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Directors of your Company take great pleasure in presenting the Fifteenth Annual Report on the business and operations of your Company and the Audited financial statements for the financial year ended March 31, 2016.
RESULT OF OPERATIONS
The consolidated total income increased from Rs. 30,411.75 Million to Rs. 32,397.33 Million, an increase of 6.53% over the previous financial year. The consolidated Net Profit After Tax increased from Rs. 2,343.18 Million to Rs. 2,649.69 Million, a growth of 13.08% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis Report provided separately as part of the Annual Report.
The standalone total income decreased from Rs. 9,328.06 Million to Rs. 9,005.31 Million, a decline of 3.46% over the previous financial year. The standalone Profit After Tax decreased from Rs. 1,637.54 Million to Rs. 1,497.36 Million, an decline of 8.56% over the previous financial year.
With a view to conserve cash reserves to meet current financial obligations of the Company, the Directors of your Company do not recommend any dividend for financial year 2015–16.
INCREASE IN SHARE CAPITAL
During the year, your Company issued 7,023,453 equity shares of the face value of Rs. 10/– each on the exercise of stock options under First source Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). Consequently, the outstanding, issued, subscribed and paid up capital of the Company has increased from 666,291,459 shares to 673,314,912 shares of Rs.10/– each aggregating to Rs. 6,733.15 Million as on March 31, 2016.
During the year, the Board approved acquisition of 100% ownership of ISGN Solutions, Inc. from its holding Company ISGN Corporation, USA and BPO business of ISG Novasoft Technologies, India Ltd. The acquisition would be completed through First source Group US Inc. (FGUS), a wholly owned subsidiary of the Company in US and Firstsource Solutions Limited in India.
ISGN Solutions, Inc. is a provider of integrated end–to–end business process outsourcing (?BPO?) services to the financial institutions that focus on the U.S. residential mortgage market. ISGN Solutions, Inc. was incorporated in Delaware, US in 1999 and has two 100% owned operating subsidiaries in US.
ISGN Solutions, Inc. provides following outsourced services:
1. Mortgage Processing Outsourcing
2. Mortgage Servicing Outsourcing
3. Title and Settlement Services
4. Valuation Services
GLOBAL DELIVERY FOOTPRINT
The Company, on a consolidated basis had 45 global delivery centers as on March 31, 2016. The centers are located across India, US, UK, Philippines and Sri Lanka. 20 of the Company's delivery centers are located in 14 cities in India, 16 in US, 6 in UK, 2 in Philippines and 1 in Sri Lanka.
During the year, the Company incurred capital expenditure of Rs. 884 Million mainly towards refurbishment and maintenance of delivery centers and establishment of new centers in UK
The Company follows the global best practices for process excellence and is certified by COPC Inc. (Customer Operations Performance Center). Firstsource Dialog Solutions (Pvt.) Limited, joint venture subsidiary of the Company in Sri Lanka has been recertified for COPC (5.0a) Standard. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.
AWARDS AND ACCOLADES
The Company received the following awards and accolades during the year.
? Won Outsource Contact Centre of the Year at the Welsh Contact Centre Awards. The win recognizes the Company as a top employer in the industry and reflects the unmatched career development and training opportunities it offers its people.
? Received the 'Innovation in Outsourcing' award for its partnership with giffgaff at the National Outsourcing Association's (NOA) Awards 2015.
? Won 2 awards at the UK Customer Experience Awards 2015:
? With NOW TV, the 'Business Change or Transformation – Transformation at the Heart' category. NOW TV is an Online Television service powered and owned by Sky.
? The Silver Award with giffgaff in the 'Technology and Telecoms – Amazing Customer Experience' category.
? Received Frost & Sullivan Asia Pacific Best Practices Award 2015 for 'Customer Value Enhancement' in the contact centre outsourcing domain.
? Awarded 4th Runner–up for its corporate film on Diversity & Inclusion at the Learning & Organisation Development (L&OD) 2016 Corporate Film Awards.
Won 2 awards for HR best practices in India:
? JetSet program won the Best First Time Managers Development Program of Asia at the Best Leadership Development Practices of Asia 2015 conducted by the Learning & Organisational Development (L&OD) Roundtable.
