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ALLSEC Technologies Ltd.

BSE: 532633 | NSE: ALLSEC | Series: NA | ISIN: INE835G01018 | SECTOR: Computers - Software Medium & Small

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

The Directors take pleasure in presenting to you the 19th Annual Report of the Company covering the financial year ended March 31, 2018.

FINANCIAL HIGHLIGHTS

Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards (IndAS) notified under the Companies (Indian Accounting Standards) Rules 2015 with effect from April 1, 2017. The performance of the Company for the financial year 2017-18 is summarized below:

(INR In Lakhs)

STANDALONE

CONSOLIDATED

YEAR ENDED

YEAR ENDED

31-Mar-18

31-Mar-17

F/(A)*

31-Mar-18

31-Mar-17

F/(A)*

INCOME FROM SERVICES

12,878

11,621

11%

32,496

31,812

1%

TOTAL COSTS

10,568

9,701

(9%)

26,393

25,540

(3%)

OPERATING MARGIN

2,310

1,920

20%

6,103

6,272

(3%)

OTHER INCOME

518

305

70%

677

589

15%

DEPRECIATION

328

336

2%

450

554

19%

INTEREST EXP /(INCOME)

22

(148)

(115%)

(29)

(21)

37%

PROFIT / (LOSS) BEFORE TAX

2,478

2,037

22%

6,359

6,328

0%

PROFIT / (LOSS) AFTER TAX

2,899

2,254

29%

5,953

6,172

(3%)

* F/(A) means Favorable / (Adverse)

Business Outlook

Allsec Technologies Limited has two core business units. One is Human Resources Outsourcing (HRO) business that offers the following services as part of its service offering: Managed payroll services, Human Resources Management Services (HRMS) & Employee Statutory services. The Second business unit offers Customer Life Cycle Management (CLM) to customers across the globe. This service is offered across verticals like Retail, BFSI (Banking Financial Services & Insurance), E-Commerce, F&A (Finance & Accounting), Manufacturing & Home Appliance Companies in both the domestic market as well as in the International market.

The HRO business unit has continued to grow steadily this year making inroads into the Asian, Middle-East and African markets. There has been increased focus in offering the services in multiple formats like managed services, SAAS based services, and as a stand-alone product. As of this year, Allsec’s Payroll services are utilized by customers across 35 countries in the world. Additionally, the service is also offered as a bundled offering with other significant modules like Time & attendance, Absence management, Reimbursement & expense management and Performance Management systems. The division has also entered into strategic tie-ups with global leaders for Payroll Compliance support in new geographies and in Time keeping for offering payroll services on a common platform.

On the technology front the Company has adopted new cutting edge technologies like Robotic Process Automation (RPA), Machine Learning, Big data & Chatbots. The portfolio of services continues to be augmented and value additions are offered to existing clients and to prospects. These technology enabled services will power the Company to break new grounds globally, allow organic growth and facilitate new customer acquisitions.

The CLM-Domestic business has improved in volumes and in margins as compared to the previous year. This is a result of our strategy of identifying processes that have better margins and also by strengthening relationships with existing clients by way of client farming and relationship nurturing. During this year incremental volumes have been added in most of the existing businesses through volume increase and process additions.

The CLM-International business has remained stable over the last year. The Company has focused on nonvoice opportunities and has added a few new verticals like ‘Energy sector’ and ‘healthcare’. Additionally, the Company is investing in emerging technologies to improve margins and to pass on cost savings to customers.

Overall financial performance of your Company has improved substantially during this year. Profit before Tax (PBT) has increased from INR 2,037 lakhs last year to INR 2,478 Lakhs (22%). Your Company has reported Net profit after tax for the current year at INR 2,899 Lakhs as compared to Net profit after tax of INR 2,254 lakhs for the previous year. Detailed analysis of the Standalone results forms part of the Management Discussion and Analysis (MD&A) report provided separately as part of the Annual Report.

