1. The Directors are pleased to present the Twenty-seventh Annual
Report on the business and operations of the Company along with the
Audited Statements of Accounts for the financial year ended March 31,
2. Result of Operations - Extract
Rs, In Crores
Sales and Services 1075.21 849.40
Other income 11.86 4.14
Total Income 1087.07 853.54
Profit before financial expenses,
depreciation and exceptional items
Less: Financial expenses -
Depreciation 22.61 24.73
Profit for the year 236.34 155.98
Less: Provision for Income tax 81.53 53.08
Profit after tax 154.81 102.90
Add: Profit brought forward 184.86 146.34
Balance available for appropriation
which has been appropriated as
under: 339.67 249.24
Depreciation on transition to
of the Companies Act, 2013 on - 13.30
tangible fixed assets with Nil
Proposed dividend 43.59 34.25
Dividend tax thereon net of
reversal thereof 8.87 6.83
Transfer to General Reserve 10.00 10.00
Balance of profit carried to
Balance Sheet 277.21 184.86
Total appropriations 339.67 249.24
Your Directors recommend for your approval, a dividend of 140 % (Rs, 14
/- per share) for the year ended 31st March, 2016, compared to 110%
(Rs,11 per share) in the previous year.
This will involve an outgo of Rs, 52.46 crores compared to Rs,41.08 crores
in the previous year, including dividend distribution tax.
Your Directors have approved a transfer of Rs,10 crores to the General
Reserve for the year ended 31st March, 2016, as against an amount of
Rs,10 crores in the previous year.
5. Review of Operations
The total income during the year under review increased by 27 % from Rs,
853.54 crores in the previous year to Rs,1087.07 crores.
The Profit Before Tax (PBT) increased by 52 % from Rs, 155.98 crores in
the previous year to Rs,236.34 crores. The Profit After Tax (PAT)
increased by 50 % from Rs,102.90 crores in the previous year to Rs, 154.81
During the year under review, your Company for the first time crossed
the 1000 crore mark in turnover in rupee terms. This was possible due
to the concerted effort in scaling up the embedded product design and
industrial design services business coupled with better utilisation of
6. MANAGEMENT DISCUSSION AND ANALYSIS
As per NASSCOM, Indian IT services have grown by 12%, with IT services
and software products maintaining a double digit growth due to higher
adoption of SMAC (Social, Mobile, Analytics, and Cloud Services) and
IoT (Internet of Things).
Also, the presence of a single government has boosted the confidence of
the industry in''Digital India'' and''Make in India'' with the domestic
market accounting to two-thirds of the revenue addition in FY 16.
The fusion of humans and machines is the next big thing for the
information and communications technology industries, which will impact
almost all industry verticals.
Our operations are classified into two business segments, i.e. Software
Development & Services and Systems Integration & Support.
Software Development and Services
This business segment grew by 29% from Rs,781.85 crores in the previous
year to Rs, 1008.17 crores in FY16. The segment profit increased by 47%
from Rs, 176.33 crores in the previous year to Rs,259.66 crores during
As per NASSCOM, Indian IT exports are expected to grow by 10-12% and
Engineering R&D and product development to grow at 12.6% in FY 17.
As technologies, industries and markets converge, each intersection
presents both challenges and opportunities for companies to innovate
and deliver new and enhanced products and services. New services are
also emerging from the increasing connectedness of people and devices.
This presents us with an unique opportunity to leverage our technology
capabilities, user centric design and creative experience, and position
ourselves as a complete solutions and service provider.
The software development and services segment consists of three
distinct business divisions:
Embedded Product Design
The Embedded Product Design (EPD) division provides technology
consulting, new product design, development, and testing services for
the broadcast, consumer electronics, healthcare, telecom and
We offer electronics, software development and system design services
for the automotive and aerospace industry.
Software content in cars is increasing, especially in areas such as
in-vehicle infotainment, active safety systems, telemetric, electric
and hybrid power trains.
We are leveraging our cross-technology expertise in multimedia,
imaging, connectivity technologies, and well- established processes for
automotive software development, to support both car manufacturers and
system suppliers in product development and engineering. We are also
working with some leading aerospace OEMs and suppliers for avionics and
We are also working on emerging requirements for mass transportation
and urban mobility solutions for smart cities of the future.
