Mar 31, 2018
The Directors are pleased to present the Thirtieth Annual Report on the Business and Operations of HOV Services Limited (the "Company" or "HOVS") together with the Audited Financial Statements for the financial year ended March 31, 2018.
The financial statements were prepared in accordance with the Indian Accounting Standards (IND AS)as notified by the Ministry of Corporate Affairs applicable to the Company effective from April 1, 2017, transition date being April 1, 2016. The Company has followed guidance prescribed in IND AS 101 i.e. First time adoption of Indian Accounting Standards for the impact of transition.
FINANICAL RESULTS AND OPERATIONS: Rs. In Lakhs
Particulars |
Consolidated |
Standalone |
||
For the year ended on March 31, 2018 |
For the year ended on March31, 2017 |
For the year ended on March31, 2018 |
For the year ended on March31, 2017 |
|
INCOME Income from Operation |
1359.95 |
1543.21 |
1254.55 |
1364.51 |
Other Income |
420.32 |
100.79 |
106.31 |
106.15 |
1780.27 |
1644.00 |
1360.86 |
1470.66 |
|
EXPENDITURE Staff Cost |
911.96 |
1005.84 |
884.89 |
995.85 |
General and Administrative Expenses |
428.02 |
529.46 |
269.12 |
284.88 |
1339.98 |
1535.30 |
1154.01 |
1280.73 |
|
Profit/ (Loss) before Interest, Depreciation and Tax |
440.29 |
108.70 |
206.85 |
189.93 |
Less: Interest |
25.42 |
62.27 |
- |
- |
Less: Depreciation |
106.62 |
85.40 |
9.76 |
17.92 |
Profit / (Loss) before Exceptional items |
308.25 |
(38.97) |
197.09 |
172.01 |
Exceptional Items |
(0.38) |
- |
(1022.72) |
- |
Profit / (Loss) Before Tax |
307.87 |
(38.97) |
(825.63) |
172.01 |
Less: Provisions for taxes Current Tax |
(57.10) |
(59.00) |
(57.10) |
(59.00) |
Deferred Tax |
(12.95) |
0.03 |
(0.97) |
0.03 |
Profit / (Loss) after Tax |
237.82 |
(97.94) |
(883.70) |
113.04 |
Share of (Loss) from an Associate |
- |
(14457.91) |
- |
- |
Profit/(Loss) for the year |
237.82 |
(14555.85) |
(883.70) |
113.04 |
Other Comprehensive Income Items that will not be reclassified subsequently to Profit or Loss |
61011.50 |
3.05 |
1.23 |
3.05 |
Total Comprehensive Income for the year |
61249.32 |
(14552.80) |
(882.47) |
116.09 |
1. Results of Operations
For the financial year ended March 31, 2018 as follows:-
Consolidated Financial Performance:
- Consolidated total Income for the current year was Rs.1780.27 Lakhs.
- EBIDT for the current year was Rs.440.29 Lakhs.
- Net Profit for the year was Rs.237.82 Lakhs.
- Total Comprehensive Income for the year was Rs.61249.32 Lakhs.
- The basic and diluted Earnings Per Share (EPS) for the year was Rs.1.90.
Standalone Financial Performance:
- Total Income for the current year was Rs.1360.86 Lakhs.
- EBIDT for the current year was Rs.206.85 Lakhs.
- Exceptional Loss for the current year was Rs.1022.72 Lakhs.
- Net Loss for the year was Rs.883.70 Lakhs.
- Total Comprehensive Income for the current year was Rs. (882.46) Lakhs.
- The basic and diluted Earnings Per Share (EPS) as under:
-EPS Before exceptional item Rs.1.11
- EPS After exceptional item Rs. (7.05)
2. Appropriations
(i) Dividend:
Your Company intends to conserve available resources to invest in the growth of the business and pursue strategic growth opportunities, accordingly did not recommend any dividend for the year.
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial year ended on March 31, 2018.
3. Subsidiary companies
i) HOVS LLC incorporated in Delaware under the laws of Unites States of America;
ii) HOV Environment LLC incorporated in Nevada State under the laws of United States of America;
iii) HOVS Holdings Limited incorporated under the Companies Ordinance of Hong Kong; and
iv) HOV Environment Solutions Private Limited incorporated in Maharashtra under Indian Company Laws.
A report on the performance and financial position of Subsidiaries as per the Companies Act, 2013 is annexed in the financial statements.
4. Significant developments- Investment
As part of SourceHOV Business Combination which got completed on July 12, 2017, the Company''s wholly owned subsidiary HOVS LLC as of March 31, 2018 received 31,390,646 common shares in Exela Technologies, Inc., through Ex-Sigma LLC a special purpose vehicle formed for SourceHOV Business Combination. The percentage of investment held by HOVS LLC in Exela Technologies, Inc., as of March 31, 2018 is 19.983% and therefore as per IND-AS, the investment has been accounted as Financial Instrument, i.e. FVOCI Equity Instruments. For details refer Note No. 5 of Consolidated Financial statements.
5. ADR/GDR
The shareholder''s in their Annual General Meeting dated July 21, 2007 granted approval for proposed 15,000,000 of ADR/GDR issue. However, so far none of the underlying equity shares were issued by the Company.
6. Share Capital of the Company
During the financial year, the Company had allotted 3,200 equity shares under ESOP Plans 2007. Consequently, after the allotment, the paid up share capital of the Company has gone up from 12,532,522 equity shares of Rs.10/- aggregating to Rs.125,325,220/- to equity shares 12,535,722 of Rs.10 aggregating to Rs.125,357,220/-.
7. Employee Stock Option Plan (ESOP)
Your Company instituted "HOVS Stock Option Plan 2007" for its employees and for employees of its subsidiary companies as detailed below:
Plan |
Shareholder''s |
No. of |
No. of |
Total |
Approval |
Options for |
Options for |
||
Date |
employees |
employees of |
||
of the Company |
subsidiary |
|||
companies |
||||
"HOVS Stock Option Plan 2007" |
July 21, 2007 |
400,000 |
700,000 |
1,100,000 |
The information to be disclosed as per SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is provided herewith as "ANNEXURE- A" to this report.
8. Conservation of Energy, Technology Absorption and Foreign Exchange
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 13 (3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is provided herewith as "ANNEXURE- B" to this report.
9. Human Resources
During the year the Company had maintained cordial relations with all its employees and has taken utmost care of its employees deployed.
The Company has no employees who received remuneration in excess of limits prescribed Under Section 197 of the Companies Act, 2013 read with the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.
10. Particular of Employees and Related Disclosures
Disclosure as per Section 197 (12) of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided herewith as "ANNEXURE-C" to this report.
11. Directors Responsibility Statement
Information as per Section 134 (5) of the Companies Act, 2013 is provided herewith as "ANNEXURE- D" to this report.
12. Financial Summary and Highlights
The financial summary and highlights are presented under the Management Discussion and Analysis Report.
13. Board Meetings
During the financial year 4 (Four) Board Meetings were held the details of which are given in the Corporate Governance Report.
14. Directors and Key Managerial Personnel
Mr. Vikram Negi Executive Director is liable to retire by rotation at the 30th Annual General Meeting. Mr. Negi has confirmed his eligibility and willingness for re-appointment. Mr. Negi has requisite qualifications and experience and therefore, your Directors recommend that the proposed resolution relating to the re-appointment of Mr. Negi, be passed.
Mr. Rohit Jain, was appointed as an additional director effective September 1, 2017 by the Board of Directors and in terms of Section 161 of the Act 2013, he holds office until the date of ensuing Annual General Meeting. The Nomination and Remuneration Committee in its meeting held on May 29, 2018 had recommended for his appointment as an Independent Director, subject to the approval from shareholders at their ensuing 30th Annual General Meeting.
Mr. Nilesh Bafna was appointed as the Chief Financial Officer of the Company with effect from September 1, 2017 by the Board of Directors in their meeting held on August 31, 2017.
15. Declarations from Independent Directors
The Company has received declarations from all the Independent Directors confirming for meeting the criteria of independence as required under Section 149(7) of the Companies Act, 2013.
16. Meeting of Independent Directors
The meeting of Independent Directors was held on February 12, 2018 to review the performance of the Board as a whole, its committees, non-independent directors, independent directors and the Chairman of the Company and assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The independent directors expressed satisfaction on the quality, quantity and timeliness of flow of information between the management and the Board.
The familiarisation program was arranged by the Company on February 12, 2018 for Independent Directors. The details of the familiarisation program was disclosed under Investor Relations section of the Company''s website www.hovsltd.com.
17. Performance Evaluation
The performance evaluation of Board, its Committees, Independent Directors, Non-independent directors and including Chairman of the Board was carried out during the year considering parameters as set by the members of the Board.
The evaluation of the Board and its Committees was carried out through a structured evaluation process covering various aspects of the Boards functioning and having well defined Committees and each Committee having co-operative working environment with the Board.
The evaluation of Chairperson was carried out by independent directors on criteria of leadership, promotes participation among all members and ability to manage conflicting situations positively.
The evaluation of the independent directors by all board members was carried out based on the criteria of efforts undertaken by them, brings independent view point in discussion and awareness of their roles and responsibilities.
18. Internal Financial Controls
The Company has adequate procedures for ensuring the internal financial controls and the same are in place with reference to financial statements. The internal control system is reviewed by the Audit Committee with the management and Internal Auditors of the Company.
19. Related Party Transactions
The transactions entered by the Company with related parties are in ordinary course of business and at arm''s length basis. The particulars of transactions entered with related parties is provided herewith as "ANNEXURE- E" to this report.
20. Corporate Governance Report
The report on Corporate Governance is annexed as the part of the Director''s report.
21. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review, as stipulated under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented as a separate section forming part of the Director''s report.
22. Code of Conduct for Board and Senior Management
The Company has adopted Code of Conduct for the Directors and Senior Management and is available on the Company''s website http://hovsltd.com/code of conduct.html. All Directors and Senior Management personnel have affirmed their compliance with the said Code. A declaration signed by the Whole-time Director to this effect is annexed as part of the Director''s Report.
23. Auditors and Auditors'' Report Statutory Auditors:
M/s BAGARIA & Co., Chartered Accountants were appointed as Statutory Auditors for a period of 5 years, in 29th Annual General Meeting held on September 1, 2017 till the conclusion of the 34th AGM to be held in year 2022.
The Statutory Auditors'' Report for FY 2017-18 does not contain any qualification, reservation or adverse remark.
Secretarial Audit Report:
M/s. J B Bhave & Co., Practicing Company Secretaries, Pune for conducting secretarial audit, the Secretarial Audit Report for FY 2017-18 is provided herewith as "ANNEXURE- F" to this report.The Secretarial Auditors'' Report does not contain any qualification, reservation or adverse remark.
During the year under review, there were no instances of frauds committed in the Company by its officers or employees, which requires reporting by the Statutory Auditors and the Secretarial Auditor.
24. Extract of Annual Return
Extract of Annual Return is provided herewith as "ANNEXURE- G" to this report.
25. Committees of the Board
The Company has constituted the Audit Committee; Nomination and Remuneration Committee; Stakeholders Relationship Committee. The details of all the committee are disclosed in the Corporate Governance Report. The Board accepts all the recommendations of the Audit Committee.
The Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The nomination and remuneration policy has been provided as "Annexure H" forming a part of this report.
26. Particulars of Loans, Advances and Investments
The particulars as required pursuant to Section 186 (4) of the Companies Act , 2013, read with Companies (Meetings of Board and its Powers) Rules, 2014 and pursuant to Regulation 34(3) and Schedule V Part A of SEBI LODR, 2015, the full particulars are mentioned in the Notes to Account to the Financial Statements.
The particulars of loans are mentioned in Note No. 6 of Standalone Notes to Accounts; the particulars of Guarantees are mentioned in Note No. 13 & 12 respectively of Standalone and Consolidated Notes to Accounts; and the particulars of Investment are mentioned in Note No. 5 of both Consolidated and Standalone Notes to Accounts.
27. Compliance with Secretarial Standards
The Secretarial Standards issued by the Institute of Company Secretaries of India, as applicable to the Company, have been complied with.
28. Whistle Blower Policy
The Vigil Mechanism/Whistle Blower Policy is adopted, in order to establish a mechanism for directors and employees to report genuine concerns or grievances about unethical behaviour, actual or suspected frauds or violation of the Company''s Code of Conduct. The Policy provides for commitment to the highest possible standards of ethical, moral and legal business conduct and its commitment to open communication and has provisions for direct access to the Chairperson of the Audit Committee in appropriate and exceptional cases.
During the year there was no instances reported under the Policy.
29. General
a. The statement relating to risk management policy and identification of risk elements are covered under Management Discussion Analysis Report as annexed with this Report.
b. On following points no reporting or disclosure is required as there were no transactionson during the financial year under review:
i. There was no loan, guarantees and investment made;
ii. Details relating to deposits covered under Chapter V of the Companies Act, 2013;
iii. No significant and material orders passed by the regulators or courts or tribunals which impacted the going concern status and operation of the Company;
iv. Issue of equity shares with differential rights as to dividend, voting or otherwise;
v. Issue of sweat equity shares; and
vi. None of the whole-time directors of the Company received any remuneration or commission from the subsidiaries of the Company.
30. Acknowledgement
Your Directors place on record their appreciation for co-operation and support received from the Government of India, Government of Maharashtra, Reserve Bank of India, Software Technology Parks of India, Registrar of Companies, Pune, other local governmental bodies, NASSCOM, the National Stock Exchange, the Bombay Stock Exchange, Bankers of the Company and Shareholders during the financial year.
Your Directors thanks the investors and shareholders for placing faith in the Company.
Your Directors express their sincere appreciation for the contributions made by employees at all levels in your Company for their hard work, co-operation and support.
For and on behalf of the Board of Directors
Sunil Rajadhyaksha
Chairman & Executive Director
(DIN: 00011683)
Date: May 29, 2018
Mar 31, 2016
The Directors are pleased to present the Twenty-Eighth Annual Report on the Business and Operations of HOV Services Limited (the "Company" or "HOVS") together with the Audited Financial Statements for the financial year ended March 31, 2016.
FINANICAL RESULTS AND OPERATIONS:
Particulars |
Rs. In Million |
|||
Consolidated |
Standalone |
|||
For the year ended on March 31, 2016 |
For the year ended on March 31, 2015 |
For the year ended on March 31, 2016 |
For the year ended on March 31, 2015 |
|
INCOME Income from Operation |
151.51 |
164.04 |
135.06 |
125.45 |
Other Income |
11.16 |
5.71 |
13.35 |
8.17 |
162.67 |
169.75 |
148.41 |
133.62 |
|
EXPENDITURE Staff Cost |
104.45 |
104.21 |
102.16 |
100.64 |
General and Administrative Expenses |
44.19 |
77.90 |
24.39 |
33.33 |
148.64 |
182.11 |
126.55 |
133.97 |
|
Profit/ (Loss) before Interest, |
14.03 |
(12.36) |
21.86 |
(0.35) |
Depreciation and Tax Less: Interest |
6.07 |
4.11 |
- |
- |
Less: Depreciation |
9.75 |
10.13 |
3.55 |
4.37 |
Profit / (Loss) before Tax |
(1.79) |
(26.60) |
18.31 |
(4.72) |
Less: Provisions for taxes Current Tax |
5.69 |
5.69 |
||
Deferred Tax |
(1.30) |
(1.79) |
(1.30) |
(1.79) |
Profit / (Loss) after Tax |
(6.18) |
(24.81) |
13.92 |
(2.93) |
Less: Minority Interest |
- |
4.70 |
- |
- |
Profit/(Loss) after minority interest |
(6.18) |
(20.11) |
13.92 |
(2.93) |
Add: Share of (Loss) from an Associate |
(2,750.19) |
(1,533.11) |
- |
- |
Net Profit / (Loss) |
(2,756.37) |
(1,553.22) |
13.92 |
(2.93) |
1. RESULTS OF OPERATIONS:
For the financial year ended March 31, 2016 as follows:-Consolidated Financial Performance:
- Consolidated total Income for the current year was Rs. 162.67 million.
