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Expleo Solutions Ltd.

BSE: 533121 Sector: IT
NSE: EXPLEOSOL ISIN Code: INE201K01015
BSE 00:00 | 24 Apr Expleo Solutions Ltd
NSE 05:30 | 01 Jan Expleo Solutions Ltd
OPEN 163.00
PREVIOUS CLOSE 163.00
VOLUME 29
52-Week high 499.00
52-Week low 112.40
P/E 5.48
Mkt Cap.(Rs cr) 167
Buy Price 158.00
Buy Qty 1.00
Sell Price 167.00
Sell Qty 1.00
OPEN 163.00
CLOSE 163.00
VOLUME 29
52-Week high 499.00
52-Week low 112.40
P/E 5.48
Mkt Cap.(Rs cr) 167
Buy Price 158.00
Buy Qty 1.00
Sell Price 167.00
Sell Qty 1.00

Expleo Solutions Ltd. (EXPLEOSOL) - Director Report


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Company director report

We are pleased to present the report on our business and operations for the year endedMarch 31 2019.

1. Financial highlights for the year ended March 31 2019:

Consolidated

Standalone

March 31 2019 March 31 2018 March 31 2019 March 31 2018
Total Income 2887.69 2844.98 2883.26 2838.02
Employee benefits expense 1833.59 1841.18 1249.77 1153.57
Depreciation and amortization expense 54.99 55.50 54.76 55.36
General administrative and other Expenses 462.76 466.29 1097.79 1203.38
Finance cost 0.67 2.87 0.67 2.87
Total Expenses 2352.01 2365.84 2402.99 2415.18
Profit/(loss) before exceptional items 535.68 479.14 480.27 422.84
Exceptional Items

-

-

-

6.89
Profit Before Tax 535.68 479.14 480.27 429.73
Tax expense 173.66 159.39 165.89 149.66
Profit After Tax 362.02 319.75 314.38 280.07
Other Comprehensive Income (1.55) (0.77) (1.55) (0.77)
Total Comprehensive Income 360.47 318.98 312.83 279.30
Earnings per Equity share (Par value of Rs. 10/- each)
Basic (Rs.) 33.79 29.90 29.35 26.19
Diluted (Rs.) 33.79 29.90 29.35 26.19

2. Business and Operations Review:

Total operating revenue was Rs. 2827.73 Mn for the Financial Year 2018-19 as comparedto Rs. 2712.33 Mn in the previous year a growth of 4%.

During the year under review repeat business from existing clients accounted for 97%revenue increased from 88% in the previous year. New client acquisitions contributed to3% revenue.

Total Comprehensive Income stood at Rs. 312.83 Mn (representing 11% of revenues) asagainst Rs. 279.30 Mn (10% of revenues) in the previous year. Currency fluctuationsresulted in a loss for the year of Rs. 26.94 Mn compared to a gain of Rs. 53.72 Mn in theprevious year.

Geographically revenue from Europe increased by 9%. Business derived from Europe was68% of our revenues (Previous year 65%) 27% from India the Middle east Asia andAustralia (previous year 27%) and 5% from US (Previous year 8%). The proportion of Onsiteto offshore revenue stood at 58% / 42% compared to 61% /39% in the previous year.

The revenue from Group clients for financial year 2018-19 has remained the same as theprevious financial year at 19% of revenue. On the practice front Banking practice grew by12% compared to the previous year contributing 38% of revenues.

Employee strength as on March 31 2019 for the standalone entity was 889(consolidated 962) compared to 914 (consolidated 1012) in the previous year. Womenemployees for the standalone entity count stood at 326 (37%) compared to 305 (33%) in theprevious year. For the consolidated women employees stood at 340 (35%) compared to 324(32%) in the previous year. The attrition rate stood at 24% for the year ended March 312019 compared to 20% in the previous year.

3. Capital expenditure:

During the financial year 2018-19 we added Rs. 23.47 Mn to our gross block withcapital expenditure which comprised of Rs. 12.04 Mn on account of technologyinfrastructure Rs. 10.98 Mn through physical infrastructure and the balance Rs. 0.45 Mnthrough intangible asset addition.

4. Liquidity:

The Company continues to maintain comfortable cash balances to meet its strategicobjectives. The liquid assets as at the end of the year stood at Rs. 1139.96 Mn (againstRs. 1131.05 Mn in the previous year). Our Cash balance stood at Rs. 839.71 Mn as comparedto Rs. 562.60 Mn in the previous year.

5. Change of Name of the Company:

During the year the Board of Directors in their meeting held on Febuary 11 2019 haveapproved the change of name of the Company from SQS India BFSI Limited to "EXPLEOSOLUTIONS LIMITED". The members of the Company vide postal ballot results ofwhich was declared on March 28 2019 approved the change of Company's name. Consequentlythe Company obtained new Certificate of Incorporation pursuant to change of name datedApril 10 2019 from the Registrar of Companies Ministry of Corporate Affairs Chennai.