Consolidated Revenues for the year stands at INR 32,496 lakhs as compared to INR 31,812 lakhs in the previous year. Consolidated Profit before Tax (PBT) stood at INR 6,359 lakhs compared to INR 6,328 lakhs in the previous year. Net profit after tax stood at INR 5,953 lakhs as compared to INR 6,172 lakhs in the previous year.

The Company has delivery centers in India at Chennai, Bangalore & NCR locations. In the international front, Allsec has centers in Manila (Philippines) and Dallas (United States of America).

Dividend

The Board of Directors of your Company recommend a dividend of INR 5/- per share of the face value of INR 10/- each for the financial year ended March 31, 2018. The dividend shall be payable subject to approval by the members in the ensuing Annual General Meeting.

Deposits

Your Company has not accepted any deposit from the public during the period under review and did not have any outstanding deposits.

Directors

Mr. Manish Gaur (DIN : 00340911) & Mr.Kapil Modi, (DIN : 07055408) Nominee Directors of First Carlyle Ventures Mauritius on the Board of the Company resigned during the year with effect from February 15, 2018. The Board wishes to place on record its sincere appreciation for the valuable services rendered by them.

Mr. A. Saravanan, Director retires at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

Key Managerial Personnel

The Key Managerial Personnel of the Company is provided below:

1. Mr. R. Jagadish - Chief Executive Officer

2. Mr. P. Raghunath - Chief Financial Officer

3. Mr. Gagan Preet Singh - Company Secretary

Mr. A. Mohan Kumar resigned during the year and Mr. Gagan Preet Singh has joined the Company as DGM-Legal and Company Secretary with effect from November 9, 2017.

Employees

The information relating to Employees to be given under Section 197(12) of the Companies Act, 2013 is given in Annexure G.

Corporate Governance

Your Company is fully compliant with the requirements under SEBI (LODR) Regulations, 2015. The report on Corporate Governance is given in Annexure A.

Certificate from Statutory Auditors confirming the compliance of conditions of Corporate Governance is included in Annexure B. CEO / CFO compliance certification is attached in Annexure I.

In terms of Regulation 34 of SEBI (LODR) Regulations, 2015, the Management Discussion and Analysis report is given in Annexure - C.

Subsidiary Companies

The Company has three subsidiaries as at year end namely Allsec Tech Inc., USA, Allsectech Manila Inc., Philippines and Retreat Capital Management Inc., USA.

The Consolidated Financial statements of the Company and its subsidiaries are prepared in accordance with Indian Accounting Standards and forms part of this Annual Report and accounts.

The Annual Accounts of the said subsidiaries and its related detailed information will be made available to the investors of the Company seeking such information at any point of time. The copies of the Annual accounts of the subsidiaries will also be available for inspection by any investor at the corporate office of the Company. Performance and financial position of subsidiaries included in consolidated financial statements of the Company is provided in Annexure-E.

The Company monitors performance of subsidiary companies (list of subsidiary companies has been provided in the financial statements), inter-alia, by the following means:

a) The Company does not have any material unlisted Indian subsidiary, and hence, is not required to nominate an Independent Director of the Company on the Board of any subsidiary.

b) The Audit Committee reviews the financial statements, in particular, the investments made by the subsidiary companies on a quarterly basis.

c) Your Company has formulated a Policy on Material Subsidiary as required under SEBI (LODR) Regulations, 2015 and the policy is hosted on the website of the Company under the web link http:// www.allsectech.com/Allsec/investor-information. aspx

Compliance under Companies Act, 2013

Pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, your Company has complied with all the compliance requirements that are applicable to the Company and the detail of such compliances under Companies Act, 2013 are provided below:

Extract of Annual Return

An Extract of the Annual Return as of March 31, 2018, pursuant to the sub section (3) of Section 92 of the Companies Act, 2013 and forming part of the report is placed in the Company’s website under the Investor’s tab https://www.allsectech.com/investor-information.

Board Meetings held during the year

During the year, 5 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached as Annexure-A to this Report.

