Your Directors have pleasure in presenting Twentieth Board's Report on the business andoperations of the Company ("Mindtree Limited" or
"Mindtree" or "Company") together with the audited standalone andconsolidated financial statements for the year ended March 31 2019.
Financial Performance Rs in million
|Particulars ||For the year ended March 31 |
| ||2019 ||2018 ||2019 ||2018 |
| ||Consolidated || ||Standalone || |
|Revenue from operations ||70215 ||54628 ||70215 ||54628 |
|Other income ||893 ||1902 ||893 ||1901 |
|Total revenues ||71108 ||56530 ||71108 ||56529 |
|Employee benefits expense ||44212 ||35641 ||44211 ||35640 |
|Finance costs ||29 ||169 ||29 ||169 |
|Depreciation and amortization expense ||1641 ||1715 ||1641 ||1715 |
|Other expenses ||15358 ||11582 ||15360 ||11584 |
|Total expenses ||61240 ||49107 ||61241 ||49108 |
|Profit before tax ||9868 ||7423 ||9867 ||7421 |
|Tax expense ||2327 ||1722 ||2327 ||1722 |
|Profit for the year ||7541 ||5701 ||7540 ||5699 |
|Other comprehensive income ||197 ||128 ||197 ||128 |
|Total comprehensive income ||7738 ||5829 ||7737 ||5827 |
The standalone numbers for all the comparative periods have been restated to giveimpact to the Amalgamation of subsidiaries with your
Company resulting in a common control business combination (refer to note 36 of thestandalone financial statements).
On a consolidated basis revenue for the year was Rs 70215 million signifying a growthof 28.5% in Rupee terms. Revenue increased due to better traction from all the verticalsmainly led by Travel and Hospitality and Hi Tech and Media as well as weakening of INRagainst major currencies mainly US$. Your Company had 349 active customers as on March31 2019 as against 338 as on March 31 2018. During the year 23 customers had revenue inexcess of US$ 10 million as against 17 customers previous year. Total employee benefitexpense has increased by 24%. The increase is in line with business-growth and increase inhead count (March 31 2019: 20204; March 31 2018: 17723). Other expenses increased by33% in line with revenue and mainly attributable towards travel expenses subcontractorexpenses recruitment expenses lease rentals and others.
Earnings before interest taxes and depreciation allowance (EBITDA) for FY 19 was Rs10645 million against Rs 7405 million for FY 18 and has grown at 43.8% over the year.EBITDA margin improved by 160 basis points from 13.6% in FY 18 to 15.2% in FY 19. Employeebenefits expense as a percentage to revenue improved from 65% to 63% due to betterutilization.
Our e ective tax rate is at 23.6% when compared to 23.2% in the previous year. PAT hasgrown by 32% attributable towards growth in EBITDA.
The standalone results mirror the consolidated results as the impact of consolidationof subsidiaries results with consolidated results is insignificant. Accordingly thecommentary provided for explaining the company's consolidated performance also applies tocompany's standalone performance.
During the year your Company allotted 287730 equity shares of Rs 10/- each toemployees ("Mindtree Minds") under Mindtree Employee
Restricted Stock Purchase Plan 2012 (ESPS/ERSP 2012). Further to the above allotmentthe paid-up equity share capital has increased from Rs 1639263110/- as on March31 2018 to Rs 1642140410/- as on March 31 2019.
Public Announcement to acquire shares of the Company by Larsen and Toubro Limited(L&T)
During the year L&T made a public announcement on March 18 2019 for theacquisition of up to 51325371 fully paid-up equity shares of Rs 10/- each ofMindtree Limited from the shareholders. L&T has also filed detailed Public Statementon March 26 2019. The above acquisition awaited Regulatory approvals as on March 312019.
The Company had constituted a committee of Independent Directors (IDC) in the interestof all stakeholders to provide their reasoned recommendation in respect of the o er byL&T. All the Independent Directors were appointed as members of IDC and Ms. ApurvaPurohit was appointed as the Chairperson of the IDC and the spokesperson.
The details of Dividend declared for the FY 2018-19 were as follows:
(i) The Board of Directors on October 17 2018 declared a first interim dividend ofRs3/- per equity share of face value of Rs 10/- each to the Shareholders which was paidon October 30 2018;
(ii) The Board on January 16 2019 declared a second interim dividend of Rs 3/- perequity share of face value of Rs 10/- each to the Shareholders which was paid on January28 2019; (iii) The Board on April 17 2019 declared a third interim dividend of Rs 3/-per equity share of face value of Rs 10/- each to the Shareholders which will be paid onor before May 10 2019; Further the Board at its meeting on April 17 2019 has alsorecommended a final dividend ofRs 4/- per equity share of face value of Rs 10/- each anda special dividend of Rs 20/- per equity share of face value of Rs 10/- each for theFinancial Year ended March 31 2019 to celebrate the twin achievements of exceeding US$ 1billion annual revenue milestone and 20th anniversary of the Company which are payable onobtaining the Shareholders' approval at the Twentieth Annual General Meeting. The finaldividend and special dividend if approved will be paid on or before July 31 2019.
The dividend payout amount for the current year inclusive of tax on dividend is Rs2183 million as compared to Rs 1742 million in the previous year.
Your Company has formulated Dividend Distribution Policy in accordance with Regulation43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andany amendments thereto ("hereinafter referred to as LODR Regulations") forbringing transparency in the matter of declaration of dividend and to protect the interestof investors. The Dividend Policy is available on the website of the Company: https://www.mindtree.com/about/investors/policies/dividend-policy.
