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Mindteck (India)

BSE: 517344|NSE: MINDTECK|ISIN: INE110B01017|SECTOR: Computers - Software
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Directors Report Year End : Mar '17    Mar 16

To the Members,

The Directors hereby present the Twenty-Sixth Annual Report of your Company along with the audited financial statements for the financial year ended March 31, 2017. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

1. FINANCIAL RESULTS

(in Rs. Millions)

Standalone

Consolidated

Year ended March 31, 2017

Year ended March 31, 2016

Year ended March 31, 2017

Year ended March 31, 2016

Revenue from operations

836.38

866.46

3,416.56

3,116.30

Other income

22.02

22.13

22.49

22.41

Employee benefits expense

556.74

512.74

2,219.03

1,984.94

Cost of technical sub-contractors

15.71

16.94

696.53

570.02

Other expenses

189.55

207.59

350.83

354.51

Profit before finance cost, depreciation, taxes and amortization

96.41

151.33

172.68

229.24

Finance cost

0.70

0.50

3.74

3.24

Depreciation and Amortization expense

14.00

15.62

17.00

18.18

Profit Before Tax

81.71

135.21

151.93

207.82

Tax expense

27.37

53.19

27.69

(51.46)

Profit After Tax

54.33

82.02

124.24

259.27

Paid-up Equity Share Capital

253.84

251.73

249.68

247.57

Earnings Per Share (EPS)

2.19

3.27

5.00

10.50

2. COMPANY AFFAIRS Standalone

On a standalone basis, your Company recorded revenue of Rs. 836.38 million, as against Rs. 866.46 million in the previous year. Mindteck''s net profit stood at Rs. 54.33 million, as against Rs. 82.02 million in the corresponding previous year. At an operating margin level, Mindteck recorded EBITDA of Rs. 96.41 million (11.53%) this year as against Rs. 151.33 million (17.46%) last year.

Consolidated

During the year under review your Company recorded consolidated revenue of Rs. 3,416.56 million as against Rs. 3116.30 million in the previous year. Of the consolidated revenue that was recorded, 71% is attributed to the US and the balance pertains to rest of the world.

Mindteck''s Consolidated Net Profit for the year stood at Rs. 124.24 million, as against Rs. 259.27 million in the corresponding previous year.

At an operating margin level, Mindteck recorded EBITDA of Rs. 172.68 million (5.05%) this year as against Rs. 229.24 million (7.36%) last year.

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relates and the date of the report.

3. DIVIDEND

The Board has recommended a dividend of 10% (Re.1 per Equity Share of Rs. 10 each) for the year ended March 31, 2017. This translates into a total outlay of Rs. 30,551,459 including Dividend Distribution Taxes.

4. BUSINESS FOCUS AND HIGHLIGHTS

Mindteck provides product engineering and information technology services to Fortune 1000 clients, start-ups, leading universities, and government entities around the globe. The Company is devoted to delivering knowledge that is critical to help our clients compete, innovate and propel forward. Mindteck''s legacy expertise in embedded systems and enterprise applications is complemented by its more recently recognized successes in loT-based solutions, such as those, for developing smart cities. It also has a strong track record in storage, life sciences, healthcare and medical devices. Mindteck is among a select group of global companies appraised at Maturity Level 5, Version 1.3 of the CMMI Institute''s Capability Maturity Model Integration (CMMI). The Company is also one of the Founding Members of The Atlas online, a visualization tool for research developed by The Center for International Development (CID) at Harvard University. Global alliances include the Intel IoT Solution, GE Digital, Thread Group, IoT Global Network and ZigBee.

Storage and Semiconductor

Mindteck''s experience in storage spans over two decades. The Company''s engagements have included storage software development, testing, hardware and firmware design, productized solutions, consultancy and implementation services. It has a readily available talent pool in the areas of system development, quality assurance, and automation and data center administration. The Company''s top storage clients have continuously provided the Company excellent customer satisfaction ratings for its consistent support in executing their business critical projects.

Mindteck is also a technology partner for the Storage Networking Industry Association (SNIA), a not-for-profit global organization comprised of member companies spanning the global storage market. The mission of this organization is to lead the storage industry worldwide in developing and promoting standards, technologies, and educational services to empower organizations in the management of information. During the year, a key storage expert from Mindteck was elected to the SNIA-India Board.

For over a decade, Mindteck has been serving the semiconductor equipment manufacturing industry. The Company''s expertise is comprised of a wide spectrum of IT services, including Semiconductor (SEMI) standards implementation, Device Net implementation, proprietary protocol development, Mechanical Engineering Services (MES), Enterprise Device Monitoring, Electronic Design Services (EDS), simulator development, automation, Change management and end-to-end testing services. Mindteck''s ready-to-deploy solution accelerators, such as a device simulator, automated equipment software testing framework and Semiconductor Equipment Communications Standard (SECS)/Generic Equipment Model (GEM)-based Factory Automation (FA) test harness, helps lower project risk and cost. Key highlights executed in FY2016-17 include:

- Expanded storage certification capabilities and added it as a new offering. Currently, Mindteck provides certification services on Citrix, VMware, Windows, VSAN and Red Hat; it is also building expertise in Microsoft Azure certification.

- Following the boom in all-flash storage devices, Mindteck has developed expertise in flash technology and is now providing services to many new players in this technology area.

- Won two new projects for software development and mechanical engineering with an atomic layer deposition group of a semiconductor equipment company in the US.

- New order with a semiconductor foundry for a wireless notification device in APAC.

- Received an award for setting up product automation testing teams within a storage company.

Electronic Design Services

Mindteck''s expertise in hardware design and embedded software development has helped it become a trusted partner to many of the world''s leading semiconductor, automotive, industrial, flow metering, and energy management companies.

