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Your Directors are pleased to present the Twenty First Annual Report on the business and operations together with the Company's Audited Financial Statements and the Auditor's Report thereon for the financial year ended March 31, 2016. The results of operations for the year under review are given below:
Your Company, on a standalone basis, achieved net sales of Rs. 7234.76 million during the year under review as against Rs. 6113.46 million during the previous financial year, a growth of more than 18% year on year. The total income increased by more than 17% from Rs. 6877.47 million in FY 2015 to Rs. 8062.86 million in FY 2016.
The operating expenses went up by 31% in FY2016 over FY 2015 primarily by reason of additional investment in manpower resources and more focus on advertising and promotion to build brands mainly 99acres.
Operating EBIDTA, for the year, stood at Rs. 1578 million in comparison with Rs. 1793 million in FY2015. Profit before tax
(PBT) from ordinary activities is Rs. 2082 million in FY2016 as against Rs. 2675 million in FY2015. Net profit after taxes (PAT), in FY2016, is reported to be Rs. 1416 million (after exceptional expense of Rs. 115 million in FY 2016) in comparison to Rs.1939 million in FY 2015 (with a large exceptional income of Rs. 292 million in FY 2015).
Your Company has a consistent & impressive track record of divided payment.
During FY2016, your Company declared and paid two interim dividends. Once, at the rate of Re.1/– (Rupee one only) per equity share of the face value of Rs. 10/– (Rupee Ten only) in the month of November, 2015 and then again in the month of March, 2016 at the rate of Rs. 2/– (Rupees two only) per equity share of the face value of Rs. 10/– (Rupee Ten only), in line with its revised Dividend Policy, which indicates that the Company strives to maintain a dividend pay–out ratio of 15%–40% of standalone profits after tax. Accordingly, your Directors have considered it financially prudent to further add to the strong reserve base of the Company and therefore has not recommended any amount as final dividend for the year ended March 31, 2016.
The total dividend pay–out (excluding Dividend Distribution tax) for the current year is Rs. 362.55 million as against Rs. 360.75 million for the previous year. The amount of Dividend Distribution Tax paid/provided by the Company for the year is Rs. 73.81 million as compared to Rs. 73.59 million during the previous financial year
TRANSFER TO RESERVE
The Company did not transfer any amount to reserves during the year.
During the year under review, the Company issued & allotted 7,00,000 equity shares, from time to time, to Info Edge Employees Stock Option Plan Trust. Pursuant to the above allotment, the issued & paid–up share capital of the Company increased to, as on March 31, 2016, at Rs. 1,209,161,590 divided into 120,916,159 equity shares of Rs. 10/– each.
The fresh shares allotted as aforesaid have been duly listed on the Stock Exchanges.
LISTING OF SHARES
The Company's shares are listed on BSE Ltd. (BSE) & National Stock Exchange of India Ltd. (NSE) with effect from November 21, 2006, post its initial public offering (IPO). The annual listing fees for the financial year 2016–17 to BSE and NSE has been paid.
The Securities and Exchange Board of India (SEBI), on September 2, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The said regulations were applicable w.e.f. December 1, 2015. Accordingly, all listed entities were required to enter into a Uniform Listing Agreement within six months from the effective date. The Company has entered into the requisite Listing Agreement with both the above Stock Exchanges.
Considering the changing trend in scale of operations in some of the service verticals, the Company has considered its business segments as the primary segments to monitor the performance of each of these business segments on regular basis with effect from quarter ended June 30, 2015 and therefore these have been considered as reportable segments under AS–17 on Segment Reporting. The reportable Segments represent "Recruitment Solutions",
"99acres" and the "Others" segment which comprises Jeevansathi and Shiksha service verticals since they individually do not meet the qualifying criteria for reportable segment as per the said Accounting Standard.
The flagship portal of the Company, Naukri.com, continues to remain the primary source of revenue and cash generation for the Company in the recruitment classifieds and related services vertical, along with naukrigulf.com, firstnaukri.com and quadranglesearch. com. There have been some improvements in the macroeconomic environment in India, primarily in terms of business sentiments. As a result recruitment business continues to grow at an improved pace in line with improved business confidence level.
