<dhhead>DIRECTORS REPORT </dhhead>
Dear Members,
Your Directors are pleased to present their 23rd Annual
Report along with the audited annual accounts for the financial year ended March 31, 2023.
1. FINANCIAL HIGHLIGHTS
The key aspects of the Companys financial performance for the
year ended March 31, 2023 are tabulated below:
Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Income from operations |
18,881.61 |
15,513.12 |
26,478.97 |
21,603.45 |
Other Income |
567.19 |
205.48 |
659.51 |
246.18 |
Total Revenue |
19,448.80 |
15,718.60 |
27,138.48 |
21,849.63 |
Operating Expenses |
13,659.11 |
10,269.49 |
19,256.82 |
14,997.63 |
Earnings before interest, tax, depreciation and |
|
|
|
|
|
5,789.69 |
5,449.11 |
7,881.66 |
6,852.00 |
amortization (EBITDA) |
|
|
|
|
EBITDA% |
29.77% |
34.67% |
29.04% |
31.36% |
Finance Costs |
162.40 |
164.24 |
211.62 |
215.20 |
Depreciation, goodwill & amortization expenses |
587.31 |
516.69 |
1,140.14 |
1,031.93 |
Earnings before Exceptional Items, Interest & Tax |
5,039.98 |
4,768.18 |
6,529.90 |
5,604.87 |
Exceptional Items |
- |
- |
- |
- |
Net Profit before Tax (PBT) |
5,039.98 |
4,768.18 |
6,529.90 |
5,604.87 |
Taxes |
1,255.96 |
1,219.22 |
1,638.09 |
1,427.29 |
Profit for the year before minority interest |
3,784.02 |
3,548.96 |
4,891.81 |
4,177.58 |
Minority interest |
- |
- |
3.61 |
3.57 |
Net Profit attributable to shareholders |
3,784.02 |
3,548.96 |
4,888.20 |
4,174.01 |
NPM% |
19.46% |
22.58% |
18.03% |
19.12% |
2. OPERATIONAL AND FINANCIAL STATE OF AFFAIRS OF THE COMPANY
The information on operational and financial performance is provided
under the Management Discussion and Analysis Report which has been prepared, inter-alia,
in compliance with the provisions of Regulation 34 of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ("Listing Regulations").
Apart from the information contained in Notes to the Financial
Statements, no material changes and commitments have occurred after the closure of FY2023
till the date of this Report, which would affect the financial position of the Company.
3. GENERAL RESERVE
The Board has not recommended transfer of any amount of profit to
reserves during the year under review. Hence, the entire amount of profit for the year
under review has been carried forward to Retained Earnings.
4. RETURN OF SURPLUS FUNDS TO SHAREHOLDERS
DIVIDEND
Based on the overall Companys performance, the Directors are
pleased to recommend a dividend of Re. 1/- (10%) per share. The total quantum of dividend
payout, if approved by the Members, will be about Rs. 49.03 million.
In view of the changes made under the Income-tax Act, 1961, by
the Finance Act, 2020, dividend paid or distributed by the Company shall be taxable in the
hands of the shareholders. The Company shall, accordingly, make the payment of the final
dividend after deduction of tax at source as per applicable tax rates.
The Company had paid a dividend of Re. 1/- per share (10%) in the
previous year. The Company intends to maintain historical payout ratio and is exploring
efficient methods to achieve the same. The historical data of dividend distributed by the
Company is as follows:
Sr. No. Dividend |
FY 2021-22 |
FY 2020-21 |
FY 2019-20 |
FY 2018-19 |
FY 2017-18 |
FY 2016-17 |
FY 2015-16 |
1 Total Dividend for the year |
1.00 |
1.00 |
1.00 |
1.00 |
1.00 |
1.00 |
1.00 |
2 Dividend as % EPS (Basic) |
1.21% |
1.23% |
1.75% |
1.66% |
1.8% |
1.4% |
1.2% |
3 Dividend as % Profit After Tax |
0.84% |
1.20% |
1.73% |
1.66% |
1.8% |
1.4% |
1.2% |
4 Tax Amount (Rs. Million) |
- |
- |
- |
7.60 |
7.95 |
8.12 |
8.36 |
The Register of Members and Share Transfer Books will remain closed
from Friday, September 1, 2023 to Thursday, September 14, 2023 (both days inclusive) for
the purpose of ascertaining entitlement for the said dividend. The 23rd Annual
General Meeting of the Company is scheduled to be held on Thursday, September 14, 2023.
