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Datamatics Global Services Ltd.

BSE: 532528 | NSE: DATAMATICS |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE365B01017 | SECTOR: Computers - Software Medium & Small

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Annual Report

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Director’s Report

Dear Members, On behalf of the Board of Directors, I am happy to present the 27th Directors'' Report of your Company with the Balance Sheet and Profit & Loss Account for the year ended March 31,2015. FINANCIAL PERFORMANCE Your Company''s financial performance for the year ended March 31, 2015 as compared to the previous financial year ended March 31,2014 is summarized below: Particulars (Rs in Million) Consolidated 2014-15 2013-2014 Income 8,347 7,411 Profit Before Interest, Depreciation & Tax 918 976 Interest 68 40 Profit Before Depreciation and Tax 850 936 Depreciation 210 161 Profit Before Tax 640 775 Provision for Taxation 155 194 Profit After Tax 485 581 Balance Brought Forward from Previous Year 901 586 Profit Available for Appropriation 1,332 1,073 Depreciation pursuant to the Transitional Provisions as per Companies Act, 2013 25 - Dividend 77 116 Tax on Dividend 15 20 Transfer to General Reserve 30 47 Balance Carried Forward 1,185 890 (Rs in Million) Standalone 2014-2015 2013-2014 Income 1,965 2,224 Profit Before Interest, Depreciation & Tax 426 566 Interest 51 16 Profit Before Depreciation and Tax 375 550 Depreciation 84 65 Profit Before Tax 291 485 Provission for Taxation 38 70 Profit Tax 253 415 Balance Brought Forward from Previous Year 1,242 948 Profit Available for Appropriation 1,495 1,362 Depreciation pursuant to the Transitional 18 - Provisions as per Companies Act, 2013 Dividend 59 74 Tax on Dividend 8 5 Transfer to General Reserve 25 41 Balance Carried Forward 1,385 1,242 OVERVIEW OF COMPANY''S FINANCIAL PERFORMANCE Your Company is a global IT and ITeS organization focused on delivering proactive and smart, next-generation business solutions helping enterprises across the world address their business challenges. Datamatics has become the 2nd fastest growing IT & BPO Company listed on the BSE Limited and National Stock Exchange of India Limited. On a Consolidated basis, your Company achieved a total revenue of Rs. 8,347 million as compared to Rs. 7,411 million in the previous year at a growth rate of 12.62%. The profit after tax for the current year was Rs. 485 million as against Rs. 581 million in the previous year. The total revenue on a standalone basis is Rs. 1,965 million as compared to Rs. 2,224 million in the previous year. The profit after tax for the current year was Rs. 253 million as against Rs. 415 million in the previous year. This was partly due to your Company hiving off its publishing BPO business into a subsidiary which was subsequently merged into PreMedia Global Private Limited, Chennai to form Lumina Datamatics Limited. CRISIL RATINGS Credit Rating Information Services of India Limited (CRISIL), a subsidiary of S&P, has reaffirmed A1 credit rating for 3rd year in succession on the total bank loan facilities of the Company. This rating signifies that your Company has a strong degree of safety regarding timely payment of financial obligations. This rating reaffirms the financial stability and the low risk profile of the Company. DIVIDEND During the year, your Board of Directors had declared and paid an interim dividend of Rs. 0.35 per equity share (7%). In addition to the interim dividend and based on the Company''s performance, your Directors are pleased to recommend for approval of members, a final dividend of Rs. 0.65 per equity share (13%) for Financial Year 2014-15. The total dividend for the Financial Year 2014-15 amounts to Rs. 1 per equity share (20%) of face value of Rs. 5 each. TRANSFER TO RESERVES The Company has transferred Rs. 30 million to the General Reserve from the amounts available for appropriation. An amount of Rs. 1,185 million is proposed to be retained in the Profit and Loss Account. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year 2007-08 is due for transfer on October 28, 2015 to the Investor Education and Protection Fund established by the Central Government. ACCEPTANCE OF FIXED DEPOSITS The Company has not accepted any fixed deposits during the year. SUBSIDIARY COMPANIES The Company has the following Indian subsidiaries (including the step down subsidiaries) as on March 31,2015: 1. Datamatics Software Services Limited 2. Cybercom Datamatics Information Solutions Limited 3. Lumina Datamatics Limited 4. CIGNEX Datamatics Technologies Limited 5. Datamatics Vista Info Systems Limited The Company has the following overseas subsidiaries (including the step down subsidiaries) as on March 31,2015: 1. Datamatics Global Services, Inc. (US) 2. Datamatics Global Services GmbH (Germany) 3. Datamatics Global Technologies GmbH (Germany) * 4. Datamatics Global Solutions GmbH (Germany) 5. Datamatics Global Services GmbH d.o.o. in Bosnia (Switzerland) 6. Datamatics Technologies UK Limited (UK) 7. Datamatics Infotech Limited (UK) 8. Datamatics Global Services Pty Limited (Australia) 9. Datamatics Global Technologies Limited (Mauritius) 10. Datamatics Global Holding Corporation (BVI) @ 11. Datamatics Global Technologies AG (Switzerland) # 12. Datamatics Global Services FZ-LLC (Dubai) 13. Lumina Datamatics Inc. (US) 14. Lumina