To the Members
We are presenting herewith the report on our business and operations for the yearended March 31 2016.
1. Financial Highlights for the year ended March 31 2016:
| ||Consolidated ||Standalone |
|Rs. in Mn ||March 31 2016 ||March 31 2015 ||March 31 2016 ||March 31 2015 |
|Total Revenue ||2706 ||2159 ||2693 ||2159 |
|Employee benefits expense ||1676 ||1361 ||1061 ||812 |
|Depreciation and amortization expense ||40 ||52 ||40 ||52 |
|General administrative and other expenses ||425 ||410 ||1091 ||998 |
|Finance cost ||3 ||16 ||2 ||16 |
|Total expenses ||2144 ||1839 ||2194 ||1878 |
|Profits Before Taxes ||562 ||320 ||499 ||281 |
|Taxes ||193 ||104 ||180 ||96 |
|Profit After Tax ||369 ||216 ||319 ||185 |
|Earnings per Equity share (Par value of Rs.10 each) || || || || |
|Basic (Rs.) ||34.85 ||20.86 ||30.09 ||17.81 |
|Diluted (Rs.) ||34.62 ||20.57 ||29.90 ||17.56 |
2. Business and Operations Review:
Total Operating Revenues increased in Rupee terms by 23% to Rs.2641.62 Mn during theFinancial Year 2015-16 from Rs.2141.55 Mn in the previous year. In US dollar termsrevenues increased by 15%.
During the year repeat business from existing clients accounted for 82% ofrevenues down from 91% of the previous year. New client acquisition contributed 18% ofrevenues. New business is expected to grow as synergies within the SQS Group feed throughthe sales pipeline.
Profit after tax was at Rs.319 Mn (representing 12% of revenues) as againstRs.185 Mn (9% of the revenues) for the previous year. Currency fluctuations resulted in again for the year of Rs.43 Mn compared to a loss of Rs.37 Mn in the previous year.
Geographically 50.98% of revenues came from Europe (previous year 46.24%)33.30% from India Middle East Asia and Australia Regions (previous year 31.58%) 15.72%from America (previous year 22.18%). The proportion of onsite to offshore revenues stoodat 61.76% / 38.24% compared to 55.34% / 44.66% in the previous year. This isreflected in the increase of 38% onsite revenue from Rs.1185.21 Mn to Rs.1631.41 Mnduring the year under review.
Employee expenses increased due to higher onsite deployments with onsite revenueincreasing to 62% of the total Revenue (previous year 55%).
Employee strength as at March 31 2016 for the standalone entity was 939(consolidated 1076) compared to 767 (consolidated 907) in the previous year. Womenemployees standalone count stood at 288 (31% of the total) compared to 221 (29%) in theprevious year. For the consolidated group women employees stood at 309 (29%) compared to250 (28%) in the previous year. The attrition rate increased to 21% for the year endedMarch 31 2016 compare to 17% in the previous year.
3. Capital Expenditure:
During the year Rs.45.26 Mn of capital expenditure was added to a gross blockcomprising of Rs.20.73 Mn on technology infrastructure Rs.3.89 Mn on physicalinfrastructure Rs.0.09 Mn on Vehicles and Rs.20.55 Mn addition on intangible assets whichincludes in-house developed software of Rs.15.81 Mn.
4. Expansion Plan:
To expand the Company has taken a lease on 23000 Sq. ft. of additional space withinthe building campus of Prince Info City Chennai and is currently working on the creationof a 250 seat facility. This additional capacity at a cost of Rs.90 Mn will be astate-of-the-art facility and will be operational from July 2016. The additional capacitywill help the Company to meet growing opportunities for offshore business. This will bethe fourth offshore delivery center in India for BFSI.
5. Enhancing automation in Test Process:
The Company developed a tool called FaXimm a financial transaction simulator thataids issuers acquirer and network providers to carry out financial transaction testingwithout requiring a direct physical connection with live production environment. Itenhances automation in test process. FaXimm has been developed to work in a hosted/cloudenvironment. The scoping and evaluation was performed and the development of the tool wascommenced during 2014. During the last two years the Company has been testing/pilotingthe tool. The development was completed during the fourth quarter ended in March 2016 andis ready for deployment.
