Your Directors have pleasure in presenting the 28th Annual Report on the business andoperations of the Company together with the Financial Statement of the Company for thefinancial year (FY) ended March 31 2018. The Consolidated performance of the Company andits subsidiaries has been referred to wherever required.
1. FINANCIAL RESULTS
| || || || ||(Rs. lakhs) |
|Particulars || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Total income ||23951.76 ||24133.69 ||53422.69 ||50136.81 |
|Total expenditure (before interest & depreciation) ||22646.79 ||20956.09 ||50157.13 ||44799.69 |
|Earnings before interest depreciation amortization and extra-ordinary items ||1304.97 ||3177.60 ||3265.56 ||5337.12 |
|Interest & finance charges ||720.32 ||170.15 ||1368.97 ||1286.12 |
|Depreciation & amortization ||1370.11 ||992.97 ||1876.32 ||1220.18 |
|Earnings before Tax and Exceptional Items ||(785.46) ||2014.48 ||20.27 ||2830.82 |
|Exceptional item ||298.69 ||45.33 ||298.69 ||(52.34) |
|Profit before Tax (PBT) ||(1084.15) ||1969.15 ||(278.42) ||2883.16 |
|Provision for Tax - Current & Deferred ||(142.34) ||678.06 ||502.78 ||142.82 |
|Net Profit after Tax (PAT) ||(941.81) ||1291.09 ||(781.20) ||1454.93 |
|Minority Interest ||0.00 ||0.00 ||43.78 ||43.27 |
|Profit for the year ||(941.81) ||1291.09 ||(824.98) ||1411.66 |
The Company continued to be engineering partners to clients in aerospace heavyengineering industrial products and auto industry. Company's engineering services revenuehas grown in both Heavy Engineering and Aerospace verticals with uptick in globalinfrastructure segment. Defense vertical along with Mistral acquisition is showingpositive momentum with domestic defense contracts in the production stage across variousresearch labs. The revenue performance during fourth quarter was upbeat though skewed.The margins however got impacted due to difficulties faced with two clients coupled withhigher cost during the quarter due to organizational restructuring. The Management isseized of the matter and has taken cost reduction initiatives. The impact of these stepsshould be visible in the next few quarters.
FINANCIAL HIGHLIGHTS - STANDALONE
Total Income decreased marginally to Rs. 2395.17 Million in 2017-18. EBIDTA decreasedby 58.9 % to Rs. 130.50 Million in 2017-18. Loss before tax and exceptional items is Rs.(78.54) Million in 2017-18. Net loss after tax is Rs. (94.18) Million in 2017-18.
FINANCIAL HIGHLIGHTS - CONSOLIDATED
Total I ncome increased by 6.55 % to Rs. 5342.69 Million in 2017-18. EBIDTA decreasedby 38.81 % to Rs. 326.56 Million in 2017-18. Profit before tax and exceptional itemsdecreased by 99.28 % to Rs. 2.03 Million in 2017-18. Net Profit after tax decreased by158.44% to Rs. (82.50) Million in 2017-18.
The Company has not transferred any amount to its reserves for the Financial Year endedMarch 31 2018.
Considering need for conservation of funds for catering to the growth plans of thecompany your Directors consider it expedient to pass over dividend for 2017-18.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the Notes to the financial statements provided in the Annual Report.
The Company has not accepted/renewed any public deposits and as such no amount onaccount of principal or interest on public deposits under Section 73 of the Companies Act2013 read with Companies (Acceptance of Deposits) Rules 2014 was outstanding as on thedate of the Balance Sheet.
ISSUE AND LISTING OF SHARES
The Company's shares are listed on BSE Limited (BSE) and National Stock Exchange ofIndia Limited (NSE). Stock performance and stock data are furnished in the section onCorporate Governance.
During the financial year the Company has not issued any shares and therefore there isno change in the Share Capital of the Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of contracts or arrangements with related parties referred to insection 188(1) of the Companies Act 2013 are furnished in the prescribed form AOC 2 asAnnexure I to this Report. All transactions with the related parties during the financialyear were in the ordinary course of business. The transactions have been approved by theAudit Committee and the Board if required. Your attention is drawn to the Notes to thefinancial statement.