The dividend declared and/or paid by the Company for FY2023 is in
compliance with the Dividend Distribution Policy.
BUYBACK
During the year, the Board of Directors vide their meeting dated
November 10, 2022 approved, subject to shareholders approval, buyback of equity
shares of the Company for an aggregate amount not exceeding Rs. 3,000 million at
maximum buyback price not exceeding Rs. 1,900/- per equity share from the
shareholders/beneficial owners of the company through tender offer. The shareholders
approval was procured vide postal ballot, results of which were announced on December 14,
2022 and the Company concluded the said buyback of 1,714,285 equity shares of Rs. 10 each
at the buyback price of Rs. 1,750/- per share, as approved by the Buy Back
Committee at its meeting dated December 15, 2022. The Buy Back opened on February 3, 2023
and closed on February 16, 2023. The settlement date for the said buyback was February 24,
2023. The shares so bought back were extinguished and the issued and paid up capital was
amended accordingly.
5. DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of the Listing Regulations, the Company has
formulated a dividend distribution policy with regards to distribution of dividend to its
shareholders and/or retaining or plough back of its profits. The Policy also sets out the
circumstances such as financial parameters, internal and external factors, utilization of
retained earnings etc. and different factors for consideration by the Board at the time of
taking such decisions of distribution or of retention of profits, in the interest of
providing transparency to the shareholders. The policy has also been hosted on the
Companys website at https://eclerx.com/ investor-relations/corporate-governance/.
6. PUBLIC DEPOSITS
During the year, the Company has not accepted any deposits within the
meaning of the provisions of Section 73 of the Companies Act, 2013 ("the Act")
read with the Companies (Acceptance of Deposits) Rules, 2014.
7. SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES
The Company had 16 (Sixteen) subsidiaries including step down
subsidiaries, and 1 (One) associate company as on March 31, 2023.
In terms of the provisions of Section 129(3) of the Act, a statement
containing salient features of the performance and financial position of each of the
subsidiaries is attached as Annexure-I to this report in Form AOC-1.
Pursuant to Section 136 of the Act, the Financial Statements including
Consolidated Financial Statements of the subsidiaries, along with relevant documents have
been hosted on the Companys website www.eclerx.com.
8. CLIENT BASE
The client segmentation, based on the last 12 months accrued
revenue for the current and previous years, on a consolidated basis is as follows:
Clients |
FY |
FY |
FY |
FY |
FY |
|
2022-23 |
2021-22 |
2020-21 |
2019-20 |
2018-19 |
US$ 0.5-1 Million |
32 |
25 |
19 |
21 |
20 |
US$ 1-5 |
30 |
26 |
26 |
22 |
18 |
Million |
|
|
|
|
|
More than |
14 |
13 |
7 |
7 |
7 |
US$ 5 Million |
|
|
|
|
|
9. INTERNAL FINANCIAL CONTROLS RELATED TO THE FINANCIAL
STATEMENTS
The details in respect of internal financial controls and their
adequacy are included in the Management Discussion and Analysis Report, which forms a part
of the annual report.
These controls are reviewed by the management and key areas are subject
to various statutory, internal and operational audits based on periodic risk assessment.
The findings of the audits are discussed with the management and key findings are
presented before the Audit Committee and Board of Directors for review of actionable
items. The review of the IFC, inter-alia, consists of the three components of
internal controls, viz., Entity level controls, Key financial reporting controls and
Internal controls in operational areas.
