of r10/- each) for the year ended
March 31, 2014. This is in addition to the two Interim Dividends of r5
per share during the Financial Year 2013-14 declared on November 11,
2013 and February 11, 2014 respectively and were duly paid. The total
dividend for financial year would be r20 per share (200% on face value
of r10/- each).
Business Review
Global ITeS Industry Overview
The global economic environment remained volatile and uncertain during
the last year. Despite challenges arising from this volatility, the
global IT-BPM industry continued its growth trajectory, driven by the
increasing acceptance of outsourcing services by corporate. In
addition to private companies, many governments have now started to
outsource services for the first time to manage costs. Further, with
technological advancement, the trend for outsourcing has been gradually
shifting from traditional services to extended services. Service
providers are now focused on improving customer experience, managing
risks and improving efficiencies with the use of Social Media,
Mobility, Analytics and Cloud Computing (SMAC).
The industry is also experiencing an increase in hybrid service
offerings from providers. These offerings enable customers to customize
and split processes into in-house and outsourcing activities. In this
model, the provider benefits from access to client database platforms
and the ability to access data simultaneously alongside its client.
Gartner expects that by 2017, around 75% of the BPM demand will be
achieved through hybrid offerings, as clients gradually become
accustomed to the latest enabled technologies such as cloud computing.
Gartner expects worldwide spend for BPM services to grow from US$140.1
billion in 2012 to US$186.5 billion in 2017, a CAGR of 5.9%. There is a
significant difference in the expected growth rates of Business Process
as a Service (BPaaS) and the traditional BPM. BPaaS is expected to grow
at three times the growth rate of the traditional BPM services. During
2013, Gartner estimated BPaaS revenues to have accounted for 22% of the
total BPM spend.
Indian ITeS Industry Overview
For FY ''14, NASSCOM projected that Indian IT-BPM exports will grow by
13% to reach US$86 billion while domestic annual revenue will touch
r1,150 billion, a YoY increase of 10%.
During the year, technology and related sectors benefitted from
vertical and geographic market expansion, new customer segments, and a
wider spectrum of the services and solutions being offered. For FY ''15,
NASSCOM expects export revenues to grow in the range of 13% to 15% and
domestic market to grow between 9% to 12%.
The sustained focus of the Indian BPM industry on providing end-to-end
transformational services with a customer-centric approach is expected
to take the industry to US$50 billion in revenue by 2020 from the
current US$21 billion. India is also expected to emerge as an effective
center for the global BPM industry by implementing new generation
technologies such as SMAC, which will drive demand for specialized
services.
Performance of Hinduja Global Solutions Ltd.
During FY ''14, Operating Income of your Company grew by around 26.3%,
displaying strong financial performance, high growth and improved
margins. This strong growth was driven by increase in volumes from
existing customers and new client additions.
Of the total growth, around 1.6% was due to full year impact of EBOS
acquisition. The balance growth was due to organic growth and variation
in the exchange rate. Geographies such as the Philippines, North
America, Canada and India experienced strong volume growth.
The significant growth in EBITDA and margin improvement was due to
better capacity utilization levels at delivery centers across all
geographies coupled with various performance optimization initiatives
undertaken during the year.
Growth in PBT was primarily due to lower interest expense as a result
of debt repayment and better working capital management.
Key Subsidiaries
HGS International, a wholly-owned subsidiary of your Company,
incorporated under the laws of Mauritius, is primarily engaged in
investment business. HGS International owns 100% of the share capital
of Hinduja Global Solutions Inc., USA, C-Cubed N.V., Curacao, Hinduja
Global Solutions Europe Ltd., UK, HGS St. Lucia Ltd., Saint Lucia and
HGS MENA FZ- LLC, UAE.
During the year under review, Total Income of HGS International was US$
4.9 million as compared to US$ 5.5 million in the previous year.
Hinduja Global Solutions Inc., USA (HGS Inc.),
wholly-owned subsidiary of HGS International, Mauritius, specializes in
marketing and provision of both voice and non-voice related Customer
Contact and Business Process Outsourcing services to its clientele. Its
key subsidiaries are HGS (USA), LLC, HGS Canada Inc., Canada and HGS
EBOS, LLC.
For FY ''14, HGS Inc. reported consolidated revenues of US$ 323.8
million as compared to US$ 270.5 million in FY ''13.
HGS (USA), LLC, which was acquired in November 2006 by HGS Inc., USA,
operates in five cities in USA and Canada. It partners with Fortune
1000 companies and Government agencies to provide comprehensive
Customer Relationship Management programs. For FY ''14, HGS (USA), LLC
recorded total revenues of US$ 218.2 million. HGS (USA) LLC and its US
subsidiaries have over 2,400 employees who are engaged in customer
services, fulfillment services, sales, marketing and account
management.
HGS Canada Inc., which was acquired in August 2011 by HGS Inc., USA is
a leading Canadian contact center service provider servicing marquee
customers across verticals such as media, telecom, technology and BFS.
HGS Canada offers technical support, inbound and outbound sales,
customer care and customer retention in English and French languages,
and has a team size of over 3000 associates at 12 centers in Canada.
For FY ''14, HGS Canada recorded total revenues of CAD 98.2 million as
compared CAD 72.8 million in FY ''13.
Hinduja Global Solutions Europe Ltd. is the UK-based subsidiary
focusing on consulting services for BPM, call center services and
markets off shoring services to UK-based clients. It owns 100% stake in
Hinduja Global Solutions UK Ltd., HGS France SARL and HGS Italy SRL.
Hinduja Global Solutions UK Ltd. is a leading contact center company
with over 890 employees in London, Preston and Selkirk (Scotland). It
offers a range of services for inbound and outbound interactions to
over 24 marquee customers across verticals such as Government, FMCG,
Financial Services, Automobiles and Retail. It has branches in
Rotterdam (Netherlands) and Hamburg (Germany). For FY ''14, Hinduja
Global
Solutions UK Ltd. reported revenues of GBP 24.7 million as compared to
GBP 26.8 million in FY ''13.
HGS St. Lucia Ltd., Saint Lucia is the holding company of Team HGS
Ltd., Jamaica.
Team HGS Ltd., Jamaica in FY ''13, has opened a call center at Kingston,
Jamaica. The center is currently servicing a Jamaican client. Jamaica
has been eliciting strong interest as a near-shore destination among
North American clients as well as local clients.
HGS International Services Pvt. Ltd. (HGSISPL) (formerly Hinduja
Outsourcing Solutions Pvt. Ltd.)
The SEZ business of HGSISPL operates through three units namely, a)
Global Village SEZ, Bengaluru, b) DLF Towers SEZ, Hyderabad; and c)
Pritech Park SEZ, Bengaluru.
During the year, HGS Business Services Pvt. Ltd, the Human Resource
Outsourcing (HRO) business was merged into HGSISPL. HGS Business
Services provide HRO services to marquee customers in Banking,
Financial Services, Insurance and other industry verticals in India and
abroad.
In FY ''14, HGSISPL recorded revenues of a1,413.8 million as compared to
a 673.6 million in FY ''13.
HGS MENA FZ-LLC was set up in the Dubai Technology and Media Free Zone,
Dubai, United Arab Emirates during the year as a wholly-owned
subsidiary of HGS International, Mauritius. HGS MENA FZ-LLC plans to
provide Business Process Management services and HRO services to
companies in the Middle East and North African region.
Addressing Social Concerns
Your Company has proved, yet again, that it remains firmly committed to
community welfare initiatives. It partnered with organizations and NGOs
championing various causes and reaching out to the needy. The Company
partnered with Sightsavers, by participating in the World 10K Run 2013
in Bengaluru. Sightsavers is an international development organization
working with partners to eliminate avoidable blindness and promote
equality of opportunity for differently bled people.
2013, unfortunately, has been a year of calamities. In the Philippines,
your Company took the lead in mitigating the effects of the
catastrophic typhoon - ''Yolanda'' that devastated homes and lives of
millions of Filipinos in November 2013. The employees donated their
leave encashment to both the Red Cross and the Baptist Churches to
distribute basic food and necessities to the typhoon stricken areas.
Similar commitment was seen in the help your Company has provided for
the earthquake-stricken Bohol victims struggling to recover after a
massive 7.2 magnitude hit their towns in October, 2013 and left
hundreds dead and thousands homeless. Your Company launched a unique
initiative "Happy Rains" in the Philippines, which was a donation-drive
program to keep public school children happy, disease-free, clean and
dry during the rainy seasons, and also gifted computers to elementary
and high school children of the Payatas Orione Foundation, which takes
care of children in one of the poorest regions of the Philippines.
In June 2013, flash floods and landslides struck Uttarakhand in India
leaving thousands of people dead and missing. Employees across nine
locations in India voluntarily contributed to the cause of alleviating
the suffering of the victims. Overwhelmed by the employees'' generosity,
management of your Company matched the contribution and Rs. 1.85 million
was donated towards relief efforts undertaken by Oxfam in Uttarakhand.
Your Company is associated with a number of non-profit organisations
such as Mother Teresa - Orphanage for Children, Desire Society, HOPE -
school for disabled children, Green life Foundation, Chaya Devi
Education Trust, Green Peace, Good Life Centre, I Lead - Education and
Magic Bus. Employees take great pride in raising funds and are actively
involved in organising interactive activities with these institutions.
In addition to financial support, clothes, toiletries, stationery and
medical supplies were donated to them. Another regular feature across
the centers in your Company is organizing blood donation camps
throughout the year.
In a bid to increase awareness among potential recruits, HGS UK has
evolved an "employability skills course" with Flood Academy Preston,
a local academy. The course includes awareness programs on the
business, role play, aid in drafting curriculum vitae and interview
skills. At the end of the course, a certificate of achievement is
presented to the local young adults, thus providing them an advantage
in the employment market. HGS UK plans to put 120 young adults through
this course by June 2014. It is notable that this course is not just
to train the future employees, but for the industry at large.
HGS centers in Canada have strong linkages with the local communities
and this year too, they contributed towards many local charities and
hospitals. The coveted Golden Spade Award, presented to the business
that embraces all aspects of the Communities in Bloom program and
serves as an example for others to follow, was presented to HGS Canada
in Pembroke, Ontario. Communities in Bloom is a Canadian non-profit
organization committed to fostering civic pride, environmental
responsibility and beautification through community involvement.
HGS USA contributed donations in cash and gifts in kind to help those
that were affected by a severe tornado which hit Illinois in November
2013. Our clients also rose to the occasion and donated generously to
take care of the immediate needs of citizens. When Typhoon Yolanda, one
of the severest typhoons ever, hit the Philippines, donations were sent
all the way from HGS USA. The HGS US team also joined hands with a
client to help their customers when a tornado struck New York City in
November 2013. The HGS team in Peoria raised funds for the American
Cancer Society in "The Relay for Life" event.
Your Company will continue to actively engage with society across all
strata and geographies through noteworthy and worthwhile causes.
Communications and Public Relations
Your Company has continued to extend its efforts towards
standardization and diversification of its communication channels, both
internal and external. As a global organization, your Company has the
responsibility to ensure consistency of branding and messaging across
all locations. This has now been achieved in totality through the
successful deployment of "One HGS" throughout the organization,
including the acquired subsidiaries. HGS has connected each employee to
every other through the revamped intranet and has also connected itself
with the wider world through the efforts of its Global Marketing and
Communications Team.
All the channels of communication have been utilized to create a 360°
engagement with our stakeholders and the media. They include the
intranet, the website, media outreach programs, social media platforms,
participation in industry events, newsletters - internal as well as
external, commemoration of important milestones, leadership blogs and
winning business awards.
Your Company effectively leveraged Press Releases (PR) to educate and
inform various stakeholders - including the public - about the latest
company updates. This year, your Company achieved unprecedented media
coverage, both domestically and internationally across publications
such as The Economic Times, Business Standard, The Hindu Business Line
and Reuters. The PR around the completion of 40 years by HGS USA was
particularly well received in North America. The CEO of HGS is now a
regular invitee to industry discussions on business TV Channels like ET
Now and NDTV Profit. The financial results of HGS are covered by
prominent media houses and discussed by leading reporters. HGS held its
first Investor Relations Meet in December 2013, which was well
attended, and made the investor community aware about the recent
achievements and strong financials of HGS. Your Company now has
considerable traction in the Analyst and Investor community.
HGS has developed an Employee Engagement Platform (EEP) - which is an
integrated, internal communication strategy with a focused plan for
communicating the Company''s vision and values, and why they matter to
employees. We use different formats such as e-mailers, newsletters,
reports, internal Points of View (PoVs) and articles to share
thought-provoking content for our employees on a regular basis. The
internal portal Ozone serves as a time-out for employees, offering
various fun elements, and enables them to interact with each other on a
common channel. While the CEO Blog remains popular on the intranet, a
''Leadership Speak'' section has been introduced on the website to enable
our leaders to share their ideas with external audiences. ''Leadership
Speak'' has emerged as one of the most popular sections on the website.
Social media continues to grow and be an important channel of
communication. HGS is utilizing all the popular social media platforms
to inform and engage the public and its own employees.
Your Company is now truly global with presence in 11 countries. To
beneft from the economies of scale in its sales efforts, a ''Global
Growth Portal'' has been launched, which is a globally accessible
archive of all collaterals, case studies, competitive insights,
proposals, sales training material and any client or internal
sales/growth supporting material.
During the year under review, HGS won many awards and featured in top
rankings of the NASSCOM Top BPO Companies survey, Dataquest Top BPO
Companies and Global 100 Survey. The Preston center of HGS UK was named
as ''Best Mid-sized Contact Centre'' at the 2014 Contact Centre World
Awards Global finals. This center has also been recognized as the best
contact center by a Telecommunications client, which is one of the
biggest telecom service providers in the UK. HGS UK was also the
highest placed outsourcer in the Top 50 Companies for Customer Service,
a prestigious benchmarking program undertaken by the International
Customer Management Institute in UK. Our contact center operation run
for a FMCG giant was ranked 11th in the Top 50 Companies'' list, making
it the highest ranked newcomer in the list. HGS also won awards for
excellence in internal communications by Corporate Affairs and Forum
Awards and Fun at Work award at the Asia BPO Summit, BPO Excellence
Awards.
HGS will continue to focus on increasing public interest in, and
visibility of, its achievements. In FY ''15, your Company will pay
special attention to digital media and analyst relations. Many of this
year''s accomplishments and highlights arose from the work that was
initiated in previous years. Communication is a continuum and HGS is
confident about leveraging the gains in the past to gain even more in
the future.
Awards & Recognition
Your Company was conferred with awards and recognitions during this
year, such as:
HGS named runner-up in the ''Best Outsourced Provider'' category at the
14th Annual Call Center Week
HGS'' Preston center in the UK named as Best Mid- sized Contact Centre
at the 2014 Contact Centre World Awards Global fnals
HGS was recognized in the Internal Communications category by the
Corporate Affairs and Forum Awards in 2014
Won the ''Fun at Work award at the 2014 Asia BPO Summit - BPO Excellence
Awards
HGS ranked in the Top 50 companies for Customer Service, a prestigious
benchmarking program undertaken by the International Customer
Management Institute, UK in 2014
Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
Certification
The Chief Executive Officer and Chief Financial Officer Certification as
required under Clause 49 of the Listing Agreements and Chief Executive
Officer declaration about the Code of Conduct are furnished as Annexure
''A and ''A-1'' to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The prescribed particulars as required under Section 217 (1)(e) of the
Companies Act, 1956 relating to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo are furnished as
Annexure ''B'' to this Report.