Datamatics GmbH (Germany) 15. CIGNEX Datamatics Corporation (BVI) 16. CIGNEX Datamatics, Inc. (US) 17. CIGNEX Datamatics, Inc. (Michigan) $ 18. CIGNEX Datamatics GmbH (Germany) $$ 19. CIGNEX Datamatics Pte. Limited (Singapore) * In the process of winding-up. @ Dissolved and struck off from the Register of Companies, BVI w.e.f. March 23, 2015. # In the process of liquidation. $ Incorporated in the Michigan during the year. $$ Incorporated in Germany during the year. During the year, the Board of Directors reviewed the performance and financial position of the subsidiaries. Pursuant to the provisions of Section 136 of the Companies Act, 2013 the financial statements of the Company including consolidated financial statements along with the relevant documents and separate audited financial statements in respect of subsidiaries are available on the website of the Company. A statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is annexed to the financial statements of the Company. DATAMATICS'' DELIVERY CENTRES IN TIER II CITIES Tier II cities are the most favored destination of highly cost- sensitive BPO service providers. As a business strategy, major BPO players have been moving to and expanding their operations in Tier II cities. Datamatics was early to realize this business imperativeness and set up its first Tier II delivery centre at Nashik during July 2007 followed by the Puducherry site in October 2011. These initiatives have helped the Company leverage on the vast untapped talent pool at these locations as compared with Tier I cities while simultaneously keeping the attrition within manageable limits. Puducherry After its successful foray into the publishing business at Puducherry, the site is now home for one more BPO service line viz. Document Management Solutions. From a value creation perspective, the site is a cost-effective location. Our headcount at the Centre is more than 448 staff members. Nashik After successfully executing all our BPO service lines, the site is currently gearing up to tap the IT talent potential of Nashik. Datamatics is among the top 10 Employers at Nashik. The Company has been set up to employ locals in IT & BPO sector. The 55,000 sq. ft. state-of-the-art-facility is the single largest facility which accommodates 1,232 employees. The guest house is located in close proximity to the office. The Company owns approximately 12 acres of land situated on the Bombay-Agra Highway (NH-3), about 10 kms away from our existing office. The Company intends to build a campus in the future. In addition to its primary role as the Delivery Centre of Excellence, both these sites are also functioning as Business Continuity Centre to support all other delivery units of the Company. The success of business operations at the above two Tier II sites enables the Company to stay ahead of competition and provides impetus to the Company''s focus on such strategic initiatives. FUTURE GROWTH STRATEGY The Company made significant progress in the last fiscal year in key accounts, owing to efficient execution of projects. In the current fiscal year, we plan to continue to maintain focus on select verticals which include BFSI, eRetail, International Organizations, Manufacturing, Publishing and Transport. We will continue to offer IT & BPO offerings and also the new age disruptive technologies which include SMAC and BPM offerings, to deliver next generation solutions to our global customers, using Open Source platforms as well as proprietary technologies. To capitalize on the new growth opportunity that is being created by the disruptive digital trend, we are focusing on select few areas and have made disciplined investments in these growth areas, which include: Consulting & Advisory Practice This year we have institutionalized our Consulting & Advisory practice. The focus of this practice is twofold. First, to help clients establish their Technology, Business Process Management (BPM), and Digital Transformation Strategy, which covers areas like Mobility, Analytics, Cloud, and Enterprise Content Management. The second is to facilitate Datamatics in moving up the value chain and provide higher value added services and function as a strategic partner to the clients. Digital Transformation Our strategic focus during the last 18 months to invest in the upcoming technological advancements have positioned us well to capture the new growth opportunities in the Digital Transformation space. Today, Datamatics team is well placed to help its clients to transform into a truly digital, data-driven enterprise and empower them to take advantage of the digital revolution to innovate, differentiate and grow. Datamatics team can help its clients to formulate their Digital Strategy; define their mobile strategy; create solutions for their customers and their employees that provide access to applications from anywhere on any device. Data-to-Intelligence Underlying every business insight is data and this data is growing exponentially. This is forcing enterprises to integrate new technologies and find new ways to use data and insights as a competitive advantage. Datamatics team has the expertise and experience to walk its clients through their Data-to- Intelligence journey; from Data Capture & Collation to Data Management, Data Cleansing & Migration to Analytics and extracting Intelligence from Enterprise Data, including analysing of unstructured data. And