- EBIDT for the current year was Rs. 14.03 million.
- Net Profit/ (Loss) was Rs. (2,756.37) million.
- The basic and diluted Earnings Per Share (EPS) was Rs. (220.08) for the year. Standalone Financial Performance
- Total Income for the current year was Rs. 148.41 million.
- EBIDT for the current year was Rs. 21.86 million.
- Net Profit/ (Loss) was Rs. 13.92 million.
- The basic and diluted Earnings Per Share (EPS) is Rs. 1.11 for the year under reporting.
2. Appropriations
(i) Dividend:
Your Company intends to conserve available resources to invest in the growth of the business and pursue strategic growth opportunities, accordingly did not recommend any dividend for the year.
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial year ended on March 31, 2016.
3. Subsidiary companies and Associate company
A. Subsidiary Companies:
i) HOVS LLC incorporated in Delaware under the laws of Unites States of America;
ii) HOV Environment LLC incorporated in Nevada State under the laws of United States of America;
iii) HOVS Holdings Limited incorporated under the Companies Ordinance of Hong Kong; and
iv) HOV Environment Solutions Private Limited incorporated in Maharashtra under Indian Company Laws.
B. Associate Company:
Source HOV Holdings Inc., in which HOVS LLC, wholly owned subsidiary of the Company, has 44.8% stake holding.
Pursuant to shareholders'' approval on November 4, 2014, SourceHOV Holdings Inc. ("SourceHOV"), a company in which HOVS LLC, wholly owned US subsidiary of HOV Services Limited, holds an investment, completed the merger with BancTec Group LLC. Post-merger the equity ownership of HOVS LLC in SourceHOV increased from 26.1% to 44.8%. The fair value of HOVS LLC investment on November 4, 2014 in SourceHOV has been valued at US$ 95 million (Rs. 58,337.60 lakhs) at the time of aforesaid merger. Accordingly, additional Capital Reserve of Rs 58,240.26 lakhs was recognized being the fair value of investment in the associate over the carrying value of investment. The Company has done the impairment test during the financial year 2015-16 under Accounting Standard 28 "Impairment of Assets" for the investment and there is no impairment to the Investment Value.
A report on the performance and financial position of Subsidiaries, Associate Company as per the Companies Act, 2013 is annexed in the financial statements.
4. Significant developments
During the financial year there was no significant development happened in the Company.
5. ADR/GDR
The shareholder''s in their Annual General Meeting dated July 21, 2007 granted approval for proposed 15,000,000 of ADR/ GDR issue. However, so far none of the underlying equity shares were issued by the Company.
6. Share Capital of the Company
During the financial year, the Company had allotted 18,500 equity shares under ESOP Plan 2007. Consequently, after the allotment, the paid up share capital of the Company has gone up from 12,524,522 equity shares of Rs. 10/- each aggregating to Rs. 125,245,220/- to 12,532,522 equity shares of Rs. 10/- aggregating to Rs. 125,325,220/-.
7. Employee Stock Option Plan (ESOP)
Your Company instituted "HOVS Stock Option Plan 2007" and "HOVS Stock Option Plan 2008" for its employees and for employees of its subsidiary companies as detailed below:
Plan |
Shareholder''s Approval Date |
No. of Options for employees of the Company |
No. of Options for employees of subsidiary companies |
Total |
"HOVS Stock Option Plan 2007" |
July 21, 2007 |
400,000 |
700,000 |
1,100,000 |
"HOVS Stock Option Plan 2008" |
September 30, 2008 |
0 |
750,000 |
750,000 |
The information to be disclosed as per SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed herewith as "ANNEXURE- A" to this report.
8. Conservation of Energy, Technology Absorption and Foreign Exchange
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 13 (3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "ANNEXURE- B" to this report.
9. Human Resources
All employees are aligned under our value system which propagates and practices being open, transparent and honest, collaborative, honoring commitments and demanding excellence among them. During the year the Company had maintained cordial relations with all its employees and has taken utmost care of its employees deployed.
The Company has no employees who received remuneration in excess of limits prescribed under Section 197 of the Companies Act, 2013 read with the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.
10. Disclosure as per Section 197 (12) of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as "ANNEXURE- C" to this report.
11. Directors Responsibility Statement:
Information as per Section 134(5) of the Companies Act, 2013 is annexed herewith as "ANNEXURE- D" to this report.
12. Financial Summary and Highlights
The Company''s current year financial summary and highlights are mentioned in the Management Discussion and Analysis Report.
13. Board Meetings
During the financial year 6 (Six) Board Meetings were held the details of which are given in the Corporate Governance Report.
14. Directors and Key Managerial Personnel
Mr. Surinder Rametra, Executive Director, retires by rotation and being eligible has offered himself for re-appointment.
Mr. Baldev Raj Gupta and Mr. Harish Bhasin were appointed in 26th Annual General Meeting held on July 26, 2014 as Independent Directors for a term comprising of two years. Their term is getting over on July 26, 2016. Based on the recommendation of the Nomination and Remuneration Committee the Board of Directors recommended their re-appointment by the shareholders in the ensuing 28th Annual General Meeting as Independent Director for a term comprising of five years from July 26, 2016 to July 25, 2021.
Mr. Sunil Rajadhyaksha, Whole time Director, Mr. Parvinder Chadha, Whole time Director and Mr. Surinder Rametra, Whole time Director of the Company were re-appointed by the shareholders in the 27th Annual General Meeting for a term of 5 years commence on April 1, 2016 till March 31, 2021.
None of the Directors were materially interested in any contract & agreements existing or at the end of the financial year that was significant in relation to the business of the Company.
All Independent Directors of the Company have given declaration under Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as mentioned in the Section 149(6) of the Companies Act, 2013.
15. Meeting of Independent Directors
Independent Directors of the Company met on March 21, 2016, to review the performance of non-independent directors, the Board as a whole and the Chairman of the Company and assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
The familiarization program was arranged by the Company for Independent Directors with regard to their roles, rights, responsibilities with the Company, the nature of the industry in which the Company operates and business model of the Company on March 21, 2016. The details of the feminization program was disclosed under Investor Relations section of the Company''s website www.hovsltd.com.
16. Performance Evaluation
During the year the evaluation of Board, its Committees, Independent Directors and other non-independent directors including Chairman of the Board was carried out considering parameters as set by the members of the Board.
For Board and its Committees, the exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience & competencies, meeting in legal frame work, time spent on agendas, receiving information from management and having well defined Committees and each Committee having co-operative working environment with the Board. The evaluation of Chairperson was carried out by independent directors on criteria of leadership, promotes participation among all members and ability to manage conflicting situations positively. In case of evaluation of the independent directors by whole board members was carried out based on the criteria of efforts undertaken for understanding the company, brings independent view point in discussion and awareness of roles and responsibilities.
17. Internal Financial Controls
The Company has adopted adequate procedures for ensuring the internal financial controls. The Company adheres to best practices for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable and accurate financial informationâs.
18. Related Party Transactions
The transactions entered by the Company with related parties are in ordinary course of business and at arm''s length basis. The particulars of transactions entered with related parties is annexed herewith as "ANNEXURE- E" to this report.
19. Corporate Governance Report
The Company believes in good corporate governance which are essential to enhance the value of the Company for the stakeholders and abide by the Corporate Governance norms as stipulated under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Corporate Governance report is annexed as the part of the Director''s report.
20. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review, as stipulated under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented as a separate section forming part of the Director''s report.
21. Code of Conduct for Board and Senior Management
The Company has adopted Code of Conduct for the Directors and Senior Management and same is available on the Company''s website http://hovsltd.com/code of conduct.html. All Directors and Senior Management personnel have affirmed their compliance with the said Code. A declaration signed by the Whole-time Director to this effect is annexed as part of the Director''s report.
22. Auditors and Auditors'' Report Statutory Auditors
At the Annual General Meeting held on July 26, 2014, M/s. Lodha & Co, Chartered Accountants, Mumbai, were appointed as Statutory Auditors of the Company to hold office till the conclusion of 29thAnnual General Meeting subject to ratification by shareholders at every Annual General Meeting and being eligible have expressed their willingness to continue.
A resolution proposing ratification of their appointment is submitted at the ensuing 28thAnnual General Meeting. The Statutory Auditors'' Report does not contain any qualification, reservation or adverse remark.
Secretarial Audit Report
The Board appointed M/s. J B Bhave& Co., Practicing Company Secretaries, Pune for conducting secretarial audit, the Secretarial Audit Report for FY 2015-16 is annexed herewith as "ANNEXURE- F" to this report. The Secretarial Auditors'' Report does not contain any qualification, reservation or adverse remark.
23. Extract of Annual Return
Extract of Annual Return is annexed herewith as "ANNEXURE- G" to this report.
24. Committees of the Board Audit Committee
The Company has constituted Audit Committee, the details of the same are disclosed in the Corporate Governance Report. The Board accepts all the recommendations of the Audit Committee.
Nomination & Remuneration Committee
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.
Stakeholders Relationship Committee
The Company has constituted the above committee to resolve the grievances of the shareholders.
The details of the committees along with their charters are annexed as part of this Board''s Report.
25. Whistle Blower Policy
The Board of Directors had adopted the Vigil Mechanism/Whistle Blower Policy in order to establish a mechanism for directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected frauds or violation of the Company''s Code of Conduct. It provides necessary safeguards for protection of employees from reprisals or victimization, for whistle-blowing in good faith. In line with the commitment of Company to the highest possible standards of ethical, moral and legal business conduct and its commitment to open communication and made provisions for direct access to the Chairperson of the Audit Committee in appropriate and exceptional cases. During the there was no instances reported under the Policy.
26. General
a. The statement relating to risk management policy and identification of risk elements are covered under Management Discussion Analysis Report as annexed with this Report.
b. On following points no reporting or disclosure is required as there were no transactions on these items during the financial year under review:
i. There was no loan, guarantees and investment made;
ii. Details relating to deposits covered under Chapter V of the Companies Act, 2013;
iii. No significant and material orders passed by the regulators or courts or tribunals which impacted the going concern status and operation of the Company;
iv. Issue of equity shares with differential rights as to dividend, voting or otherwise;
v. Issue of sweat equity shares;
vi. None of the whole-time directors of the Company received any remuneration or commission from the subsidiaries of the Company.
27. Acknowledgement
Your Directors place on record their appreciation for co-operation and support received from the Government of India, Government of Maharashtra, Reserve Bank of India, Software Technology Parks of India, Registrar of Companies, Pune, other local governmental bodies, NASSCOM, the National Stock Exchange, the Bombay Stock Exchange, Bankers of the Company and Shareholders during the financial year.
Your Directors express their sincere appreciation for the efforts made by employees at all levels for their hard work, co-operation and support extended to your Company during the financial year.
For and on behalf of the Board of Directors
Sunil Rajadhyaksha
Date: May 13, 2016 Chairman & Executive Director
(DIN- 00011683)
Mar 31, 2015
Dear Members,
The Directors are pleased to present the Company''s Twenty-Seventh
Annual Report on the Business and Operations of HOV Services Limited
(the "Company" or "HOVS") together with the Audited Financial
Statements for the financial year ended March 31, 201S.
The financial statements are prepared for the year comprising of the 12
(Twelve) months period ended on March 31, 201S and are not comparable
to the financial statements of previous year comprising of 1S (Fifteen)
months ended March 31, 2014, as the financial year was changed from
calendar year to financial year as per the Companies Act, 2013.
FINANCIAL RESULTS AND OPERATIONS:
Rs. In Million
Consolidated Standalone
Twelve Fifteen Twelve Fifteen
Particulars months months months months
period period period period
ended ended ended ended
on on on on
March March March March
31, 2015 31, 2014 31, 2015 31, 2014
INCOME
Income from Operation 164.04 1 73.26 12S.45 159.24
Other Income 5.71 10.14 8.17 12.74
169.75 183.40 133.62 171.98
EXPENDITURE
Staff Cost 104.21 128.50 100.64 122.17
General and Administrative
Expenses 77.90 69.92 33.33 31.72
182.11 198.42 133.97 153.89
Profit / (Loss) before
Interest, Depreciation (12.36) (15.02) (0.35) 18.09
& Tax
Less: Interest 4.11 1.60 - -
Less: Depreciation 10.13 9.74 4.37 4.03
Profit / (Loss) before Tax (26.6) (26.36) (4.72) 14.06
Tax pertaining to earlier
years - 0.04 - 0.04
Less: Provisions for taxes - - - -
Current Tax - 6.23 - 6.23
Deferred Tax (1.79) (1.94) (1.79) (0.74)
Profit / (Loss) after Tax (24.81) (30.69) (2.93) 8.53
Less: Minority Interest 4.70 (6.41) - -
Profit/(Loss) after
minority interest (20.11) (24.28) (2.93) -
Add: Share of Profit/
Loss) from an Associate (1,S33.11) (464.S0) - -
Profit / (Loss) for
the year/period (1,553.22) (488.78) (2.93) 8.53
1. Results of Operations
Consolidated Financial Performance
* Consolidated total Income for the current year was Rs. 169.75
million.
* EBIDT for the current year was Rs. (12.36) million.
* Net Profit/ (Loss) for the current year was Rs. (1553.22) million.
* The basic and diluted Earnings per share (EPS) is Rs. (124.20) for
the current year.
Standalone Financial Performance
* Total Income for the current year was Rs. 133.62 million.
* EBIDT for the current year was Rs. (0.35) million.
* Net Profit/(Loss) for the current year was Rs. (2.93) million.
* The basic and diluted Earnings Per Share (EPS) is Rs. (0.23) for the
current year under reporting.
2. Appropriations
(i) Dividend:
Your Company intends to conserve available resources to invest in the
growth of the business and pursue strategic growth opportunities and
also in view of losses during the financial year 2014-15 the Board of
Directors, accordingly did not recommend any dividend for the year.
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial year ended on
March 31, 2015.
3. Subsidiary companies and Associate
A. The Company has following subsidiary companies:
i) HOVS LLC incorporated in Delaware State under the laws of Unites
States of America;
ii) HOV Environment LLC incorporated in Nevada State under the laws of
United States of America;
iii) HOVS Holdings Limited incorporated under the Companies Ordinance
of Hong Kong; and
iv) HOV Environment Solutions Private Limited incorporated in
Maharashtra under Indian Company Law.
B. Associate
SourceHOV Holdings Inc., in which HOVS LLC, wholly owned subsidiary of
the Company, has 44.8% stake holding.
A report on the performance and financial position of Subsidiaries,
Associate companies as per the Companies Act, 2013 is annexed to the
financial statements.
4. Significant developments
A) Merger transaction
On November 4, 2014 the SourceHOV Holdings Inc. ("SourceHOV"), a
company in which HOVS LLC, wholly owned US subsidiary, holds an
investment, has completed the merger with BancTec Group LLC. The
shareholders'' approval was obtained through notice of postal ballot
dated September 30, 2014. The result of postal ballot was declared on
November 4, 2014 wherein the shareholders had approved with requisite
majority. Post-merger the stake holding of HOVS LLC in SourceHOV has
increased from 26.1% to 44.8% in the combined entity.