During the year under review recruitment solutions grew by 19.4% from Rs. 4449.53 million in FY2015 to Rs. 531 1.96 million in FY2016. Operating EBITDA from recruitment solutions in FY2016 was Rs. 2846 million
The real estate market continued to remain subdued in India with many builders saddled with incomplete inventory. Across various regional real estate markets in India, there is a demand–supply imbalance that has had an impact on the overall trend in the real estate market. However, 99acres.com is at a critical juncture in its growth phase where the Company is making significant investments to improve the competitive positioning. The source of revenue for 99acres.com is from property listings, builders' and brokers' branding and visibility through micro–sites, home page links and banners.
During the year under review, real estate business grew by 10% from Rs. 1004.24 million in FY2015 to Rs. 1 106.22 million in FY2016. Operating EBITDA loss from real estate business stood at Rs. (910.8) million in FY 2016 largely on account of additional investments in people & advertising costs.
Your Company also provides matrimonial and education based classifieds and related services through its portals jeevansathi.com and shiksha.com respectively. The other business verticals of the Company have been gaining traction for some time. The Company is actively promoting jeevansathi.com among northern and select western Indian communities and establishing strong leadership position in this market segment. On the other hand, the online education classifieds space is still at an early stage of development. The demand for education and education based information services is increasing in India due to demographics and increase in enrolment in secondary education in India and the growing participation of the private sector is increasing publicity and spending on classifieds and advertising.
With revenues from these other verticals increasing by 23.4%, their combined contribution to the company's net sales was 11.29% in FY2016. Jeevansathi.com grew by 20% & Shiksha.com grew by 29%. The Company would continue to invest more to scale up these businesses.
Detailed analysis of the performance of the Company and its businesses has been presented in the section on Management Discussion and Analysis Report forming part of this Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014, till the standards of accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rule, 2006, as amended] and other relevant provisions of the Companies Act, 2013.
The consolidated financial statements have been prepared on the basis of the audited financial statements of the Company, its subsidiaries and associate companies, as approved by their respective Boards of Directors. However, for the purpose of consolidation of financial statements of the Company as regards the investments in certain Associate companies i.e. Canvera Digital Technologies Pvt. Ltd., Rare Media Company Pvt. Ltd., Mint Bird Technologies Pvt. Ltd and Kinobeo Software Pvt. Ltd., unaudited financial statements have been considered. For further details please refer note no.43 under notes to the Consolidated Financial Statements for the year ended March 31, 2016.
Pursuant to the provisions of Section 136 of the Act, the Financial Statements of the Company, the Consolidated Financial Statements along with all relevant documents and the Auditors' Report thereon form part of this Annual Report.
With a new government at the centre with a decisive mandate, there were high expectations from the Indian economy. While the Government has taken number of proactive steps, especially related to the infrastructure development, the structural weaknesses of the economy were fairly acute. Thus, while the economy has started to look up the pace of recovery has been somewhat muted. This subdued business sentiment may prevail for some more time as the trailing economic slowdown continues to evaporate. However, despite such slowdown impact, your Company continues to benefit by the significant digital transformation in the last 15 years. It took 10 years for India to get the first 10 million users and another decade to hit the first 100 million. However, the next 100 million has been added in four years–between 2010 and 2014 and as of October 2015 there were an estimated 317 million internet users. This growth trend is expected to continue. Deeper Internet penetration and enhanced broadband usage continued to show strong secular growth trends. Therefore, the potential for growth of internet enabled businesses is immense. Clearly, the digital economy in India has come of age and for entrenched players like Info Edge there are several opportunities for growth.
At Info Edge, we believe in this potential and are going to invest in all our businesses primarily on people, product development, marketing and brand building. The aim is to be a dominant leader driving the internet led economic growth of the country. The job market continues to show signs of picking up. Your Company also continues to gain share from other forms of recruiting and from competition. The competitive position in Naukri.com continues to be strong and the new product launches will help tap new sources of revenue. As GDP growth picks up, Info Edge should benefit going forward. The Company's investments specifically in product development will continue to help maintain and strengthen the leadership position. Growth of 99acres.com slowed down due to the uncertain market conditions but it gained traffic share; but the Company continues to invest in the business and growth is expected to come back in near future. Info Edge also continues to invest in Jeevansathi.com and Shiksha.com Some of the investee companies have gained traction and if they need investments, same will be made on a case to case basis.
MATERIAL CHANGES AND COMMITMENTS
There has been no material changes affecting the financial position of the Company which have occurred between the end of the financial year of the Company and the date of the Report.
