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Oracle Financial Services Software Ltd.

BSE: 532466 Sector: IT
NSE: OFSS ISIN Code: INE881D01027
BSE 00:00 | 24 Apr 2020 Oracle Financial Services Software Ltd
NSE 05:30 | 01 Jan 1970 Oracle Financial Services Software Ltd

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OPEN 2050.00
PREVIOUS CLOSE 2030.10
VOLUME 808
52-Week high 3580.00
52-Week low 1532.50
P/E 12.72
Mkt Cap.(Rs cr) 17,509
Buy Price 2035.00
Buy Qty 1.00
Sell Price 2100.00
Sell Qty 1.00
OPEN 2050.00
CLOSE 2030.10
VOLUME 808
52-Week high 3580.00
52-Week low 1532.50
P/E 12.72
Mkt Cap.(Rs cr) 17,509
Buy Price 2035.00
Buy Qty 1.00
Sell Price 2100.00
Sell Qty 1.00

Oracle Financial Services Software Ltd. (OFSS) - Director Report


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Company director report

Financial year 2018-19

Dear Members

The Directors present their report on the business and operations of your Company alongwith the Annual Report and audited financial statements of the Company for the financialyear 2018-19.

Financial highlights
As per Consolidated financial statements: (Amounts in Rs. million)
Particulars Year ended March 31 2019 Year ended March 31 2018
Revenue from operations 49589.03 45274.72
Finance income 1319.73 794.84
Other income net 441.19 112.06
Total income 51349.95 46181.62
Depreciation and amortization (537.17) (614.63)
Profit before tax 22669.87 18404.41
Tax expenses (8810.89) (6034.00)
Profit for the year 13858.98 12370.41
Other comprehensive income for the year 226.49 461.62
Total comprehensive income for the year 14085.47 12832.03
As per Unconsolidated financial statements: (Amounts in Rs. million)
Particulars Year ended March 31 2019 Year ended March 31 2018
Revenue from operations 35808.97 38617.27
Finance income 1173.47 722.62
Other income net 216.03 163.65
Total income 37198.47 39503.54
Depreciation and amortization (501.98) (573.53)
Profit before tax 19864.15 14869.14
Tax expenses (7039.45) (4809.24)
Profit for the year 12824.70 10059.90
Other comprehensive income for the year 25.83 32.79
Total comprehensive income for the year 12850.53 10092.69

Performance

On consolidated basis your Company's revenue stood at Rs. 49589.03 million this yearan increase of 10% from Rs. 45274.72 million of the previous financial year. The netincome this year was Rs. 13858.98 million an increase of 12% over the previous year. Onan unconsolidated basis your Company's revenue stood at Rs. 35808.97 million during thefinancial year 2018-19 decrease of 7% from the previous year. The Company's net incomefor the financial year 2018-19 was Rs. 12824.70 million an increase of 27%. Previousyear's figures have been re-arranged / re-classified wherever necessary as per theapplicable regulations.

A detailed analysis of the financials is given in the Management's discussion andanalysis report that forms a part of this Directors' report.

Dividend

The Board has decided to conserve the funds for investment in the business andaccordingly has not recommended a dividend for the financial year 2018-19.

Transfer to reserves

The Company does not propose to transfer any amount to the General Reserve out of theamount available for appropriation.

Particulars of loans guarantees or investments

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

Share capital

During the financial year 2018-19 the Company allotted 362254 equity shares of facevalue of Rs. 5 each to its eligible employees and Directors who exercised their stockoptions under the prevailing Employee Stock Option Schemes of the Company. As a resultthe paid-up equity share capital of the Company as on March 31 2019 was Rs. 428895735divided into 85779147 equity shares of face value of Rs. 5 each.

Extract of annual return

Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014 extract of Annual Return (in formMGT-9) is annexed as Annexure 1 to this report.

Directors and key managerial personnel

Ms. Kimberly Woolley Director of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible offers herself for re-appointment. A resolutionseeking Members' approval for her re-appointment forms part of the Notice. During theyear Mr. Robert K Weiler who was liable to retire by rotation at the Twenty Ninth AnnualGeneral Meeting held on August 14 2018 did not opt for re-appointment as a Non-ExecutiveNon-Independent Director. As such he ceased to be a Director of the Company on August 142018.

Mr. S Venkatachalam and Mr. Richard Jackson were re-appointed as Independent Directorsof the Company at the Twenty Ninth Annual General Meeting held on August 14 2018 to holdoffice for a further term of five consecutive years i.e. from April 1 2019 up to March31 2024.