B) Proposed sale transaction
i) The Board of Directors of the Company vide its notice of postal
ballot dated September 30, 2014 conducted a postal ballot process for
taking shareholders'' approval seeking in-principle approval for sale of
Company''s investment in SourceHOV vide the notice of postal ballot
dated September 30, 2014. The result of postal ballot was declared on
November 4, 2014 wherein the shareholders had approved with requisite
majority.
ii) Certain group of shareholders had filed on November 3, 2014 a
petition before Mumbai Bench of the Hon''ble Company Law Board (CP No.
101/397-398/CLB/ MB/2014), against the three resolutions put before the
shareholders vide the notice of postal ballot dated September 30, 2014.
As part of the hearing process with the Mumbai Bench of the Hon''ble
Company Law Board, all necessary documents including the valuation
report and fairness report were submitted for due consideration by the
Hon''ble Company Law Board.
iii) The Hon''ble Company Law Board vide its order dated January 29,
201S disposed- off the petition by permitting the objecting
shareholders, on the request of objecting shareholders, to withdraw the
petition. The Company had filed necessary disclosure regarding the
outcome of the hearing with the Hon''ble Company Law Board vide its
intimation dated February 19, 201S to BSE Limited and National Stock
Exchange of India Limited.
iv) The proposed sale transaction did not consummate on account of the
prevailing situation including shareholder litigation and transaction
delays. The Company had immediately communicated to the shareholders
vide intimations filed with the BSE Limited and National Stock Exchange
of India Limited on April 20, 201S.
5. ADR/GDR
The shareholder''s in their Annual General Meeting dated July 21, 2007
granted approval for proposed 1S,000,000 of ADR/GDR issue. However, so
far none of the underlying equity shares were issued by the Company.
6. Share Capital of the Company
During the financial year, the Company has allotted twice equity shares
under ESOP Plan 2007 to its employee''s on May 21, 2014 and on December
19, 2014 allotted 3,000 and 10,S00 equity shares respectively.
Consequently, after the allotment, the paid up share capital of the
Company has gone up from 12,499,S22 equity shares of Rs. 10/- each
aggregating to Rs. 124,99S,220/- to 12,S14,022 equity shares of Rs.
10/- aggregating to Rs. 12S,140,220/-
7. Employee Stock Option Plan (ESOP)
Your Company instituted "HOVS Stock Option Plan 2007" and "HOVS Stock
Option Plan 2008" for its employees and for employees of its subsidiary
companies as detailed below:
Plan Shareholder''s No. of No. of Total
Approval Options Options
Date for for
employees employees
of the of
Company subsidiary
ompanies
"HOVS Stock Option
Plan 2007" July 21, 2007 400,000 700,000 1,100,000
"HOVS Stock Option
Plan 2008" September 0 750,000 750,000
30, 2008
The information to be disclosed as per SEBI (Employees Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed
herewith as ANNEXURE - ''A'' to this report.
8. Conservation of Energy, Technology Absorption and Foreign Exchange
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 13 (3) (m)
of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts)
Rules, 2014, is annexed herewith as ANNEXURE - ''B'' to this report.
9. Human Resources
During the financial year the Company had maintained cordial relations
with all its employees and has taken utmost care of its employees
deployed. All employees are aligned under our value system which
propagates and practices open, transparent and honest, collaborative,
honoring commitments and demanding excellence among them.
The Company has no employees who received remuneration in excess of
limits prescribed under Section 197 of the Companies Act, 2013 read
with the Companies (Appointment & Remuneration of Managerial Personnel)
Rules, 2014.
10. Disclosure as per Section 197 (12) of the Companies Act, 2013 and
Rule S of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is annexed herewith as ANNEXURE - ''C'' to this
report.
11. Directors Responsibility Statement
Information as per Section 134(5) of the Companies Act, 2013 is annexed
herewith as ANNEXURE - ''D'' to this report.
12. Financial Summary and Highlights
The Company''s current year financial summary and highlights are
mentioned in the Management Discussion and Analysis Report.
13. Board Meetings
During the financial 8 (Eight) Board Meetings were held the details of
which are given in the Corporate Governance Report.
14. Directors
Mr. Sunil Rajadhyaksha, Executive Director, retires by rotation and
being eligible has offered himself for re-appointment.
Mrs. Lakshmi Kumar was appointed as an Additional Director of the
Company by the Board of Directors pursuant to the Section 161 of the
Companies Act, 2013, who shall hold office till the conclusion of the
ensuing 27th Annual General Meeting. In terms of provisions of Section
149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement,
her appointment is proposed for further period as an Independent
Director, who shall hold office for five years (from July 22, 201S to
July 21, 2020) subject to the shareholders'' approval in the ensuing
27th Annual General Meeting of the Company.
Mr. Parvinder S Chadha, Executive Director and Mr. Surinder Rametra,
Executive Director and Mr. Sunil Rajadhyaksha, Executive Director were
appointed as whole-time directors of the Company for a period of five
years from April 1, 2011 to March 31, 2016 by the Shareholders'' in
their 23rd Annual General Meeting held on August 3, 2011. The tenure of
their office as whole-time director will be ending on March 31, 2016.
Pursuant to the provisions of the Sections 196, 197 read with Schedule
V of the Companies Act, 2013 the approval of the Shareholders'' of the
Company is being sought for their re-appointment as whole-time
directors for a further term of five years from April 1, 2016 to March
31, 2021.
Mr. Prakash Shukla, Independent Director ceased to be director w.e.f.
from July 26, 2014.
None of the Directors were materially interested in any contract &
agreements existing or at the end of the financial year that was
significant in relation to the business of the Company.
All Independent Director of the Company have given declaration under
Section 149(7) of the Companies Act, 2013, stating that they meet the
criteria of independence as mentioned in the Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
15. Meeting of Independent Directors
Independent Directors of the Company met on March 21, 201S, to review
the performance of non-independent directors, the Board as a whole and
the Chairman of the Company and assess the quality, quantity and
timeliness of flow of information between the Company management and
the Board that is necessary for the Board to effectively and reasonably
perform their duties.
The familiarisation program was arranged by the Company to Independent
Directors with regard to their roles, rights, responsibilities with the
Company, the nature of the industry in which the Company operates and
business model of the Company on March 21, 201S. The details of the
familization program is disclosed on the Company''s website http://www.
hovsltd.eom/Policies_Disclosures.html#
16. Performance Evaluation
The evaluation of Independent Directors, Board, Committees and other
non-independent directors was carried out as per criteria such as
objective, attendance, contribution, interactive, experience,
integrity, disclosures provided, ability to monitor corporate
governance, domain expertise, strategic vision, industry knowledge,
participation in discussions etc., prescribed by the Nomination and
Remuneration Committee. The details of the same are as mentioned below.
Board: The Board regularly spent quality time in reviewing performance
of the Company and has working environment which is congenial and
co-operative. It has appropriate committees and skill sets to enable
its working. It receives timely information from the management to
fulfill its role.
Committees: The Board Committees are appropriately constituted with
clear charter which is effective, interactive and decisive.
Directors: All the directors invest time in understanding Company and
its requirements. They bring external knowledge and participate during
discussion in the meeting of Board and its various committees. Each one
expresses his views on the matter of discussion in the Board/
Committee. All directors keep abreast of the updated issues that are
likely to be taken up at the Board level. They are committed to
fulfillment of director obligation and fiduciary responsibilities.
17. Key Managerial Personnel
During the financial year Company has appointed Mr. Sriram Iyengar, as
a Chief Financial Officer w.e.f. April I, 2014 pursuant to the
provision of Section 203 of the Companies Act, 2013. Mr. Bhuvanesh
Sharma resigned from the post of Company Secretary and Compliance
Officer of the Company w.e.f. July 30, 2014 and the Board re-appointed
him from January 1, 201S as VP-Corporate Affairs and Company Secretary
and Compliance Officer of the Company.
18. Internal Financial Controls
The Company has adopted adequate procedures for ensuring the internal
financial controls. The Company adheres best practices for
safeguarding its assets, the prevention and detection of frauds and
errors, the accuracy and completeness of the accounting records and
timely preparation of reliable and accurate financial informations.
19. Related Party Transactions
The transactions entered with related parties are in ordinary course of
business and on arm''s length basis of the Company. The particulars of
transactions entered with related parties is annexed herewith as
ANNEXURE - "E'' to this report.
20. Corporate Governance Report
The Company believes in good corporate governance which are essential
to enhance the value of the Company for the stakeholders and abide by
the Corporate Governance norms as stipulated under Clause 49 of the
Listing Agreement with the Stock Exchanges. The Corporate Governance
report is annexed as the part of the Director''s report.
21. Management Discussion and Analysis
Management Discussion and Analysis report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming part of the
Director''s report.
22. Code of Conduct for Board and Senior Management
The Company has adopted Code of Conduct for the Directors and Senior
Management and the same is available on the Company''s website
http://www.hovsltd.com/code_of_conduct.html. All Directors and Senior
Management personnel have affirmed their compliance with the said Code.
A declaration signed by the Whole-time Director to this effect is
annexed as part of the Director''s report.
23. Auditors and Auditors'' Report Statutory Auditors
At the 26th Annual General Meeting held on July 26, 2014, M/s. Lodha &
Co, Chartered Accountants, Mumbai, were appointed as Statutory Auditors
of the Company to hold office till the conclusion of 29th Annual
General Meeting subject to ratification for their appointment by
shareholders at every Annual General Meeting and being eligible have
expressed their willingness to continue.
A resolution proposing ratification for their appointment is submitted
at the ensuing 27th Annual General Meeting.
The Statutory Auditors'' Report does not contain any qualification,
reservation or adverse remark.
Secretarial Audit Report
The Board appointed M/s. JDNASSA & Associates, Pune for conducting
secretarial audit, the Secretarial Audit Report for FY 2014-1S is
annexed herewith as ANNEXURE - ''F'' to this report.
The Secretarial Auditors'' Report does not contain any qualification,
reservation or adverse remark.
24. Extract of Annual Return
Extract of Annual Return is annexed herewith as ANNEXURE- ''G'' to this
report.
25. Committees of the Board Audit Committee
The Company has constituted Audit Committee, the details of the same
disclosed in the Corporate Governance Report. The Board accepts all the
recommendations of the Audit Committee.
Nomination & Remuneration Committee
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration. The said Policy is annexed as
part of the Director''s report.
Stakeholders Relationship Committee
The Company has constituted the above committee to resolve the
grievances of the shareholders.
The details of the committees along with their charters is annexed as
part of this Board''s report.
26. Whistle Blower Policy
The Board of Directors had adopted the Vigil Mechanism/Whistle Blower
Policy in order to establish a mechanism for directors and employees to
report genuine concerns or grievances about unethical behaviour, actual
or suspected frauds or violation of the Company''s Code of Conduct. It
provides necessary safeguards for protection of employees from
reprisals or victimisation, for whistle-blowing in good faith. In line
with the commitment of Company to the highest possible standards of
ethical, moral and legal business conduct and its commitment to open
communication and make provisions for direct access to the Chairman of
the Audit Committee in appropriate and exceptional cases. The said
policy is annexed as part of this Board''s report.
27. Prevention of Insider Trading
The Board of Directors has adopted new internal Code of Conduct for
Prevention of Insider Trading and Fair disclosure of Unpublished Price
Sensitive Information. The Code of Conduct for Prevention of Insider
Trading is to regulate, monitor, govern and report trading in
securities of the Company by insiders and compliance of the SEBI
(Prohibition of Insider Trading) Regulations, 201S. The said Code is
annexed as part of this Board''s report.
28. General
On following points no reporting or disclosure is required as there
were no transactions on these items during the financial year under
review:
i. Details relating to deposits covered under Chapter V of the
Companies Act, 2013;
ii. No significant and material orders passed by the regulators or
courts or tribunals which impacting the going concern status and
operations of the Company;
iii. Issue of equity shares with differential rights as to dividend,
voting or otherwise;
iv. Issue of sweat equity shares;
v. None of the whole-time directors of the Company received any
remuneration or commission from the subsidiaries of the Company.
29. Acknowledgement
Your Directors'' place on record their appreciation for co-operation and
support received from the, the Government of India, Government of
Maharashtra, Reserve Bank of India, Software Technology Parks of India,
Registrar of Companies, Pune, other local governmental bodies, NASSCOM,
the National Stock Exchange, the BSE Limited, Bankers of the Company
and Shareholders during the financial year.
Your Directors express their sincere appreciation for the efforts made
by employees at all levels for their hard work, co-operation and
support extended to your Company during the financial year.
For and on behalf of the Board of Directors
Place: Mumbai Sunil Rajadhyaksha
Date: May 22, 201S Chairman & Executive Director
(DIN- 00011683)
Mar 31, 2014
Dear members,
The Directors are pleased to present the Company''s Twenty- Sixth
Annual Report on the Business and Operations of HOV Services Limited
(the "Company" or "HOVS") together with the Audited Statement of
Accounts for the fifteen months period ended March 31, 2014.
The financial year was changed from calendar year to fiscal year i.e.
April to March from April 1, 2014. Accordingly, the current financial
statements are prepared for 15 (Fifteen) months period from January 1,
2013 up to March 31, 2014 and therefore, are not comparable to the
financial statements of previous year which comprises of the 12
(Twelve) months year ended on December 31, 2012.
FINANCIAL RESULTS AND OPERATIONS: Rs. In Million
Consolidated Standalone
Fifteen Twelve Fifteen Twelve
Particulars months months months months
period year period year
ended on ended on ended ended on
March 31, December on March December
2014 31, 2012 31, 2014 31, 2012
INCOME
Income from Operations 173.26 140.20 159.24 113.60
Other Income 10.14 15.58 12.74 14.73
183.40 155.78 171.98 128.33
EXPENDITURE
Purchase for resale - 21.20 - -
Staff Cost 128.50 96.59 122.17 87.61
General and Administrative
Expenses 69.92 36.59 31.72 15.43
198.42 154.38 153.89 103.04
Profit/ (Loss) before
Interest, Depreciation
and Tax (15.02) (1.40) 18.09 25.29
Less: Interest 1.60 - -
Less: Depreciation 9.74 4.99 4.03 3.42
Profit / (Loss) before Tax (26.36) (3.59) 14.06 21.87
Tax pertaining to earlier
years 0.04 0.70 0.04 0.70
Less: Provisions for taxes
Current Tax 6.23 7.77 6.23 7.77
Deferred Tax (1.94) (0.83) (0.74) (0.83)
Profit / (Loss) after Tax (30.69) (11.23) 8.53 14.23
Less: Minority Interest (6.41) (8.80) - -
Profit/(Loss) after
minority interest (24.28) (2.43) - -
Add: Share of Profit/(Loss)
from an Associate (464.50) 51.23 -
Profit / (Loss) after Tax &
Share of Profit/(Loss)
from an Associate (488.78) 48.80 8.53 14.23
1. RESULTS OF OPERATIONS:
Consolidated Financial Performance
* Consolidated total Income for the current fifteen months period was
Rs. 183.40 million.
* EBIDT for the current fifteen months period was Rs. (15.02) million.
* Net Profit / (Loss) was Rs. (488.78) million.
* The basic and diluted Earnings per share (EPS) for the fifteen months
period is Rs. (39.13). Standalone Financial Performance
* Total Income for the current fifteen months period was Rs. 171.98
million.
* EBIDT for the current fifteen months period was Rs. 18.09 million.
* Net Profit was Rs. 8.53 million.
* The basic and diluted Earnings per share (EPS) is Rs. 0.68 for the
period under reporting.
2. Appropriations
(i) Dividend:
Your Company intends to conserve available resources to invest in the
growth of the business and pursue strategic growth opportunities.
Accordingly your Directors do not recommend any dividend for the
period.
For the fifteen months period ended March 31, 2014 the Company does not
have any unpaid dividend meant to be transferred to the Investor
Education Protection Fund under Section 205C of the Companies Act,
1956.
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial period ended
on March 31, 2014.