Development Spend & Amortization: The Company has so far spent an amount ofRs.15.81 Mn in terms of development efforts and related consulting over the last twoyears. Now as the development work is complete the development spend is beingcapitalized in the books of Accounts on March 31 2016. The tool cost will be amortizedas per the Accounting standards and the policy of the Company over the useful life of thetool during the next three years.
Revenues: The Company has successfully demonstrated the framework to five of ourClients and also received very positive feedback about the marketability of the product.Clients suggestions for additional features are considered to meet the changingbusiness needs. The Company as such is confident of making progress in marketing the toolto its existing and prospective clients.
The Company has repaid its Loan commitments in advance and became a debt free Companyat the year end. The Company continues to maintain sufficient cash balance to meet itsstrategic objectives. The liquid assets at the end of the year stood at Rs.893.00 Mn (asagainst Rs.1034.72 Mn previous year). The Year-end Account Receivables improved to 76days sales (Rs.347.60 Mn) as against 94 days sales (Rs.549.81 Mn) in the previous year.
7. Share Capital:
As at the end of the financial year the Companys Equity Share Capital stands atRs.106.39 Mn consisting of 10638749 fully paid up Equity Shares of Rs.10 each. Theexercise of employee share options granted under Thinksoft ESOP Scheme 2011 resulted inthe allocation of 93450 equity shares during the Financial Year 2015-16 to employees. Asa result the paid-up share capital of the Company increased from Rs.105.45 Mn toRs.106.39 Mn. The disclosure in compliance of Rule 12 of Companies (Share Capital andDebentures) Rules 2014 is attached to this report as Annexure I.
8. Net Worth:
The net worth of the Company increased to Rs.870.53 Mn as at March 31 2016 fromRs.848.56 Mn at the end of the previous year. This works out to a per share net worth ofRs.81.83.
9. Transfer to General Reserve:
During the financial year the Company has transferred Rs.31.9 Mn (previous yearRs.18.48 Mn) to General Reserve which represents 10% of the net profits of the Company.As a result the total amount of General Reserve as on March 31 2016 was Rs.131.39 Mn(Rs.99.49 Mn as at the end of the previous year).
Based on the Companys performance and the Net Cash Position of the Company theBoard of Directors is pleased to recommend a final Dividend of Rs.20/- per share (200% onface value of Rs.10/- each) for the financial year 2015-16. The Board had also declared aninterim dividend of Rs.4/- per equity share (40% on face value of Rs.10/- each) onNovember 05 2015.
The Final Dividend if approved by the Shareholders in the General Meeting wouldresult in a total dividend of Rs.24/- per equity share (240% on face value of Rs.10/-each) for the financial year ended March 31 2016. (Previous year 240% on face value ofRs.10/- each i.e. Rs.24/- per equity share).
The Company operates internationally through five wholly owned subsidiaries:
a) SQS BFSI Pte. Ltd (formerly Thinksoft Global Services Pte. Ltd.) Singapore
b) SQS BFSI Inc. (formerly Thinksoft Global Services Inc.) USA
c) SQS BFSI UK Ltd (formerly Thinksoft Global Services UK Ltd.) UK
d) SQS BFSI FZE (formerly Thinksoft Global Services FZE.) UAE
e) Thinksoft Global Services (Europe) GmbH Germany (being wound up)
The Company has initiated action towards voluntary winding up of the German Subsidiary.With a view to harmonize the operations in UK region the Companys branch office inUK is closed with effect from July 31 2015 and our wholly owned subsidiary SQS BFSI UKLimited continues to operate as usual to meet the business requirements. The Company alsohas branches / place of business in Belgium Malaysia Australia and Hong Kong.
Financial Statement of Subsidiaries:
A separate section on the salient features of the financial statements of subsidiariesas prescribed under Section 129(3) of the Companies Act 2013 read with Rule 5 ofCompanies (Accounts) Rules 2014 can be found in Annexure II.
The Audited Annual Accounts and related information of subsidiaries whereverapplicable will be made available to shareholders upon request and will also be availablefor inspection during normal business hours at the registered office of the Company. TheAudited Accounts shall also be available at the website of the Company.
12. Annual Return:
The extracts of the current Annual Return for the present financial year as prescribedunder Section 92(3) of the Companies Act 2013 read with Rule 12 of Companies (Managementand Administration) Rules 2014 is attached to this report as Annexure III.