Mr. Vincent Secondo Grelli and Mr. Yong Meng Kau were appointed as Additional Directorsof the Company in the capacity of Non-Executive Non-Independent Directors at the BoardMeeting held on November 2 2018 and their term ends at the ensuing Annual GeneralMeeting. Resolutions seeking Members' approval for their appointment as Directors of theCompany forms part of the Notice.

Ms. Jane Murphy was appointed as an Additional Director of the Company in the capacityof Non-Executive Independent Director at the Board meeting on February 13 2019.Resolution seeking Members' approval for her appointment as a Director of the Company fora term of five consecutive years not liable to retire by rotation forms part of theNotice.

The Members of the Company at the Twenty Sixth Annual General Meeting held onSeptember 11 2015 had appointed Mr. Sridhar Srinivasan as an Independent Directorof the Company to hold office for a term of five consecutive years upto March 31 2020. Inaccordance with the provisions of Section 149 152 of the Companies Act 2013 andapplicable provisions of Securities and Exchange Board of India (Listing Obligations &Disclosure Requirements) Regulations 2015 ("Listing Regulations") and based onthe performance evaluation and recommendation of the Nomination and RemunerationCommittee it is proposed to re-appoint Mr. Sridhar Srinivasan as an Independent Directorfor a further term of five consecutive years from April 1 2020 up to March 31 2025. Aspecial resolution to this effect forms part of the Notice.

Mr. Makarand Padalkar Chief Financial Officer of the Company was appointed as anAdditional Director of the Company at the Board Meeting held on May 9 2019 to hold officeup till the ensuing Annual General Meeting in the capacity of Whole-time Director andChief Financial Officer of the Company for a term of five consecutive years from May 92019 up to May 8 2024 liable to retire by rotation. A resolution seeking Members'approval for his appointment as a Whole-time Director and Chief Financial Officer of theCompany forms part of the Notice.

Ms. Maria Smith resigned as a Non-Executive Non-Independent Director of the Companywith effect from May 9 2019. The Board places on record its appreciation for thecontributions made by her as a member of the Board.

Pursuant to Listing Regulations the Company has appointed the following of itsIndependent Directors on the Boards of its material subsidiaries:

- Mr. Richard Jackson has been appointed as a Director of Oracle Financial ServicesSoftware Inc. USA.

- Ms. Jane Murphy has been appointed as a Director of Oracle Financial ServicesSoftware B.V. Netherlands and Oracle Financial Services Software Pte. Ltd.Singapore.

Brief resumes of the Directors proposed to be appointed / re-appointed the nature oftheir expertise and the names of companies in which they hold directorships andChairpersonships / Memberships of Board Committees etc. are provided in the Notice toMembers forming part of this Annual Report.

The Directors seeking appointment / re-appointment are not debarred from holding theoffice of Director pursuant to any Securities and Exchange Board of India("SEBI") order. All the Independent Directors of the Company have givendeclaration under Section 149(6) of the Companies Act 2013 confirming that theymeet the criteria of independence.

During the year there were no changes to the Key Managerial Personnel.

Number of meetings of the Board

Six meetings of the Board were held during the financial year 2018-19. For details ofmeetings of the Board please refer to the Corporate Governance Report which is a part ofthis Annual Report.

Board Committees

The details pertaining to Committees of the Board are included in the CorporateGovernance Report which is a part of this Annual Report.

Board policies

The Company has formed following policies as required by the Companies Act 2013 andListing Regulations:

Particulars Details Website link for policy / details
Record retention policy The policy details the requirements for retention and destruction of the Company's records in hard copy and electronic media. http://www.oracle.com/us/industries/ financial-services/record-retention- policy-2889568.pdf
Directors' appointment policy This policy governs the manner of appointment of Directors of the Company. https://www.oracle.com/a/ocom/ docs/industries/financial-services/ofss- directors-appointment-policy.pdf
Remuneration policy This policy establishes principles governing remuneration of the directors key managerial personnel and senior management of the Company. http://www.oracle.com/us/industries/ financial-services/ofss-remuneration- policy-4492725.pdf
Policy on determination of material events / information This policy provides framework for determination of material events / information and sets out classes and types of material events / information that require disclosure to stock exchanges. http://www.oracle.com/us/industries/ financial-services/policy-determination- events-2889567.pdf
Code of ethics and business conduct and vigil mechanism / whistle blower policy This code defines and implements Oracle ethical business values and sets forth key rules and employee responsibilities. It also provides a context to handle any questions issues or concerns. https://www.oracle.com/assets/cebc- 176732.pdf
Related party transactions policy This policy sets out the principles and processes http://www.oracle.com/us/industries/
that apply in respect of transactions by the Company with a Related Party. enteredinto nancial-services/ofss-party-transactions- fi policy-2288144.pdf
Dividend distribution policy This policy details the factors to be considered by the Board while deciding or recommending any dividend. http://www.oracle.com/us/industries/ financial-services/ofss-dividend- distribution-policy-3125465.pdf
Policy for determining material subsidiaries This policy defines material subsidiaries and describes related actions to be taken by the Company with significant transactions with them. http://www.oracle.com/us/industries/ financial-services/policy-determining- material-2615655.pdf
Directors' familiarization program Details of Company's familiarization program for its new directors including independent directors. http://www.oracle.com/us/ industries/financial-services/financial- familarization-program-2547373.pdf
Corporate social responsibility policy This policy governs corporate social responsibility program of the Company and covers details of CSR activities that it can undertake and how to implement monitor and report on these activities. http://www.oracle.com/us/industries/ financial-services/ofss-social- responsibility-2437852.pdf