Apart from active participation in leading consortiums and technology
standards bodies related to the automotive industry, we participated in
leading trade shows and events such as the VDI-ELIV Congress in Baden
Baden – Germany, showcasing our automotive technology development
capabilities and solutions for safety, comfort and infotainment.
Broadcast and Communications
We address the complete product development lifecycle from R&D, new
product development and testing to maintenance engineering for
Broadcast, Consumer Electronics and Communications.
We engage with leading Broadcast and Communications service providers
across the world for the development of value-added applications, and
help them reduce engineering costs associated with development and
deployment through cost-effective offshore services. Increasingly,
major operators are bundling voice, video and data services and
providing consumers with a converged triple play service, thereby
blurring the lines between a conventional telecom operator and a Pay TV
service provider. Emerging technologies such as IoT (Internet of
Things) and Analytics are creating new opportunities to drive
operational efficiency, reduce costs, deliver new services to consumers
and enable new streams of revenues for operators and product
We are investing in developing capability to support customers in these
new technologies and help them in their digital transformation journey.
We continue to participate in leading international industry events and
standards bodies, to strengthen our leadership position and keep
abreast of technology trends in concerned industry sectors. Tata Elxsi
was featured with a keynote session titled''New Disrup to rs - the
Internet of Things revolution'' at the International Broadcasting
Convention (IBC), the leading event for the broadcasting and
communications industry, in Amsterdam in September 2015.
Industrial Design (ID)
The Industrial Design division helps customers develop endearing brands
and products by using design and technology as a strategic tool for
This division services a broad spectrum of industries including
automotive, consumer electronics, retail & consumer goods and
We have worked for leading Metro projects in India, including the
Chennai & Kochi Metro to enhance the passenger experience in the use of
the metro services, right from design of signage systems to branding,
coach interiors and station aesthetics.
Products designed by us have been awarded the I Mark, which signify
good design not only in terms of form and aesthetic appeal, but also in
terms of product quality, functionality, safety, sustainability,
usability and social responsibility.
We participated in the''Make in India Week'', which aimed to showcase
the potential of design, innovation and sustainability across India''s
manufacturing sectors in the coming decade. This event also showcased
products with the I Mark to the international community.
We conducted an annual design event''Connect D'' in order to promote
design thinking amongst the next generation of designers and help them
create new connected experiences. The event is intended to engage with
students and help them to think critically about the latest technology
and its implications for the present and future. The 4th edition of the
contest received an overwhelming response from design students from
across the country, which concluded in June 2015.
Visual Computing Labs (VCL)
VCL provides high-end content and 3D Animation services, addressing
content development for feature films, television, advertising
commercials and custom corporate content.
VCL has been awarded with FICCI BAF 2016 for the''Best VFX in a
Commercial'' in the Afterlife Series. Our work for feature films,
including''Neerja'' which was released in February 2016, has won much
appreciation and critical acclaim.
Systems Integration and Support
During the year under review, our Systems Integration & Support segment
reported a turnover of Rs,67.03 crores and profit of Rs,6.72 crores.
We implement and integrate complete systems and solutions for
High-Performance Computing, CAD/CAM/CAE/PLM, Broadcast, Virtual
Reality, Storage, and Disaster Recovery. We also provide Professional
Services for maintenance and support of IT infrastructure in India and
We continue to focus on increasing the share of software sales and
support services in this segment, for improved margins.
Threats, concerns and risks
According to NASSCOM, despite the political uncertainty across major
economies of the world, currency fluctuations and changing nature of
the business, the industry has still sustained a double digit growth
and may continue to do so with the emergence of new technologies such
as internet of things, analytics, and social media.
Our revenues are well distributed amongst various currencies and
geographies, thereby reducing the impact from any single geography or
currency to some extent.
Protectionist government policies in key markets such as the US and
Europe may create barriers in on-site deployment of India-based talent.
Economic uncertainty aggravated by plunging oil prices, plummeting
Chinese markets hurt the Indian IT sector.
