| DEAR MEMBERS,
The Directors present herewith the Eighteenth Annual Report on the
business and operations of the Company together with the audited
Financial Statements for the year ended 31 March 2015.
1. FINANCIAL RESULTS:
The company's operating performance during the year ended 31 march 2015
as compared to the previous year is indicated in brief below:
(Rs. in Lacs)
Consolidated Standalone
2014-15 2013-14 2014-15 2013-14
Total income 27,064 27,657 14,415 13,234
Profit before interest,
depreciation and tax 2,987 2,669 1,959 1,844
depreciation and Amortisation 438 380 349 339
Profit before tax 2,474 2,184 1,559 1,458
Provision for tax 627 592 390 420
Profit brought forward from
previous year 1,817 1,487 1,169 1,038
Balance brought forward from
previous year 6,449 5,552 6,207 5,759
Profits available for
appropriation 8,266 7,038 7,376 6,797
Less: Transfer to General
Reserve 117 104 117 104
Translation Adjustment (Net) 63 - 68 -
Dividend (Proposed) 432 415 432 415
Tax on Proposed Dividend 90 71 90 71
Balance carried forward to
Balance Sheet 7,564 6,449 6,669 6,207
Publication of results of subsidiary companies
Section 129 (3) of the Companies Act, 2013, requires the company to
attach along with the financial statement, a separate statement
containing the salient features of the financial statement of its
subsidiaries. The performance and financial position of the
subsidiaries and associate of the company, included in the consolidated
financial statement, forms part of the Annual Report and is an integral
part of the Directors' Report.
The Balance Sheet, Profit and Loss Account, Report of the Board of
Directors and the Report of the Auditors of the subsidiary Companies
have not been attached with the Balance Sheet of the Company. If any
member so desires, the Company will make available these documents /
details upon specific request by the member of the Company.
2. DIVIDEND
Your Directors are pleased to recommend payment of a dividend of Rs.
4/- per equity share of Rs. 10/- each during the year subject to the
approval of the shareholders. (Previous year Rs. 4 per share of Rs.
10/- each).
3. operating results and business
During the year under review, total income of the Company was Rs. 144
Crores as compared to Rs. 132 Crores in the previous financial year,
i.e. an increase of 9%. On a consolidated basis, total income decreased
from Rs. 276 Crores to Rs. 271 Crores, a decline of around 2%.
The net profit after tax on a standalone basis for the year ended 31
March 2015 was Rs. 11.69 Crores as against Rs. 10.38 Crores in the
previous year, an increase of around 13%. On a consolidated basis, the
net profit after tax for the year ended 31 March 2015 was Rs. 18.17
Crores as compared to Rs. 14.87 Crores for the previous financial year
marking an increase of 22% on a year to year basis.
4. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors had, on the recommendation of the Nomination and
Remuneration Committee appointed Ms. Kalpana Trivedi as an Additional
Director of the Company with effect from 30 March 2015. Her appointment
as an Independent director for a period of 5 years will be subject to
the members' approval at the Annual General Meeting.
the erstwhile chief Financial officer and company Secretary Mr. V
Sudarshan resigned from the services of the company effective 31 may
2014. Mr. Aloke Ghosh was appointed the chief Financial officer and
company Secretary of the company effective 2 June 2014.
5. A STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS
a statement on declaration of Independence required to be made under
section 149 of the companies act, 2013 has been obtained from each of
the Independent Directors confirming their independence.
6. BOARD EVALUATION
Pursuant to the provisions of the companies Act, 2013 and clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of the directors individually as well as the evaluation of
the working of its Audit, Nomination and Remuneration and other
committees. the criteria on the basis of which the evaluation has been
carried out has been explained in the corporate Governance report.
7. POLICY ON NOMINATION AND REMUNERATION
the Board on the recommendation of the Nomination and Remuneration
committee has framed a policy for selection and appointment of
Directors, Senior Management and their remuneration. the highlights of
the policy on Nomination and Remuneration is provided as a part of the
Directors' report. the detailed policy is available on the website of
the company.
8. meetings of the board
the Board of Directors met four (4) times on 14 may 2014, 23 July 2014,
17 october 2014 and 19 January 2015 during the financial year 2014-15.
9. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
the company at present has the following subsidiary companies:
a) Blue Star Infotech America, Inc. (BSIA)
the wholly owned subsidiary of the company, Blue Star Infotech America,
Inc. achieved a total income of uS$ 196,35,989 (equivalent of Rs.
120.07 crores) for the financial year ending 31 march 2015 as compared
to uSS 2,21,38,707 (equivalent of Rs. 134.19 crores) for the previous
year. Despite a lower turnover, essentially due to reduction in low and
negative margin business, a concerted effort to keep costs under check,
the company reported a net profit of uSS 2,74,867 (equivalent of Rs.
1.68 crores) this year compared to a net loss of uSS 2,49,867
(equivalent of Rs. 1.50 crores) for the previous year marking a
turnaround in profits after four consecutive years. the performance of
the subsidiary is satisfactory and expected to progress in the ensuing
year as well.
Your company made an additional investment of uSS 5,00,000 (equivalent
of Rs. 3.04 crores) at par in the equity of the subsidiary in order to
further the growth, operations and business of the company. with this
investment, the paid-up capital of the subsidiary as at year end is uSS
23,50,000 (18,50,000 in the previous year). The investment is in
shares of uSS 1 each.
b) Blue Star Infotech (UK) Ltd.
The total income of this wholly owned subsidiary, Blue Star Infotech
(UK) Limited was œ 23,92,092 (equivalent of Rs. 23.59 crores) for the
financial year ended 31 March 2015 as compared to œ 23,04,183
(equivalent of Rs. 23 Crores) for the previous year. The company
registered a net profit of œ 207,016 (equivalent of Rs. 2.04 Crores)
for the financial year ending on 31 March 2015 compared to net profit
of œ 2,15,409 (equivalent of Rs. 2.15 Crores) for the previous year.
The shrinkage in profits is due to addition of manpower in the sales
team. The business is stable.
c) Blue star Infotech (singapore) Pte. Limited
The total income of the wholly owned subsidiary, Blue Star Infotech
(Singapore) Pte. Limited was SGD 30,75,977 (equivalent of Rs. 14.62
Crores) for the financial year ended 31 March 2015 as compared to SGD
21,67,203 (equivalent of Rs. 10.45 Crores) for the previous year. The
subsidiary registered a net profit of SGD 476,804 (equivalent of Rs.
2.27 Crores) for the financial year ending on 31 March 2015 compared to
a net profit of SGD 3,46,802 (equivalent of Rs. 1.92 Crores) for the
previous year.
Blue Star Infotech Singapore Pte. Ltd. has two wholly owned
subsidiaries, one each, in Singapore and Malaysia viz. Blue Star
Infostack Solutions Pte. Ltd. and Blue Star Infostack (Malaysia) Sdn.
Bhd. which caters to the Banking and Insurance sector. The performance
of the subsidiary is satisfactory. Blue Star Infotech Singapore Pte.
Ltd. has made an additional investment of RM 500,000 in the equity of
Blue Star Infostack (Malaysia) Sdn. Bhd. in order to further the
growth, operations and business of the Company. With this investment,
the paid-up capital of the subsidiary as at year end is RM 1,000,000.
10. directors' responsibility statement
The Directors would like to inform the members that the Audited
Accounts for the financial year ended 31 March
2015 are in full conformity with the requirement of the Companies Act,
2013. The Directors hereby confirm that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit and
loss of the company for that period;
(c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern
basis;
(e) the directors, had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
(f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively;
11. reservations and/or qualifications in the statutory auditors'
report
The Directors would like to inform that there were no qualifications,
reservations or adverse remarks made by the
Auditors of the Company in their Audit Report.
12. reservations and/or qualifications in the secretarial auditors'
report
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed M/s. Jayshree Dagli &
Associates, Practising Company
Secretaries to undertake the Secretarial Audit of the Company. The
Report of the Secretarial Audit Report provided in the Annual report
forms part of the Directors' report. the Directors would like to inform
that there were no qualifications, reservations or adverse remarks made
by the Secretarial Auditors of the company in their audit report.
13. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE
REGULATORS OR COURTS OR TRIBUNALS
There were no orders passed by any regulators or courts or tribunals
which can impact the going concern status and the company's operations
in future. Hence, the company has no information to furnish in this
regard.
14. LOANS AND GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT, 2013
Particulars of Loans and Guarantees covered under the provisions of
Section 186 of the companies act, 2013 forms part of the Directors'
report and is provided in the annual report.