Related party transactions

All related party transactions entered into during the financial year 2018-19 were atan arm's length basis and in the ordinary course of business. Form AOC-2 providing thedetails of related party transactions of the Company is annexed to this report as Annexure2.

Risk management

The Company's principles and processes have been established by Risk Management Policywith regard to identification analysis and management of applicable risks. The Board ofDirectors of the Company has formed a Risk Management Committee to frame implement andmonitor the risk management plan for the Company and ensuring its effectiveness. The AuditCommittee has additional oversight in the area of financial risks and controls. The majorrisks identified by the businesses and functions are systematically addressed throughmitigating actions on a continuing basis.

Board evaluation

In accordance with the requirements of the Section 178 of the Companies Act 2013 andRegulation 17(10) of the Listing Regulations the Chairperson of the Nomination andRemuneration Committee conducts the Board evaluation. The performance of the board and itscommittees was evaluated by seeking inputs from all the directors on the basis of variouscriteria such as its composition and structure effectiveness of processes / meetingsinformation sharing and functioning etc. The Board Evaluation Report for financial year2018-19 was tabled at the Board Meeting on May 9 2019.

Subsidiaries

Your Company has subsidiaries in Greece India Chile China Mauritius Singapore theNetherlands and the United States of America. Pursuant to provisions of Section 129(3) ofthe Companies Act 2013 a statement containing salient features of the financialstatements of the Company's subsidiaries in Form AOC-1 is attached to the financialstatements of the Company.

On May 9 2019 the Board of Directors of the Company approved restructuring ofownership of its Indian step down subsidiaries for acquiring majority stake in MantasIndia Private Limited and Oracle (OFSS) BPO Services Limited.

Pursuant to the provisions of Section 136 of the Companies Act 2013 the standaloneand consolidated financial statements of the Company and separate annual accounts of itssubsidiaries are available on the website of the Company at www.oracle.com/financialservices

Research and development

Your Company continuously makes significant investments in research and development(R&D) to develop solutions that the global banking industry needs today and will needtomorrow. Your Company's dedicated in-house R&D centers have produced a number ofproducts that are used by banks in more than 150 countries around the world for runningtheir critical operations. The investment your Company makes in building applicationscoupled with access to Oracle's technology provides a unique competitive edge to itsofferings.

Five in-house R&D centers in India of your Company have been accorded recognitionby the Department of Scientificand Industrial Research (DSIR) from February 26 2016. Theaggregate expenditure on research and development activities in these in-house R&Dcenters is as follows:

(Amounts in Rs. million)
Particulars Year ended March 31 2019 Year ended March 31 2018
Revenue Expenditure 2081.89 2058.24
Capital Expenditure 519.36 82.06

Fixed deposits

During the financial year 2018-19 the Company has not accepted any fixed depositswithin the meaning of Rule 2(c) of the Companies (Acceptance of Deposits) Rules 2014 andas such no amount of principal or interest was outstanding as of the date of the BalanceSheet.

Corporate governance

The Company has taken appropriate steps and measures to comply with all the corporategovernance regulations and related requirements as envisaged under Regulation 27 of theListing Regulations. A separate report on Corporate Governance along with a certificatefrom Mr. Prashant Diwan Practicing Company Secretary with regard to compliance ofconditions of Corporate Governance as stipulated in Regulation 34(3) of the ListingRegulations forms part of this Annual Report.

