THE MEMBERS OF INSPIRISYS SOLUTIONS LIMITED
(Formerly Accel Frontline Limited)
The Directors are pleased to present the 24th Annual Report of the Company togetherwith the Standalone and Consolidated Audited Financial Statements of the Company for thefinancial year ended 31st March 2019.
1. FINANCIAL RESULTS
| || || |
Rs in lakhs
|Particulars ||Consolidated ||Standalone |
| ||March 2019 ||March 2018 ||March 2019 ||March 2018 |
|Total Revenue ||55392 ||49291 ||45262 ||40724 |
|Earnings before interest tax depreciation and amortization (EBITDA) ||2699 ||500 ||2620 ||2109 |
|Finance costs ||1825 ||1923 ||1652 ||1810 |
|Depreciation and amortization expense and impairment loss ||469 ||670 ||450 ||643 |
|Profit / (loss) before tax and exceptional items ||405 ||(2093) ||518 ||(344) |
|Exceptional items ||- ||(1566) ||- ||6661 |
|Profit / (loss) before tax ||405 ||(3659) ||518 ||6317 |
|Tax expense ||338 ||209 ||335 ||1225 |
|Profit / (loss) for the year from continuing operations ||67 ||(3868) ||183 ||5092 |
|Profit from Discontinued operations ||- ||6207 ||- ||- |
|Less: Tax Expense ||- ||(1129) ||- ||- |
|Profit for the year from discontinued operations ||- ||5078 ||- ||- |
|Profit for the year ||67 ||1210 ||- ||- |
|Other comprehensive income for the year net of tax ||(136) ||137 ||26 ||59 |
|Total comprehensive income for the year ||(69) ||1347 ||209 ||5151 |
2. BUSINESS PERFORMANCE
Revenue at a Consolidated basis stood at Rs. 55392 lakhs for FY 2018-19 asagainst Rs. 49291 lakhs in the previous year. Revenue from standalone operations stood atRs. 45262 lakhs which is a growth of 11% over the e. FY 2017-18 Rs. 40724 lakhs.The EBITDA on a consolidated basis was Rs. 2699 lakhs and on a standalone basis stood atRs. 2620 lakhs.
3. PREFERENTIAL ALLOTMENT OF EQUITY SHARES
Thecompanyhasissuedand(at a price of Rs. 62.14 per equity share) and 5625000 equityshares (at a price of Rs. 54.30 per equity share) to CAC Holdings March Corporation 2019and 19th June 2019
The reason for preferential allotment of Equity Shares to CAC Holdings CorporationJapan the promoter of the Company is to enable themtoinfuseadditional capital in theCompany for business expansion and growth and for general corporate purposes includingbut not limited to recapitalizing the overseas wholly owned subsidiaries bringing downthe short term and long term borrowings of the Company and / or toinvestinnewbusinessopportunities. The capital infusion has also increased the net-worth ofthe Company on standalone basis and on a consolidated basis making the Company net-worth
4. INCREASE IN AUTHORISED SHARE CAPITAL
The company has increased the authorised capital from Rs. 330000000 (RupeesThirty Three Crore only) divided into 33000000 (Three Crore Thirty Lakhs) equity sharesof Rs. 10 (Rupees Ten only) each to Rs. 500000000 (Rupees Fifty Crore only) dividedinto 50000000 (Five Crore) equity shares of Rs. 10 (Rupees Ten only) each by anOrdinary resolutionpassed at the Extra Ordinary General Meeting held on 22nd March .2019.
The Directors do not recommend any dividend for the year ended 31st March 2019 due toinadequate profits.
6. HUMAN RESOURCES DEVELOPMENT
EMPLOYEES ARE THE ASSETS OF THE COMPANY - The Company understands this and alsobelieves in transforming manpower resources from "Asset" to "StrategicAsset" by increasing their capabilities. The Company recognises people as the primarysource of its competitiveness and continues its focus people development by leveragingtechnology. In line with this business philosophy the Company continues to initiatetraining of resources to keep up with the new technological challenges meet the marketrequirements and deliver high quality services to our clients. The thrust of HumanResource has been on improvement of the performance of employees through training anddevelopment. Employee relations remained cordial throughout the year and the Company had2080 permanent employees on its rolls as on 31st March 2019. The Board places on recordits sincere appreciation for the valuable contributionmade by the employees across alllevels in the growth of the Company.
7. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has adopted a Policy on Prevention Sexual Harassment at Workplace which isin line with the requirements of The Sexual Harassment of Women at the Prohibition &Redressal) Act 2013.workplace(Prevention
The policy has been formed in order to prohibit prevent or deter the commission actsof sexual harassment at workplace.
Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees are covered under the Policy and the Policy isgender neutral. During the year under review complaints received by the ICC has beenaddressed and closed and there were no cases pending for disposal.
8. BUSINESS EXCELLENCE AND QUALITY INITIATIVES
The Company continues to maintain highest levels of quality enhance customersatisfaction.
During the year under review the company kept the Quality Management Systems updatedwith continued investment in technologies infrastructure and processes.
The company has certifications for:
ISO 9001:2015 (Quality Management System)
ISO 27001:2013 (Information Security Management System)
ISO 20000-1:2011 (Service Management System)
CMMI Level 3 Dev 1.3
The Company has various policiesin the last quarter of processes and systems in placethat will not only enable strengthening and smooth operations but also improve the qualityof functioning operations.
9. DOCUMENTS PLACED ON THE WEBSITE (www.inspirisys.com)
The following documents have been placed on the company's website in compliance withthe Companies Act:
a. Financial Statements of the Company and Consolidated Financial Statements.
b. Separate audited accounts in respect of subsidiaries as per fourth proviso toSection 136(1).
c. Details of Vigil Mechanism for Directors and Employees to report genuineconcerns as per proviso to Section 177(10).
d. The terms and conditions of appointment of on Independent Directors.
e. Details of unpaid dividend as per Section 124(2).
10. SUBSIDIARY COMPANIES
The Company operatingthe continued wholly owned subsidiaries in United States ofAmerica Japan UAE and United Kingdom which are not listed in India or abroad as of date.The Company also has a wholly owned unlisted Indian Subsidiary which closed down itsoperationsin the last quarter of FY 18-19. The Statutory Audit Report of the SubsidiaryCompanies for the financial year are placed before the Audit Committee and reviewed bythem. Shareholders interested in obtaining a copy of the audited annual accounts of thesubsidiary companies may write to the Company Secretary.
Pursuant to the provisions of sub-section (3) of Section 129 of the Act and read withrule 5 of the Companies (Accounts) ofRules 2014 the salient features of the financialStatement of the subsidiaries are set out in the prescribed Form AOC-1 which forms partof the Annual Report.
The Board would like to mention that following the decision to close down theoperations of the wholly owned Indian Subsidiary Inspirisys Solutions IT Resources Limited(Formerly Accel IT Resources Limited) (WOIS) it decided to impair its investments andwrite off the Loans and Advances provided to the Indian subsidiary company during the yearunder review. The WOIS main business was into training on Computer Hardware and NetworkMaintenance and it was operating 7 training centers and had the head office in Chennai.The WOIS has been incurring losses since 2009-10 and accumulated tolosses have alreadywiped out the Net Worth of WOIS. The Revenue from operations started moving southwards due to change in the method of training adopted by the students and there wascomplete shift in the business model which impacted the growth of the company. Though theWOIS had worked out various business strategies and changed the business model to be inline with the current trend the same did not yield any result in growing the revenues andthe losses continue to mount. With the WOIS Net Worth becoming negative the WOIS was notconsidered as a going concern by its auditors and by the auditors of Inspirisys SolutionsLimited. After having explored various options the company finally concluded that thebusiness turn around is not feasible and decided to shut down the operations FinancialYear 2018-19 in order to bring down the losses. The WOIS is not considered as a goingconcern and is therefore not in a position to repay the loans and advances paid by theCompany. The Company in its Board Meeting held on 09th May 2019 has approved theimpairment of its investments in the WOIS and also has written off Loans and Advanceswhich is aggregating to Rs. 792 lakhs upto 31st March 2019 provided to WOIS.