this would differentiate us from other IT service providers. QUALITY It would not be an exaggeration to claim that Quality is a way of life in our Company. Our Company believes in the very philosophy that quality encompasses and permeates every action and thought process. This year our strategic theme has been Delivery as per Commitment and Quality of Solutions. In this wake, several initiatives have been rolled out to transform the way we look at our customer and execute our projects. Winning accolades and awards for the quality of our deliverables has almost become a habit. We have been continuously winning best quality and service awards at events organized by our various prestigious Fortune 500 customers. This year too we won several such awards. Your Company is the first and the only I.T. Company to have won the International Asia Pacific Award for Quality in Services sector. The Award was won against competition from hundreds of companies from 38 countries spread across the world, including the US, Japan, Australia, New Zealand, Russia, Canada, China, Israel, South Korea, Peru and Mexico. Your Company also won the prestigious IMC IT Award for Quality in January, 2014. Further significant initiatives of your Company towards quality are: 1) Lean Six Sigma Initiative Leveraging the proven, effective and recognized Lean Six Sigma continues to be one of the key strategies to bring in exponential improvements in efficiencies, productivity and customer delight. This initiative continues to deliver significant benefits to the Company with improvements in Productivity, Efficiency, Quality and Customer Satisfaction. Over 320 Lean Six Sigma Projects and 1600 Kaizen Projects have been completed since the launch of this initiative in 2007. For the past consecutive four years, our improvement projects have been ranked within the top 5 projects out of around 80 projects from multiple industries and organizations in QIMPRO Conventions. In the last financial year, an overall benefit that includes tangible and intangible benefits, of Rs. 15 million with an ROI of more than 200% was achieved through these performance improvement methodologies. The Company has about 18 Six Sigma Green Belt and 25 Six Sigma White Belt certified professionals along with 3 Six Sigma Black Belt and 1 Six Sigma Master Black Belt certified professionals. The Company spent over 4500 person hours of training around continuous improvement in the last financial year. 2) Certifications Your Company, keeping true to its commitment of designing and implementing its Quality Management Systems as per the global standards and benchmarks has been assessed and certified on standards such as ISO 9001:2008, SEI - CMMI Version 1.3, and ITIL. New centers that we added last year have also been assessed and certified for compliance to these standards. This year we are also in the process of upgrading the SEI-CMMi certification to level 5. As you are aware, the thrust and demands on information security is increasingly becoming stricter. In line with the demands as well as our own analysis of the information security landscape, we continue to lay great emphasis on the Information Security Management Systems (ISMS). Last year, we not only retained the ISO 27001:2005 certification for our ISMS, but also brought all our centers under the purview of the information security management. We have further strengthened our ISMS by incorporating the guidelines of and getting assessed and certified for international standards such as SSAE 16 and HIPAA. 3) Customer Satisfaction Tracking Last year, we conducted a comprehensive branding survey among our customers as to assess their priorities and their perceptions about the Company against these priorities. We are happy to share with you that there is no jarring incongruence between the two. However, as an organizational improvement initiative, we have identified, as shared earlier, delivery as per commitment and quality of solutions. The Customer Satisfaction and Loyalty index measuring process continues to provide invaluable insights into our customer''s expectations and our performance vis-a-vis these expectations. This is done once every six months and captures customer''s feedback on a wide range of parameters that encompass each aspect of service excellence. We feel proud to share with you that overall our Customer Satisfaction Index has been 4.73 on a scale of 1-6 (1 being the lowest and 6 being the highest) with a significant number of customers rating us a perfect 6/6 on all the parameters. Over 25 key customers have rated perfect 6/6 on the organization improvement theme of Delivery as per commitment and quality of solutions. In addition to this formal mechanism, we also have systems that capture customer feedback received through other formal and informal channels. The results of these also show an improving trend. 