A certificate from Mr. Prashant Diwan Practicing Company Secretary has also beenreceived stating that none of the Directors on the board of the Company have been debarredor disqualified from being appointed or continuing as directors of companies by the SEBIMinistry of Corporate Affairs (MCA) or any such statutory authority.

Statutory Auditors' report

There are no qualifications reservations adverse remarks or disclaimers in theStatutory Auditors' report.

As mentioned in Para 4 of the Independent Auditors Report dated May 9 2019 attached tothe Financial Statements of the Company for the year ended March 31 2019 the StatutoryAuditors are required to report any material misstatements in ‘other information' inthe Annual Report. The ‘other information' was made available to the statutoryauditors by the Company after the date of adoption of financial statements on May 9 2019by the Board of Directors. The Statutory Auditors have communicated that they have readthe ‘other information' included in the Annual Report and that there is no materialmisstatement therein.

With regard to the Statutory Auditors' comment in the CARO report concerning delays inpayment of foreign taxes the Company has no outstanding demand or claim from anyauthority in this respect. The Company however evaluates potential material taxliabilities and records provisions accordingly. The said liabilities are regularlymonitored.

Secretarial audit report

In terms of Section 204 of the Companies Act 2013 and the Rules made thereunder theBoard has appointed Mr. Prashant Diwan Practicing Company Secretary as SecretarialAuditor of the Company for the financial year 2018-19. The Secretarial Audit report isannexed to this report as Annexure 3. This report does not contain any qualificationreservation or adverse remark.

Business responsibility report

Business Responsibility Report for the financial year 2018-19 that forms part of thisAnnual Report has been hosted on the website of the Company atwww.oracle.com/financialservices . The Members who wish to obtain a printed copy of thereport may write to the Company Secretary at the Registered Office of the Company.

Employee Stock Option Plan ("ESOP")

The Members at their Annual General Meeting held on August 14 2001 approved grant ofESOPs to the employees / directors of the Company and its subsidiaries up to 7.5% of theissued and paid-up capital of the Company from time to time. This said limit was enhancedand approved up to 12.5% of the issued and paid-up capital of the Company from time totime by the Members at their Annual General Meeting held on August 18 2011. Thisextended limit is an all-inclusive limit applicable to the stock options("options") granted in the past and in force and those that will be granted bythe Company under this authorization.

Pursuant to ESOP scheme approved by the Members of the Company on August 14 2001 theBoard of Directors on March 4 2002 approved the Employees Stock Option Scheme("Scheme 2002") for issue of 4753600 options to the employees and directors ofthe Company and its subsidiaries. According to the Scheme 2002 the Company has granted4548920 options prior to the Initial Public Offering (IPO) and 619000 options atvarious dates after the IPO (including the grants of options out of options forfeitedearlier). On August 25 2010 the Board of Directors approved the Employees Stock OptionPlan 2010 Scheme ("Scheme 2010") for issue of 618000 options to the employeesand directors of the Company and its subsidiaries. According to the Scheme 2010 theCompany has granted 638000 options (including the grants of options out of optionsforfeited earlier).

Pursuant to ESOP scheme approved by the Members of the Company in their meeting held onAugust 18 2011 the Board of Directors approved the Employees Stock Option Plan 2011Scheme ("Scheme 2011"). Accordingly the Company has granted 1950500 optionsunder the Scheme 2011. Nomination and Remuneration Committee in their meeting held onAugust 7 2014 approved Oracle Financial Services Software Limited Stock Plan 2014("OFSS Stock Plan 2014"). This plan enables issue of deeply discounted optionsat the face value and referred to as OFSS Stock Units ("OSUs") for convenience.Accordingly the Company granted 178245 Stock Options and 712203 OFSS Stock Units("OSUs") under OFSS Stock Plan 2014. The issuance terms of OSUs are the same asfor Stock Options employees may elect to receive 1 OSU in lieu of 4 awarded Stock Optionsat their respective exercise price.

As per the Scheme 2002 Scheme 2010 and Scheme 2011 each of 20% of the total optionsgranted will vest on completion of 12 24 36 48 and 60 months from the date ofgrant and is subject to continued employment of the employee or directorship of thedirector with the Company or its subsidiaries. Options have an exercise period of 10 yearsfrom the date of grant. The employee pays the exercise price upon exercise of options.

In respect of the OFSS Stock Plan 2014 each of 25% of the total stock options / OSUsgranted will vest on completion of 12 24 36 and 48 months from the date of grantand is subject to continued employment of the employee with the Company or itssubsidiaries. Options / OSUs have an exercise period of 10 years from the date of grant.The employee pays the exercise price upon exercise of options / OSUs.