13. Number of meetings of the Board:
Five Board Meetings were held during the year. The dates on which the said meetingswere held are as follows: April 23 2015 May 18 2015 July 23 2015 November 05 2015and January 28 2016. The details of the same are given in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Companies Act 2013.
14. Corporate Governance and Management Discussion Analysis Report:
A separate section on Corporate Governance forming part of the Directors Reportand the certificate from the Companys auditors confirming compliance with CorporateGovernance norms as stipulated in the erstwhile Clause 49 of the Listing Agreement enteredinto with National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited(BSE) and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 areincluded in the Annual Report. The Company has taken adequate steps for strict compliancewith the Corporate Governance guidelines as amended from time to time.
A separate Management Discussion and Analysis Report is also attached and forms part ofthis report.
15. Declaration given by Independent Directors:
All the Independent Directors of the Company have given their declaration under Section149(7) of the Companies Act 2013 confirming that they are in compliance with the criteriaof independence as laid down in Section 149(6) of the Companies Act 2013 for being anIndependent Director of the Company.
16. Policy on Directors Appointment and Remuneration:
The Policy of the Company on Directors appointment and Remuneration includingcriteria for determining Qualifications Positive attributes independence of a Directorand other matters as required under Section 178 (3) of the Companies Act 2013 isavailable. There has been no change in the policy since the last financial year. Thedetails of the Remuneration Policy is covered in the Corporate Governance Report.
17. Particulars of loans guarantees or investments:
The Company has not given any loan to any person or other body corporate given anyguarantee or provided security in connection with a loan to any other body corporate orperson or acquired by way of subscription purchase or otherwise the securities of anyother body corporate. As specified under Section 186 of the Companies Act 2013 theCompany has the following investments in its Wholly Owned Subsidiaries:
|Particulars ||March 31 2016 ||March 31 2015 |
|Unquoted equity instruments (in subsidiaries) ||Rs. ||Rs. |
|100000 equity shares (Previous year - 100000 equity shares) of SGD 1/- each in SQS BFSI Pte. Ltd (formerly Thinksoft Global Services Pte. Ltd.) Singapore ||2658023 ||2658023 |
|3000 equity shares (Previous year - 3000 equity shares) of USD 0.01/- each in SQS BFSI Inc. (formerly Thinksoft Global Services Inc.) USA ||4625400 ||4625400 |
|EUR 50000/- (Previous year - EUR 50000) in Thinksoft Global (Europe) GmbH Germany ||2714774 ||2714774 |
|350000 equity shares (Previous year - 350000 equity shares) of GBP 1/- each in SQS BFSI UK Ltd (formerly Thinksoft Global Services UK Ltd.) UK ||24168000 ||24168000 |
|24 equity shares (Previous year - 24 equity shares) of AED 25000/- each in SQS BFSI FZE (formerly Thinksoft Global Services FZE.) UAE ||8696000 ||8696000 |
18. Particulars of contracts or arrangements with related parties:
During the year 2015-16 the contracts and arrangements entered by the Company withrelated parties were on an "arms length" basis and in the ordinary courseof business. The contracts and transactions with the promoters M/s.SQS Software QualitySystems AG along with its subsidiaries has exceeded the threshold limit of 10% on theprevious year consolidated turnover of the Company. Hence the transactions with M/s.SQSSoftware Quality Systems AG and its subsidiaries have become "MaterialTransactions" as per SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. A transaction limit upto Rs.975 Mn per annum for providing services hasbeen approved by the Shareholders in the Annual General Meeting of the Company held onJuly 23 2015. The aforesaid transactions falls within the limits approved by theMembers.There are no materially significant related party transactions made by the Companywith Directors Key Managerial Personnel or other designated persons which may have apotential conflict with the interests of the Company at large. All Related PartyTransactions are placed before the Audit Committee and the Board of Directors for theirapproval.
In respect of transaction with the wholly Owned Subsidiaries prior omnibus approval ofthe Audit Committee is obtained on an annual basis which are foreseen and repetitive innature. The transactions entered into pursuant to the omnibus approval so granted aretracked and verified. A statement giving details of all related party transactions isplaced before the Audit Committee and the Board of Directors for their approval on aquarterly basis.
The policy on materiality of Related Party Transactions as approved by the Board isavailable on the Companys website. None of the Directors has any pecuniaryrelationships or transactions vis--vis the Company.