6. Share capital:

At the end of the financial year March 31 2019 the Company's Paid-up Equity ShareCapital stood at Rs.107.13 Mn consisting of 10713381 fully Paid-up Equity Shares ofRs. 10/- each. The exercise of employee stock options granted under Thinksoft ESOP Scheme2011 resulted in the allocation of 3000 equity shares during the financial year 2018-19to employees. As a result the Company's Paid-up Equity Share capital increased toRs.107.13 Mn from Rs. 107.10 Mn. The details of the Thinksoft ESOP Scheme 2011 and therequirement as specified under

Regulation 14 of SEBI (Share Based Employee Benefits) Regulations 2014 is available atthe Company's website at http://www.sqs-bfsi.com/corporate-governance-policies. php. Thedisclosure in compliance of Rule 12 of Companies (Share Capital and Debentures) Rules2014 is attached to this report as Annexure I.

7. Net worth:

The Company's net worth stood at Rs. 1068.82 Mn as at March 31 2019 as against Rs.1013.96 Mn at the end of the previous year.

8. Transfer to general reserve:

During the financial year the Company transferred Rs. 31.00 Mn (previous year - Rs.28.00 Mn) to the general reserve which represents 10% of the net profit of the Company.As a result the total amount of general reserve as on March 31 2019 was Rs. 212.09 Mn(previous year - Rs. 181.09 Mn).

9. Dividend:

The Company has not declared or recommended any Dividend during the Financial Year2018-19.

10. Subsidiaries:

During the year your Company had initiated change of name ofits wholly ownedsubsidiary Companies to reflect the Group Brand "Expleo". The names ofwholly owned subsidiaries located in Singapore and United kingdom are changed and thewholly owned subsidiaries in USA and UAE are in the process of change.

The Company operates internationally through four wholly-owned subsidiaries:

a) Expleo Solutions Pte. Ltd. Singapore (formerly known as SQS BFSI PTE. LTD)

b) Expleo Solutions UK Ltd. UK (formerly known as SQS BFSI UK LTD)

c) SQS BFSI Inc. USA

d) SQS BFSI FZE. UAE

The Board of Directors of the Company reviewed the affairs of the wholly ownedsubsidiaries of the Company for the financial year 2018-19. In accordance with Section129(3) of the Companies Act 2013 the Company has prepared the Consolidated FinancialStatements of the Company which forms part of this Annual Report. Further a separatesection on the salient features performance and financial position of each of thesubsidiaries or associate companies and their contribution to the overall performance ofthe Company during the period under report as prescribed under Section 129(3) of theCompanies Act 2013 read with Rule 5 and Rule 8(1) of Companies (Accounts) Rules 2014can be found in Annexure II.

The Audited Annual Accounts and related information of subsidiaries or associatecompanies wherever applicable will be made available to shareholders upon request andwill also be available for inspection during normal business hours at the registeredoffice of the Company. The Audited Annual Financial Statements shall also be available onthe website of the Company.

11. Annual Return:

The extracts of the Annual Return for the financial year ended March 31 2019 asprescribed under Section 92(3) and Section 134(3)(a) of the Companies Act 2013 read withRule 12 of Companies (Management and Administration) Rules 2014 is given in AnnexureIII. The same is disclosed in the website of the Companyhttp://www.sqs-bfsi.com/agm-and-annual-reports.php.

12. Number of meetings of the Board:

The Board met seven times during the financial year. The dates on which the saidmeetings were held are as follows: May 4 2018; July 26 2018; August 09 2018; October25 2018 January 31 2019 February 11 2019 and March 29 2019.

The details of the same are given in the Corporate Governance Report. The interveninggap between the meetings was within the period prescribed under the Companies Act 2013and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 asamended.

13. Corporate Governance and Management Discussion Analysis Report:

A separate section on Corporate Governance forming part of the Directors' Report andthe certificate from the Company's auditors confirming compliance with CorporateGovernance norms as stipulated in the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended are included in the Annual Report. TheCompany has taken adequate steps for strict compliance with the Corporate Governanceguidelines as amended from time to time.

A separate Management Discussion and Analysis Report is also attached and forms part ofthis report.

14. Declaration given by Independent Directors:

All the Independent Directors of the Company have given their declaration under Section149(7) of the Companies Act 2013 confirming that they are in compliance with thecriteria of independence as laid down in Section 149(6) of the Companies Act 2013 andRegulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015as amended for being an Independent Director of the Company.

15. Policy on Directors' appointment and remuneration:

The Company has a policy in place on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a Directorand other matters as required under Section 178(3) of the Companies Act 2013 andRegulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015as amended. There has been no change in the policy since the last financial year. Thedetails of the remuneration policy are covered in the Corporate Governance Report.