3. Subsidiary companies
The Company has the following subsidiary companies:
i) HOVS LLC incorporated in Delaware under the laws of Unites States of
America;
ii) HOV Environment LLC incorporated in Nevada State under the laws of
United States of America;
iii) HOVS Holdings Limited incorporated under the Companies Ordinance
of Hong Kong; and
iv) HOV Environment Solutions Private Limited incorporated in
Maharashtra under Indian Company Laws.
4. Significant developments
i) On March 19, 2013, Citi Venture Capital International ("CVCI Private
Equity") invested in the SourceHOV as a new equity partner wherein CVCI
Private Equity purchased all of the ownership interests of affiliates
of Apollo Global Management, LLC ("Apollo") and certain minority
holders'' in SourceHOV. This new partnership positioned SourceHOV for
accelerated growth through industry leading advisory formed by a
tenured investment team with specialized technology and service
industry experience. The HOVS owns an equity interest in SourceHOV.
ii) On September 6, 2013 HOV Environment Solutions Private Limited
("HOV ESPL") was made subsidiary of HOV Environment LLC, a subsidiary
company of HOVS LLC. HOV ESPL earlier was indirect subsidiary of HOV
Services Limited through HOVS Holdings Limited a wholly owned
subsidiary (WOS) of HOV Services Limited. The change was made in order
to streamline & strengthen execution of operations and work related to
environmental projects. Post the change HOV ESPL will continue to be an
indirect subsidiary of the Company through HOVS LLC.
5. ADR/GDR
The shareholder''s in their Annual General meeting dated July 21, 2007
granted approval for proposed 15,000,000 of ADR/GDR issue. However, so
far none of the underlying equity shares were issued by the Company.
6. Share Capital of the Company
During the quarter ended March 31, 2014 pursuant to the options
exercised, 8,500 equity shares were allotted. Consequently after the
allotment, the paid up share capital of the Company has gone up from
12,491,022 equity shares of Rs. 10/- each aggregating to Rs.
124,910,220/- to 12,499,522 equity shares of Rs. 10/- each aggregating
to Rs.124,995,220/- Consequently the fully diluted outstanding share
capital of the Company as at period ended March 31, 2014, on
consolidated basis comprise of 12,499,522 equity shares of Rs. 10/-
(Ten only) each.
7. Employee Stock Option Plan (ESOP)
Your Company instituted "HOVS Stock Option Plan 2007" and "HOVS Stock
Option Plan 2008" for its employees and for employees of its subsidiary
companies as detailed below:
Plan Shareholder''s No. of Options No. of Options Total
Approval for employees for employees
Date of the Company of subsidiary
companies
"HOVS Stock
Option July 21, 2007 400,000 700,000 1,100,000
Plan 2007"
"HOVS Stock
Option September 30, 0 750,000 750,000
Plan 2008" 2008
The information to be disclosed as per SEBI (Employees Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed
to this report.
8. Conservation of Energy, Technology Absorption, and Foreign
Exchange:
Particulars furnished pursuant to Companies (Disclosures of Particulars
in the Report of Board of Directors) Rules, 1998:
Conservation of Energy: Your Company''s operations involve low energy
consumption. The Company strives to conserve energy on continuous
basis.
Research and Development: The Company has not undertaken any R&D
activity in any specific area during the period under review, and hence
no cost has been incurred towards the same.
Technology Absorption, Adaptation and Innovation: The Company is
constantly developing and adopting modern technologies and standards to
grow its competitive advantage, to better serve its clients, retain
employees and improve productivity and performance, however during the
period no such activities been carried out.
Foreign Exchange Earnings and Outgo: Almost the entire earnings of the
Company are from the export of services since the Company has no
domestic business. The foreign exchange earnings and outgo is contained
in the Note number 20.10 of Notes to the Financial Statements of the
Annual Report.
9. Particulars of Employees:
The Company has no employees drawing remuneration in excess of limits
specified under Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules, 1975, as amended.
10. Human Resources:
During the period the Company had maintained cordial relations with all
its employees and has taken utmost care of its employees deployed. All
employees are aligned under our value system which propagates and
practices being open, transparent and honest, collaborative, honoring
commitments and demanding excellence among them.
11. Directors Responsibility Statement:
Information as per Section 217(2AA) of the Companies Act, 1956 is
annexed and forms part of the report.
12. Fixed Deposit
The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act, 1956, during the period
under review.
13. Corporate Governance Report
The Company adheres to Corporate Governance guidelines to fulfill its
responsibilities to all its stakeholders i.e. investors, customers,
vendors, government, employees. Company believes that good corporate
governance enhances accountability and increases shareholder value.
The Company complies with the corporate governance norms as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges and a
report thereto is included in annexure to the Directors'' report.
14. Management Discussion and Analysis
Management Discussion and Analysis Report for the period under review,
as stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming a part of this
report.
15. Statutory Auditors
The Statutory Auditors M/s Lodha & Co, Chartered Accountants, Mumbai,
hold office till the conclusion of ensuing Annual General Meeting and
have expressed their willingness and being eligible to continue, if
re-appointed. Your directors recommend their re-appointment. A
resolution proposing their appointment at remuneration to be fixed by
the Board of Directors is submitted at the Annual General Meeting.
16. Directors
The Company had, pursuant to the provisions of clause 49 of the Listing
Agreements entered into with Stock Exchanges, appointed Mr. B R Gupta,
Mr. Harish Bhasin and Mr. Prakash Shukla as Independent Directors of
the Company.
As per section 149(4) of the Companies Act, 2013 (Act), which came into
effect from April 1, 2014, every listed public company is required to
have at least one-third of the total number of directors as Independent
Directors. In accordance with the provisions of section 149 of the Act,
Mr. B R Gupta and Mr. Harish Bhasin, are being appointed as Independent
Directors to hold office as per their tenure of appointment mentioned
in the Notice of 26th Annual General Meeting (AGM) of the Company. Mr.
Prakash Shukla intends not to seek for his appointment.
Mr. Surinder Rametra, Director, retires by rotation and being eligible
has offered himself for re-appointment.
None of the Director was materially interested in any contracts or
arrangements existing during or at the end of the financial period that
was significant in relation to the business of the Company.
17. Subsidiary companies and consolidation of Accounts
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the directors'' report, auditors'' report, balance sheet, and
statement of profit and loss, schedules to account and notes to the
account of subsidiaries of your Company along with the balance sheet of
your Company. However general exemption is granted in terms of General
Circular No. 2/ 2011 and No. 5/12/2007-C1-III dated February 8, 2011,
issued by the Ministry of Corporate Affairs under section 212(8) of the
Companies Act, 1956 granting general exemption. Your Company is in
compliance of the section read with the provisions of the circular and
will not be attaching the accounts of the subsidiaries.
The audited annual accounts and related information of subsidiary
companies, where applicable, will be kept in the registered office and
will be available for inspection, upon request by any of shareholders
of the holding and subsidiary companies. A statement showing details on
the subsidiary companies as prescribed vide general circular is
attached in separate section of this Annual Report.
18. Acknowledgement
Your Directors'' place on record their appreciation for co-operation and
support received from the Software Technology Parks of India, the
Government of India, Government of Maharashtra, Reserve Bank of India,
other governmental agencies and NASSCOM and the National Stock Exchange
and the Bombay Stock Exchange and, bankers and shareholders during the
year.
Your Directors express their sincere appreciation for the efforts made
by employees at all levels for their hard work, co-operation and
support extended to your Company during the year.
For and on behalf of the Board of Directors
Place: Mumbai Sunil Rajadhyaksha
Date: May 21, 2014 Chairman & Executive Director
Dec 31, 2012
The Directors are pleased to present the Company''s Twenty- Fifth
Annual Report on the Business and Operations of HOV Services Limited
(the "Company" or "HOVS") together with the Audited Statement of
Accounts for the year end December 31, 2012.
The financial statements are prepared for the year comprising of the 12
(Twelve) months period ended on December 31, 2012 and are not
comparable to the financial statements of previous year comprising of 9
(Nine) months ended December 31, 2011, as the financial year was
changed to the calendar year ended December 31 in 2011.
FINANICAL RESULTS AND OPERATIONS:
Rs. In Million
Consolidated Standalone
Twelve
months Nine
months Twelve
months Nine
months
Particulars ended on ended on ended on ended on
December December December December
31, 2012 31, 2011 31, 2012 31, 2011
INCOME
Income from Operation 140.20 105.42 113.60 94.10
Other Income 15.58 9.88 14.73 10.01
155.78 115.30 128.33 104.11
EXPENDITURE
Purchase for resale 21.20 - - -
Staff Cost 96.59 57.58 87.61 57.65
General and
Administrative
Expenses 36.59 35.05 15.43 19.75
154.34 92.63 103.04 77.40
Profit / (Loss)
before Interest,
Depreciation and Tax (8.59) 22.67 25.29 26.71
Less: Interest - - - -
Less: Depreciation 4.99 2.76 3.42 2.76
Profit / (Loss) before
Tax (3.60) 19.91 21.87 23.95
Tax pertaining to
earlier years 0.70 0.21 0.70 0.21
Less: Provisions
for taxes
Current Tax 7.77 8.38 7.77 8.38
Deferred Tax (0.83) (0.64) (0.83) (0.64)
Profit / (Loss)
after Tax (11.24) 11.96 14.23 16.00
Less: Minority Interest (8.80) - - -
Profit/(Loss) after
minority interest (2.43) - - -
Add: Share of Profit/
(Loss) from an Associate 51.23 (104.33) - -
Profit/ (Loss) after
Tax & Share of Profit/
(Loss) from an Associate 48.80 (92.37) 14.23 16.00
1. RESULTS OF OPERATIONS:
Consolidated Financial Performance for the Year ended December 31, 2012
- Consolidated total Income for the current twelve month period was Rs.
140.20 million.
- EBIDT for the current twelve month period was Rs. 1.38 million.
- Net Profit was Rs. 48.80 million.
- The basic and diluted Earnings per share (EPS) for the twelve months
period is 3.91. Standalone Financial Performance:
- Total Income for the current twelve month period was Rs. 113.60
million.
- EBIDT for the current twelve month period was Rs. 25.29 million.
- Net Profit was Rs. 14.23 million.
- The basic and diluted Earnings per share (EPS) is Rs 1.14 for the
Year under reporting.
2. SIGNIFICANT DEVELOPMENTS:
During the year following developments took place;
i) In April 2012, HOVS LLC (the WOS of the Company) invested in a new
company named "HOV Environment LLC", having equity interest of 61.10%;
and
ii) In October 2012, the Company had acquired building property
admeasuring 13,243 Square feet area situated at Vashi InfoTech Park,
Vashi, Navi Mumbai.
3. Appropriations
(i) Dividend:
Your Company intends to conserve available resources to invest in the
growth of the business and pursue strategic growth opportunities.
Accordingly your Directors do not recommend any dividend for the year.
For the financial year 2012 the Company does not have any unpaid
dividend meant to be transferred to the Investor Education Protection
Fund under Section 205C of the Companies Act, 1956.
(ii) Transfer to Reserve: No amount was transferred to Reserve during
the financial year ended December 31, 2012.
4. Subsidiary companies
The Company has the following subsidiary companies:
i) HOVS LLC incorporated in Delaware under the laws of United States of
America;
ii) HOVS Holdings Limited incorporated under the Companies Ordinance of
Hong Kong;
iii) HOV Environment LLC incorporated in Nevada under the laws of
United States of America; and
iv) HOV Environment Solutions Private Limited incorporated in
Maharashtra under Indian Company Laws.
5. ADR/GDR
In the earlier proposed 15,000,000 of ADR/GDR issue by the Company none
of the underlying equity shares were issued.
6. Share Capital of the Company
The fully diluted outstanding share capital of the Company on
consolidated basis comprise of 12,491,022 equity shares of Rs. 10/-
(Ten Only) each.
7. Employee Stock Option Plan (ESOP)
Your Company instituted "HOVS Stock Option Plan 2007" and "HOVS Stock
Option Plan 2008" for its employees and for employees of its subsidiary
companies as detailed below:
Plan Shareholder''s No. of
Options No. of Options
Approval Date for
employees of for employees Total
the
Company of subsidiary
companies
"HOVS Stock
Option July 21, 2007 400,000 700,000 1,100,000
Plan 2007"
"HOVS Stock
Option September 0 750,000 750,000
Plan 2008" 30, 2008
The information to be disclosed as per SEBI (Employees Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed
to this report.
8. Conservation of Energy, Technology Absorption, and Foreign
Exchange:
Particulars furnished pursuant to Companies (Disclosures of Particulars
in the Report of Board of Directors) Rules, 1998:
Conservation of Energy: Your Company''s operations involve low energy
consumption. The Company strives to conserve energy on continuous
basis.
Research and Development: The Company has not undertaken any R&D
activity in any specific area during the year under review, and hence
no cost has been incurred towards the same.
Technology Absorption, Adaptation and Innovation: The Company is
constantly developing and adopting modern technologies and standards to
grow its competitive advantage, to better serve its clients, retain
employees and improve productivity and performance, however during the
year no such activities been carried out.
Foreign Exchange Earnings and Outgo: Almost the entire earnings of the
Company are from the export of services since the Company has no
domestic business. The foreign exchange earnings and outgo is contained
in the Note number 20.4 of Notes to the Accounts of the Annual Report.
9. Particulars of Employees:
The Company has no employees drawing remuneration in excess of limits
specified under Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules, 1975, as amended.
10. Human Resources:
During the year the Company had maintained cordial relations with all
its employees and has taken utmost care of its employees deployed. All
employees are aligned under our value system which propagates and
practices being open, transparent and honest, collaborative, honoring
commitments and demanding excellence among them.
11. Directors Responsibility Statement:
Information as per Section 217(2AA) of the Companies Act, 1956 is
annexed and forms part of the report.
12. Fixed Deposit
The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act, 1956, during the year
under review.
13. Corporate Governance Report
The Company adheres to corporate governance guidelines to fulfill its
responsibilities to all its stakeholders i.e. investors, customers,
vendors, government, employees. Company believes that good corporate
governance enhances accountability and increases shareholder value.
The Company complies with the corporate governance norms as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges and a
report thereto is included in annexure to the Director''s report.
14. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming a part of this
report.
15. Statutory Auditors
The Statutory Auditors M/s Lodha & Co, Chartered Accountants, Mumbai,
hold office till the conclusion of ensuing Annual General Meeting and
have expressed their willingness and being eligible to continue, if
re-appointed. Your directors recommend their re-appointment. A
resolution proposing their appointment at remuneration to be fixed by
the Board of Directors is submitted at the Annual General Meeting.
16. Directors
There is no change in the Board of Directors during the year under
review. Mr. Prakash Shukla, Director is to retire by rotation at
ensuing 25th Annual General Meeting. Mr. Prakash Shukla confirmed his
eligibility and willingness to continue the directorship of the
Company, if appointed. It is considered prudent that Company should
continue to avail the services of Mr. Prakash Shukla and therefore the
Board recommends approving the proposed resolution relating to his
re-appointment.
None of the Director was materially interested in any contracts or
arrangements existing during or at the end of the financial year that
was significant in relation to the business of the Company.
17. Subsidiary companies and consolidation of Accounts
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the directors'' report, auditors'' report, balance sheet, and
profit and loss account, schedules to account and notes to the account
of subsidiaries of your Company along with the balance sheet of your
Company. However, general exemption is granted in terms of General
Circular No. 2/2011 and No. 5/12/2007-Cl-III dated February 8, 2011,
issued bt the Ministry of Corporate Affairs under section 212(8) of the
Companies Act, 1956 granting general exemption. Your Company is in
compliance of the section read with the provisions of the circular and
will not be attaching the accounts of the subsidiaries.