Mindteck''s Electronic Design Services (EDS) group provides core embedded technology solutions and services in a wide variety of sectors, including industrial control systems, gas control and monitors, computer modules, electric vehicle chargers, instrumentation, storage, smart energy and IoT The Company''s integrated product design capabilities span hardware/firmware design, mechanical design, software development, connectivity solutions and value engineering. With a sound ecosystem of established partnerships, Mindteck''s comprehensive approach to product development consistently results in the reduction of time-to-market for the end-customer. Highlights of recent work include:

- Successfully delivered a medical communication gateway board for multiple ECG devices.

- Completed a car audio player upgrade project for an existing Original Equipment Manufacturer (OEM) customer, enabling them to migrate to a new hardware platform.

- Engaged with an existing customer in the area of analytical instruments to develop hardware and firmware for their next generations Gas Chromatography (GC) system based on new sensor technology.

- Executed the design and development of two light therapy products for a UK-based customer.

- Launched a wearable device for production floor automation to improve productivity in semiconductor fabrication.

- Completed a complex wireless flow meter design for a Swiss customer; also, supporting large scale production of the flow meter.

- Won multiple design projects in the automotive area from an industry pioneer.

Smart Energy and Wireless

Mindteck is one of the earliest adopters of the ZigBee standards, and possess its own ZigBee and 6LowPan wireless stacks. Having developed ZigBee stacks for major silicon providers, Mindteck''s work is demonstrated through their solution accelerators:

- Wireless short-range and long-range communication modules

- Sensor modules for monitoring solar power generation/ efficiency

- Connectivity with WiFi, ZigBee, LoRa, LTE

The Company has been consistently focusing on wireless communication and wireless sensor networks for design and development of wireless monitoring and load control solutions in the automation space. Mindteck has been a ZigBee Alliance contributor member since 2004. It has developed ZigBee Stack and Application profiles for leading semiconductor companies, and conceptualized and developed ZigBee-based products for OEMs. Mindteck is also investing in proactive development of LoRa stacks. The Company has solution IPs that are market-ready and in line with smart city initiatives. It has also ventured into Wi-Fi based solutions, including wearables.

The visibility and acceptance of Mindteck''s smart energy offerings increased with the introduction of its Internet of Things (IoT) solutions—parking, building automation, smart grid, street lighting, health care and sustainable energy efficient solutions.

Enterprise IT Solutions

Mindteck has a strong track record of providing enterprise business solutions for large and medium enterprises in all streams of technologies. In the current year, Mindteck augmented its expertise in mobility solutions by delivering standalone solutions along with its Smart City solution offerings. The development approach has progressively moved to an Agile/Scrum methodology for most projects executed at Mindteck.

The range of Mindteck''s service offerings in this area include:

- Enterprise Business Application development using Microsoft, Java and LAMP technologies

- Enterprise Mobility solutions on IOS, Android and Windows platforms

- Application Maintenance/upgrade/migration across technologies

- Data Analytics and Visualization

- Independent Verification and Validation of IT solutions

Some of the major projects executed by Mindteck during the current year include:

- SharePoint portal for one of the leading banks in India.

- SharePoint-based internal tool for one of the largest global IT enterprises.

- Performance Management Systems for one of the leading banks in India.

- Independent verification and validation in the area of medical compliance.

- Mobility application on iOS and Android for a world leader in car entertainment systems.

Application Support Services and BPM

Mindteck provides application support services based on customer requirements. For one of the largest global IT enterprises worldwide, the Company has been providing support for internal business tools for several years. Mindteck''s services have been rated very high on customer satisfaction, consistently - in part due to a combination of the right IT skills, along with a strong understanding of the business processes of the customer.

Mindteck has also been providing services in Business Process Management for areas such as insurance. For underwriting services, Mindteck''s servicing for the niche catastrophic insurance sector has been much appreciated by the client.

Cloud Computing and Big Data

Mindteck provides end-to-end cloud-based IT Consulting Services across multiple cloud variants (private, public and hybrid cloud enablement). We have in-depth expertise in various cloud platforms, including Amazon Web Services (AWS), Azure, Eucalyptus, Open Stack and VMware, backed with SMEs and technical architects with strong enterprise background and application management, data center and IT infrastructure expertise.

Mindteck''s cloud enterprise solutions expertise includes cloud-based monitoring and analytics, and big data solutions. The Company has built a solution hosted on Amazon EC2 that leverages cloud infrastructure to provide the best analytical solutions with regard to the dashboard, custom reports and data mining capabilities. Its holistic analytics and business intelligence service offerings help clients act instantly on their data.

Mindteck''s Mind-CDMI brings niche expertise in cloud-based storage interoperability in the form of a Cloud Data Management Interface.

Mindteck''s MegaMind is a big data platform that enables automated extraction of car license plate information. A high volume of multi-media content (multiple images) streamed from IP cameras located in a city is processed and the car number plate is extracted with greater than a 70% success rate. This solution is targeted for security system providers and law enforcement.

Healthcare and Medical Devices

Mindteck''s Kolkata and Bengaluru Development Centers were recertified for ISO 13485 - the world''s most acclaimed medical device standards by many global organizations.

Mindteck''s medical device expertise focuses on medical imaging, remote monitoring and patient monitoring devices. The company integrates its experience in Life Sciences and Healthcare to provide scientific software solutions and product engineering related services in this niche domain. During the year, Mindteck enriched its capabilities in the areas of predictive analytics for pharma manufacturers. Other new offerings include RA/QA services, pharmacovigilance and scientific data management of pharma research laboratories.

In the UK, Mindteck expanded its business with a key medical device client. It is also pursuing a major technology partnership with a leading medical device company in the area of smart healthcare.