Corporate Governance
As required under Clause 49 of the Listing Agreements, a detailed
report on Corporate Governance forms Annexure ''C to this Report.
The Statutory Auditors of the Company have examined the Company''s
compliance and have certified the same as required under the Listing
Agreements. The certificate is reproduced as Annexure ''D'' to this
Report.
Management Discussion and Analysis Report
Further, a separate Management Discussion and Analysis Report covering
a wide range of issues relating to industry trends, company
performance, SWOT analysis, corporate process, business outlook among
others is annexed as Annexure ''E'' to this Report.
ESOP Disclosure
The disclosures required to be made under the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are given in Annexures ''F1'' and ''F2''
to this Report.
Fixed Deposits
Your Company has not accepted any fixed deposits from the public and,
as such, no amount of principal or interest was outstanding as on the
Balance Sheet date.
Directors
Ms. Shanu S.P Hinduja, who was appointed as a Director in the casual
vacancy caused by the resignation of Mr. Dheeraj G. Hinduja and
designated as Co-Chairperson of the Company with effect from March 4,
2013, will be appointed as a Director on the Board of the Company at
the ensuing Annual General Meeting (AGM) proposed to be held on July 3,
2014.
Ms. Vinoo S. Hinduja, Director of your Company is liable to retire by
rotation at the ensuing Annual General Meeting (AGM) and being
eligible, offers herself for re-appointment.
Appointment of Mr. Anil Harish, Mr. Rajendra P. Chitale and Mr. Rangan
Mohan as Independent Directors pursuant to Sections 149 and 152 of the
Companies Act, 2013 are proposed to be made at the forthcoming Annual
General Meeting for a term of consecutive five years. Pursuant to
Sections 149 and 152 of the Companies Act, 2013 Independent Directors
will not be liable to retire by rotation.
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the information and documents made available to
them, confirm that:
i) in the preparation of Annual Accounts for the year ended March 31,
2014, the applicable accounting standards have been followed. There are
no material departures in the adoption and application of the
accounting standards;
ii) they have selected such accounting policies and applied them
consistently, and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profit of your
Company for that period;
iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities; and
iv) they have prepared the Annual Accounts on a going concern basis.
Auditors
M/s. Price Waterhouse, Chartered Accountants, the Statutory Auditors of
your Company, retire at the conclusion of the forthcoming Annual
General Meeting of your Company and being eligible, offer themselves
for re- appointment. The Board recommends the re-appointment of the
Auditors.
Exemption from attaching Accounts and other Documents of Subsidiaries
The Ministry of Corporate Affairs (MCA) vide Circular dated February 8,
2011 has granted exemption under Section 212(8) of the Companies Act,
1956 from annexing Balance Sheet and other documents of subsidiaries
with the Annual Report of the holding company provided certain
conditions are fulfilled. The Board of Directors of your Company at its
meeting held on February 11, 2014 (in view of fulfillment of all
conditions prescribed by the Ministry of Corporate Affairs under
Circular No. 5 / 12 /2007 - CL - III dated February 8, 2011) resolved
for not attaching the Balance Sheet and other documents of the
subsidiaries, with the Balance Sheet of the holding Company, i.e.
Hinduja Global Solutions Limited, for FY ''14.
Accordingly, the Annual accounts and other documents for the year ended
March 31, 2014 of the subsidiary companies are not attached to the
Annual Report. The accounts of the subsidiaries will be made available
for inspection by any member of the Company at its Registered Office
and also at the Registered Office of the concerned subsidiary. The
accounts of the subsidiary companies and detailed information will be
made available to the members upon receipt of request from them. The
summary of key financials of the Company''s subsidiaries, as provided in
the circular dated February 8, 2011 is included in this Annual report.
The accounts of individual subsidiary companies would be available on
Company''s website www.teamhgs.com.
Employees'' Particulars
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended, form part of this Directors'' Report. However,
in accordance with the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, this Report is being sent to all the shareholders
of the Company excluding the aforesaid information. Members interested
in obtaining the said information may write to the Company Secretary at
the Registered Office of the Company.
Complaints
1. The Whistle Blower Policy: No complaints were received during the
FY ''14.
2. The Sexual Harassment of women at work place (Prevention,
Prohibition and Redressal) Act, 2013:
A. Number of complaints received during the year: 2
B. Number of cases disposed of during the year: 2
C. Number of cases pending as on March 31, 2014 for more than 90 days:
Nil
Acknowledgements
Your Board takes this opportunity to thank the customers, vendors,
business partners, shareholders and bankers for the faith reposed in
the Company, and also thank the Government of India, various regulatory
authorities and agencies, State Governments, Governments of various
countries for their support, and looks forward to their continued
encouragement. Your Directors place on record their sincere
appreciation of the contribution of the Company''s most important asset,
viz. the employees, who through their competence, hard work and
co-operation have enabled the Company to achieve consistent growth.
For and on behalf of the Board of Directors
Place : Mumbai Ramkrishan P. Hinduja
Date : May 21, 2014 Chairman
Mar 31, 2013
To The Members,
The Directors are pleased to present their Report on the business and
operations of your Company for the financial year ended March 31, 2013.
Financial Results
(Rs. in million except share data)
For the year ended March 31 Standalone Consolidated
2013 2012 2013 2012
Operating Income 7,034.1 6,313.5 19,834.3 15,543.1
Other Income 175.0 141.7 332.8 288.2
Total Income 7,209.1 6,455.2 20,167.1 15,831.3
Operating Expenses 5,874.8 5,261.5 17,650.0 13,702.0
Depreciation and Amortization 386.0 361.4 772.5 612.9
Financial Expenses 173.1 110.2 436.6 292.3
Profit Before Tax 775.2 722.1 1,308.0 1,224.1
Provision for tax (incl.
deferred tax) 235.1 95.9 402.3 163.4
Profit After Tax 540.1 626.2 905.7 1,060.7
Add: Balance brought
forward from Previous year 1,196.0 1,109.5 2,989.7 2,476.7
Profit Available for
Appropriation 1,736.1 1,735.7 3,895.4 3,537.4
Dividend
- Final (Proposed) 411.8 411.8 411.8 411.8
- Dividend Tax 68.4 65.3 70.0 66.8
Transferred to General Reserve 54.0 62.6 75.2 69.1
Balance Carried Forward 1,201.9 1,196.0 3,338.4 2,989.7
Earnings per share (Rs.)
- Basic 26.23 30.41 43.99 51.52
- Diluted 26.23 30.41 43.99 51.52
Review of Financials
On a Consolidated basis (covering global operations in India, USA,
Canada, Europe, Philippines, Jamaica and Mauritius), Operating Income
for FY''13 was Rs. 19,834 million higher by 27.6% compared to the
Operating Income of Rs. 15,543 million in FY''12. EBITDA (Earnings
before Interest, Taxes, Depreciation & Amortization) was Rs. 2,237
million and it grew by 22% over the EBITDA of Rs. 1,841 million in
FY''12.
On a Standalone basis (for India and overseas branch offices),
Operating Income was Rs. 7,034 million in FY''13, an increase of 11.4%
over the Operating Income of Rs. 6,314 million in FY''12. EBITDA
increased by 15.2% from Rs. 1,052 million in FY''12 to Rs. 1,212
million in FY''13. PAT fell by 13.7% from Rs. 626 million in FY''12
to Rs. 540 million in FY''13.
Key highlights for the year were:
- Growth of consolidated revenues by 27.6%;
- Acquisition of healthcare revenue cycle management business by HGS
Inc. from Deloitte;
- Opening of five new centers at - Belleville (Canada), Preston (UK),
Jamaica, Hyderabad (SEZ) and Bangalore; Total number of centers now
stand at 55;
- Employee headcount at 23,100 (Previous Year-end 23,899);
- Addition of 50 new customers during the year including addition of
11 customers from the acquisition of healthcare revenue cycle
management business in the US. As of March 31, 2013, your Company has
535 active customers;
- As of March 31, 2013, your Company had a Net Worth of Rs. 12,355
million translating into a Book Value of Rs. 600.07 per share.
Dividend
Your Directors are pleased to recommend final dividend of Rs. 20 per
equity share (200% on face value of Rs. 10/- each) for the year ended
March 31, 2013. The total dividend for the financial year will absorb
Rs. 481.8 million including dividend distribution tax of Rs. 70.0
million.
Business Review
Global ITES Industry Overview
In the context of volatile economic environment, the ITES sector has
registered a steady growth rate of 4.8% compared to the previous year.
Global IT spend was estimated to be $1.9 trillion in 2012, of which
software products, IT and Business Process Management (BPM) services
accounted for $1.1 trillion. The global outsourcing market was
estimated to grow at 9% to reach $130 billion. The ongoing uncertainty
in demand impacted the overall volumes which declined by around 13%.
The ongoing corporate IT spending budget constraints continued to put
pressure on the IT/BPO industry margins. This has led to outsourcing
service providers offer solutions that can leverage technology-enabled
platforms and effective delivery models. The BPO industry today is
focused on delivering innovative business models that offer specialized
delivery services to their customers. These new solutions are designed
to provide customized solutions and facilitate transformation. Access
to specialized services, ability to concentrate on their core
businesses, decreased time-to-market and increased customer centricity
are some of the key drivers.
Increasing use of the mobile technologies is expected to result in
significant growth in the pace of adoption of high-end mobile devices
and mobile applications in the coming years. Delivery of complex
services from India along with emerging technologies such as social
media, analytics, cloud technology and platform-based solutions will
offer new opportunities to the outsourcing service providers in the
near future.
Indian ITES Industry Overview
The Indian IT services and BPO sectors are an integral part of the
global sourcing strategy. These sectors have made increasing
contributions to the domestic economy over the years. During FY''13,
the IT industry in India is estimated to have generated revenues of
$108 billion, with the IT software and services sector accounting for
$95 billion of revenues. Export revenues are estimated to be at $76
billion in FY''13, up 10.2% compared to the previous year and have
contributed 80% to the total IT-BPO revenues (Source: NASSCOM).
NASSCOM indicated that FY''14 total revenues from India (domestic and
exports) are expected to grow by 13-15% to reach $106-111 billion and
out of this, exports are likely to be in the range of $84-87 billion,
indicating a growth of 12-14%.
Despite India being the global outsourcing leader, it accounts for only
10% of the global IT-BPM spend. This reflects significant untapped
opportunities for Indian IT-BPM firms. They are well positioned to take
advantage of these trends by developing new capabilities, servicing the
entire IT services value chain and expanding their focus to new
geographies and industry verticals.
Performance of Hinduja Global Solutions Ltd.
During FY ''13, revenues of your Company grew by around 27.6%. Of the
total growth, around 10.5% was due to the revenue cycle management
business acquisition made during the year and full benefits of the
Canada and payroll processing businesses acquired in August 2011. The
balance of the growth was due to organic growth and variation in the
exchange rate.
Nearly 31% of your Company''s revenues are from the telecom sector. In
the first half of FY ''13, telecom volumes across all geographies
remained subdued. This coupled with costs associated with opening of
new centers at Belleville (Canada), and Preston (UK), adversely
affected the financial performance of the Company during the first two
quarters. Telecom volumes in Canada rebounded strongly in the second
half of FY ''13. This along with costs better matched with revenues
led to a strong improvement in the financial performance of your
Company in the second half of the year.
For a larger part of the year, the financial performance of your
Company was also adversely affected by the excess capacity built in the
Philippines. By the end of the year, volumes improved significantly
which contributed to the improvement in the financial performance of
your Company.
During the year, your Company performed a stringent review of its
various accounts and has initiated necessary measures to improve the
overall profitability of the Company.
Depreciation and amortization expenses for the year were higher on
account of the new delivery centers opened during the year, impact of
exchange rate and full year impact of the acquisition.
Interest costs were higher on account of full year impact of loans
taken for the HGS Canada acquisition and growth in working capital
requirements in line with growth in the business.
Tax was higher on account of end of tax holiday period for some of the
units in the Philippines and absence of the tax reversals recorded in
FY''12. Overall profitability was impacted by certain one-time costs
related to the revenue cycle management business acquisition and
exceptional costs on account of a settlement of a dispute with a bank.
Key Subsidiaries
HGS International, a wholly owned subsidiary of your Company,
incorporated under the laws of Mauritius, is primarily engaged in
investment business. HGS International owns 100% of the share capital
of Hinduja Global Solutions Inc., USA, C-Cubed N.V., Curacao, Hinduja
Global Solutions Europe Ltd., UK and HGS St. Lucia Ltd., Saint Lucia.
During the year under review, Total Income of HGS International was US$
5.5 million as compared to US$ 5.6 million in the previous year.
Hinduja Global Solutions Inc., USA (HGS Inc.), a wholly owned
subsidiary of HGS International, Mauritius, specializes in marketing
and provision of both voice and non-voice related Customer Contact and
Business Process Outsourcing services to its clientele. Its key
subsidiaries are HGS (USA), LLC and HGS Canada Inc., Canada. During the
year HGS EBOS, LLC was setup to acquire the healthcare revenue cycle
management business from Deloitte.
For FY''13, HGS Inc. reported consolidated revenues of US$ 270.5
million as compared to US$ 230.7 million in FY''12.
HGS (USA), LLC, which was acquired in November 2006 by HGS Inc., USA,
operates in five cities in USA and Canada. It partners with Fortune
1000 companies and Government agencies to provide comprehensive
Customer Relationship Management programs. For FY''13, HGS (USA), LLC
recorded total revenues of US$ 191.7 million. HGS (USA) LLC and its US
subsidiaries have over 2,000 employees who are engaged in customer
services, fulfillment services, sales, marketing and account
management.
HGS Canada Inc., which was acquired in August 2011 by HGS Inc., USA is
a leading Canadian contact center service provider servicing marquee
customers across verticals such as media, telecom, technology and BFS.
HGS Canada offers technical support, inbound and outbound sales,
customer care and customer retention in English and French languages
and has a team size of over 2,200 associates at 10 centers in Canada.
For FY''13, HGS Canada recorded total revenues of CAD 72.8 million as
compared CAD 48.6 million in FY''12.
Hinduja Global Solutions Europe Ltd. is the UK based subsidiary
focusing on consulting services for BPO and call center services and
markets offshoring services to UK based clients. It owns 100% stake in
Hinduja Global Solutions UK Ltd. During FY''13, it acquired 100% stake
in HGS France making it a wholly owned subsidiary. It also has a
subsidiary in Italy called HGS Italy, SARL.
Hinduja Global Solutions UK Ltd. is a leading contact center company
with over 850 employees in London, Preston and Selkirk (Scotland).