The audited annual accounts and related information of subsidiary
companies, where applicable, will be kept in the head office and will
be available for inspection, upon request by any of shareholders. These
documents will also be available for inspection during business hours
at our registered office. A statement showing details on the subsidiary
companies as prescribed vide general circular is attached in separate
section of this Annual Report.
18. Acknowledgement
Your Directors'' place on record their appreciation for co-operation and
support received from the Software Technology Parks of India, the
Government of India, Governments of Maharashtra, Reserve Bank of India,
other governmental agencies and NASSCOM and the National Stock Exchange
and the Bombay Stock Exchange and, bankers and shareholders during the
year.
Your Directors express their sincere appreciation for the efforts made
by employees at all levels for their hard work, co-operation and
support extended to your Company during the year.
For and on behalf of the Board of Directors
Place: Mumbai Sunil Rajadhyaksha
Date: February 27, 2013 Chairman & Executive Director
Dec 31, 2011
The Directors are pleased to present the Company's Twenty- Fourth
Annual Report on the Business and Operations of HOV Services Limited
(the "Company" or "HOVS") together with the Audited Statement of
Accounts for the year end December 31, 2011.
During the reported year the Company i) completed merger of its
indirect subsidiary HOV Services LLC with SOURCECORP Inc., creating
Source HOV LLC, reflecting the union of our two companies and our
expanded capabilities; and ii) entered into environment protection
business through its subsidiary HOV Environment Solutions Private
Limited ("HOV ESPL").
The financial year was changed to a calendar year ended December 31
therefore the current financial year is comprised of 9 (Nine) months
ended on December 31, 2011. Accordingly, the financial statements are
prepared for the 9 (Nine) months ended December 31, 2011 and are not
comparable to the financial statements of previous year comprising of
the 12 (Twelve) month period ended on March 31, 2011.
FINANICAL RESULTS AND OPERATIONS:
In the financial year 2011, your Company has recorded consolidated
revenue of Rs. 105.42 million and loss after tax was Rs. (92.37)
million. The brief financial highlights with comparison of previous
year are as below:
Rs. In Million
Consolidated Standalone
Particulars Nine months FY 2010-11 Nine months FY 2010-11
ended on ended on ended on ended on
December 31, March 31, December 31, March 31,
2011 2011 2011 2011
INCOME
Income from
Operation 105.42 7,092.53 94.10 247.40
Other Income 9.88 15.65 10.01 2.28
115.30 7,108.18 104.11 249.68
EXPENDITURE
Staff Cost 57.58 3,607.22 57.65 56.31
General and
Administrative
Expenses 35.05 2,374.87 19.75 22.57
92.63 5,982.09 77.40 78.88
Profit / (Loss)
before Interest,
Depreciation and
Tax 22.67 1,126.09 26.71 170.80
Less: Interest - 292.75 - -
Less: Depreciation 2.76 291.64 2.76 3.72
Profit / (Loss)
before Tax 19.91 541.70 23.95 167.08
Tax pertaining
to earlier years 0.05 0.05
Less: Provisions
for taxes
Current Tax 8.54 3.88 8.54 0.38
Deferred Tax (0.64) 0.52 (0.64) 0.52
Profit / (Loss)
after Tax 11.96 537.30 16.00 166.18
Less: Share
of Profit/(Loss)
from an Associate (104.33) - - -
Profit / (Loss)
after Tax & - - - -
Share of Profit/
(Loss) from an
Associate (92.37) 537.30 16.00 166.18
1. RESULTS OF OPERATIONS:
Consolidated Financial Performance for the Fiscal Year ended December
31, 2011 FY 2011 have been the pivoting point and a new beginning for
the Company- wherein the merger of Source HOV LLC occurred and the
Company also entered through its subsidiary-HOV Environment Solutions
Private Limited ("HOV ESPL") in the business of environmental
protection solutions. The detailed information is provided under the
separate section of this Annual Report.
The management is confident that the actions being taken will result in
growth and added value in the coming years.
The performance of the nine months period ended December 31, 2011
highlighted as follows:
- Consolidated total Income for the current nine month period ended
on December 31, 2011 is Rs. 105.42 million.
- EBIDTA for the current nine month period ended on December 31, 2011
Rs. 12.79 million.
- Net Loss was Rs. 92.37 million.
- The basic and diluted Earnings per share (EPS) were Rs (7.4) for
the nine months period ended December 31, 2011.
Standalone Financial Performance for the nine months period ended
December 31, 2011:
- Total Income for the current nine month period ended on December
31, 2011 is Rs. 94.10 million.
- EBIDTA for the current nine month period ended on December 31, 2011
Rs 16.70 million.
- Net Profit was Rs. 16.00 million.
- The basic and diluted Earnings per share (EPS) were Rs 1.28 for the
Year ended December 31, 2011.
2. HOVS Corporate Strategy
a) Operates Businesses as Investment Portfolios:
- We organize our portfolio companies by industry and by sector with
forward-looking goals for combination based on the ultimate benefit to
the target customer base and to HOVS. Part of our investment strategy
for each deal is to initially, complete a thorough analysis of the
industry and its respective segments, prior to making a platform
acquisition. Post acquisition, we continue to allow the companies to
operate autonomously before building scale. Through inorganic growth,
we scale our investments by acquiring products and services in the
industry/sector. Our goal is to become a leading, diversified player in
every industry we enter increasing the overall benefit to our clients
and our shareholders.
- By maintaining our portfolio companies as autonomous entities, we
are able to execute strategic combinations or divestitures whenever the
opportunity for an advantageous transaction arises.
b) Operates Businesses as a diversified services organization:
- We facilitate appropriate opportunities for each HOVS portfolio
company to cross-sell its services to the major clients of each other
HOVS portfolio company.
- We manage delivery of services based on best practices and
contribution to profits from our global platform to our portfolio
companies.
- We identify, in coordination with portfolio company senior
management, strategic M&A opportunities, and we make those
opportunities happen.
- We help our portfolio companies maintain and improve their cash
flow and liquidity, and we identify opportunities for portfolio
companies to take advantage of our relationships with lending
institutions and other financial partners.
- In this way, our portfolio companies receive support services
similar to what they would receive as business units of a diversified
services corporation.
3. SIGNIFICANT DEVELOPMENTS:
(a) Source HOV - Merger
On April 29, 2011, the Company completed the merger of its indirect
subsidiary HOV Services LLC with SOURCECORP, Inc., a portfolio company
of Apollo Management V, L.P. The merged entity called Source HOV LLC
("Source HOV"), reflecting the union of the two companies and our
expanded capabilities.
Source HOV is a provider of end-to-end business process outsourcing
solutions with highly customized services as well as specialized
knowledge-based processing and consulting solutions. The company
offers clients in information-intensive industries, such as healthcare,
financial services, legal, public sector, and transportation, the
solutions to manage their information and document intensive business
processes and the solutions to fulfill certain specialized knowledge-
based processing and consulting requirements, enabling these
organizations to concentrate on their core competencies. As a global
business process solutions and knowledge process outsourcing provider,
the company operates approximately 87 operating and sales locations
throughout the United States, India, China, Canada, the Philippines and
Mexico, with approximately 12,531 employees at December 31, 2011. The
Company serves a diverse client base where enterprises can outsource
many of their information management, distribution, certain knowledge
based processing and specialized consulting needs to us due to the
breadth of our capabilities and subject matter expertise.
The combination transaction was accounted for using the equity method
in terms of Accounting Standard 23 "Accounting for Investments in
Associates in Consolidated Financial statements". The Company has a
27.2% equity interest in Source HOV LLC., Management believes HOVS has
significant influence as they have a 50% vote of the Board of
Directors, but not control over the financial and operating policies.
Current year results are not comparable to prior year as in FY 2010-11
HOV Services LLC was a consolidated subsidiary of the Parent, where in
current year it is treated as an associate investment accounted for
under the equity method due to the combination discussed above.
(b) HOV ESPL
The HOV ESPL is an indirect subsidiary of HOV Services Limited (the
"HOVS") through HOVS Holdings Limited, (the "HOVS HK") a Hong Kong
based wholly owned subsidiary of the HOVS. HOV ESPL had undertaken
business in environment protections.
4. Appropriations:
(i) Dividend:
Your Company intends to conserve available resources to invest in the
growth of the business and pursue strategic growth opportunities.
Accordingly your Directors do not recommend any dividend for the year.
During the Financial year ended as on December 31, 2011 the Company
paid on August 22, 2011 Final dividend of FY 2010-11 as approved by the
shareholders in their Annual General Meeting held on August 3, 2011.
For the financial year 2011 the Company does not have any unpaid
dividend meant to be transferred to the Investor Education Protection
Fund under Section 205C of the Companies Act, 1956.
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial year ended on
December 31, 2011.
5. Subsidiary companies
The Company has the following subsidiary companies:
i) HOVS LLC incorporated in Delaware under the laws of United States of
America;
ii) HOVS Holdings Limited incorporated under the Companies Ordinance of
Hong Kong; and
iii) HOV Environment Solutions Private Limited incorporated in
Maharashtra under Indian Company Law.
6. ADR/GDR
In the earlier proposed 15,000,000 of ADR/GDR issue by the Company none
of the underlying equity shares were issued.
7. Class A Preferred Units by HOV Services LLC
By virtue of the merger of its indirect subsidiary HOV Services LLC
("HOV Services") with SOURCECORP, Inc., the 10,467,532 Class A
Preferred Units issued by HOV Services have ceased to exist. Effective
May 2, 2011 the fully diluted outstanding share capital of the Company
on consolidated basis comprise of 12,491,022 equity shares of Rs.10
each only.
8. Employee Stock Option Plan (ESOP)
a) The Company instituted "HOVS Stock Option Plan 2007" and "HOVS Stock
Option Plan 2008" for its employees and for employees of its subsidiary
companies as detailed below:
Plan Shareholder's No. of
Options No. of
Options Total
Approval Date for
employees for
employees
of the
Company of
subsidiary
companies
"HOVS Stock
Option July 21, 2007 400,000 700,000 1,100,000
Plan 2007"
"HOVS Stock
Option September 30, 0 750,000 750,000
Plan 2008" 2008
Options were issued to employees at an exercise price not less than
closing price of the stock exchange where there is highest trading
volume, prior to the date of meeting of the Compensation & Remuneration
Committee in which options were granted. The options will vest in a
phased manner within five years as 10% in each first to four years and
balance 60% at the end of fifth year.
No options have been granted under Plan 2008.
i) The details of options granted and lapsed under Plan 2007 during the
year are as below :
Plan 2007
Employees of Employees of Total
the Company the subsidiary
companies
Approved Options 400,000 700,000 1,100,000
Grant in 2007 141,500 526,000 667,500
Grant in 2008 28,150 217,900 246,050
Grant in 2011 52,500 10,000 62,500
Total Grant 222,150 753,900 976,050
Options Lapsed as
of December 2011 155,150 325,400 480,550
Options in force 67,000 428,500 495,500
Balance options
available 333,000 271,500 604,500
ii) Information of grant made to directors and employees:
Options granted date Directors Other than Total
Directors
(A) (B) (A B)
July 21, 2007 7,500 640,000 647,500
October 25, 2007 0 20,000 20,000
Junly 30, 2008 7,500 183,550 191,050
October 8, 2008 0 55,000 55,000
May 27, 2011 30,000 32,500 62,500
Total Granted 45,000 931,050 976,050
Options lapsed 10,000 470,550 480,550
Options outstanding 35,000 460,500 495,500
iii) The details of options granted under the two plans are given in
the table.
As of December 31, 2011
Plan 2007 Plan 2008
a. Options Granted: 976,050 Nil
b. The Pricing formula: Closing price of the
stock exchange where
there is highest trading
volume, prior to the
date of the meeting
of the Compensation &
Remuneration Committee in
which options are granted. Nil
c. Options Vested: Nil Nil
d. Options Exercised: Nil Nil
e. Total number of shares
would be 976,050 Nil
arising as a result of
exercise of options:
f. Options lapsed: 480,550 Nil
g. Variation of terms
of option: NA NA
h. Money realized by
exercise of options: NA NA
i. Total number of
options in force: 495,500 Nil
j. Employee wise details
of Options Nil
granted to:
i. Senior Management
personnel: 495,500
ii. Employee receiving 5%
or more Nil
of the total number
of options granted
during the year:
iii. Employee granted 1%
or more of the issued
capital: Nil
k. Diluted EPS on issue
of shares on exercise
calculated in accordance
with AS 20. NA NA
b) The Compensation and Remuneration Committee and the Board of
Directors in their respective meetings held on May 27, 2011 consented,
in the best interest of employees of HOV Services LLC which now part of
Source HOV LLC, to continue the options of all such employees whom the
options were granted out of the HOVS ESOP Plan 2007 during the year
2007 and 2008.
9. Conservation of Energy, Technology Absorption, and Foreign
Exchange:
Particulars furnished pursuant to Companies (Disclosures of Particulars
in the Report of Board of Directors) Rules, 1998:
Conservation of Energy: The operation of Company is not energy
intensive. The Company strives to conserve energy on continuous basis
and conducted energy audit and implemented desired recommendations.
This has resulted in reduction of energy consumption during this
financial year.
Research and Development: The Company has not undertaken any R&D
activity in any specific area during the year under review, and hence
no cost has been incurred towards the same. However, the Company
believes technology is strategic to its growth and has invested heavily
in hosted platforms, automation, capture, presentation and analytics.
Technology Absorption, Adaptation and Innovation: The Company has been
focused on providing state-of-the-art end-to-end BPO services to
Clients. In carrying out this mission, HOVS has invested heavily in
technology innovation, while leveraging its global footprint that is no
longer confined by traditional borders through the use of a globally
stable and secure network infrastructure that conforms to the highest
international standards including ISO, HIPAA and SSAE 16. The Company
has adopted Six Sigma practices and LEAN techniques in its centers and
processes; a number of our team member have gone through Six Sigma
training and are certified at higher levels of competency. The Company
is constantly developing and adopting modern technologies and standards
to grow its competitive advantage, to better serve its clients, retain
employees and improve productivity and performance.
Foreign Exchange Earnings and Outgo: Almost the entire earnings of the
Company are from the export of services since the Company has no
domestic business. The foreign exchange earnings and outgo is contained
in the Note number 19 (11) of Notes to the Accounts of the Annual
Report.
10. Particulars of Employees:
The Company has no employees drawing remuneration in excess of limits
specified under Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules, 1975, as amended.
11. Human Resources:
During the year the Company has taken utmost care of its employees
deployed in wide-ranging cultures across the globe. The Company has
well defined Human Resource Policies, excellent training facilities and
a well established, healthy working environment. The Company organizes
regular health checkups through recognized medical centers and the
relationship of HOVS with its employees remained cordial throughout the
year.
12. Directors Responsibility Statement:
As stipulated in Section 217(2AA) of Companies Act, 1956, your
Directors subscribe to the "Directors Responsibility Statement" and
confirm as under:
a) that in preparation of Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures; and
b) that the directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit and loss account of the Company for that period; and
c) that the directors have taken proper and sufficient care of the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
d) that the directors have prepared the annual accounts on a going
concern basis.
13. Fixed Deposit
The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act, 1956, during the year
under review.
14. Corporate Governance
A separate section on Corporate Governance forming part of the
Directors' Report and the Certificate from the Company's Auditors
confirming compliance of Corporate Governance norms as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges is included
as a separate section in this Annual Report.
15. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming a part of this
report.
16. Auditors
The Statutory Auditors M/s Lodha & Co, Chartered Accountants, Mumbai,
hold office till the conclusion of ensuing Annual General Meeting and
have expressed their willingness and being eligible to continue, if
re-appointed. You are requested to consider their re-appointment.
