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Hexaware Technologies
BSE: 532129 | NSE: HEXAWARE | ISIN: INE093A01033 | Computers - Software
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Dec '07 |
The Directors are pleased to present their Fifteenth Annual Report, to
the members, on the business and operations of Hexaware Technologies
Limited (hereafter referred to as ‘Hexaware’) together with Audited
Accounts for the financial year ended December 31, 2007.
Financial Performance:
Global Operations:
Year ended December 31 2007 2006 Y-o-Y
Rs. Million Rs. Million Growth %
Income from Operations 10,398.03 8,482.14 22.6
Other Income 288.71 244.15 18.3
Total Income from Operations 10,686.74 8,726.29 22.5
Profit before Depreciation & Tax 1,468.91 1,561.34 (5.9)
Less: Depreciation 235.48 198.58 18.6
Profit before Taxation and
Exceptional Items 1,233.43 1,362.76 (9.5)
Exceptional Loss – Loss on
foreign currency transactions (net) 1,029.95 - -
Profit Before Tax 203.48 1,362.76 (85.1)
Less: Provision for Taxation 132.69 120.43 10.2
Profit after Tax before Minority
Interest 70.79 1,242.33 (94.3)
Minority Interest in loss of subsidiary (1.50) - -
Profit after Tax and Minority Interest 72.29 1,242.33 (94.2)
India Operations:
Year ended December 31 2007 2006 Y-o-Y
Rs. Million Rs. Million Growth %
Income from Operations 4,687.96 4,126.92 13.6
Other Income 269.45 490.12 (45.0)
Total Income from Operations 4,957.41 4,617.04 7.4
Profit before Depreciation, Tax
& Exceptional Loss 1,132.54 1,382.98 (18.1)
Exceptional Loss on foreign
currency transactions (net) 1,029.95 - -
Less: Depreciation 165.87 156.70 5.9
Profit before Taxation (63.28) 1,226.28 (105.2)
Less: Provision for Taxation 44.33 39.67 11.8
Net Profit after tax (107.61) 1,186.61 (109.1)
Add: Balance b/f from previous year 1,608.66 904.06
Balance available for appropriation 1,501.05 2,090.67
Appropriation
Transfer to/(from) General Reserve - 200.00
Interim Dividend* 128.37 112.65
Proposed final Dividend - 127.89
Dividend for previous year 0.84 6.78
Tax on Dividends 25.76 34.69
Balance carried to Balance Sheet 1,346.08 1,608.66
* Interim dividend includes dividend on Preference shares for the year
2007.
Results of Operations
a) Global operations
Your Company has recorded a consolidated income (as per Indian GAAP) of
Rs. 10,686.74 million in 2007 as compared to Rs. 8,726.29 million in
2006. The revenue from operations grew by 22.6% to Rs. 10,398.03
million in 2007 from Rs. 8,482.14 million in 2006. Your Company has
achieved robust growth for the year 2007 from the global IT software
services & BPO business.
Profit after Tax decreased by 94.2 % to Rs. 72.29 million in 2007 as
compared to a profit of Rs. 1,242.33 million in 2006.Your Company has
booked a net loss of Rs. 1,029.95 million as an exceptional one-off
loss on foreign currency transactions which has adversely affected the
profit after Tax of the company.
Some of the major achievements of your Company in 2007 are:
* During the year, 66 new clients were added, highest addition ever.
The record client addition of 66 during the year took the total number
of active clients to 175. Currently, your Company has 60 Fortune 500 /
Global 500 clients.
* Your Company’s strategy to mine high potential existing accounts has
resulted in an increase in the million dollar clients from 41 to 54 .
Out of above seven accounts were in the - million band and four
clients billed more than million each on a trailing twelve month
basis.
* The year 2007 saw a healthy order book addition for your company, in
each of the quarters, both from existing and new clients. Many new
orders booked in 2007 from existing clients were for higher revenue
commitments. For instance, your Company has signed a multi-million
dollar deal with one of its largest existing clients to manage a set of
internal applications including Enterprise Applications and customized
applications in BA/ BI and Testing Solutions. The total size of the 3-
year deal is in excess of million and provides for 30% increase
over the current revenue with the same client.
* One of Hexaware’s strategic customers extended the duration of their
total application management contract by another three years. Hexaware
has been managing a set of internal applications including BI/BA,
PeopleSoft, Siebel and Mainframe Systems for the past 3 years. The
total size of the deal is in excess of million.
* In the last quarter of the year, Focus Frame, a subsidiary of your
company, added one of the world’s largest broad-based manufacturers of
health care products as its first client to deliver software services
from India-based delivery centers.
* During the second half of the financial year, your company added a
leading integrated multi-module core-banking application developer as a
strategic partner. Through this alliance, your company has added one of
the largest Mexican retail bank as a client for implementing specific
modules of the core-banking application. This relationship is being
nurtured and delivered from the global delivery center based in Mexico,
the newly opened development centre.