Established in 1977, it offers a range of services for inbound and
outbound interactions to over 20 marquee customers across verticals
such as Government, FMCG, Financial Services, Automobiles and Retail.
It has branches in Rotterdam (Netherlands) and Hamburg (Germany). For
FY''13, Hinduja Global Solutions UKLtd. reported revenues of GBP 26.8
million as compared to GBP 25.0 million in FY ''12. During the year,
it was selected as one of the four service providers for the UK
Government''s outsourcing contracts.
HGS St. Lucia Ltd., Saint Lucia is the holding company of Team HGS
Ltd., Jamaica.
Team HGS Ltd., Jamaica in FY''13, has opened a call center at
Kingston, Jamaica. The center is currently servicing a Jamaican client.
Jamaica has been eliciting strong interest as a near-shore destination
among North American clients.
HGS International Services Pvt. Ltd. (HGSISPL)
HGSISPL has set up two Special Economic Zone (SEZ) units at i) Global
Village, Bangalore; and ii) DLF Towers, Hyderabad. While the Global
Village SEZ has completed two years of operations, the Hyderabad SEZ
commenced operations in the last quarter of FY''13. HGSISPL has also
received approvals for setting up its third SEZ at Pritech Park,
Bangalore which is in the process of being built up and is expected to
be completed in the first half of FY''14. In FY''13, it recorded
revenues of r 673.6 million as compared to r 284.7 million in FY''12.
HGS Business Services Pvt. Ltd., which was acquired in August 2011, is
a prominent player in Human Resource Outsourcing (HRO) domain. This
acquisition also included a Payroll Processing activity in the Middle
East. HGS Business Services offers payroll, statutory compliance and
employee life cycle support to marquee customers in Banking, Financial
Services, Insurance and other industry verticals. In FY''13, it
recorded revenues of r 388.9 million as compared to r 227.2 million in
FY''12.
HGS International Services Private Limited and HGS Business Services
Private Limited have filed a Scheme of Amalgamation of HGS Business
Services Private Limited into HGS International Services Private
Limited with Hon''ble High Court of Judicature at Bombay on March 29,
2013.
Addressing Social Concerns
Your Company continues to be committed to community welfare initiatives
and engages with the local community where HGS has work locations.
HGS employees participated in the Bangalore 10K Open as well as the
Majja Run and the proceeds from this event were donated to Concern
India Foundation - an NGO which supports the primary education of less
privileged children, specifically children of migrant workers.
In addition, HGS is engaged with Magic Bus Foundation which supports
the education of children and enables them develop skills in order to
support themselves reducing their dependence on others. The Foundation
has programmes running across the country and your Company supported a
programme which trains their project leaders to manage their programmes
in their local regions.
HGS also continues to support orphanages, old age homes and the cause
of less privileged children through its offices at different locations
including Durgapur and Siliguri in the East, Bangalore, Mysore and
Guntur in the South.
HGS is also engaged with various NGOs for the collection of donations
and subscriptions on their behalf.
In the Philippines, your Company has partnered with Dr. Jose Fabella
Memorial Hospital and Quirino Memorial Medical Center for charitable
purposes. Besides, the Philippines branch on a regular basis supports
the children and public during the period of national disasters.
In the US, your Company supports two national charities each year and
it supported St. Jude Children''s Research Hospital and the American
Cancer Society in the past year. The Peoria center supported the
Children''s Hospital of Illinois and the Peoria Humane Society. The
Waterloo center supports the Cedar Bend Humane Society and Cedar Valley
Hospice. Your Montreal center takes great pride in raising funds for
the Cure Foundation.
On the whole, your Company actively meets its duties towards all
stakeholders through a positive and a very active Corporate Social
Responsibility programme.
Marketing / Communication and Public Relations
HGS continued to employ all the communications and marketing tools to
constructively engage with all its stakeholders. FY''13 marked the
completion of brand alignment of all its units. The year was especially
fruitful in terms of generating brand awareness internally and
externally using all possible media channels, including social media.
Brand transition activities were successfully carried out in HGS UK,
HGS Canada and HGS Business Services India. Your Company hopes to reap
benefits of brand integration, which will enable it to put together
cross-geography teams to carry out complex global projects in quick
time. ''One HGS'' - the umbrella program for carrying out brand
integration has now become bigger and better. ''One HGS'' has two
equally important objectives - Standardize the look and feel of all
entities and substantially increase the brand awareness of your Company
among the general public. It has used the print as well as the digital
and electronic media to good effect in raising the brand awareness
globally. Your Company received considerable media interest during the
past year, and all its events and awards were covered by leading media
houses. It got positive mentions in all media channels and its press
releases were syndicated in good numbers.
HGS paid special attention to the social media, creating platforms for
continuous outreach to the wider community on Facebook, LinkedIn,
twitter and YouTube. The response has been encouraging. These platforms
will be used for branding and recruitment activities. Your Company
believes in pro-actively sharing information with all stakeholders and
tapping the boundless opportunities to listen, understand and engage
with its audiences.
All the Global Delivery Centers are now connected to the rest of the
centers through the new intranet - Ozone. Ozone has developed into a
powerful tool to engage the employees and facilitate two-way
communication between the management and the employees. Through many
creatively conceived online events and competitions, Ozone has helped
augment the awareness level of all employees regarding the business and
the brand of your Company. In the coming year, Ozone will become richer
in terms of features and build on the good work done in the past year.
This new avatar of the intranet will soon become your Company''s
internal wiki.
The CEO of your Company continued to communicate directly with the
employees through his blog and Town Hall Meetings. The Town Hall
Meetings now cover all the locations and get active participation from
thousands of employees. ''Global Voice'', the flagship internal
digital quarterly newsletter, keeps employees informed on the latest
happenings in your Company.
Continuing the trend of the previous years, HGS was recognized for its
excellence during FY''13 too. It featured in the NASSCOM list of Top
10 BPO exporters in India and among the Top 10 in Dataquest India''s
list of Top BPO Companies. HGS featured among the Top 50 Business
Process Management Service Providers in the annual International
Association of Outsourcing Professionals'' (IAOP) Global Outsourcing
100 List of 2012. It jumped 28 ranks within a span of just one year,
reaffirming the belief of the stakeholders that your Company is making
the right moves towards the top of the field.
Your Company''s financial results, and updates on important
developments and achievements are available on its website
www.teamhgs.com.
Awards & Recognition
Your Company was conferred with awards and recognitions during the
year, such as:
- HGS Canada Inc. was recognized as top 3rd party vendor by a
Canadian telecom client across all its outsourced lines of business;
and
- Charlottetown, Canada center earned recognition as the #1 site for
warranty product sales across North America by a technology client in
FY''13.
Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
Certification
The Chief Executive Officer and Chief Financial Officer Certification
as required under Clause 49 of the Listing Agreements and Chief
Executive Officer declaration about the Code of Conduct are furnished
as Annexure ''A'' and ''A-1'' to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The prescribed particulars as required under Section 217 (1)(e) of the
Companies Act, 1956 relating to Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo are furnished as
Annexure ''B'' to this Report.
Corporate Governance
As required under Clause 49 of the Listing Agreements, a detailed
report on Corporate Governance forms Annexure ''C'' to this Report.
The Statutory Auditors of the Company have examined the Company''s
compliance and have certified the same as required under the Listing
Agreements. The certificate is reproduced as Annexure ''D'' to this
Report.
Management Discussion and Analysis Report
Further, a separate Management Discussion and Analysis Report covering
a wide range of issues relating to industry trends, company
performance, SWOT analysis, corporate process, business outlook among
others is annexed as Annexure ''E'' to this Report.
ESOP Disclosure
The disclosures required to be made under the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are given in Annexures ''F1'' and
''F2'' to this Report.
Fixed Deposits
Your Company has not accepted any fixed deposits from the public and,
as such, no amount of principal or interest was outstanding as on the
Balance Sheet date.
Directors
Ms. Shanu S.P. Hinduja has been appointed as Director and designated as
Co-Chairperson of the Company w.e.f. March 4, 2013, in the casual
vacancy caused by resignation of Mr. Dheeraj G. Hinduja. The Board
place on record their appreciation of the invaluable contribution
provided by Mr. Dheeraj G. Hinduja during his tenure as a Director.
Mr. Rangan Mohan and Mr. Anil Harish, Directors of your Company, are
liable to retire by rotation at the ensuing Annual General Meeting
(AGM) and being eligible, offer themselves for re-appointment.
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors,
based on the information and documents made available to them, confirm
that:
i) in the preparation of Annual Accounts for the year ending March 31,
2013, the applicable accounting standards have been followed. There are
no material departures in the adoption and application of the
accounting standards;
ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profits of
your Company for that period;
iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities; and
iv) they have prepared the Annual Accounts on a going concern basis.
Auditors
M/s. Price Waterhouse, Chartered Accountants, the Statutory Auditors of
your Company, retire at the conclusion of the forthcoming Annual
General Meeting of your Company and being eligible, offer themselves
for re-appointment. The Board recommends the re-appointment of the
Auditors.
Exemption from attaching Accounts and other Documents of Subsidiaries
The Ministry of Corporate Affairs (MCA) vide Circular dated February 8,
2011 has granted exemption under Section 212(8) of the Companies Act,
1956 from annexing Balance Sheet and other documents of subsidiaries
with the Annual Report of the holding company provided certain
conditions are fulfilled. The Board of Directors of your Company at its
meeting held on May 28, 2013 (in view of fulfilment of all conditions
prescribed by the Ministry of Corporate Affairs under Circular No. 5 /
12 /2007 - CL - III dated February 8, 2011) resolved for not attaching
the Balance Sheet and other documents of the subsidiaries, with the
Balance Sheet of the holding Company, i.e. Hinduja Global Solutions
Limited, for FY''13.
Accordingly, the Annual accounts and other documents for the year ended
March 31, 2013 of the subsidiary companies are not attached to the
Annual Report. The accounts of the subsidiaries will be made available
for inspection by any member of the Company at its Registered Office
and also at the Registered Office of the concerned subsidiary. The
accounts of the subsidiary companies and detailed information will be
made available to the members upon receipt of request from them. The
summary of key financials of the Company''s subsidiaries, as provided
in the circular dated 8th February, 2011 is included in this Annual
report. The accounts of individual subsidiary companies would be
available on Company''s website www.teamhgs.com.
Employees'' Particulars
Particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended, form part of this Directors'' Report. However,
in accordance with the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, this Report is being sent to all the shareholders
of the Company excluding the aforesaid information. Members interested
in obtaining the said information may write to the Company Secretary at
the Registered Office of the Company.
Acknowledgements
Your Board takes this opportunity to thank the customers, vendors,
business partners, shareholders and bankers for the faith reposed in
the Company and also thank the Government of India, various regulatory
authorities and agencies, State Governments, Government of various
countries for their support and looks forward to their continued
encouragement. Your Directors place on record their sincere
appreciation of the contribution of the Company''s most important
asset, viz. the employees, who through their competence, hard work and
co-operation have enabled the Company to achieve consistent growth.
For and on behalf of the Board of Directors
Place : Mumbai Ramkrishan P. Hinduja
Date : May 28, 2013 Chairman
Mar 31, 2012
The Directors are pleased to present their Report on the business and
operations of your Company for the financial year ended March 31, 2012.
Financial Results
(R in Crore except share data)
For the year ended March 31 Standalone Consolidated
2012 2011 2012 2011
Operating Income 631.35 544.71 1,554.31 1,073.07
Other Income 14.17 8.20 28.82 29.12
Total Income 645.52 552.91 1,583.13 1,102.19
Operating Expenses 526.15 420.48 1,370.20 917.53
Depreciation and
Amortisation 36.14 38.04 61.29 45.22
Financial Expenses 11.02 5.96 29.23 9.32
Profit Before Tax 72.21 88.43 122.41 130.12
Provision for tax
(incl. deferred tax) 9.59 13.24 16.34 22.80
Profit After Tax 62.62 75.19 106.07 107.32
Add: Balance brought
forward from Previous year 110.96 90.98 247.67 195.56
Profit Available for
Appropriation 173.58 166.17 353.74 302.88
Dividend
- Final (Proposed) 41.18 41.18 41.18 41.18
- Dividend Tax 6.53 6.52 6.68 6.52
Transferred to General Reserve 6.26 7.51 6.91 7.51
Balance Carried Forward 119.61 110.96 298.97 247.67
Earnings per share (R)
- Basic 30.41 36.52 51.52 52.12
- Diluted 30.41 36.50 51.52 52.09
Review of Financials
On a Consolidated basis (covering global operations in India, USA,
Canada, Europe, Philippines and Mauritius), Total Income for FY '12 was
R 1,583.13 crore, higher by 43.6% compared to the Total Income of R
1,102.19 crore in FY '11. EBITDA (Earnings before Interest, Taxes,
Depreciation & Amortization) was R 184.11 crore and it grew by 18.4%
over the EBITDA of R 155.53 crore in FY '11.
On a Standalone basis (for India and overseas branch offices), Total
Income was R 645.52 crore in FY '12, an increase of 16.7% over the
Total Income of R 552.91 crore in FY '11. EBITDA fell by 15.3% from R
124.23 crore in FY '11 to R 105.20 crore in FY '12. PAT fell by 16.7%
from R 75.19 crore in FY '11 to R 62.62 crore in FY '12.
Key highlights for the year were:
- Growth of 45% in consolidated revenues;
- Acquisition of Canada based On-Line Support Inc. ("OLS, Inc"),
which services marquee customers across verticals such as media,
telecom, technology and BFS from 10 centres in Canada;
- Acquisition of Mumbai-based HGS Business Services Pvt. Ltd. ("HGS
Business Services"), (formerly known as HCCA Business Services Pvt.
Ltd.), which is a prominent player in the Human Resource Outsourcing
(HRO) domain;
- Operations started in Netherlands, Germany, Italy and France;
- Fourth delivery centre in Philippines commissioned in Manila;
- Achieved Level 4 certification of eSCM SP V 2.01 from UL-DQS;
- Employee headcount at 23,899 (Previous Year-end 19,442);
- Addition of 401 new customers during the year including the
addition of 5 customers from OLS, Inc., 357 customers from HGS Business
Services and 39 customers on an organic basis. As of March 31, 2012,
your Company has 485 active customers.
- Addition of 18 centres during the year including the addition of 10
centres from OLS, Inc., 4 centres from HGS Business Services and 4
centres on an organic basis. As of March 31, 2012, your Company has 50
centres across its global operations.
- As of March 31, 2012, your Company had a Net Worth of R 1,148.26
crore translating into a Book Value of R 557.70 per share.
Dividend
Your Directors have recommended a dividend of R 20/- per share (200% on
the face value of R10/-) for the current year.
The dividend payout will absorb R 47.71 crore, including dividend tax.
The dividend payout ratio for the year
(including dividend distribution tax) will be 76.2% of the standalone
profits and 45% of the consolidated profits.