As required under section 134(3) of the Act, the Board of Directors inform the members that during the financial year, there have been no material changes, except as disclosed elsewhere in report:
• In the nature of Company's business;
• In the Company's subsidiaries or in the nature of business carried out by them, and
• In the classes of business in which the Company has an interest.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/ TRIBUNALS
During the year under review, no significant and material orders have been passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in the future.
INTERNAL FINANCIAL CONTROLS
Your Company has put in place adequate internal financial controls with reference to the financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.
The Company has also put in place adequate systems of Internal Control to ensure compliance with policies and procedures which is commensurate with size, scale and complexity of its operations. The Company has appointed an external professional firm as Internal Auditor. The Internal Audit of the Company is regularly carried out to review the internal control systems and processes. The internal Audit Reports along with implementation and recommendations contained therein are periodically reviewed by Audit Committee of the Board.
DETAILS OF SUBSIDIARIES/JOINT VENTURES/ASSOCIATE COMPANIES
The developments in the operations/performance of each of the subsidiaries & associates included in the consolidated financial statement are presented below:
Naukri Internet Services Ltd.(NISL), had net revenue of Rs. 100 thousand during the year, similar to the Rs. 100 thousand revenue during the previous financial year. The total income of NISL is Rs. 145 thousand in FY 2016 as compared to Rs.143 thousand in FY 2015.
During the year, the Company invested an amount of Rs. 1570 million in NISL by subscribing to 0.0001% cumulative redeemable preference shares. NISL, in turn, further invested an aggregate amount of Rs. 1,554 million in Zomato during the year and now holds 7.02% of the paid–up share capital of Zomato Media Private Limited on a fully converted & diluted basis.
Jeevansathi Internet Services Pvt. Ltd.(JISPL), owns & holds the domain names & related trademarks of the Company. During the year under review, it had net revenue of Rs. 100 thousand, similar to the Rs. 100 thousand revenue during the previous financial year. The total income stood at Rs. 101 thousand in FY 2016 as against Rs. 100 thousand in FY 2015.
Allcheckdeals India Pvt. Ltd., provides brokerage services in the real estate sector in India. During the year under review, it achieved net revenue of Rs. 13.48 million as against Rs. 29.54 million during the previous financial year. The total income is Rs. 36.51 million in FY 2016 as compared to Rs. 44.64 million in FY 2015.
MakeSense Technologies Ltd., (MTL),
The Company had transferred its entire shareholding in Etechaces Marketing and Consulting Private Limited ("Policybazaar") to MTL for a total consideration of about Rs. 1,013.39 million. The transfer was completed in two equal tranches, where the first half of shareholding was transferred on 31st March, 2015 for a consideration of Rs. 500 million. (reported in the Company's audited financials for FY15) and the second half of the shareholding was transferred on 1st October, 2015 for a consideration of about Rs. 513.39 million.
During the year, MTL also entered into a definitive agreement with MacRitchie Investments Pte. Ltd., an indirect wholly owned subsidiary of Temasek, an investment company based in Singapore, enabling MacRitchie to subscribe to the shares of Makesense to the extent of 49.99% of its share capital (on a fully converted & diluted basis) for a total consideration of about Rs. 1341.65 million. Consequent to aforesaid transaction, the Company will own 50.01% of MakeSense and Makesense will hold about 19.65% of Policybazaar on a fully diluted & converted basis.
Interactive Visual Solutions Pvt. Ltd., is the owner of a proprietary software which enables a high quality virtual video/3D image of a proposed or existing real estate development to be viewed online by customers.
During the year under review, the total income of the company is Rs. 1 thousand only as compared to Rs. 497 thousand in FY2015.
Startup Investments (Holding) Ltd.,(SIHL), is a holding and investment company. During the year, the Company made following investments through SIHL:
• Subscribed Compulsorily Convertible Debentures (CCDs) in Green leaves Consumer Services Pvt. Ltd. for a consideration of about Rs. 64 million.
• Subscribed Preference Shares in Happily Unmarried Marketing Pvt. Ltd. for a consideration of about Rs. 50 million.
Additionally, the Company transferred the following investments held by it to SIHL during the year:
• About 50% of the shareholding (34,651 preference shares) held by the company in Kinobeo Software Pvt. Ltd. at cost of acquisition of about Rs. 135.0 million.