Your Company intends to maintain similar or better levels of dividend payout in future.However the actual dividend payout in each year will be based on the profits andinvestment opportunities of the Company.
Your Company had no opening balance of Deposits. Further your Company has not acceptedany Deposits during the Financial Year 2018-19 and as such no principal or interest wereoutstanding as on March 31 2019 as per the provisions of the Companies Act 2013(hereinafter referred to as "Act") and the Rules framed thereunder.
Your Company maintains sufficient cash to meet its operations and strategic objectives.Cash and investments (net of short-term borrowings) have increased from Rs 7463 millionas on March 31 2018 to Rs 9375 million as on March 31 2019. The balance funds have beeninvested in deposits with banks highly rated financial institutions and debt schemes ofmutual funds.
At Mindtree we focus on Culture Learning Performance Talent Management Skilldevelopment and motivate minds through various reward and recognition programs thatdelivers values and results to the organization and also to the individual.
Culture that delivers values and results
The Mindtree Culture is a set of shared attitudes values beliefs and practices thatcharacterize us. It is the behavior that we witness when a group of Mindtree minds worktogether this behavior results from a set of largely unwritten and unspoken rules. Simplysaid - culture is what Mindtree Minds engage in when no one is looking.
Culture forms an important pillar in our quest to build Mindtree as a memorableinstitution. As we grow and absorb diverse views and influences culture ensures that weremain true to our Mission and Values. The Mindtree Culture is both an enabler and dierentiator for all our stakeholders.
Culture is a prominent reason our beloved Mindtree Minds and Mindtree's esteemedclients stay and love Mindtree and are so passionate about being part of the grandfamily. Mindtree's Culture App and the site https://culture.mindtree.com/ are being usedto capture/share Mindtree stories virtually from anywhere in the globe and also for all towatch/ listen to these fascinating Mindtree stories.
Performance Retention and Talent Management
Mindtree's performance management system and process are focused on creating empoweredand motivated talent pool. Our annual performance review focuses on future prospects.360-degree feedback process for Mindtree Minds in middle and senior management roles areevaluated on their leadership competencies.
Ozone our internal job portal has delivered excellent value to Mindtree Minds infinding right role for their talent. Performance management is focused on careerimagination through progress lead constructive learning lead feedback.
Focused approach to hiring assimilation evaluation recognition through awards dierentiated compensation and growth opportunities linked to performance are helping inattracting and retaining high caliber Mindtree Minds.
Recognitions and Motivation
Recognition and making recognition special has been a high point of Mindtree's culture.
Spot on for instant gratification Outstanding performers for exceling in the yearswork Pillar's for consistently standing out year after year. Chairman's Award the mostcoveted awards for those who are consistently extraordinary in the performance approachand attitude.
Learning and Development
Continuing with our focused and well-mapped transformation journey in terms of keytechnology identification and adoption we scaled
Yorbit- our home-grown cloud-based mobile-enabled digital learning platform whichcan be accessed anywhere everywhere it covers
800+ critical skills by o ering more than 2200 courses.
Osmosis our annual tech-fest was a huge success this year as well with a great levelof participation from the technical community within and outside of Mindtree. The Techieof the Year event had 532 techies participate in the Hackathon and 2249 externalparticipants with 25 K-Safari stalls showcasing the best of Mindtree. We introduced 2 newevents this year: AI Wizard - a platform to build competency in Artificial
Intelligence (AI) while showcasing AI & Machine Learning skills & DiY - DevelopIt Yourself an instant engine to learn new skills and develop solutions. The highlightwas Mindtree winning the CII MIKE Awards for the most innovative knowledgeenterprise'. The "Recruit to Reskills 301"program where Java/DotNetprofessionals are being transformed to Digital experts have been experienced by 130Mindtree Minds so far.
Learning culture at Kalinga
"Culture and values cannot be taught" is a general consensus among people.They happen through inspiration. At Kalinga we took a little stretched position saying"nothing can be taught". Our source of inspiration at Kalinga aren'tconventional aspects of education such as curriculum classroom teachers lectures orexaminations. Rather we have relied much on "work" as a vehicle of learning.Work renders purpose. When a Campus Mind works on solving the room allocation problem insocial center or the thermal comfort issue inside rooms or water management of campusthrough sensors and meters or automation of employee claimseligibilityforourfinancefunction or workflow automation of project submission and evaluation for our homegrownlearning platform Yorbit or integration of building management system parameters withMindtree's indigenous digital surveillance platform called Gladius the Mindtree Mindsfinds meaning in education; it makes the learning process purposeful.
Hiring and Onboarding
In 2018 we transformed the selection process through paperless and AI-driven candidateselection these two key initiatives of our Talent Acquisition team resulted in quick andaccurate identification and hiring of talent across all levels. Women diversity isimportant to Mindtree and we support the growth of women workforce via hiring at thecampus and lateral levels. Encouraging women interviewers to participate in the hiringprocess running women-on-break hiring events. The Refresh Women Back to Work program wasa great success that saw the on-boarding of many capable Women Mindtree Minds who embracedthe opportunity to start their careers once again.
Multiple Elite/ Star Seeker Events' were also convened to unearth top-notchArchitects Tech Experts and Program Managers.
Homecoming or Alumni hiring has been a key people practice that is supported across allthe geographies that we operate in. Mindtree's unique culture is embodied in its people.