? Firstsource Academy won in the Corporate Best HR practices category at the NHRD HR Showcase 2015.
Retained 7th position in the Top 15 BPM Export Companies and Ranked #19 in the Top 20 IT–BPM Employers as per Nasscom rankings for the year 2014–15
? Ranked #19 in Ulster Business in 'Top 100 Companies' list in Northern Ireland.
On a consolidated basis, the Company has 23,886 employees as of March 31, 2016.
Particulars of the Employees and Related Disclosures:
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 ("Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure I.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
During the year, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2016.
PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient are provided in the notes to the standalone financial statements. (Please refer to Note 12, 16, 19 & 32 to the standalone financial statements).
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Company seeks to be a good corporate citizen in all aspects of its operations and activities. The Company commits to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders. Our Corporate Social Responsibility ("CSR") Policy is governed and guided by our Group's corporate vision to enable inclusive growth, and our aspiration to be India's leading business group serving multiple market segments, for our customers, shareholders, employees and community.
The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.
The CSR Committee consists of Shashwat Goenka (Chairman) and Rajesh Subramaniam, Subrata Talukdar & Pradip Roy (Independent Director) as its members. The CSR Committee held 1 meeting during the year. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Policy, formulated in accordance with schedule VII of the Act and the Companies (CSR Policy) Rules, 2014, is available on the website of the Company at the link <http://www.firstsource.com/articles/fsl–>corporate–social–responsibility–policy.pdf. The Annual Report on CSR Activities, as stipulated under the Act forms an integral part of this Report and is appended as Annexure II. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.
During the year, the Company has spent an amount of Rs. 26.29 million, being 2% of the average net profits of the Company for the last 3 years on CSR activities as mentioned in the CSR Policy. Out of the said amount, majority of the amount has been contributed by the Company towards the corpus of the CSR Trust, which would be spent by the CSR Trust on the focus areas as mentioned in the CSR Policy of the Company.
Besides the focus areas of engagement as mentioned in the CSR Policy of the Company, the Company and its subsidiaries also voluntary undertake various CSR activities. The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company through its employee engagement activities has contributed in a variety of areas. Our Social Initiative areas across the geographies are as follows:
1. Employee Volunteering
2. Payroll Giving
3. Response to disasters
4. Partnering with NGOs
5. Participating in popular fundraising events
? India Smile Challenge 2015: During the Joy of Giving week, the Company initiated a Fundraising drive and encouraged employees to contribute to the NGOs identified for this cause i.e.: The Akanksha Foundation and Association for Non–traditional Employment for Women (ANEW). The Company collected close to Rs. 7 Lacs and received a matching grant from Give India as the winning prize. The Company won the 1st place in the "New Donor Count" (3302) and 2nd place in "Total Funds Raised" categories in the India Smile Challenge 2015 for corporates with over 5000 employees.
? Partnered with Lotus Flower Trust in fund raising for building a school in Tamil Nadu. This NGO raises funds to build homes, school and orphanages for the underprivileged.
? Employees from various centers in India raised Rs. 361,952/–to aid victims of the Nepal earthquake. The amount collected was handed over to the Consul General at the embassy office in Kolkata
? Fund raising initiated to aid victims of the flood in Chennai and Pondicherry.
? As part of the CSR Theme "Education", The Company's offices identified a particular NGO in their location for this cause. Fund raising was initiated for the chosen NGO and the amount collected was used to buy books, study materials, stationaries etc. The volunteers visited the NGOs and organised activities like quiz competition & games for the children and spent quality time with them
Fund raising activities: The most lucrative event of the year was a charity ball event in Cardiff in aid of the Teenage Cancer Trust, which raised £4,500. This was followed by the Strictly Salsa event in Londonderry which raised £3,500 when couples made up of members of staff took to the dance floor to compete in a charity dance competition. While over £23,000 was raised by staff, we also made corporate donation of £2,000 as part of the staff entry to the Mood Walk in Londonderry.