In addition to this, the Company also has an Enterprise Wide Risk
Management (EWRM) Framework where the Company has identified and documented risks with
respect to financial reporting as well as the controls for such risks. The EWRM framework
is also reviewed periodically and updated as and when required. The Internal Auditor of
the Company periodically conducts an audit/check of the effectiveness of such framework
and the observations are placed before the Audit Committee.
10. CHANGES IN SHARE CAPITAL
Authorised Share Capital
During FY2023, pursuant to an ordinary resolution passed by the
shareholders through postal ballot on September 11, 2022, the Authorised Share Capital was
increased from Rs. 50,01,00,000/- (Rupees Fifty Crore One Lakh Only) divided into
5,00,10,000 (Five Crore Ten Thousand) Equity Shares of Rs. 10/- (Rupees Ten Only) each to
Rs. 100,00,00,000/- (Rupees One Hundred Crore Only) divided into 10,00,00,000 (Ten
Crore) Equity Shares of Rs. 10/- (Rupees Ten Only) each by addition of 4,99,90,000 (Four
Crore Ninety-Nine Lakhs Ninety Thousand) Equity Shares of Rs. 10/- (Rupees Ten Only),
ranking pari-passu in all respect with the existing Equity Shares of the Company.
Paid-up Share Capital
Particulars |
No. of shares |
Amount in Rupees |
Issued, subscribed and |
|
|
paid-up capital as on |
3,38,26,429 |
33,82,64,290 |
April 1, 2022 |
|
|
Add: Bonus shares |
|
|
|
1,69,13,215 |
16,91,32,150 |
allotted during FY2023* |
|
|
Less: Shares bought back |
|
|
via "Tender offer" route |
17,14,285 |
1,71,42,850 |
during FY2023# |
|
|
Issued, subscribed and |
|
|
paid-up capital as on |
4,90,25,359 |
49,02,53,590 |
March 31, 2023 |
|
|
* Pursuant to an ordinary resolution passed by the Shareholders through
postal ballot on September 11, 2022, the Stakeholders Relationship Committee on September
23, 2022 allotted 1,69,13,215 fully paid_up Bonus equity shares of Rs. 10/_ (Rupees
Ten Only) each in the proportion of 1 (one) new equity share for every existing 2 (two)
equity shares to the eligible existing shareholders of the Company.
# The Company has completed buy back of 1,714,285 (One Million
Seven Hundred and Fourteen Thousand Two Hundred and Eighty-Five) fully paid-up equity
shares of face value of Rs. 10 (Rupees Ten) each ("Equity Shares"), on a
proportionate basis from all eligible shareholders of the Company, through the Tender
Offer route for cash at a buy back price of Rs. 1,750 (Rupees One Thousand Seven
Hundred and Fifty only) per Equity Share.
11. STATUTORY AUDITORS
M/s. S.R. Batliboi & Associates LLP, Chartered Accountants, Mumbai,
[ICAI Registration No. 101049W/E300004], the Statutory Auditors of the Company, were
appointed by the shareholders at their meeting held on August 29, 2019 for a period of 5
(Five) years i.e. upto conclusion of 24th Annual General Meeting.
There are no qualifications, reservations, adverse remarks or
disclaimer made by M/s. S.R. Batliboi & Associates LLP, Statutory Auditors in their
report for FY2023. The Statutory Auditors have not reported any incident of fraud to the
Audit Committee of the Company during the financial year under review.
12. SECRETARIAL AUDITORS
In terms of the provisions of Section 204 of the Act read with the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of
Directors of the Company had appointed M/s. Mehta & Mehta, Company Secretaries as the
Secretarial Auditors for conducting the audit of the secretarial records for the financial
year ended March 31, 2023. The report of the Secretarial Auditor is attached as
Annexure-II. The Secretarial Auditors Report does not contain any qualification,
reservation or adverse mark.
The Company is in compliance with the relevant Secretarial Standards
issued by the Institute of Company Secretaries of India (ICSI) and notified by the Central
Government.
13. MAINTENANCE OF COST RECORDS
Maintenance of cost records and requirement of cost audit as prescribed
under the provisions of Section
148(1) of the Companies Act, 2013 are not applicable for the business
activities of the Company.