Skills Transformation at Mindtree
These strategic instruments have enabled Mindtree realize a strong digital skillstransformation in the technology areas of Digital Content/
Commerce Digital Channels Digital Experience Cloud Data Science and Engineering. Inaddition Mindtree invests significantly into custom made Mindtree signature programs thatcreate expertise and di erentiation in strategic areas of Digital Technologies and nicheroles such as Digital Full Stack Engineers. Digital Skills transformation is not limitedto technology professionals for the Digital era need to demonstrate unique leadership andprofessional skills. Design Thinking Digital Consulting and Agile are fundamentalelements of being Digital at Mindtree. Over the years Mindtree has equipped 450+ MindtreeMinds with Future Technologies readiness (AI BlockChain IoT RPA) 1000+ Mindtree Mindswith Digital era Engineering skills 500+ Minds with Digital Core Technologies 1000+Mindtree Minds with Modern Web Applications skills 1500+ Minds with Modern Data Science1000+ Minds with Modern Data Warehousing and 1000+ Minds with Digital Cloudcapabilities. Further Mindtree has created 250+ Engineers with deep Digital skills andFull Stack Engineering abilities and the journey continues.
Sales and Delivery Skills
Mindtree is focused on programs which have direct impact on internal and externalcustomers. More than 100 senior delivery leaders are going though leadership program whichfocuses on enhancing customer experience. Other key focus is to build technology expertisefor the needs of future. Sales fellowship and development programs focus on key behavioralcompetencies in the area of customer service and business building.
Seamless Integration of enabling processes
People Shared Services (PSS) is a constantly evolving team that incorporates the latesttechnologies to achieve excellence in the di erent areas that it encompasses. Automationin PSS has been a key focus area. 85 RPA bots were deployed and more than 6000 hours ofhuman e ort was saved this year. Most of the people processes have been automated.
The total number of Mindtree Minds including subsidiaries as on March 31 2019 was20204 as against 17723 as on March 31 2018.
Business Responsibility Report
Your Company has embedded in its core business philosophy the vision of societalwelfare and environmental protection. Responsible business characterizes its policiespractices and operations. As a believer in the principle of transparency Mindtreepublishes its Business Responsibility Report as a part of its annual report inaccordance with the LODR Regulations. The Business Responsibility Report is also availableon the Company's website: https://www.mindtree.com/about/investors.
Mergers and Amalgamations
During the year your Company received Order from the Hon'ble National Company LawTribunal Bengaluru Bench approving the Scheme of
Amalgamation of Magnet 360 LLC the wholly owned subsidiary of the Company withMindtree. Your Company has completed the necessary requirements under various regulations.Further the Order was filed with the Registrar of Companies Karnataka on December 142018 which being the e ective date of Amalgamation.
Your Company had three direct subsidiaries and two step- down subsidiaries as on March31 2019. During the year Magnet 360 LLC the wholly owned subsidiary amalgamated withthe Company and ceased to exist. Blouvin (Pty) Limited the step-down subsidiary wasliquidated during the year. In accordance with Section 129 (3) of the Act a separatestatement containing salient features of the financial statement of the subsidiaries ofthe Company in Form AOC-1 is given in Annexure 1. In accordance with Section 136 (1) ofAct the annual report of your Company containing inter alia financial statementsincluding consolidated financial statements have been placed on our website:https://www.mindtree.com/about/investors. Further the financial statements of thesubsidiaries have also been placed on our website:https://www.mindtree.com/about/investors. The Company will provide physical copies ofthese documents upon written request from any shareholder of the Company.
Awards and Recognitions
During the year under review your Company received the following awards andrecognitions:
Recognized as a Rising Star in Service Operation and Delivery (USA) by 2019 ISGProvider Lens Report on SIAM/ITSM.
Positioned as a Leader in Enterprise Research and Development Services across NineCategories in Zinnov Zones Report.
Named as a Leader in Digital Services for Travel and Hospitality by Zinnov.
Recognized as a Rising Star' in US & Global by the ISG Provider Lens CloudTransformation/ Operation Services & XaaS Quadrant Report.
Named as an IoT Technology Services Leader Across Nine Categories in Zinnov ZonesReport.
Recognized as Leader by ISG Provider Lens Next-Gen ADM Quadrant Report for ApplicationDevelopment and Maintenance Services.
Recognized as an Innovator in Avasant's Intelligent Automation RadarView 2018 report.
The ISG Provider Lens SAP HANAR Services Quadrant Report Recognized Mindtree as:
- Rising Star' in S/4HANA
- Rising Star' in BW/4HANA
- Leader' in the SAP Cloud Platform
Magnet 360 Mindtree's Sales force Practice included in ISG's 25 Best DigitalTransformation Case Studies.
SAFA Best Presented Annual Report Awards and SAARC Anniversary Awards for CorporateGovernance Disclosure- 2017 under IT Sector (Joint 2nd Runner-up) during the FY 2018-19which is token of recognition for adopting best governance disclosures.
Silver Shield under ICAI Awards for Excellence in Financial Reporting for the FY2017-18.
Mindtree as a brand reflects our identity values and beliefs. Collaborative SpiritUnrelenting Dedication and Expert Thinking are the foundation of our presence andtherefore we have deliberated these principles into our branding and logo. Mindtree'sbrand voice actively promotes brightness and confidence that stimulates our forwardthinking confidence strength and passion. These themes are custom stitched thecollaterals inspired by our fresh design thinking.