Payroll Giving: Firstsource was awarded "The Payroll Giving Platinum Award" in conjunction with HM Government and The Institute of Fundraising. This award recognized us given that 27% of our staff donated to Payroll Giving. The donations raised an impressive annual revenue of £57,000 for 86 different charities. Receiving Platinum status meant that we were then short–listed for Best Innovative Promotional Partnership at the National Payroll Giving Awards 2015 which were hosted at the House of Lords
Education: In partnership with Business In The Community (BITC), our Belfast and Londonderry offices have been actively engaged with a number of schools in the local community. The schools supported include Moville Community College, Saint Joseph's and Saint Brigid's in Londonderry and Mercy College in Belfast. Students were given insight into the real working world and got to interact with staff from various functions of the business. Part of the programme involved running interview skills training, C.V. workshop and a module on Customer Service.
Food and Gift Donations included over £200 worth of Easter Eggs for underprivileged children in Cardiff. 70 presents and seven large boxes of non–perishable foods in Banbury and 97 shoe–boxes full of Christmas gifts were collected in Londonderry for under–privileged children in Eastern Europe at Christmas time.
? Employees in Miami office raised a total of $1,556 for the Making Strides against Breast Cancer and attended the walking event held at the Marlins Park to support this cause.
? Employees participated in Strides Walk for Breast Cancer organised by American Cancer Society. There were 330 walkers from our offices across US and a total of USD 22,464 was raised through this activity. Bake sales, raffles, dress–down day, pie in the face, chili cook–off and many other activities were organised to mark the event.
? Employees in Colorado office raised a total of $4,000 for St. Baldrick's Foundation, an NGO which supports cure for childhood cancer. The funds were collected through bake sales, contests and cash donations.
? To sponsor the American Heart Association, employees took part in a 50/50 raffle through which an amount of $1,230 was collected.
? The Ride for Roswell 2015: Employees in Amherst office organised a 50/50 raffle to help raise money for this initiative which helps in funding cancer research for Roswell Park Cancer Institute. The Ride for Roswell event has raised more than $3.8 million dollars for Roswell Park Cancer Institute since its inception in 1996 and Firstsource has participated in the ride for the past 6 years.
? "The Wounded Warrior Project": Fundraising done to provide unique, direct programs and services to meet the needs of injured service members. We collected $6437 which was donated directly to the project.
? Food Drive: Employees in Amherst office donated barrels of food and other non –perishable items which were distributed to Salvation Army.
? Volunteers from our office visited "Kithu Sevana" Children's Development Home in Ragama. They distributed gift packs and organised fun activities for the children.
? Employees of the Company's office in Manila have been sponsoring the Chosen Children Village Foundation, Inc., an internationally acclaimed facility geared towards securing the future of the physically, mentally, and emotionally challenged children for more than 3 years in a row. "Fund My Future" Campaign was launched to provide funding for Chosen Children Village through greeting cards sales. Another initiative "Dream in a Bag" was launched and the funds raised were used to procure school supplies for the children.
? Cook out sale conducted by Leadership Team in Cebu and the proceeds of which went out to "Lapu–Lapu City Central Elementary School", which is an adopted school for differently–able children.
? "FSL Supports Pink October" campaign launched to create awareness on Breast Cancer and its prevention.
? The Industrial Tripartite Council held a CSR activity in collaboration with the Department of Labor. All the members of the council including Firstsource which is a founding member donated educational materials to the Special Education Department of the Institution.
The Company has implemented a comprehensive and fully integrated 'Enterprise Risk Management' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.
The Company has introduced several improvements to Enterprise Risk Management and processes to drive a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management and Internal Audit methodologies and processes in order to maximise enterprise value of the Company and ensure high value creation for our stakeholders over a time.
The details of the 'Enterprise Risk Management' framework with details of the principal risks and the plans to mitigate the same are given in the 'Risk Management Report' section of the 'Management Discussion and Analysis Report' which forms part of this Annual Report.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference to financial statements. Such internal financial controls over financial reporting are operating effectively.