4) Metrics and Process Compliance Index We use a Delivery Index to measure and compare the performance for each Line of Business (LOB). It incorporates the three key indicators of performance of any project viz Quality, Effort and Schedule adherence and a stop light (red-amber-green) dashboard is used to display the performance. In addition, regular process compliance checkups and speedy follow-ups on the corrective and preventive actions have helped us significantly to keep non-compliances in check and thereby reduce rework and defects at the source. Process Compliance Index (PCI) measures and compares the compliance levels for the different LOBs. The PCI are well above the defined targets. The defined quality gates ensure that we are adhering to process requirements and deliverables at each of the critical stages of the project. A regular review of this with Senior Management ensures that the processes are on track. In order to create processes at par with global best practices, we have also tied up with a number of global forums such as ISBSG, CSI and PMI to understand and benchmark ourselves against key metrics. We have also introduced advanced statistical tools and analysis and simulation techniques to improve our ability to predict the performance of the projects and thereby take proactive steps and measures to improve the performance. PROCESS ENGINEERING (PE) CELL The PE cell of our Company is given the mandate of process improvement and development of innovative IP solutions. These solutions are used for its BPO service offerings as well as for providing the same to our clients to use it in their own offices. The PE Cell had a good year since some of the solutions based in i-Q and i-Bridge (earlier Robokey) got a very favorable response from BFSI sector. The solutions devised for trade finance operations and tab based KYC compliance for Banks were adopted by a leading private sector Bank of India. With their reference many other banks are following suite. PE Cell also developed an intelligent auto-classification solution for its large e-retail clients and this software called ClassyFire is getting a very good response for all our clients. These solutions are enabling our clients to make their process paperless and carry out their transactions swiftly, improve accuracy and lower these efforts. Some of our clients won recognition and awards for these solutions including the Information Week Edge Award by two of our clients. We are creating an R&D team at our Nashik office to accelerate this product development further, derive additional benefits and provide more business for the Company. INTELLECTUAL PROPERTY RIGHTS Your Company is leading towards innovation in tools, products and platform, resulting in more intellectual property rights being created. It has always invested in building a core intellectual property that is offered to our clients through our products and innovative solutions. Our policy is to protect our competitive position, among other methods, by filing Indian and international intellectual property applications to protect the identity and recognition of our Company and to protect the technology and improvements that we consider important to the development of our business. Your Company currently has 17 copyrights registered till date for its proprietary processes and various logos. It has also registered 36 proprietary logos as Trade Mark and Service Mark in India, UK, USA, Australia, China, Norway, Switzerland, EU and its 28 member countries. During the fiscal year 2015, your Company''s subsidiary Lumina Datamatics Limited has filed two (2) trademark applications for logo Lumina Datamatics and tagline Lumina Datamatics We Manage Knowledge in the United States Patent and Trademark Office (USPTO), Indian Registrar of Trademarks Office and European Union (EU) Community Trademark Office. The logo Lumina Datamatics and tagline Lumina Datamatics We Manage Knowledge has been successfully registered in the EU and its 28 member countries. LEARNING & DEVELOPMENT (L&D) L&D at Datamatics successfully conducted the following during FY 2014-15: The Eagles@Datamatics Program Phase VII was flagged off in April 2014, with 36 Eagles & 23 Game Changers. This team was mentored by 6 senior members and a strong leadership team. The duration of the program was 7 months. The objective of Eagles VII team was to enhance footprints within existing clients with the help of Game Changers. This helped the organization in creating passion and zest among all the team members. The team members explored and enhanced their creativity, resourcefulness, bonding, accountability, influencing skills and belief in themselves. This phase of the Eagles was regarded as the most successful program as it helped the organization generate the additional revenue of Rs. 23 crores and a healthy pipeline of app.Rs. 53 crores. 1) Blended Learning Training via the WebEx Training tool: The L&D team has expanded their horizons for training execution to be done via WebEx for employees across the organization. With the help of the tool L&D is able to address the global learning audience with ease and also large audiences effectively. This helps the L&D teams to execute training and participants to participate in training from any location. It''s a win-win situation for all the parties involved. The L&D team records the training for future usage and executes the pre- recorded training via WebEx. Recorded WebEx training is made available to employees as and when they feel the need to revisit any training in case they have missed this during the live session. This has imbibed a continuous learning attitude amongst the employees. 2) Learning Foreign Languages L&D team supported to create a new language skill set on both Italian & German language - Level 1. The employees were trained and all of them successfully completed the Level 1 certification. 