* During the last quarter of 2007, your company added a marquee client
in the financial valuation, pricing and data services. Building on this
significant new win, your company plans to launch a new service
offering with this unique combination of IT and BPO services in the
BFSI domain.
b) India operations
Your Company has recorded a total income of Rs. 4,957.41 million in
2007 compared to Rs. 4,617.04 million in 2006, demonstrating a growth
of 7.4%. The revenue from the Software business grew by 13.6% to Rs.
4,687.96 million in 2007 from Rs. 4,126.92 million in the previous
year. The net loss after tax was 107.61 million as compared to a profit
of Rs. 1,186.61million in 2006 mainly due to booking of a net loss of
Rs. 1,029.95 million as an exceptional one-off loss on foreign currency
transactions.
Your Company has successfully unwound all the foreign exchange option
contracts and had provisioned for the financial loss arising from the
same in last quarter of 2007, with no carryover to 2008.
Reserves
During the year, your Company does not propose to transfer any amount
to the General Reserve.
Dividend
a) Preference Dividend
During the year 2007, your Company paid an amount of Rs. 2,19,42,638/-
as interim dividend @ 2.95% for 181 days on 10,55,570 Series ‘A’
Redeemable and/or Optionally Convertible Preference Shares.
b) Equity Dividend
During the year 2007, your Company declared and paid an interim
dividend @ 40% (Re. 0.80/-) per share on equity shares aggregating to
Rs. 106,430,868/-.
c) Final Dividend
Your Directors do not recommend any final dividend on the Preference
and Equity shares.
The total cash outgo on account of total dividend & tax thereon amounts
to Rs. 150.19 million. The break up of dividend is as under:
Total Preference Equity
Dividend Shares Shares
128,373,506/- 2,19,42,638/- 106,430,868/-
The members are requested to confirm the interim dividends declared by
the company on the Preference and Equity shares as final dividends.
As per Investor Education and Protection Fund (Awareness and Protection
of Investors) Rules, 2001, an amount of Rs. 8,14,965/-, for the
financial year 1999 towards unclaimed dividends was transferred during
the year to the Investor Education and Protection Fund.
Share capital
During the year 2007, the paid-up Share Capital of your Company
increased to Rs. 287.23 million comprising of 14,36,16,485 equity
shares of Rs. 2/- each.
During the year, upon exercise of warrants / options, 1,62,080 equity
shares of Rs. 2/- each were allotted under the Employee Stock Option
Scheme 1999 and 9,18,080 equity shares of Rs. 2/- each under Employee
Stock plan – 2002 respectively.
Pursuant to the Special Resolution passed by the shareholders at the
Extra-Ordinary General Meeting held on September 11, 2007, for adoption
of Employee Stock Option Scheme 2007, 40,40,000 options were granted to
the employees/ Directors of the Company.
During the year 1,055,570, 2.95% Series ‘A’ Redeemable and/or
Optionally Convertible Preference Shares of Rs. 1421/- each issued &
allotted to GA Global Investments Limited were redeemed by issue of
unregistered American Depository Receipts (ADRs) represented by
10,555,700 equity shares of Rs. 2/- each.
The market capitalization of your Company as on December 31, 2007 was
at Rs. 12,286.39 million (US$ 315.04 millions). The market
capitalization is calculated on the basis of closing price of Rs.
85.55/- as of December 31, 2007.
Investment
During the year, your Company made an investment of Rs. 8.51 million
in new subsidiaries out of which Rs. 8.50 million was invested in Risk
Technology International Limited, a subsidiary of the company. With
this investment, Company’s holding has become 85% in the said
subsidiary company.
The other investment was in participation share in another subsidiary,
Hexaware Technologies (Mexico) S De R L De C V amounting to Rs. 0.01
million.
Infrastructure
Your Company intends to continue to invest in physical and
technological infrastructure to support the growing worldwide sales and
delivery operations. In terms of technology infrastructure, Hexaware is
making optimum investments in latest technology to win customer’s trust
& confidence as also to improve operational efficiencies. In terms of
physical infrastructure Hexaware is making adequate investment to
support the scaling up of operations which will provide a world class
work ambience to its employees, which in turn helps in recruiting and
retaining the best talent. The company currently operates out of the
following facilities in India:
* Pune
In line with the anticipated growth and vision, during the year, your
company has expanded its presence by taking on lease 37,892 sq. feet at
A3 Building, E-Space, Nagar Road in Pune to seat 350 Software
Professionals.
* Nagpur
Your company and Caliber Point, the 100% subsidiary of your company,
together have acquired 10 acres of land in Nagpur, a tier II city, at a
SEZ location. The campus will scale up to accommodate 3,000 people
through multiple phases, first phase of which is expected to be ready
for occupation from the last quarter of 2008.