Life Sciences

Mindteck provides niche engineering services to many major players of the life sciences industry. Starting from test and measurement companies, Mindteck works across multiple industry segments within analytical and bio-analytical instruments, such as control systems and physical and chemical testing instruments which are extensively used in nanotechnology and materials science. The Company''s offerings include software and hardware development across many emerging areas, such as mobility, big data and analytics. The service capabilities of Mindteck broadly cover the complete product engineering needs of device manufacturers.

For over ten years, Mindteck has been a leading software and hardware solutions provider for the life sciences instrument segment. With its blend of engineering expertise and IT experience, Mindteck is uniquely positioned to deliver against the exacting, and often demanding needs of the industry. Mindteck has longstanding relationships with many major players of the industry and the company''s services have consistently exceeded client expectations.

During the financial year:

- Mindteck initiated a new offering in platform testing of laboratory software, and is developing a Lab Intelligence tool for a Southeast Asian company that will ultimately be an enterprise lab analytics tool.

- Started an engagement with a property casualty insurance company, and an offshore engagement with an analytical instrument company.

Research and Development

Mindteck''s R&D team has developed a Smart Solutions portfolio to stay ahead in the global market and to help our clients derive more value. It includes: Smart Parking, Energy Monitoring and Management, Smart Lighting, Smart Healthcare, and Smart Collaboration Solutions. Key pilot projects executed by R&D during the year 2016-17 include:

Implementation of a Smart Parking Solution for a leading Indian Urban Local Body (ULB): This innovative car occupancy detection solution uses both Wi-Fi camera with edge-based video analytics and battery-operated wireless sensors to capture car parking occupancy details, along with the date and time stamp. The sensors, which have multi-year battery life, were tested for extreme weather conditions at the client location.

The aggregated real-time parking availability information effortlessly integrates with any government-run and third-party parking aggregator service via the Application Programming Interfaces (APIs). Service providers can also run analytics on real-time parking data for detecting any revenue leakages and implementing dynamic pricing models. The solution includes a Smart Parking Mobile App that enables motorists to navigate and zero in on the nearest parking in real-time, resulting in reduced fuel consumption and carbon footprint.

Big Data POC deal with an Indian global telecommunications services company: For telcos, it is mandatory to store the call detail records (CDRs) of every incoming and outgoing call on their network for a period of seven years. Since the data volume of these CDRs is huge, data older than three months is stored on low-cost LTO-4 tapes. Telcos are also mandated to respond to specific CDR pull requests from government investigative agencies in a timely manner which requires restoring the tape and searching for specific CDRs. The current process is manually cumbersome—in addition to being cost prohibitive when the data has to be stored.

To ease the whole process, Mindteck is now partnering with a multinational storage and data management company to replace the Tivoli-based tape storage system for CDRs by developing a Hadoop-based big data solution which archives the CDR data to their Storage GRID Webscale—a low-cost object storage product that can scale in petabytes of storage and provides software-defined storage. This enables the CDR data to be available online for pull requests and analytics.

Mindteck''s R&D team is also focusing on creating new innovative smart solutions, products and processes and further assimilating them with existing IoT solutions to enhance the company''s smart city offerings. Over the past year, it has conducted proof of concepts (POCs) with clients for select projects and collaborated on initiatives with marquee clients.

Government and Smart Cities

Mindteck has been working with state and local governments since 1999. The company has successfully executed numerous projects in health and human services, education, constituent services, and public safety in the US, including in Pennsylvania, Texas, Michigan, Massachusetts, Oregon, District of Columbia, Wisconsin, California, West Virginia, New York, New Hampshire and Florida. Mindteck has a strong history of delivering projects comprising application development, program and project management, business analysis, testing, strategic consulting and professional services. During the year, Mindteck initiated a new business engagement with an established software services company that provides a myriad of business and technical solutions to the commercial and federal government market.

Within the smart city space, Mindteck further accelerated momentum by implementing smart capabilities for cities. Mindteck''s notable highlights in this area include:

- Deployment of smart meters, along with software back-end integration, for the first smart grid project a large electricity supply company in South India.

- Implemented the first smart parking solution for a large municipal corporation in India.

- Won a smart home pilot automation/grid project.

CENTERS OF EXCELLENCE Storage Testing

Mindteck''s Storage Center of Excellence (CoE) has a long-term vision for the storage product line with a well-structured implementation plan. The company has the capacity and capability to offer a diverse range of storage engineering services. Leading storage solution vendors have benefited from our comprehensive quality assurance.

Mindteck'' Storage Testing CoE is primarily aimed at providing the skills, people, processes and infrastructure to enable our customers to build and enhance product quality in the storage space. For over a decade, Mindteck has built comprehensive expertise in storage functional testing, automation, performance testing, system testing and certification testing

- especially in the SAN, NAS and unified storage space, in tandem with multiple storage product vendors.

Wireless and Smart Energy

Mindteck continues to focus on providing monitor and control solutions by designing blocks required for wireless connectivity for IoT. The company''s current focus is on control nodes, gateways with multi-technology connectivity, and web server/applications for support over the cloud for building automation and energy-efficient solutions across various industry sectors. Mindteck won a new project with an existing client in the Solar PV business for integrating a new module and also secured extensions for their application support.

With mobile applications becoming a part of every enterprise solution, Mindteck has built mobility expert centers with deep skills in developing both hybrid and native mobile applications on IOS, Android and Windows smart phones. As part of this initiative, Mindteck has dedicated teams in various aspects of mobility, including HTML5 and Java Script-based hybrid application development using tools like Cordova and PhoneGap, native application development on IOS using Xcode/Objective C and native Android development using Eclipse and Android Studio/Java. Mindteck has also nurtured the backend development related to mobility using Jason-based Web Services and proprietary protocols. Based on this CoE initiative, Mindteck has acquired customer projects and developed mobile applications in the smart energy, medical and infotainment areas. Some of these applications were deployed in Google Play Store, Apple iTunes and the Windows Store.