14. ANNUAL RETURN
Pursuant to Section 134(3)(a) and Section 92(3) of the Act read with
Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return
(Form MGT-7) for the financial year ended March 31, 2023, is hosted on the website of the
Company at https://eclerx.com/investorrelations/ corporate-governance/.
15. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE
There were no significant or material orders passed by any regulatory
Authority, Court or Tribunal which shall impact the going concern status and
Companys operations in future during the financial year.
16. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company comprises of eminent persons of
proven competence and integrity. They bring diversified experience, strong financial &
business acumen, management & leadership qualities.
Appointments
The Board of Directors on basis of recommendation of Nomination and
Remuneration Committee, appointed Mr. Naval Bir Kumar (DIN: 00580259) and Mr. Naresh Chand
Gupta (DIN: 00172311) as Additional (Non-Executive Independent) Directors of the
Company with effect from August 9, 2022. The shareholders of the Company at the 22nd
Annual General Meeting held on September 21, 2022 also approved their appointment as
Non-Executive Independent Directors of the Company for a tenure of 5 (five) consecutive
years commencing from August 9, 2022 to August 8, 2027.
The Board of Directors on basis of recommendation of Nomination and
Remuneration Committee, approved appointment of below mentioned Directors subject to the
approval of shareholders. The Company has circulated the postal ballot notice for seeking
such approval.
i) appointment of Mr. Kapil Jain (DIN: 10170402) as Managing Director
& Group CEO of the Company (not liable to retire by rotation) for a period of 5
consecutive years effective from May 25, 2023 till May 24, 2028, subject to approval of
the Central Government. ii) appointment of Ms. Bala C Deshpande (DIN: 00020130) as
an Independent Director of the Company for a period of 5 consecutive years effective from
May 25, 2023 till May 24, 2028. In the opinion of the Board, Ms. Bala
possess requisite integrity, expertise, experience and proficiency.
Resignations and retirements
In accordance with Section 152 and other applicable provisions, if any,
of the Act read with Companies (Appointment and Qualification of Directors) Rules, 2014
and Articles of Association of the Company, Mr. Anjan Malik, (DIN: 01698542)
retires by rotation, and being eligible, offers himself for re-appointment at the
forthcoming AGM of the Company.
Mr. Alok Goyal (DIN: 05255419) ceased to be Non-Executive Independent
Director of the Company with effect from close of business hours on August 9, 2022.
Mrs. Roshini Bakshi (DIN: 01832163) who was appointed as an Additional
(Non-Executive Independent) Director of the Company with effect from August 9, 2022 ceased
to be on Board with effect from September 9, 2022.
The Directors place on record their appreciation for the valuable
contribution and support provided by Mr. Goyal and Mrs. Bakshi, during their tenure in
their respective capacity.
17. DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the Certificate of Independence from all the
Independent Directors pursuant to Section 149 of the Act and Regulation 16 of the Listing
Regulations, confirming and certifying that they have complied with all the requirements
of being an Independent Director of the Company.
The Independent Directors have also confirmed that they have complied
with the Companys Code of Conduct. The Company has also received declarations under
Regulation 25(8) of Listing Regulations from the Independent Directors confirming that
there were no existing or anticipation of any circumstances during the year that could
impair or impact their ability to discharge their duties with an objective independent
judgement and without any external influence.
In the opinion of the Board, all the Independent Directors have acted
with integrity and have the requisite experience and expertise in the context of the
business of the Company to make a significant contribution to the deliberations of the
Board of Directors.
18. PERFORMANCE EVALUATION
The Board of Directors of the Company had appointed an external expert
for conducting evaluation of the performance of the Chairman, Board, individual Directors
including peer review and self-assessment and of the Committees of the Board. The report
of the performance evaluation of the individual Directors were submitted to the respective
Directors whereas the observations and the report on the performance evaluation of the
Board and its Committees was placed before the Nomination and Remuneration Committee. The
feedback of the Nomination and Remuneration Committee was then placed before the Board of
Directors for review and taking appropriate action on the basis of the findings in the
performance evaluation report.