* Madurai
Your Company has also acquired 5 acres of land at Madurai for its
subsidiary Caliber Point.
* Chennai
Your company has consolidated the operations by securing a lease for
bigger premises in Ambattur of 120,000 sq.ft to seat 1,400 software
professional and de leased the existing HT2 & HT 4 buildings.
* Siruseri Campus
The 1st phase of Green Campus in Siruseri, Chennai, one of India’s
largest campuses became partially operational in March 2008. The total
capacity of this 1st phase of the environment friendly and world-class
facility will be around 5,000 software professionals and will be
available for occupation by end of 2008.
Human Resource Capital
Your Company recognizes that “Human Capital” is its principal asset.
Your company has initiated programs to induct the best talent from
leading engineering and business schools across the country and
overseas, to create a diverse intellectual pool and ensure sufficient
talent scale-up for anticipated business.
* Your company increased its headcount to 7,068 as on December 31,
2007.
* To attract and retain people, your company provides a judicious
combination of attractive career-personal growth and a lucrative
performance-based compensation structure.
* Your company has introduced an improved and enhanced Performance
Management System that follows a balanced score card approach providing
greater insights to individual capabilities and performance.
Business
* During the year, your Company re-aligned its business and technology
service offerings successfully to the global business environment by
re-aligning its offshore and onsite business structure.
* Your Company continues to expand its testing service offerings at a
brisk pace, which reinforces our expertise in Independent Testing and
Verification services. The testing services unit is the fastest growing
business segment. The integration of FocusFrame with your Company has
taken off well, thereby your Company now encompasses a complete range
of testing services across the globe.
* Your Company has successfully formed a range of service offerings
around Enterprise Risk Management through its Joint Venture Company
Risk Technologies International Limited and its subsidiaries in US and
UK. The various offerings under this include operational risk, credit
risk, asset liability management risk and market risk solutions, there
by expanding your company’s service offerings in BFSI space.
* Your Company expanded its offerings in Transportation by adding
offerings for Hospitality and Third Party Logistics (3PL) companies,
thereby enabling the Company to strengthen its position as niche
service provider.
* During the year, your Company has expanded its presence overseas by
opening up its 2nd near-shore state- of-the-art development center in
Mexico with an aim to offer services from the same time zone as
Americas and easy access of talent pool, which will help in creating a
scalable model.
* Your Company seeks to selectively expand its global presence to
enhance its ability to service clients. Your Company plans to
accomplish this by establishing new sales and marketing offices,
representative offices and global development centers to expand its
global footprint.
Operations
a. Multi-Cultural Dimension
Your Company operates on a global platform, working with many Fortune
500 customers in North America, Europe and Asia Pacific. This gives
your company a unique understanding and access to not only the business
practices but also the cultural and work-ethics in different regions
and corporate leaders.
b. Process and Methodologies
Your Company has developed and institutionalized innovative project
management and transition/ change management methodologies to ensure
timely, consistent and accurate delivery of superior quality technology
solutions, to improve operational efficiency and to maintain a high
level of customer satisfaction.
Your company benchmarks its processes and methodologies against
globally recognized quality standards and guidelines on an ongoing
basis.
Certifications: Your company has received various certifications
including ISO 9001: 2000, SEI-CMM Level 5, Tick IT, BS7799 and ISO
27001.
c. Leadership in Focus Areas
Your Company has demonstrated leadership and expertise in focus areas
like attaining global leadership role in PeopleSoft services, leading
IT solution providers for the Transportation & Hospitality Industry,
one of the fastest growing independent testing services provider and a
fast emerging IT services provider in Germany.
d. Enhance our niche areas
Your company differentiates itself by focusing on niche service
offerings, emerging technologies, new industry trends, and pervasive
business issues that confront its clients. In recent years, your
company has added new service offerings, such as Enterprise risk
management services, capital market services and business analytics
services, which are major contributors to the growth of your company.
e. Right sized Company
Being a right-sized company, your Company has the ability to
demonstrate agility and flexibility in its operations to suit the
dynamic needs of its customers. Your Company has demonstrated
capability in meeting human capital and physical infrastructure
requirements for large projects, at the same time establish its
customer relationship comfort.
f. Nurturing and retaining Talent
As indication to these efforts, your Company has the distinction of
being among India’s best IT employers for three consecutive years
ranking among the Top 20 in Dataquest-IDC’s Annual Best Employer Survey
in 2005, 2006 and 2007. The Company facilitates and supports a number
of key initiatives that provide an enabling environment to enrich
employee experience and stimulate employee performance. This has
ensured that your Company enjoys lower attrition rates than the
industry average which has translated into a strong competitive
advantage based on a reputation for continuity and efficient execution
of business.
g. Enhance brand visibility
Your company continues to increase its brand identity through
participation in media and industry events, alliance partners programs,
sponsorship of and participation in targeted industry conferences,
trade shows, recruiting efforts, corporate social responsibility (CSR)
programs and investor relations.