Medical Devices

Mindteck Kolkata''s CoE has made further in-roads into value development. It has developed expertise in medical data exchange protocols, such as HL7 and DICOM, medical data security aspects involving FIPS140-2 and HIPPA, and FDA-recommended development guidelines. Mindteck has worked with a wide set of medical vital parameters and gathered significant expertise in using medical data simulators.

Life Sciences

With two, state-of-the-art, in-house analytical instrument laboratories, Mindteck is capable of delivering software and hardware solutions, executing R&D assignments, and conducting analytical testing on a variety of instruments for customers.

Change in Nature of Business

There were no changes in the Nature of Business of the Company during the year.

5. QUALITY

At Mindteck, we believe Quality is the result of a carefully constructed cultural environment. It has to be fabric of the organization, not part of the fabric. - Phill C

Mindteck''s Quality Management System (QMS) is a collection of business processes focused on consistently meeting customer requirements and enhancing their satisfaction. Mindteck continues to adhere to ISO certifications 9001:2008, ISO 13485:2003, ISO 27001:2013 and CMMI-DEV Version 1.3 Maturity Level 5.

Mindteck''s appraisal at CMMI-DEV Version 1.3 Maturity Level 5 is a testament to its corporate commitment and attention to quality, providing significant benefits to clients and employees. Mindteck leveraged CMMI-DEV Version 1.3 Maturity Level 5 to achieve improved customer satisfaction, and ultimately further profitability and growth.

ISO certifications demonstrate Mindteck''s ongoing commitment to delivering a consistent level of quality to customers through its well-defined process and procedures. Mindteck is enterprise-wide certified against ISO 9001:2015 (Quality Management) and continues to hold domain-specific quality certification ISO 13485:2003 (for Medical Devices). This assures the company''s commitment to providing value to clients through process-driven innovation principles at every stage of medical device development and design.

Mindteck understands that the confidentiality, integrity, and availability of information are vital to business operations and success. Mindteck uses a multi-layered approach to protect key information by constantly monitoring and improving its applications, systems, and processes to meet the growing demands and challenges of dynamic security threats. Last year, again, Mindteck successfully maintained CMMI Level 5 for software and hardware development projects in its Bengaluru and Kolkata locations. Additionally, the Capability Maturity Model Integration (CMMI) Institute accepted Mindteck as a partner. In its role as Partner, the Company is now certified to provide official CMMI Institute services in Capability Maturity Model Integration (CMMI) and Data Management Maturity (DMM).

6. INFRASTRUCTURE

Mindteck has offices in the US, UK, Singapore, Malaysia, Philippines, Bahrain, Netherlands, Germany and India. There are also four development centers equipped with R&D laboratories across the globe. The infrastructure includes space for workstations, conference rooms, meeting rooms, labs and a world-class communication system. The innovative ''best shore delivery model'' has provided our customers with a mix of onsite, offshore, near shore, offshore-onsite and other hybrid delivery options across geographies, for faster and more efficient delivery of quality services.

7. SUBSIDIARIES

On March 31, 2017, Mindteck had six wholly-owned subsidiaries: Mindteck, Inc. (US), Mindteck Middle East Limited S.P.C. (Bahrain), Mindteck Software Malaysia SDN. BHD. (Malaysia), Mindteck Singapore Pte. Ltd. (Singapore), Mindteck (UK) Limited (UK) and Chendle Holdings Limited (British Virgin Islands). Mindteck (UK) Limited has two subsidiaries – Mindteck Germany GmbH (Germany) and Mindteck Netherlands B.V. (Netherlands). Mindteck Singapore Pte. Ltd. has one subsidiary -Mindteck Solutions Philippines, Inc. (Philippines).

The Consolidated Financials have been audited and form part of this Annual Report. The financials of the subsidiaries have also been audited by the respective statutory auditors. The Consolidated Financials have been prepared and audited in strict compliance with applicable Accounting Standards and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as prescribed by SEBI. All information, including (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation and (j) proposed dividend as directed by the Ministry of Corporate Affairs, has been disclosed in the Consolidated Balance Sheet. Financial Highlights with the Indian rupee equivalent of the figures given in the foreign currency, along with exchange rate as on closing day of the financial year, and the statement pursuant to Section 129(3) in Form AOC-1, forms part of this Annual Report as Annexure-1.

Further, the Company undertakes that the annual accounts of the subsidiary companies and the related detailed information will be made available to any investor seeking such information at any point of time. The annual accounts of the subsidiary companies and related detailed information will also be kept for inspection by any investor at Mindteck''s Registered Office and that of the respective subsidiary companies. We shall furnish a hard copy of the accounts of subsidiaries to any shareholder on demand and a soft copy of accounts is available on the Investors section of Company''s website www.mindteck.com. The Holding, as well as Subsidiary companies, regularly files the applicable data to various regulators and government authorities, as and when required.

None of the Subsidiaries, Joint ventures or Associate companies ceased during the year.

8. RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered during the financial year were on an arm''s length basis and in the ordinary course of business. There were no material significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons and their relatives except with its wholly-owned subsidiaries. The particulars of such contracts or arrangements with related party are attached in Annexure-2.

9. AWARDS AND RECOGNITION

Mindteck is among the select group of global companies appraised at CMMI-DEV Version 1.3 Maturity Level 5 from CMMI Institute. It is enterprise-wide certified against ISO 9001:2015— Quality Management and continues to hold domain-specific quality certification ISO 13485:2003 for Medical Devices. In recognition of its security efforts, Mindteck was certified for ISO 27001:2013-Information Security Management System. Additionally, this year Mindteck was certified to provide official CMMI Institute services in Capability Maturity Model Integration (CMMI) and Data Management Maturity (DMM).