WHISTLE BLOWER POLICY
The Company has a Whistle Blower Policy (the "WB Policy") with a view to provide vigil mechanism to Directors, employees and other stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The WB Policy also states that this mechanism should also provide for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy has been posted on the website of the Company and the details of the same are explained in the 'Report on Corporate Governance' forming part of this Annual Report. The Whistle Blower Policy is available at the website of the Company at the link <http://www.firstsource.com/articles/Whistle–Blower–Policy>. pdf.
PREVENTION OF SEXUAL HARRASSMENT POLICY
The Company has a 'Prevention of Sexual Harassment Policy' in force in terms of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees will deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.
BOARD OF DIRECTORS
Mr. Shashwat Goenka (DIN 03486121) retires by rotation and, being eligible, has offered himself for re–appointment at the ensuing Annual General Meeting ("AGM").
All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.
Mr. Rajesh Subramaniam's (DIN 02617781) current tenure as Managing Director & CEO ("MD & CEO") of the Company would complete on July 31, 2016. He is proposed to be re–appointed as MD & CEO of the Company.
Board and Audit Committee Meetings During the year, 4 Board Meetings were held on May 5, August 3 & October 29 in 2015 and on January 28 in 2016. Time gap between any two meetings was not more than 4 months. Further, 4 meetings of the Audit Committee were held during the year on May 5, August 3 & October 29 in 2015 and on January 28 in 2016. The time gap between any two meetings was not more than 4 months. The full details of the said meetings are given in the 'Report on Corporate Governance' forming part of this Annual Report.
The Familiarisation Programmes for Independent Directors
The Company has put in place a system to familiarise its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarisation programmes are put up on the website of the Company at the link: <http://www.firstsource.com/> articles/policy–on–familiarisation–of–independent–directors.pdf.
(i) Performance Evaluation of the Independent Directors and other Individual Directors
The Company has framed a Policy for Appointment of Directors and Senior Management and Evaluation of Directors' Performance ("Board Evaluation Policy"). The said Policy sets out criteria for performance evaluation of Independent Directors, other Non–Executive Directors and the Executive Director(s).
Pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Board carries out the performance evaluation of all the Directors (including Independent Directors) on the basis of recommendation of the Nomination and Remuneration Committee and the criteria mentioned in the Board Evaluation Policy. The Board decided that the performance evaluation of Directors should be done by the entire Board of Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors' performance:
a. Attendance and active participation in the Meetings
b. Bringing one's own experience to bear on the items for discussion
c. Governance – i) Awareness ii) Observance
d. Value addition to the business aspects of the Company
(ii) Performance Evaluation of Executive Director
The performance of Managing Director & Chief Executive Officer is evaluated on the basis of achievement of performance targets/ criteria given to him by the Board from time to time.
(iii) Performance Evaluation by the Board of its own performance and its Committees
The performance of the Board is evaluated by the Board in the overall context of understanding by the Board of the Company's principle and values, philosophy and mission statement, strategic and business plans and demonstrating this through its action on important matters, the effectiveness of the Board and the respective Committees in providing guidance to the management of the Company and keeping them informed, open communication, the constructive participation of members and prompt decision–making, level of attendance in the Board meetings, constructive participation in the discussion on the Agenda items, monitoring cash flow, profitability, income & expenses, productively & other financial indicators, so as to ensure that the Company achieves its planned results, effective discharge of the functions and roles of the Board etc.
The performance of the Committees is evaluated by the members of the respective Committees on the basis of the Committee effectively performing the responsibility as outlined in its Charter, Committee meetings held at appropriate frequency, length of the meetings being appropriate, open communication & constructive participation of members and prompt decision–making etc.
POLICY ON DIRE APPOINTMENT AND REMUNERATION
The criteria for Directors' appointment and for determining qualification, positive attributes and independence of a Director as mentioned in the 'Policy for Appointment of Directors and Senior Management and Evaluation of Directors' Performance' in terms of Section 178(3) of the Act is mentioned below:
Appointment criteria and qualifications:
1. The Nomination & Remuneration Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, Key Managerial Personnel ("KMP") or at Senior Management level and recommend to the Board his / her appointment.
2. A person should possess adequate qualifications, expertise and experience for the position he / she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person are sufficient / satisfactory for the concerned position.