The elevation of brand aesthetics for Mindtree is a continuous process with the rightmix of Public Relations Social Media Advertisement and Digital Marketing. The year haswitnessed the execution of our new cloud strategy Mindtree 3.X' which is drivingour digital leadership and establish the need for re-imagination approach as businessopportunities. Our newly-built website reflects the digital in our DNA and has beeninstrumental in lead generation driving sales and optimized across any digital devices.Our social media strategy echoes the Mindtree values and significantly contributing to ourbusiness well supported with focused advertisement campaigns.
Your Company has an e ective Investor Relations Program ("IR") through whichthe company continuously interacts with the investment community across various channels(Periodic Earnings Calls Annual Investor / Analyst Day Individual MeetingsVideo-Conferences Participation in One on One interactions and group meetings throughNon-Deal Roadshows). Your Company ensures that critical information about the Company isavailable to all the investors by uploading all such information at the Company's websiteunder the Investors section. Your Company also sends regular email updates to analysts andinvestors on upcoming events like earnings calls declaration of quarterly and annualearnings with financial statements.
Your Company is receptive to the needs of the investment community through its periodicIR Perception Studies conducted by an independent agency and also by seeking directfeedback from the analysts and investors. Your company strives to adopt emerging bestpractices in IR and building a relationship of mutual understanding with investor andanalysts.
At the beginning of the year your Company had 2229340 sq. ft of space consisting of17768 seats spread across various locations in India apart from Mindtree's BhubaneswarFacility ("Kalinga") Training and residential facility for 500 campus mindsmeasuring about 302000 sq. ft . Following are the key changes made during the year:Bhubaneswar: During the year under review your Company has completed the construction ofnew Software Development Block measuring about 180000 sq. ft. Completed fit out works inone floor adding about 400 seats. Consequently a portion of learning center which wasused as office has been converted back as training rooms. New Software Development Blockhas capacity to add another 800 seats depending upon business requirement. Due toincreased demand for training your company is in the process of constructing New SocialCenter Building measuring about 150000 sq. ft and consisting of about 550-bedaccommodation for Campus Minds. These buildings are expected to be ready for occupation byJuly 2020.
Hyderabad: Your Company has added 550 seats in the leased facility measuring about65000 sq ft.
With the above additions currently your company has 2474340 sq. ft consisting of18705 seats spread across various locations in India apart from Mindtree Kalinga Trainingand residential facility for 500 campus minds measuring about 302000 sq. ft.
Your Company has sufficient capacity to meet its growth needs over short and mediumterms. Your Company has prioritized adopting Sustainable best practices in accordance withLEED green building design for creating & maintaining workplace infrastructureprojects.
Your Company has successfully installed 550 KW solar power plant at Bhubaneswar. Thisplant is meeting about 25% of power requirement of our Bhubaneswar Facility. The Eastcampus of your Company located at Whitefield Bengaluru and also Mindtree Kalingacertified as PLATINUM rated facilities by India Green Building Council. Greencertification process for New Software Development Center Buildings at Bhubaneswar is inprogress.
These achievements stand testimony to your company's strong commitment towardssustainable best practices.
Board of Directors
At the year ended March 31 2019 the Board of Directors comprised of three Executiveand Promoter Directors one Non-Executive and Promoter Director and four IndependentDirectors including a Woman Director.
As per the Articles of Association of the Company one third of the Directors areliable to retire by rotation at the Annual General Meeting of the
Company every year. Mr. Subroto Bagchi (DIN 00145678) retires by rotation and beingeligible o ers himself for reappointment at the ensuing Twentieth Annual General Meeting.
Mr. Bijou Kurien (DIN 01802995) was appointed as Independent Director on July 17 2018for a period of three years from July 17 2018 to July 16 2021. Further Mr. N SParthasarathy (DIN 00146954) was re-appointed as Executive Vice Chairman from January 012019 to January 31 2021 and Ms. Apurva Purohit (DIN 00190097) was re-appointed asIndependent Director for a second term from January 01 2019 to December 31 2023 throughPostal Ballot on December 17 2018.
Prof. Pankaj Chandra Non-Executive and Independent Director of the Company retiredfrom the Board on April 01 2018 due to the completion of his tenure. Ms. ManishaGirotra Independent Director resigned from the Board on April 18 2018 due topre-occupation.
Mr. Jagannathan Chakravarthi resigned as Chief Financial Officer on July 20 2018. Mr.Pradip Kumar Menon was appointed as Chief Financial Officer with ect from September24 2018.
Other than the above there were no changes in the Board of Directors and KeyManagerial Person (KMP) during the FY 2018-19.
Criteria for the appointment of Directors
The Nomination and Remuneration Committee (NRC) is responsible for developingcompetency requirements for the Board based on Industry and Strategy of the Company. TheBoard composition analysis reflects in depth understanding of the Company's strategiesenvironment operations financial conditions compliance requirements etc.
In terms of provisions of the Act and LODR Regulations NRC has identified list of coreskills expertise and competencies required for a person to possess in order to beselected as a Board member. The NRC also focuses on the qualification and competence ofthe person professional experience the positive attributes standards of integrityethical behaviour and independent judgement of the person in selecting a new Boardmember.
The Committee satisfies itself with regard to the criteria for independence of theDirectors as required under the applicable statutes in order to enable the Board todischarge its functions and duties e ectively. The details of core skills expertise andcompetencies identified by NRC are provided in detail in the Corporate Governance Report.
In case of re-appointment of Non-Executive and Independent Directors the NRC and theBoard takes into consideration the performance of the Director based on the Boardevaluation and his/her engagement level during their previous tenure.