Your company believes that a strong brand recall will facilitate the
new business through lead generation and enhance our ability to attract
talent globally.
h. Process oriented Company
Your Company has appointed KPMG as its Internal Auditors. Your company
continues to strengthen its internal systems and control mechanisms in
all its departments.
Quality and Security
The process improvement initiatives planned and executed over the last
one year have shown positive results under various process categories.
Your company’s Chennai and Mumbai centers were assessed against CMMI
Level 5 - Dev Ver1.2 and the findings of the appraisal were presented
by KPMG, India on 31st March 2007. Software Engineering Institute (SEI)
has accepted the SCAMPI appraisal and awarded CMMI v1.2 Level 5 for the
Chennai and Mumbai delivery centers. This assessment status will be
valid till 31st March 2011.
Your company continues to ensure benchmarking and certification against
international standards like ISO 9001:2000, TickIT and ISO 27001
standards.
The implementation of the Project Management Tool (Plan Arena) has been
completed and is now used enterprise-wide for real-time monitoring of
projects by all relevant stakeholders.
The following initiatives will be the focus for the year 2008:
* Promote development and usage of productivity tools through Centers
of Excellence
* Leverage high maturity practice expertise to expand process
consultancy business
* Set the processes and benchmarks for Deming and Golden Peacock awards
Talent Management - Asset Development
Your Company places great importance on nurturing and retaining the
best skills in the industry. Moreover, it is careful in aligning the
needs of your Company with aspirations of its employees. Your company
has the distinction of being among India’s best IT employers for three
consecutive years ranking among the Top 20 in Dataquest-IDC’s Annual
Best Employer Survey in 2005, 2006 and 2007. At the end of the year,
your Company’s employee strength stood at 7,068 as compared to 5,829 in
the previous year. Your Company has, over the years, made consistent
efforts to retain and nurture talent by providing quality work,
opportunities for capability enhancement and leadership development,
and a work culture of meritocracy, learning and initiative. Your
company also provides world class infrastructure and facilities to
employees, and offers wealth creation programs like ESOPs. The
attrition rate stood at 17.5% on an annualized basis.
Hexa Varsity
Your company continues to focus on its strategy to remain as a
multi-niche player in the IT & ITES segment by developing competencies
and enhancing the technological quotient of the company. Your company
firmly believes that developing project management skills with focus on
quality management increases productivity and process driven approach
in the organization.
Hexa Varsity ensures smooth Induction of fresh engineers and lateral
recruits in the company, and conducts Technical, Functional and Domain
related skill development programs for the existing employees.
HexaVarsity has separate stream of programs for Leadership and
Management Development. The induction and foundation training program
for Fresh Engineer Graduates for Indians as well as Foreign nationals
has been institutionalized and is playing an important role in
development of skilled manpower. Early Intervention Program will
enhance the intake quality along with reduction in Foundation Training
Program. Role based training gives the assurance for high performance
of the leaders at all levels. Your company’s collaborations with
Universities, Academic Institutes and Professional Bodies enables your
company to implement the most innovative training approaches and best
practices followed in industry. Your company is using the Technological
advancements in training methologies to ensure consistent delivery
cutting across the geographical boundaries. Diversified spectrum of
Training approaches ensures that your company is always ready for
current and future business challenges and have short term as well as
long term plan to ensure the growth.
Corporate Social Responsibility (CSR)
We make a living by what we get; we make a life by what we give is
what your company believes in.
Your Company firmly believes that actual growth cannot be quantified in
money and its equivalents. Your Company is committed to, and has been
committed over the years, to help social causes.
H3O - Helping Hands from Hexaware is our Corporate Social
Responsibility (CSR) initiative which inculcates the spirit of ‘giving
back to the society’ and has been consistently taking up social
responsibility projects in Mumbai and Chennai to facilitate the health
and education of the underprivileged children and has received an
overwhelming response.
Some of the CSR initiatives undertaken by your company are listed
below:
* A heart surgery was sponsored for a needy person, costing Rs.
1,65,000/- from the funds contributed by employees.
* Thiruvalluvar Gurukulam Middle School run by “South India Scheduled
Tribes Welfare Association” has 850 children from economically backward
sector. At present, homes are being run at 5 places with 650 children,
including 100 scheduled Tribal children (called Erullar). So far
around 1000 gypsies and other nomadic children have benefited and have
also sustained their life in overseas also. Your company undertook the
renovation of the Thiruvalluvar Gurukulam in 2006. The inauguration of
the Gurukulam took place in 2007 and your Company was actively involved
with the co- ordination. The Company employees also celebrated the
Annual Day and Independence Day with the children.
* Your company arranged blood donation camps at all the towers of the
company at Chennai.