• About 90% of the shareholding (249,974,932 preference shares and 13,429 equity shares) held by the company in Applect Learning Systems Pvt. Ltd. at cost of acquisition of about Rs. 919.5 million.
• Entire shareholding (6,635 preference shares and 275 equity shares) held by the company in Happily Unmarried Marketing Pvt. Ltd. at the cost of acquisition of about Rs. 113.5 million.
Smartweb Internet Services Ltd.,(SISL), is a company incorporated during the year to carry on the business of providing all kinds and types of internet services. SISL made investment in shares of Canvera Digital Technologies Pvt. Ltd. Additionally, the Company transfered 532,216 preference shares and 34,711 equity shares in aforesaid Investee company to SISL at cost for a consideration of about Rs. 243.78 million.
One more wholly owned subsidiary was incorporated during the year by the name of Startup Internet Services Ltd.
Your Company has following continuing external strategic investments:
All holding percentages in the investee companies given below are computed on fully converted and diluted basis. It may be noted that the economic interest in these investee companies may or may not be equal to the percentage shareholding on account of the terms of the agreements with them.
Zomato Media Pvt. Ltd.
Zomato Media Pvt. Ltd. owns & operates the website, www.zomato.com Zomato has started gaining significant acceptance in the market place. It generates revenue from advertisements of restaurants and lead sales. The Company invested an aggregate amount of Rs. 1,554 million in Zomato during the year through its wholly owned subsidiary, Naukri Internet Services Ltd. With this investment, the aggregate investment in Zomato is about Rs. 4838 million. It raised additional funds during the year from other investors. The Company did not participate in said fund raise, accordingly as at the end of the financial year, the aggregate holding of the Company including that of its wholly owned subsidiary stood at about 46% on a fully diluted and converted basis
During the year under review, Zomato achieved, on consolidated basis, net sales of Rs. 1849.65 million as against Rs. 966.73 million during the previous financial year. The total income increased by 82% from Rs. 1 135.74 million in FY 2015 to Rs. 2064.92 million in FY 2016.
Zomato, due to fall in stake to 46% on fully diluted & converted basis, no longer is a subsidiary under the relevant provisions of the Companies Act, 2013. However, in accordance with the applicable Accounting Standards the same has been considered to be a subsidiary for consolidation purposes as the equity share capital holding of the Company in Zomato continues to be more than 50%.
Applect Learning Systems Pvt. Ltd.
Applect owns & operates a website with the name www.meritnation.com which is delivering kindergarten to Class 12 (K–12) study material. The company has an experienced team that specializes in content development and assessment modules in the education space. Your Company has invested an aggregate amount of Rs. 968 million for around 59% stake, on fully diluted & converted basis, in Applect.
During the year under review, it achieved net sales of Rs.287 million as against Rs. 216 million during the previous financial year. The total income increased by 30% from Rs. 229 million in FY 2015 to Rs. 298 million in FY 2016.
Applect falls in the category of a Subsidiary Company of the Company.
Etechaces Marketing & Consulting Pvt. Ltd.
Etechaces operates through website, www.policybazaar.com which helps customers understand their need for insurance and other financial products to select products/schemes accordingly, that best suit their requirements. Your Company had invested an aggregate amount of Rs. 325 million in Etechaces.
The Company transferred its entire shareholding in Etechaces to one of its wholly owned subsidiary viz. Makesense Technologies Ltd. for a total consideration of about Rs. 1013.39 million. The said transfer was completed in two equal tranches, where the first half of shareholding was transferred on 31st March, 2015 for a consideration of Rs. 500 million (as reported in the Company's audited financials of FY 14–15) and the second half has been transferred on 1st October, 2015 for a consideration of about Rs. 513.39 million. Further, the said wholly owned subsidiary entered into a definitive agreement with MacRitchie Investments Pte. Ltd., an indirect wholly owned subsidiary of Temasek, an investment company based in Singapore, enabling MacRitchie to subscribe to the shares of Makesense to the extent of 49.99% of its share capital (on a fully converted & diluted basis) for a total consideration of about Rs. 1341.65 million. Consequent to aforesaid transaction, the Company will own 50.01% of MakeSense and Makesense holds about 19.65% of Etechaces.
Kinobeo Software Pvt. Ltd.