The Company's remuneration Policy is market-driven and aims at attracting and retaininghigh performance talent. Mindtree follows a compensation mix of fixed pay benefits andperformance based variable pay which is paid based on the business performance and goalsof the di erent business units/ overall company. The Chairman Managing Director and otherExecutive Directors are paid remuneration by way of salary benefits perquisites andallowances (fixed component) and performance incentives phantom stocks commission(variable component). Annual compensation changes are decided by the Nomination andRemuneration Committee after considering external benchmark data and overall businessperformance within the salary scale approved by the Board and Shareholders.
The Remuneration Policy has been updated on the website of the Company at:https://www.mindtree.com/about/investors
Details of remuneration to Directors
The information relating to remuneration paid to Directors as required under Section197(12) of the Act is given in Annexure 3.
Declaration of Independence by Independent Directors
The Company has received necessary declaration from the Independent Directors asrequired under Section 149(7) of the Act and LODR as laid down in Section 149(6) of theAct and that of LODR Regulations. Regulationsconfirmingthat
The external agency appointed by the NRC and the Board has carried out the evaluationof the performance of the Board as a whole functioning of the Committees of the Boardindividual Directors and the Chairperson of the Board in accordance with the applicableprovisions of the Act and LODR Regulations.
Detailed questionnaires drafted in accordance with the guidance note issued by SEBIwere sent out to the Board members. The external agency also had one on one discussionwith Board Members CFO Company Secretary Investor Relations team Risk team Strategyteam and the People
The performance of the Board was evaluated on the basis of various criteria such ascomposition of the Board information flow to the board and its dynamism strategicissues roles and functions of the Board relationship with the management engagementwith the Board and external stakeholders and other development areas. The performance ofthe Committees was evaluated after seeking the inputs of committee members on the criteriasuch as understanding the terms of reference Committee composition Independencecontributions to Board decisions etc.
The performance of the individual Directors was evaluated after seeking inputs from allthe Directors other than the one who is being evaluated.
The evaluation was based on the criteria such as Director's knowledge and understandingof their role Company's vision and mission market potential Director's Commitmentqualification skill and experience openness in communication etc.
The performance of the Board Chairperson was evaluatedafterseeking the inputs from allthe Directors other than the Board Chairperson on the basis of the criteria such asChairperson's role accountability and responsibilities promotion of e ectiverelationship and open communication positive and appropriate working relationship withCEO commitment etc.
The Board evaluation report was submitted to the Board Chairperson and the Chairpersonof Nomination and Remuneration Committee. The Board Chairperson discussed the outcome ofevaluation of the individual Directors separately with them in detail. The evaluationreport contains an executive summary of findings and several key recommendations from theevaluation process. The report of the Board evaluation was adopted at the NRC and theBoard meetings.
Number of meetings of the Board
The Board of Directors of the Company met nine times (including one adjourned meeting)during the year. The details of Board Meetings are provided in the Corporate GovernanceReport. The gap intervening between two meetings of the board is within the timeprescribed under the Act and LODR Regulations.
The following are the Board Committees during the Financial Year 2018-19:
1 Audit Committee;
2 Nomination and Remuneration Committee;
3 Stakeholders' Relationship Committee;
4 Corporate Social Responsibility Committee;
5 Risk Management Committee and
6 Administrative Committee
The composition of each of the above Committees their respective roles andresponsibilities are provided in detail in the Corporate Governance
Vigil Mechanism / Whistle Blower Policy
The Company's vigil mechanism /Whistle blower Policy aims to provide the appropriateplatform and protection for Whistle blowers to report instances of any actual or suspectedincidents of unethical practices violation of applicable laws and regulations includingthe Integrity Code
Code of Conduct for Prevention of Insider Trading in Mindtree Securities Code of FairPractices and Disclosure. All employees and Directors have access to the Chairperson ofthe Audit Committee. Mindtree investigates such complaints speedily confidentially and inan impartial manner and take appropriate action to ensure that the requisite standards ofprofessional and ethical conduct are always maintained. The details of the Whistle BlowerPolicy and the Committee which oversees the compliance are explained in detail in theCorporate Governance Report.
Code of Conduct for Prevention of Insider Trading in Mindtree securities
During the year Mindtree has amended the Code of Conduct for Prevention of InsiderTrading in Mindtree Securities ("Code") in accordance with
SEBI (Prohibition of Insider Trading) Amendment Regulations 2018 which is e ectivefrom April 01 2019. The amended Code is uploaded on the website of the Company. Theobjective of the Code is to protect the interest of shareholders at large to preventmisuse of any unpublished price sensitive information and to prevent any insider tradingactivity by dealing in shares of the Company by its Directors Designated Persons other
Mindtree Minds and their immediate relatives. Mr. Pradip Kumar Menon CFO is theCompliance Officer under the Code.
Related Party Transactions
All related party transactions were entered into with the prior approval of the AuditCommittee. During the Financial Year 2018-19 all the transactions with related partieswere entered into at arm's length and in the ordinary course of business and none of suchrelated party transactions required the approval of the Board of Directors or theShareholders as per the Act or LODR Regulations. Further there were no materiallysignificant related party transactions that may have potential conflict of interests ofthe Company at large.
The policy for determining material related party transactions as approved by the Boardis uploaded on the Company's website and can be accessed athttps://www.mindtree.com/about/investors/policies/policy-determining-material-related-party-transactions.The details of the related party transactions as required under the Act and the Rules areattached in Form AOC-2 as Annexure 4.