3) Project Management Preparatory Course (PMP) - 5th Edition Being a Registered Education Provider for PMP, a 5-day PMP training was scheduled in Mumbai, MIDC premises for those engaged in an activity that contributes to the management of a project, portfolio, or program, as part of the project management profession. With all the above, the L&D team has clocked 240,337 man-hours in the year 2014-2015 as compared with 210,515 man-hours in the year 2013-2014 with an average feedback of 4 out of 5. HUMAN RESOURCES MANAGEMENT (HRM) AND EMPLOYEE RELATIONS The IT business is chiefly talent-based and a people driven business. Employees therefore, play an indispensable and significant role in the success of the Company, and are the key assets of the Company. Hence, we precisely term them as ''Human Capital''. Our Company''s endeavour is to create a work environment that imbibes a positive attitude for excellent performance. The key areas of the Company''s HRM strategy include a comprehensive approach to managing people, the workplace culture and environment. Managing a strong employer and employee relationship leads to the ultimate success of an organisation. A strong relationship at any work centre will lead to more qualitative & efficient productivity, generate cohesion among the employees and create a smooth functional environment. The HR department of the Company regularly conducts the following programs: Climate Survey and Open House to ensure that employees views and opinions are taken on board, as well as the Company''s larger strategy is discussed and shared with them. Both these initiatives have HR Head, CEO and leadership teams of each LOB to bring a shared understanding of the larger organizational direction. New Entrant Observation (NEO): It is a session conducted by HR for new entries after they complete 30 days to get their feedback. Client site visit: To establish connect, to address various issues, and for continuous to & fro performance related information exchange with our employees based at different client locations. Saarathi: With a view to ensure smooth integration of new entries into the processes, systems and work culture Buddy System which is known as SAARATHI has been introduced. Saarathis is the Point of contact, friend and guide for the new joinee during initial days within the organization. A Saarathi card is given to Saarathi during Euphoria. Euphoria-Monthly Departmental Meet: A monthly meeting is conducted by the HR, offering the team an opportunity to interact with each other, come together and celebrate. Our Company has rich diversity in its employees with a common aim to excel. A culture of cooperation and solidarity is infused by celebrating National holidays and festivities such as Independence & Republic Day, Diwali, Dandiya & Christmas. Initiatives such as JOSH, where employees offer their innovative ideas help to unleash their creativity, maintain a balance between work & life and create a deep sense of bonding among employees. REWARDS AND RECOGNITION Rewards & Recognition programs aren''t just about making employees feel good, though that''s a crucial part of the process. These programs can help to boost up employee morale & productivity and induces improvement in performance level. Therefore, continuous scaling exercises are carried out to identify the outstanding performer and rightly reward and recognize such individuals and teams. Annual Awards: Datamatics believes in the need to recognize top performers and thank them for their hard work and commitment shown throughout the year. This is done in a high profile large scale ceremony held companywide wherein all the employees are invited. There are various categories of awards such as merit, excellence to leadership awards catering to each area of the business. Instant Performance Recognition (EoM & Spot Award): The objective is to encourage high performers by conferring the instant awards. The aim is to instantly recognize significant achievement, excellence in performance and special contributions by individuals and teams. There are 3 kinds of spot awards: a). Spot Individual; b) Spot Team; c) Employee of the month. Rendezvous: Coffee with the Line of Business Heads (LoBH): Instant Award winner are invited to have coffee with the LoBH. Personal notes are inscribed on the NOTEivate cards by the LoBH are presented to all the awardees. Praise for Performance: This program aims to recognize the hard working employees who have received client appreciation. It aims to recognize the efforts of employees in front of a larger audience to induce a sense of pride and contentment. iAppreciate: These cards are awarded by the Reporting Manager to appreciate their team members at right time for good work and efforts. Employee Relations & Engagement has become a top business priority in this rapid-cycle economy. HR knows that having a high-performing workforce is essential for growth and survival. They recognize that a highly engaged workforce can increase innovation, productivity, and bottom-line performance. Additionally, HR grossly performs to workout in selecting the outstanding performers for the work centres spread out widely. Thus, the pillars of success of the Company are delineated clearly to obtain future directions towards progress & architect definite shape to remain as competitive player in the global market. AWARDS & ACHIEVEMENTS During the year, in recognition of its performance and initiatives, the