17. Directors
There is no change in the Board of Directors during the year under
review. Mr. Harish Bhasin, Director retires by rotation at ensuing
Annual General Meeting and being eligible offers himself for
reappointment.
The Central Government approved re-appointment of Mr. Parvinder S
Chadha, Mr. Sunil Rajadhyaksha and Mr. Surinder Rametra as whole-time
directors of the Company w.e.f April 1, 2011 for a period of five
years.
18. Subsidiary companies and consolidation of Accounts
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the directors' report, auditors' report, balance sheet, and
profit and loss account, schedules to account and notes to the account
of subsidiaries of your Company along with the balance sheet of your
Company.
In accordance with terms of general Circular No. 2/2011 and No.
5/12/2007-Cl-III dated February 8, 2011, the Ministry of Corporate
Affairs has issued a direction under section 212(8) of the Companies
Act, 1956 granting general exemption to all the companies having
subsidiaries and which required exemption from attaching the prescribed
documents as mentioned in section 212(1) of the Companies Act, 1956.
Such exemption would be available to all the companies after fulfilling
certain conditions prescribed in the aforesaid general circular.
Accordingly, the Board of Directors of the Company has consented vide
its resolution dated May 2, 2012 for not attaching the balance sheet of
the subsidiary companies of the Company.
The audited annual accounts and related information of subsidiary
companies, where applicable, will be kept in the head office and will
be available for inspection, upon request by any of shareholders of the
holding and subsidiary companies. These documents will also be
available for inspection during business hours at our registered
office. A statement showing details on the subsidiary companies as
prescribed vide general circular is attached in separate section of
this Annual Report.
19. Acknowledgement
Your Directors' place on record the co-operation and assistance
received from different government authorities, customers, suppliers,
bankers and shareholders during the year.
Your Directors express their sincere appreciation for the efforts made
by employees at all levels for their hard work, co-operation and
support extended to your Company during the year.
For and on behalf of the Board of Directors
Place: Mumbai Sunil Rajadhyaksha
Date : May 2, 2012 Chairman & Executive Director
Mar 31, 2011
The Directors are pleased to present the Companys Twenty- Third
Annual Report on the Business and Operations of HOV Services Limited
(the "Company" or "HOVS") together with the Audited Statement of
Accounts for the year end March 31, 2011.
HOVS is one of the largest end-to-end BPO Company, providing
healthcare, finance and accounting, e-content management, document
lifecycle, presentment, HR assist, and strategic consulting services
across key verticals such as BFSI, Healthcare, Government, Telco,
Publishing, Retail, Commercial and Industrial Manufacturing industries.
FINANICAL RESULTS AND OPERATIONS:
In the financial year 2010-11, your Company has recorded consolidated
revenue of Rs. 7092.53 million and profit after tax was Rs. 537.30
million. The brief financial highlights with comparison of previous
year are as below:
Particulars For the year end March 31,
Rs. In Million
Consolidated Standalone
2011 2010 2011 2010
INCOME
Income from Operation 7,092.53 8,483.93 247.40 74.91
Other Income 15.65 14.74 2.28 2.82
7,108.18 8,498.67 249.68 77.73
EXPENDITURE
Staff Cost 3.607.22 4,474.60 56.31 32.05
General and Administrative
Expenses 2,374.87 4,133.09* 22.57 7.61
5,982.09 8,607.69 78.88 39.66
Profit / (Loss) before
Interest, Depreciation
and Tax 1,126.09 (109.02) 170.80 38.07
Less: Interest 292.75 336.25 - -
Less: Depreciation 291.64 252.17 3.72 3.51
Profit / (Loss) before Tax 541.70 (697.44) 167.08 34.56
Less: Provisions for taxes
Current Tax 3.88 48.78 0.38 6.35
Deferred Tax 0.52 15.10 0.52 (1.02)
Profit / (Loss) after Tax 537.30 (761.32) 166.18 29.23
Less: Minority Interest - (2.92) - -
Profit / (Loss) after Tax &
Minority Interest 537.30 (758.40) 166.18 29.23
*Includes Exceptional items of Rs. 1327.64 Million.
1. RESULTS OF OPERATIONS:
Consolidated Financial Performance for the Fiscal Year (FY) ended March
31, 2011
FY 2010-11 was the pivoting point for the industry à the current US
Economy and Federal & State Budgets being at impasse caused drop in
Revenues and EBIDTA, but the management is confident that their actions
being taken will result in solid growth in the coming years.
The performance of the year ended March 31, 2011 highlighted as
follows:
- Consolidated total Income for the current FY decreased 16.40% to Rs.
7,092.54 million from Rs 8,483.94 million for the corresponding last
fiscal year 2009-10
- EBIDTA decreased by 7.8% for the FY to Rs. 1,110.4 million from Rs.
1,203.9 million over the corresponding last fiscal year 2009-10
- Net Profit was Rs. 537.3 million versus a Net Loss of Rs. 758.4
million reported in the prior year.
- The basic and diluted Earnings per share (EPS) were Rs 23.40 for the
Year ended March 31, 2011.
Standalone Financial Performance for the Year ended March 31, 2011
- Total Income for the current FY increased 230.26% to Rs. 247.40
million from Rs 74.91 million for the corresponding last fiscal year
2009-10
- EBIDTA increased by 379.15% for the FY to Rs 168.47 million from Rs
35.17 million over the corresponding last fiscal year 2009-10
- Net Profit was Rs. 166.13 million versus a Net Profit of Rs. 29.24
million reported in the prior year
- The basic and diluted Earnings per share (EPS) are Rs 13.30 for the
Year ended March 31, 2011.
2. SIGNIFICANT DEVELOPMENTS:
(a) Key Highlights during the year were:
- Added new business with over US $12.0 million in total contract value
in the fourth quarter FY 2010-11.
- Top 100 clients represent over 78% of total revenues with the largest
customer representing only 19% of total revenues.
- Company maintained strong liquidity position with Ã
a. DSO (Debt Sale Outstanding) of 56 days
b. Debt to Equity Ratio of 1.39
c. Net Bank Debt of US$ 113.6 million at March 31, 2011 as against US$
102.8 million at March 31, 2010.
(b) Key Accomplishment and Noteworthy Items:
- International Association of Outsourcing Professionals (IAOP) ranked
us:
a. Best 20 Leaders by Industry Focus: Health Care;
b. Best 10 Companies by Service Offered: Document Management;
c. Best 10 Leaders by Service Offered: Financial Management;
d. Best 20 Leaders by Region Served: India;
e. Best 20 Leaders by Region Served: Canada;
- Global Presence and experienced team with over 8,357 associates,
strategically located across the globe: India 5,851, North America
1,440, China 655 and Mexico 411
- HOVS is also nominated with the following recognition / awards during
the year 2010-2011:
1) Nasscom Annual Survey 2010 has ranked HOV Services amongst the "Top
15 BPO Exporters 2009- 10" in India.
2) 2010 Global Services 100 (GS 100) Survey has awarded HOV Services as
a Top BPO provider in three categories namely, "Industry Specific BPO
Vendors", "Top BPO Vendors" and "Top FAO Vendors" list.
3) Government of Maharashtra has honoured HOV Services with
"Maharashtra Information Technology Support Services- BPO /KPO award
2010".
(c) Appropriations:
(i) Dividend:
Your Board of Directors at the meeting held on May 27, 2011 recommended
a final dividend of Rs. 2 per fully paid up equity share of Rs. 10/-
each for the financial year 2010-11.
Earlier, during the year under review, your Board had declared an
interim dividend of Rs. 2/- per equity share of Rs. 10/- each of the
Company for every quarter as detailed below;
Quarter ended Interim dividend Record date Payment Date
FY 2010-11 declared
Q1 1st August 21, 2010 August 27, 2010
Q2 2nd November 3, 2010 November 18, 2010
Q3 3rd February 2, 2011 February 21, 2011
For the financial year 2010-11 the Company does not have any unpaid
dividend meant to be transferred to the Investor Education Protection
Fund under Section 205C of the Companies Act, 1956.
(ii) Transfer to Reserve: Your Company proposes to transfer Rs
16,617,943/- to the general reserve.
3. Re structuring of subsidiary companies
During the year under review your Board of Directors has consented the
steps taken by HOV Services LLC for restructure of its subsidiary
companies in order to maximize business operations efficiencies. The
details of restructuring steps taken are as herein below:
i) The Board of Directors in its meeting held on February 27, 2011
accorded consent to incorporate a HOV SPV LLC in Delaware under the
laws of Unites States of America as a wholly owned subsidiary of the
Company.
And, HOV SPV LLC in turn incorporated HOVS Corp., a Nevada corporation
under the laws of Unites States of America as a step down subsidiary of
the Company.
Subsequently, the HOV SPV LLC name was changed to HOVS LLC on March 17,
2011;
ii) Thereafter, the Board of Directors of the Company in its meeting
held on March 9, 2011 approved the merger of HOV Services LLC with HOVS
Corp (a Nevada corporation and wholly owned subsidiary of HOVS LLC, a
Delaware company as discussed in paragraph (i)
above). As a result of the merger HOV Services LLC continued as the
surviving entity and as a wholly-owned subsidiary of HOVS LLC.
4. Joint Venture ("JV")
On March 12, 2011 the Board of Directors of HOVS accorded consent for
the merger of its indirect subsidiary of the company HOV Services LLC
incorporated under the laws of Delaware, ("HOV Services") with
SOURCECORP, Inc., a portfolio company of Apollo Management V, L.P.
incorporated under the laws of Delaware ("SOURCECORP"), a Texas-based
BPO services and specialty consulting Services Company (the
"Transaction").
Shareholders of HOV Services and SOURCECORP will each control 50% of
the combined entity, i.e. SOURCEHOV, Inc., ("SOURCEHOV"), a Delaware
corporation. The merger brings together two highly recognized companies
and created one of the largest global business process outsourcing and
professional consulting services entities in the world. The management
team of SOURCEHOV has over 25 years of expertise in the Industry, with
a proven track record of seamlessly integrating core M&A components and
continuously innovating new technologies to create end-to-end services
and new value for its customers.
The new company SOURCEHOV, with approximately $480 million in revenue,
is one of the largest pure play BPO and specialty consulting companies
in the industry, serving customers in more than half of the Fortune
100î with deep domain expertise, including document centric
applications, in Healthcare Payer and Provider, Finance and Banking,
Public Sector, Publishing, Legal, Insurance, Manufacturing and
Commercial industries, including specialized consulting services for
construction management, tax benefits, legal claims settlements and
economic consultancy. With this combination, the Companys global
workforce is now more than 14,200 employees operating from
approximately 80 delivery centers in 6 countries viz U.S., Mexico,
Canada, India, China and Philippines.
As of April 29, 2011, the HOV Services completed previously announced
merger of its indirect subsidiary HOV Services LLC ("HOV Services")
with SOURCECORP, Inc. The new name of the combined company is SourceHOV
Inc., reflecting the union of our two companies and our expanded
capabilities.
Subsequent to aforesaid merger the Companys head office is relocated
to 3rd Floor, Sharda Arcade, Pune Satara Road, Bibwewadi, Pune-411 037.
5. Class A preferred Units by HOV Services LLC
Effective April 29, 2011, by virtue of the closure of the merger of its
indirect subsidiary HOV Services LLC ("HOV Services") with SOURCECORP,
Inc. ("SOURCECORP"), the 10,467,532 Class A preferred Units issued by
HOV Services LLC and outstanding as of March 31, 2011, have ceased to
exist. Therefore, effective May 2, 2011 the fully diluted outstanding
share capital of the Company on consolidated basis comprised of 12,
491, 022 equity shares of Rs 10/- each only.
6. ADR/GDR
In the earlier proposed 15,000,000 of ADR/GDR issue by the Company,
none of the underlying equity shares are issued.
7. Employee Stock Option Plan (ESOP)
a) The Company instituted "HOVS Stock Option Plan 2007" and "HOVS Stock
Option Plan 2008" for its employees and for employees of its subsidiary
companies as detailed below:
Plan Shareholders No. of Options for No. of Options Total
Approval Date employees of the for employees
Company of subsidiary
companies
"HOVS Stock
Option Plan July 21, 2007 400,000 700,000 1,100,000
2007"
"HOVS Stock
Option Plan September 30,
2008 0 750,000 750,000
2008"
Options were issued to employees at an exercise price not less than
closing price of the stock exchange where there is highest trading
volume, prior to the date of meeting of the Compensation & Remuneration
Committee in which options were granted. The options will vest in a
phased manner within five years as 10% in each first to four years and
balance 60% at the end of fifth year.
No options have been granted under Plan 2008.
i) The details of options granted and lapsed under Plan 2007 are as
below:
Plan 2007
Employees of the Employees of
Company the subsidiary Total
Companies
Approved Options 400,000 700,000 1,100,000
Grant in 2007 141,500 526,000 667,500
Grant in 2008 28,150 217,900 246,050
Total Grant 169,650 743,900 913,550
Options Lapsed as
of April 1, 2011 155,150 217,900 373,050
Options in force 14,500 526,000 540,500
Balance options available 385,500 174,000 559,500
ii) Information of grant made to directors and employees:
Options granted date Directors Other than Total (A+B)
Directors
(A) (B)
July 21,2007 7,500 640,000 647,500
25-Oct-07 0 20,000 20,000
30-Jul-08 7,500 183,550 191,050
8-Oct-08 0 55,000 55,000
Total number of
Options Granted 15,000 898,550 913,550
Options lapsed as of
April 1, 2011 10000 363,050 373,050
Options outstanding 5,000 535,500 540,500
iii) The details of options granted under the two plans are given in
the table.
As of March 31, 2011
Plan 2007 Plan 2008
a. Options Granted: 9,13,550 Nil
b. The Pricing formula: Closing price of the
stock exchange
where there is highest
trading volume, prior
to the date of the Nil
meeting of the
Compensation &
Remuneration Committee
in which options are
granted.
c. Options Vested: Nil Nil
d. Options Exercised: Nil Nil
e. Total number of shares
arising as a result of 9,13,550 Nil
exercise of options:
f. Options lapsed: 3,73,050 Nil
g. Variation of terms of
option: NA NA
h. Money realized by
exercise of options: NA NA
i. Total number of options
in force: 5,40,500 Nil
j. Employee wise details of Nil
Options granted to:
i. Senior Management 5,40,500
personnel:
ii. Employee receiving 5% Nil
or more of the total
number of options
granted during the year:
iii. Employee granted 1% Nil
or more of the issued
capital:
k. Diluted EPS on issue of
shares on exercise calculated NA NA
in accordance with AS 20.
b) The Compensation & Remuneration Committee in its meeting held on May
27, 2011 have granted options out of the ESOP Plan 2007 as per detailed
below:
Grant Date Independent Employees of Employee of Total
Directors the Company the subsidiary
company
May 27, 2011 30,000 22,500 10,000 62,500
c) The Compensation and Remuneration Committee and the Board of
Directors in their respective meetings held on May 27, 2011 consented,
in the best interest of employees of HOV Services LLC which is merged
with SOURCECORP, to continue the options of all such employees whom the
options were granted out of the HOVS ESOP Plan 2007 during the year
2007 and 2008.
8. Conservation of Energy, Technology Absorption, and Foreign
Exchange:
Particulars furnished pursuant to Companies (Disclosures of Particulars
in the Report of Board of Directors) Rules, 1998:
Conservation of Energy: The operation of Company is not energy
intensive. The Company conducted energy audit in some of the units and
has implemented recommendations. This has resulted in reduction of
energy consumption during this financial year.
Research and Development: The Company has not undertaken any R&D
activity in any specific area during the year under review, and hence
no cost has been incurred towards the same. However, the Company
believes technology is strategic to its growth and has invested heavily
in hosted platforms, automation, capture, presentation and analytics.