The details of contracts or arrangements with related parties entered during the yearare given in a separate annexure to the report in Annexure IV.
19. Material changes and commitments if any affecting the financial position of theCompany:
There are no material changes or commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report.
20. Transfer to Investor Education and Protection Fund:
As required under the provisions of Section 205A and 205C and other applicableprovisions of Companies Act 1956 (the corresponding provisions in the Companies Act 2013have not been notified and hence the earlier law is still applicable in respect of theseprovisions) the Company is required to transfer the dividends that remain unpaid/unclaimed for a period of seven years to an Investor Education and Protection Fund("IEPF") an account administered by the Central Government. On transfer of theamounts to IEPF no claim shall lie in respect of those amounts against the Company.During the financial year 2015-16 no unpaid or unclaimed dividend was transferred to theIEPF.
All Members who have so far not encashed their dividend warrant(s) or those yet toclaim their dividend amounts may write to the Company/Companys Registrar and ShareTransfer Agent Karvy Computershare Private Limited.
21. Conservation of energy research and development technology absorption foreignexchange earnings and outgo:
(A) Conservation of energy:
(i) The steps taken that impact on conservation of energy:
The Company continues its drive on going green and has initiated steps toconserve resources reduce its carbon footprint and create sustainable alternativeswherever feasible. The Companys current operations do not require high-energyconsumption and the Company continues its drive to adopt various measures to optimizeenergy usage.
The conservation steps include:
Conversion of all desktops to small form/ultra small form factor based to reducepower consumption
Managing business expansions without additional data centers.
Light Sensors to automatically switch off unwanted lights
Shutting down air conditioners on a budgeted hours basis.
Proposal to move towards LED lighting from current CFL.
Utilizing more Video conferencing (VC) to reduce travel costs and improve energysavings.
Continuing the disposal of e-waste generated in-house through vendors who adopt"Safe disposal practices" recycling and re-manufacture of printers toners andcartridges.
All these initiatives are taken forward at a sustained pace.
(ii) The steps taken by the Company for utilizing alternate sources of energy The Companys registered office is located in a tech park where in close to 50% ofthe energy consumed are being sourced from grid using Wind Turbines.
(iii) The capital investment on energy conservation equipment - Nil
(B) Research & Development and Technology absorption:
(i) The Company continues to focus on improving the technology for testautomation and services framework to improve its offering to the customers.
(ii) The Company developed a tool called FaXimm which enhances the automation inTest Process. This tool is basically a financial transaction simulator that aids issuersacquirer and network providers to rapidly test payment transactions in a simulatedenvironment. This in fact helps testing the software systems for messaging compliancewithout a physical connection in a live production environment. This has been developed towork in hosted/cloud environment allows multiple users and instances to be deployed. TheCompany is actively demonstrating the features with the prospective clients includingleading banks and card operators.
(iii) The Company has absorbed appropriate technology advancements in providing thebest services to its customers with a focus of providing the same without any majorfinancial implications to the organization. The Company has invested in infrastructurewhich is compliant and has been certified under established standards including SSAE 16ISAE 3402 and PCI-DSS.
(iv) The procurement system continuously ensures cost effective purchases of thehardware more through local vendors thereby reducing dependency on imports. Whererequired the Company also imports servers switches etc. reserving foreign currency fromout of its EEFC accounts.
(v) There are no imported technologies during the last three financial years.
(C) Foreign exchange earnings and outgo:
Foreign Exchange earned during the year in terms of actual inflows was Rs.2450 Mn.Foreign Exchange outgoings during the year in terms of actual outflows was Rs.1081 Mn.
22. Risk Management:
Risk Management at SQS BFSI is a comprehensively evolved process over the years andincludes the identification assessment monitoring and mitigation of various risks thatthe Company may face in its business. The Companys Enterprise Risk Managementapproach identifies major risk categories: Operations Industry Resources and Regulatoryenvironment. The Companys objective is to achieve a balance between acceptablelevels of risk and reward in effectively managing its Operational Financial Business andMarket risks.
Quarterly Internal Audits by an independent firm;
Regular Process Compliance audits for ISO 9001 and ISO 27001 standards; Periodicaudits of compliance to other regulatory frameworks;
Annual Capital and Revenue Budget Planning followed by monthly reviews; AnnualSales Planning with Monthly / Periodic Monitoring;
Annual Perspective and Strategic Planning exercise with yearly update; Aconservative approach in planning funding requirements.