We are focusing on maximizing offshore execution of projects and having
a presence in multiple industries to mitigate the impact of such
policies and risks caused by the cyclical nature of any one industry
Internal Control Systems and their adequacy
We believe that internal control and risk management are necessary
prerequisites of the principle of governance. Our Management is
committed to ensuring an effective internal control environment,
commensurate with the size and complexity of the business, which
provides assurance on the efficiency of operations and security of
assets. We have an effective internal control system, which is assessed
and strengthened with new/revised standard operating procedures and
which ensures that all our assets are safeguarded and protected against
We have co-sourced the internal audit function. We have entrusted
quarterly internal audits to a reputed Audit firm – Ernst & Young. In
addition, the in-house internal audit team also regularly carries out
audits of specific processes. Their annual audit plans are approved by
the Audit Committee of the Board. Based on the internal audit reports,
process owners undertake corrective actions in their respective areas
and thereby strengthen the controls. Internal Audit Reports along with
corrective actions are discussed with the Management and are reviewed
by the Audit Committee of the Board, which also reviews the adequacy
and effectiveness of our internal controls.
2015-16 2014-15 Change over Percentage of income
year 2015-16 2014-15
crores % % %
services 1075.21 849.40 26.58 98.91 99.51
Other income 11.86 4.14 186.47 1.09 0.49
Total Revenues 1087.07 853.54 27.36 100.00 100.00
Cost of sales 69.98 75.21 - 6.95 6.44 8.81
expenses 576.49 460.61 25.16 53.03 53.96
expenses - - - - -
Amortization 22.61 24.73 -8.57 2.08 2.90
Other expenses 181.65 137.01 32.58 16.71 16.05
Total Expenditure 850.73 697.56 21.96 78.26 81.73
Profit before tax
items 236.34 155.98 51.52 21.74 18.27
Tax 81.53 53.08 53.60 7.50 6.22
tax for the year 154.81 102.90 50.45 14.24 12.06
Analysis of Overheads
2015-16 2014-15 Variance
crores crores %
Operating lease rent 15.73 14.01 12.28
Communication expenses 9.70 9.07 6.95
Inland travel and conveyance 8.03 6.53 22.98
Overseas travel 50.23 41.29 21.65
Consultant fees for software
development 45.12 25.53 76.73
Provision for doubtful debts/
advances 0.82 0.49 67.35
Significant Ratio Analysis
No. Particulars Unit 31.03.16 31.03.15
1 Earnings before
and tax/Sales % 24.08 21.27
2 Profit before taxes/
Sales % 21.98 18.36
3 Profit after taxes/
Sales % 14.39 12.11
4 Current Ratio No. of
times 2.32 1.92
5 Debt Equity Ratio Ratio - -
6 Earnings per share Rs, 49.72 33.05
As a technology-led design company we continue to attract and retain
top talent. Leadership training, Performance management, Talent
development, Employee engagement and Succession planning form the
bedrock of our strategy. Benchmarking, Recognizing contributions,
Improving Customer experience, and Keeping pace with changes are the
pillars of our value system and help create an atmosphere of oneness
and collaboration. Our employees are highly motivated and we develop
the necessary capabilities and behaviours so that employees can deliver
greater value to our customers and become trusted advisors. Our recent
initiates of pre-connecting with colleges before we hire fresher''s are
helping us to attract the best minds across campuses. Our total
headcount including consultants was 4452 as of March 31, 2016.
We have instituted very strong quality processes in the execution of
our software development projects, and implemented robust information
security management processes to assure our global customer base of the
required level of confidentiality and protection of data and
information. We have also been assessed and certified organization wide
for industry-specific standards such as ISO 9001:2008 and ISO
27001:2013. Additionally, for Medical Engineering BU we have ISO
13485:2012 certification and for Transportation BU we have Automotive
SPICE OML5 certification.
7. Directors and Key Managerial Personnel
In terms of Section 152 of the Companies Act, 2013 Mr. N.G. Subramaniam
retires by rotation and being eligible offers himself for
Dr. R. Natarajan, Independent Director, retired from the Board with
effect from January 10, 2016 in terms of his appointment. The Board
placed on record their appreciation for the valuable contributions and
guidance rendered by Dr. Natarajan during his tenure on the Board and
the Committees in which he was a member.