Directors’ Responsibility Statement

The Board of Directors acknowledges the responsibility of ensuring compliance with the provisions of Section 134(3)(c) of the 2013 Act. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements:

Your Directors confirm the following that:

(i) In preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures wherever applicable;

(ii) The Directors had 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 had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors had prepared the annual accounts on a going concern basis.

(v) Proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

(vi) Proper systems were in place so as to ensure compliance with the provisions of all applicable laws and were adequate and operating effectively.

Independent Directors and Board Evaluation

The Independent Directors of the Company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013.

Independent Directors, considered / evaluated the performance of the Non-Independent Directors at a meeting without anyone from the Non-Independent Directors and Management present.

The Board members subsequently evaluated performance of the Board, the Committees and Independent Directors as per the criteria and questionnaire developed for the purpose as mandated by Section 134(3) of the Companies Act, 2013 & Rule (8) of the Companies (Accounts) Rules, 2014.

Familiarisation Programme

Your Company follows an orientation and familiarization program through various reports / codes / internal policies for all the Directors with a view to update them on the Company’s policies and procedures on a regular basis. Periodic presentations are made at the Board Meetings on business and performance, long term strategy initiatives and risks involved. The details about the familiarization program have been posted on the website of the Company under the web link http://www. allsectech.com/Allsec/investor-information.aspx.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Company’s policy on appointment and remuneration including criteria for determining qualifications, positive attributes, and independence are provided in the Corporate Governance Report forming part as an Annexure-A to this Report.

Related Party Transactions

The Company has formulated a policy on Related Party Transactions as approved by the Board and the same is uploaded on the Company’s website http://www. allsectech.com/Allsec/investor-information.aspx

All the Related Party Transactions that were entered into by the Company during the financial year 2017-18, were on an arm’s length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and are within the limits obtained by a prior approval in accordance with the requirements of the SEBI (LODR) Regulation, 2015. The transactions entered into pursuant to such approval are placed periodically before the Audit Committee.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company otherwise than disclosed in the Corporate Governance Report, forming part of this report.

Details of the transaction are provided in Form AOC-2 which is attached as Annexure - F to this Report.

Vigil Mechanism / Whistle Blower Policy

In accordance with the requirements of the Companies Act 2013, your Company has established a Vigil Mechanism / Whistle Blower Policy for Directors and Employees to report genuine concerns. The said Policy meets the requirement of the Vigil Mechanism framework under the 2013 Act, and the members can view the details of the policy on http://www.allsectech.com/Allsec/investor-information.aspx. No member has been denied access to Vigil Mechanism and no complaints have been received during the year.

Corporate Social Responsibility

The Board of Directors of your Company has constituted the CSR Committee to help the Company to frame, monitor and execute the CSR activities.

As per Sec. 135 of the Companies Act 2013, the Board of every Company referred to in sub-section (1), shall ensure that the Company spends, in every financial year, at least 2% of the average net profits of the Company made during the three immediately preceding financial years.

As per computations made under Section 198 of the Companies Act, 2013, the Company must contribute approximately INR 23 lakhs as CSR Contribution. During the financial year 2017-18, the Company has formulated a CSR policy and the CSR committee had a meeting on January 24, 2018 which approved the proposal to contribute INR 6 lakhs towards education which falls under the categories prescribed in Schedule VII of the Companies Act 2013 under clause (ii) - promoting education, including special education and employment enhancing vocational skills specially among children, women, elderly and the differently abled and livelihood enhancement project.

Allsec’s CSR initiatives are based on the focus areas approved by the Board and thereby benefitting the community. The Company is in the process of identifying specific long term projects to make CSR contributions. Although during the current year, the Company’s spend on CSR activities has been less than the limits prescribed under the Companies Act, 2013, the Company shall endeavour to spend the complete amount on CSR activities in accordance with the Companies Act requirements in the coming year.

Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the financial statements.

Internal Financial Control and Adequacy

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures.