The Company has developed over the last few years a comprehensive internal financialcontrol processes and procedures that could effectively mitigate the overallorganizational risks. These processes and controls form part of review verification andimprovement by our internal audit and process teams as detailed in the following section.
23. Adequacy of Internal Financial Controls:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain independence of the Internal Audit function theInternal Auditor reports to the Chairman of the Audit Committee of the Board.
The frame work for the Internal Finance Controls was made by:
Defining Controls Governance and Standards which includes Policies &Procedures Organizational Structures and Performance Objectives.
Establishing Control designs which includes Roles & Responsibilities RiskIdentification Capacity to deliver business objectives.
Evolving Controls including Control Systems and Improvements.
Compliance and Control Monitoring through internal resource or through Audit ora combination of both.
The Internal Audit Team along with the Process Team monitors and evaluates the efficacyand adequacy of internal control systems in the Company its compliance with operatingsystems accounting procedures and policies of the Company. Based on the report ofinternal audit corrective actions in the respective areas are undertaken and controlsstrengthened. Significant audit observations and responses / corrective actions thereonare presented to the Audit Committee of the Board.
During the year review of Internal Financial Control (IFC) has been made mandatory forthe statutory auditors the review of which has been carried out and report annexed aspart of Auditors Report.
24. Corporate Social Responsibility:
The essence of Companys policy on Corporate Social Responsibility (CSR) is tocontribute towards education supporting differently abled supporting clean and greenenvironment and sensitizing employees on their responsibility towards society andencouraging them to take active part in various Company initiatives.
The Company has been supporting Vidya Sagar (earlier known as The Spastics Society ofIndia) an NGO in Chennai providing support to needy children / people with disabilityfocusing on early intervention special education physiotherapy vocational trainingcommunication therapy etc. The Company makes periodical contributions by way of anendowment fund to ensure generation of certain fixed income to take care of theirday-to-day operational expenses over a period of time. Employees are encouraged tocontribute to Vidya Sagar and in support of this initiative the Company also contributesan amount equal to employees contribution to Vidya Sagar.
The Company has also contributed to an NGO World Vision India towards improvement ofsanitation facilities in a Government School in Erukampattu Village in Vellore District.
The details about the policy developed and implemented by the Company on corporatesocial responsibility and initiatives taken during the year are given as Annexure Vas required under Companies (Corporate Social Responsibility Policy) Rules 2014.
25. Composition of Audit Committee:
The Audit Committee of the Company has been constituted in line with the provisions ofSection 177 of Companies Act 2013 read with Regulation 18 of the SEBI (ListingObligations Disclosure Requirements) Regulations 2015.
The members of the Audit Committee are as follows:
1) Prof. K. Kumar Chairman
2) Prof. S. Rajagopalan Member
3) Mr. Rajiv Kuchhal Member
4) Mr. Ren Gawron M ember
26. Recommendation of Audit Committee:
During the year all the recommendations of the Audit Committee were accepted by theBoard.
27. Vigil mechanism:
The Company has formulated and adopted a vigil mechanism for employees to reportgenuine concerns to the Chairman of the Audit Committee. The Policy provides opportunitiesfor employees to access in good faith the Audit Committee if they observe unethical andimproper practices. The Whistle Blower Policy of the Company is available in the websiteof the Company. The link for the same ishttp://www.sqs-bfsi.com/investors/corporate-governance-policies.php
28. Directors Responsibility Statement as required under Section 134 (5) of theCompanies Act 2013:
Pursuant to Section 134 (5) of the Companies Act 2013 the Directors confirm that:
a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b. Accounting policies had been selected and applied consistently; made judgments andestimates that were reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit and loss ofthe Company for that period;
c. Proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act to safeguard the assets of theCompany to prevent and detect fraud and other irregularities;
d. Annual accounts were prepared on a going concern basis;
e. Adequate internal financial controls were followed by the Company and that suchinternal financial controls are adequate and these were operating effectively;
f. Proper systems to ensure compliance with the provisions of all applicable laws weredevised and such systems were adequate and operating effectively.