16. Particulars of loans guarantees or investments:

The Company has neither given any loan to any person nor given any guarantee orprovided security in connection with a loan to any other body corporate or person oracquired by way of subscription purchase or otherwise the securities of any other bodycorporate. The Company has the following investments in its wholly-owned subsidiaries asspecified under Section 186 of the Companies Act 2013:

Particulars March 31 2019 March 31 2018
Unquoted equity Instruments (in Subsidiaries)
100000 equity shares (Previous year - 100000 equity shares) of SGD 1/- each in Expleo Solutions Pte. Ltd. (formerly known as SQS BFSI Pte. Ltd.) Singapore 2.66 2.66
3000 equity shares (Previous year - 3000 equity shares) of USD 0.01/- each in SQS BFSI Inc. USA 4.62 4.62
350000 equity shares (Previous year - 350000 equity shares) of GBP 1/- each in Expleo Solutions UK Ltd. (formerly known as SQS BFSI UK Ltd.) UK 24.17 24.17
600 equity shares (Previous year - 600 equity shares) of AED 1000/- each in SQS BFSI FZE. UAE 8.70 8.70

17. Particulars of contracts or arrangements with related parties:

During the year 2018-19 all the contracts and arrangements entered by the Company withrelated parties were on an "arm's length" basis and in the ordinary course ofbusiness. The total value of all the transactions with M/s. Expleo Groupe SAS (formerlyknown as Assystem Technologies Groupe SAS) along with its subsidiaries have exceeded thethreshold limit of 10% of the previous year consolidated turnover of the Company. Thesetransactions have been classified as "Material Transactions" as per SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 as amended. Howeverthe aforesaid transactions fall within the limits as approved by the Shareholders in theAnnual General Meeting held on July 26 2018. There is no material significant relatedparty transactions made by the Company with Directors Key Managerial Personnel or otherdesignated persons which may have a potential conflict with the interests of the Companyat large. All related party transactions are placed before the Audit Committee and theBoard of Directors for their prior approval.

In respect of transactions with the wholly-owned subsidiaries which are foreseen andrepetitive in nature prior omnibus approval of the Audit Committee is obtained on anannual basis. The transactions entered pursuant to the omnibus approval so granted aretracked and verified. A statement giving details of all related party transactions isplaced before the Audit Committee and the Board of Directors for their approval on aquarterly basis.

The Policy on Materiality of Related Party Transactions as approved by the Board ofDirectors is available on the Company's website. The link for the same is https://www.sqs-bfsi.com/ resources/Policv-on-materialitv-of- Related-Partv-Transactions.pdf. Noneof the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

The details of contracts or arrangements with related parties entered during the yearare given in a separate annexure to the report in Annexure IV.

18. Material changes and commitments if any affecting the financial position of theCompany:

There is no material changes or commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report.

19. Transfer to Investor Education and Protection Fund ("IEPF"):

Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 (‘the Rules') allunpaid or unclaimed dividends are required to be transferred by the Company to the IEPFestablished by the Government of India after the completion of seven years. Furtheraccording to the Rules the shares on which dividend has not been paid or claimed by theshareholders for seven consecutive years or more shall also be transferred to the Demataccount of the IEPF Authority. During the financial year 2018-19 an amount of Rs.151338/- which was lying in the Final Dividend account pertaining to the year 2010-11and an amount of Rs. 292172/- lying in the Interim Dividend account pertaining to theyear 2011-12 of the Company was transferred to the IEPF on completion of 7 years.

Pursuant to proviso to Rule (6) of Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 as amended from time to timewherein the seven years period provided under sub-section (5) of Section 124 is completedfor unpaid / unclaimed dividends during 2018-19 the Company had transferred 2772 EquityShares to the credit of IEPF Authority in respect of shareholders who have not claimedtheir Dividend for a consecutive period of 7 years.

Members who have so far not encashed their dividend warrant(s) or those yet to claimtheir dividend amounts may write to the Company Secretary & Compliance Officer /Company's Registrar and Share Transfer Agent (Cameo Corporate Services Limited).

The details of shareholders in respect of whom the shares were transferred to IEPFAuthority are available in the website and link for the same is http://www.sqs- bfsi.com/transferred-iepf.php.

20. Conservation of energy research and development technology absorption foreignexchange earnings and out go:

(A) Conservation of energy:

(i) The steps taken that impact conservation of energy: The Company always endeavour onthe eco-friendly and go-green initiatives. The Company continues to work on reducing itscarbon footprint energy conservation and usage of alternative energy wherever possible.The Company continues to deploy adequate measures to conserve energy by using less powerconsuming USFF based computers implementations of LEDs for perimeter lighting in the MEPZpremise. The Company is also in the process on optimizing lighting equipment resulting inoverall reduction of light bulbs etc in addition to conversion to LED bulbs. VRF basedAir-conditioning and sensor based lighting in all cabins and meeting rooms hassignificantly reduced the electricity consumption and also the carbon footprint. As a partof go-green initiatives trees the Company continues to plant new trees in the MEPZfacility to commemorate any significant event in the organisation like a customer visit orretirement of an employee.

(ii) Steps taken by the Company for utilizing alternate sources of energy: TheCompany's registered office is located in a tech park wherein close to 80% of the energyconsumed is being sourced from the grid using wind turbines thus promoting ‘GreenEnergy'.

(iii) Capital investment on energy conservation equipment : Nil

(B) Research & Development and Technology absorption:

(i) The company has significantly contributed in developing a technology hub in Indiacalled Digital Labs which helps customers in their digital transformation projects such asDevOps Continuous Integration & Deployment (CI/CD) Infrastructure as Code (IaC)Performance Engineering Security Engineering and Robotic Process Automation (RPA). Thecompany is leading the light for group in transforming its workforce into Digital. Theentire Expleo India Delivery team has been motivated to take up development and technicalcertifications in order to help customers in their digital journey.