The Company has not entered into any transaction with related parties which can beconsidered material in accordance with the policy of the Company on material related partytransactions formulated as per the requirements of Listing Regulations. The Policy onmateriality and dealing with related party transactions formulated and approved by theBoard is posted on the website of the Company and is accessible at www.axiscades.com
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments affecting the financial position of theCompany occurred between the financial year end and the date of this report. However thecompany has agreed to acquire Mistral Solutions Pvt. Ltd. (MSPL) in a phased manner whereby in phase I (which was completed on 15th December 2017) it acquired 43% stake in MSPLby way of share acquisition from its existing shareholders and in Phase II by way ofScheme of Amalgamation of the Shareholder Company of MSPL. The said Scheme was filed withthe Stock Exchanges for their approval and Company has received the observation lettersfrom the Stock Exchanges dated 26th April 2018 with no adverse remarks. The same is filedwith the National Company Law Tribunal.
MANAGEMENT DISCUSSION AND ANALYSIS
I n terms of the provisions of Regulation 34 of the Securities and Exchange Board ofIndia (Listing Obligation and Disclosure Requirements) Regulation 2015 a detailed chapteron Management discussion and analysis highlighting the Company's strategy businessenvironment operations performance risks and outlook is provided separately in thisAnnual Report.
BUSINESS STRUCTURE SUBSIDIARIES
The Company has the following subsidiaries:
|Sl. No ||Name of the subsidiary ||Location/Country ||%age Shareholding |
|1 ||AXISCADES Inc. (formerly Axis Inc.) ||Peoria Illinois USA ||100% |
|2 ||AXISCADES UK Ltd. (formerly Axis EU Europe Ltd.) ||Leicestershire UK ||100% shares held by AXISCADES Inc. |
|3 ||AXISCADES Technology Canada Inc. (Formerly Cades Technology Canada Inc.) ||Montreal Quebec Canada ||100% |
|4 ||Axis Mechanical Engineering Design (Wuxi) Co Ltd ||Wuxi City China ||100% |
|5. ||AXISCADES GmbH ||Germany ||100% |
|6. ||Mistral Solutions Inc. ||USA ||100% shares held by Mistral Solutions Pvt. Ltd. |
|7. ||Mistral Solutions PTE Ltd. ||Singapore ||100% shares held by Mistral Solutions Pvt. Ltd. |
|Sl. No ||Name of the subsidiary ||Location/Country ||%age Shareholding |
|1 ||Cades Studec Technologies (India) Private Limited (CSTI) ||Bengaluru India ||76% |
|2. ||AXISCADES Aerospace & Technologies Pvt. Limited (ACAT) ||Bengaluru India ||100% |
|3. ||AXISCADES Aerospace Infrastructure Private Limited (AAIPL) ||Bengaluru India ||99.99% shares are held by ACAT |
|4. ||Enertec Controls Limited (ECL) ||Bengaluru India ||51.84 % is held by ACAT and 48.16% by AAIPL |
|5. ||Mistral Solutions Pvt. Ltd. ||Bengaluru India ||43 % is held by ACETL and 44.22 % is held by Explosoft Tech Solutions Pvt. Ltd. |
|6. ||Aero Electronics Pvt Ltd. ||Bengaluru India ||100% shares held by Mistral Solutions Pvt. Ltd. |
|7. ||Mistral Technologies Pvt Ltd. ||New Delhi India ||100% shares held by Mistral Solutions Pvt. Ltd. |
There are no associate companies within the meaning of section 2(6) of the CompaniesAct 2013.
A report on the performance and financial position of each of the subsidiaries as perrule 8(1) of Companies (Accounts )Rules 2014 is furnished under the statement containingsalient features of financial statements of subsidiaries in Form AOC 1 is attached to thisReport as Annexure II pursuant to Section 129(3) of Companies Act 2013.
I n accordance with the provisions of Section 136 of the Companies Act 2013 theaudited financial statements of subsidiaries have been placed on the Company's website atwww.axiscades.com. The copies of these documents will be sent if requested by anyshareholder of the Company/ subsidiary interested in obtaining the same. These documentswill also be made available for inspection at the Registered Office of the Company duringbusiness hours on working days.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to the provisions of Section 129(3) of Companies Act 2013 read with AccountingStandards
(AS) 2123 and 27 the audited Consolidated Financial Statements are furnished in theAnnual Report.
2. ORGANIZATION DEVELOPMENT BOARD OF DIRECTORS Retirements and Reappointments
I n the ensuing Annual General Meeting Mr. Sidhartha Mehra Director retires byrotation and being eligible offers himself for re-appointment
The Directors recommend his re-appointment at the ensuing Annual General Meeting.
No independent director is liable to retire at the ensuing Annual General Meeting(AGM).
Mr. Sidhartha Mehra & Mrs. Vimmi M Trehan were regularized as Directors in theAnnual General Meeting held on 24th August 2017. Subsequently Mrs. Vimmi M Trehanresigned from the Directorship with effect from 14th September 2017 due to her poor healthcondition.