11. CORPORATE GOVERNANCE REPORT REQUIRED UNDER SEBI (LODR) REGULATIONS 2015
As per SEBI LODR Regulations 2015 Corporate Governance Report with AuditorsCertificate on Compliance with the conditions of Corporate Governance is attached and formpart of this report.
12. MANAGEMENT DISCUSSION & ANALYSIS
In terms of Regulation 34 of SEBI (LODR) Regulations separate Annexure II to thisReport is enclosed where the Management Discussion and Analysis and various initiativesand future prospects of the Company are provided.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section Board of Directors of the Company herebyconfirms that: i. in the preparationof the annual accounts for the financial year ended31st March 2019 applicable Accounting Standards have been followed and there were nomaterial departures from the same; ii. we have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company at 31st March2019 and of the profit and loss of the Company for the year ended on that date; iii. wehave taken proper and sufficient care for the maintenance of adequate accounting recordsaccordance with the provisions of the Companies Act s as prescribed under Rule 8(3) ofthe 2013 for safeguarding of the assets of the Company and for preventinganddetectingfraudandotherirregularities; iv. we have prepared the annual accounts for thefinancial year ended 31st March 2019 on a going concern basis; v. we have laid downinternal financial controls and the same have been followed by the Company and that suchinternal financialcontrols are adequate and operating effectively; and vi. we have devisedproper systems to ensure compliance with the provisions of all applicable laws andthat such systems are adequate and operating effectively.
14. IMPORTANT DISCLOSURES MADE BY THE COMPANY UNDER REGULATION 30 OF THE SEBI (LODR)REGULATIONS 2015 TO THE STOCK EXCHANGES
Alteration of Articles of Association of the company.
Change of name of the company from Accel Frontline Limited to Inspirisys Solutions
To increase the authorised share capital ofthe Company No. from Rs. 330000000(Rupees Thirty Three Crore only) divided into 33000000 (Three Crore Thirty Lakhs)equity shares of Rs. 10 (Rupees Ten only) each to Rs. 500000000 (Rupees Fifty Croreonly) divided into 50000000 (Five Crore) equity shares of Rs. 10 (Rupees Ten only)each.
To issue and allot 4230000 equity shares and 5625000 equity shares of Rs. 10 eachto CAC Holdings Corporation of Japan on preferential basis.
Receipt of Trading approvals for 4230000 equity shares and 5625000 equity sharesissued on preferential allotment basis.
Receiptofrequestforde-classification of Accel Limited Accel Systems Group Inc. andMr. N.R. Panicker as promoters of the company termination of Shareholders Agreement andShare Subscription Agreement both dated 09th December 2013 submission of the extract ofthe minutes of the meeting considering the request of Accel Limited Accel Systems a GroupInc. and Mr. N.R. Panicker to be de-classified as promoters of the company and submissionof application with the stockexchangesforde-classification of Accel Limited Accel SystemsGroup Inc. and Mr. N. R. Panicker as promoters of the Company.
Reappointment of M/s. Walker Chandiok & Co LLP 134(5) of the Act the CharteredAccountants as Statutory Auditors for a second term of 5 years.
Appointment of Mr. Koji Iketani as an Additional Director (Non-ExecutiveNon-Independent) with effect from 19th June 2019.
Updates on the change of name of the wholly owned subsidiaries.
15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The Company has strong commitment towards conservation in of energy and adoption oflatest technology in its areas of operations. The Companies (Accounts) Rules 2014 areset out in an Annexure-III to this Report.
16. SEPARATE MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met on 05th February 2019 and evaluated the performance ofNon- Independent Directors and the Board as a whole. Details regarding the same isprovided in the Corporate Governance Report.
17. EVALUATION OF THE BOARD'S PERFORMANCE
The Board has carried out an evaluation of its own performance also that of itsDirectors individually and it's Committees. The manner in which the evaluation has beencarried out is explained in the Corporate Governance report.