(ii) Our steadfast focus on RPA and investments on Data Scientists have yieldedsuccessful collaborations in proving our Data Analytics and Deep Learning talents toMicrosoft and Blueprism the market leader in AI and Robotic Process Automation in theareas very relevant to BFSI such as Anti Money Laundering (AML).

(iii) Our Digital capabilities have helped us to emerge as "Leaders" in"Next Generation Testing Services" "AI based Cognitive TestingServices" and "Mobile Testing Services" areas from prestigious Nelson Hallas part of its NEAT Report 2019. This is a great recognition and motivation for ourDigital Labs group.

(iv) The Company has developed newer cutting edge technological skills in Deep Learningand Machine Learning Data Analytics with Python and R programming language and also inconnected cars Robotics and IoT (internet of things) and ROS (Robotic Operating System).These skills will help the company to transform quickly and be a fit vessel to executeprojects in cutting edge technologies from Expleo Group as and when required. The companycontinues to focus on enabling its accelerators and tools with AI and Machine Learning tomake them more interactive easy-to-use and accurate.

(v) As part of the Data-Q service line the company has developed an in-houseaccelerator - Data Feeds inspection Tool (DFiT) - a tool based framework for verifyingRegulatory reporting data feeds using ready to use rules repository for AnaCredit MiFIDII EMIR etc. DFiT helps to identify and remediate the inconsistencies in regulatoryreporting data feeds before submission to the regulator.

(vi) The company has been investing in developing a cutting edge testing productivityaccelerator called ScriptGenie that helps testers to fast-forward test script preparationdirectly from domain repository. Currently ScriptGenie is being used as internalproductivity improvement tool for Cards & Payments projects in managed serviceengagements.

(vii) The enhanced video conference systems of the Company by moving towards usingMicrosoft Skype for business as its primary business-meeting platform with an objectiveof reducing travel cost has started providing results.

(viii) The procurement system continuously ensures cost effective purchases of thehardware more through local vendors thereby reducing imports dependency. Where requiredthe Company also imports servers switches etc. and using foreign currency from out ofits Exchange Earners' Foreign Currency (EEFC) accounts.

(ix) There is no imported technology during the last three financial years.

(C) Foreign exchange earnings and outgo:

Foreign exchange earned during the year in terms of actual inflows was Rs. 2943.10 MnForeign exchange outgo during the year in terms of actual outflows was Rs. 634.33 Mn.

21. Risk management:

The Company is committed to effectively manage its operational financial and otherrisk with a view to achieve a balance between acceptable levels of risk and reward. TheCompany has a policy on risk assessment and minimization procedures which describes therisk management methodology structures and systems involving personnel at all levels ofthe Company to manage various business uncertainties and to enable arriving at the rightdecisions pertaining to all business divisions and corporate function. Risk Management inthe Company includes identification assessment monitoring and mitigation of variousrisks through a comprehensively evolved process over the years.

This includes:

• Quarterly internal audits by an independent firm;

• Regular process compliance audits for ISO 9001 and ISO 27001 standards;

• Periodic audits of compliance to other regulatory frameworks;

• Annual capital and revenue budget planning followed by monthly reviews;

• Annual sales planning with monthly/periodic monitoring;

• Annual perspective and strategic planning exercise with yearly update;

• A conservative approach in planning funding requirements.

The Company has developed over the last few years a comprehensive internal financialcontrol processes and procedures that could effectively mitigate the overallorganizational risks. These processes and controls form part of review verification andimprovement by our internal audit and process teams as detailed in the following section.

22. Adequacy of Internal Financial Controls:

The Company has a proper and adequate system of internal controls. This ensures thatall transactions are authorised recorded and reported correctly and assets aresafeguarded and protected against loss from unauthorized use or disposition. In additionthere are operational controls and fraud risk controls covering the entire spectrum ofInternal Financial Controls.

An extensive programme of internal audits and management reviews supplement the processof Internal Financial Control framework. Properly documented policies guidelines andprocedures are laid down for this purpose. The Internal Financial Control framework hasbeen designed to ensure that the financial and other records are reliable for preparingfinancial and other statements and for maintaining accountability of assets. In additionthe Company has identified and documented the risks and controls for each process thatlinks to the financial operations and reporting.

The Company also has an Audit Committee comprising of 4 (Four) Directors who interactwith the Statutory Auditors Internal Auditors and Management in dealing with matterswithin its terms of reference. This Committee mainly deals with accounting mattersfinancial reporting and internal controls.

The frame work for the Internal Financial Controls was made by:

• Defining controls governance and standards which includes policies andprocedures organizational structures and performance objectives;

• Establishing control designs which includes roles and responsibilities riskidentification and capacity to deliver business objectives;

• Evolving controls including control systems and improvements;

• Compliance and control monitoring through internal resource or through audit ora combination of both.

The internal audit team along with the process team monitors and evaluates the efficacyand adequacy of internal control systems in the Company its compliance with operatingsystems accounting procedures and policies of the Company. Based on the report ofinternal audit corrective actions if any in the respective areas are undertaken andcontrols strengthened. Significant audit observations and responses/corrective actions ifany are presented to the Audit Committee of the Board.

During the year review of Internal Financial Control (IFC) has been carried out by theStatutory Auditors and the report thereat annexed as part of Independent Auditor's Report.