10. LITIGATION

No material litigation is outstanding as on March 31, 2017 except one recovery suit filed in connection with advance payment made for the proposed office premises, which was not occupied by the Company.

11. CHANGES TO SHARE CAPITAL

The Board of Directors of the Company allotted 21,366 Equity Shares on May 20, 2016, 40,666 Equity Shares on August 10, 2016, 78,996 Equity Shares on November 11, 2016 and 69,766 Equity Shares on February 10, 2017 pursuant to allotment of shares under the Employee Stock Option Schemes. Consequently, the outstanding, issued, subscribed and paid up Equity Shares increased from 25,173,101 to 25,383,895 as on March 31, 2017.

12. BOARD COMMITTEES

The details of various Committees of the Board are provided in the Corporate Governance Report.

13. FIXED DEPOSITS

The Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as on the Balance Sheet date.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, Guarantees or Investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the Financial Statements provided in the Annual Report.

15. TRANSFER TO RESERVES

During the year, the Company transferred Rs. 54,334,201 to its reserves.

16. DIRECTORS

As per Article 112 of the Articles of Association of the Company, Mr. Meenaz Dhanani retires by rotation as Director in the ensuing Annual General Meeting and, being eligible, offers himself for reappointment. A brief resume of Mr. Meenaz Dhanani is included in the notice for the Annual General Meeting. Mr. Meenaz Dhanani was re-appointed as an Executive Director of the Company for a period of three years effective from October 04, 2016.

Mr. Sanjeev Kathpalia was appointed as an Additional Director effective from February 10, 2017 and subsequently he was elevated to the position of Managing Director and Chief Executive Officer with effect from March 01, 2017 for a period of three (3) years. The Resolution seeking the approval of Members for appointment of Mr. Sanjeev Kathpalia as Managing Director and Chief Executive Officer forms part of the notice for the 26th Annual General Meeting. A brief resume of Mr. Sanjeev Kathpalia is included in the notice for the Annual General Meeting.

Declarations by Independent Directors

All Independent Directors have given declarations to the effect that they meet the criteria of independence as laid down under Regulation 16(1)(b) & 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Sub-Section 6 & 7 of Section 149 of the Companies Act, 2013.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has carried out an annual performance evaluation of its Board''s performance, the Directors individually, as well as the evaluation of the working of its Committees and Chairperson.

Board Diversity

The Company places great emphasis on the principle of diversity, including gender diversity. Diversity throughout the organization makes great business sense. The Company maintains that appointments to the Board should be based on merit as well as complementing and expanding the skills, knowledge and experience of the Board as a whole.

Policy on Directors'' appointment and remuneration

Mindteck has an appropriate mix of Executive and Independent Directors to maintain the independence of the Board, and separate its functions of governance and management. As on date, the Board consists of Eight Directors, two of whom are Executive or Whole-time Directors, one is Non-Executive and five are Independent Directors, including one woman Director. The Board periodically evaluates the need for change in its composition and size. The policy of the Company on Directors'' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Sub-section 3 of Section 178 of the Companies Act, 2013, adopted by the Board, is attached as Annexure-3 to the Board''s report. We affirm that the remuneration paid to the Directors is as per the terms.

Number of meetings of the Board

The Board met four times during the Financial Year, the details of which are given in the Corporate Governance report that forms part of this Annual Report. The intervening gap between any two meetings was within the limit prescribed by the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Vigil Mechanism/Whistleblower Policy

The Company has established a Whistleblower Policy for Directors and employees to report their genuine concern and the said policy is attached as per Annexure-4.

17. KEY MANAGERIAL PERSONNEL

Mr. Sanjeev Kathpalia was appointed as Managing Director and Chief Executive Officer with effect from March 01, 2017 for a period of three (3) years. The term of Mr. Yusuf Lanewala as Managing Director and Chief Executive Officer completed on March 31, 2017 and he continues to be a Non-Executive Chairman of the Company with effect from April 01, 2017.

18. AUDITORS Statutory Auditor

Mindteck''s statutory auditor, M/s. B S R & Company, Chartered Accountants, Bengaluru, holds office as Auditor until the conclusion of the ensuing Annual General Meeting and by virtue of compulsory rotation of Auditor, the Board recommends the appointment of S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W/E300004) to the shareholders in the ensuing Annual General Meeting, who has confirmed its eligibility and willingness to accept the office of Auditor, if appointed for a period of five (5) years, i.e. up to the AGM of FY 2021-22, as per the Companies Act, 2013.

Secretarial Auditor

CS S Kannan a Practicing Company Secretary, was appointed to conduct the Secretarial Audit of the Company for the FY 2016-17, as required under Section 204 of the Companies Act, 2013 and Rules thereunder. The Secretarial Audit Report for the FY 2016-17 forms part of the Annual Report as Annexure-5 to the Board''s Report.

The Board noted the reports given by Statutory Auditor & Secretarial Auditor and confirmed that there are no qualifications, reservations or adverse remarks or disclaimers.

19. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is attached as Annexure-6 to the Board''s Report.

20. SIGNIFICANT AND MATERIAL ORDERS

There were no significant and material orders passed by the Regulators or the Courts or Tribunals impacting the going concern status and Company''s operation in the future. The details of Tax Matters are disclosed in Annexure to Auditor''s Report in the Standalone Financial Statements.

21. INTERNAL FINANCIAL CONTROL

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

22. INDEPENDENT DIRECTORS FAMILIARISATION PROGRAMME

Mindteck has an established a familiarization programme for its Independent Directors. The business heads, Executive

Directors and Company Secretary make presentations on business models, nature of industry and its dynamism, the roles, responsibilities and liabilities of Independent Directors etc. Further, updates on business, statutory law and industry are made available to Independent Directors, especially to the Audit Committee members on an ongoing basis by internal teams and Statutory and Internal Auditors on a quarterly basis.