29. Board Evaluation:
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing ObligationsDisclosure Requirements) Regulations 2015 the Board of Directors of the Company hascompleted a formal evaluation of their performance and that of its Committees andindividual Directors.
The Independent Directors evaluated the performance of the Non-Executive DirectorsChairman and the Board at a meeting of Independent Directors held on March 04 2016. TheBoard of Directors in their meeting held on April 28 2016 evaluated the IndependentDirectors individually. No Director participated in his/her own evaluation.
Directors were evaluated on various criteria including attendance participation inBoard Meetings and the willingness and commitment to devote the extensive time necessaryto fulfill his/her duties.
The Independent Directors were also evaluated based on the professional conduct rolesand duties as specified in Schedule IV to the Companies Act 2013. The evaluation of theBoard as a whole was based on composition and statutory compliance understanding ofbusiness risks adherence to process and procedures; overseeing managementsprocedures for enforcing the organizations code of conduct ensuring that variouspolicies including the whistle blower policy of the Company were in force and actionswere taken as appropriate.
30. Criteria for making payment to Non-Executive Directors:
The Nomination and Remuneration Committee and the Board of Directors while decidingupon the payments to be made to the non-executive directors have considered the followingcriteria for making payments to non-executive directors:
Performance of the Company
Maintenance of independence & adherence to Corporate Governance
Contributions during the meeting and guidance to the Board on important policymatters of the Company
Active participation in strategic decision making and informal interaction withthe management
31. Familiarization Programs:
The Company has a familiarization program for Independent Directors pursuant toRegulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The aim of the familiarization program is to provide insights into theCompany to the Independent Directors to enable them to understand the Companysbusiness in depth and contribute significantly to the Company. The overview of thefamiliarization process and details of the familiarization programs imparted to theIndependent Directors have been updated in the Companys website athttp://www.sqs-bfsi.com/investors/corporate-governance-policies.php.
32. Policy for determining Material Subsidiaries:
Pursuant to Regulation 16(1)(c) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a policy for determining material subsidiaries has beenformulated by the Company. The same is dealt with elsewhere in the Annual Report.
33. Particulars of Employees:
In accordance with the provisions of Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the required information is annexed and forms part of this Report in Annexure VIA and Annexure VI B.
34. Directors & Key Managerial Personnel:
During the year Dr. Martin Mller resigned as Managing Director and CEO with effectfrom March 31 2016. We thank him for his significant contribution to the successfulintegration of Thinksoft into SQS and wish him well in the future. Ms. Aarti Arvind hasbeen appointed as Managing Director and CEO and Mr. N. Vaidyanathan has been appointed asExecutive Director with effect from April 01 2016. The appointments were approved by theshareholders through Postal Ballot on March 16 2016.
Mr. Gireendra Kasmalkar resigned as a non-executive director at the financial year end.We thank him for his support and contribution as non-executive director and wish him wellin his n ew ventures. Further Mr. Reji Thomas Cherian has been appointed as an AdditionalDirector with effect from April 28 2016. A Shareholder has proposed the appointment ofMr. Reji Thomas Cherian as Non-Executive Director and the same has been proposed in thenotice to the Annual General Meeting.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. David Bellin (DIN-06790066) retires by rotationand being eligible offers himself for re-appointment.
In the Annual General Meeting held on July 23 2015 Ms. Lilian Jessie Paul wasappointed as an Independent Director of the Company with effect from October 30 2014.
Ms. S. Akila has resigned as Company Secretary with effect from April 28 2016 and Mr.S. Sampath Kumar has been appointed as Company Secretary and Compliance Officer witheffect from the same date.
35. Public Deposits:
The Company has not accepted any public deposits and as such no amount of principal orinterest was outstanding as on the Balance Sheet date.
36. Status of Application money refund:
As on date of the balance sheet an amount of Rs.72000/- is lying unpaid in the IPORefund Account. Any members who have not availed themselves of refund should write to"The Registrar and Share Transfer Agent" of the Company. The amount lying in theIPO Refund Account shall be transferred to the Investor Education and Protection Fund ofthe Central Government on October 14 2016.
37. Statutory Auditors:
M/s.PKF Sridhar & Santhanam LLP Chartered Accountants Chennai is the Auditors ofthe Company. They were appointed in the 16th Annual General Meeting of the Company tillthe conclusion of third consecutive Annual General Meeting of the Company and subject toratification by the shareholders at every Annual General Meeting. An ordinary resolutionfor ratification is being placed before the Members of the Company in the ensuing 18thAnnual General Meeting for their approval.
