TO THE MEMBERS
1. The Directors present the Twenty-Fifth Annual Report, along with
the Audited Statements of Accounts of your Company, for the year ended
March 31, 2014.
2. Financial Highlights:
During the financial year 2013-14, the operations of your Company
resulted in the following:
2013-14 2012-13 2013-14 2012-13
Sales and Service 772.10 604.68 774.79 621.67
Other income 15.68 6.23 12.54 4.84
Total Income 787.78 610.91 787.33 626.51
Profit before financial expenses,
depreciation and exceptional
items 151.81 75.29 149.01 76.90
Less: Financial expenses 1.83 3.91 1.83 3.91
Depreciation 34.99 23.72 34.99 23.72
Exceptional Items 15.90 15.90
Profit for the year 114.99 31.76 112.19 33.37
Less: Provision for Income tax 39.88 10.77 39.93 10.99
Share of loss from associate
Profit after tax 75.11 20.99 72.26 21.31
Add: Profit brought forward 111.36 111.09 114.24 113.65
Balance available for
appropriation which has been
appropriated as under: 186.47 132.08 186.50 134.96
Proposed dividend 28.02 15.57 28.02 15.57
Dividend tax thereon net of
reversal thereof 4.11 2.65 4.11 2.65
Transfer to General Reserve 8.00 2.50 8.00 2.50
Balance of Profit carried to
Balance Sheet 146.34 111.36 146.37 114.24
Total appropriations 186.47 132.08 186.50 134.96
Your Directors recommend for your approval, a dividend of 90% (Rs. 9 per
share) [previous year 50% (Rs.5.00 per share)] for the year ended 31st
March 2014, involving an outgo of Rs. 28.02 crores compared to Rs. 15.57
crores in the previous year. Additionally, the dividend distribution
tax will involve an outlay of Rs. 4.11 crores compared to Rs. 2.65 crores
in the previous year. The total payout ratio is 43% for this year as
compared to 87% in the previous year.
4. Review of Operations:
The total consolidated income during the year under review was Rs. 787.33
crores as against Rs. 626.51 crores in the previous year, registering an
increase of 26%.
The Profit Before Tax (PBT) was Rs. 112.19 crores, as against Rs. 33.37
crores in the previous year. The Profit Before Tax increased by 236%
over the previous year. The Profit After Tax (PAT) was Rs. 72.26 crores,
as against Rs. 21.31 crores in the previous year, registering an increase
During the year under review, your Company''s concerted effort in
growing its revenues from the embedded and industrial design services,
focussing on solutions and services in the systems integration
business, and containing costs of its animation and visual effects
business, resulted in improved top line and bottom line performance.
More details are set out in the attached Management Discussion and
A business-wise analysis of your Company''s two main segments viz.
Software Development & Services and Systems Integration & Support
Software Development & Services:
The services constituting this segment are Embedded Product Design,
Industrial Design and Visual Computing Labs. This segment reported
revenue of Rs. 682.70 crores in FY14 against Rs. 552.95 crores in the
previous year, registering an increase of 23% over the previous year.
The segment''s Profit was Rs. 137.90 crores.
Embedded Product Design
The Embedded Product Design helps customers develop electronic products
by providing design of hardware, implementation of technologies such as
audio, video, imaging and connectivity onto the hardware, and
developing software applications and user interface that enable users
to use the product and its functionality with ease and convenience. It
addresses the automotive, aerospace, broadcast, consumer electronics,
communications, healthcare, and semiconductor industries.
Embedded Product Design division worked with a leading Japanese
automotive OEM to design and develop a complete Electronic Control Unit
(ECU) for a hybrid electric vehicle, including software and hardware.
The hybrid vehicle was successfully released in the market in June
The division supported India''s Mars Orbiter mission Mangalyaan, by
designing the Data Control Hardware which was installed in the Mars
Orbiter and launched into space on November 05, 2013.
The division announced the licensing of its in-house developed Ultra
High Definition (UHD) video decoder software to a US based company,
which will enable very high-quality video on embedded devices.