18. AUDITORS .
a) Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s.. Walker Chandiok & Co LLP Chartered Accountants (Firm's Registration001076N/N500013) were reappointed as the Statutory Auditors of the Company for a period of5 yearstillthe conclusion of the 29th Annual General Meeting.
b) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment Remuneration Managerial Personnel) Rules 2014 and the Company has appointedMr. M.Alagar Practicing Company Secretary (Membership No. F7488 and CoP No. 8196)of M/s. M.Alagar & Associates Practicing Company Secretaries Chennai to undertakethe Secretarial Audit of the Company for the financial year ended 31st March 2019. TheSecretarial Audit Report is annexed as Annexure V to this report. The said SecretarialAudit Report does not contain any qualifications adverse remarks.
19. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration as required under Section 197(12) of theCompanies Act 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report. No employee drawsremuneration in excess of the limits in terms of the provisions of the Section 197(12) ofthe Companies Act 2013 read with Rules 5(2) & 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
The statement containing names of top ten employees in terms of remuneration drawn andthe particulars of employees as required under Section 197(12) of the Act read with Rule5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is available for inspection at the Registered Office of the Company. Anyinterested in obtaining a copy of the same may write to the Company Secretary.
20. FIXED DEPOSITS FROM PUBLIC
The Company has not accepted any deposits within the meaning of sub-section (31)ofSection2 and Section the Companies Act 2013 and the Rules framed thereunder from publicand as such no amount on account of principal or interest on deposits from public wereoutstanding as on the date of the Balance Sheet.
21. CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act 2013Corporate Social Responsibility Committee was formed to recommend: (a) the policy onCorporate Social Responsibility and (b) implementation CSR Projects or Programs to beundertaken by the Company as per CSR Policy for consideration and approval by the Board ofDirectors. The policy on Corporate Social Responsibility is posted on the company'swebsite www.inspirisys.com. Detailed report on CSR activities forming part of this annualreport.
22. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMPs) Directors
Mr. Malcolm F. Mehta Director is liable to retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for reappointment.
Mr. Koji Iketani was appointed as the Additional Director (Non-ExecutiveNon-Independent) of the Company with effect from 19th June 2019 and holds office thisAnnual General Meeting and Mr. Koji Iketani will be appointed as a Director by theshareholders of the company in the ensuing Annual General Meeting
Based on the performance evaluation and recommendationof the Nomination Committee theBoard at its meeting held on 08th August 2019 has reappointed Mrs. Ruchi Naithani and Mr.Raj Khalid as an Independent Directors for a second term of five years.
The Directors have recommended the appointment / reappointment for the approval ofShareholders. The brief profile of the Directors are furnished in the Notice convening theAGM of the Company.
23. NAME CHANGE OF SUBSIDIARIES
The name of the following wholly owned subsidiaries have been changed:
|Sl. No. ||Country ||Old Name ||New Name |
|1 ||Japan ||Accel Japan KK ||Inspirisys Solutions Japan KK |
|2 ||United Kingdom ||Accel Technologies Limited ||Inspirisys Solutions Europe Ltd. |
|3 ||United States of America ||Accel North America Inc. ||Inspirisys Solutions North America Inc. |
|4 ||India ||Accel IT Resources Limited ||Inspirisys Solutions IT Resources Limited 73 of |
Your Directors take this opportunity to convey their appreciation to businessassociates for their support and contribution during the year. The Directors would alsolike to thank all valuable stakeholders viz. customers suppliers alliance partnersbankers and other business associates for the continued and excellent support given bythem to the Company and their confidence reposed in the management. The Directorsacknowledge the unstinted commitment and of the valuable contribution of all employees ofthe Company. Your Directors also appreciate and value the trust reposed in them by Membersof the Company
|For and on behalf of the Board of Directors || |
|Place: Chennai ||Malcolm F. Mehta |
|Date: 08th August 2019 ||Chairman & Chief Executive Officer |