3. The Company shall not appoint or continue the employment of any person as Managing Director/ Whole time Director who has attained the age of seventy years. Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.
Meeting of Independent Directors
The Independent Directors of the Company hold at least one meeting in a year, without the attendance of non–independent Directors and members of management.
The Independent Directors in the meeting:
i. Review the performance of non–independent Directors inculding Managing Director & CEO and the Board as a whole.
ii. Review the performance of the Chairperson of the Company, taking into account the views of executive Directors and non–executive Directors.
iii. Assess the quality, quantity and timeliness of the flow of information between the Company's management and the Board that is necessary for the Board to effectively and reasonably perform its duties
The Board, on the recommendation of the Nomination & Remuneration Committee framed a Remuneration Policy for Non–Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and Other Employees of the Company. The details of Remuneration Policy for Non–Executive Directors and Independent Directors is provided as Annexure IIIA and details of Remuneration Policy for Key Managerial Personnel and Other employees of the Company is provided as Annexure IIIB to this Report.
COMMITTEES OF THE BOARD
A detailed note on the Board and its Committees is provided in the 'Report on Corporate Governance' forming part of this Annual Report. The composition of the major Committee is a follows:
As at March 31, 2016, the Audit Committee comprised of 3
Independent Directors namely Y. H. Malegam (Chairman),
Charles Miller Smith & Ms. Grace Koshie and 1 Non–Independent
Director namely Subrata Talukdar.
Nomination and Remuneration Committee
As at March 31, 2016, the Nomination and Remuneration
Committee comprised of 3 Independent Directors namely Y. H.
Malegam (Chairman), Charles Miller Smith and Pradip Roy and 1
Non–Independent Director namely Subrata Talukdar.
Corporate Social Responsibility (CSR Committee)
As at March 31, 2016, CSR Committee comprised of Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and 1 Independent Director namely Pradip Roy.
Stakeholders Relationship Committee
As at March 31, 2016, Stakeholders Relationship Committee comprised of Subrata Talukdar (Chairman) and Rajesh Subramaniam.
RELATED PARTY TRANSACTIONS
All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arm's length basis and in the ordinary course of business. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material, requiring approval of the Board/ shareholders, in accordance with the policy of the Company on materiality of related party transactions. All Related Party Transactions are placed before the Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board is available on website of the Company at the link: <http://> www.firstsource.com/articles/Related–Party–Transaction– Policy.pdf.
Details of Related Party Transactions are given at Note No. 28 to the Standalone Financial Statements. None of the Directors of the Company has any pecuniary relationships or transactions vis–a–vis the Company.
EMPLOYEES STOCK OPTION SCHEME
With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long–term wealth, the Company has an Employee Stock Option Scheme (ESOS), namely, the Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The Scheme is applicable to the eligible employees that include employees and Directors of the Company and its subsidiary companies. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("SEBI ESOP Regulations"), as amended. There has not been any material change in the Scheme during the financial year. The disclosure pursuant to SEBI ESOP Regulations read with Circular No CIB/CFD/Policy/CELL/2,2015 dated June 16, 2015, are given on the website of the Company (<http://www>. firstsource.com/us/investors–corporate–governance).
As on March 31, 2016, your Company had 12 subsidiaries:
1. Firstsource Process Management Services Limited* (Formerly known as Anunta Tech Infrastructure Services
Limited) [Wholly Owned Subsidiary ("WOS") of the Company]
1. Firstsource Solutions UK Limited, UK (WOS of the Company)
2. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource Solutions UK Limited)
3. Firstsource Group USA, Inc., USA (WOS of the Company)
4. MedAssist Holding, LLC, USA (WOS of Firstsource Group USA, Inc)
5. Firstsource Business Process Services, LLC, USA (WOS of Firstsource Group USA, Inc)
6. Firstsource Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC)
7. One Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC)
8. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding, LLC)
9. Firstsource Transaction Services, LLC, USA (WOS of Firstsource Solutions USA, LLC)
10. Firstsource BPO Ireland Limited (WOS of the Company)
11. Firstsource Dialog Solutions (Private) Limited (Subsidiary of the Company)
1) The name of Anunta Tech Infrastructure Services Limited was changed to Firstsource Process Management Services Limited w.e.f. December 30, 2015.