23. Corporate Social Responsibility:

Expleo Solutions has always been a forerunner in implementing various schemesbenefiting surrounding communities. This is visibly demonstrated in the various CorporateSocial Responsibility ("CSR")initiatives undertaken by the company. Being in theknowledge intensive industry the focus is on the following key areas:

i. Infrastructure support for education in rural areas

ii. Support the education of the differently abled and the underprivileged

iii. Create awareness and raise the Scientific tempo in underprivileged communities

iv. Access to Education for underprivileged children

v. Promote a clean and green environment

vi. Prime Minister Relief Fund

i. Infrastructure support for education in rural areas

Project Site: TT Motor Village of Penambet block of Vellore district Tamilnadu.

Target Benefit group: approx. 254 boys and 248 girls from below poverty line group

The Company has since 2014-15 identified schools especially in Vellore and Gingee Talukand has been providing support for creating and enhancing the infrastructure of theidentified schools in terms of sanitation access to water and good class room conditions.

During the current year Expleo contributed to the creation of the followinginfrastructure facilities

• Construction of underground Water storage tank (Sump)

• Construction of septic tank

• Distribution of hygiene kits

• Construction of new toilet for girls

• Providing sports material

These activities have resulted in the following benefits to the immediate community inthe vicinity

• Basic toilet and sanitation facilities to the school students

• Improved attendance to school especially girl students

ii. Support the education of the differently abled and the underprivileged

Project Site: Vidya Sagar. Kotturpuram.

Target Benefit group: Specially challenged young people in Vidya Sagar Expleocontinues its association with Vidya Sagar by supporting multiple activities

a. The High School project for differently abled:

• The project helps in providing physiotherapy speech alternative andaugmentative communication training to the differently abled children and helps them toenrol into the National Institute of Open Schooling (NIOS) to write their 10th and 12thexams.

• It also helps them to acquire functional skills and life skills thereby enablingthem to get opportunities to explore vocations.

• The contribution to this project is utilised towards salary for therapistsspecial educator and pre-vocational trainers.

b. Encouragement for employee participation

At Expleo the employees are encouraged to play a key role in all the CSR activities andspecially for Vidya Sagar. The employees can opt to contribute for a good cause for thechildren at Vidya Sagar and the company matches an amount equal to that of the employees'contribution as part of the CSR activity.

iii. Create awareness and raise the Scientific tempo in underprivileged communities

a. Tech La Bike program by Agastya International

Project Site: Chitoor Palamner and Tirupati

Target Benefit group: Economically disadvantaged Government School Children

Expleo partnered with Agastya International foundation by contribution to TechLaBikeproject for the third consecutive year.

• Under this project hands-on science sessions and multimedia sessions areconducted in the identified government schools by the instructor of the Tech La Bike

• The instructor of the Tech La Bike used models covering a wide range of topicsin Science subjects - Physics Chemistry and Biology to the disadvantaged children

• The program covered Chitoor Palamner and Tirupati areas and supplements thegovernment school system with experiential science learning.

b. Create Science Centre to target Economically underprivileged group within Chennai

Project Site: JaigopalGarodia Government girls HSC School Virugambakkam.

Target Benefit group: Around 1100 girls from the economically disadvantaged group

A science centre has been set up in this school to increase access to practicalhands-on Science education for economically disadvantaged government school children. Itnot only sparks curiosity creativity and build leadership among underprivileged childrenbut also supplements government school system with experiential science learning linked toschool syllabus. An instructor is appointed permanently at the school as part of thisproject.

• Expleo contibutions includes the fixed expense for science models andexperiments Installation and setup cost furniture refurbishing laptop dongle andinstructor training.

• Recurring expense would include instructor cost utilities and maintenance andconducting special activities like teacher training young instructor training etc.

iv. Access to Education for underprivileged children

Project Site: Thiruvalluvar Gurukulam Uthiramerur Kancheepuram District.

Target Benefit group: 105 tribal children from Narikuravar (gypsies)Malaivaazhummakkal (inhabitants of mountain regions) and Irular (traditionally snakecatchers) communities.

Expleo partnered with Concern India Foundation for the second consecutive year towardssalary for teachers professional psychological counsellor and purchase of computers insupport of education to children towards Educational programme for children from tribalcommunities in Uthramerur - Thiruvalluvar Gurukulam Kancheepuram District.

• The above project trains Children on computer skills and spoken English.

• Apart from supporting education to children from socially and economicallybackward communities it provides training through social skills to lead a happy andhealthy life.

Through proper counselling the project aims to curtail dropout rates from schoolsamongst tribal children thus preventing child labour and child marriages.

v. Promote a Clean and Green Environment

Project Site: Multiple locations in Chennai and Mumbai

Target Benefit group: Farmers and to promote green environment

In order to support and contribute to a green environment apart from implementinginternal green steps Expleo has carried out tree planting programmes in cities where ouroffices are located

• With active participation of our employees with the banner "Let themLive" - a pledge towards planting and protecting trees for a healthier happier andcleaner plant - we have planted:

i. 150 trees at Madras medical college Chennai

ii. 200 trees at Farmer fields in Palekhurd Panvel City Navi Mumbai

iii. 250 trees at Saraswathi Vidyalaya Chennai.