No material litigation was outstanding as on March 31 2019. Details of litigation ontax matters are disclosed in the financial statements.
Details of unclaimed shares
The details of unclaimed shares as required under LODR Regulations is provided inAnnexure 2.
Transfer of Dividend to Investor Education and Protection Fund (IEPF)
Dividends amounting to Rs 565023/- that were unclaimed for a period of seven yearswere transferred to the Investor Education and Protection Fund Authority in accordancewith the provisions of the Act. The details of the consolidated unclaimed/unpaid dividendas required by the Act read with Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 (hereinafter referred to at"IEPF Rules") for all the unclaimed/ unpaid dividend accounts outstanding (drawnup to the date of Nineteenth Annual General Meeting on July 17
2018) have been uploaded under the Company's website:https://www.mindtree.com/unpaid-dividend-information-2018.
Attention is drawn that the unclaimed/ unpaid dividend for the Financial Years 2011-12(Final) and 2012-13 (Interim) is due for transfer to IEPF during August 2019 and November2019. In view of this the Members of the Company who have not yet encashed theirdividend warrant(s) or those who have not claimed their dividend amounts may write to theCompany/ Company's Registrar and Share Transfer Agent Link Intime India
Transfer of Shares in favor of Investor Education and Protection Fund (IEPF) Authority
Pursuant to the provisions of the Act read with the IEPF Rules the shares on whichdividends have not been claimed for 7 consecutive years have been transferred in favor ofIEPF authority. As on date the company had transferred 17582 equity shares in favour ofIEPF authority.
Particulars of Employees
Information as required under the provisions of Section 197 of the Act read with Rules5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are set out in Annexure 3 to the Directors' Report. There were no employeeswho were himself/ herself or along with his/ her spouse and dependent children held morethan employedthroughoutthefinancial two percent of the equity shares of the company. Asper the proviso to Rule 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the particulars of employees posted and working outside India notbeing Directors or their relatives drawing the salary in excess of the prescribed limitsunder the above Rules need not be included in the statement but such particulars shall befurnished to the Registrar of Companies. Accordingly the statement included in thisreport does not contain the particulars of employees who are posted and working outsideIndia. If any Member is interested in obtaining a copy thereof such Member may write tothe Company in this regard.
Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
Your Company provides equal opportunities and is committed to creating a healthyworking environment that enables our Mindtree Minds to work with equality and without fearof discrimination prejudice gender bias or any form of harassment at workplace. YourCompany has in place a Prevention of Sexual Harassment (POSH) policy in accordance withthe requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. The policy is frequently communicated at regular intervalsthrough assimilation programs to Mindtree Minds. Following are some of the awarenessprograms imparted to train Mindtree Minds and Internal complaints committee (ICC) duringthe year.
1. Every Mindtree Mind has to undergo mandatory e-learning module on "Preventionof Sexual Harassment" at workplace.
2. Every new joiner is trained on Prevention of Sexual Harassment during inductionprogram.
3. The Internal Complaints Committee is trained by an external agency when thecommittee members are on-boarded to the committee.
4. Policy of "Prevention of Sexual Harassment" at workplace is available onthe intranet portal for Mindtree Minds to access as and when required. Further yourcompany has setup an ICC both at the head office / corporate office and at every locationwhere it operates in India. ICC has equal representation of men and women and is chairedby senior woman and has an external women representation.
Penal consequences of Sexual Harassment ("SH") and the constitution of theICC is displayed at conspicuous places. The following are the summary of the complaintsreceived and disposed o during the Financial Year 2018-19:
In India a) No. of SH complaints received: 10 b) No. of SH complaints disposed o : 9
Rest of the World a) No. of SH complaints received: 1 b) No. of SH complaints disposedo : 1
Employee Stock Option Plans and Employee Stock Purchase Scheme
During the year your Company has granted shares under Employee Stock Purchase Schemenamely Mindtree Employee Restricted Stock Purchase Plan 2012 (ESPS or ERSP 2012).
The Employee Stock Option Plans and ESPS or ERSP 2012 are in compliance with SEBI(Share Based Employee Benefits)Regulations 2014
("Employee Benefit Regulations") and there has been no material changes tothese plans during the Financial Year 2018-19. The summary information of various EmployeeStock Option Plans (ESOPs) and ESPS/ERSP 2012 of the Company is provided under Notes toAccounts under Standalone Financial Statements of this Annual Report. The Company hasrecorded compensation cost for all grants using the fair value - based method ofaccounting in line with prescribed SEBI guidelines. Refer to Notes to accounts ofStandalone Financial Statements of this Annual Report for details on accounting policy.
Disclosure on ESOPs and ESPS/ ERSP 2012 details of options/ shares granted sharesallotted on exercise etc. as required under Employee Benefits Regulations read with SEBIcircular no. CIR/CFD/POLICYCELL/2/2015 dated June 16 2015 are available on the Company'swebsite: https://www.mindtree.com/about/investors. No employee was granted options/ shares(under ESOPs and ESPS/ERSP 2012) during the year equal to or exceeding 1% of the issuedcapital.
Directors' Responsibility Statement
Your Company's Directors make the following statement in terms of sub-section (5) ofSection 134 of the Act which is to the best of their knowledge and belief and accordingto the information and explanations obtained by them: I. The financial statements havebeen prepared in conformity with Indian Accounting Standards (Ind AS) and requirements ofthe Act and that of guidelines issued by SEBI to the extent applicable to company; on thehistorical cost convention except financial instruments which are measured at fair value;as a going concern and on the accrual basis. There are no material departures in theadoption of the applicable Accounting Standards.