Business Review
Global ITES Industry Overview
While FY '12 has clearly been a challenging year, some geographic
regions and businesses were able to circumvent the trend. Global GDP
grew 2.7% on the whole in the calendar year 2011 which indicates that
the contraction in certain developed economies was compensated by
expansion in others as well as continued growth in emerging markets.
With the financial crisis continually affecting two of the biggest
outsourcing client markets - US & Europe, there is a concern that the
growth of the industry will be affected. In general, economic
conditions such as these represent opportunities to increase services
outsourcing contracts to better implement cost-cutting initiatives.
However, the misplaced concern that outsourcing takes away crucial jobs
from the domestic population continues to be a point of contention,
especially on the sociopolitical front.
There is a visible shift towards localisation with these countries
encouraging service providers to set up delivery centres within their
jurisdictions thereby opening themselves to both investment from global
service providers and local employment. However, it is believed that
outsourcing activity will continue to increase but contract size may
diminish given budget cuts.
According to the Everest Group, the global business process outsourcing
(BPO) industry could be worth $220-$280 billion this year, with growth
in both voice- based and non-voice based services. There is a clear
preference towards more complex skills and services with a greater
proportion of research and analytics based operations.
Some of the key trends emerging in 2012
1. Changing Delivery Models:
With reduced budgets and increased cost consciousness, enterprises are
demanding more from their service providers. There is a noticeable
shift away from cost and labour arbitrage towards high value
transformational programs. Service providers and clients alike are
focused on further efficiencies in the delivery of services, with a
greater impetus on process innovation. There is an increasing
prevalence of Business Process as a Service (BPaaS) models. Only those
vendors that remain relevant through delivery evolution and manage to
differentiate their offerings will continue to see growth.
2. Focus on Verticalisation:
An emerging trend is the growth of vertical-specific BPO processes or
Vertical BPO, characterized by the delivery of an array of processes
rooted on a deep understanding of a specific vertical industry. There
has been a rise in the demand for domain-specific processes, especially
across the BFS sector. It is imperative for service providers to
understand how industry verticals and customer segments adjust to the
changing technology landscape. Service Providers need to devise
specific strategies, develop products and mobilise people to meet the
evolving needs of various verticals.
3. Evolving Mediums for market engagement:
Disruptive technologies especially social media, mobility, big
data/analytics and cloud computing are impacting service providers
themselves who are applying these technologies to their internal
operations - from IT to Human Resources to Finance, and dramatically
changing how they do business, in addition to developing solutions
around the same for their customers. It is expected that service
providers will re-invent the use of social media as a pragmatic,
interactive link to the end-users and a significant value add to
service buyers.
4. Increasing importance of Risk:
While risk has always been one of components considered by customers in
vendor selection, it has often been overshadowed by more primary
concerns such as costs and availability of skilled labor. Global
Service Provider offerings have always incorporated comprehensive
solutions addressing risk management, data security, business
continuity and disaster management. However, recent events like natural
disasters in Indonesia, floods in Bangkok have dimmed the
attractiveness of emerging delivery destinations. Customers now assess
the political, social, and natural risk of a location and how they
influence business operations.
5. Greater focus on the midmarket opportunity:
The midmarket segment has been traditionally underserved for a variety
of reasons, including lack of knowledge of outsourcing, unattractive
deal sizes for the premium vendors, inability of traditional delivery
models to customize offerings and a lower degree of competitiveness and
industry maturity. The increasing propensity of pay-as-you- use models
and the rising outsourcing maturity of midmarket companies are
catalyzing the opportunity in addressing this segment. Vendors are
increasingly looking beyond Fortune lists.
Indian ITES Industry Overview
It has been a landmark year for the Indian IT and ITES industry which
is rapidly approaching the landmark of US$ 100 billion in aggregate
revenues (Source: Nasscom Strategic Review 2012). While growth rates in
the primary geographic regions and services lines are moderating as the
industry matures, several new avenues have emerged. These include a
budding domestic market, hitherto underserved geographies and emerging
service lines.
Within the overall pie, it is estimated that export revenues from ITES
alone will touch US$ 16 billion in FY '12 growing 12% over FY '11
(Source: Nasscom Strategic Review 2012). While the USA remains the
largest market by value for Indian ITES providers, markets such as
Europe, Japan and Australia are gaining ground as lucrative markets
with abundant scope for both traditional service lines as well as
emerging areas. The APAC region also exhibited fairly healthy growth as
customers in that region aim to compete on a more even scale in the
global market.
The Indian domestic market provides an exciting opportunity for ITES
providers to tap. It is estimated that the domestic IT/ITES market will
touch R 918 billion in FY '12. Of this, the BPO Services market alone
is expected to be R 149 billion representing growth of 17% over FY '11
(Source: Nasscom Strategic Review 2012). This provides an attractive
market with adequate critical mass and scale for leading global
vendors. Growth is being driven by demand from voice-based (incl. local
language) services and increasing adoption by both traditional and
emerging verticals, including the government.
India will continue to remain a leading provider of services due to:
- Increasing maturity of service offerings: The
profile of the industry and service providers has undergone a
significant evolution from delivering basic labour and cost arbitrage
to providing a high value proposition. The track record, skill sets,
market understanding, innovation focus and domain expertise of Indian
service providers remain unmatched.
- Sustained focus on cost efficiency: The lessons of the 2008
financial crisis have resounded well and customers continue to remain
focussed on costs. India emerged as and remains a cost-competitive
provider of IT-BPO services. The ability to leverage innovation to
further enhance cost efficiencies through process and productivity
improvements, effective cost management, widening of the employee
pyramid, innovative delivery models and a shift to Tier II/III cities
has ensured that India retains its pre-eminent position in the
Industry.
- Unparalleled human capital: India will churn out an estimated 4.4
million graduates in FY '12 compared to 2.0 million in China and 0.5
million in the Philippines. It retains its position as the largest
source of employable talent in the world. Service providers are
effectively utilising India's talent pool by designing large scale
talent re-engineering initiatives and employee engagement activities.
This is enabling the industry to provide both end-to-end and high-end
value-added services across sectors.
- Increasing geographic presence: While countries such as China,
Philippines, Poland, Brazil, Mexico are clamouring to increase their
relevance in the global sourcing market, Indian service providers are
moving to establish bases in these countries to cater to client
preference for diversified and near-shore delivery models. As the
talent pools in these markets improve their capabilities, they are
being tapped by Indian service providers in greater numbers.
- Unique focus on customer needs: Leading industry players have been
able to deliver continuous value to customers. This unique
customer-centric approach is best demonstrated by re-engineering their
business/ organisational structures, engage in strategic advisory
relationships, focus on delivery innovation and manage high-end complex
engagements.
- Scalable and secure environment: The sheer size of the Indian
market provides a high level of stability in terms of managing
concentricity risk as compared to other sourcing markets. With a
largely unblemished track record, India is able to stand out among
service providers on parameters like value for money, quality, depth
and stability of business and legal systems, propensity of natural
disasters and susceptibility to economic and political shocks to ensure
business continuity.
Performance of Hinduja Global Solutions Ltd.
Your Company delivered exemplary growth and a steady financial
performance in the face of varied operating conditions. Total
Consolidated Operating Revenue for FY '12 was higher by 45% at R
1,554.31 crore. Revenue growth was both organic and inorganic in
nature. Organic growth of 20% was realised by focused delivery, growing
existing client accounts and new account wins. On the inorganic front,
the contribution from OLS, Inc. and HGS Business Services, which were
acquired during the year were instrumental towards achieving robust
growth rates.
There has been significant variability in operating conditions in FY
'12 with a sluggish pace of recovery in USA, intensification of the
Eurozone Debt crisis, political unrest in the Middle East, fallout of
natural disasters in Japan and Indonesia and slowing growth in India
and China. This has led to volatility in foreign exchange rates, a
variety of interest rate regimes in different markets, changing
commodity prices and persistent inflation in high growth markets.
These challenges intensified customer needs for operating efficiencies
and resulted in increased demand for your Company's services. To
further its cause, your Company has also consistently been ranked among
the top vendors on several customer accounts. The innovative right
shore delivery model offering customers the option of an optimal mix of
onshore, near-shore and offshore delivery has also been a factor in
greater customer engagement. Your Company's track record in
implementing successful transformational programs in established
geographies provided customers in recently entered geographies with the
confidence to embark on similar programmes.
This year also saw further growth in key markets. In the US, there has
been growth in onshore healthcare and telecom accounts. In Europe,
Careline has reported new wins in public sector accounts and a
successful pan-European rollout for one of its marquee customers. In
the Philippines, a fourth centre was commissioned and Philippines has
sufficient capacity in the coming year for dealing with growing demand.
The first UK offshore contract with Manila delivery centre went live
during the year. In India, increased volumes from the telecom segment
due to new client wins, tariff hikes and rollout of value added
services like 3G and Mobile Number Portability (MNP) have aided growth.
Initiatives catering to the BFS segment and emerging verticals have
also provided abundant traction.
To add to the impressive organic growth, your Company also successfully
undertook two acquisitions during the year. The first was the
acquisition of a 100% stake in Canada based On-Line Support Inc., which
is a leading customer relationship management company with marquee
clients in verticals such as telecom, technology, BFS and media. OLS,
Inc. has multi-lingual delivery capabilities and has team size of over
2,000 associates at over 10 centres in Canada. OLS, Inc. offers HGS a
gateway into the lucrative and stable Canadian market as also an
alternative near-shore option for the US market. When combined with
its existing US operations, this acquisition makes your Company a
formidable player in the North American market.
The other acquisition during the year was the purchase of a 100% stake
in HGS Business Services Pvt. Ltd. (formerly known as HCCA Business
Services Pvt. Ltd.) This Mumbai based company is a prominent player in
the Human Resource Outsourcing (HRO) domain. The transaction also
included the Payroll Processing activities in UAE and other Gulf
Council countries. This opened up a new horizontal for your Company and
also provided it with a presence in the Middle East, a hitherto
unpenetrated geography. With over 350 clients serviced by over 600
employees, HGS Business Services has been a valuable addition to your
Company's portfolio.
Marking another global footprint, an entity has been set up for onshore
and near-shore business in Jamaica and the first delivery centre is
expected to go live in the first half of FY '13.
This year also saw increased cost pressures due to an increased
employee base, higher sales and marketing investments, setting up of
new centres and cost inflation. However, your Company was able to
mitigate some of these challenges. Further, some of these investments,
especially the set-up costs of centres in Siliguri, Manila, and
acquisition of three properties in Peoria will provide benefits in
coming years. Your Company is well placed to grow with steady progress
in strategic plans, renewal of multi-year contracts, rollouts of
planned initiatives and significant potential to cross sell and up sell
to clients across its operations in multiple countries.
Subsidiaries
HGS International (formerly known as Pacific Horizon Limited), a wholly
owned subsidiary of your Company incorporated under the laws of
Mauritius. The principle activity of the company consists of
investments. HGS International owns 100% of the share capital of
Hinduja Global Solutions Inc., USA, C-Cubed N.V., Curacao, Hinduja
Global Solutions Europe Ltd. (formerly known as HTMT Europe Ltd.), UK
and HGS
St. Lucia Ltd., which was formed during the year and has in turn
incorporated Team HGS Ltd., Jamaica.
During the year under review, Total Income was USD 5,566,011 as against
USD 5,514,868 in the previous year.
Hinduja Global Solutions Inc., USA (HGS, Inc.), a wholly owned
subsidiary of HGS International, Mauritius, specialising in marketing
and providing both voice and non-voice related Customer Contact and
Business Process Outsourcing services to its clientele.
For FY '12, HGS, Inc., reported consolidated revenues of USD
231,012,250. HGS, Inc., added two subsidiaries during the year viz. HGS
Properties LLC (for acquisition of three properties in Peoria,
Illinois) and HGS Canada Holdings LLC (for acquisition of Canada-based
OLS, Inc.), in addition to its earlier two subsidiaries, one being in
North America namely, HGS (USA), LLC and one in Europe namely, Hinduja
TMT France.
HGS (USA), LLC (formerly known as Affina LLC), which was acquired in
November 2006 by HGS, Inc., USA, operates in five cities in USA and
Canada. It partners with Fortune 1000 companies and government agencies
to provide comprehensive Customer Relationship Management programs. For
FY '12, HGS (USA), LLC recorded total revenues of USD 85,758,030
compared to FY '11 revenues of USD 85,139,154.
On-Line Support Inc. (OLS, Inc.) which was acquired in August 2011 by
HGS, Inc., USA is a leading Canadian contact centre provider servicing
marquee customers across verticals such as media, telecom, technology
and BFS. OLS, Inc. offers technical support, inbound and outbound
sales, customer care and customer retention in English and French
languages and has a team size of over 2,000 associates at 10 centres in
Canada. For FY '12, OLS, Inc. recorded total revenues of CAD
48,573,797.
Hinduja Global Solutions Europe Ltd. (formerly known as HTMT Europe
Ltd.) is a UK based subsidiary which focuses on consulting services for
BPO and call centre services and markets off shoring services to UK
based clients. It owns 100% stake in U.K. based Careline Services Ltd.
Careline Services Ltd. is a leading contact centre company with over
800 highly trained employees in London and Scotland. Established in
1977, it offers a range of services for inbound and outbound
interactions to over 20 marquee customers across verticals such as
Government, FMCG, Financial Services, Automobiles and Retail. In FY
'12, Careline, as part of its pan European rollout for a key customer,
established branches in Hamburg (Germany) and Rotterdam (Holland).
Careline, through its affiliates Hinduja TMT France and HGS Italy,
SARL, has also set up centres in Paris (France) and Rome (Italy). For
FY '12, Careline reported revenues of GBP 24,982,311.
Hinduja Outsourcing Solutions India Pvt. Ltd. (HOSIPL) Your Company
holds 100% stake in HOSIPL which has received the necessary permissions
to set up a unit in the Special Economic Zone at Global Village,
Bangalore. The unit is housed over an area of approximately 43,000 sq.
ft. and has a capacity of approximately 1,000 seats. FY '12 was the
first full year of operations for HOSIPL and it recorded revenues of R
28.47 crore.
HGS Business Services Pvt. Ltd. (formerly known as HCCA Business
Services Pvt. Ltd.), which was acquired in August 2011, is a prominent
player in Human Resource Outsourcing (HRO) domain. The acquisition also
included the Payroll Processing activities of 3i Infotech in UAE and
other Gulf Council countries. HGS Business Services offers payroll,
statutory compliance and employee life cycle support to marquee
customers in Banking, Financial Services, Insurance and other industry
verticals. It has over 350 clients and over 600 employees and for the
year ended 31st March, 2012, it reported revenues of R 22.72 crore.
Addressing Social Concerns
In the past year, your Company has proved yet again, that it is firmly
committed to community welfare initiatives. It supported and partnered
with organizations and NGOs, championing various causes and reaching
out to the needy and disadvantaged in the society.
During the year, your Company supported orphanages and Destitute homes
at Mysore, Chennai and Durgapur and organised blood donation camps.
Your Company has also partnered with "Sadhana", an NGO dedicated to
the welfare of persons who are mentally challenged.