23. PARTICULARS OF EMPLOYEES

The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure-7 to the Board''s report.

The list of top 10 employees and other employees employed throughout the financial year and are in receipt of remuneration of Rs. 102 lakhs or more, or employed for part of the year and in receipt of Rs. 8.50 lakhs or more in a month, under Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is as under:

Top 10 Employees of the Company based upon the remuneration drawn during the FY 2016-17

Employee Name

Designation

Remuneration Received

Nature of Employment

Qualification

Experience (in years)

Date of Commencement of Employment

Age

Last Employment

Percentage of Equity shares held by the employee in the Company

Any such employee is a relative of any Director or manager of the Company and if so, name of such Director or manager

Yusuf Lanewala

CMD

6,999,996

Contractual

B.Com, MBA

38

11-Jun-13

63

Information Technical Consultant

0.20%

NO

Anand Balakrishnan

CFO

4,980,323

Employee

CA

19

04-Sep-14

44

JLT

NIL

NO

Sumit Goswami *

EVP -Managed Services (US)

4,976,068

Employee

B.E (Computer Technology), PGDBM

23

16-May-16

50

Wipro Limited

NIL

NO

Surjit Lahiri

VP Technology

4,495,183

Employee

B. Tech

25

29-Mar-05

47

Novellus India Pvt Ltd

0.04%

NO

Arup Banerjee

Sr. VP- Managed

Services

(ROW)

3,384,814

Employee

B. Tech

28

08-Jul-11

51

HCL Technologies Ltd

0.002%

NO

Girish Chandrasekhar Pachuveetil

AVP-Delivery

3,374,456

Employee

MS

22

09-Apr-15

49

CGI Information Systems and Management Consultants Pvt. Ltd.

NIL

NO

Satheesh

Kumar

Sreedharan

VP- Delivery

3,311,893

Employee

M. Tech

30

14-Jun-11

57

GE Healthcare

0.04%

NO

Shivarama Adiga S.

VP - Legal and Company Secretary

3,261,321

Employee

M.Com, LLB and CS

39

18-Mar-13

59

Diligent Media Corporation Limited

0.06%

NO

Dr. Krishnan K V

VP - TSA

3,172,077

Employee

M.Sc., Ph.D.

35

03-May-07

66

ISRO - Govt of India

NIL

NO

Harish Nair

Regional VP-IMEA

2,948,156

Employee

MBA

20

11-Sep-13

43

EDC Creattive Technology Solutions

0.04%

NO

Employees employed throughout the financial year and are in receipt of remuneration of Rs. 102 Lakhs or more, or employed for part of the financial year and are in receipt of Rs. 8.50 Lakhs or more a month.

Employee Name

Designation

Remuneration Received

Nature of Employment

Qualification

Experience (in years)

Date of Commencement of Employment

Age

Last

Employment

Percentage of Equity shares held by the employee in the Company

Any such employee is a relative of any Director or manager of the Company and if so, name of such Director or manager

Sanjeev Kathpalia

Managing Director and Chief Executive Officer

987,535

Contractual

B. Tech, IIT Delhi (Chemical Engineering), MBA, IIM Calcutta

35

March 01, 2017

64

Senior Advisor to the Prime Minister (Republic of Turkey)

NIL

NO

24. COMMITTEES OF THE BOARD

Currently, the Board has six Committees: the Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Corporate Governance Committee and Risk Management Committee.

A detailed note on the Board and its Committees is provided under the Corporate Governance report in this Annual Report. The composition of the Committees and compliances, as per the applicable provisions of the Act and Rules, are as follows:

Name of the Committee

Composition of the Committee

Highlights of duties, responsibilities and activities

Audit Committee

Mr. Narayan A. Menon - Chairman Mr. Yusuf Lanewala - Member Mr. Javed Gaya - Member Mr. Jagdish Malkani - Member Mr. Guhan Subramaniam - Member Ms. Prochie Mukherji - Member

- The Committee oversees the Company''s financial reporting process and disclosures of its financial information to ensure accuracy and reliability.

- The Company has adopted the Whistleblower mechanism for Directors and employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the Company''s Code of Conduct and Ethics. The Whistleblower Policy is attached as Annexure-4 to the Board''s report.

- In accordance with the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated policies on Related Party Transactions and material subsidiaries. The policies, including the Whistleblower Policy, are available on Company''s website.

Nomination and Remuneration Committee

Mr. Javed Gaya - Chairman Mr. Jagdish Malkani - Member Mr. Narayan A. Menon - Member Mr. Guhan Subramaniam - Member Ms. Prochie Mukherji - Member

- The Committee oversees and administers executive compensation, operating under a written charter adopted by the Board of Directors.

- The Committee has designed and continuously reviews the compensation program for the Managing Director & Chief Executive Officer and senior executives to align both short-term and long-term compensation with business objectives and to link compensation with the achievement of measurable performance goals.

- The Committee structures compensation to ensure that it is competitive in the global markets in which it operates in order to attract and retain the best talent. The Committee intends to have a combination of stock options and performance-based stocks to align senior employee compensation.

- The Nomination and Remuneration Committee has framed the nomination and remuneration policy. A copy of the policy is attached as Annexure-3 to the Board''s report.

Corporate Social Responsibility Committee

Mr. Yusuf Lanewala - Chairman Mr. Javed Gaya - Member Mr. Jagdish Malkani - Member

- The Board has laid out the Company''s policy on Corporate Social Responsibility (CSR), and the CSR activities of the Company are carried out as per the instructions of the committee.