* Voluntary contributions in cash/coupons from employees in case of
natural disasters or in response to acts of God.
* Your Company celebrated Diwali at one of the orphanage in Chennai in
November 2007 and Christmas in December 2007.
* Your company announced a Payroll Giving Program for employees through
GiveIndia, a non-profit organization. The formal launch of this program
took place in September 2007. GiveIndia is a non-profit organization
dedicated to helping people donate to good NGOs. Payroll giving is a
programme where employees can donate a small part of their salary,
every month, to a cause of their choice.
Milestones
> Selected in the Leaders category for ‘The 2007 Global Outsourcing
100’ by the International Association of Outsourcing Professionals
(IAOP).
> Your company featured in Business Week’s annual list of Asia’s Hot
Growth Companies for the second consecutive year. Your company ranked
6th among the 13 Indian companies and 53rd among Asia’s 100 companies
with annual sales below $ 500 million.
> Your company has the distinction of being among India’s best IT
employers for three consecutive years ranking among the Top 20 in
Dataquest-IDC’s Annual Best Employer Survey in 2005, 2006 and 2007.
> A survey of ‘Women in IT’ by Dataquest-IDC conducted in 2007
recognised your company among the top 3 employers with highest number
of women working for the organisation. Your company ranked second in
the survey for the highest number of women in the managerial cadre.
> Your company was positioned by Gartner Inc. in the niche quadrant for
‘Magic Quadrant for ERP Service Providers, North America, 2007’ report
as well as in the ‘Magic Quadrant for North American Offshore
Applications Services, 2007’ report.
> Your company was Ranked No. 11 for 2006 - 2007 in the NASSCOM’s
(India’s National Association of Software and Service Companies) Top 20
IT Software and Services Exporters from India.
> Your company was identified as one of India’s best mid- sized
companies and has been labelled as one of “Tomorrow’s Giants” by
Business World, one of the leading business magazines in India.
Additionally, Business World ranked Hexaware as the 10th biggest wealth
creator among mid size companies across all industry verticals.
Outlook
The year 2007 was a year of consolidation and the year 2008 will be a
year of Innovation in our Service offerings and in operational
excellence. Your company expects to witness and participate in
significant advances towards Service Oriented Architecture (SOA) and
Software as a Service (SaaS).
Outsourcing and offshoring trends signify increased offshoring due to
margin pressures at the times of global slow down.
Your company’s key revenue stream for the year 2008 will continue to
come from the key service offerings in the vertical and horizontal
practices. Independent testing will provide a good stimulus for growth
along with the enterprise solutions. These platforms continue to be
the focus of your Company, on which new verticals & horizontals will be
built. In addition to that your Company is confident to win new
businesses with premium for the focused service offerings. With the
visibility of a formidable order book, your company is confident of
strengthening business in terms of quality, client base, geographies,
verticals & horizontal services by which every stakeholder’s value is
expected to be enhanced.
Corporate Governance and Management Discussion and Analysis
Your company takes pride in mentioning that the Institute of Company
Secretaries of India (ICSI) has rated your company amongst the top
twenty five companies which has displayed excellence in Corporate
Governance for the year 2007. This is for the second time in a row that
your company has received the award. Your company believes in Corporate
Governance not only in law but also in spirit. Your Company endeavors
to maximize the wealth of the shareholder by managing the affairs of
the Company with a pre-eminent level of accountability, transparency
and integrity.
A report on Corporate Governance including the relevant Auditors’
Certificate regarding compliance with the conditions of Corporate
Governance as stipulated in Clause 49 of the listing agreement with
stock exchanges is annexed.
Management Discussion and Analysis is also annexed.
Directors’ Responsibility Statement
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors hereby state and confirm that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanations
relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit or
loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) the Directors have prepared the annual accounts on a going concern
basis.
Employee Stock Option Plans (ESOP)
Pursuant to the approval of the shareholders, your Company had
instituted the Employee Stock Option Scheme, 1999, Employee Stock
Option Plan, 2002 and Employee Stock Option Plan, 2007 for all eligible
directors (excluding promoter directors), employees of the Company and
employees of its subsidiaries. All the Plans are administered by the
Remuneration & Compensation Committee of the Board.
During the year under review, your Company allotted 1080160 equity
shares of Rs. 2/- each on exercise of Stock Warrants / Options. These
shares have been listed on the Bombay Stock Exchange Limited and
National Stock Exchange of India Limited. Pursuant to the Special
Resolution passed by the shareholders at an Extra-Ordinary General
Meeting held on September 11, 2007, the Employee Stock Option Scheme
2007 has been approved and 4,040,000 options were granted to the
employees/Directors. The Board/Compensation Committee of the Board at
their meeting held on June 2, 2008 granted 61,20,749 Stock Options,
convertible into equal number of equity shares of the Company, under
the Employee Stock Option Scheme - 2007 to the Employees/Directors of
the Company (including Employees/Directors of the subsidiary
companies).