The Board, on the recommendation of the Nomination and Remuneration
Committee, had at its meeting held on January 04, 2016 appointed Prof.
M.S. Ananth as an Additional Director (Independent Director) of the
Company with effect from January 04, 2016. In terms of Section 161(1)
Prof. Ananth holds office up to the date of the ensuing Annual General
meeting and being eligible offers himself for re-appointment. Notice
has been received from a member u/s 160 of the Companies Act, 2013,
proposing Prof. Ananth to the office of the Directorship of the
Company. The Board recommends the appointment of Prof. Ananth as an
Independent Director to hold office up to November 14, 2020.
During the year under review, Six (6) Board meetings were held and have
been well attended by the Directors. The calendar of meetings for the
year 2016-17 has been circulated to all the directors detailing the
schedule of Board and Committee meetings during 2016-17.
The Independent Directors have submitted their declaration that they
fulfil the requirements as stipulated in Section 149 (6) of the
Companies Act, 2013. Pursuant to Clause VII (1) of Schedule IV of the
Companies Act, 2013 the Independent Directors had separate meetings on
28th April, 2015 and 15th May, 2015 during 2015-16.
Pursuant to the provisions of Section 203 of the Act, the Key
Managerial Personnel (KMP) of the Company are -
Mr. Madhukar Dev, MD & CEO. Mr. K Ramaseshan, CFO and Mr. G.
Vaidyanathan, Company Secretary. There is no change in the KMP during
8. Directors'' Responsibility Statement
Based on the framework of internal financial controls and compliance
systems established and maintained by the Company, work performed by
the internal, statutory and secretarial auditors including audit of
internal financial controls over financial reporting by the statutory
auditors and the reviews performed by Management and the relevant Board
Committees, including the Audit Committee, the Board is of the opinion
that the Company''s internal financial controls were adequate and
effective during the financial year 2015-16.
Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the
Board of Directors, to the best of their knowledge and ability, confirm
(a) in the preparation of the annual accounts the applicable accounting
standards had been followed along with proper explanations relating to
(b) the directors had selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of our state of affairs
at the end of the financial year and of our profit and loss for that
(c) the Directors had taken proper and sufficient care, for the
maintenance of adequate accounting records, in accordance with the
provisions of Companies Act, 2013, for safeguarding the assets of the
Company, and for preventing and detecting fraud and other
(d) the Directors have prepared the annual accounts on a going concern
(e) the directors had laid down internal financial controls to be
followed by the Company, and that such internal Controls are adequate
and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with
provisions of all applicable laws and that such systems were adequate
and operating effectively.
9. Particulars on Remuneration
The information required under Section 197(12) of the Companies Act
2013 read with Rule 5(2) and 5(3) of the Companies (Appointment &
Remuneration of Managerial Personnel) Rules, 2014 forms part of the
Directors'' Report and have not been attached. However, in terms of
first proviso to Section 136 the particulars as referred above are
available for inspection at our Registered office during business hours
on working days, up to the date of the ensuing Annual General Meeting.
Any shareholder interested in obtaining a copy of the same may write to
the Company Secretary.
Particulars pursuant to Section 197(12) of the Companies Act, 2013 read
with Rule 5(1) of the Companies (Appointment & Remuneration of
Managerial Personnel) Rules, 2014 are provided in Annexure-A.
Our Board has adopted a Remuneration Policy as also the Charter for the
Nomination & Remuneration Committee (NRC). The Policy covers the Policy
on remuneration to our Managing Director, Key Managerial Personnel and
other officers. The Charter lays down the Rights, Roles and
Responsibilities of the NRC. A Policy on Board diversity has also been
adopted by the Board. A comprehensive Governance Guidelines for Board
effectiveness has also been adopted by the Board on the recommendation
of NRC. The Guidelines lay down the following:
- Composition and Role of the Board (Role of the Chairman, Directors,
size of the Board, Managing Director, Executive Director, Non-Executive
Directors, Independent Directors, their term, tenure and Directorship).
- Board appointment, Industrial Development.
- Directors remuneration (Guided by Remuneration policy).
- Subsidiary oversight.