- The Company allocated 2% of its average net profits for three years immediately preceding the financial year on CSR activities to various beneficiaries.

- Financial data pertaining to the Company''s CSR activities to various beneficiaries for the FY 201617 is attached under the prescribed format in Annexure-8 to the Board''s Report.

- The contents of the CSR policy are available on Company''s website (Weblink: http://www.mindteck.com/ assets/investor_pdf/CSR_Policy.pdf).

Stakeholders Relationship Committee

Mr. Javed Gaya - Chairman Mr. Yusuf Lanewala - Member Mr. Jagdish Malkani - Member

- The Committee reviews and ensures redressal of investor grievances.

- The Committee noted that all the grievances of the investors have been resolved during the year and there are no pending grievances as on the year end.

Risk Management Committee

Mr. Yusuf Lanewala - Chairman Mr. Meenaz Dhanani - Member Mr. Anand Balakrishnan - Member

- The purpose of the Committee is to assist the Board in fulfilling its Corporate Governance with regard to the identification, evaluation and mitigation of operational, strategic and environmental risks efficiently and effectively.

- The Company has developed and implemented a risk Management framework that includes identification of elements of risk, if any which in the opinion of the Board may threaten the existence of the Company.

- The details of the Management framework form part of this Annual Report.

Corporate Governance Committee

Mr. Narayan A. Menon - Chairman Mr. Yusuf Lanewala - Member Mr. Jagdish Malkani - Member Mr. Meenaz Dhanani - Member

- Review Board/Corporate Codes and make suitable recommendations to the Board from time to time.

- Review the Structure/Charters of other Board Committees and make suitable recommendations to the Board from time to time.

- Recommend best practices and standards in any particular area to the Board of Directors as per its mandate.

25. RISK MANAGEMENT POLICY

The Company has a robust Enterprise Risk Management (ERM) framework to identify and evaluate business risk opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The business risk policy defines the Risk Management approach across the enterprise at various levels, including documentation and reporting. The model has different modes that help in identifying risk trends, exposure and potential impact analysis at a Company level and also separately for different business segments. The Company has identified various risks and also has mitigation plans for each risk identified.

26. CORPORATE GOVERNANCE REPORT

Mindteck recognizes good Corporate Governance and is committed to sound corporate practices based on conscience, openness, fairness, professionalism and accountability, for the benefit of its stakeholders and for long-term success. We adhere to the standards set by SEBI for Corporate Governance practices as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and a report on Corporate Governance pursuant to Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this report in Annexure-9.

27. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis is part of this Annual Report.

28. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of its knowledge and belief, and according to the information and explanations obtained by the Company, your Directors made the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. that in the preparation of the annual financial statements for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policy as mentioned in Note 2 of the notes to the Financial Statements have been selected and applied consistently. Judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken 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;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f. that system to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

29. WE CARE

At Mindteck, care is rooted in the ways we engage and enable, and fundamental to the way in which the Company builds and nurture relationships, champion others, foster careers in technology, and steward community causes. In2012, Mindteck established WE CARE as a framework for honouring our commitments and making a lasting difference both inside and outside the organization. The cornerstones are Knowledge, Opportunity, Advocacy, Inclusion, Goodwill and Respect. Constituents include Shareholders, Clients, Employees, Partners and Communities.

During FY 2016-17, Mindteck made further strides forging positive brand associations, building stronger relationships and innovating within the WE CARE framework:

Mindteck Academy, and IT workforce development solution, builds opportunities for learning, hiring and economic growth in the communities we serve.

- The underserved - qualified military veterans, recent college graduates, displaced workers - learn the technology skills required for gainful employment;

- Companies and government entities struggling to overcome IT skill shortages hire local citizens who have been trained to exact specification and need;

- Communities grow as their unemployed or underemployed are hired or retrained.

Notable highlights for the Academy''s year include:

- Conducted their first onsite Business Analyst Boot camp in Madison, WI.

- Launched online, live, instructor-led Java/JEE course.

- Established partnerships for graduate placement, including one of the largest financial institutions in the world.

- Conducted internal Java and Agile-Scrum training for three clients.

- Hired a Technical Director to oversee classes, courseware and trainee performance.

Consultant Care focuses on retaining and developing Mindteck''s valued people assets who work onsite at client locations. On an ongoing basis, our Brand Ambassadors assist, educate and engage consultants in multiple states throughout North America and Canada. During the year, the Leads Rewards Program was expanded to include non-W2 Mindteck employees and consultants. Our Brand Ambassadors also assisted the recruiting team on improving their process and remarketing reporting. As an adjunct activity, the Consultant Care Manager acquired two new clients, and also nurtured relationships related to smart city initiatives in the US. In the coming year, Consultant Care will establish a pilot program for global Consultant Care endeavors, strengthen dialogue and multi-level engagement with top-tier ''ambassador consultants'' optimize the consultant portal to achieve ''destination'' status, and continue spearheading footprint expansion in Missouri.

Transition Care provides opportunities for seasoned technology professionals, who have been a victim of downsizing, to continue benefiting from their wealth of experience and knowledge. We match their skillets to our niche needs to help build a stronger Mindteck. Transition Care is also a resource for clients who want to preserve their reputation and employee morale during a restructuring, as well as for outplacement firms that want to reduce their roster of displaced IT professionals.

Client Care, which focuses on the client constituent of WE CARE, is a customer experience (CX) endeavour designed to engage and enable clients, as well as champion a caring culture and business approach. The Client Care Ambassador is a client advocate, operating both cross-functionally and independently across the organization. Key efforts during the year focused on: Supporting process improvements, and delivery and service performance; Liaising with the US sales teams; Referrals to new clients and partners. An expansion of these efforts, along with increased channel/other engagement, will foster additional advocacy, loyalty and credibility during FY 2017-18.