Subject to the approval of the shareholders, your Company is in the
process of framing a new Employees Stock Option Scheme 2008 (“ESOP
Scheme 2008’) to create, grant / offer, issue and allot at any time to
or to the benefit of such person(s) who are in permanent employment,
including Directors whether working in India or abroad or otherwise,
except the Promoter Directors, of the Company and its subsidiaries such
number of equity shares and/or equity linked instruments (including
Options/Warrants), and/or Restricted Stock Units (RSU’s) and/or
Performance Options exercisable into equity shares, and/or any other
instruments or securities (hereinafter collectively referred to as
“Securities’’) not exceeding 2% of the paid up share capital as on the
date of grant. The performance measures for vesting will be decided by
the Board/Committee of Directors.
The details of the Warrants / Options granted under the 1999, 2002 and
2007 plans are given as under:
Disclosures in compliance with the SEBI Guidelines and Guidance Note on
Accounting for Employee Share-based Payments, issued by ICAI:
Sr. Description
No.
1 Method used for accounting of the
employee share-based payment plans
2 If Intrinsic value method is used,
impact for the accounting period had
the fair value method been used on
the following -
Net results (in Rs.)
Earnings per Share (EPS)(in Rs.)
- Basic
- Diluted
3 Description of each type of employee
share-based payment plan that existed
at any time during the period including
the following -
Total number of options under the plan
Vesting Requirements
Maximum term to grant options from
scheme becoming effective
Method of Settlement
4 Number and weighted average exercise
prices of stock, warrants / options for each
of the following groups of
warrants / options-
- Outstanding at the beginning of the
period
- Granted during the period
- Lapsed during the period
- Exercised during the period
- Outstanding at the end of the
period and
- Exercisable at the end of the period
5 Number of options vested
6 Total number of shares arising as a
result of exercise
7 Money realised by exercise of options
(Rs.)
ESOP - 1999 ESOP - 2002
Intrinsic value method Intrinsic value method
0.19 Million 10.57 Million
0.17 Consolidated 0.17 Consolidated
(1.15) Standalone (1.15) Standalone
0.17 Consolidated 0.17 Consolidated
(1.14) Standalone (1.14) Standalone
18,000,000 11,049,145
Vesting 25% on each Vesting 25% on each
successive anniversary successive anniversary
of the grant date or as of the grant date or as
per the discretion of the per the discretion of the
Committee. Committee.
Deferred - 33.33% on
each successive
of the grant date or as
per the discretion of the
Committee.
Loyalty - 100% on the
successive anniversary of
of the grant date or as
per the discretion of the
Committee.
10 years 7 years
Equity Settled Equity Settled
Number Weighted Number Weighted
of Warrants Average of options Average
Exercise Exercise
Price (Rs.) Price (Rs.)
1,362,250 9.00 3,723,680 72.21
- - - -
852,915 9.00 1,428,490 73.05
486,240 9.00 918,080 38.38
23,095 9.00 1,377,110 93.89
23,095 9.00 929,230 75.89
23,095 929,230
162,080 918,080
1,458,720 35,234,145
ESOP - 2007
Intrinsic value method
12.26 Million
0.17 Consolidated
(1.15) Standalone
0.17 Consolidated
(1.14) Standalone
7,179,992
Vesting 25% on each
successive anniversary
of the grant date or as
per the discretion of the
Committee.
7 years
Equity Settled
Number Weighted
of options Average
Exercise
Price (Rs.)
- -
4,040,000 109.00
- -
- -
4,040,000 109.00
- -
-
-
-
8 Employeewise details of options
granted to -
- Senior management personnel
- Employees holding 5% or more of
the total number of warrants/options
granted during the year
- Identified employees who were
granted warrant/option, during
any one year equal to or exceeding
1% of the issued capital (excluding
outstanding warrants/options and
conversions) of the Company at the
time of grant.
9 For stock options exercised during the
period the weighted average share price
at the date of exercise. If options were
exercised on a regular basis throughout
the period, the weighted average share
price during the period.
10 For stock options outstanding at the
end of the period, the range of exercise
prices and weighted average remaining
contractual life (vesting period +
exercise period). If the range of the
exercise prices is wide, the outstanding
options should be divided into ranges
that are meaningful for assessing the
number and timing of additional
shares that may be issued and cash
that may be received upon exercise
of those options.
Nil Nil
Nil Nil
Nil Nil
As disclosed in point
4 above
934,000 options to 7
senior management
personnel as under
Name No. of
Options
Rusi Brij 450,000
Sunil Surya 175,000
Yogendra Shah 90,000
Moorthi 75,000
Chokkanathan
R V Ramanan 81,000
G R Raju 18,000
Deependra
Chumble 45,000
Nil
Nil
The said schemes provide for the exercise of the warrants / options at
any time after the vesting and hence the warrants / options do not have
any contractual life and accordingly the same has not been disclosed.