The Company has no other joint venture or associate Company. No company has become/ceased to be a joint venture or associate during the financial year 2015–16.
REPORT ON THE PERFORMANCE FINANCIAL POSITION Subsidiaries:
A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC – 1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company has a policy on material subsidiaries which was revised w.e.f. October 29, 2015 pursuant to Regulation 16(1)(c) of the Listing Regulations. The same is available on website of the Company viz: <http://> www.firstsource.com/articles/Material–Subsidiary–Policy.pdf
Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE
The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider management and is further maintained across the entire functioning of the Company. The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under provisions of Chapter IV & Schedule V of the Listing Regulations is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate governance is attached to the Report on Corporate Governance.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with section 129(3) of the Act and Accounting Standard (AS) – 21 on Consolidated Financial Statements, the Company has prepared consolidated financial statements of the Company and all its subsidiaries, which form part of this Annual Report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT– 9 is annexed herewith as Annexure IV.
STATUTORY DISCLOURES OF PARTICULARS
A) Conservation of Energy
The Company has made progress towards energy conservation across all its delivery centers. The Company is continuously monitoring the earlier initiatives of reducing energy consumption in the computers which are used in its' delivery centers. The Company, similar to its previous years initiatives of GREEN IT, continued to replace the normal Desktops with Mini Desktops as the power consumption of mini desktop was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts have been deployed where possible to shut down the Desktops/Thin clients which are not being used for more than 1 hour which would save lot of energy.
B) Absorption of Technology
The Company has been innovating consistently to absorb newer technology offerings which can benefit business to improve operational efficiency with a cost effective manner. During the year, the Company has reduced considerable resources from Onsite to Remote Support for Desktop, Server Support and Enterprise – Email/Domain Support Services. The Company also started using new technology, from Microsoft based SAS to VMWARE Horizon. These new technologies have helped the Company to have a cost effective solution. The Company has also moved from the traditional rack mount servers to virtualized servers over the last year and will eventually move on a complete virtualized platform from a server and network domain perspective. The Company has also moved from the traditional storage systems with Gen next storage which have much smaller footprint in terms of space and energy without compromising on storage output. On the telephony side, the Company has made significant development in migration from TDM to IP architecture allowing it to offer a single platform for voice, email, back office & chat applications.
C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans.
The Company's income is diversified across a range of geographies and industries. During the year, 75.06% of the Company's standalone total revenues was derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Ms. Amrita D.C. Nautiyal, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this Report as Annexure V. There is no qualification, reservation or adverse remark(s) in the Secretarial Audit Report.
STATUTORY AUDITORS AND AUDITORS' REPORT
M/s. B S R & Co. LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company by the Members at their previous Annual General Meeting (AGM) for a period of 2 years. The Audit Committee and the Board have recommended ratification of their appointment to the members at the ensuing AGM until the next AGM at a remuneration to be decided by the Audit Committee. The Statutory Auditors have submitted a certificate, as required under section 139(1) of the Act to the Company stating that they satisfy the criteria provided in Section 141 of the Act.
The Notes on financial statements referred to in the Auditors' Report are self–explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. However, there are Emphasis of Matter in the Auditors' Report which are self explanatory.
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the financial year 2015–16:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees Stock Option Scheme as referred to in this Report.
3. The Managing Director & CEO does not receive any remuneration or commission from any of its subsidiaries.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company's operations in future.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(3)(c) and 134(5) of the Act, Directors of your Company state and confirm that:
(a) In the preparation of the annual accounts for the financial year 2015–16, the applicable accounting standards have been followed and there are no material departures from the same;
(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 as at March 31, 2016 and of the profit and loss of the Company for year ended on that date;
(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 safe guarding 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; and
(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.
The Board wishes to place on record its sincere appreciation for the support and co–operation extended by all the customers, vendors, bankers and business associates. The Board also expresses its gratitude to the Ministry of Telecommunications, Collector of Customs and Excise, Director – Software Technology Parks of India and various Governmental departments and organisations for their help and co–operation.
The Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Date : May 12, 2016