30. CSR INITIATIVES

Mindteck''s Corporate Social Responsibility (CSR) commitment is part of WE CARE. We believe that through our successes around the globe, we should give back in kind and deed. We do what we can to create shared value and steward our resources to create hopeful tomorrows for others.

Core pillars of Mindteck''s CSR endeavors are Global Education and Local Targeted Giving. We believe in the empowerment of knowledge and how it helps to bring positive change and stability to society as a whole; we also know that giving to local organizations that embrace the interests and values of the communities we serve builds stronger communities and makes business sense.

INDIA CSR:

In FY 2016-17, Mindteck allocated more than 2% of its three-year average net profits towards CSR activities and the details of the same are attached to this report as Annexure-8.

Bangalore Samarthanam Trust - empowers visually impaired, disabled and underprivileged individuals through developmental initiatives focused on education, social, economic independence and technology.

Government Girls High School and Government PreUniversity (PU) College for Girls in Hoskote through Bangalore Indiranagar Rotary Trust - supports academic improvement, extracurricular activities and sanitation facilities.

Gandhi Old Age Home - Donated an ambulance and provided other infrastructure support to a government recognized institution dedicated to the welfare of the aged and neglected;

Western Railways, Mumbai through Rotary Club of Bombay, Kandivli Charitable Trust - Repair and major revamp of toilet blocks on suburban railway stations from Virar to Churchgate (Mumbai) for local Stations, through Rotary Club of Bombay Kandivli Charitable Trust.

US CSR:

Local, targeted CSR efforts in the US for the new year are under way. In 2016-17, these organizations were selected:

Northeast: The Seeing Eye - breeds and raises puppies to guide blind people; instructs blind people in proper use/ handling/care of the dogs; conducts and supports research on canine health and development.

Elijah''s Promise - harnesses the power of food to break the cycle of poverty, eliminate hunger and change lives.

Central Southeast: Pennsylvania Breast Cancer Coalition

- represents supports and serves breast cancer survivors and their families in Pennsylvania through educational programming, legislative advocacy and research.

Coder Kids - encourages kids to learn about Computer Science and programming; develops their interests in all areas of Science, Technology, Engineering and Mathematics (STEM) through active, hands-on learning with projects, demos and presentations by other kids and local technology professionals.

Southwest and Missouri: North Texas Food Bank (Plano

Food4Kids) - committed to addressing food insecurity of Chronically hungry early childhood and elementary school children in Plano, TX. Through partnering with the food bank, Food4Kids provides kids with a backpack filled with nutritious, shelf-stable food every Friday during the school year.

A.R.C. Angels Foundation - dedicated to saving lives by helping teens be actively involved in the prevention of teenage suicide; provides educational programs that empower teens to recognize signs/symptoms of suicide and take preventative actions.

West: YES! for Schools - teaches youth healthy strategies to manage stress and emotions, so that they may exhibit greater confidence and motivation to succeed in school and make healthy choices when faced with life''s challenges.

31. MINDTECK EMPLOYEES STOCK OPTION SCHEMES

Mindteck believes in the policy of enabling Mindteckians to participate in the ownership of the company and share in its wealth creation as they are responsible for the management growth and success of the Company. The Company has three Employee Stock Options Schemes: Mindteck Employees Stock Options Scheme 2005, Mindteck Employees Stock Options Scheme 2008 and Mindteck Employees Stock Options Scheme 2014.

a. Mindteck Employees Stock Options Scheme 2005

During the year ended March 31, 2017, under this Scheme, the company granted 14,400 options on November 11, 2016 at an exercise price of Rs. 85.05 per share and 14,400 options on February 10, 2017 at an exercise price of Rs. 92.10 per share, and also issued and allotted 59,300 shares to eligible employees. There has been no variation in the terms of ESOP Scheme during the year.

b. Mindteck Employees Stock Options Scheme 2008

During the year ended March 31, 2017, under this Scheme, the company granted 69,600 options on May 20, 2016 at an exercise price of Rs. 103.90 per share and 239,000 options on August 10, 2016 at an exercise price of Rs. 90.75 per share, and it has issued and allotted 151,494 shares to eligible employees. There has been no variation in the terms of ESOP Scheme during the year.

c. Mindteck Employees Stock Options Scheme 2014

During the year ended March 31, 2017, under this Scheme, the company granted 250,000 options on March 30, 2017 at an exercise price of Rs. 78.10 per share. There has been no variation in the terms of ESOP Scheme during the year.

The details of the Employees Stock Option Schemes as required under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 are displayed on the website of the Company. (Weblink: http://www.mindteck.com/ assets/investor_pdf/Disclosures-pursuant-to-SEBI-Regulations-2014.pdf)

32. MINDTECK EMPLOYEES WELFARE TRUST

The Mindteck Employees Welfare Trust was set up in the year 2000 to implement the Company''s Share Incentive Scheme. As on March 31, 2017, the said Trust holds 416,000 shares of the Company and has not yet granted any shares to the Company''s employees under the said scheme.

33. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE AND OUTGO

Particulars that are required to be disclosed under Sub-section 3(m) of Section 134 of the Companies Act 2013, read with the Companies (Accounts) Rules, 2014 are set out in Annexure-10 included in this Report.

34. ACKNOWLEDGEMENTS

The Directors place on record their appreciation of cooperation and continued support extended by customers, shareholders, investors, partners, vendors, bankers, the Government, and statutory authorities for the Company''s growth. We thank employees at all levels across the Group for their valuable contribution in our progress and look forward to their continued support.

for and on behalf of the Board of Directors

Bengaluru, India Sanjeev Kathpalia

May 22, 2017 Managing Director and Chief Executive Officer

(DIN: 05257060)

Source : Dion Global Solutions Limited
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