II. The Board of Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of a airs of the Company at the end of thefinancial year and of the profit of the Company for that period.
III. The Board of Directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities. IV. The Board of Directors have laid down internal financial controls tobe followed by the company and that such internal financial controls are adequate and wereoperating effectively.
V. The Board of Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
VI. The financial statements have been audited by M/s. Deloitte Haskins & SellsChartered Accountants the Company's Auditors. VII. The Audit Committee meets periodicallywith the Internal Auditors and the Statutory Auditors to review the manner in which theAuditors are discharging their responsibilities and to discuss audit internal control andfinancial reporting issues. VIII. To ensure complete independence the Statutory Auditorsand the Internal Auditors have full and free access to the Members of the Audit Committeeto discuss any matter of substance.
Management Discussion and Analysis Report
Management Discussion and Analysis Report as required under LODR Regulations isdisclosed separately in this Annual Report.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outflow
Pursuant to the provisions of Section 134(3)(m) of the Act read with the Companies(Accounts) Rules 2014 the details of Conservation of energy Technology AbsorptionForeign Exchange earnings and Outgo are attached as Annexure 5 to this report.
Sustainability and Corporate Social Responsibility Initiatives
Sustainability framework at Mindtree is based on triple-bottom line people planet andprofit.
Sustainability is ingrained into our vision of making societies flourish. Whilesustainability makes smart business sense in terms of resource conservation ourtechnological competencies give us an opportunity to solve larger issues of sustainabledevelopment. Mindtree is increasingly involved in taking these opportunities forward. Ourpriorities are set by pressing sustainability issues in the global and national contextsissues that touch us deeply and our capabilities to execute ideas. Our short term goalsare satisfactorily bearing fruit in terms of resource and our medium term plans for cleanenergy have progressed well.
As part of its Corporate Social Responsibility (CSR) initiatives Your Company hasundertaken several projects in accordance with Schedule VII of the Act. Mindtreeimplements its CSR initiatives via three channels:
- Directly by Mindtree;
- Through Mindtree Foundation;
- Through "Individual Social Responsibility" programs undertaken by MindtreeMinds and supported by Mindtree as appropriate.
Further Mindtree's CSR will primarily focus on programs that:
- Benefit the di erently abled;
- Promote education;
- Create sustainable livelihood opportunities.
The Annual Report on CSR activities is annexed herewith as Annexure 6.
Your Company at its Sixteenth Annual General Meeting held on June 22 2015 hadappointed M/s. Deloitte Haskins & Sells Chartered Accountants (Firm Registration No.008072S) as Statutory Auditors of the Company up to the conclusion of the Twenty FirstAnnual General Meeting at a remuneration as may be fixed by the Board of Directors orAudit Committee in consultation with the Auditors thereof. The requirement for the annualratification of auditor's appointment at the Annual General Meeting has been omittednotified on May 7 2018. The Statutory Auditors have confirmed that they satisfy theindependence criteria as required under the Act.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 Secretarial Audit has been carried outby Mr. G Shanker Prasad Practicing Company Secretary.
Auditor's Report and Secretarial Audit Report
There are no qualifications reservations or adverse remarks in the Statutory Auditor'sReport and Year 2018-19. The Statutory Auditor's Report is enclosed with the financialstatements in the Annual Report. The Secretarial Auditor's report is annexed as Annexure 8and is a part of this report.
Reporting of frauds by Auditors
During the year under review the Statutory Auditors or Secretarial Auditor of theCompany have not reported any frauds to the Audit Committee or to the Board of Directorsunder Section 143(12) of the Act including rules made thereunder.
Mindtree has a strong legacy of following fair transparent and ethical governancepractices. Mindtree's Corporate Governance policy is based on the belief that a goodgovernance is an essential element of business which helps the Company to fulfill itsresponsibilities to all its stakeholders. The fundamentals of the governance at Mindtreeincludes transparency accountability integrity and independence. A detailed report onCorporate Governance is a part of this Annual Report. Auditor's Certificate on CorporateGovernance obtained from Deloitte Haskins & Sells Chartered Accountants (FirmRegistration No.008072S) for compliance with LODR Regulations is provided as Annexure 9and is a part of this Report.