Induction and cessation of Directors and KMP
|Sl No ||Name of the Director ||Category ||Date of Appointment/reappointment ||Date of Approval by Shareholder ||Date of Resignation/cessation |
|1. ||Mr. Sidhartha Mehra ||Non- Executive Director ||10.08.2016 ||24.08.2017 ||- |
|2 ||Mr. Mritunjay Singh ||CEO & Executive Director ||02.01.2018 ||31.03.2018 ||- |
|3. ||Ms. Mariam Mathew ||Independent Director ||13.02.2018 ||31.03.2018 ||- |
|3 ||Mrs. Vimmi M. Trehan ||Independent Director ||30.03.2015 Reappointed on 11.03.2017 ||24.08.2017 ||14.09.2017 |
|4. ||Mr. Valmeekanathan S ||Non- Executive Director ||25.02.2014 ||09.09.2014 ||Resigned as CEO w.e.f. 8.01.2017 & as Director w.e.f. 13.09.2017 |
|5. ||Mr. Kedarnath Choudhury ||Non- Executive Director ||31.10.2008 ||- ||30.05.2018 |
HUMAN RESOURCES DEVELOPMENT
The Company is committed to build an environment where employees are inspired toachieve excellence in their area of functioning. The Human Resource Policy of the Companyis focused on attracting building and retaining best talents. In this direction theCompany has taken several Human Resource initiatives. training and employee developmentprograms are put in place. Company's Policy commits to provide safe and healthy workenvironment to all the employees.
The Employee strength of the company on consolidated basis stood at 2100 employeesduring the year end.
EMPLOYEE BENEFIT SCHEME
The Company approved the ESOP Scheme-
AXISCADES Engineering ESOP 2018 -Series 1 & AXISCADES Engineering ESOP 2018 -Series
2 on 31 March 2018 which are in compliance with SEBI (Share Based EmployeeBenefits) Regulations 2014 and are made effective from 1 April 2018. Thus as on 31 March2018 no stock options were granted under the Scheme.
The Company is in the process of obtaining in-principal approval from the StockExchanges. In this regard the Company has received certificate from the Company's Auditoras per Annexure III and Registered Merchant Banker confirming the Plan is as per SEBI(Share Based Employee Benefits) Regulations 2014.
The applicable disclosures in compliance with Regulation 14 of Securities and ExchangeBoard of India (Share Based Employee Benefits) Regulations 2014 and Rule 12 of companies(Share Capital and Debentures) Rules 2014 are set out below:
|Particulars ||AXISCADES Engineering ESOP 2018 -Series 1 ||AXISCADES Engineering ESOP 2018 -Series 2 |
|A. Description of each Employee Stock Option Plan/Scheme that existed at any time during the year including the general terms and conditions of each such Scheme/Plan || || |
|a) Date of shareholders' approval ||31 March 2018 || |
|b) Total number of options approved ||under ESOS 1510381 ||1510381 |
|c) Vesting requirements ||Not less than 1 year from date of grant and maximum period in which the options shall be vested shall be within five years from the date of grant. ||Not less than 1 year from date of grant and maximum period in which the options shall be vested shall be within four years from the date of grant. |
|Particulars ||AXISCADES Engineering ESOP 2018 -Series 1 ||AXISCADES Engineering ESOP 2018 -Series 2 |
|d) Exercise price or pricing formula || |
The exercise price shall be decided by the Board or the Compensation Committee in line with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014 and any other applicable guidelines.
|e) Maximum term of option granted || |
Exercise period would be eight years from the date of grant of options Primary
|f) Source of shares (primary secondary or combination || || |
Other disclosures in relation to Method used to account for ESOP Option movementduring the year Employee wise details of options granted to description of the Methodand significant assumptions used during the year to estimate the fair value of options isnot applicable as no grant has been made during the financial year 2017-18.
The Company's ESOP disclosure can be accessed on its website axiscades.com
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 (12) of the Companies Act 2013 readwith Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is provided as Annexure IIIA to this Report.
The statement of particulars of employees pursuant to Rule 5(2) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached as AnnexureIV to this Report.
3. CORPORATE GOVERNANCE
The report on Corporate Governance as required under Schedule V of the SEBI (LODR)Regulations 2015 is attached and forms part of the Annual Report. A certificate from theAuditors of the Company as regards to compliance of conditions of corporate governance isalso appended to the report.