Your Company has invested an aggregate amount of Rs. 270 million in www.mydala.com for a 42% stake. This is a website offering discount offers and deals with a focus on the mobile application space. Revenues are generated from merchant commissions and fees from telecom Operators. During the year, the Company transferred 34,651 preference shares in Kinobeo Software Pvt. Ltd. for a consideration of about Rs. 135.0 million to its wholly owned subsidiary i.e Startup Investments (Holding) Ltd.
Canvera Digital Technologies Pvt. Ltd.
The website www.canvera.com is owned & operated by this company. The website is operational since 2008 and offers solutions to professional photographers. Revenues are generated from sale of printed photo books.
Your Company has invested an aggregate amount of Rs. 901 million in Canvera for a 49% stake. The additional investments made by the Company during the year, were made through its wholly owned subsidiary viz. Smartweb Internet Services Ltd. Additionally, the Company transferred 532,216 preference shares and 34,711 equity shares in aforesaid Investee company to Smartweb Internet Services Ltd. for a consideration of about Rs. 243.78 million. During the year an exceptional loss of Rs. 463 million was booked on account of diminution in value.
Happily Unmarried Marketing Pvt. Ltd.
The Company has invested an amount of Rs. 163 million in www.happilyunmarried.com for 44% stake. This business generates revenues from design and sale of fun creative products as also a men's grooming range ("Ustraa") and has a large addressable market.
During the year, the Company transferred 6,635 preference shares and 275 equity shares in Happily Unmarried Marketing Pvt. Ltd. for a consideration of about Rs. 113.5 million to its wholly owned subsidiary i.e. Startup Investments (Holding) Ltd.
Mint Bird Technologies Pvt. Ltd.
The Company has invested an amount of Rs. 60 million in www.vacationlabs.com for 26% stake. Vacation Labs is developing a software tool for tour & activity operators which apart from automating the online reservations & payments system also provides entire back office operations.
Green Leaves Consumer Services Pvt. Ltd.
The Company has invested an amount of Rs. 64 million in www.bigstylist.com for 25% stake. Bigstylist is an on–demand marketplace for beauty professionals, which gives access to the network of beauty professionals in one's neighbourhood. The Company invested in bigstylist through its wholly owned subsidiary, Startup Investments (Holding) Ltd.
Rare Media Company Pvt. Ltd.
The Company has invested an amount of Rs. 74 million in www.bluedolph.in for 35% stake. It is a service offering secure location tracking and workflow management of mobile employees. The service is delivered by means of the 'Blue Dolphin' application, which is pre–installed on smartphones running the Android Operating System, and the Blue Dolphin Portal, which is an access controlled web portal.
The aforesaid Investee Companies (other than Zomato, Applect) achieved an aggregate revenue of Rs.2707.7 million as against Rs. 2124.6 million during the previous financial year The aggregate operating EBITDA level loss was Rs. (1648.7) million as compared to Rs. (959.2) million during the previous financial year.
The above companies are treated as "Associate Companies" except Green Leaves Consumer Services Pvt. Ltd. and Etechaces Marketing & Consulting Pvt. Ltd. in our Consolidated Financial Statements as per the Accounting Standards issued by the Institute of Chartered Accountants of India and notified by the Ministry of Corporate Affairs.
During the FY2016, your Company invested, directly or indirectly, about Rs. 2302.34 million into the Investee companies.
During the year under review, your Company has not invited or accepted any deposits from the public/members pursuant to the provisions of Sections 73 and 76 of the Companies Act, 2013 read together with the Companies (Acceptance of
Deposits) Rules, 2014.
AUDITORS AND AUDITOR'S REPORT
M/s. Price Waterhouse & Co Bangalore LLP (FRN–007567S/S–200012), Chartered Accountants hold office until the conclusion of forthcoming Annual General Meeting and being eligible offer themselves for re–appointment. They have confirmed their eligibility to the effect that their re–appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re–appointment.
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.
Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Chandrasekaran Associates, Company Secretaries as the Secretarial Auditors of the Company to undertake Secretarial Audit of the Company for FY2016. The Secretarial Audit Report is annexed herewith as Annexure I.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
M/s. T.R. Chaddha & Associates, Chartered Accountants perform the duties of internal auditors of the Company and their report is reviewed by the audit committee quarterly.
DIRECTORS & KEY MANAGERIAL PERSONNEL
There were no changes in the composition of the Board during the year under review.