Your Company contributed to the "Concern India Foundation", by way
of participating in the World 10k Run. The contributed sum will aid in
supporting the Bridge School run by the foundation to help in
mainstreaming children of the migrant workers who live in the slums on
the outskirts of Bangalore City, who otherwise end up as rag pickers or
indulge in anti social activities.
In Philippines, your Company has partnered with Dr. Jose Fabella
Memorial Hospital and Quirino Memorial Medical Center for charitable
purposes. Besides, the Philippines branch on a regular basis supports
the children and public during the period of national disasters.
In the US, your Company each year supports two national charities and
last year, it supported St. Jude Children's Research Hospital and the
American Cancer Society. The Peoria centre supported the Children's
Hospital of Illinois and the Peoria Humane Society. The Waterloo centre
supports the Cedar Bend Humane Society and Cedar Valley Hospice. Your
Montreal centre takes great pride in raising funds for the Cure
Foundation.
On the whole, your Company actively meets its duties to all
stakeholders through positive and active Corporate Social
Responsibility programme.
Communication and Public Relations
Your Company recognizes that meaningful, transparent, timely and
accurate communication is integral in enhancing brand value and
strengthening stakeholder support. It appreciates the importance of
ensuring an appropriate balance in meeting the diverse needs and
expectations of all its stakeholders and building lasting relationships
with them. Your Company has tried with good success to keep all the
stakeholders well informed. This includes its employees, shareholders,
government, clients, suppliers, rating agencies, local communities and
the media.
During the year, your Company successfully re-branded itself with a new
corporate identity. To launch the new logo and position itself as a
thought leader, your Company associated with Nasscom BPO Summit 2011 as
a 'Knowledge Partner'. With keynote addresses from the leaders of your
Company stimulating significant media and analyst interest, the summit
served as a good branding platform.
Your Company has now adopted a uniform brand identity, with all the
subsidiaries being brought under the umbrella brand of 'HGS'. It has
used the print as well as the digital and electronic media to good
effect in raising the brand awareness globally.
Your Company got positive media coverage on all its announcements
throughout the year. The communication about the two acquisitions by
your Company during the year was well received.
The CEO communicates with the employees directly and regularly through
his blog on the intranet. Town Hall meeting, one every quarter, has
become an effective tool for real-time interaction of the CEO with the
employees across the globe. 'Global Voice', the flagship internal
digital newsletter, keeps all the employees abreast with the most
recent happenings within your Company.
Continuing the trend of the previous year, your Company was recognised
for its excellence during FY '12. It featured in the Nasscom list of
Top 10 BPO exporters in India. It moved five notches up to thirteenth
position in the Dataquest India's list of Top BPO Companies.
Your Company's financial results, and updates on important developments
and achievements are available on its new website www.teamhgs.com
Rebranding and Consolidation of Global Operations
With diverse operations, entities and employees, your Company has
embarked on a project to provide a common global identity to all its
operations across the globe. In FY '11, your Company rebranded its
operations as HGS and introduced a new, reinvigorated logo.
The colour combination of the new logo with a contemporary typography
and the rainbow hues on the 'Energy Rings' symbolise the renewed
strength and vigour of HGS and emphasize your Company's flexibility to
changes as it makes inroads into new continents. The colour gradient
also represents a work environment that is an assimilation of varied
regions, religions, cultures and traditions.
The brand name has higher recall value and retains your Company's
heritage and pride while being versatile, attractive and designed for
an increasingly international audience. It also provides an umbrella
brand to your Company's culturally and geographically diverse global
operations.
During FY '12, your Company has taken further steps to rebrand its
global operations and to consolidate recently acquired entities into
one single identity. Accordingly, the names of various subsidiaries
have been changed to implement the concept of "ONE HGS".
New Name Old Name Effective Date
Hinduja Global HTMT Europe Ltd March 28, 2012
Solutions
Europe Ltd.
HGS (USA), LLC Affina LLC March 29, 2012
HGS International, Pacific Horizon
Limited, April 16, 2012
Mauritius Mauritius
HGS Business HCCA Business Se- May 11, 2012
Services Pvt. Ltd. vices Pvt. Ltd.
Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
Certification
The Chief Executive Officer and Chief Financial Officer Certification
as required under Clause 49 of the Listing Agreements and Chief
Executive Officer declaration about code of conduct are furnished in
Annexure A and A-1 to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The prescribed particulars as required under Section 217 (1)(e) of the
Companies Act, 1956 relating to Conservation of Energy, Technology
Absorption and Foreign Exchange earnings and outgo are furnished in
Annexure - B to this Report.
Corporate Governance
As required under Clause 49 of the Listing Agreements, a detailed
report on Corporate Governance forms Annexure-C to this Report.
The Statutory Auditors of the Company have examined the Company's
compliance and have certified the same as required under the Listing
Agreements. The certificate is reproduced as Annexure-D to this Report.
Management Discussion and Analysis Report
Further, a separate Management Discussion and Analysis Report covering
a wide range of issues relating to industry trends, company
performance, SWOT analysis, corporate process, business outlook among
others is annexed as Annexure - E to this Report.
ESOP Disclosure
The disclosures required to be made under the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are given in Annexures - F1 and F2 to
this Report.
Fixed Deposits
Your Company has not accepted any fixed deposits from the public and,
as such, no amount of principal or interest was outstanding as on the
Balance Sheet date.
Directors
Mr. Dheeraj G. Hinduja and Mr. Rajendra P. Chitale, Directors of your
Company, are liable to retire by rotation at the ensuing Annual General
Meeting (AGM) and being eligible, offer themselves for re-appointment.
Directors' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors,
based on the information and documents made available to them, confirm
that:
i) in the preparation of Annual Accounts for the year ending 31st
March, 2012, the applicable accounting standards have been followed.
There are no material departures in the adoption and application of the
accounting standards;
ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profit of your
Company for that period;
iii) they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities; and
iv) they have prepared the Annual Accounts on a going concern basis.
Auditors
M/s Price Waterhouse, Chartered Accountants, the Statutory Auditors of
your Company, retire at the conclusion of the forthcoming Annual
General Meeting of your Company and being eligible, offer themselves
for re-appointment. The Board recommends the re-appointment of the
Auditors.
Exemption from attaching Accounts and other Documents of Subsidiaries
The Ministry of Corporate Affairs (MCA) vide Circular dated 8th
February, 2011 has granted exemption under Section 212(8) of the
Companies Act, 1956 from annexing Balance Sheet and other documents of
subsidiaries with the Annual Report of the holding company provided
certain conditions are fulfilled. The Board of Directors of your
Company at its meeting held on 9th February, 2012 (in view of
fulfilment of all conditions prescribed by the Ministry of Corporate
Affairs under Circular No. 5 / 12 /2007 - CL - III dated 8th February,
2011) resolved for not attaching the Balance Sheet and other documents
of the subsidiaries, with the Balance Sheet of the Holding Company
i.e., Hinduja Global Solutions Limited, for FY '12.
Accordingly, the Annual accounts and other documents for the year ended
March 31, 2012 of the subsidiary companies are not attached to the
Annual Report. The accounts of the subsidiaries will be made available
for inspection by any member of the Company at its Registered Office
and also at the Registered Office of the concerned subsidiary. The
accounts of the subsidiary companies and detailed information will be
made available to the members upon receipt of request from them. The
summary of key financials of the Company's subsidiaries, as provided in
the Circular dated 8th February, 2011 is included in this Annual
Report. The accounts of individual subsidiary companies would be
available on Company's website www.teamhgs.com.
Employees' Particulars
Particulars of employees as required under Section 217(2A) of Companies
Act, 1956 and the Companies (Particulars of Employees) Rules, 1975 as
amended, forms part of this Directors' Report. However, in accordance
with the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956
this Report is being sent to all the shareholders of the Company
excluding the aforesaid information. Members interested in obtaining
the said information may write to the Company Secretary at the
Registered Office of the Company.
Acknowledgements
Your Board takes this opportunity to thank the customers, vendors,
business partners, shareholders and bankers for the faith reposed in
the Company and also thank the Government of India, various regulatory
authorities and agencies, State Governments, Government of various
countries for their support and looks forward to their continued
encouragement. Your Directors place on record their sincere
appreciation of the contribution of the Company's most important asset,
viz. the employees, who through their competence, hard work and
co-operation have enabled the Company to achieve consistent growth.
For and on behalf of the Board of Directors
Ramkrishan P. Hinduja
Chairman
Place: Mumbai
Date : May 23, 2012
Mar 31, 2011
The Directors are pleased to present their Report on the business and
operations of your Company for the year ended March 31, 2011.
Financial Results
(Rs. in Crore except share data)
For the year ended 31st March Standalone Consolidated
2011 2010 2011 2010
Operating Income 544.88 486.81 1,073.24 892.34
Other Income 8.03 2.71 28.95 31.13
Total Income 552.91 489.52 1,102.19 923.47
Operating Expenses 420.85 352.32 917.90 737.85
Depreciation 38.04 33.60 45.22 38.56
Financial Expenses 5.59 7.65 8.95 9.93
Profit before Exceptional Items
and Tax 88.43 95.95 130.12 137.13
Exceptional Items -- (5.76) -- (5.76)
Profit before Tax 88.43 101.71 130.12 142.89
Provision for tax (incl.
deferred tax) 13.24 6.57 22.80 12.81
Profit after Tax 75.19 95.14 107.32 130.08
Add: Share of Profit in Associates -- -- -- 0.02
Add: Balance brought forward from the
Previous Year 90.98 53.53 195.56 123.15
Profit Available for Appropriation 166.17 148.67 302.88 253.25
Dividend
-Final (Proposed) 41.18 41.18 41.18 41.18
-Dividend Tax 6.52 7.00 6.52 7.00
Transferred to General Reserve 7.51 9.51 7.51 9.51
Balance Carried Forward 110.96 90.98 247.67 195.56
Earnings per share (Rs.)
-Basic 36.52 46.32 52.12 63.35
-Diluted 36.50 46.16 52.09 63.12
Review of Financials
On a standalone basis, Total Income for the year ended 31st March 2011
(FY 2011) was Rs. 552.91 crore, an increase of 12.9% over the Total
Income of Rs. 489.52 crore for the year ended 31st March 2010 (FY
2010). Profit Before Tax (PBT) (pre-exceptional items) was Rs. 88.43
crore, a decrease of 7.8% from Rs. 95.95 crore in the previous
Financial Year. The PBT Margin (pre-exceptional items) fell by 40 basis
points to 15.9% in FY 2011 from 19.6% in FY 2010. Profit after Tax
(PAT) for FY 2011 was Rs. 75.19 crore as against Rs. 95.14 crore in FY
2010. PAT Margin fell from 19.4% in FY 2010 to 13.6% in FY 2011.
On a Consolidated basis, Total Income was Rs. 1,102.19 crore in FY 2011
as against Rs. 923.47 crore in FY 2010, an increase of 19.4%. PBT
(pre-exceptional items) was Rs. 130.12 crore in FY 2011 as compared to
Rs. 137.13 crore in FY 2010, a decrease of 5.1%. PBT Margin
(pre-exceptional items) was at 11.8% as compared to 14.8% in FY 2010.
PAT was Rs. 107.32 crore in FY 2011 as against Rs. 130.08 crore in FY
2010. PAT Margin fell from 14.1% in FY 2010 to 9.7% in FY 2011.
The highlights of the year were:
Growth of 20.3% in Consolidated Revenues;
Employee headcount at 19,442 associates - a growth of 24.5% (Previous
Year - 15,615);
Addition of 34 new clients - an increase of 47.2%, bringing the total
to 106 clients at the end of the year;
Acquisition of Careline Services Limited, UK;
Addition of 7 new centres of which 3 centres are in India, 3 in the UK
through Careline acquisition and 1 in the Philippines (Manila);
Setting up SEZ unit by Hinduja Outsourcing Solutions India Private
Limited, a wholly owned subsidiary of the Company;
Consolidated PAT for FY 2011 - Rs. 107.32 crore translating into a
Diluted EPS of Rs. 52.09 per share;
Cash & Cash equivalents as on 31st March 2011 - Rs. 618.92 crore
translating to Cash & Cash Equivalents of Rs. 300 per share; and
Net Worth as on 31st March 2011 - Rs. 998.83 crore translating to a
Book Value of Rs. 485 per share.
Dividend
Your Directors have recommended a dividend of Rs. 20/- per share (200%
on the face value of Rs. 10/-) for the current year.
The dividend payout will absorb Rs. 47.70 crore, including dividend
tax. The dividend payout ratio for the year (including dividend
distribution tax), would be 63.4% of the standalone profits and 44.4%
of the consolidated profits.
Business Review
BPO Industry Overview
Your Company focuses on ITeS BPO services within the broader IT/ITeS
industry.
While the domestic market continued to demonstrate a strong performance
with sustained growth in GDP, the key customer markets of North America
and Europe displayed marginally improved signals of economic
performance. This was evident in the resurgence in demand for business
services in both traditional as well as emerging markets. While this
was helped in part by pent-up demand from the corporate sector and the
return of discretionary spending, the improved value proposition from
service providers was a key catalyst in industry growth. FY 2011 has
been a year in which the operating environment became more dynamic
resulting in a heightened focus on innovation for suppliers. Apart from
engaging current customers, service providers needed to attract and
encourage fi rst time buyers.
This has brought about a shift in focus from rudimentary outsourcing
models which deliver cost or talent leverage to higher value added
services, innovation and transformation; the latter results in greater
strategic benefits to clients.
The emergence of the newer, value added focus is evident in the manner
in which the sector has begun to actively diversify beyond core
offerings and markets through new business and pricing models,
specialize in providing end-to-end service offerings with deeper
penetration across verticals, transform process delivery through
re-engineering and drive inclusive growth in India by developing
targeted solutions for the domestic Indian market. All these factors
helped India grow faster than its competitors, accounting for almost
90% of incremental growth in the global sourcing market.
Global Sourcing Trends
On the back of resurgence in global business spending, the IT services
spend increased by 1.4% in 2010. Of this, IT outsourcing grew by 2.4%.
An ROI-led focus resulted in BPO sector growing by 4%, while software
products rose by 3.7%. Within IT outsourcing, global sourcing grew by
10.4% in 2010 validating Industrys integral position in service
delivery chain.
The year saw wide ranging contract restructuring exercises and deal
size reductions as buyers came to terms with new business models and
budgetary constraints. With customers demanding more immediate value
from IT and forward-looking strategies that support growth and
innovation, service providers are adopting newer value focused methods
incorporating operational excellence through ongoing innovation,
diversifi cation, renewed partnerships and alliances and recalibrated
business models.
The BPO services market in Asia/Pacifi c (excluding Japan) reached USD
8.6 billion in 2010, a 22.85% increase from 2009 revenue of USD 7
billion. By vertical, Banking, Financial Services and Insurance (BFSI),
Communications, Government and Travel & Transportation were the largest
consumers of BPO services in the region.