• We have also contributed for planting 1250 fruit bearing and medicinal trees inand and around chengalpet and kanchipuram district which not only promotes a greenerenvironment but the livelihood of farmers as well.

vi. Prime Minister Relief Fund

As part of the CSR activity of the company we also contribute to the Prime Minister'sRelief Fund which is utilized by the government for various welfare programmes in thecountry.

Additional details

The details about the policy developed and implemented by the Company on CorporateSocial Responsibility and initiatives taken during the year are given in Annexure V asrequired under Companies (Corporate Social Responsibility Policy) Rules 2014.

24. Composition and Recommendation of Audit Committee:

The Audit Committee of the Company has been constituted in line with the provisions ofSection 177 of Companies Act 2013 read with Regulation 18 of the SEBI (ListingObligations Disclosure Requirements) Regulations 2015.

The members of the Audit Committee are as follows:

1) Prof. K Kumar Chairman

2) Prof. S Rajagopalan Member

3) Mr. Rajiv Kuchhal Member

4) Mr. Rene Gawron Member

During the year all the recommendations of the Audit Committee were accepted by theBoard.

25. Vigil mechanism:

The Company has formulated and adopted a vigil mechanism for employees to reportgenuine unethical and improper practices or any other wrongful conduct in the Company tothe Chairman of the Audit Committee. The Policy provides opportunities for employees toaccess the Audit Committee in good faith if they observe unethical and improperpractices. The amended Whistle Blower Policy of the Company is available in the website ofthe Company. The link for the same is https://www. sqs-bfsi.com/resources/Whistle-Blower-Policy.pdf.

26. Directors' Responsibility Statement as required under Section 134(5) of theCompanies Act 2013:

Pursuant to Section 134(5) of the Companies Act 2013 the 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. Accounting policies have been selected and applied consistently; made judgments andestimates that were reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit and loss ofthe Company for that period;

c. Proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act to safeguard the assets of theCompany to prevent and detect fraud and other irregularities;

d. Annual accounts were prepared on a going concern basis;

e. Adequate Internal Financial Controls were laid down by the Company and that suchinternal financial controls are adequate and these were operating effectively;

f. Proper systems were devised to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively.

27. Board evaluation:

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing ObligationsDisclosure Requirements) Regulations 2015 as amended the Board of Directors of theCompany in their meeting held on May 6 2019 evaluated its own performance that of itscommittees and individual directors including Independent Directors. No Directorparticipated in his / her own evaluation.

The Independent Directors reviewed the performance of the Non-Executive DirectorsChairman and the Board at a meeting of Independent Directors held on January 29 2019. TheBoard of Directors were evaluated on various criteria including attendance participationin board meetings their involvement by way of providing advice guidance suggestions onthe business front and the willingness and commitment to devote their extensive timenecessary to fulfill his/her duties.

The Independent Directors were also evaluated based on the professional conduct rolesand duties as specified in Schedule IV to the Companies Act 2013. The evaluation of theBoard as a whole was based on composition and statutory compliance understanding ofbusiness risks adherence to process and procedures; overseeing management's proceduresfor enforcing the organization's code of conduct ensuring that various policiesincluding the whistle blower policy of the Company were in force and actions were takenas appropriate.

28. Criteria for making payment to Non-Executive Directors:

The Nomination and Remuneration Committee and the Board of Directors while deciding upon the payments to be made to the non-executive directors have considered the followingcriteria for making payments to non-executive directors:

• Performance of the Company

• Maintenance of independence & adherence to Corporate Governance

• Contributions during the meeting and guidance to the Board on important policymatters of the Company

• Active participation in strategic decision making and informal interaction withthe management

29. Familiarization programs:

The Company has a familiarization program for Independent Directors pursuant toRegulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended. The aim of the familiarization program is to provideinsights into the Company to the Independent Directors to enable them to understand theCompany's business in depth and contribute significantly to the

Company. The overview of the familiarization process and details of the familiarizationprograms imparted to the Independent Directors have been updated in the Company's websiteat https://www.sqs-bfsi.com/ resources/familiarization-program-for-independent-directors.pdf.

30. Policy for determining material subsidiaries:

Pursuant to Regulation 16(1)(c) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended a policy for determining materialsubsidiaries has been formulated by the Company. The same is updated in the Company'swebsite at https://www.sqs-bfsi.com/ resources/Policy-for-determining-Material-Subsidiary.pdf. and also dealt with elsewhere in the Annual Report.

31. Particulars of employees:

In accordance with the provisions of Section 197 of the Companies Act 2013 read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 as amended a statement containing the names of top ten employees in terms ofremuneration drawn during the financial year and that of every employee employedthroughout the financial year and in receipt of a remuneration of Rs. 1.02 crore or moreper annum or employed for part of the financial year and in receipt of Rs. 8.50 lakhs permonth is annexed and forms part of this Report in Annexure VI A and the ratio ofremuneration of each director to that of median employees' remuneration as per Section 197(12) of Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended forms part of this Reportin Annexure VI B.