- Code of Conduct (Managing Director, Executive Director,
Non-Executive Directors, Independent Directors).
- Board effectiveness review.
- Mandate of the Board Committee.
The Remuneration Policy and the Charter for NRC are available at:
10. Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The particulars pursuant to section 134 (m) of the Companies Act, 2013
is attached with this report as Annexure-B.
11. Risk Management Policy
We have adopted a Risk Management Policy to identify and categorize
various risks, implement measures to minimize impact of these risks
where it is deemed necessary and possible, and a process to monitor
them on a regular basis. More details are given under Section-6 of
Corporate Governance Report (page - 37).
12. Corporate Social Responsibility
We have constituted a CSR committee for the purposes of recommending
and monitoring the CSR initiatives of the Company.
The Board on the recommendation of CSR Committee adopted a CSR Policy.
The same is available on Company''s website at
(http://www.tataelxsi.com/company/corporate-sustainability). The CSR
objectives are designed to serve societal, local and national goals in
the locations that we operate in, create a significant and sustained
impact on local communities and provide opportunities for our employees
to contribute to these efforts through volunteering.
The Annual Report on the CSR initiatives undertaken by the Company as
per the Companies (Corporate Social Responsibilities Policy) Rules,
2014 is annexed as Annexure-C. The details of the CSR Committee and its
composition is given in section-7 of the Corporate Governance Report
(page - 38).
13. Closure of wholly owned Subsidiary Company
During the year under review the formalities for closure of company''s
wholly owned subsidiary, Tata Elxsi (Singapore) Pte. Ltd. has been
completed. Presently the Company do not have any subsidiary Company.
14. Corporate Governance
In terms of Regulation 34(3) and 53(f) of the SEBI (Listing Obligations
& Disclosure Requirements) Regulations, 2015 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.
15. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, Ms. Jayashree Parthasarthy, a Company
Secretary-in-Practice, was appointed to undertake the Secretarial
Audit. The Report of the Secretarial Audit for the year ended 31st
March, 2016 is attached to the Directors'' Report at page No. 30.
16. Prevention of Sexual Harassment
We have zero tolerance for sexual harassment at workplace and have
adopted a Policy on prevention, prohibition and redressal of sexual
harassment at workplace in line with the provisions of the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and the Rules there under for prevention and
Redressal of complaints of sexual harassment at workplace.
No concerns have been raised under POSH during the year 2015-16.
17. Vigil Mechanism
Our company has established a Vigil Mechanism for its employees and
Directors, enabling them to report any concerns of unethical behaviour,
suspected fraud or violation of the Company''s''Code of Conduct''.
To this effect the Board has adopted a''Whistle Blower Policy'' (WBP),
which is overseen by the Audit Committee. The policy provides
safeguards against victimization of the Whistle Blower. Employees and
other stakeholders have direct access to the Chairperson of the Audit
Committee for lodging concerns if any, for review.
The said policy has been posted on our intranet where all the employees
have access. Our Company conducts''Policies Awarness Campaign''
regularly for its employees at its various centres, and the WBP also
features in the campaign amongst others.
There are no loans, guarantees and investments made by us u/s 186 of
the Companies Act, 2013 during the year under review.
The extract of Annual Return in MGT-9 is attached and forms part of the
Directors''report. We have neither accepted nor renewed any deposit
during the year under review.
The Unclaimed Dividend in respect to the financial year 2008-09 is due
for remittance to Investors'' Education & Protection Fund (IEPF) on
October 13, 2016 in terms of Section 125 of the Companies Act, 2013.
There are no material changes and commitments affecting the Company''s
financial position between the end of the financial year to which this
financial statement relate and the date of this report.
Delloitte Haskins & Sells (DHS), Chartered Accountants, the Statutory
Auditors, who have been appointed for a period of 3 years and whose
re-appointment is to be ratified at the ensuing Annual General Meeting,
have confirmed vide their letter dated April 22, 2016 that they are
eligible for re-appointment.
Your Directors wish to thank employees, customers, partners, suppliers,
and above all, our shareholders and investors for their continued
support and co-operation.
On behalf of the Board of Directors
Bengaluru, 28th April, 2016