Indian IT - BPO performance
The sector is estimated to aggregate revenues of USD 88.1 billion in FY
2011, with the IT software and services sector (excluding hardware)
accounting for USD 76.1 billion of revenues.
Export Market:
Export Revenues: Export revenues of the IT software and services sector
(excluding hardware) are estimated to gross USD 59 billion in FY 2011
accounting for a 2 million workforce. The BPO segment of this sector
grew by 14 per cent to reach USD 14.1 billion.
Geographic focus: The year was characterized by a consistent demand
from the US, which increased its share to 61.5% to retain its status as
the pre-eminent market. Emerging markets of Asia Pacifi c and Rest of
the World also contributed signifi cantly to overall growth.
Vertical Markets: While the sectors vertical mix is well balanced
across several mature and emerging sectors, the year was characterized
by broad based demand across traditional segments such as Banking,
Financial Services and Insurance (BFSI), as well as across emerging
verticals of Retail, Healthcare, Media and Utilities.
Service Lines: The BPO segment grew by 14% to reach USD 14.1 billion
and the year also witnessed the next phase of BPO sector evolution
characterized by greater breadth and depth of services, process
re-engineering, increased delivery of analytics and knowledge based
services through platforms, strong domestic market focus and SME
centric delivery models. Changing demand patterns led to a renewed
focus on existing client relationships, mining for new clients and
restructured operations to provide focused vertical solutions. Further,
the Industry focused on achieving excellence in business process
management and delivering strong transformational benefits creating
revenue impact for clients.
Domestic Market:
Domestic Revenues: Domestic IT-ITeS revenues, excluding hardware, are
expected to grow at almost 16% to reach USD 17.1 billion in FY 2011. IT
services is one of the fastest growing segment in the Indian domestic
market, rising by 16.8% to reach Rs. 501 billion, driven by localized
strategies designed by service providers.
Movement to Non-Metro Cities: Service Providers are beginning to reap
the benefits of transitioning business from Tier I to Tier III cities.
These destinations result in signifi cant cost savings and are an
attractive proposition for the price sensitive Indian market.
Drivers of Growth: The Domestic market in India offers among the
highest growth rates globally and is characterized by emerging
sophistication as well as heightened competition. The growth of the
Domestic BPO segment is expected to be driven by demand from emerging
verticals, new customer segments and value based transformational
outsourcing platforms in addition to voice based services. Strong
economic growth, rapid advancement in technology infrastructure,
increasingly competitive Indian organizations, enhanced focus by the
government and emergence of business models that help provide IT to new
customer segments are the key drivers for increased technology adoption
in India.
Government Initiatives: The Government sector has emerged as a key
catalyst for increased IT adoption - through sector reforms that
encourage IT acceptance. National e-Governance Programmes (NeGP) and
the Unique Identifi cation Development Authority of India (UIDAI)
program are landmark programs that highlight the increased adoption of
large scale IT infrastructure and IT enabled services by Central, State
and Local governments.
Indian IT-BPO Value Proposition & Outlook
The top three slots in AT Kearneys 2011 Global Services Location Index
(GSLI) are occupied by three Asian countries: India, China and
Malaysia; with India a half-point ahead of China and a full point in
front of Malaysia as per the report.
India has retained its position as the leading global off-shoring
destination with a 55% share of the global IT and ITeS market in 2010
and been able to increase its market share in spite of competitive
challenges presented by emerging off-shoring destinations. This has
been made possible due to the development of a set of factors unique to
India, which help to multiply its value proposition manifold. While the
cost advantage has narrowed over the years, India enjoys the worlds
largest pool of employable talent, a service delivery infrastructure
across multiple geographically dispersed locations within the country
and a supportive policy regime.
Indian IT-ITeS companies are expected to diversify their business from
core markets such as the US and UK and Indian IT companies have already
begun to explore opportunities offered by other growing markets such as
Mexico, Ireland, the Netherlands, the Philippines and Brazil. Though
these fl ourishing markets are presently small, they are expected to
drive the growth in future. In addition, by concentrating on these
markets, businesses can diversify their risks across regions.
Software Technology Parks of India (STPI) units have played a vital
role in fostering growth of the Indian IT-ITeS industry. The cessation
of tax holiday after March 2011 could slow down future expansion
proposals especially of smaller companies. However, larger companies
are expected to alleviate the marginally higher taxes and narrowing
returns through increased scale.
In future, the IT-ITeS industry is likely to go through a paradigm
shift across fi ve parameters:
Markets - Growth will be driven by new markets - SMEs, Asia, public
sector and government infl uenced entities will become a priority
customer base.
Customers - Customers will demand transformative value propositions
that go beyond cost leverage. As technology creates virtual supply
chains, customers will require a seamless experience across time zones
and geographies and there will be an increasing demand for innovation
and end-to-end transformation.
Service Offerings - Offerings that are high-end and deeply embedded in
customer value chains will emerge. Services and delivery will become
location-agnostic leading to new opportunities such as design services
in manufacturing and Remote Infrastructure Management (RIM). Solutions
for the domestic market will be a key focus area.
Talent - Government pressures to create local jobs and the need for
local knowledge will alter the employee mix - a higher proportion of
non-Indians with multilingual and localized capabilities. There will be
a much greater focus on ongoing development of specialized skills and
capabilities.
Business models - Driven by a focus on expertise and intellectual
property, offerings will shift from piecemeal, technology-centric
applications to a range of integrated solutions and higher-end
services, spanning new service lines (e.g., green IT). Additional
productivity improvements and the development of Tier II and Tier III
cities as future delivery centres is expected to help enhance Indias
competitiveness.
Other aspects of the Indian ITeS industry, besides the growing breadth
and depth of the service portfolio that refl ect its increasing
maturity, include the increasing global delivery footprint and
continuous emphasis on enhancing service delivery effi ciency and
productivity.
Strong fundamentals, a robust enabling environment and enhanced value
delivery capability are the hallmarks of the Indian IT-ITeS industry.
Performance of Hinduja Global Solutions Ltd.
Your Company continued its strong performance despite the uncertainty
and volatility of the operating environment. The Total Consolidated
Income for FY 2011 expanded by 19.4% to Rs. 1,102.19 crore from Rs.
923.47 crore in FY 2010.
This performance was creditable in view of the challenges faced by the
Company during the year, viz.:
o Appreciation of the Indian Rupee and Philippine Peso against the U.S.
dollar;
o Pricing pressure in the domestic market by domestic telecom clients
due to heightened competition and a continued reduction in ARPUs;
o Rising infl ation leading to salary revisions and increase in
employee attrition rates; and
o Phasing out of some of the Companys tax benefits.
This performance was due to initiatives undertaken by your Company to
reduce cost of delivery in order to be more price competitive as it
pursues more opportunities in the gradually improving operating
environment.
During FY 2011, in India, your Company opened delivery centres in Tier
III cities of Nagercoil and Guntur and set up a second center in
Durgapur. The total seat capacity for your Company stands at 10,434 as
of March 31, 2011. Your Company has initiated steps to open a delivery
centre in Siliguri in northern West Bengal and is examining the
possibility of opening more centers in other parts of India.
Your Company has set up its third Philippines delivery centre at Iloilo
city with a capacity of 400 seats and spread across 25,000 sq. ft. Your
Company was one of the fi rst Indian BPO companies to enter the
Philippines and setting up of the third delivery centre is a testimony
to the excellent performance of the Companys Philippines operations.
Apart from the Philippines operations, your Companys international
operations, viz. Affi na, LLC (in the USA) and Careline Services Ltd
(in the UK) (acquired in June 2010) have performed well and have
contributed to the overall profitability of your Company. The
integration of Careline has progressed well and your Company is already
discussing expansion plans with some of Carelines key customers.
Your Company will continue to pursue growth primarily from these three
areas: -
Increase business volumes from the existing customers;
Increase business by approaching new customers in the existing
verticals and markets; and
Identify and enter new verticals and markets.
Your Company believes that this diversifi ed business model would
enable it to maintain growth and profitability in the coming years.
In future, your Companys outsourcing projects are expected to be both
operative and consultative in nature. It will need to work more closely
with clients to better understand and evaluate strategies and business
models and identify room for improvement. Despite an improved operating
environment over the last couple of years, customers continue to be
conservative with budgets and are keen to run leaner organizations in
order to sustain the cost savings realized from measures taken in the
aftermath of the global fi nancial crisis of 2008. In order to respond
to the dynamic macro-environment, your Company will concentrate on
reducing costs, increase the diversifi cation of its business across
different markets / verticals, setup centres in best fit geographies
and sustain best practices within the organization.
Subsidiaries
Pacifi c Horizon Limited is a wholly owned subsidiary of your Company
incorporated under the laws of Mauritius. Its principle activity
consists of investments in overseas subsidiaries and investment of
surplus funds. Pacifi c Horizon Limited owns 100% of the share capital
of Hinduja Global Solutions Inc., USA, C-Cubed NV, Netherlands and HTMT
Europe Ltd., UK.
During the year under review, the total income was USD 5,714,604 as
against USD 6,810,527 during the previous year and profit after tax
was USD 4,100,355 as against USD 5,090,352 during the previous year.
Hinduja Global Solutions Inc., (Previously known as Source1 HTMT Inc.,)
USA, a wholly owned subsidiary of Pacifi c Horizon Ltd., Mauritius,
specializes in marketing and provides both voice and non-voice related
Customer Contact and Business Process Outsourcing services to its
clientele. The name of the Company was changed from Source1 HTMT Inc.
to Hinduja Global Solutions Inc. with effect from 29th June, 2010.
For FY 2011 Hinduja Global Solutions Inc., reported consolidated
revenues of USD 169,259,605 and Net Income of USD 2,056,094.
Affi na LLC, (and its subsidiaries RMT LLC and Affi na Company) "Affi
na" was acquired in November 2006 by Hinduja Global Solutions lnc.,
USA. Affi na operates in fi ve cities in USA and Canada. Affi na
partners with Fortune 1,000 companies and government agencies to
provide comprehensive Customer Relationship Management programs
integrating inbound contact center, internet, database marketing,
market research, close-loop lead management and fulfi llment services.
For FY 2011, Affina recorded total revenues of USD 85,139,154 as
compared to FY 2010 revenues of USD 79,233,758 and Profit before Tax
of USD 5,556,870 as compared to USD 6,087,256 in FY 2010.
Apart from Affi na LLC, Hinduja Global Solutions Inc., has a subsidiary
called Hinduja TMT France.
HTMT Europe Limited is a UK based subsidiary which focuses on
consulting services for BPO and call centre services and markets
offshoring services to UK based clients. In June 2010, HTMT Europe
acquired 100% stake of the U.K. based Careline Services Limited thereby
making it a wholly owned subsidiary of HTMT Europe with effect from
21st June, 2010.
Careline Services Limited is a leading contact centre servicing more
than 20 marquee customers across verticals such as Government, FMCG,
Financial Services, Automobiles, Telecom and Retail. Established in
1977, it offers a range of services for inbound and outbound
interactions and has over 800 highly trained employees in London and
Scotland. It handles in excess of 50,000 customer interactions every
day across multiple channels and in 14 different languages.
For the period 21st June 2010 to 31st March 2011, Careline reported
revenues of GBP 15,626,268 and Profit after tax of GBP 820,810.
Hinduja Outsourcing Solutions India Private Limited (HOSIPL)
During FY 2011, your Company also acquired 100% equity stake of Hinduja
Outsourcing Solutions India Private Limited (HOSIPL) making it a wholly
owned subsidiary. HOSIPL has received necessary approvals from the
Development Commissioner, Special Economic Zone (IT/ITeS), Karnataka,
Bangalore and has set up a unit in Special Economic Zone (SEZ) at
Global Village, Bangalore. HOSIPLs SEZ unit, housed over an area of
approximately 43,000 sq. ft., has a capacity of approximately 1,000
seats.
During FY 2011, HOSIPL has commenced partial operations with
international clients from the health insurance and hospitality
verticals and recorded revenues of Rs. 2.78 crore.
New Logo
With operations in six countries and continuously expanding to other
geographies, your Company is today uniquely poised at the edge of an
important transformation with its operations becoming truly global.
This metamorphosis must refl ect in an identity and a logo is a
critical component of such identity.
Your Company has therefore, designed a new logo which is easy on the
tongue for international audience and binds your Companys diverse
operations across globe.
The basic color gradient of the new logo in a contemporary typography
and the rainbow hues on the Energy Rings are a symbol of the renewed
strength and vigor of HGS and emphasizes your Companys fl exibility to
changes as it makes inroads into new continents. The color gradient
also represents a work environment that is an assimilation of varied
regions, religions, cultures and traditions. For a business
transformation powerhouse like HGS, the deep blue hues of the initials
HGS progresses from a dark blue to a lighter shade of blue,
signifying exploration, adventure and movement to a much brighter
future.
The recall value of the new logo is improved by the fact that it uses
the acronym for Hinduja Global Services. The logo retains our heritage
and pride while being contemporary, providing an umbrella brand to your
Companys culturally and geographically diverse global operations.
Addressing Social Concerns
In the past year, your Company has proved, yet again, that it has fi
rmly remained committed to community welfare initiatives. It patronized
and partnered with organizations and NGOs championing various causes,
reaching out to the needy. The Company contributed to the Concern India
Foundation, by way of participating in the World 10k Run. The
contributed sum will aid in supporting the child care center for
preschool children, run by the foundation. Apart from numerous other
NGOs, the Company has also donated funds to the Hinduja Foundation,
known for its humanitarian activities in the fi elds of Arts, Culture,
Education, Social Welfare and Healthcare.
Your Company continues to enrich its contribution to the society by
engaging in activities that make a positive social impact. The Company
has made a concerted effort to contribute to the community, by engaging
in philanthropic acts such as visiting orphanages and old age homes,
donating clothes, money, toiletries and stationary and organizing
interactive activities for the inmates of these institutions. Another
regular feature across the centers is organizing blood donation camps
through the year. In a bid to increase awareness among potential
recruits from various institutes about the ITeS sector, the recruitment
team also organized various awareness programs across the centers.
Driven by a sense of responsibility to the community that is deeply
embedded in its culture, your Company engages with the society across
all levels, across geographies. From initiating projects promoting
public health to creating awareness about the importance of education
and environmental protection, there has been a constant involvement in
noteworthy and worthwhile causes. As your Company scales new heights,
its resolve to serve and contribute to the society has also gotten
stronger.
Communication and Public Relations
Your Company progressed to the next level in its communications and
public relations plan by expanding the function and building a more
robust communication strategy. Driven by a vision that envisaged the
Company as climbing greater heights, the Companys communications plans
have now matured as a tool to shape its future in the media. Thus, as
your Company diversifi es its reach and potential, its communication
strategy is now all set to ensure a parallel spurt in visibility and
brand recognition, internally and externally.
2010-2011 also saw the initiation of various projects meant to
strengthen the brand of your Company and streamline its communication
processes. The intranet and internet overhaul formed the crux of this
initiative, with both communication platforms receiving a more
progressive and user friendly look in terms of design, content and
functionality.