The said evaluation for the Board and individual Directors was carried
out, based on pre-defined comprehensive checklists, which were circulated to the Directors
covering various evaluation criteria, inter-alia, modelled on the following
factors:
Accountability towards shareholders;
Critical review of business strategy;
Conducive environment for the communication and rigorous
decision making;
Boards focus on wealth maximization for shareholders;
Boards ability to demand and foster higher performance;
Business Continuity preparedness;
Skill set and mix thereof among Board members;
Flow of information so as to enable informed opinions by the
Directors;
Adequacy of meetings of Directors in terms of frequency as well
as the time dedicated for discussions and deliberations.
The performance evaluation criteria for the Committees of the Board,
was modelled on the following factors:
Contribution, control and counselling by the Committee on
various matters;
Qualitative comments/inputs;
Deficiencies observed, if any;
Qualification of members constituting the Committee;
Attendance of Committee members in the respective meetings;
Frequency of meetings.
In addition, the Chairman of the Board was also evaluated on the key
aspects of his role and the report on his performance evaluation was placed before the
separate meeting of the Independent Directors for review. During the year, a separate
meeting of Independent Directors was held on May 24, 2022. In this meeting, the
performance of the Non-Independent Directors, performance of the Board as a whole
and performance of the Chairman was evaluated, taking into account the views of Executive
Director and Non-Executive Directors. The same was also discussed in the subsequent
Nomination and Remuneration Committee Meeting and Board Meeting that followed the meeting
of Independent Directors.
19. FAMILIARISATION PROGRAMME
The Company conducts familiarisation programme for Independent
Directors to enable them to get a clear understanding about the business of the Company,
organizational set-up, functioning of various verticals/departments, industry scenario,
changes in the regulatory framework and its impact on the business of the Company.
The Company has formulated a detailed Induction pack for on-boarding of
new Directors, which, inter-alia, covers the following:
Introduction and meeting with other Directors on the Board and
the Senior Management;
Brief introduction about the business, strategy and nature of
industry of the Company in which it operates;
Roles, rights and responsibilities of Directors including
Independent Directors;
Extant Committees of Board of Directors;
Meetings of Board and Committees, venue, generic dates and
timings when such meetings are generally held and the Annual General Meeting of
shareholders of the Company;
The Codes of Conduct which are in place and applicable to the
Directors;
Remuneration payable to Directors pursuant to shareholders
approval to that effect;
Liability Insurances taken by the Company to cover Directors.
In addition to this, periodic familiarization programmes are conducted
for the Directors about the business operations, industry overview, threats, opportunities
and challenges in respective verticals. Furthermore, detailed business presentations are
made at quarterly meetings of Board of Directors. The details of familiarization
programmes/training imparted to Independent Directors have been hosted on the
Companys website at https://eclerx.com/investor-relations/ corporate-governance/.
The Independent Directors are encouraged to attend educational programs
in the area of Board/ Corporate governance.
The Directors have access to management to seek any additional
information, clarification and details as may be required. In terms of the Listing
Regulations, the standard letter of appointment of NonExecutive Independent
Directors of the Company containing the requisite familiarization details has been hosted
on the Companys website at https://eclerx.com/investor-relations/
corporate-governance/.
20. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act and other applicable Rules and
Regulations, the Directors, to the best of their knowledge and ability, confirm that:
in the preparation of the annual accounts for FY2023, the
applicable accounting standards had been followed along with proper explanation relating
to material departures, if any;
the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as at March 31,
2023 and of the profit or loss of the Company for the year ended on that date;
the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of the Act
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities;
the Directors had prepared the annual accounts on a going
concern basis;
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;
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.
21. BOARD MEETINGS
During FY2023, 5 (Five) Board Meetings were held details of which,
along with particulars of attendance of the Directors at each of the Board Meetings are
given in the Corporate Governance Report of the Company, which forms a part of this
report. The intervening gap between the meetings was within the period prescribed under
the Act and the Listing Regulations.