All the above mentioned Schemes of the Company are in compliance with SEBI (Share BasedEmployee Benefits) Regulations 2014. Applicable disclosures relating to Employees StockOptions Schemes pursuant to SEBI (Share Based Employee Benefits) Regulations 2014 areplaced on the website of the Company at www.oracle.com/financialservices The details ofthe options / OSUs granted under the Scheme 2002 Scheme 2010 Scheme 2011 and OFSS StockPlan 2014 to eligible employees / directors from time to time are given below:

Particulars Scheme 2002 Scheme 2010 Scheme 2011 OFSS Stock Plan 2014 OFSS Stock Plan 2014 (OSUs) Total

(Stock Options)

Pricing Formula

At the market price as on the date of grant

Rs. 5
Variation of terms of Option / OSUs None None None None None
Number of options / OSUs granted till March 31 2019 5167920 638000 1950500 178245 712203 8646868
Number of options / OSUs lapsed and forfeited (620725) (283332) (453630) (32358) (68909) (1458954)
Number of options / OSUs exercised (4547195) (317603) (1114646) (8792) (225817) (6214053)
Total number of Options in force as on March 31 2019 37065 382224 137095 417477 973861

The details of options / OSUs granted to Directors and Senior Managerial Personnelunder OFSS Stock Plan 2014 during the financial year ended March 31 2019 are as follows:

Particulars Number of Stock Options Number of OSUs
i. Director:
Mr. Chaitanya Kamat 22500
ii. Senior Managerial Personnel:
Mr. Arvind Gulhati 4750
Mr. Avadhut Ketkar 1600
Ms. Bindu Venkatesh 2125
Mr. Dinakar K Kini 150
Mr. Edwin Moses 1750
Mr. Mahesh Rao 1750
Mr. Makarand Padalkar 8750
Mr. Onkarnath Banerjee 500
Mr. Prajakt Deshpande 300
Mr. Rajaram Vadapandeshwara 750
Mr. Sanjay Bajaj 250
Mr. Surendra Shukla 1000 250
Mr. Vikram Gupta 4750
Mr. Vinayak Hampihallikar 2500 625
iii. Any other employee who receives grant in any one year of Option / OSUs amounting to 5% or more of Option / OSUs granted during the year Nil
iv. Identifiedemployees who were granted options / OSUs during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil
v. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard (Ind AS) 33 ‘Earnings Per Share' Rs. 149.01

All stock options were granted at market price on the date of grant and OSUs weregranted at the face value of the equity shares. The compensation cost arising on accountof stock options and OSUs is calculated using the fair value method. The reported profitis after considering the cost of employee stock compensation (Rs. 488.71 million) usingfair value method on stock options / OSUs. A summary of the activities in the Company'sScheme 2010 and Scheme 2011 for the year ended March 31 2019 are as follows:

Particulars

Scheme 2010

Scheme 2011

Shares arising from Options Weighted average exercise price (Rs. ) Shares arising from Options Weighted average exercise price (Rs. )
Outstanding at the beginning of the year 41485 2050 635882 2966
Granted
Exercised (3120) 2050 (241558) 3034
Forfeited (1300) 2050 (12100) 2949
Outstanding at the end of the year 37065 2050 382224 2924
Vested Options 37065 382224
Unvested Options
Options vested during the year 93450
Options forfeited / lapsed during the year 1300 12100

A summary of the activities in the Company's OFSS Stock Plan 2014 for the year endedMarch 31 2019 are as follows:

Particulars Shares arising from OSUs Weighted average exercise price (Rs. ) Shares arising from Options Weighted average exercise price (Rs. )
Outstanding at the beginning of the year 422298 5 138371 3481
Granted 125219 5 12450 4158
Exercised (114070) 5 (3506) 3293
Forfeited (15970) 5 (10220) 3611
Outstanding at the end of the year 417477 5 137095 3537
Vested OSUs / Options 104601 87853
Unvested OSUs / Options 312876 49242
Options vested during the year 128263 33590
Options forfeited / lapsed during the year 15970 10220

The weighted average share price for the year over which stock options / OSUs wereexercised was Rs. 3960. Money realized by exercise of options / OSUs during the financialyear 2018-19 was Rs. 751.34 million. The Company has recovered perquisite tax on theoptions / OSUs exercised by the employees during the year. The weighted average fair valueof stock options and OSUs granted during the year was Rs. 991 and Rs. 4154 respectivelycalculated as per the Black Scholes valuation model as stated in 26 (b) in the notes toaccounts of the unconsolidated financials.