Auditors

M/s. Walker Chandiok & Co., LLP the Statutory Auditors of the Company were appointed at the previous Annual General meeting held on 11th August 2016 for a period of 5 years The Company has received necessary certificates under Sections 139 and 141 of the 2013 Act, to the effect that they satisfy the conditions under the 2013 Act and the rules made thereunder for the above appointment. As required under the SEBI (LODR) Regulations 2015, the Statutory Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Comments on Auditors’ report

There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors and Company Secretary in Practice in their reports respectively. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.

Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2018 and May 24, 2018 (date of the Report)

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2018) and the date of the Report (May 24, 2018).

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. P. Sriram, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is given as an Annexure- E and forms part of this Report.

Names of Companies which have ceased / become Subsidiaries / Joint Ventures / Associates

During the year there is no change in the status of any subsidiary.

Quality & Information Security

The vision of Quality and Information security at Allsec is to institutionalize excellence in quality of services and security of data of Clients, customers and Organization by developing and deploying simple, efficient and effective processes using the latest Quality models in accordance with ISO 9001 (Quality Management System) (QMS) interlined with data security controls prescribed by International standards such as ISO 27001:2013 (Information Security Management System). ISO 9001 certification at Chennai has been upgraded to latest version i.e. ISO 9001:2015 from ISO 9001:2008 which enhances strength of our QMS to a new level. ISO 27001:2013 certification renewal at Chennai and Manila facilities is completed. This year, our Bangalore facility is included in ISO 27001:2013 scope and this facility is also certified for ISO 27001:2013. PCI DSS compliance certifications at Chennai and Manila locations and ISO 27001:2013 certification at Irving facility are renewed during the year. Our Irving facility in the US is newly certified for PCI DSS this year. Further, existing SSAE 16 / ISAE 3402 which is a graduated version of SAS 70 Type

II certification for the HRO business has been renewed and upgraded to SSAE 18 / ISAE 3402.

Disclosure as per Securities and Exchange Board of India (Employees Stock option Scheme and Employee Stock Purchase Scheme) Guidelines, 2011

The options granted under the scheme have lapsed.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

Since your Company is in the Information Technology Enabled Services (ITES) Sector, the provisions relating to conservation of energy and technology absorptions are not applicable. The details of the earnings and expenditure in foreign currency are given below:

Particulars

INR in Lakhs

Earnings in Foreign Currency

4,040

Expenditure in Foreign Currency

199

Dividend received in foreign currency

54

Investor Services

Your Company will constantly endeavor to give the best possible services to the investors. Towards this end, the following are some of the initiatives taken by the Company:

The investor Information section of the Website of the Company (www.allsectech.com), furnishes important financial details and other data of frequent reference by the investors as per the Regulation 46 of SEBI (LODR) Regulations, 2015. The Company also has a Stakeholders Relationship Committee to address shareholders grievances, if any, and resolve them as & when they are reported. The Company has provided an exclusive email id: investorcontact@allsectech.com for the investors to facilitate the redressal of the queries and complaints of the investors.

The Company has appointed M/s. Karvy Computershare Pvt. Ltd. as Registrars & Share Transfer Agents for attending to issues relating to Physical shares and routine services requests.

Shareholders can also address any unresolved issues or information requests by postal mail to - Company Secretary, Allsec Technologies Ltd., 46B, Velachery Main Road, Chennai 600042.

Shareholders are requested to update their email addresses with their respective Depository Participants so that the Company can provide better services at all times.

Acknowledgement

Your Directors wish to place on record their appreciation for the excellent support and co-operation given by customers, shareholders, service providers and Government Agencies.

Your Directors also record their appreciation and gratitude to Financial Institutions and Bankers for their continued support and timely assistance in meeting the Company’s resource requirements. Your Directors acknowledge the dedicated services rendered by all the employees of the Company.

For and on behalf of the Board of Directors

Chennai A. Saravanan R. Jagadish

May 24, 2018 Director Director

DIN : 00033683 DIN : 00033589

Director’s Report