15. PARTICULARS OF CONTRACTS AND ARRANGEMENTS UNDER SECTION 188 OF THE
COMPANIES ACT, 2013
The Particulars of the contracts and arrangements, provided in form Aoc
2, forms part of the annual report and is an integral part of the
Directors' report.
16. PARTICULARS OF EMPLOYEES
Information as per 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, and the names of
every employee employed throughout the financial year and in receipt of
Rs. 60 Lakhs or more, or employed for part of the year and in receipt
of Rs. 5 Lakhs or more a month, under rule 5(2) of the companies
(Appointment and Remuneration of Managerial Personnel) rules, 2014, is
a part of the Board's report. However, this information is not being
provided as part of the annual report but will be available to the
shareholders on request to the company Secretary.
It may be noted that particulars of employees posted and working in a
country outside India, not being directors or their relatives, drawing
more than Rs. 60 Lakhs per financial year or Rs. 5 Lakhs per month, are
not circulated to the members in the Board's report, but such
particulars shall be filed with the Registrar of companies while filing
the financial statement and Board reports:
Particulars shall be made available to any shareholder on a specific
request made by them in writing before the date of such annual General
Meeting wherein financial statements for the relevant financial year
are proposed to be adopted by shareholders and such particulars shall
be made available by the company within three days from the date of
receipt of such request from shareholders and in case of request
received even after the date of completion of annual General Meeting,
such particulars shall be made available to the shareholders within
seven days from the date of receipt of such request.
17. MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments other than what is
already stated in the financials which will affect the financial
position of the company during the period 31 March 2015 till the date
of the report.
18. CONSERVATION OF ENERGY, TECHNOLOGY Absorption, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information as per Section 134(3)(m) of the companies act 2013 read
with rule 8 of the companies (Accounts) rules, 2014, relating to the
conservation of energy, technology, absorption, foreign exchange
earnings and outgoings respectively, is annexed to and forms part of
this report.
19. RISK MANAGEMENT
The company has adopted a risk management policy which is elaborated in
the Management Discussion and analysis report which is part of the
annual report and forms part of the Directors' report.
20. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Company was required to spend Rs. 24.83 Lakhs by 31 March 2015
towards charitable and social causes, as part of its commitment to
corporate Social Responsibility. the Board decided to expend these
funds in support of the HRD Minister's nationwide campaign of "Swachh
Bharat/ Swachh vidyalaya" to build toilets in schools. Since the
process of identifying NGOs specialised in this field has taken more
time than anticipated, these funds could not be expended in the
financial year 2014-15.
The Report on CSR activities is provided in the Annual Report and forms
part of the Directors' Report.
21. INVESTMENTS
The Company invests its surplus funds in debt based broad-based mutual
funds or with reputed scheduled banks in liquid funds or short-term
deposits, respectively, which are considered safe.
22. DIRECTORS
Mr. Sanjay Vaswani, Non-Executive-Promoter Director of the Company is
liable to retire by rotation.
In accordance with the provisions of sections 152 of the Companies Act,
2013, Mr. Sanjay Vaswani, Director retires by rotation and, being
eligible, offers himself for reappointment at the ensuing Annual
General Meeting. The profile of the Director is stated in the
explanatory statement to the notice of the Annual General Meeting.
23. EMPLOYEES STOCK OPTION PLAN (ESOP)
Disclosures required to be made under SEBI (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ESOP and
Companies Act, 2013 are given in note 2.1 of the Notes to the Financial
Statements, forming part of the Accounts. The diluted EPS on
considering unvested ESOPs is Rs. 9.24 per share as on 31 March 2015.
A brief summary of ESOPs is provided below:
Sr. Particulars ESOP Scheme 2003 (Amended 2015)
No.
1 Options granted 15,18,000 (Including ESOP's issued against
lapsed options). Outstanding ESOP's at no
point of time have exceeded 14,71,000
grants as against 15,00,000 grants
approved by shareholders.