Quality Initiatives and Certifications
Your Company continues its journey of delivering value to its clients throughinvestments in quality programs. Your Company has adopted several external benchmarks andcertifications. Your Company is certified under various standards to meet clients'requirements and enhancing valuable delivery and the following certifications are held byyour company:
|Certificate Name ||Issuing Authority ||Certification Date ||Certificate Expiry Date ||Frequency of Surveillance Audits ||Description |
|PCI-DSS V 3.1 ||Trustwave ||March 21 2019 ||March 21 2020 ||Annual ||The Payment Card Industry Data Security Standard (PCI DSS) is a proprietary information security standard for organizations that handle branded credit cards from the major card schemes including Visa MasterCard American Express Discover and JCB. |
|CMMI SVC L3 Ver 1.3 ||QAI ||July 17 2017 ||July 17 2020 ||Once in 3 years ||CMMI for services (CMMI SVC) model which is a comprehensive set of guidelines that helps organizations in the Services industry domain to establish and improve processes for delivering services. |
|ISO/IEC 20000- 1:2011 ||BSI ||November 28 2016 ||November 27 2019 ||Once in 3 years ||ISO/IEC 20000 is an international IT standard that allows companies to demonstrate excellence and prove best practice in IT management. |
|ISO 14001:2015 ||BSI ||December 13 2016 ||September 24 2019 ||Once in 3 years ||ISO 14001:2015 specifies requirements for an environmental management system to enable an organization to enhance its environmental performance. |
|BS OHSAS 18001:2007 ||BSI ||December 13 2016 ||September 24 2019 ||Once in 3 years ||BS OHSAS 18001 is a truly international standard which sets out the requirements for occupational health and safety management good practice for any size of organization. |
|Information Security Management System - ISO/IEC 27001:2013 ||BSI ||May 10 2018 ||May 09 2021 ||Once in 3 years ||ISO/IEC 27001 (ISO 27001:2013) is the international Standard that describes best practice for an Information Security Management System (ISMS). Accredited certification to ISO 27001 demonstrates that an organization is following international information security best practices. |
|CMMI Dev L5 Ver 1.3 ||QAI ||June 08 2016 ||June 09 2019 ||Once in 3 years ||CMMI for development contains practices that cover project management process management systems engineering hardware engineering software engineering and other supporting processes used in development and maintenance. |
| || || || || || |
Internal Control Systems and Adequacy of Internal Financial Controls
Mindtree has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Audit committee defines the scope and authority of theInternal Auditor. The Audit Committee comprises of professionally qualified Directorswho interact with the statutory auditors internal auditors and management in dealing withmatters within its terms of reference. Your Company has a proper and adequate system ofinternal controls. These controls ensure transactions are authorized recorded andreported correctly and assets are safeguarded and protected against loss from unauthorizeduse or disposition. In addition there are operational controls and fraud risk controlscovering the entire spectrum of internal financial controls. An extensive program ofinternal audits and management reviews supplements the process of internal financialcontrol framework. Documented policies guidelines and procedures are in place foreffective management of internal financial controls.
To maintain its objectivity and independence the Internal Auditor reports to theChairman of the Audit Committee of the Board. The internal auditor monitors and evaluatesthe efficacy and adequacy of internal control system in the Company its compliance withoperating systems accounting procedures and policies at all locations of the Company andits subsidiaries. Based on the report of internal auditor process owners undertakecorrective action in their respective areas and thereby strengthen the controls.Significant audit observations and proposed to fix the observations are presented to theAudit Committee of the Board.
The internal financial control framework design ensures that the financial and otherrecords are reliable for preparing financial and other statements. In addition theCompany has identified and documented the key risks and controls for each process that hasa relationship to the financial operations and reporting. At regular intervals internalteams test identified key controls. The internal auditors also perform an independentcheck of effectiveness of key controls in identified areas of internal financial controlreporting.
Any other material changes and commitments
No material changes and commitments affecting the financial position of the Companyoccurred between April 1 2019 and the date of signing this report.
Audit Committee Recommendation
During the year all recommendations of the Audit Committee were accepted by the Board.The Composition of the Audit Committee is as described in the Corporate Governance Report.
As per the requirements of Section 92(3) of the Act and Rules framed thereunder theextract of the annual return for FY 2018-19 is given in Annexure 7 in theprescribed Form No. MGT-9 which is a part of this report and the same is also availableon our website : https://www.mindtree.com/about/investors.
Significant & Material Orders passed by Regulators or Courts
There are no significant and material orders passed by Regulators or Courts during theyear under review.
Particulars of Loans Guarantees and Investments
Disclosure on details of loans guarantees and investments pursuant to the provisionsof Section 186 of the Act and LODR Regulations are provided in the financial statements.
Risk Management Policy
Risk Management is a strategic business discipline that supports the achievement of anorganization's objectives by addressing the full spectrum of its risks and managing thecombined impact of those risks as an interrelated risk portfolio. Mindtree uses EnterpriseRisk Management (ERM) as a key tool to help achieve its short term and long term businessobjectives to generate value for its customers investors employees and otherstakeholders. ERM encompasses areas of organizational exposure to risk (strategicoperational financial and compliance) and provides a structured process for management ofrisks.
This has been achieved by deploying an effective risk management framework toproactively identify assess treat monitor and report risks as well as to create arisk-aware culture within Mindtree. The Mindtree ERM framework has been designed byincorporating elements of leading risk management standards such as:
IRM Risk Management Standard
The Chief Risk Officer is the custodian of the framework and oversight of the frameworkis provided by the Risk Management Committee to the Board of Directors.
The Company affirms that the annual listing fees for the year 2019-20 to both NationalStock Exchange of India Limited (NSE) and BSE Limited (Bombay Stock Exchange) has beenpaid.
The Board places on record their deep sense of appreciation to all the Mindtree Mindssupport sta for adopting to the values of the Company viz. collaborative spritunrelenting dedication and expert thinking for making Mindtree an expertise ledorganization and the Company's customers for letting us deliver the Company's Missionstatement to engineer meaningful technology solutions to help the businesses andsocieties flourish. The Board also immensely thank all the Departments of Government ofIndia Central Government State Government Tax Authorities Reserve Bank of IndiaMinistry of Corporate A airs Securities and Exchange Board of India Stock Exchanges andother governmental/ Semi-governmental bodies and look forward to their continued supportin all future endeavors . The Board also would like to thank our shareholders investorsvendors service providers bankers and academic institutions and all other stakeholdersfor their continued and consistent support to the Company during the year.
| ||For and on behalf of the Board of Directors |
|Place: Bengaluru ||Krishnakumar Natarajan |
|Date: April 17 2019 ||Chairman |