Your Company participated in leading industry events such as the
International Broadcast Conference (IBC) Amsterdam, Consumer
Electronics Show (CES) - Las Vegas and Mobile World Congress (MWC)
Barcelona, to showcase its capability and innovations to the global
market. It also presented technical papers on topics such as
next-generation vehicle security at the VDI conference in Germany.
The Industrial Design division helps customers deliver a superior
product or service through design. In the case of products, this
includes the form, color, branding and textures, as well as the way the
product interfaces with the user. The division also help customers
improve their service delivery by studying, analyzing, and providing
design interventions that improve end-user experience at every touch
It worked with GVK to design the experiential services for various
consumer touch points at Mumbai International Airport''s new integrated
Terminal 2, and helped redefine the passenger experience, while
enhancing efficiencies and productivity for the airport staff at T2. As
part of this project, the division designed entertainment zones,
customer service zones, general and lifestyle seating areas from the
security to the boarding gates. Other elements included designing
pay/help phones, charging stations, housing of ATM vending machine,
internet workstations/ kiosks amongst others.
The division worked with St. James'' Court, A Taj Hotel and Taj 51
Buckingham Gate, Suites and Residences to redefine the visual identity
of the hotel. This involved developing the brand identity for both the
hotels. Over 100 collaterals were designed including stationery,
promotional collaterals, amenities, and service and communication
collaterals amongst others.
Your Company was declared winner of the first Automotive Grade Linux
(AGL) User Experience Contest in the Best User Experience category.
The AGL contest was centered on the theme ''Designing the Future of
Automotive Infotainment User Experience''. Your Company''s concept Human
Machine Interface (HMI) won the award for its intuitive and effortless
Visual Computing Labs (VCL)
Visual Computing Labs provides high-end animation and Visual Effects
(VFX) services. It caters to the entertainment industry by providing
these services for feature films, episodic television serials and
high-end gaming. It also caters to the marketing and advertising
industry by providing these services for TV ad commercials and
corporate videos for visualization and new product launches.
The division won the coveted Film fare 2014 award and the Star Guild
Award 2014 for Best Visual Effects for a feature film, for its work in
The division was also recognized for its stellar work in delivering
Visual Effects for Bhaag Milkha Bhaag.
Systems Integration & Support:
During the year under review, the segment turnover and Profit were Rs.
92.08 crores and Rs. 8.43 crores respectively.
This business segment, designs and implements solutions, using
contemporary hardware and application software for in-house R&D and
design centers of organizations. It provides solutions for Computer
Aided Design and Manufacturing (CAD/CAM), Virtual Reality and High
Performance Computing. It also supports enterprises in effectively
managing their IT infrastructure, including storage, computing and
This business delivered improved results through its focus on a
solution-centric approach that drives higher composition of software
and support services in the business mix to improve revenues and
The interest cost for FY14 was Rs.1.83 crores, as against Rs. 3.91 crores
in the previous year. Borrowings as at the end of FY14 were NIL,
compared to Rs. 58.51 crores in the previous year.
6. Corporate Social Responsibility (CSR):
The Board, pursuant to the provisions of section 135 of the Companies
Act, 2013, has at its meeting held on 2nd April, 2014 constituted a CSR
committee with the following Directors as members:
Mrs. Shyamala Gopinath, Chairperson
Mr. Piyush Mankad, Member
Mr. Madhukar Dev, Member
Pursuant to the provisions of section 149 read with Schedule IV of the
Companies Act, 2013, Mrs. Shyamala Gopinath, Dr. R. Natarajan, Mr. P.
Mankad and Mr. P McGoldrick have given declaration that they meet the
criteria for independence as provided therein. Accordingly, the
above named directors are proposed to be appointed as independent
directors for a term of five (5) years from the date of the ensuing
Annual General Meeting or attainment of retirement age for independent
Directors prescribed under the Revised Guidelines (2012) for
Composition of Board of Directors, Committees of the Board and
Retirement Age of Directors as may be revised from time to time,
whichever is earlier.