2 Options vested 4,74,375
3 Options exercised 4,15,075
4 Vested and unexercised 49,400
5 Options lapsed 1,17,525
6 The exercise price Rs. 60 - grants made on 31 August 2012
Rs. 57 - grants made on 29 March 2013
Rs. 52 - grants made on 29 May 2013
Rs. 83 - grants made on 18 December 2013
Rs. 188 - grants made on 18 December2014
7 Variation of terms of Nil
options
8 Money realised by
exercise of options Rs. 2,53,74,025
9 Total number of options
in force 9,85,400
10 Employee wise details
of options granted to
a. key managerial Sunil Bhatia- Chief Executive Officer
personnel; and Managing Director (982,000)
Aloke Ghosh-chief Financial officer and
company Secretary (20,000)
b. any other employee NIL
who receives a grant in
any one year of option
amounting to 5% or more
of options granted during
that year.
c. identified employees Sunil Bhatia- chief executive officer
who were granted option, and managing Director (982,000)
during any one year,
equal to or exceeding 1%
of the issued capital
(excluding outstanding nishith mathur-chief operating
warrants and conversions) officer (226,000)
of the company at the time
of grant;
24. AUDITORS
M/s walker, chandiok & co. HP, (formerly walker, chandiok & co)
chartered Accountants, (firm Registration No.: 001076N) mumbai, have
been appointed as the Statutory Auditors of the company in the annual
General meeting held on 23 July 2014. The company has placed the matter
relating to their appointment, for ratification of members in the
ensuing annual General meeting, for the residual portion of their term.
A written certificate from the Auditors has been obtained by the
company to the effect that the re-appointment, if made, would be in
accordance with the limits specified under section 139 of the companies
Act, 2013 read with section 142 of the companies Act, 2013.
25. AUDIT COMMITTEE
the composition of the Audit committee is covered in the corporate
Governance report forming part of the Board's report. the Board has
accepted all the recommendations made by the Audit committee to the
Board.
26. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
the company has an Internal control System, commensurate with the size,
scale and complexity of its operations. the scope and authority of the
Internal Audit (IA) function is pre- defined. the internal auditor
function is entrusted to an independent firm of chartered Accountants
of repute. To maintain its objectivity and independence, the Internal
Auditors report to the chairman of the Audit committee of the Board.
the Internal Auditors monitor and evaluate the efficacy and adequacy of
internal control system in the company, its compliance with operating
systems, accounting procedures and policies at all locations of the
company and its subsidiaries. Based on the report of internal audit
function, process owners undertake corrective action in their
respective areas and thereby strengthen the controls. Significant audit
observations and corrective actions thereon are presented to the Audit
committee of the Board.
27. WHIsTLE Blower POLICY
the company has a vigil mechanism named the whistle Blower Policy to
deal with instances of fraud and mismanagement, if any.
this Policy of the company allows for disclosure by employees,
customers and/or third-party intermediaries of such matters internally,
without fear of reprisal, discrimination or adverse employment
consequences, and also permits the company to address such disclosures
or complaints by taking appropriate action, including but not limited
to, disciplining or terminating the employment and/or services of those
responsible.
The Whistle Blower Policy is available on the website of the Company.
During the year, no instances of fraud on the company or by the company
were reported.
28. CORPORATE GOVERNANCE
the company has complied with the recommendations of the corporate
Governance code as provided in clause 49 of the Listing Agreement with
the stock exchanges.
A separate section on corporate Governance, together with a certificate
from the company's auditors confirming compliance, is set out
separately, forming part of this Report.
29. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
the Management Discussion and analysis report has been attached to the
annual report and forms part of the Directors' Report.
30. EXTRACT OF ANNUAL RETURN
the details forming part of the extract of the annual return is annexed
to and forms part of the Directors' report.
31. GREEN INITIATIVE IN CORPORATE GOVERNANCE
Pursuant to the "Green Initiative in corporate Governance" by the
Ministry of corporate affairs in allowing paperless compliances, the
company has implemented the policy of sending the Notice with Balance
Sheet, Profit and Loss account, Auditor's Report, Director's Report and
Explanatory Statement etc. through email to those shareholders whose
email addresses are registered with the company's Registrar. Out of
12,345 shareholders, 4,424 shareholders (around 36%) have opted for
receiving documents in electronic mode as of 31 March 2015.
32. ACKNOWLEDGEMENT
The Board places on record their sincere acknowledgement of the support
from all the stakeholders of the company viz. clients, Vendors,
Bankers, Employees and other Business Associates etc. for the support
received from them during the year.
For and on behalf of the Board of Directors
Suneel Advani
Mumbai Chairman and Managing Director
14 May 2015 blue Star Infotech Limited |