MEETINGS OF THE BOARD
The Board of the Company met 8 (eight) times during the year. The dates attendance andother particulars of the meetings are furnished in the Report on Corporate Governanceattached to this Report. The intervening gap between any two meetings was within the limitprescribed by the provisions of Companies Act 2013.
COMMITTEES OF THE BOARD
The Audit Committee consists of 4 members namely Mr. Kailash M. Rustagi Mr. PradeepDadlani Mr. Srinath Batni and Dr. Vivek Mansingh Independent Directors consequent tothe resignation of Mr. Kedarnath Choudhury Non-executive Director w.e.f. 30.05.2018. TheChairman of the Audit Committee is an Independent Director.
All the recommendations made by the Audit Committee during the year have been acceptedby the Board.
The Company has also constituted Nomination and Remuneration Committee StakeholdersRelationship Committee and Corporate Social Responsibility Committee as required under theprovisions of Companies Act 2013 and also as required under Listing Regulations and thecomposition scope of their functions responsibilities etc. are given in the CorporateGovernance Section which forms part of this Report.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received declarations from all Independent Directors under Section149(7) of the Companies Act 2013 (read together with Companies Amendment Act 2017 tothe effect that they meet the criteria of independence as laid down in section 149(6) ofthe Companies Act 2013 read together with any amendment thereto. The terms and conditionsof appointment of Independent Directors are placed on the website of the Company atwww.axiscades.com
PERFORMANCE EVALUATION OF THE BOARD COMMITTEES AND DIRECTORS
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual directors pursuant to the provisions of the Companies Act2013 and SEBI (LODR) Regulations 2015.
The performance of the Board and its committees were evaluated by the Board/committeeafter seeking inputs from all the directors/members on the basis of the criteria andframework adopted by the Board. The evaluation process has been explained in the CorporateGovernance Report section of the Annual Report.
The Vigil Mechanism of the Company which also incorporates the Whistle blower policyprovides a formal mechanism to all Directors and employees to approach the Chairman of theAudit Committee and make protective disclosures about unethical behavior actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. TheWhistle Blower Policy is an extension of the Company Code of Conduct which requires everyemployee to promptly report to the Management any actual or possible violation of the Codeor an event he is aware of that could affect the business or reputation of the Company.The disclosures reported are addressed in the manner and within the time frames prescribedin the Policy. No personnel of the Company were denied access to the Chairman of the AuditCommittee. The Whistle blower policy which also describes the mechanism may be accessed onthe Company's website at www. axiscades.com.
POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION
The Company's policy on directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and the policyon remuneration of directors key managerial personnel and other employees formulatedpursuant to Section 134(3) (e) and 178 (3) of the Companies Act 2013 are furnished inAnnexure V.
RISK MANAGEMENT POLICY
The Company has formulated and implemented a Risk Management Policy which focuses onidentification of elements of risk if any which in the opinion of the Board maythreaten the existence of the Company.
The Company has a risk identification and management frame work appropriate to its sizeand the environment under which it operates. The risk management process involvesidentification and periodic assessment of potential risks and their impact on theoperations profitability growth and continuity of the business and focuses on riskelements pertaining to competitive position in the key market segments businessenvironment statutory and regulatory changes global economy and business scenariocurrency exchange rate fluctuations resource constraints etc. and initiating timelypreventive as well as remedial actions.
Reporting and control mechanisms ensure timely information availability and facilitatesproactive risk management. These mechanisms are designed to cascade down to the level ofline managers so that risk at the transaction level is identified and steps are takentowards mitigation in a decentralized fashion.
Risks are being continuously monitored in relation to business strategy operations andtransactions statutory/ legal compliance financial reporting information technologysystem etc. based on the inputs from both external and internal sources like keyincidents Internal audit findings etc.
The Board of Directors is responsible for monitoring risk levels on various parametersand the senior management group ensures implementation of mitigation measures ifrequired. The audit committee provides the overall direction on the risk managementpolicies.
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
In order to prevent sexual harassment of women at work place your Company has adopteda Policy for prevention of Sexual Harassment of Women at Workplace and has propermechanism to control the same which is commensurate with the nature and size of thebusiness of the company. During the financial year 2017-18 no such complaints werereceived.
4. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) read with Section 134 (3) (c) of the Companies Act 2013your Directors confirm that:
a. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b. t hey have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit or loss of the Company for that period;
c. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. they have prepared the annual accounts on a going concern basis;
e. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively; and
f. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
5. AUDITORS AND AUDITORS' REPORT
M/s S.R. Batliboi & Associates LLP Chartered Accountants (Firm Registration No.FRN 101049W/ E300004) were appointed as Statutory Auditors of the Company by theshareholders at the AGM held on August 24 2017 to hold office until the conclusion of the32nd AGM of the Company. Hence they will continue to be the Auditors of the Company.
