BOARD'S REPORT TO THE MEMBERS, The Directors have pleasure in presenting before you the 17th Annual Report of the Company together with the Audited Statements of Accounts on standalone & consolidated basis for the year ended 31 st March, 2015. Review of Operations: The total revenue of the Company for the financial year under review on consolidated basis was Rs. 38,043.32 Lakhs as against Rs. 25,909.98 lakhs. The net profit was Rs. 2,570.13 for the financial year as against the net profit of Rs. 2,254.50 lakhs for the previous year. Dividend The Board of Directors are striving hard to maximise the shareholders returns in the long run by proposing inorganic acquisitions globally and placing the Company at No.1 position in the world. Hence the Directors express their inability to declare the dividend. Qualified Institutional Placement For global expansion of the Company, the Board of Directors are looking forward for huge investments in the Company. Hence recommended for approval of members, issue of such number of equity shares or the global depositary receipts ("GDR"), the American depositary receipts ("ADR"), the foreign currency convertible bonds ("FCCBS"), fully convertible debentures/partly convertible debentures, preference shares convertible in to equity shares, non-convertible debentures with warrants and / or any other financial instruments or securities convertible in to equity shares by way of Qualified Institutional placement for an amount of Rs. 150 crores (including premium). Share Capital During the year, your Company has allotted 21,06,245 equity shares of Rs. 10/- each at a premium of Rs. 208.40/- each and 18,17,974 equity shares of Rs. 10/- each at a premium of Rs. 346/- per share by way of preferential allotment to promoters and others. Consequently the paid up share capital of the Company has increased to Rs. 24,73,92,190/- divided into 2,47,39,219 equity shares of Rs. 10/- each. Utilization of Proceeds During the year Company has allotted 39,24,219 equity shares of Rs. 10/-for cash to the promoters and the others. The Company raised about Rs. 110.72 crores from the above issue and spent the same towards purposes as mentioned in the respective explanatory statements. i.e. Capital expenditure, working Capital requirements etc. Information about the Financial Performance / Financial Position of the Subsidiaries / Associates/ Joint Ventures Your Company has two Indian wholly owned subsidiary companies (WOS) and six wholly owned foreign subsidiary company (WOS) in USA. The performance of the subsidiaries have been included in the consolidated financials and published in the report. The names of the subsidiaries are furnished below: Gallop Solutions Private Limited (Indian WOS) Cigniti Software Solutions Private Limited (Indian WOS) Cigniti Inc, USA (Foreign WOS) Gallop Solution Inc., USA (Foreign WOS) Cigniti Technologies Inc, USA (Foreign WOS) Cigniti Technologies Canada Inc, Canada (Foreign WOS) Cigniti Technologies UK Limited, UK (Foreign WOS) Cigniti Technologies Australia PTY Limited, Australia (Foreign WOS) Management Discussion and Analysis Report The Management Discussion and Analysis as required under clause 49 (VIII) (D) of the Listing Agreement forms a part of this Report. Corporate Governance A Separate section titled "Report on Corporate Governance" along with the Auditors' Certificate on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms a part of this report. Extract of Annual Return As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report. Directors And Key Manangerial Personnel During the year, Ms. M. Amala was appointed as Additional Director in the category of Independent Director. However she resigned from office of directorship w.e.f. to 29.08.2015 and the Board accordingly relieved her while placing on the records its sincere appreciation for the valuable services rendered by her tenure as a director. Mr. P. Sudhakar will retire by rotation at the ensuing Annual General Meeting in terms of Section 152 and any other applicable provisions of the Companies act, 2013 and being eligible offers himself for re-appointment. The Company has appointed Mr. V. Krishanan as Chief Financial Officer w.e.f. 08th June, 2015 Declaration from Independent Directors on Annual Basis The Company has received a declaration from Mr. K. Ch. Subba Rao, Mr. Mani Subramani and Mr.K. Nageswer Rao Independent directors of the company to the effect that they are meeting the criteria of independence as provided in Sub-section (6) of Section 149 of the Companies Act, 2013 and are annexed herewith Vigil Mechanism Policy has been established by the Company for directors and employees to report genuine concerns pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013. The same has been placed on the website of the Company. Director's Responsibility Statement In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) The Directors had prepared the annual accounts on a going concern basis; and (e) The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Auditors and Auditors Report In the previous Annual General Meeting (16th AGM), the Company appointed M/s. P. Murali & Co, Chartered accountants as statutory Auditors to hold office until the conclusion of the 17th annual General Meeting. The Company has already received letter from them to the effect that their ratification, if made by the shareholders, would be within the prescribed limits and that they are not disqualified for re-appointment within the meaning of the Companies act 2013. The Board of Directors recommend their re-appointment ratification for the financial year 2015-16. Internal Audit The company has adequate Internal audit system and internal control process in place commensurate with the size of the business. However keeping in with the global expansion and aggressive volume the company is on the look out for appointing an independent practicing chartered accountant firm as internal auditors of the company. The Board has took note of the same and has approved the same for completing the task this financial year. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of managerial personnel) Rules 2014, Mr. Vivek Surana, Practicing Company Secretary has conducted Secretarial Audit of the Company for the FY 2014-15. The Secretarial Audit Report for the FY 2014-15 is annexed hereto and forms part of this Annual report. The Company has shortlisted two firms and will appoint one of them as Internal Auditor shortly. It is further stated that the delay in appointment of CFO was occurred for identifying a right candidate with appropriate exposure to meet both domestic & global business practices. Disclosure of Particulars with Respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo: A. Conservation of Energy: Your Company's operations are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment. B. Technology Absorption: Your Company has not undertaken any research and development activity for any manufacturing activity nor was any specific technology obtained from any external sources which needs to be absorbed or adapted. C. Foreign Exchange Earnings and Out Go: Foreign Exchange Earnings: X 1,11,65,1 1,350/-Foreign Exchange Outgo: X 23,33,18,068/- Public Deposits Your Company has not accepted any deposits falling within the meaning of Sec. 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules 2014, during the financial year under review. Details of Adequacy of Internal Financial Controls Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations. The organization is adequately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board. Insurance The properties and assets of your Company are adequately insured. Particulars of Loans, Guarantees or Investments Details of loans, guarantees or investments made under section 186 of the companies Act, 2013 are given in the note to the financial statements. Risk Management Policy Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well-structured risk management process. Corporate Social Responsibility With the mission to discover once again the social responsibility of developing economic, social and environmental capital towards sustainability, Cigniti crafted CSR projects in achieving the mission. Your Company believes and strives hard in sustainable development of society in which the enterprise draws economic and natural resources by enriching its capacity in contributing to the significant positive change in the economy. The CSR committee has been formed to achieve the mission and implement the CSR objectives. The Company has adopted the CSR policy and budgeted outlay of X 20 lacs has been approved by the Board of Directors. As per the programme, the Company has started implementation of CSR activity. However, during the year it was practical to spend only X 18,44,890. The residual amount shall be spent as per the CSR policy. The details on CSR corpus and amount spent, projects for which funds are utilized have been disclosed as part of Corporate Governance Report. Related Party Transactions All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with the promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large. As required under clause 49(V)(D) of the listing agreement, the Company has formulated a policy for determining 'material' subsidiaries, the said policy is disclosed at Company's website at www.cigniti.com <http://www.cigniti.com>. As required under clause 49(VIII)(A)(2) of the listing agreement, the Company has disclosed the policy on dealing with related party transactions at Company's website at www.cigniti.com <http://www.cigniti.com>. Your Directors draw attention of the members to Note 29 to the financial statement which sets out related party disclosures. Disclosure About Cost Audit Cost Audit is not applicable to your Company. Ratio of Remuneration to each Director Under section 197(12) of the Companies Act, 2013, and Rule 5(1)(2) & (3) of the Companies (Appointment & Remuneration) Rules, 2014, ratio of remuneration to maiden employees for Mr. C.V. Subramanyam is 1:10 times in rupees and for Mr. C. Srikanth is 1:5 times in rupees. Listing with Stock Exchanges The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to BSE Limited and National Stock Exchange Limited where the Company's Shares are listed. Corporate Information: Governance and Shareholders Directors are happy to report that your Company is compliant with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. A separate section on Corporate Governance and Management Discussion and Analysis together with a certificate from the Statutory Auditor confirming compliance is set out in the Annexure forming part of this report. Industry Based Disclosures as Mandated by the Respective Laws Governing the Company The Company is not an NBFC, Housing Companies etc., and hence Industry based disclosures are not required. Secretarial Standards Event Based Disclosures During the year under review, the Company has not taken up any of the following activities: Secretarial Standards Event Based Disclosures During the year under review, the Company has not taken up any of the following activities: 1. Issue of sweat equity share: NA 2. Issue of shares with differential rights: NA 3. Issue of shares under employee's stock option scheme: NA 4. Disclosure on purchase by company or giving of loans by it for purchase of its shares: NA 5. Buy back shares: NA 6. Disclosure about revision: NA 7. Preferential Allotment of Shares: Yes Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. The following is the summary of sexual harassment complaints received and disposed during the calendar year. No. of complaints received: Nil No. of complaints disposed off: Nil Acknowledgements Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels, to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation of business constituents, banks and other financial institutions and shareholders of the Company like SEBI, BSE, NSE, MCX, NSDL, CDSL, Axis Bank, HDFC Bank etc. for their continued support for the growth of the Company. For and on behalf of the Board Cigniti Technologies Limited C.V. Subramanyam Chairman & Managing Director DIN: 00071378 Place: Hyderabad Date: 24.08.2015 |