32. Directors & Key Managerial Personnel:

Mr. K. Ramaseshan (DIN 03025474) has submitted his resignation as Additional Director(Executive Director) and Chief Financial Officer (Key Managerial Personnel) of the Companydue to personal reasons with effect from July 17 2018 and was accepted by the Board. Hecontinued to hold office as Chief Financial Officer (Key Managerial Personnel) up toSeptember 21 2018 for serving the notice period as decided and approved by the Board.

Mr. Balaji Viswanathan (DIN 06771242) was appointed as Managing Director & CEO (KeyManagerial Personnel) of the Company by the Board in their meeting held on July 26 2018with effect from September 1 2018. Ms. Aarti Arvind (DIN-07414979) has resigned asManaging Director and CEO (Key Managerial Personnel) of the Company with effect fromAugust 31 2018 due to personal reasons.

Mr. Ralph Franz Gillessen (DIN 05184138) was appointed as Additional Director(Non-Executive) of the Company by the Board of Directors in their meeting held on and witheffect from August 9 2018. His appointment was confirmed by the Shareholders asNon-Executive Director vide Postal Ballot Resolution dated March 26 2019.

Mr. Diederik Vos (DIN 06744640) has submitted his resignation as Chairman &Director of the Company with effect from January 02 2019 due to personal reasons. TheBoard of Directors have unanimously approved the appointment of Mr. Rene Gawron existingDirector of the Company as Chairman of the Board of the Company with effect from January31 2019.

Mr. Olivier Aldrin (DIN 08345218) has been appointed as Additional Director(Non-Executive) of the Company with effect from January 31 2019. His appointment wasconfirmed by the Shareholders as Non-Executive Director vide Postal Ballot Resolutiondated March 26 2019.

Prof. K. Kumar (DIN 02343860) Prof. S. Rajagopalan (DIN 01584674) Mr. Rajiv Kuchhal(DIN 02257381) and Mr. Ulrich Baumer (DIN 06763831) were re-appointed as IndependentDirectors with effect from April 01 2019 for a further period of 5 years.

Mr. Desikan Narayanan was appointed as Chief Financial Officer (Key ManagerialPersonnel) of the Company by the Board of Directors in their meeting held on August 92018 with effect from September 24 2018.

Mr. Phani Tangirala Senior Director - BFSI and Senior Management Personnel wasappointed as Key Managerial Personnel of the Company w.e.f. April 1 2019 by the Board ofDirectors in their meeting held on January 31 2019.

33. Public deposits:

The Company has not accepted any public deposits and as such no amount of principal orinterest was outstanding as on the Balance Sheet date.

34. Statutory Auditors:

M/s. Kalyaniwalla & Mistry LLP Chartered Accountants Mumbai are the StatutoryAuditors of the Company. They were appointed in the 19th Annual General Meeting and willhold office till the conclusion of 24th Annual General Meeting of the Company.

The report issued by the Auditors to the members for the financial year ended March 312019 does not contain any qualification reservation or adverse remark or disclaimer.

35. Secretarial Audit Report:

Pursuant to Section 204 of the Companies Act 2013 and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s. M.Alagar & Associates Practicing Company Secretaries COP No.8196 as the SecretarialAuditor of the Company in the Board Meeting held on May 4 2018 for the financial year2018-19. The Secretarial Audit Report issued by M/s. M. Alagar & Associates is annexedand forms part of this Report in Annexure VII.

The Secretarial Audit Report does not contain any reservation or adverse remark for theyear under review. Further the Company complies with the mandatory Secretarial Standardsissued by the Institute of Company Secretaries of India (ICSI) and notified by Ministry ofCorporate Affairs (MCA).

36. Material orders passed by the regulators courts or tribunals:

There are no significant and material orders passed by the regulators or courts ortribunals that may have an impact for the Company as a going concern and/or Company'soperations.

37. Human potential:

There is a good old Management principle that states "If you think learning anddevelopment is expensive then try estimating the cost of ignorance". The Companyconsciously adheres to this management principle and continues to invest in its employeesto enhance its core competence and to attain competitive market position. We have beenconstantly focusing on enhancing technical capability of our employees to stay as an acutecompetitor in terms knowledge and preferred partner for our customers.

We maintain a strong learning culture and provide a wide range of opportunities foremployees to learn develop and progress in their careers. Here is the snapshot oftechnology programs we conducted:

Apart from technology program sufficient focus was given in the areas of soft skillsand behavioural skills by leveraging Learning Management System and typical class roomtrainings. Launched Toast Masters club in Chennai to increase presentation skills ofemployees.

Hyperion Financial Management Tool training was given to finance team to be inaccordance with market trends. All these initiatives helped us to achieve 43.3 hours ofaverage training as against industrial norm of 40 hrs.

We encouraged employees to take up different certifications like ISTQB AgileCertified Scrum Master Prince2 PMP TOSCA RPA etc. as a part of continuousimprovement.

For the financial year 2019 - 2020 our emphasis would be to transform the organizationto techno functional organization which is in alignment to our organization goal andmarket demand one flagship program that we will focus this year would be QA to QE program(Quality Assurance to Quality Engineering).

Employees' with more than five years' experience with the Company was at 29% (27% inthe previous year). The workplace diversity was at 35% represented by women.