Re–appointment of Executive Directors
Mr. Sanjeev Bikhchandani, Executive Vice–Chairman & Whole–time Director and Mr. Hitesh Oberoi, Managing Director & CEO were appointed for a term of five years each by the shareholders of the Company in their meeting held on July 21, 2011 effective 27th April, 2011. The said term expired on April 26, 2016. Pursuant to the recommendation of the Nomination & Remuneration Committee, the Board of Directors, in its meeting held on January 28, 2016, re–appointed Mr. Sanjeev Bikhchandani as Executive Vice–Chairman & Whole–time Director and Mr. Hitesh Oberoi as Managing Director & CEO, subject to the shareholders' approval in the ensuing annual general meeting, for another term of five years effective April 27, 2016 to April 26, 2021.
Directors liable to retire by rotation
In accordance with the provisions of the Act, not less than 2/3rd (Two–third) of the total number of Directors (other than Independent Directors) shall be liable to retire by rotation. Accordingly, pursuant to Companies Act, 2013 read with Article 119 of the Articles of Association of the Company, Mr. Kapil Kapoor (DIN 00178966) is liable to retire by rotation and, being eligible, offers himself for re–appointment.
Declaration by Independent Directors
The Independent Directors hold office for a fixed term of five years and are not liable to retire by rotation. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and under the SEBI (LODR), Regulations, 2015.
Familiarization Programme for the Independent Directors
In compliance with the requirements of the Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their roles, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the familiarization programme are explained in the Corporate Governance Report. The same is also available on the website of the Company and can be accessed by web link Infoedge.in/ir–corporate–governance–ac.asp#A11.
Performance Evaluation of the Board of Directors
Listing Regulations laying down the key functions of the Board mandates that the Board shall monitor and review the Board Evaluation Process and also stipulates that the Nomination and Remuneration Committee of the Company shall lay down the evaluation criteria for performance evaluation of Independent Directors. Section 134 of the Companies Act, 2013 states that a formal evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Further, schedule IV to the Companies Act, 2013 states that performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated.
In accordance with the aforesaid provisions, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees.
Some of the performance indicators based on which the evaluation takes place are–attendance in the meetings and quality of preparation/participation, ability to provide leadership, work as team player. In addition, few criteria for independent directors include commitment to protecting/enhancing interests of all shareholders, contribution in implementation of best governance practices. Performance criteria for Whole–time Directors includes contribution to the growth of the Company, new ideas /planning and compliances with all policies of the Company.
Separate Meeting of Independent Directors
Pursuant to Schedule IV to the Companies Act, 2013 and Listing Regulations, two meetings of Independent Directors were held during the year i.e. on May 29, 2015 and on January 28,2016, without the attendance of Executive directors and members of Management. In addition, the Company encourages regular separate meetings of its independent directors to update them on all business–related issues and new initiatives. At such meetings, the executive directors and other members of the Management make presentations on relevant issues.
Key Managerial Personnel
The following persons have been designated as Key Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Act, read with the Rules framed thereunder:
1. Mr. Hitesh Oberoi, Managing Director & CEO.
2. Mr. Chintan Thakkar, Whole–time Director & CFO.
3. Mr. Murlee Manohar Jain, VP– Secretarial & Company Secretary.
Your Company always places a major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an Organization's corporate governance philosophy is directly linked to high performance. The Company understands and respects its fiduciary role and responsibility towards its stakeholders and society at large and strives to serve their interests, resulting in creation of value for all its stakeholders.
In terms of Regulation 34 of the SEBI (LODR) Regulations, a separate section on "Corporate Governance" with a detailed compliance report on corporate governance and a certificate from M/s. Price Waterhouse & Co Bangalore LLP (FRN– 007567S/S–200012) Chartered Accountants, Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance, forms part of this Annual Report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013.
MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion & Analysis Report for the year under review as stipulated under Listing Regulations with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met 6 (six) times during the year under review. In addition to this, two meetings of Independent Director's were also held. The details of the meetings of the Board including of its Committees and Independent Directors' meeting are given in the Report on Corporate Governance section forming part of this Annual Report.
COMPOSITION OF AUDIT COMMITTEE
During the year, all recommendations of Audit Committee were accepted by the Board.
The details of the composition, powers, functions, meetings of the Committee held during the year are given in the Report to Corporate Governance section forming part of this Annual Report.