The Company has development teams in US, India and Mexico implementing
this vision.
Technology Absorption, Adaptation and Innovation: The Company has been
focused on providing state-of-the-art end-to-end BPO services to
Clients. In carrying out this mission, HOVS has invested heavily in
technology innovation, while leveraging its global footprint that is no
longer confined by traditional borders through the use of a globally
stable and secure network infrastructure that conforms to the highest
international standards including ISO, HIPAA and SAS70. The Company has
adopted Six Sigma practices and LEAN techniques in a majority of its
centers and processes; a significant number of our team member have
gone through Six Sigma training and are certified at higher levels of
competency. The Company is constantly developing and adopting modern
technologies and standards to grow its competitive advantage, to better
serve its clients, retain employees and improve productivity and
performance.
Foreign Exchange Earnings and Outgo: Almost the entire earnings of the
Company are from the export of services since the Company has no
domestic business. The foreign exchange earnings and outgo is contained
in the Note number 16(b) of schedule 14B to the Accounts of the Annual
Report.
9. Particulars of Employees:
The Company has no employees drawing remuneration in excess of limits
specified under Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules, 1975, as amended.
10. Human Resources:
During the year the Company has taken utmost care of its employees
deployed in wide- ranging cultures across the globe. The Company has
well defined Human Resource Policies,
excellent training facilities and a well established, healthy working
environment. The Company organizes regular health checkups through
recognized medical centers and the relationship of HOVS with its
employees remained cordial throughout the year.
11. Directors Responsibility Statement:
As stipulated in Section 217(2AA) of Companies Act, 1956, your
Directors subscribe to the "Directors Responsibility Statement" and
confirm as under:
a) that in preparation of Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures; and
b) that the directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit and loss account of the Company for that period; and
c) that the directors have taken proper and sufficient care of the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
d) that the directors have prepared the annual accounts on a going
concern basis.
12. Fixed Deposit
The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act, 1956, during the year
under review.
13. Corporate Governance
A separate section on Corporate Governance forming part of the
Directors Report and the Certificate from the Companys Auditors
confirming compliance of Corporate Governance norms as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges is included
as a separate section in this Annual Report.
14. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming a part of this
report.
15. Auditors
The Statutory Auditors M/s Lodha & Co, Chartered Accountants, Mumbai,
hold office till the conclusion of ensuing Annual General Meeting and
have expressed their willingness and being eligible to continue, if
re-appointed. You are requested to consider their re-appointment.
16. Directors
There is no change in the Board of Directors during the year under
review. Mr. B R Gupta, Director retires by rotation at ensuing Annual
General Meeting and being eligible offers himself for reappointment.
The Board of Directors in their meeting held on May 27, 2011 had
subject to the approval of Central Government, approved re-appointment
of Mr. Parvinder S Chadha, Mr. Sunil Rajadhyaksha and Mr. Surinder
Rametra as whole-time directors of the Company w.e.f April 1, 2011 for
a period of five years.
17. Subsidiary companies and consolidation of Accounts
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the directors report, balance sheet, and profit and loss
account of the subsidiary companies. The application was made to the
Central Government of India for an exemption from such attachment as
the Company presents the audited consolidated financial statements in
the Annual Report. The Government of India has granted exemption to the
Company from complying with section 212 for all the subsidiary
companies vide its approval letter dated January 25, 2011. Pursuant to
the conditions of Government of India approval the statement thereto is
annexed to the Annual Report.
Accordingly, the Annual Report does not contain the financial
statements of the subsidiary companies. We will make available the
audited annual accounts and related information of subsidiary
companies, where applicable, upon request by any of our investors.
These documents will also be available for inspection during business
hours at our registered office.
18. Acknowledgement
Your Directors express their appreciation for assistance and
co-operation received from employees, shareholders, customers,
suppliers, bankers and government authorities for their continued
support to the Company during the year.
For and on behalf of the Board of Directors
Parvinder S Chadha
Chairman & Executive Director
Place: Mumbai
Date : May 27, 2011
Mar 31, 2010
The Directors are pleased to present the Companys Twenty- Second
Annual Report on the Business and Operations of HOV Services Ltd (the
"Company" or "HOVS") together with the Audited Statement of Accounts
for the year end March 31, 2010.
HOVS is one of the largest end-to-end BPO companies, providing
healthcare, finance and accounting, e-content management, document
lifecycle, presentment, HR assist, and strategic consulting services
across key verticals such as BFSI, Healthcare, Government, Telco,
Publishing, Retail, Commercial and Industrial Manufacturing industries.
FINANICAL RESULTS AND OPERATIONS:
In the financial year 2009-10, your Company recorded consolidated
revenue of Rs. 8,483.93 million and loss after tax was Rs. 758.40
million. The brief financial highlights with comparison of previous
year are as below:
Particulars For the year end March 31,
Rs. In Million
Consolidated Standalone
2010 2009 2010 2009
INCOME
Income from Operation 8,483.93 8,970.72 74.91 43.77
Other Income 14.74 21.72 2.90 2.99
8,498.67 8,992.44 77.81 46.76
EXPENDITURE
Staff Cost 4,474.60 4,518.83 32.14 37.27
General and Administrative 4,133.09* 3,325.84 7.61 17.77
8,607.69 7,844.67 39.75 55.04
Expenses
Profit / (Loss) before Interest,
Depreciation,
Tax & Minority Interest (109.02) 1,144.77 38.06 (8.28)
Less: Interest 336.25 444.78 - 0.14
Less: Depreciation 252.17 236.53 3.51 3.78
Profit / (Loss) before Tax & (697.44) 466.46 34.55 (12.20)
Minority Interest
Less: Provisions for
taxes
Current Tax 48.78 13.86 6.10 -
Deferred Tax 15.10 (15.85) (0.78) 3.30
Fringe Benefit Tax - 4.92 - 0.26
Profit / (Loss) after (761.32) 463.53 29.23 (15.75)
Tax & before
Minority Interest
Less: Minority Interest (2.92) (0.34) - -
Profit / (Loss)
after Tax & Minority Interest (758.40) 463.87 29.23 (15.75)
*Includes Exceptional items of Rs. 1327.64 Million.
1. RESULTS OF OPERATIONS: Performance on Consolidated basis:
- The consolidated total income decreased by 5.43 % in the current
fiscal year, to Rs. 8,483.93 million from Rs. 8,970.72 million in the
corresponding last fiscal year 2008-09.
- EBIDTA before exceptional item increased by 2.33% for the current FY
to Rs.1,206.86 million from Rs. 1,176.44 million over the corresponding
last fiscal year 2008-09.
- Net Profit decreased by 263.61% for the current FY to Rs. (758.40)
million from Rs. 463.53 million over the corresponding last fiscal year
2008-09.
- The basic and diluted Earnings per share (EPS) before exceptional
item are Rs. 45.57 for the current FY.
Performance on Standalone basis:
- Total Income for the current FY increased 71.15% to Rs. 74.91 million
from Rs 43.77 million for the corresponding last fiscal year 2008-09.
- EBITDA increased by 412.03% for the current FY to Rs 35.17 million
from Rs (11.27) million over the corresponding last fiscal year
2008-09.
- Net Profit increased by 285.62% for the current FY to Rs 29.23
million from Rs (15.75) million over the corresponding last fiscal year
2008-09.
- The basic and diluted Earnings per share (EPS) before exceptional
item are Rs. 2.34 for the current FY.
2. SIGNIFICANT DEVELOPMENTS:
(a) Key Highlights during the year were:
- Employee headcount at 8,900+ associates.
- Added over US $9.9 million in customer contracts in the fourth Fiscal
Quarter 2009- 10, and $68.8 million for the Fiscal Year ended March 31,
2010.
- Top 100 clients represent over 79% of total revenues with the largest
customer representing only 17% of total revenues.
- Developed and launched four new hosted services to expand our
presence in Healthcare, e-learning and F&A services.
- The Company maintained strong liquidity position with DSO of 53 days,
Debt to Equity Ratio of 1.4:1 and Net Bank Debt of US $102.8 million at
March 31, 2010, down $16.3 million from March 31, 2009.
(b) Key Accomplishment and Noteworthy Items:
International Association of Outsourcing Professionals (IAOP) ranked
us:
a. Best 20 Leaders by Industry Focus: Health Care;
b. Best 10 Companies by Service Offered: Document Management;
c. Best 10 Leaders by Service Offered: Financial Management;
d. Best 20 Leaders by Region Served: India;
e. Best 20 Leaders by Region Served: Canada;
(c) Material Transaction by HOV Services, LLC
During the Year 2009-10, the CompanyÃs Board of Directors approved the
action of its wholly owned subsidiary, HOV Services, LLC to enter into
a Material Transaction in order to focus on end-to-end high growth and
margin services, improve operational efficiency and streamline the
decision making process by selling certain assets: 100% interest in Bay
Area Credit Services, LLC, 100% interest in HOV AR Management Services
Private Limited and its 30 % minority interests in TRAC Holdings, LLC
(TRAC) and SAM Holdings, LLC (SAM), to Rustic Canyon, LLC, an
Associate, (which already has 70% ownership interest in TRAC & SAM) for
$12 million USD in cash (approximately Rs. 5,563 Lakhs). Details
related to the impact of this transaction have been provided in the
Management Discussion & Analysis section.
(d) Buyback of Equity Shares:
During the year under review, the Buy-back offer of the Company through
an open market stock exchange route was successfully completed. The
details of this are as follows:
(e) Appropriations:
(i) Dividend:
Your Board of Directors at the meeting held on May 24, 2010 recommended
a final dividend of Rs. 2/- per fully paid up equity share of Rs. 10/-
each for the financial year 2009-10.
Earlier, your Board of Directors in their meeting held on January 28,
2010 had declared an interim Dividend of Rs. 2/- per share of Rs. 10/-
each for the year ended March 31, 2010 and it was paid to the
shareholders on February 18, 2010.
For the financial year 2009-10 the Company does not have any unpaid
dividend meant to be transferred to the Investor Education Protection
Fund under Section 205C of the Companies Act, 1956.
(ii) Transfer to Reserve:
a. Your Company proposes to transfer Rs 29,23,466/- to the general
reserve.
b. Pursuant to the section 77 AA of the Companies Act, 1956 a sum
equal to nominal value of the shares bought back is required to
transfer to Capital Redemption Reserve account. The Company as of
February 12, 2010, up to the closure of its Buy-back offer had bought
back 20,000 equity shares. Therefore an amount of Rs 2,00,000/ - is
transferred to Capital Redemption Reserve Account during the year under
review.
3. Conservation of Energy, Technology Absorption, and Foreign
Exchange:
Particulars furnished pursuant to Companies (Disclosures of Particulars
in the Report of Board of Directors) Rules, 1998:
Conservation of Energy: The operation of Company is not energy
intensive. The Company conducted energy audit in some of the units and
has implemented recommendations such as keeping a spare stock of energy
efficient compact fluorescent lamps (CFL) instead of conventional
incandescent light bulbs, changing or cleaning the filters on air
conditioners in the beginning of summer and increasing temperature
settings from 210C to 240C on thermostats in a phased manner. This has
resulted in reduction of energy consumption during this financial year.
Research and Development: The Company has not undertaken any R&D
activity in any specific area during the year under review, and hence
no cost has been incurred towards the same. However, the Company
believes technology is strategic to its growth and has invested heavily
in hosted platforms, automation, capture, presentation and analytics.
The Company has development teams in US, India and Mexico implementing
this vision.
Technology Absorption, Adaptation and Innovation: The Company has been
focused on providing state-of-the-art end-to-end BPO services to
Clients. In carrying out this mission, HOVS has invested heavily in
technology innovation, while leveraging its global footprint that is no
longer confined by traditional borders through the use of a globally
stable and secure network infrastructure that conforms to the highest
international standards including ISO, HIPAA and SAS70. The Company has
adopted Six Sigma practices and LEAN techniques in a majority of its
centers and processes; a significant number of our team member have
gone through Six Sigma training and are certified at higher levels of
competency. The Company is constantly developing and adopting modern
technologies and standards to grow its competitive advantage, to better
serve its clients, retain employees and improve productivity and
performance.
Foreign Exchange Earnings and Outgo: Almost the entire earnings of the
Company are from the export of services since the Company has no
domestic business. The foreign exchange earnings and outgo is contained
in the Note number 17(b) of schedule 14B to the Accounts of the Annual
Report.
4. Particulars of Employees:
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, and forming
part of the Directorsà report for the year ended March 31, 2010 is set
out in the Annexure I to the DirectorÃs Report.
5. Human Resources:
During the year the Company has taken utmost care of its employees
deployed in wide- ranging cultures across the globe. The Company has
well defined Human Resource Policies, excellent training facilities and
a well established, healthy working environment. The Company organizes
regular health checkups through recognized medical centers and the
relationship of HOVS with its employees remains cordial throughout the
year.
6. Directors Responsibility Statement:
As stipulated in Section 217(2AA) of Companies Act, 1956, your
Directors subscribe to the ÃDirectors Responsibility Statementà and
confirm as under:
a) that in preparation of Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures; and
b) that the directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit and loss account of the Company for that period; and
c) that the directors have taken proper and sufficient care of the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
d) that the directors have prepared the annual accounts on a going
concern basis.
7. Fixed Deposit
The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act, 1956, during the year
under review.
8. Corporate Governance
A separate section on Corporate Governance forming part of the
Directorsà Report and the Certificate from the CompanyÃs Auditors
confirming compliance of Corporate Governance norms as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges is included
as a separate section in this Annual Report.
9. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming a part of this
report.
10. Auditors
The Statutory Auditors M/s Lodha & Co, Chartered Accountants, Mumbai,
hold office till the conclusion of ensuing Annual General Meeting and
have expressed their willingness and being eligible to continue, if
re-appointed. You are requested to consider their re-appointment.
11. Directors
During the year under review Mr. Prakash Shukla was inducted as an
Additional Director w.e.f. October 26, 2009 and holds office up to the
date of ensuing Annual General Meeting. His appointment requires the
approval of members at the ensuing Annual General Meeting.
The Company has received a notice in writing from a member pursuant to
Section 257 of the Companies Act, 1956 proposing the candidature of Mr.
Prakash Shukla for the office of Director, liable to retire by
rotation.
Brief resume of the Director proposed to be appointed, as stipulated in
Clause 49 of the Listing agreement with the stock exchanges is provided
in section of Notice of the Annual General Meeting.
12. Subsidiary companies and consolidation of Accounts
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the directorÃs report, balance sheet, and profit and loss
account of the subsidiary companies. The application was made to the
Central Government of India for an exemption from such attachment as
the Company presents the audited consolidated financial statements in
the Annual Report. The Government of India has granted exemption to
the Company from complying with section 212 for all the subsidiary
companies vide its approval letter dated February 5, 2010. Pursuant to
the conditions of Government of India approval the statement thereto is
annexed to the Annual Report.
Accordingly, the Annual Report does not contain the financial
statements of the subsidiary companies. We will make available the
audited annual accounts and related information of subsidiary
companies, where applicable, upon request by any of our investors.
These documents will also be available for inspection during business
hours at our registered office.
Options were issued to employees at an exercise price not less than
closing price of the stock exchange where there is highest trading
volume, prior to the date of meeting of the Compensation & Remuneration
Committee in which options are granted. The options will vest in a
phased manner within five years as 10% in each first to four years and
balance 60% at the end of fifth year.
14. Acknowledgement
Your Directors express their appreciation for assistance and
co-operation received from employees, shareholders, customers,
suppliers, bankers and government authorities for their continued
support to the Company during the year.