Company received several awards, some of which are: - Datamatics was awarded the ''Fastest Growing Indian Company Excellence Award - 2014'' at the 6th International Achievers Summit & Awards ceremony on ''Global Corporate Achievements & Social Responsibilities'' held in Bangkok; - Datamatics was voted India''s most Respected Software Company in Corporate Governance at the 5th Annual India Leadership Conclave & Indian Affairs Business Leadership Award; - Datamatics entered the Leader Category for the 2014 IAOP Global Outsourcing 100; - Datamatics was awarded for ''Excellence in Quality'' at IMC - IT Awards 2014; - Datamatics won the ''Global Quality Challenge Award'' by United Healthcare at their Semi-Annual UHC Operations Global Quality Challenge for the seventh time in a row; - Won the ''Information Week Edge Award'' for providing cutting edge DMS solution for MMRDA; - Won the ''Information Week Edge Award'' for process improvement project for a leading private Insurance company; - Datamatics won the ''Technology Partner for Global Transit Revenue Systems award'' at the 4th Annual Metro Rail India Summit; - Datamatics won the coveted ''Global Achievers Award'' for Business Excellence at the 75th International Achievers Conference; - Datamatics made it to the Technology Fast 500TM ranking by Deloitte - a list that recognizes the fastest growing companies in Asia-Pacific; - Dr. Lalit Kanodia, Chairman & Whole time Director received the prestigious ''Asia Pacific Entrepreneurship Award'' under the Special Achievement category; - Mr. Rahul Kanodia, Vice Chairman & CEO, was felicitated with ''CEO of the Year'' award at the Asian Leadership Awards held in Dubai; - Mr. Rahul Kanodia, Vice Chairman & CEO was presented with the ''IT Leadership Award'' at the National Awards For IT Excellence. SHARE CAPITAL As on March 31,2015, the Paid-up Share Capital of the Company is '' 294,746,685/- divided into 58,949,337 equity shares of '' 5/- each fully paid up. During the year, there has been no change in the Share Capital of the Company. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Retirement by rotation In accordance with the provisions of the Companies Act, 2013 (Act) and the Articles of Association of the Company, Mrs. Asha L Kanodia and Mr. Rahul L. Kanodia, retires by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Resignation of Independent Director Mr. Dileep C. Choksi resigned from the position of directorship of the Company with effect from April 2, 2015 due to his other commitments and pre-occupation. The Board placed its sincere appreciation for his valuable contribution during his tenure as a director of the Company. Independent Director Pursuant to the provisions of Section 161(1) of the Act and the Articles of Association of the Company, Mr. Vinay Aggarwal was appointed as an Additional Director designated as Non- Executive Independent Director with effect from May 27, 2015 and he shall hold office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing appointment of Mr. Vinay Aggarwal as a Director of the Company. As per the provisions of the Act, Independent Directors are required to be appointed for a term of five consecutive years, but shall be eligible for re-appointment on passing of a special resolution by the Company and shall not be liable to retire by rotation. The Company has received declarations from all Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement entered with the Stock Exchanges. Re-appointment of Dr. Lalit S. Kanodia, Chairman & Whole Time Director Dr. Lalit S. Kanodia was appointed as a Chairman & Whole Time Director of the Company for a period of five years with effect from May 15, 2010. On the recommendation of the Nomination & Remuneration Committee, the Board of Directors at its meeting held on May 27, 2015, has re-appointed Dr. Lalit S. Kanodia as a Chairman & Whole Time Director of the Company for a further period of five years with effect from May 15, 2015, subject to the approval of the members. POLICY ON DIRECTOR''S APPOINTMENT AND REMUNERATION AND OTHER DETAILS In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued thereunder and Clause 49 of the Listing Agreement, as amended from time to time, the Board of Directors at their meeting held on August 12, 2014 formulated the Remuneration Policy of your Company on the basis of recommendations of the Nomination and Remuneration Committee. The policy on Director''s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director, and also remuneration for Key Managerial Personnel and other employees, forms part of Corporate Governance Report of this Annual Report. PARTICULARS OF EMPLOYEES Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 read with Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure - A to this Report. A statement containing names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 Lakh or more, or employed part of the year and in receipt of Rs. 5 Lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure - A to this Report. Details of employees remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours before 21 days of the Annual General Meeting and shall be made available to any shareholder on request. The full annual report including the information required under Rule 5 is being sent electronically to all those members who have registered their email addresses and such details are also available on your Company''s