22. BOARD COMMITTEES
The Company has constituted various Committees of the Board as
required under the Companies Act, 2013 and the Listing Regulations. For details like
composition, number of meetings held, attendance of members etc. at such Committee
meetings, please refer to the Corporate Governance Report, which forms a part of this
Annual Report.
23. AUDIT COMMITTEE
The Audit Committee comprises of Mr. Biren Gabhawala, Mr. Anish
Ghoshal, Ms. Deepa Kapoor, Mr. Naval Bir Kumar and Mr. PD Mundhra. The majority of
the Members are Independent Directors and Mr. Biren Gabhawala, Independent Director is the
Chairperson of the Committee.
Mr. Naval Bir Kumar was appointed as a Member of the Audit
Committee with effect from August 15, 2022.
During the year, all recommendations made by the Audit Committee were
accepted by the Board.
24. REPORTING OF FRAUD BY THE STATUTORY AUDITORS
There were no instances of fraud reported by the Statutory Auditors
during FY2023 in terms of the Section 143 of the Act read with the Companies (Audit and
Auditors) Rules, 2014.
25. NOMINATION AND REMUNERATION POLICY
The Company has formulated the Nomination and Remuneration Policy in
accordance with the provisions of the Act and the Listing Regulations. The said policy
acts as a guideline for determining, inter-alia, qualifications, positive
attributes and independence of a Director, matters relating to the remuneration,
appointment, removal and evaluation of performance of the Directors, Key Managerial
Personnel, Senior Management and other employees. The aforesaid policy is hosted on the
Companys website at https://eclerx.com/ investor-relations/corporate-governance/.
26. VIGIL MECHANISM
The Company has zero tolerance policy for any form of unethical
behaviour. Pursuant to the provisions of the Act and Listing Regulations, the Company has
in place a Whistle Blower Policy to encourage all employees or any other person dealing
with the Company to disclose any wrong-doing that may adversely impact the Company, the
Companys customers, shareholders, employees, investors, or the public at large. This
policy, inter-alia, also sets forth
(i) procedures for reporting of questionable auditing accounting,
internal control and unjust enrichment matters
(ii) reporting instances of leak or suspected leak of Unpublished Price
Sensitive Information and
(iii) an investigative process of reported acts of wrong doing and
retaliation from employees, inter-alia, on a confidential and anonymous basis.
The aforesaid policy has also been hosted on the Companys website
at https://eclerx.com/ investorrelations/corporate-governance/. The same is reviewed by
the Audit Committee from time to time.
27. PARTICULARS OF LOAN, GUARANTEE AND INVESTMENTS
Details of loans, guarantees and investments under the provisions of
Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules,
2014, as on March 31, 2023, are set out in Note No. 5.1 to the Standalone Financial
Statements of the Company. The Company has not provided any guarantee during the year
under review.
28. PARTICULARS OF TRANSACTIONS, CONTRACTS OR ARRANGEMENTS WITH RELATED
PARTIES
During FY2023, all the transactions that the Company entered into with
related parties were in the ordinary course of business and at arms length basis.
All such transactions were approved by the Audit Committee and were reviewed by it on a
periodic basis. Further, the Company has not entered into material contracts or
arrangements as defined under Section 188 of the Act read with the Companies (Meetings of
Board and its Powers) Rules, 2014.
The policy on Related Parties as approved by the Board is hosted on the
Companys website at https:// eclerx.com/investor-relations/corporate-governance/.
The particulars of the transactions with related parties pursuant to
the provisions of Section 188 of the Act read with Companies (Meetings of Board and its
Powers) Rules, 2014 are as under. Further, details with respect to related party
transactions are also set out in the Note No. 31 to the Standalone Financial Statements of
the Company for the year ended March 31, 2023.
Pursuant to the related party disclosure requirements under Part A of
Schedule V of Listing Regulations, there were no loans and advances in nature of loans
outstanding for the financial year ended March 31, 2023, from subsidiaries, associate
companies or firms/companies in which Directors are interested.
|