The Auditors' Report does not contain any qualification reservation or adverse remark.The Auditors' Report is enclosed with the financial statements in this Annual Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 201 4 the Company hasappointed M/s Anant B. Khamankar & Co. Company Secretaries to undertake SecretarialAudit of the Company for the financial year 2017-18. The Secretarial Audit Report attachedas Annexure VI forms part of this report. Secretarial Audit Report does not contain anyqualification reservation or adverse remark. They have mentioned that the Woman directorresigned w.e.f. 14 September 2017 due to her poor health condition and the new womandirector joined w.e.f. 13 February 2018.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS OTHER THAN THOSE WHICH ARE REPORTABLETO THE CENTRAL GOVERNMENT
The Statutory Auditors or the Secretarial Auditors of the Company have not reported anyfrauds to the Audit Committee or to the Board of Directors under Section 143(12) of theCompanies Act 2013 including rules made thereunder.
SIGNIFICANT ORDERS BY REGULATORS/COURTS/TRIBUNALS
There are no significant and material orders passed by the regulators or courts whichwould impact the going concern status of the company and its future operations.
EXTRACT OF ANNUAL RETURNS
The extract of Annual Return of your Company as on March 31 2018 prepared pursuant toSection 92(3) of the Companies Act 2013 and the Rules made thereunder in Form MGT-9 isattached as Annexure VII to this Report.
INTERNAL FINANCIAL CONTROLS
Your Company has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures. The same has been audited and certified by the StatutoryAuditors of the company in their Audit Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted a Corporate Social Responsibility Committee (CSR Committee)in accordance with the provisions of Section 135 of the Companies Act 201 3 and the rulesmade thereunder. The Committee is chaired by an Independent Director. The Company onrecommendation of the CSR Committee has framed a CSR policy in line with Schedule VII ofthe Companies Act 2013. The policy has been posted and is accessible on the company'swebsite at www. axiscades.com.
The annual report on CSR activities is furnished in 'Annexure VIII' to this Report.
6. CONSERVATION OF ENERGY FOREIGN EXCHANGE EARNINGS ETC
The particulars pursuant to Rule 8(3) of Companies (Accounts) Rules 2014 are givenbelow:
CONSERVATION OF ENERGY
Being an Information Technology company is not energy intensive. However adequatemeasures have been taken to conserve energy by introducing improved operational methods.The company in its initiative to be ISO14001 - Environmental Management System compliantis adhering to the provisions of E-Waste (Management and Handling) Rules 201 1 andBatteries (Management and Handling) rules 2011 by efficiently managing the ACinstallations replacing PC's by VPC and recycling of paper etc.
Foreign Exchange Earnings and Outgo (Standalone)
| || ||Rs. Lakhs |
| ||2017-2018 ||2016-2017 |
|Foreign Exchange Earnings (actual inflows) ||20126.71 ||19137.50 |
|Foreign Exchange Outgo (actual outflows) ||11701.25 ||9019.60 |
The Company has not adopted any imported technology. Since the requirements of thetechnology business are changing constantly your Company has sought to focus on criticalin house technologies and processes which are likely to create value in the foreseeablefuture.
7. FUTURISTIC STATEMENTS
Certain statements made in this section or elsewhere in this report may be futuristicin nature. Such statements represent the intentions of the Management and the effortsbeing put in by them to realize certain goals. The success in realizing these goalsdepends on various factors both internal and external. Therefore the investors arerequested to make their own judgment by taking into account all relevant factors beforemaking any investment decision.
8. GREEN INITIATIVES
As in the previous years this year too we are publishing the Annual Report in theprint version only for the members who have not registered their email address with theCompany/Depository Participant. The Physical copies are sent in the permitted mode.Electronic copies of the Annual Report are sent to all the members whose email addressesare so registered.
Your Directors deeply appreciate and acknowledge the co-operation and support extendedby Clients Vendors Investors and Bankers various government agencies & regulatorybodies across the globe the Software Technology Park Noida Hyderabad & Bangaloreand other industry forums and agencies like NASSCOM and look forward to their continuedsupport in the future. Your Directors wish to place on record their appreciation of thevaluable contribution made by the employees of the Company at all levels.
For and on behalf of the Board of Directors
|Sd/- ||Sd/- |
|Vivek Mansingh ||Sudhakar Gande |
|Chairman & Director ||Vice Chairman & Executive Director |
|Place: Bengaluru || |
|Date: 31st May 2018 || |