The details of Options unvested and Options vested and exercisable as on March 31 2019are as follows:

Exercise prices (Rs. ) Number of options / OSUs Weighted average exercise price (Rs. ) Weighted average remaining contractual life (Years)
Options /OSUs unvested 5 312876 5 8.3
3393 25100 3393 7.2
3579 6450 3579 8.2
3987 6792 3987 6.6
4158 10900 4158 9.2
Options /OSUs vested and exercisable 5 104601 5 6.6
1930 57541 1930 2.7
2050 37065 2050 1.4
3077 176683 3077 4.5
3127 148000 3127 3.8
3241 41578 3241 6.0
3393 23712 3393 7.2
3579 2155 3579 8.2
3987 20408 3987 6.6
973861 1726 5.9

Employee Stock Purchase Scheme ("ESPS")

The Company had adopted the ESPS administered through a Trust with the name i-flexEmployee Stock Option Trust ("the Trust") to provide equity based incentives tokey employees of the Company. i-flex Solutions Trustee Company Limited is the sole Trusteeof this Trust.

No allocation of shares to the employees have been made through the Trust since 2005and all selected employees under the Trust have exercised their right of purchase ofshares prior to March 31 2014. In this regard i-flex Solutions Trustee Company Limitedhad filed a petition in the Hon'ble Bombay High Court to seek directions for utilizationof the remaining unallocated shares along with the other assets held by the Trust for thebenefit of the employees of the Company. As per the order of the Hon'ble Bombay High Courtdated August 1 2016 the trust funds would be utilized for the benefit of the employees.

As at March 31 2019 27160 equity shares of the Company were held by the Trust (March31 2018 - 70600 equity shares).

Human resources

Human Resources are key assets of your Company and your Company invests continuously inimparting latest technology skills together with a range of soft skills to help them excelin their roles. Your Company has a strong performance management system together with aformal talent management processes to nurture employee careers groom future leaders andcreate a high performance workforce.

Your Company's total employees at the end of March 31 2019 were 8054 (March 31 2018- 8818) including employees of subsidiaries.

The Company is committed to provide a healthy environment to all its employees and thusdoes not tolerate any discrimination and / or harassment in any form. The Company has inplace a Prevention of Sexual Harassment (POSH) policy in line with the requirements of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.Frequent communication of this policy is done through various programs and at regularintervals. The Company has setup an Internal Complaints Committees (ICC) both at theregistered office and at every location where it operates in India which have men andwomen committee members as per the regulations are chaired by senior woman employees andhave external women representation. The details of complaints pertaining to sexualharassment that were filed disposed of and pending during the financial year are providedin the Corporate Governance report which is a part of this Annual Report.

Corporate social responsibility

Pursuant to Rule 8 of Companies (Corporate Social Responsibility) Rules 2014 annualreport on the CSR activities for the financial year ended March 31 2019 is annexed asAnnexure 4 to this report.

Internal financial controls

The Board has adopted adequate policies and procedures in terms of Internal FinancialControls commensurate with the size scale and complexity of the Company's operations.Such policies and procedures ensure orderly and efficient conduct of business adherenceto the Company's policies safeguarding of its assets prevention and detection of fraudsand errors accuracy and completeness of the accounting records and timely preparation ofreliable financial information.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internalcontrol system of the Company its compliance with risk management system accountingprocedures and policies at all locations of the Company and its subsidiaries. The InternalAudit team reports to the Audit Committee.

Directors' responsibility statement

As required under clause (c) of sub-section 3 of Section 134 of the Companies Act2013 for the financial year ended on March 31 2019 the Directors hereby confirm that:a. in the preparation of the annual accounts the applicable accounting standards had beenfollowed along with proper explanation relating to material departures; b. the directorshad selected such accounting policies and applied them consistently and made judgments andestimates that are 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 of the company for thatperiod; and theprofit c. the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; d. the directors had prepared the annual accounts on a going concernbasis; e. the directors had laid down internal financial controls followed by the Companyand that such internal financial controls are adequate and were operating effectively; andf. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

Auditors

The Members of the Company have appointed M/s. Mukund M. Chitale & Co. CharteredAccountants (ICAI Firm Registration No. 106655W) as the Statutory Auditors of theCompany till the conclusion of the 33rd Annual General Meeting to be held in the year2022.

Reporting of frauds by Auditors

During the year under review neither the Statutory Auditors nor the SecretarialAuditor has reported to the audit committee under Section 143(12) of the Companies Act2013 any instances of fraud committed against the Company by its officers or employees.