ESTABLISHMENT OF THE VIGIL MECHANISM
The Company has formulated an effective Whistle Blower Mechanism and a policy that lays down the process for raising concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Company has appointed M/s. Thought Arbitrage Consulting, as an Independent External Ombudsman. This policy is further explained under Corporate Governance section, forming part of this Report and the full text of the Policy is available on the website of the Company at www.infoedge.in
Your Company hereby affirms that no Director/employee have been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
For your Company, Corporate Social Responsibility (CSR) means the integration of social, environmental and economic concerns in its business operations. CSR involves operating Company's business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of businesses. In alignment with vision of the Company, Info Edge, through its CSR initiatives, will continue to enhance value creation in the society through its services, conduct & initiatives, so as to promote sustained growth for the society.
The CSR Committee of the Company helps the Company to frame, monitor and execute the CSR activities of the Company. The Committee defines the parameters and observes them for effective discharge of the social responsibility of your Company. The CSR Policy of your Company outlines the Company's philosophy & the mechanism for undertaking socially useful programmes for welfare & sustainable development of the community at large as part of its duties as a responsible corporate citizen. The constitution of the CSR Committee is given in the Corporate Governance Report which forms part of this Annual Report.
The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure II to this Report.
RISK MANAGEMENT POLICY
The Company has an effective risk management procedure, which is governed at the highest level by the Board of Directors, covering the process of identifying, assessing, mitigating, reporting and review of critical risks impacting the achievement of Company's objectives or threaten its existence.
To further strengthen & streamline the procedures about risk assessment and minimization procedures, the Board of Directors constituted a Board level Risk Management Committee (RMC). The details on Risk Management plan of the Company are given in the Report to Corporate Governance section forming part of this Annual Report.
COMPANY'S POLICY RELATING TO REMUNERATION FOR DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The Company's Policy relating to Remuneration for Directors, Key Managerial Personnel and other Employees is given in the Report to Corporate Governance section forming part of this Annual Report.
The percentage increase in the median remuneration of employees in the financial year.
The median remuneration of the employees of the Company during the financial year was Rs. 346,892/–.
The number of permanent employees on the rolls of the Company. 4214
Explanation on the relationship between average increase in remuneration and Company performance.
The increase in company's net sales for the Financial Year 2015–16 was 18% and the average increase given to employees was around 14%. The average increase in remuneration is based on factors such as company's performance, the average increases being given by similar companies in the industry and overall budgetary impact within the Company.
Variation in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase/ decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with last public offer.
Average percentile increase already made in the salaries of the employees other than the Managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in managerial remuneration.
The average increase in salaries of employees other than managerial personnel in 2015–16 was around 14%. Percentage increase in the managerial remuneration for the year was 24.15%.
The key parameters for any variable component of remuneration availed by the directors.
The key parameters for the variable component of remuneration availed by the directors are as laid down in the Remuneration Policy for Directors, Key Managerial Personnel and other Employees. The Nomination and Remuneration Committee recommends the payment of variable component, to the Board within the overall limits approved by the shareholders.
The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in the excess of the highest paid director during the year. –Not Applicable
Affirmation that the remuneration is as per the remuneration policy of the Company.
It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.
PARTICULARS OF THE EMPLOYEES
The particulars of employees required under Rule 5(2) of the Companies (Appointment and Remuneration of the Managerial Personnel) Rules, 2014 framed under Companies Act, 2013 forms part of this Report. However, pursuant to provisions of Section 136 of the Companies Act, 2013, the Annual Report excluding the aforesaid information, is being sent to all the Members of your Company and others entitled thereto. Any Member interested in obtaining such particulars may write to the Company Secretary of the Company. The same shall also be available for inspection by members at Registered Office of your Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
The detail of the investments made by Company are given in the note no. 10A, 10B & 14 of the notes to the financial statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH
As per the provisions of the Act and the Listing Regulations, your Company has formulated a Policy on Related Party Transactions which is also available on Company's website at <http://infoedge.in/> pdfs/Related–Party–Transaction–Policy.pdf.
The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.
This Policy specifically deals with the review and approval of Material Related Party transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is also obtained for related party transactions on an annual basis for transactions which are of repetitive nature and/or entered in the ordinary course of business and are at arm's length basis. The Company has not entered into any material related party transaction, i.e. transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statements.
The particulars of contracts or arrangements with related parties referred to in sub–section (1) of section 188 in the prescribed Form AOC–2 are given in Annexure III.