While the Companys internal human resources newsletter, Global
Connect, has now adopted a consistent format, the Town Hall meetings
have received a fi llip by covering all global centers in the webcast
and includes speakers from these centers. The Company also focused on
increasing brand awareness amongst employees in its acquired entities,
by tailoring an engagement plan themed Connect Beyond.
Your Companys visibility in the media has grown substantially with
astute media management. Proactive and positive coverage on the
Companys success stories, appearances in key forums and discussions
have ensured that brand HGS has come a long way in gaining a foothold
in mainstream media. The Companys top rankings in the NASSCOM Top BPO
Companies survey, Dataquest Top BPO Companies and Dataquest Employee
Satisfaction survey, and its inclusion in the India Inc. Fast 500
Companies list is indicative of the growing stature of your Company.
With the launch of the new visual identity, multiple initiatives for
brand enhancement and brand integration are currently underway and are
slated to continue into the next fi nancial year.
Your Companys financial results, important developments and
achievements are communicated and uploaded on its website
www.hindujagsl.com.
Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
Certifi cation
Chief Executive Officer and Chief Financial Officer Certifi cation as
required under Clause 49 of the Listing Agreement and Chief Executive
Officer declaration about Code of Conduct are furnished in Annexure A
and A-1 to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The prescribed particulars as required under Section 217(1) (e) of the
Companies Act, 1956 relating to Conservation of Energy, Technology
Absorption and
Foreign Exchange earnings and outgo are furnished in Annexure-B to this
Report.
Corporate Governance
As required under Clause 49 of the Listing Agreements, a detailed
report on Corporate Governance forms Annexure-C to this Report.
The Statutory Auditors of the Company have examined the Companys
compliance and have certifi ed the same as required under the Listing
Agreements. The certifi cate is reproduced as Annexure-D to this
Report.
Management Discussion and Analysis Report
Further, a separate Management Discussion and Analysis Report covering
a wide range of issues relating to performance, outlook etc., is
annexed as Annexure-E to this Report.
ESOP
The disclosures required to be made under the Securities Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are given in Annexure-F to this Report.
Fixed Deposits
Your Company has not accepted any fixed deposits from the public and,
as such, no amount of principal or interest was outstanding as on the
Balance Sheet date.
Directors
Ms. Vinoo S. Hinduja and Mr. Anil Harish - Directors of your Company,
are liable to retire by rotation at the ensuing Annual General Meeting
(AGM) and being eligible, offer themselves for re-appointment.
Directors Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the information and documents made available to
them, confi rm that:
i) In the preparation of Annual Accounts, for the year ending 31st
March 2011, the applicable accounting standards have been followed.
There are no material departures in the adoption and application of the
accounting standards;
ii) They have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the fi nancial year and of the profit of
your Company for that period;
iii) They have taken proper and suffi cient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities; and
iv) They have prepared the Annual Accounts on a going concern basis.
Auditors
M/s Price Waterhouse, Chartered Accountants, the Statutory Auditors of
your Company, retire at the conclusion of the forthcoming Annual
General Meeting of your Company and being eligible offer themselves for
re-appointment. The Board recommends the re-appointment of Auditors.
Exemption from attaching Accounts and other Documents of Subsidiaries
The Ministry of Corporate Affairs (MCA) vide Circular dated 8/2/2011
has granted exemption under section 212(8) of the Companies Act, 1956
from annexing Balance Sheet and other documents of subsidiaries with
the Annual Report of the holding company provided certain conditions
are fulfi lled. The Board of Directors of your Company at its meeting
held on 8th February 2011, (in view of fulfi llment of all conditions
prescribed by the Ministry of Corporate Affairs under Circular No.
5/12/2007-CL-III dated 8th February 2011) resolved for not attaching
the Balance Sheet and other documents of the subsidiaries named below,
with the Balance Sheet of the Holding Company i.e., Hinduja Global
Solutions Limited, for the fi nancial year 1st April, 2010 to 31st
March, 2011:
1) Pacifi c Horizon Limited, Mauritius;
2) Hinduja Global Solutions Inc., USA;
3) Affi na LLC, USA;
4) Affi na Company, Canada;
5) RMT LLC, USA;
6) HTMT Europe Limited, UK;
7) Careline Services Limited, UK;
8) Hinduja TMT France, France;
9) Customer Contact Center Inc., Philippines;
10) C-Cubed (Antilles) N.V., Netherlands;
11) C-Cubed B.V., Netherlands;
12) Hinduja Outsourcing Solutions India Pvt. Ltd., India.
Accordingly, the Annual Accounts and other documents for the year ended
March 31, 2011 of the subsidiary companies are not attached to the
Annual Report. The Accounts of the subsidiaries will be made available
for inspection by any member of the Company at its Registered Office
and also at the Registered Office of the concerned subsidiary. The
accounts of the subsidiary companies and detailed information will be
made available to the members upon receipt of request from them. The
summary of key fi nancials of the Companys subsidiaries, as provided
in the Circular dated 8/2/2011 is included in this Annual Report. The æ
accounts of individual subsidiary companies would be available on
Companys website www.hindujagsl.com
Employees Particulars
Particulars of employees as required under Section 217 (2A) of the
Companies Act, 1956 and the Companies (Particulars of Employees) Rules
1975 as amended, forms part of this Directors Report. However, in
accordance with the provisions of Section 219 (1) (b) (iv) of the
Companies Act, 1956, this Report is being sent to all the shareholders
of the Company excluding the aforesaid information. Members interested
in obtaining the said information may write to the Company Secretary at
the Registered Office of the Company.
Acknowledgements
Your Board takes this opportunity to thank the customers, vendors,
business partners, shareholders and bankers for the faith reposed in
the Company and also thank the Government of India, various regulatory
authorities and agencies for their support and looks forward to their
continued encouragement. Your Directors place on record their sincere
appreciation of the contribution of the Companys most important asset,
viz. the employees, who through their sheer competence, hard work and
co-operation have enabled the Company to achieve consistent growth.
For and on behalf of the Board
Place: Mumbai Ramkrishan P. Hinduja
Date: May 12, 2011 Chairman
Mar 31, 2010
The Directors are pleased to present their Report on the business and
operations of your Company for the year ended March 31, 2010.
Financial Results
(Rs. in lakhs except share data)
For the year ended 31st March 2010 2009 2010 2009
Standalone Consolidated
Operating Income 48,681.35 44,476.46 89,234.15 79,756.60
Other Income 270.98 367.89 3,113.35 3,306.19
Total Income 48,952.33 44,844.35 92,347.50 83,062.79
Operating Expenses 35,231.63 32,638.42 73,785.11 66,474.96
Depreciation 3,360.38 2,814.59 3,856.99 3,268.48
Financial Expenses 764.75 858.66 992.53 859.10
Profit before Exceptional
Items and Tax 9,595.57 8,532.68 13,712.87 12,460.25
Exceptional Items (576.05) 1,061.40 (576.05) 1,061.40
Profit before Tax 10,171.62 7,471.28 14,288.92 11,398.85
Provision for tax (incl.
deferred tax) 657.30 1,279.88 1,280.70 2,026.32
Profit after tax 9,514.32 6,191.40 13,008.22 9,372.53
Add: Share of Profit in Associates -- -- 2.42 3.99
Add: Balance brought forward
from Previous year 5,353.09 3,385.10 12,315.32 7,162.21
Profit Available for
Appropriation 14,867.41 9,576.50 25,325.96 16,538.73
Dividend
à Final (Proposed) 4,117.84 3,080.70 4,117.84 3,080.70
à Dividend Tax 699.83 523.57 699.83 523.57
Transferred to General Reserve 951.44 619.14 951.44 619.14
Balance
Carried Forward 9,098.30 5,353.09 19,556.85 12,315.32
Earnings per
share (Rs.) - Basic 46.32 30.15 63.35 45.64
- Diluted 46.16 30.15 63.12 45.64
Review of Financials
On a standalone basis, Total Income for FYÃ09-Ã10 was Rs. 489.52 crore,
an increase of 9.2% over the Total Income of Rs. 448.44 crore in
FYÃ08-Ã09. Profit Before Tax (PBT) (pre-exceptional items) was Rs.
95.96 crore, an increase of 12.5% from Rs. 85.33 crore in the previous
Financial Year. The PBT Margin (pre-exceptional items) improved by 60
basis points to 19.6% in FYÃ09-Ã10 from 19.0% in FYÃ08-Ã09. Profit
after Tax (PAT) for the year was Rs. 95.14 crore as against Rs. 61.91
crore during the previous year. The PAT Margin improved considerably
from 13.8% last year to 19.4% in the current year.
On a Consolidated basis, Total Income was Rs. 923.48 crore in the
current year against Rs. 830.63 crore during the previous year, an
increase of 11.2%. The PBT (pre-exceptional items) was Rs. 137.13 crore
in FYÃ09-Ã10 compared to Rs. 124.60 crore in the previous financial
year, an increase of 10.1%. The PBT Margin (pre-exceptional items) was
maintained at 14.8%. The PAT was Rs. 130.08 crore in the current year
against Rs. 93.73 crore in the previous year. The PAT Margin improved
from 11.3% in the previous year to 14.1% in the current year.
The highlights during the year were:
- Growth of 11.2% in Consolidated Revenues.
- Employee headcount at 15,615 associates (Previous Year 13,787).
- 80 clients at the end of the year.
- Consolidated PAT for FYÃ09-Ã10 - Rs. 130.08 crore translating into a
Diluted EPS of Rs. 63.12 per share.
- Cash & Cash equivalents as on March 31, 2010 - Rs. 642.31 crore
translating to Cash & Cash Equivalents of Rs. 312 per share.
- Net Worth as on March 31, 2010 - Rs. 949.06 crore translating to a
Book Value of Rs. 461 per share.
Dividend
Your Directors have recommended a dividend of Rs. 20/- per share (200%
on the face value of Rs.10/-) for the current year.
The dividend payout will absorb Rs. 4,817.67 lakh, including dividend
tax. The dividend payout ratio for the year (including dividend
distribution tax), as a percentage of net profits, would be 37%.
Business Review
BPO Industry Overview
Over the past decade, the Indian IT-BPO sector has become the countryÃs
premier growth engine, crossing significant milestones in terms of
revenue growth, employment generation and value creation, in addition
to becoming the global brand ambassador for India.
IndiaÃs fundamental advantages-abundant talent and cost-are sustainable
over the long term. With a young demographic profile and over 3.5
million graduates and postgraduates that are added annually to the
talent base, no other country offers a similar mix and scale of human
resources.
While the sector as a whole has delivered impressive growth rates over
the past decade, the financial crisis of 2008 brought about a slowdown
in blended growth rates for the IT & ITeS industry in FYÃ09-Ã10. A
Nasscom study estimates the industry to report 12% growth in domestic
revenues at Rs. 662 billion and 5.5% growth in export revenues to US$
49.7 billion in FYÃ09-Ã10. Within the overall industry, ITeS services
exports are expected to increase by 18% and will be the fastest growing
segment across software and services exports driven by scale as well as
scope. The ITeS service portfolio has been strengthened by vertical
specialisation and global delivery capabilities.
Another highlight for the ITeS sector is the emergence of domestic BPO
operations which recorded a growth of over 40% in INR terms in
FYÃ09-Ã10. The growth is led by the BFSI, Telecom and Airline
industries and a greater vendor focus with specific service offering.
The IT Sector was more affected by the effects of the financial crisis
as IT budgets were frozen and implementation of discretionary spends
was delayed. The ITeS Sector was not impacted as severely since it
focuses on improving operating efficiencies and reducing operating
expenditure for its customers.
The changing demand outlook, customer conversations and requirements
acted as a driver to build in greater efficiencies and flexibility
within the service delivery and the business models à which is here to
stay. 2009 was also instrumental in compelling vendors to re-configure
their offerings in view of the altered landscape. The industry was
forced to diversify beyond core offerings and markets through new
business and pricing models, provide end-to-end service offerings with
deeper penetration across verticals and transform the process delivery
through re-engineering and enabling technology and drive inclusive
growth in India by developing targeted solutions for the domestic
market. All these measures, along with IndiaÃs game changing value
proposition, have helped it to widen its leadership position in the
global sourcing market.
The outlook for the ensuing financial year is promising as Nasscom has
projected healthy growth for the IT & ITeS sector on a blended basis.
It anticipates export revenues to grow 13-15% and domestic revenues to
grow 15-17%. The Total IT & ITeS industry is expected to aggregate
revenues of US$ 73.1 billion in FYÃ09-Ã10. During this period, direct
employment is expected to reach nearly 2.3 million, an addition of
90,000 employees, while indirect job creation is estimated at 8.2
million. As a proportion of national GDP, the sector revenues have
grown from 1.2% in FYÃ97-Ã98 to an estimated 6.1% in FYÃ09-Ã10. Its
share of total Indian exports (merchandise plus services) increased
from less than 4% in FYÃ97-Ã98 to almost 26% in FYÃ09-Ã10.
The projections for the domestic ITeS industry, in particular, are
higher. A Gartner study anticipates that the BPO market in India will
grow 25% in 2010 and is estimated to grow 19% through 2013. Gartner
estimates the Indian domestic BPO market will grow into a $1.2 billion
market by 2011 and into a $1.8 billion market by 2013.
Other aspects of the Indian ITeS industry, besides the growing breadth
and depth of the service portfolio that reflect its increasing
maturity, include the increasing global delivery footprint and
continuous emphasis on enhancing service delivery efficiency and
productivity. Strong fundamentals, a robust enabling environment, and
enhanced value delivery capability are the hallmarks of the Indian
IT-ITeS industry.
India enjoys a cost advantage of around 60-70% as compared to source
markets. Additional productivity improvements and the development of
Tier II and Tier III cities as future delivery centres, are expected to
enhance IndiaÃs cost competitiveness.
The advent of 2010 has signaled the revival of outsourcing within core
markets, along with the emerging markets increasingly adopting
outsourcing for enhanced competitiveness. Key demand indicators in the
last two quarters such as increased deal flow, volume growth, stable
pricing, and faster decision making has made the industry post good
results. Though full recovery is still forthcoming, development of new
growth levers, improved efficiency and changing demand outlook
signifies early signs of recovery which will help fuel the prospects
for the industry.
Key trends in 2010
Recession Driven Changes
The events of the last two years have compelled organisations to place
greater emphasis on cost optimisation. As the visibility of revenue
growth diminished, organisations turned to prudent cost management to
preserve their margins. The need for greater cost management compelled
several organisations to evaluate the benefits of outsourcing thereby
increasing the number of potential customers. Customers who had
experienced benefits of outsourcing were also open to expanding the
scale and scope of work as they sought to increase cost optimisation.
This change in approach by providers as well as customers is driving
greater demand for Business Process Management and has placed it as a
key component of business execution strategy even as the economic
environment displays signs of stabilisation.
Deepening of Customer Engagements
Customers are exploring methods to expand the scale and scope of work
as they seek to enhance the potential savings from outsourcing
relationships. This would compel the industry to evolve into
third-party Ãtransformational outsourcingà relationships from the
existing captive dominated market structure. This implies that rather
than merely running isolated processes for customers, BPOs would engage
more deeply to identify and transform core business processes to add
greater market value in the Ãcreation and delivery of end products and
servicesÃ.