The report issued by the Auditors to the members for the year ended March 31 2016 doesnot contain any qualification reservation or adverse remark or disclaimer.
38. Secretarial Audit Report:
Pursuant to Section 204 of the Companies Act 2013 and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s. M.Alagar & Associates Practicing Company Secretary as the Secretarial Auditor of theCompany in the Board Meeting held on July 23 2015 for the financial year 2015-16. TheSecretarial Audit Report issued by M/s. M. Alagar & Associates is annexed and formspart of this Report in Annexure VII.
There is no Secretarial Audit qualification for the year under review.
39. Material orders passed by the Regulators Courts or Tribunals:
There are no significant and material orders passed by the Regulators or Courts orTribunals that may have an impact for the Company as a going concern and / orCompanys operations.
40. Human Potential:
The Company continues to invest in its employees to enhance its core competence andcompetitive market position. Training is designed to build domain knowledge technicalskill language proficiency and abilities to respond pro-actively to the emergingdevelopments in a dynamic market.
In 2015-16 the Company crossed the 1000 employee mark with the closing head count of1076. More than 15% of the total work force was added in the second half of the year. Thefocus was on training the new recruits on the methodology internal processes and bestpractices. As compared to the industry average of 40 hours of training per employee peryear the Company achieved 50 hours in spite of the high growth in head count.
Out of the 233 training programs conducted during the year on 171 topics training wasaligned on equipping employees on Agile testing Dev-Ops and Mobile testing. The overallemployee strength (consolidated) increased during this period to 1076 (previous year 907).
41. Quality Technology and Systems:
PCI DSS (Payment Card Industry Data Security Standard):
Data protection is critical for the Company in maintaining its services to clients. TheSQS India BFSI Limited offshore TCoE (Testing Centre of Excellence) in Chennai is fullycompliant with ISAE 3402 (the International Standard on Assurance Engagements) and SSAE 16(Statement on Standards for Attestation Engagements). Both provides for third partyassurance to clients outsourcing data management and business processes.
PCI DSS (Worldwide Data security standard defined by the Payment Card IndustrySecurity Standards Council) provides Complete Secured Physical/Logical Work EnvironmentsMultilayer Encryption for data at Receipt Processing and Storage Comprehensive PrivacyFramework Detailed Risk and Governance Framework Wireless Intrusion and PreventionSystem Enhanced HR Security Controls Intensive Vulnerability Management Program byAuthorized Scan Vendors (ASV) Business Continuity Program meeting ISO 22301 standards.
All offshore TCoE of SQS India BFSI Limited continue to adhere to internalcertification for Quality Management System ISO 9001 and ISO 27001 Information SecurityManagement System.
42. Disclosure as required under Section 22 of The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013:
The Company has in place a Policy on The Sexual Harassment Prevention in line with therequirements of "The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013". The Internal Complaints Committee ("ICC") hasbeen set up to redress any complaints received regarding sexual harassment. All employeesare covered under this policy.
The following is the summary of the complaints received/cases filed and disposed-offduring the financial year 2015-16:
a) No. of complaints received/cases filed: Nil
b) No. of complaints disposed off: Nil
43. Listing Fees:
The Company confirms that it has paid the annual listing fees for the year 2015-16 toboth National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
We thank our Customers Bankers and Vendors for their continued support during theyear. We place on record our appreciation of the contribution made by our employees at alllevels. Our consistent growth and successful integration into a larger SQS group was madepossible by their hard work loyalty cooperation and support.
We thank the Governments of various countries where we have operations. We also thankthe Central and State Governments Security and Exchange Board of India National StockExchange of India Limited Bombay Stock Exchange Limited the Reserve Bank of India theMadras Export Processing Zone (MEPZ) and other Government Agencies for their support andlook forward to their continued support in the future.
The Directors also thank the investors for their continued faith in the Company.
| ||For and on behalf of Board of Directors of |
| ||SQS India BFSI Limited |
| ||(formerly Thinksoft Global Services Limited) |
|Place: Chennai ||David Bellin |
|Date : April 28 2016 ||Chairman & Director |