| TO THE MEMBERS OF CMC LIMITED
The Directors have pleasure in presenting the 39th Annual Report of
CMC Limited (the Company) and Consolidated CMC along with the audited
financial statements for the financial year ended 31 March, 2015.
1. FINANCIAL RESULTS
< Rs. in crore)
Particulars Standalone Consolidated
2014-15 2013-14 2014-15 2013-14
Income from Sales
and Services 1,288.46 1,189.79 2,513.49 2,230.93
Other Income 13.68 141.11 14.32 25.01
Total Income 1,302.14 1,330.90 2,527.81 2,255.94
Operating Expenses 1,030.12 918.53 2,129.11 1,841.59
Profit before
Depreciation, Interest
and Tax 272.02 412.37 398.70 414.35
Depreciation and
amortization 67.19 26.56 67.23 26.98
Interest 0.03 - 0.05 0.08
Profit before Tax 204.80 385.81 331.42 387.29
Provision for Taxation
(incl. deferred Income Tax) 7.02 62.20 54.30 106.87
Profit after Tax 197.78 323.61 277.12 280.42
Add: Profit brought
forward from previous year 938.04 726.55 992.17 823.87
Amount available for
appropriations 1,135.82 1,050.16 1,269.29 1,104.29
Appropriations
Proposed Dividend 83.33 68.18 83.33 68.18
Tax on Proposed Dividend* - 11.58 - 11.58
Transfer to General Reserve 19.78 32.36 19.78 32.36
Balance carried to
Balance Sheet 1,032.71 938.04 1,166.18 992.17
1,135.82 1,050.16 1,269.29 1,104.29
*No provision for tax on proposed dividend for the financial year
2014-15 is required since the Company has adjusted the proposed
dividend with the dividend received from its wholly owned foreign
subsidiary, CMC Americas Inc., in April 2015.
2. DIVIDEND
Your Directors are pleased to recommend for approval of the Members a
dividend of Rs.27.50 per equity share of Rs.10/- each of the Company for
the financial year 2014-15. The The total cash outflow on account of
dividend on equity shares for the financial year 2014-15 would
aggregate Rs.83.33 crore resulting in a payout of 42.13% of the
standalone profits of the Company.
3. TRANSFER TO RESERVES
The Company proposes to transfer Rs.19.78 crore to the General Reserve
out of amount available for appropriations and an amount of Rs.1,032.71
crore is proposed to be retained in the Profit and Loss Account.
4. OPERATING RESULTS AND BUSINESS OPERATIONS
During the financial year 2014-15, your Company has achieved another
milestone of crossing Rs.2,500 crore revenue from operations on
consolidated basis. The Company has earned total income from sales and
services of Rs.2,513.49 crore during the financial year 2014-15
registering a growth of 13%.
The Company achieved broad based revenue growth across the geographies.
The revenue from international market increased to Rs.1,713.54 crore in
financial year 2014-15 compared to Rs.1,501.29 crore in financial year
2013-14, registering a growth of 14%, while revenue from domestic
market increased to Rs.799.95 crore in 2014-15 compared to Rs.729.64 crore
in 2013-14, registering a growth of 10%.
The wholly owned subsidiary CMC Americas, Inc., contributed with 17%
revenue growth in dollar terms.
The income from sales and services on standalone basis grew by 8% to
Rs.1,288.46 crore in financial year 2014-15 compared to Rs.1,189.79 crore
in financial year 2013-14.
The Systems Integration (SI) segment has been the main contributor to
the revenue growth, where the revenue grew by 17% over the previous
financial year followed by Customer Services (CS) with 7% revenue
growth.
The operating profit (earnings before interest, tax, depreciation and
other income) marginally decreased by 1.27% on consolidated basis to
Rs.384.38 crore in financial year 2014-15 compared to Rs.389.34 crore in
financial year 2013-14. On a standalone basis, the operating profit
stood at Rs.258.34 crore during financial year 2014-15 compared to
Rs.271.26 crore during the financial year 2013-14, registering a decline
of 4.76%. Operating profit in the previous financial year 2013-14
included Rs.31.72 crore resulting from a favourable decision in a legal
case against a customer. Excluding the impact of this one time
transaction, the operating profit during the financial year 2014-15
grew by 7.48% on consolidated basis and 7.85% on standalone basis over
the previous financial year.
5. HUMAN RESOURCES DEVELOPMENT
The Company has continuously adopted structures that help attract best
external talent and promote internal talent to higher roles and
responsibilities. CMC's people centric focus providing an open work
environment fostering continuous improvement and development helped
several employees realize their career aspirations during the year.
Company's Health and Safety Policy commits to provide a healthy and
safe work environment to all employees. The Company's progressive
workforce policies and benefits,various employee engagement and welfare
initiatives like Maitree, various employee engagement programs, have
addressed stress management, promoted work life balance.
6. DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance for sexual harassment at workplace and
has adopted a policy on prevention, prohibition and redressal of sexual
harassment at workplace in line with the provisions of Sexual
Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and the rules framed thereunder.
During the financial year 2014-15, the Company received 7 complaints on
sexual harassment. All complaints have been disposed off after taking
appropriate action and no complaints remain pending as of 31 March,
2015.
7. BUSINESS EXCELLENCE AND QUALITY INITIATIVES
Your Company continues to be guided by the philosophy of business
excellence to achieve sustainable growth using the Tata Business
Excellence Model (TBEM). Your Company launched the Tata Group Customer
Promise manifesto. Innovation in products, services and business models
is a key agenda of the Management along with a customer-focused culture
towards building long-term customer relationships. Net Promoter Score
was adapted to further Company's efforts at Customer Centricity and
Customer Relationship building.
Continuing along the principles of Total Quality Management, your
Company also maintained compliance to ISO 9001:2008, Data Protection
Act through information security practices and ISO 27001 certification.
8. DOCUMENTS PLACED ON THE WEBSITE (www.cmcltd.com)
The following documents have been placed on the website in compliance
with the Act:
- Details of unpaid dividend as per section 124(2).
- Corporate Social Responsibility policy as per section 135(4)(a).
- Financial statements of the Company and consolidated financial
statements along with relevant documents as per third proviso to
section 136(1).
- Separateauditedaccountsin respectofsubsidiariesasper fourth
provisotosection 136(1).
- Details of vigil mechanism for directors and employees to report
genuine concerns as per proviso to section 177(10).
- The terms and conditions of appointment of independent directors as
per Schedule IV to the Act.
9. SUBSIDIARY COMPANIES
Your Company has two subsidiaries viz., CMC Americas, Inc. (Direct
subsidiary) and CMC eBiz, Inc. (Step down subsidiary) in USA. There are
no associate companies within the meaning of Section 2(6) of the
Companies Act, 2013 ("Act"). Further there has been no material change
in the nature of business of the subsidiaries.
Shareholders interested in obtaining a copy of the audited annual
accounts of the subsidiary companies may write to the Company
Secretary.
In terms of proviso to sub section (3) of Section 129 of the Act, the
salient features of the financial statement of the subsidiaries is set
out in the prescribed form AOC-1, which forms part of the annual
report.
Performance and financial position of the subsidiary companies is given
in clause 13 of Annexure-I.
10. AMALGAMATION
At the respective meetings held on 16 October, 2014, the Board of
Directors of the Company and of its holding company- Tata Consultancy
Services Limited (TCS), have approved a scheme of amalgamation
("Scheme") between the Company, TCS and their respective shareholders
under Sections 391 to 394 of the Companies Act, 1956. The appointed
date of the proposed scheme is 1 April, 2015.
As per terms of the Scheme, shareholders of the Company will receive 79
equity shares of Re.1 each of TCS for 100 equity shares of Rs.10 each of
the Company. The swap ratio has been arrived at, based on the valuation
report issued by M/s BSR Associates LLP, Chartered Accountants. The
Scheme is subject to regulatory and other necessary approvals.
Pursuant to an Order of the High Court of Judicature at Hyderabad,
shareholders of the Company at their meeting held on 5 March, 2015,
duly approved the scheme. Company has filed the petition before the
said court for sanction of the scheme.
11. CORPORATE GOVERNANCE REPORT, MANAGEMENT DISCUSSION & ANALYSIS AND
OTHER INFORMATION REQUIRED UNDER THE COMPANIES ACT, 2013 AND LISTING
AGREEMENT
As per Clause 49 of the listing agreement entered into with the stock
exchanges, Corporate Governance Report with Auditors'certificate
thereon and Management Discussion and Analysis report are attached and
form part of this report.
Various information required to be disclosed under the Act and the
Listing Agreement is set out in the Annexure-I and forms part of this
report.
12. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134(5) of the Act, and based on
the representations received from the management, the directors hereby
confirm that:
i. in the preparation of the annual accounts for the financial year
2014-15, the applicable accounting standards have been followed and
there are no material departures;
ii. they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for the financial year;
iii. they have taken proper and sufficient care to the best of their
knowledge and ability for the maintenance of adequate accounting
records in accordance with the provisions of the Act. They confirm that
there are adequate systems and controls 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
operating properly; and
vi. they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
13. AUDITORS AND SECRETARIAL AUDITORS REPORT
There are no disqualifications, reservations or adverse remarks or
disclaimers in the Auditors and Secretarial Auditors Report.
14. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Rule 8(3) of the Companies
(Accounts) Rules, 2014, are set out in an Annexure-II to this Report.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR Policy of the Company and the details about the initiatives
taken by the Company on CSR during the year as per the Companies
(Corporate Social Responsibility Policy) Rules, 2014 have been
disclosed in Annexure-III to this Report along with a compliance
certificate from Secretarial Auditor. Further details of composition
of the Corporate Social Responsibility Committee and other details are
provided in clause 3.5 of the Corporate Governance Report which forms
part of this report.
16. BOARD EVALUATION
The performance evaluation of the Board, its Committees and individual
directors was conducted and the same was based on questionnaire and
feedback from all the Directors on the Board as a whole, Committees and
self-evaluation.
Directors, who were designated, held separate discussions with each of
the Directors of the Company and obtained their feedback on overall
Board effectiveness as well as each of the other Directors.
Based on the questionnaire and feedback, the performance of every
director was evaluated in the meeting of the Nomination and
Remuneration Committee (NRC). The meeting of NRC also reviewed
performance of the Chief Executive Officer and Managing Director on
goals (quantitative and qualitative) set at the beginning of the year
in April 2015. Ms. Aarthi Subramanian, additional director, being
appointed on 31 March, 2015, was excluded from the process of
evaluation.
A separate meeting of the independent directors ("Annual ID meeting")
was convened, which reviewed the performance of the Board (as a whole),
the non-independent directors and the Chairman. Post the Annual ID
meeting, the collective feedback of each of the Independent Directors
was discussed by the Chairman of the NRC with the Board's Chairman
covering performance of the Board as a whole; performance of the
non-independent directors and performance of the Board Chairman.
Some of the key criteria for performance evaluation are as follows -
Performance evaluation of Directors:
- Attendance at Board or Committee meetings.
- Contribution at Board or Committee meetings.
- Guidance/support to management outside Board / Committee meetings.
Performance evaluation of Board and Committees:
- Degree offulfillment of key responsibilities.
- Board structure and composition.
- Establishment and delineation of responsibilities to Committees.
- Effectiveness of Board processes, information and functioning.
- Boardcultureanddynamics.
- Quality of relationship between Board and Management.
- Efficacy of communication with external stakeholders.
17. DEPOSIT FROM PUBLIC
The Company has not accepted any deposits from public and as such, no
amount on account of principal or interest on deposits from public was
outstanding as on the date of the balance sheet.
18. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. S Ramadorai retired as the Director and Chairman of the Board
w.e.f. 17 October, 2014 in accordance with the retirement age policy
for Directors. The Directors place on record their appreciation of the
invaluable contribution and guidance provided by Mr. S Ramadorai.
Mr. N Chandrasekaran was appointed as an Additional Director and took
over as the Chairman of the Board from Mr. S Ramadorai w.e.f. 17
October, 2014.
Ms. Kalpana Morparia, Independent Director resigned from the Board of
the Company w.e.f. 10 March, 2015. The Directors place on record their
appreciation of the valuable contribution made by her.
Ms. Aarthi Subramanian has been appointed as Additional Director on 31
March, 2015, based on the recommendation of Nomination and Remuneration
Committee.
Pursuant to Section 161(1) of the Act, Mr. N Chandrasekaran and Ms.
Aarthi Subramanian hold office only upto the date of forthcoming Annual
General Meeting (AGM) of the Company and are eligible for appointment
as Directors.
The Board recommends their appointments and accordingly resolutions
seeking approval of the members for their appointments have been
included in the Notice of forthcoming Annual General Meeting of the
Company along with their brief profile.
Mr.S Mahalingam,Director,retires by rotation and being eligible,has
offered himself for re-appointment. The Board recommends the same for
your approval.
Pursuant to the provisions of Section 203 of the Act, the appointment
of Mr. R Ramanan, Managing Director & Chief Executive Officer, Mr. J K
Gupta, Chief Financial Officer and Mr. Vivek Agarwal, Company
Secretary, were formalized as the Key Managerial Personnel of the
Company.
19. AUDITORS
Pursuant to the provisions of Section 139 of the Act and the rules
framed thereunder, M/s Deloitte Haskins & Sells, Chartered Accountants,
were appointed as statutory auditors of the Company from the conclusion
of the 38th Annual General Meeting (AGM) of the Company held on 23
June, 2014 till the conclusion of the 41st AGM to be held in the year
2017, subject to ratification of their appointment at every AGM.
20. PARTICULARS OF EMPLOYEES
The information required under section 197 of the Act and rules made
there-under, in respect of employees of the Company, is provided in
Annexure-IV forming part of this report.
21. ACKNOWLEDGEMENTS
The Directors wish to convey their appreciation to business associates
for their support and contribution during the year. The Directors would
also like to thank the employees, shareholders, customers, suppliers,
alliance partners and bankers for the continued support given by them
to the Company and their confidence reposed in the management.
On behalf of the Board of Directors
Mumbai N Chandrasekaran
9 April, 2015 Chairman
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