Further, as organisations continue to embrace Business Process
Management to improve business performance during challenging times,
this quest is pushing Business Process Management offerings beyond
their traditional focus on routine, predictable, sequential processes
towards broader, cross-boundary processes that include more
unstructured work.
Emergence of Domestic Markets
IndiaÃs domestic BPO market, with nearly 500 players, is set to grow at
a CAGR of 33.3% to touch revenues of US$ 6.82 billion by 2013, up from
US$ 1.62 billion recorded in 2008. (source: IDC)
However, it is the non-English BPOs in Tier-II and Tier-III centres
that can provide services to the Telecom and Aviation sectors at a
lower overall cost that are expected to play an increasing role in the
growth of the domestic outsourcing industry. Currently, such
sub-regional / local BPOs are estimated to have capabilities to offer
services in 10-15 Indian languages.
The domestic BPO market shows promise of growth, especially in
verticals like BFSI and Telecom in the short term. Areas of concern for
the BPO industry, that services overseas customers, such as Rupee-US
Dollar volatility, rising infrastructure costs in Tier-I cities, over
dependence on North American and European markets are expected to have
minimal impact on the domestic BPO sector.
Penetration into Tier II & Tier III cities
With rapidly developing infrastructure, availability of trained
manpower, better connectivity and lower real estate costs, several
Tier-II and Tier-III cities in India have fast emerged as the new BPO
Ãgo toà destinations. However, higher training costs in Tier-II and
Tier-III cities and lack of availability of adequate talent pool
continues to be an area of concern for players.
Attempts by neighboring countries to improve Competitiveness
India is the undisputed leader in offshore services in the Asia Pacific
Region with China remaining the greatest challenger in terms of
potential scale. However, a number of countries are making considerable
investments in this area and positioning themselves as credible
alternatives.
Countries such as Malaysia, Philippines and Vietnam have continued to
strengthen their position against leading alternatives, while Indonesia
has shifted up several notches. Some of these countries have invested
considerably and leveraged increased demand for lower-cost services.
The mature markets of Australia, Singapore and New Zealand offer
limited cost savings, but are competing on factors such as language,
political and economic environment, cultural compatibility,
globalisation and legal maturity, data and intellectual property,
security and privacy.
Performance of Hinduja Global Solutions
Your Company continued its strong performance despite the uncertainty
and volatility of the operating environment. The Total Income for
FYÃ09-Ã10 expanded by 11.2% to Rs. 923.48 crore from Rs. 830.63 crore
in the previous year. PAT expanded by 38.8% to Rs. 130.08 crore in
FYÃ09-Ã10 from Rs. 93.73 crore in the previous year.
This performance was more creditable in view of the challenges faced by
the company during the year, viz.
- Uncertainty caused by the external environment
- Appreciation of the Indian Rupee and Philippine Peso against the U.S.
Dollar
- Less than expected volumes from North American clients in the holiday
season due to the economic challenges still prevalent in that region.
- Pricing pressure in the domestic market by domestic telecom clients
due to heightened competition and a continued reduction in ARPUs.
This performance was due to initiatives by your Company to reduce cost
of delivery in order to be more price competitive as it pursues more
opportunities in the gradually improving operating environment.
During the year, your Company opened its second center in Manila which
has a capacity of 1,000 seats. This is in addition to its existing
center in Manila which has a capacity of 2,000 seats. In the domestic
market, your Company is in the process of establishing new centers in
Tier III cities of Nagercoil and Guntur. The total seat capacity for
the company stands at 14,708 as of March 31, 2010.
Your Company was ranked as the top partner by its leading domestic
client. This is favourable for the Company as it strives to garner
incremental business while its client undertakes vendor consolidation.
Another notable development during the year has been an order win from
a new Media Client in the U.K. This was the first order for your
Company in this geography and it is significant as it diversifies
operation through the addition of a new vertical, a new geography and a
new currency.
Your Company has also been able to improve the performance of its
subsidiaries notably Affina. When it was acquired, Affina was at a
breakeven level and the contribution to overall profitability has been
steadily increasing.
Your Company will continue to pursue growth from three areas. It will
look to increase business volumes from existing costumers, to increase
business by approaching new costumers in existing verticals and
markets, and to identify and enter new verticals and markets. The
reason for the consistent performance over the last few difficult
quarters is attributed to its diversified business model.
In future your CompanyÃs outsourcing projects will be both operative
and consultative in nature. It will work closely with clients to
understand and determine various outsourcing options, models and plans.
Post recessionary period ITeS companies will continue to make giant
strides as organisations will strive to sustain their cost savings and
there will be an enhanced focus on non fruitful expenditures. In order
to sustain the ongoing performance, your Company will have to
concentrate on reducing costs, diversify in different markets /
verticals, setup up new centres and to sustain best practices within
the organisation.
Subsidiaries
Pacific Horizon Limited, is a wholly owned subsidiary of your Company
incorporated under the laws of Mauritius, its principle activity
consists of investments in overseas subsidiary and investment of
surplus funds in short-term financing activities. Pacific Horizon
Limited owns 100% of the share capital of Source1HTMT Inc, USA, C-Cubed
NV, Netherlands and HTMT Europe Ltd.
During the year under review, the total income is US$ 6,810,527 as
against US$ 6,811,356 during the previous year. Profit after tax is US$
5,090,352 as against US$ 5,974,929 during previous year. Pacific
Horizon Limited had acquired 100% holding in HTMT Europe Ltd. w.e.f.
30-3-2010 and HTMT Europe Ltd became wholly owned subsidiary of Pacific
Horizon Limited w.e.f. 30-3-2010.
Source1HTMT Inc., USA, a wholly owned subsidiary of Pacific Horizon
Ltd., Mauritius, specialises in marketing and providing both voice and
non-voice related Customer Contact and Business Process Outsourcing
services to its clientele.
Source1HTMT Inc, USA, has a subsidiary in North America, Affina LLC and
a subsidiary in Europe : Hinduja TMT France. Souce1HTMT Inc. is
essentially a marketing outfit and operates on a fixed margin on the
business secured for the Parent Company and hence its profit margins
are not comparable to that of Affina, which is an operating call center
company.
During the year under review, total revenues were US$ 64,362,091 as
compared to US$ 51,798,381 during last year. Net Income/(Loss) was US$
(3,444,841) as compared to loss of US$ (2,180,301) during previous
year. During the year under review, Source1HTMT Inc. sold its entire
investment in HTMT Europe Ltd to Pacific Horizon Ltd.
Affina LLC, which was acquired in November 2006 by Source1HTMT Inc,
USA, has two subsidiaries namely RMT LLC and Affina Company, and it
operates in five cities in USA and Canada. Affina LLC partners with
Fortune 1000 companies and government agencies to provide comprehensive
Customer Relationship Management programs integrating inbound contact
center, internet, database marketing, market research, close-loop lead
management and fulfillment services.
During the year under review, total revenues are US$ 79,233,758 as
compared to US$ 71,260,557 during last year. Net Income is US$
6,087,256 as compared to US$ 4,854,295 during previous year.
Addressing Social Concerns
Your Company is committed to doing well for all causes all the time,
wherever it can. In the past year, it continued in this pursuit with
great zeal. It reached out to the distressed and dispossessed sections
of the society by partnering with leading NGOs. The Company partnered
with CRY, an organisation dedicated to championing the cause of
children in India, in a major campaign to increase the coverage and
spend under the Right of Children to Free and Compulsory Education Act
2009, Act. Among other NGOs, the Company has funded Arunodaya
Charitable Trust towards its philanthropic activities and Hinduja
Foundation towards its humanitarian activities in the field of
Healthcare, Education, Arts, Culture and Social Welfare. It contributed
towards the relief efforts for Typhoon Ketsana in Manila and flood
relief in Andhra Pradesh and Karnataka in 2009.
Your Company engages on a constant basis with the differently-abled
section of the society. The recruitment team visits institutes for
organising awareness programmes on ITeS sector and recruits from this
section. Every process of the Company has its own community engagement
team which donates cash, clothes, toiletries and books and stationeries
for the orphanages. Regular blood donation camps are organised in all
the facilities of the Company throughout the year.
In general, your Company engages with the society across all its
geographies for improving the conditions in: community health à through
awareness generation and vaccination, education à through training and
sponsorships, environment à through recycling and no-plastic campaigns
and community development à through interactive sessions.
As your Company grows bigger, its engagement with the society gets even
bigger. It does so not do so because it is mandated by law, but because
it is ingrained in its culture.
Communication and Public Relations
Your Company continued to ensure that all the stakeholders are
well-informed about the Company, and that the CompanyÃs perspective is
represented in the media. The Company took the lead on media handling;
proactively placing good news stories, dealing with enquiries and
producing media releases. All its Public Relations activities were
directed towards preserving the corporate brand, enhancing reputation,
maximising organisational potential and overseeing communications to
all functions to achieve consistency. Special efforts were made in
brand management à ensuring that corporate identity standards are clear
and followed and maintaining visual continuity and brand recognition
across all physical representations of the brand.
Your Company used multiple tools like print publications, online
communications, manuals, website content, blogs and internet
initiatives. The CEO communicates with the employees directly through
his blog on the intranet. The Company conducted a ÃGlobal Customer
Satisfaction Surveyà through an independent agency. The results of this
survey confirmed that our customers are delighted with your CompanyÃs
services. Town-hall meetings have evolved as an effective tool for
real-time interaction of the employees with the CEO. With an increased
frequency, it has become the perfect platform to seek feedback from
staff and discuss important issues.
Your Company has continued to win coveted awards and industry
recognitions. It was adjudged among the Global Best 10 in Sales Service
in the 2010 Global Outsourcing 100 survey by the International
Association of Outsourcing Professionals (IAOP). It figured in the
ÃDeloitte Technology Fast 50Ã, which is a ranking of the countryÃs 50
fastest-growing technology companies based on the percentage growth
over the last five years. Your Company was once again ranked in the
ÃNASSCOM Top 15 BPO Exportersà list and the ÃNASSCOM Top 20 IT- BPO
Employersà list. The external endorsements of our business excellence
were equally matched by internal affirmations by our clients. For the
second time in the last four years, your Company won the most valued
partner award of a major telecom client. These business awards endorse
that the Company is moving in the right corporate direction and help in
talent retention and public relations.
Your Company continued to maintain a strong flow of information
throughout the breadth of the organisation to support teamwork and
commitment to implement the objectives in an accurate and timely
manner. It also continued to communicate information such as new staff,
changes in policies and procedures, program updates and organisational
developments through internal newsletters. ÃGlobal ConnectÃ, a
quarterly publication, continues to be the CompanyÃs flagship
newsletter for internal communication. The intranet is extensively used
to provide access to shared files, resources and other information to
staff who are located all around the world but have access to the
internet.
Your CompanyÃs financial results, important developments and
achievements are communicated and uploaded on its website
www.hindujagsl.com
Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
Certification
Chief Executive Officer and Chief Financial Officer Certification as
required under Clause 49 of the Listing Agreement and Chief Executive
Officer declaration about Code of Conduct are furnished in Annexure A
and A-1 to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The prescribed particulars as required under Section 217(1)(e) of the
Companies Act, 1956 relating to Conservation of Energy, Technology
Absorption and Foreign Exchange earnings and outgo are furnished in
Annexure - B to this Report.
Corporate Governance
As required under Clause 49 of the Listing Agreements, a detailed
report on Corporate Governance forms Annexure-C to this Report.
The Statutory Auditors of the Company have examined the CompanyÃs
compliance and have certified the same as required under the Listing
Agreements. The certificate is reproduced as Annexure-D to this Report.
Management Discussion and Analysis Report
Further, a separate Management Discussion and Analysis Report covering
a wide range of issues relating to performance, outlook etc., is
annexed as Annexure - E to this Report.
ESOP
The disclosures required to be made under the Securities Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are given in Annexure - F to this Report.
Fixed Deposits
Your Company has not accepted any fixed deposits from the public and,
as such, no amount of principal or interest was outstanding as on the
balance sheet date.
Directors
Mr. Rajendra Chitale and Mr. Rangan Mohan, Directors of your Company,
are liable to retire by rotation at the ensuing Annual General Meeting
(AGM) and being eligible, offer themselves for re-appointment.
Directorsà Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the information and documents made available to
them, confirm that:
i) In the preparation of Annual Accounts for the year ending 31st March
2010, the applicable accounting standards have been followed. There are
no material departures in the adoption and application of the
accounting standards.
ii) They have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
your Company at the end of the financial year and of the profit of your
Company for that period;
iii) They have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Companies Act, 1956
for safeguarding the assets of your Company and for preventing and
detecting fraud and other irregularities;
iv) They have prepared the Annual Accounts on a going concern basis.
Auditors
M/s Price Waterhouse, Chartered Accountants, the Statutory Auditors of
your Company, retire at the conclusion of the forthcoming Annual
General Meeting of your Company and being eligible offer themselves for
re-appointment. The Board recommends the re-appointment of Auditors.
Exemption from attaching Accounts and other Documents of Subsidiaries
Your Company has made an application to the Central Government under
Section 212(8) of the Companies Act, 1956 requesting for granting
exemption from attaching the Annual Accounts and other documents of its
subsidiary companies to the Annual Accounts of the Company, on March
31, 2010. The approval of the Central Government is expected shortly.
Accordingly, the Annual Accounts and other documents for the year ended
March 31, 2010 of the subsidiary companies are not attached to the
Annual Report. The Accounts of the subsidiaries will be made available
for inspection by any member of the Company at its Registered Office
and also at the Registered Office of the concerned subsidiary. The
Accounts of the subsidiary companies and detailed information will be
made available to the members upon receipt of request from them. The
summary of key financials of the CompanyÃs subsidiaries as provided in
the approval is included in this Annual Report. The accounts of
individual subsidiary companies would be available on CompanyÃs website
www.hindujagsl.com
EmployeeÃs Particulars
Particulars of employees as required under Section 217(2A) of the
Companies Act,1956 and the Companies (Particulars of Employees) Rules
1975 as amended, forms part of this Directorsà Report. However, in
accordance with the provisions of Section 219(1) (b) (iv) of the
Companies Act 1956, this Report is being sent to all the shareholders
of the Company excluding the aforesaid information. Members interested
in obtaining the said information may write to the Company Secretary at
the Registered Office of the Company.
Acknowledgements
Your Board takes this opportunity to thank the customers, vendors,
business partners, shareholders and bankers for the faith reposed in
the Company and also thank the Government of India, various regulatory
authorities and agencies for their support and looks forward to their
continued encouragement. Your Directors place on record their sincere
appreciation of the contribution of the CompanyÃs most important asset,
viz. the employees, who through their sheer competence, hard work and
co-operation have enabled the Company to achieve consistent growth.
For and on behalf of the Board
Ramkrishan P. Hinduja
Place :Mumbai Chairman
Date : April 27, 2010