Cost records and cost audit

Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable for thebusiness activities carried out by the Company.

Material changes and commitments

There have been no material changes and commitments which affect the financial positionof the Company which have occurred between the end of the financial year to which thefinancial statements relate and the date of this report.

Conservation of energy technology absorption and foreign exchange earnings and outgo

The particulars as prescribed under sub-section (3)(m) of Section 134 of the CompaniesAct 2013 the relevant data pertaining to conservation of energy technology absorptionand foreign exchange earnings and outgo are furnished hereunder:

Conservation of energy

The Company strives to conserve energy and use energy efficient computers andillumination systems. The Company also deploys sophisticated office automation andmanagement equipment which optimizes energy consumption. During the year the Companycompleted the projects to install photovoltaic solar panels at its campuses in Mumbai andPune in an effort to increase the use of renewable energy. As part of an initiative tosupport Oracle's global sustainability goal of reducing waste to landfill compost machinehas been installed at the Mumbai office with excess manure provided to NGO ‘GreenYatra' where waste is used for tree plantation projects. Green Yatra also recognized theCompany with a certificate of appreciation for contributions to increasing local greencover.

Technology absorption

The Company regularly strives to utilize newer technologies with a view to conserve theenergy and create an environmentally friendly work environment. The initiatives taken bythe Company are summarized below: Network: Efficient networks are essential to support ourglobal business and the Company continues to invest in upgrades and modernization of thenetworks thereby increase uptime of the network infrastructure increase capacity andenable greater collaboration. Your Company has made significant changes in the Wi-Fienvironment across the organization migrating to a faster more secure next generationwireless network. Not only it is more secure but it is also two to four times faster onaverage than the previously used network. This also provides easy access to the internetfor employees as well as guests based on their respective access requirement. In line withthis initiative technology refresh of the Wi-Fi infrastructure and access points was alsocompleted. This high performance Wi-Fi with increased density of access points willeventually bring down the need for wired ports which would correspondingly lead tosignificant energy and cost savings. There has also been significant investment intosecuring the network infrastructure to provide a secure computing environment for ouremployees and customers.

Cloud migration: Your Company is working towards migrating infrastructure to the nextgeneration cloud platform. All corporate applications will be hosted on the Oracle nextgeneration cloud. This move significantly reduces infrastructure costs as well as reducesspace and power utilization across the globe. This migration has been initiated and willspan across a couple of years. Datacenter consolidation the next logical consequence ofcloud migration is also in progress keeping in mind the reducing need for physicaldatacenters and increasing demand for flexible infrastructure utilization.

Business Resiliency: Resiliency is the key to effective management of operations andyour Company has successfully implemented disaster recovery initiatives for criticalinfrastructure services ensuring a balance between tolerance to downtime and effectivetechnology investments. The cloud migration initiative is also instrumental in planningeffective resiliency requirements for critical infrastructure.

Virtual presence: Your Company has made significant investments in providing a nearvirtual working environment to its employees. Multifunctional and multiple methods ofcollaboration across geographies has enhanced business operations. This enhancescommunication across the globe minimizing travel increasing efficiencies from a supportperspective as well by making self-service operations easier and effective.

All these initiatives would provide a more secure and efficient operating environmentwith the utilization of innovative technology.

Foreign exchange earnings and outgo:

(Amounts in Rs. million)
Foreign exchange earnings 32845.50
Foreign exchange outgo (including capital goods and other expenditure) 2662.04
Net equity dividend remitted in foreign exchange 8196.66

Activities relating to exports; initiatives taken to increase exports; development ofnew export markets for products and services; and export plans: Your Company hasestablished an extensive global presence across leading markets through its sales andmarketing network. The Company will continue to focus on tapping various potential marketsavailable globally. Experienced sales and marketing specialists focus on building stronginternational business presence to develop new export markets for your Company.

Prospects

A rapid evolution of technologies rise of consumer forces and the increasing scopeand speed of regulations is driving a fundamental transformation in the financial servicesindustry.

Financial institutions are investing in newer technologies to create insightful andcontext aware solutions for the digitally savvy customers. Institutions are deployinganalytical tools that deliver insights in customer behavior combined with a powerfuldigital engagement platform to gain an edge over their competition. FinTechs offeringniche solutions are becoming an important partner in banks' strategies and thereforeopen banking technology that can easily co-exist with the FinTech world is a priority areafor the banks.

Regulatory compliance is a major focus area for the financialinstitutions and requiresextensive usage of big-data and data analytics to effectively meet evolving compliancerequirements.