The price range for ESOP 1999 is Rs. 9/- and the number of outstanding
options are 23,095.
The price range for ESOP 2007 is Rs. 109/- and the number of
outstanding options are 4,040,000.
Number options outstanding under ESOP 2002 falls into the following
range of exercise price
Price Range Nos.
(Rs.)
9 - 25 365615
70.6 - 101 370820
135 - 171 640675
Total 1377110
11 For stock options granted during the
period, the weighted average fair value
of those options at the grant date and
information on how the fair value was
measured including the following -
- Option pricing model used
- Inputs to that model including -
weighted average share price (Rs)
exercise price (Rs)
expected volatility
option life (comprising vesting
period + exercise period)
expected dividends
risk-free interest rate
any other inputs to the model
including the method
used and the assumptions made to
incorporate the effects of expected
early exercise.
- Determination of expected volatility
including explanation to the extent
expected volatility was based on
historical volatility
- Any other features of the option
grant were incorporated into the
measurement of the fair value, such
as market conditions.
12 For other instruments granted
during the period (i.e., other than
stock options) -
- Number and weighted average
fair value of those instruments
at the grant date
- Fair Value determination in case -
(a) fair value not measured on
the basis of an observable
market price
(b) whether and how expected
dividends were incorporated
(c) whether and how any other
features were incorporated
No grants made during No grants made during
the current year the current year
No other instruments No other instruments
were granted during the were granted during the
year year
30-Oct-07 34.31
Black Scholes Option
Pricing Model
107.00
109.00
38.76% to 47.59%
4.25 years
0.91%
7.53% to 7.94%
-
Based on historical
volatility.
-
No other instruments
were granted during the
year
13 For employee share-based payment
plans that were modified during
the period -
- Explanation of those modifications
- Incremental fair value granted
(as a result of those
modifications)
- Information on how incremental
fair value granted was measured,
consistently with the requirements
as set out in points 7 and 8 above.
14 Total expense recognised for the
period for employee share-based
payment plans
15 Separate disclosure of that portion
of the total expense that
arises from transactions accounted
for as equity-settled employee
share-based payment plans
16 For liabilities arising from employee
share-based payment plans
- Total carrying amount at the
end of the period
- Total intrinsic value at the end
to the period for which the right
of the employee to cash or other
assets had vested by the end
of the period.
17 Diluted earnings per share (EPS)
pursuant to issue of shares on
exercise of option (in Rupees)
No modifications were No modifications were
made to the schemes made to the schemes
during the year during the year
Nil (As the intrinsic Nil (As the intrinsic
value is 0) value is 0)
Nil (As the intrinsic Nil (As the intrinsic
value is 0) value is 0)
Nil (As the intrinsic Nil (As the intrinsic
value is 0) value is 0)
0.34 Consolidated 0.34 Consolidated
(0.98) Standalone (0.98) Standalone
No modifications were
made to the schemes
during the year
Nil (As the intrinsic
value is 0)
Nil (As the intrinsic
value is 0)
Nil (As the intrinsic
value is 0)
0.34 Consolidated
(0.98) Standalone
Post split the diluted earnings per share were Rs. 0.34/- and Rs.
8.99/- for the financial year ended December 31, 2007 and December 31,
2006 respectively.
Fixed deposits
During the year under review, your Company did not accept or invite any
deposits from the public.
Insurance
All the properties of your Company including new Campus at Siruseri,
Chennai are adequately insured and safeguarded.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The information relating to Conservation of Energy, Technology
Absorption, Foreign Exchange Earnings and Outgo required under Section
217(1) (e) of the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988 is annexed and forms part of this
Report.
Subsidiaries
In accordance with the provisions laid down in Section 212 of the
Companies Act, 1956 your Company is required to attach the Directors’
Report, Balance Sheet and Profit and Loss Account of the subsidiaries
to its Balance Sheet. As per the requirements under Section 212 (8) of
the Companies Act, 1956, your Company had applied for the necessary
application to the Central Government which has been conferred with the
power to grant exemption from the aforesaid requirement. In this
regard, your Company has received an approval from the Government of
India, Ministry of Company Affairs, vide their letter no. 47/424/2007 –
CL – III dated December 4, 2007 granting an exemption from attaching
the audited accounts of the subsidiaries to this Annual Report for the
financial year ended December 31, 2007, except for one of the
subsidiary company, Specsoft Technologies India Limited, the Directors’
Report, Balance Sheet and Profit and Loss Account of which is attached
and forms part of this Annual Report. Audited Accounts of all
subsidiaries of the Company are available at the Registered Office of
the Company for inspection by members. The Company will make available
these documents upon request by any member of the Company.