8. Directors Responsibility Statement:
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors, based on the representations received from the Operations
Management, conform that- (i) in the preparation of the annual accounts,
the applicable accounting standards have been followed and that there
are no material departures;
(ii) they have, in the selection of the accounting policies, consulted
the Statutory Auditors and have 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 of the Company for that year;
(iii) they have taken proper and sufficient care, to the best of their
knowledge and ability, 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) they have prepared the annual accounts on a going concern basis.
Your Company''s workforce composition is aligned to the delivery of
design and creative services. The Embedded Product Design, Industrial
Design, and Systems Integration divisions are mainly comprised of
graduates and post- graduates in engineering and design. Visual
Computing Labs employ creative professionals with proficiency in the
software tools that are used to deliver animation and VFX services.
Your Company recognizes the critical importance of its human capital.
Capacity addition, through the induction of fresh engineers and lateral
hires are driven by the annual business planning exercise. Capacity
addition is continuously monitored and managed, depending on the
business demand and near-term projections. Your Company undertakes
significant initiatives to increase efficiency through improved
operations, training and retooling, leadership development, and other
10. Disclosure of Particulars:
The information required under Section 217 (2A) of the Companies Act,
1956 and the Rules made there under, is provided in Annexure-B forming
part of the Report. In terms of Section 219 (1) (b) (iv) of the Act,
the Report and Accounts are being sent to the Shareholders, excluding
the aforesaid Annexure. Any Shareholders interested in obtaining a copy
of the same may write to the Company Secretary.
11. Subsidiary Company, Statement under Section 212 of the Companies
Act, 1956 and Consolidated Financial Statements:
The Company''s wholly owned subsidiary, Tata Elxsi (Singapore) Pte. Ltd.
recorded a turnover of Rs. 2.69 crores and Profits before Tax of Rs. 1.01
crores during the year 2013-14, as against the previous year''s turnover
of Rs. 17.21 crores and Profit before Tax of Rs. 1.93 crores. The Board of
Directors of your Company has given their consent for not attaching to
its Balance Sheet, the documents relating to its subsidiary specified in
Section 212 (1) of the Companies Act, 1956 in terms of the General
Circular no. 2/2011 of the MCA.
In terms of the said circular, a statement in one page containing
specified financial details of the subsidiary company is to be included
in the consolidated annual financial statements of the parent Company.
The annual accounts of the subsidiary and the related detailed
information will be made available to the holding and subsidiary
company''s investors seeking such information at any point of time. The
annual accounts of the subsidiary will also be kept available for
inspection by any investor at the head office of the parent and
subsidiary Company respectively.
As required pursuant to the Accounting Standards of the Institute of
Chartered Accountants of India (ICAI) and the Listing Agreement with
the Stock Exchanges, the stand-alone annual accounts of your Company,
along with the consolidated financial statements of your Company and the
subsidiary Company made up to 31st March 2014, are also presented.
12. Corporate Governance:
Pursuant to Clause 49 of the Listing Agreement, the Corporate
Governance Report, the Management Discussion & Analysis Statement, and
the Auditors'' Certificate regarding Compliance of Conditions of
Corporate Governance are part of this Annual Report.
Deloitte Haskins & Sells (DHS), Chartered Accountants, who are the
Statutory auditors of the Company, hold office till the Conclusion of
the Forthcoming AGM and are eligible for re-appointment. Pursuant to
the provisions of Section 139 of the Companies Act, 2013 and the rules
framed there under, it is proposed to appoint DHS as Statutory auditors
of the Company from the Conclusion of the Forthcoming Annual General
Meeting till the Conclusion of the 28th Annual General Meeting to be
held in the year 2017, subject to ratification of appointment at every
The Directors wish to thank the Company''s employees, customers,
partners, suppliers, and above all, its shareholders and investors for
their continued support and co-operation.
On behalf of the Board of Directors
Mumbai, April 22, 2014