38. Quality Technology and Systems:

The Company has established a Compliance Framework which follows a phased approachstarting with establishing Legal Contractual and Security requirements to be compliedwith internal communication and creating awareness on requirements integration ofrequirements with existing security and process framework for ongoing compliancemonitoring and audit for ensuring compliance periodic assessment of maturing level ofcompliance processes and reporting and improvement of security framework.

The compliance framework has been independently assessed and certified by externalcertification bodies on an annual basis.

ISO 9001: 2015 (Quality Management System) & ISO 27001:2013 (Information SecurityManagement System)

All offshore testing centers of the Company are certified for Quality Management System(ISO 9001: 2015) and Information Security Management System (ISO 27001: 2013).

The Company promote the adoption of a process approach when developing implementingand improving the effectiveness of a quality management system to enhance customersatisfaction by meeting customer requirements. The process approach involves thesystematic definition and management of processes and their interactions to achieve theintended results in accordance with the quality policy and strategic direction of the TopManagement. The Company adopts various forms of improvement in addition to correction andcontinual improvement such as breakthrough change innovation and re-organization.

The certification under ISO 27001:2013 evidences the Company's compliance with therequirements of establishing implementing operating monitoring reviewing maintainingand improving a documented information security management system within the context of anorganization's overall business risks. Information security in the Company is achieved byimplementing a suitable set of controls including policies processes proceduresorganizational structures software and hardware functions. The Company believes that thecompliance with the requirements of this certification will help to improve theconfidentiality integrity availability and business continuity of vital corporate andcustomer information which may be essential to maintain competitive edge.

SSAE 18 (Statement on Standards for Attestation Engagements)/ISAE 3402 (theInternational Standard on Assurance Engagements):

The offshore TCoE (Testing Centre of Excellence) of the Company in Chennai is compliantwith ISAE 3402 (the International Standard on Assurance Engagements) and SSAE 18(Statement on Standards for Attestation Engagements). SSAE 18/ ISAE 3402 is an independentassessment report that provides the confidence on control procedures adequacy andreasonable assurance in our service delivery and information security data privacyrelated controls. SSAE 18 is more relevant for the US market while ISAE 3402 is relevantfor the rest of the world This report has been prepared to provide information on theApplication Testing services and related General Computer Controls for the servicesprovided to Clients by the Company. The assessment report illustrates the positive effectsof properly functioning and articulated control environment to an organization's seniormanagement and our clients

PCI-DSS (Payment Card Industry Data Security Standard): Data protection is criticalfor the Company in maintaining its services to clients. The Company is also compliant withPCI-DSS (Worldwide Data security standard defined by the Payment Card Industry SecurityStandards Council) which ensures data security and reduces the risk of data breaches. TheCompany adopted PCI DSS to meet the customer requirement specific to Cards domain. TheCompany has designed and implemented technical and operational controls to protectcardholder data.

These controls not only address the set of requirements for protecting cardholder databut also address the legislation or regulatory requirements on protection of personal dataor other data elements.

General Data Protection Regulation:

Data Protection is a major concern for organizations worldwide. The focus is on securehandling of data to ensure privacy of customer data and that of corporate data. When itcomes to privacy different countries have enacted laws to deal with Data Protection andData Privacy. The European Union views privacy of personal information as a fundamentalright and with the introduction of General Data Protection Regulation (GDPR) in 2018 EUhas given people more control over their personal data. The United States has sectorspecific laws on privacy of customer data such as health information and financialinformation. The Company with its global reach and client base is expected to varioussuch data privacy compliance requirements.

The Company has designed and implemented a GDPR framework for protecting the Privacyrelated information provided by its customers from engagement till closure of services. Aspart of the GDPR framework the Company has implemented technical and organizationalmeasures for data protection.

39. Disclosure as required under Section 22 of The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013:

The Company has a Policy on Sexual Harassment Prevention in place in line with therequirements of "The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013". The Internal Complaints Committee (ICC) has been set up toredress any complaints received regarding sexual harassment. All employees are coveredunder this policy.

There was no complaint received during the year.

40. Listing fees:

The Company confirms that it has paid the annual listing fees for the financial year2019-20 to both National Stock Exchange of India Limited and Bombay Stock ExchangeLimited.

41. Acknowledgments:

We thank our customers bankers and service providers for their continued supportduring the year. We place on record our appreciation for the contribution made by ouremployees at all levels. Our success was made possible by their hard work loyaltycooperation and support.

We thank the Government of India particularly the Ministry of Communication andInformation Technology the Ministry of Commerce the Ministry of Finance the Ministry ofCorporate Affairs the Customs and Excise Departments the Income Tax Department theReserve Bank of India the State Governments Madras Export Processing Zone (MEPZ) andother government agencies for their support and look forward to their continued support inthe future. We also thank the Governments of various countries where we have operations.

The Directors also wish to place on record their appreciation of business constituentslike SEBI NSE BSE NSDL CDSL etc. for their continued support for the growth of theCompany.

The Directors also thank investors for their continued faith in the Company.

For and on behalf of Board of Directors of

Expleo Solutions Limited

(formerly known as SQS India BFSI Limited)

Place: Chennai RENE GAWRON
Date : May 06 2019 Chairman & Director