A Statement, as directed by the ministry, furnishing particulars of the
subsidiaries, forms part of this Annual report and is available at the
Registered Office of the Company for inspection by members. The Company
will make available the said document upon request by any member of the
Company.
Directors
In accordance with the Articles of Association of the Company, Mr. L.
S. Sarma, Mr. Mark Dzialga and Mr. Shailesh Haribhakti, Directors of
the Company, retire by rotation at this Annual General Meeting and,
being eligible, offer themselves for re-appointment at the ensuing
Annual General Meeting.
Your Directors appointed Mr. S. K. Mitra as an Additional Independent
Director with effect from November 30, 2007 and Mr. P. R. Chandrashekar
as an Additional Director, Global Chief Executive Officer and
Vice-Chairman with effect from June 2, 2008 in accordance with the
provisions of Section 260 of the Companies Act, 1956 and Article 88 of
the Articles of Association of the Company. Mr. S. K. Mitra & Mr. P.
R. Chandrasekar hold office up to the date of forthcoming Annual
General Meeting. Notice in terms of provisions of Section 257 of the
Companies Act, 1956 along with the requisite deposit has been received
from a member proposing the candidature of Mr. S. K. Mitra and Mr. P.
R. Chandrasekar as a Director of the Company liable to retire by
rotaion.
The shareholders information as necessitated in Clause 49 of the
Listing Agreement pertaining to brief resume, expertise in functional
areas, names of companies in which Mr. Shailesh Haribhakti, Mr. L. S.
Sarma, Mr. Mark Dzialga, Mr. S. K. Mitra and Mr. P. R. Chandrasekar are
Directors etc. is being provided separately in the Annexure on Page 41
of the Corporate Governance Report of this Annual Report. Members are
requested to refer the said section of the Corporate Governance Report.
Other appointments
Mr. Bhagwant Bhargawe has joined as the Company Secretary and
Compliance officer of the company w.e.f. February 21, 2008. Mr.
Bhagwant Bhargawe is M.Com, LL.B, Fellow Company Secretary and a Cost
Accountant. He brings with him over 25 years experience in Accounts,
Legal, Company Secretarial and other fields. He has worked with Voltas
Ltd., Hindustan Unilever Ltd., Abbott Laboratories Ltd., Geometric
Solutions Co. Ltd., and Kwality Ice Creams Group.
He joins us from Wire and Wireless (India) Ltd. He has been involved in
Group Secretarial and legal matters, Strategy formations, Joint Venture
Formations, Intellectual Property Rights (IPR) protections.
In view of the resignation of Mr. Rajesh Ghonasgi as the Chief
Financial Officer of the company, Mr. Prateek Aggarwal has joined your
company as the Chief Financial Officer of the company w.e.f. June 2,
2008. Mr. Aggarwal is a commerce graduate and has obtained his Masters
degree from IIM Calcutta. He brings with him 16.5 years of rich
experience in finance. He has been CFO of various businesses over the
last 6.5 years (FMCG, SPO & IT Services).
Auditors
Pursuant to the recommendation of the Audit Committee at their meeting
held on February 21, 2008 for re- appointment of M/s. Deloitte Haskins
& Sells as Statutory Auditors of the Company, for the financial year
2008, the Board of Directors have, at their meeting held on February
21, 2008 approved the re-appointment of M/s. Deloitte Haskins & Sells
as the Statutory Auditors of the Company for the financial year 2008
and to hold office till the conclusion of the next Annual General
Meeting scheduled to be held in 2009. In terms of provisions of Section
224 of the Companies Act, 1956, M/s. Deloitte Haskins & Sells retire at
this Annual General Meeting and being eligible, offer themselves for
re-appointment. In terms of provisions of section 224(1B) of the
Companies Act, 1956, M/s. Deloitte Haskins & Sells have furnished a
certificate that their appointment, if made, will be within the limits
prescribed under the said section of the Act.
Particulars of employees
The particulars of employees, required to be furnished under Section
217(2A) of Companies Act, 1956, read with the Companies (Particular of
Employees) Rules, 1975 is annexed hereto and forms part of this Report.
Acknowledgment
Your Directors place on record their sincere appreciation of the
customers, clients, bankers, Government of India and other countries,
Registrar and Share Transfer Agents, vendors and Technology Partners
for the support extended. Your Directors are also deeply touched by the
efforts, sincerity and loyalty displayed by the employees without whom
the growth was unattainable. Your Directors wish to thank the investors
and shareholders for placing immense faith in them and the plans
designed for growth of your Company. Your Directors seek, and look
forward to the same support during the future years of growth. Your
Directors hope that they can continue to satisfy you better in the
years to come.
For and on behalf of the Board of Directors
Atul K. Nishar
Executive Chairman
Place: Mumbai
Date : June 2, 2008 |
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| Source : Religare Technova | |
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