For and on behalf of the Board of Directors
Place: Chennai
Date : May 24, 2010
Parvinder S Chadha
Chairman & Executive Director
Mar 31, 2009
The Directors are pleased to present their Twenty-First Annual Report
on the Business and Operations of HOV Services Ltd. (the "Company" or
"HOVS") together with Audited Statement of Accounts for the year ended
March 31, 2009.
1. FINANCIAL RESULTS AND OPERATIONS:
The particulars of the Company and its Subsidiaries Consolidated
financials statements are as below:
For the year ended March 31,
Particulars Rs. In Million
Consolidated Standalone
2009 2008 2009 2008
INCOME
Income from Operations 8,970.72 8,335.11 43.77 62.28
Other Income 21.72 744.87 2.99 0.29
8,992.44 9,079.98 46.76 62.57
EXPENDITURE
Staff Cost 4,518.83 4,220.09 37.27 24.31
General and Administrative 3,325.84 3,329.45 17.77 25.68
Expenses
7,844.67 7,549.54 55.04 49.99
Profitless) before Interest, 1,144.77 1,530.44 (8.28) 12.58
Depreciation and Tax
Less: Interest 444.78 509.26 0.14 0.13
Less: Depreciation 236.53 169.78 3.78 1.65
Profit/(Loss) before Tax 466.46 851.4 (12.20) 10.8
Tax pertaining to earlier years NIL (0.08) (0.01) -
Less: Provisions for taxes
Current Tax 13.86 27.77 NIL 1.2
DeferredTax (15.85) 0.14 3.30 0.01
Fringe Benefit Tax 4.92 1.56 0.26 0.3
Profit/(Loss) after Tax 463.53 822.01 (15.75) 9.29
Less: Minority Interest (0.34) 277.59 NIL -
Profit/(Loss) after Tax After
Minority Interest 463.87 544.42 (15.75) 9.29
2. RESULTS OF OPERATIONS
Performance on consolidated basis:
- Consolidated total Income for the current FY increased by 7.6% to Rs.
8,970.7 million from Rs. 8,335.1 million for the corresponding last
fiscal year 2007-08.
- EBITDA increased by 7.39% for the FY to Rs.1,176.44 million from
Rs.1,095.5 million over the corresponding last fiscal year 2007-08.
- Net Profit decreased by 14.8% for the current FY to Rs. 463.9 million
from Rs.544.4 million over the corresponding last fiscal year.
- Rupee depreciation against the USD resulted in decrease of the
companys Net Profit to the tune of Rs 80.6 million.
- The basic and diluted Earnings per share (EPS) is Rs 36.96 for the
FY.
3. Significant Developments:
i) Highlights of Business Performance:
- Added over $17.5 million in customer contracts in the 4th Fiscal
Quarter with $12.5 million from existing customers.
- Substantial savings from integration and rationalization of global
operations helped defray overall increases in costs in India with
11,419 associates across over 40 delivery centers in India, China,
Mexico, U.S. & Canada.
- By right shoring we were able to successfully transition some key
business processes from US to our near shore and off Shore operations
in Mexico, India and China.
- Diversified Client Base with low Customer Concentration with and
minimal exposure to financial services companies.
- Top 100 clients represent over 79% of total revenues with the largest
customer representing only 16% of total revenues.
- Over 50% of leading FORTUNE 100î companies as reference-able clients
in our core Service offerings.
ii) Key Accomplishments and Noteworthy Items:
- Company maintained strong liquidity position with DSO of 51.6 days,
Debt to Equity Ratio of 1.33 and Net Bank Debt of $110.9 million at
March 31, 2009;
- Successfully continue to leverage Companys Top Tier BPO Service
Provider with established reputation for Reliable, High Quality and
Secure services;
- International Association of Outsourcing Professionals (IAOP) ranked
the Company:
- Best 20 Leaders by Industry Focus: Health Care;
- Best 10 Companies by Service Offered: Document Management;
- Best 10 Leaders by Service Offered: Financial Management;
- Best 20 Leaders by Region Served: India;
- Best 20 Leaders by Region Served: Canada;
iii) Material transaction proposal:
The proposal was received by the Company in June 2008 and was reported
in Annual Report of 2007- 08. The Board of Directors in their meeting
held on October 8, 2008 keeping in view the market conditions, proposed
to postpone considering the Transaction in the best interest of the
shareholders.
iv) Issue of ADR/GDR
The Shareholders in their Annual General meeting held on July 21, 2007
approved the issue of up to 15,000,000 number of Global Depository
Receipts (GDRs), American Depository Receipts (ADRs). Foreign Currency
Convertible Bonds (FCCBs), and / or Equity Shares through Depository
Receipt Mechanism (hereinafter referred to as ("DR") per SEBI
guidelines and subject to all rules and regulations. The Company also
received In-Principal approval from Bombay Stock Exchange Limited vide
its letter dated November 29, 2007 and from National Stock Exchange
Limited vide its letter dated November 29, 2007 for issue and allotment
of equity shares not exceeding 15,000,000 to be allotted towards the
proposed DRs. The Company has not issued any of the aforesaid equity
shares post approval.
v) Buyback of Equity Shares:
During the year under review the Board of Directors approved buy back
of equity shares of the Company through open market stock exchanges
route. The details of the same are as follows:
Structural details of the buyback program:
Date of Board Resolution approving January 13, 2009
Buyback
Date of Public Notice cum Public January 13, 2009, Published on
January 15, 2009
Announcement
Maximum Offer size 10,00,000 Equity Shares
Minimum Offer size 2,50,000 Equity Shares
Maximum Offer Price: Rs. 50/- Per Equity Share
(Aggregate Amount Not more
than Rs. 5.00 Crore).
Date of Opening of the Buy back: February 2, 2009
Duration of the program: Up to January 12, 2010 (12
months from the date of Board
resolution)
Number of shares bought back:
As on March 31, 2009 43,023 Equity Shares
As on June 26, 2009 63,023 Equity Shares
Details of the shares bought back:
As on March 31, 2009 43,023 Equity Shares were
bought back at average rate of
Rs. 28.67 per equity share.
As on June 26, 2009 63,023 Equity Shares were
bought back at average rate of
Rs. 29.65 per equity share.
Execution method: Open Market Purchases through
Stock Exchanges.
Buyback price and the aggregate amount
paid on buyback:
As on March 31, 2009 43,023 Equity Shares bought
back @ Rs. 28.67,aggregating
amount Rs. 12,33,279/-
As on June 26, 2009 63,023 Equity Shares bought
back @ Rs. 29.65,aggregating
amount Rs, 18,85,680/-
Sources from which buyback is
financed: Share Capital And Free
Reserves Account
Amount by which the share capital and Total share capital and free
free reserves including share reserves including share
premium premium are reduced on Premium are reduced by
account of buyback of the shares Rs.4,30,230/- and 8,09,572/-
respectively.
Un-cancelled shares: Total equity shares bought
back as on March 31,2009
were 43,023 out of which
35,620 shares were
extinguished; remaining equity
shares of 7,763 extinguished
in April, 2009.
Amount transferred to Capital Redemption An amount of Rs. 4,30,230/-
Reserve Account transferred to Capital
Redemption Reserve Account.
4. Appropriations:
Dividend
Your Company intends to conserve available resources to invest in the
growth of the business and pursue strategic growth opportunities.
Accordingly your Directors do not recommend any dividend for the year.
Transfer to Reserve
Pursuant to the Section 77AA of the Companies Act, 1956 a sum equal to
nominal value of the shares bought back is required to transfer to
Capital Redemption Reserve account. The Company as of March 31, 2009
had bought back 43,023 equity shares. Therefore an amount of Rs.
4,30,230/- is transferred to Capital Redemption Reserve Account.
5. Conservation of Energy, Technology Absorption, and Foreign Exchange
Particulars furnished pursuant to Companies (Disclosures of Particulars
in the Report of Board of Directors) Rules, 1998:
Conservation of Energy: The operation of Company is not energy
intensive. The Company conducted energy audit in some of the units and
has implemented the recommendations in a phased manner. This has
resulted in reduction of energy consumption during this financial year.
Research and Development: The Company has not undertaken any R&D
activity in any specific area during the year under review, and hence
no cost has been incurred towards the same. The Company believes
technology deployment is strategic to its growth and has invested
heavily in automation, capture, presentation and analytics. The Company
has development teams in US, India and Mexico implementing its vision.
Technology Absorption, Adaptation and Innovation: The Company has been
focused on providing end- to-end BPO services to Clients. The Company
has heavily invested in technology innovation and is leveraging its
global footprint to take advantage of shrinking distances and blurry
traditional borders bypassed by global, stable, secure network
infrastructure all while conforming to international standards
including ISO. HIPAA and SAS70. The Company has adopted Six Sigma
practices and LEAN techniques in a majority of its centers and
processes; a significant number of our team member have and go through
Six Sigma training as well and many are certified at various levels.The
Company is constantly pursuing and adopting modern technologies and
standards to grow its competitive advantages, to better serve its
clients, retain employees and improve productivity and performance.
Foreign Exchange Earnings and Outgo: Almost the entire earnings of the
Company are from the export of services since the Company has no
domestic business. The foreign exchange earnings and outgo is contained
in the Note number 15(c) to the Accounts of the Annual Report.
6. Particulars of Employees
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, and forming
part of the directors report for the year ended March 31, 2009 is set
out in the Annexure I to the Directors Report.
7. Human Resources
The relationship of your Company with its employees remained cordial
throughout the year.
8. Directors Responsibility Statement
As stipulated in Section 217(2AA) of Companies Act, 1956, your
Directors subscribe to the "Directors Responsibility Statement" and
confirm as under:
a) that in preparation of Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures; and
b) that the directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit and loss account of the Company for that period; and
c) that the directors have taken proper and sufficient care of the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
d) that the directors have prepared the annual accounts on a going
concern basis.
9. Fixed Deposit
The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act, 1956, during the year
under review.
10. Corporate Governance
A separate section on Corporate Governance forming part of the
Directors Report and the Certificate from the Companys Auditors
confirming compliance of Corporate Governance norms as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchanges is included
as a separate section in this Annual Report.
11. Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review, as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming a part of this
report.
12. Auditors
The Statutory Auditors M/s Lodha & Co, Chartered Accountants, Mumbai,
hold office till the conclusion of ensuing Annual General Meeting and
have expressed their willingness and being eligible to continue, if
re-appointed. You are requested to consider their re-appointment.
13. Directors
Mr. Rajeev Gupta, Director who retires by rotation prior to the Annual
General Meeting notified his inability to continue his directorship due
to pre-occupation. His notice was placed before the Board in its
meeting held on June 4, 2009 and the same was accepted by the Board.
The Board of Directors place on record their appreciation for the
support rendered by him during the tenure as Director of the Company.
During the year under review Mr. Hansh P Bhasin was inducted as an
additional director w.e.f March 24. 2009 and holds office up to the
date of ensuing Annual General Meeting. His appointment requires the
approval of members at the ensuing Annual General Meeting. The Company
has received a notice in writing from a member pursuant to Section 257
of the Companies Act, 1956 proposing the candidature of Mr. Hansh P
Bhasin for the office of Director, liable to retire by rotation.
Brief resume of the Director proposed to be appointed, as stipulated in
Clause 49 of the Listing agreement with the stock exchanges is provided
in section of Notice of the Annual General Meeting.
14. Particulars Required Under Section 212 of the Companies Act, 1956
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the directors report. balance sheet, and profit and loss
account of the subsidiary companies. The application was made to the
Central Government of India for an exemption from such attachment as
the Company presents the audited consolidated financial statements in
the Annual Report. We believe that the consolidated accounts present a
full and fair picture of the state of affairs and the financial
conditions. The Government of India has granted exemption to the
Company from complying with section 212 for all the subsidiary
companies vide its letter dated February 4, 2009. Pursuant to the
conditions of Government of India approval the statement thereto is
annexed to the Annual Report.
Accordingly, the Annual Report does not contain the financial
statements of the subsidiary companies. We will make available the
audited annual accounts and related information of subsidiary
companies, where applicable, upon request by any of our investors.
These documents will also be available for inspection during business
hours at our registered office in Pune, India.
15. Employee Stock Option Plan (ESOP)
The Company has instituted "HOVS Stock Option Plan 2007" and "HOVS
Stock Option Plan 2008" for its employees and for employees of its
subsidiary companies.
The shareholders in its Nineteenth Annual General meeting held on July
21, 2007 approved 11,00,000 equity shares of a face value of Rs. 10
each with each such option conferring a right upon the employee to opt
for one equity share of the Company, in terms of HOVS ESOP Plan 2007.
Under the 2007 plan, 4,00,000 options were reserved for employees of
the Company and 7,00,000 for employees of subsidiary companies.
The shareholders also, in its Twentieth Annual General meeting held on
September 30, 2008 approved additional 7,50,000 equity shares of a face
value of Rs.10 each with each such option conferring a right upon the
employee to opt for one equity share of the Company, in terms of HOVS
ESOP Plan 2008. Under the 2008 plan, 7, 50,000 options were reserved
for employees of the subsidiary companies of the Company, working in
India or out of India.
Options were granted to employees at an exercise price not less than
closing price of the stock exchange having highest trading volume,
prior to the date of meeting ofthe Compensation & Remuneration
Committee. Such options will vest in a phased manner within five years
as 10% in each first to four years and balance 60% at the end of fifth
year.
i) The details of Plan 2007 and Plan 2008 are as below:
Plan 2007
Parent Subsidiary Total
Approved Options 400,000 700,000 1,100,000
Grant in 2007 141,500 526,000 667,500
Grant in 2008 28,150 217,900 246,050
Total Grant 169,650 743,900 913,550
Options Lapsed - 80,000 80,000
Options in force 169,650 663,900 833,550
Balance available 230,350 36,100 266,450
Plan 2008
Parent Subsidiary Total
Approved Options - 750,000 750,000
Grant in 2008 - - -
Total Grant - - -
Options Lapsed - - -
Options in force - - -
Balance available - 750,000 750,000
ii) Information of grant made to directors and employees:
Options granted date Directors Employees Total (A+B)
(A) (B)
July 21,2007 7,500 640,000 647,500
October 25,2007 0 20,000 20,000
July 30,2008 7,500 183,550 191,050
October 8,2008 0 55,000 55,000
Total Granted 15,000 898,550 913,550
Options lapsed 0 80,000 80,000
Options outstanding 15,000 818,550 833,550
iii) The details of options granted under the two plans are given in
the table.
As of March 31,2009
Plan 2007 Plan 2008
a. Options Granted: 9,13,550 Nil
b. The Pricing formula: Closing price of the stock Closing price of
exchange with highest tra- the stock exchange
ding volume,prior to the with highest trad-
date of the meeting of the ing volume,prior
compensation & Remuneration to the compensation
Committee in which options & Remuneration
are granted Committee in which
options are granted
c. Options Vested: 59,550 Nil
d. Options Exercised: Nil Nil
e. Total number of shares 9,13,550 Nil
arising as a result of
exercise of options:
f. Optioned lapse: 80,000 Nil
g. Variation of terms of NA NA
option:
h. Money realized by NA NA
exercise of options:_
i. Total number of options 8,33,550 Nil
in force:
j. Employee wise details of
Options granted to: Nil
i. Senior Management
personnel; 8,33,550
ii. Employee receiving 5%
or more of the total number
of options granted during
the year; Nil
iii.Employee granted 1% or more
of the issued capital Nil
k. Diluted EPS on issue of
shares on exercise calculated
in accordance with AS 20. NA NA
16. Acknowledgement
The Board wishes to convey their appreciation to its employees,
shareholders, customers, suppliers, bankers and Government authorities
for the continued support given by them to the Company during the year.
For and on behalf of the Board of Directors
Place: Mumbai Sunnder Rametra
Date: June 4, 2009 Chairman & Executive Director
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