website: www.datamatics.com/investors/AnnualReports. MEETINGS OF THE BOARD Five meetings of the Board of Directors were held during the year. For further details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this Annual Report. BOARD AND COMMITTEE EVALUATION Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 (Act) states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Act states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the Act and the corporate governance requirements as prescribed by SEBI under Clause 49 of the Listing Agreement. The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. DIRECTORS'' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge confirms that: (i) in the preparation of the annual accounts for the year ended March 31,2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; (ii) they have 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 the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on that date; (iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act 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; (v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and (vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. AUDITORS Statutory Auditors The Statutory Auditors, M/s. Kanu Doshi Associates, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and have confirmed their eligibility and willingness to accept the office of the Statutory Auditors, if reappointed. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. Secretarial Auditor Pursuant to the provisions of Section 204 of the Companies Act, 2013 (Act)and the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, the Company with the approval of the Board, appointed Mr. Tushar Shridharani, Practicing Company Secretary, to undertake the secretarial audit for the financial year ended March 31, 2014. Mr. Tushar Shridharani has submitted the Report confirming compliance with the applicable provisions of the Act and other rules and regulations issued by SEBI/other regulatory authorities for corporate law. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed as Annexure - B to this Report. INFORMATION ON AUDITORS'' OBSERVATIONS 1) Statutory Auditors: Observations of Auditors mentioned in the Independent Auditors Report under the heading ''Emphasis of Matter'' regarding non-provisioning for diminution in the value of investments in the subsidiaries has been adequately explained in Notes to Accounts. These investments are for long term and of strategic nature. It is clarified that though the net worth of these subsidiaries has declined, the management is confident of turning around these subsidiaries in the near future. Hence, it is decided not to make any provision for diminution in the value of investments made in the subsidiaries. The other observations are self-explanatory and do not require further comments in this report. 2) Secretarial Auditor: There were no qualifications, reservations or adverse remarks made by the Secretarial Auditors in their report. CORPORATE GOVERNANCE A Report on Corporate Governance together with a certificate from the Statutory Auditors of the Company forms part of the Annual Report. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis forms an integral part of this Report and gives detail of the overview of the industry, overview of the business, outlook, internal controls systems and their adequacy, risk and concerns and discussion on financial performance during the financial year. COMPOSITION OF THE COMMITTEES OF THE BOARD Audit Committee The Audit Committee consists of the following members: Mr. R. K. Saraswat, Chairman; Mr. Sudhir Deshpande, Member and Mr. Shahzaad Dalal, Member. Nomination & Remuneration Committee The Nomination and Remuneration Committee consists of the following members: Mr. Sudhir Deshpande, Chairman; Mr. R. K. Saraswat, Member and Dr. Lalit S. Kanodia, Member Stakeholders Relationship Committee The Stakeholders Relationship Committee consists of the following members: Mr. R. K. Saraswat, Chairman and Mr. Sudhir Deshpande, Member. Corporate Social Responsibility Committee The Corporate Social Responsibility Committee consists of the following members: Mr. Rahul L. Kanodia, Chairman; Mr. R. K. Saraswat, Member; Mr. Vidur V. Bhogilal, Member and Mr. Sameer L. Kanodia, Member. EMPLOYEE STOCK OPTION PLANS Details of the shares issued under Employee Stock Option Plan (ESOP), as also the disclosures in compliance with Section 62 of Companies Act, 2013 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Employee Benefits) Regulations, 2014 and SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 are annexed as Annexure - C to this Report. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the standalone financial statements provided in this Annual Report. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES In line with the requirements of the Companies Act, 2013 and the Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company''s website at http://www.datamatics.com/investors/ corporate-governance. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and related parties. All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. No Material Related Party Transactions were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable. Your Directors draw attention of the members to Notes to accounts of the financial statement which sets out related party disclosures. INTERNAL FINANCIAL CONTROL SYSTEMS RELATED TO FINANCIAL STATEMENTS The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of operations. The Audit Committee reviews adequacy and effectiveness of the Company''s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company''s risk management policies and systems. Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with Generally Accepted Accounting Principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Auditors. The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of your Company. The accounts of the subsidiary companies are audited and certified by their respective Auditors for consolidation. Your Company operates in SAP, an ERP system, and has many of its accounting records stored in an electronic form and backed up periodically. The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of account. Your Company has automated processes to ensure accurate and timely updation of data in the underlying ERP system. The Management periodically reviews the financial performance of your Company and takes necessary action, wherever necessary. WHISTLEBLOWER/VIGIL MECHANISM The Company is committed to adhere to the highest standards of loyalty, honesty, integrity, transparency and conduct of business operations in an ethical manner. In compliance with Companies Act, 2013 (Act), rules framed thereunder and the Listing Agreement entered with Stock Exchanges and principles of good corporate governance, the Audit Committee of the Company is committed to adopting procedures to receive and address any concern or complaint regarding accounting or auditing matters, internal accounting controls, reporting of fraudulent financial information or any other company matters involving fraud, employee misconduct, illegality or health and safety and environmental issues which cannot be resolved through normal management channels. Accordingly, the Board of Directors have formulated a Whistleblower Policy/Vigil Mechanism in compliance with the provisions of Section 177(10) of the Act and Clause 49 of the Listing Agreement and is also available on the Company''s website http://www.datamatics. com/investors/corporate-governance. This Policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of employees and the Company. RISK MANAGEMENT Your Company has a well defined, robust and effective Information Security and Risk mitigation system. The information security management system based on international standard ISO 27001 addresses all concerns and apprehensions towards handling information that is sensitive and confidential effectively. The risk mitigation system ensures that all potential risks associated with business, processes and infrastructure are within control. Business Continuity Plan (BCP) and Disaster Recovery (DR) plans are integral plans of the project plans and they are periodically audited as per predefined schedule to ensure the readiness and effectiveness with minimal impact on the business as usual. BCP also ensures that the organization is well prepared for risks related to hardware, software, infrastructure and people. The applicability and effectiveness BCP and DR are also regularly reviewed during Management Information Security Forum (MISF) that takes place once in every quarter. Risk management is controlled by the Risk Management Policy. In line with the requirements of the Companies Act, 2013 and the Listing Agreement, the Board of Directors has approved the Risk Management Policy to monitor the risks and their mitigating actions. There are some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report. CORPORATE SOCIAL RESPONSIBILITY The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company during the financial year 2014-15 are annexed as Annexure - D to this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy), Rules, 2014. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future. EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company is annexed as Annexure - E to this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information required in connection with conservation of energy, technology absorption and foreign exchange earnings and outgo, under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the Directors furnish herein below the required information: A. CONSERVATION OF ENERGY: i) Our Company being in IT & ITeS industry, our operations are not energy intensive. Adequate measures have been taken to conserve energy. ii) The Company has not taken any steps for utilising alternate sources of energy. iii) There were no additional capital investment on energy consumption equipments and proposals if any, being implemented for reduction of consumption of energy as the nature of your Company''s operations entails a very low level of energy consumption. B. TECHNOLOGY ABSORPTION: i) Every effort is made by the Company to update the technological skills of its technical staff in order to ensure that they possess adequate skills to enable them to service the Company''s clients. ii) Your Company has not imported any technology during the year under review. iii) Your Company is predominantly a service provider and therefore has not set up a formal R&D unit. However, it continues to develop software tools and products in its existing delivery setup. For and on behalf of the Board Dr. Lalit S. Kanodia Chairman (DIN: 00008050) Place : Mumbai Date : May 27, 2015

Director’s Report