Increasing complexity of the markets has changed the banking needs of corporates.Corporate customers need innovation in the areas of credit liquidity cash managementtrade finance and payments. Banks are in need of solutions that improveefficiencycentralize processing provide real-time data and reduce operating costs. Payments isanother field where speed of innovation is creating new opportunities in the areas ofnewer channels reduced cost of transaction and speed and reliability of the service.Your Company's commitment to innovation is a driving factor that keeps it in the forefrontof the information technology industry. Our continuous planned investments in research anddevelopment and unwavering focus on excellence allow us to evolve with the industry andhelp our customers reach their goals. Our products and solutions are designed to helpfinancial institutions drive transformation initiatives harness the potential ofdisruptive technologies and successfully manage regulatory demands.

Statement on compliance of applicable Secretarial Standards

The Company complies with all applicable mandatory provisions of Secretarial Standardsissued by the Institute of Company Secretaries of India.

Employee particulars

The information required under Section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) AmendmentRules 2016 is given below: For statistically relevant computation of median value ofemployee remuneration employees who have served the entire 12 months in the correspondingfiscal year were considered. The expression "median" means the numerical valueseparating the higher half of a population from the lower half and the median of a finitelist of numbers is found by arranging all the observations from lowest value to highestvalue and picking the middle one; and if there is an even number of observations themedian is the average of the two middle values. The remuneration used for the analysis inthis section includes the details of employees and only of those Directors to whom theremuneration has been paid by the Company and excludes remuneration of the employees ofoverseas branches and the (perquisite) value of the difference between the fair marketvalue and the exercise price on the date of exercise of options to make the comparisonsrelevant.

(i) Ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Name of the Director Ratio to median remuneration
Non-Executive Independent Directors
Mr. S Venkatachalam 3
Mr. Richard Jackson 3
Mr. Sridhar Srinivasan 2
Ms. Jane Murphy Not Applicable
Executive Director
Mr. Chaitanya Kamat* 28

* Excludes the (perquisite) value towards difference between the fair market value andthe exercise price on the date of exercise of options.

(ii) The percentage increase in remuneration of each director chief executive officerchief financial officer and company secretary in the financial year:

Name and Title Percentage increase / (decrease) of remuneration in FY 2019 as compared to FY 2018
Non-Executive Independent Directors*
Mr. S Venkatachalam 35%
Mr. Richard Jackson 41%
Mr. Sridhar Srinivasan 41%
Ms. Jane Murphy Not Applicable
Managing Director and Chief Executive Officer#
Mr. Chaitanya Kamat (3%)
Key Managerial Personnel#
Mr. Makarand Padalkar Chief Financial Officer 1%
Mr. Onkarnath Banerjee Company Secretary 4%

# Excludes the (perquisite) value towards difference between the fair marketvalue on the date of exercise of options and the exercise price.

(iii) The percentage increase in the Median Remuneration of Employees in fiscal 2019 ascompared to fiscal 2018:

6%.

(iv) The number of permanent employees on the rolls of the Company:

6503 as on March 31 2019.

(v) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

During the financial year 2018-19 the average remuneration of employees other than thekey managerial personnel increased by 5% over the previous year. During the same periodaverage remuneration of the key managerial personnel decreased by 1%.

(vi) Affirmation that the remuneration is as per the remuneration policy of theCompany:

The remuneration is as per the remuneration policy of the Company.

The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Amendment Rules 2016 is provided in a separateannexure forming part of this report. Further the report and the accounts are being sentto the Members excluding the aforesaid annexure. In terms of Section 136 of the CompaniesAct 2013 the said annexure is open for inspection at the Registered Office of theCompany. Any Member interested in obtaining a copy of the same may write to the CompanySecretary.

Awards and recognition

Your Company was awarded the Financial Express CFO Award 2019 in the category of LargeEnterprises Services Industry. The Company was named ‘Leader' in IDC's WorldwideEnd-to-End Corporate Banking Solution Providers 2019 Vendor Assessment report. It was alsonamed ‘Category Leader' for Data Integrity and Control (DI&C) on Chartis' FinTechQuadrant for DI&C solutions in Financial Services.

Acknowledgements

The Directors place on record their appreciation for the excellent contributions madeby the employees of the Company through their commitment co-operation and diligence. TheDirectors gratefully acknowledge the continued support received by the Company from itsstakeholders customers members vendors and bankers during the year. The Directors alsowish to thank the Government of India and the State Governments in the jurisdictions itoperates and their various agencies and departments.

For and on behalf of the Board

S Venkatachalam

Chairperson

DIN: 00257819

June 20 2019


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