EXTRACT OF ANNUAL RETURN
As required by Section 92(3) read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Extract of Annual Return in Form MGT–9 is furnished in Annexure IV to this Report.
EMPLOYEE STOCK OPTION PLAN
Our ESOP schemes help us share wealth with our employees and are part of a retention oriented compensation program. They help us meet the dual objective of motivating key employees and retention while aligning their long term career goals with that of the Company.
ESOP–2007 (Modified In June 2009): This is a SEBI compliant ESOP scheme being used to grant stock based compensation to our Associates since 2007. This was approved by passing a special resolution in the Extra–ordinary General Meeting (EGM) held on March 26, 2007 which was further amended in June 2009 through approval of shareholders by Postal Ballot by introducing Stock Appreciation Rights (SARs)/ Restricted Stock Units (RSUs) and flexible pricing of ESOP/SAR Grants. The scheme is currently used by the Company to make fresh ESOP/ SAR grants.
ESOP–2015: This is a new Scheme introduced by the Company during the year. The Scheme was approved and recommended by the Nomination & Remuneration Committee and adopted by the Board of Directors on 27th July, 2015, subject to the approval of the members of the Company. The approval of the members was obtained by way of a postal ballot dated 2nd March, 2016. The results of the Postal Ballot were announced on April 19, 2016. The Scheme has been formulated to provide equity–based incentives to Employees of the Company i.e. the Options granted under the Scheme may be in the form of ESOPs / SARs / other Share–based form of incentives. The Company shall issue a maximum of 40 lac Options exercisable into equity shares of the Company.
Further, the Company will create, issue & allot equity shares not exceeding 3% of the issued & paid–up Equity Share Capital of the Company as on March 31, 2015, i.e.,36,06,484 (Thirty Six lacs Six Thousand Four Hundred and Eighty Four) including any expansion thereof, in one or more tranches to implement its ESOP Schemes.
The applicable Disclosures as stipulated under the SEBI Guidelines as on March 31, 2015 with regard to the Employees' Stock Option Scheme (ESOS) are annexed with this report as Annexure V.
A certificate from M/s Price Waterhouse & Co Bangalore LLP Chartered Accountants (Firm Registration Number: 007567S/S–200012) with regards to the implementation of the Company's Employee Stock Option Scheme in line with SEBI (Share Based Employees Benefits) Regulations, 2014 would be placed in the ensuing Annual General Meeting.
The shares to which Company's ESOP Scheme relates are held by the Trustees on behalf of Info Edge Employees Stock Option Plan Trust. The individual employees do not have any claim against the shares held by said ESOP Trust unless they are transferred to their respective de–mat accounts upon exercise of vested options by them. Thus, there are no shares in which employees hold beneficial ownership however the Voting rights in respect of which are exercised by someone other than such employees. The ESOP trust did not vote on any resolution moved at the previous annual general meeting or the Postal Ballot issued to approve the ESOP–2015 Scheme.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy and technology absorption as required to be disclosed under the Act are part of Annexure VI to the Directors' report. The particulars regarding foreign exchange earnings and expenditure are furnished below:–
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(3)(c) and 134(5) of the Companies Act, 2013 the Board of Directors confirm that:
a) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b) the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for that year;
c) the Directors have 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 have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such financial controls are adequate and were operating effectively;
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Company has implemented the "Green Initiative" to enable electronic delivery of notice/documents annual reports to shareholders. Electronic copies of the Annual Report 2016 and notice of the 21st Annual General Meeting are sent to all members whose e–mail addresses are registered with the Company/Depository Participant(s). For members, who have not registered their e–mail addresses, physical copies of the Annual Report 2016 and the Notice of the 21st Annual General Meeting are sent in permitted mode. Members requiring a physical copy may send a request to the Company Secretary.
The Company is providing e–voting facility to all members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to section 108 of the Companies Act, 2013 read with relevant rules thereon. The instructions for e–voting are provided in the Notice of the AGM.
Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and areas as well as the efficient utilization of the Company's resources for sustainable and profitable growth.
Your Directors acknowledge with gratitude and wishes to place on record its appreciation for the dedication and commitment of your Company's employees at all levels which has continued to be our major strength. Your Directors also thank the shareholders, investors, customers, visitors to our websites, business partners, bankers and other stakeholders for their confidence in the Company and its management and look forward for their continuous support.
For and on behalf of Board of Directors
Date: June 21,2016