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To the Members,
Your Directors' have pleasure in presenting before you the Twenty–first Annual Report of your Company together with the Audited Financial Statements for the Financial Year ended 31st March, 2016.
Your Company is primarily engaged in the business of providing IT Services and Solutions to its customers in the US, Europe, Middle East, Asia Pacific and Distribution of Software Products in India. The consolidated results of your Company include operations of its Indian and Overseas Subsidiaries and are best explained and analyzed under the two distinct segments of:
a) International IT Services;
b) Domestic Products and Services.
The year gone by was strategically eventful for the Company. During the year your Company acquired and successfully completed the integration of Halosys Technologies Inc., a mobility platform solution and Interactive Business Information Systems Inc (I.B.I.S. Inc.) a leading Distribution and Supply Chain solutions provider on Dynamics in the US. During the year, the Company developed new industry specific solutions like Brick & Click Retail solution for the retail vertical and also continued to extend Rezopia Travel Experience Management platform which helped the Company to position/strategize itself as the IP led solutions provider across key verticals of Travel, Retail, Distribution and ISV.
During the Financial Year that ended on 31st March, 2016, your Company continued its growth in the industry and segment by concentrating on its core strength and prudently expanding its geographic spread, industry focus and product portfolio. All these have resulted in your Company getting recognized as 'Strategic partner of choice' by many customers.
Your Company continued to remain focused on quick adoption to the disruptive technologies such as hybris, dynamics AX Retail, cloud, analytics, mobility, BI and ecommerce. The year under review saw a lot of action on the people front. Sonata's leadership team was significantly enhanced with new leaders joining into steer our vertical and digital initiatives. The addition of talent from the newly acquired entities also went a long way to strengthen the company's footprint in specific technologies such as Mobility and Dynamics. Your Company will continue to invest in its talent and develop IP based solutions which can be game changer in the verticals of choice and strength.
This focused approach was invigorated by our persistent approach to the value statement of "Go Deeper", essentially meaning go deeper into a customer to emerge higher in what we do for them. Your Company continues to build on its traditional vertical of strength – Travel and Outsourced Product Development (OPD) while entering new verticals like Retail, Distribution and CPG (Consumer Products & Goods). While strengthening existing partnerships with large firms such as Microsoft, IBM, your Company forged new partnerships with leading technology firms and solution providers. Your Company has also strengthened sales team across various geographies and continues to do so, to drive the engine of growth in the years to come.
Significant steps taken by your Company during the Financial Year under review were:
• Strengthening business in existing geographies and expanding onto others like Australia, France and thereby creating a diversified geographical mix;
• Scaling up its focus area the Company acquired Halosys Technologies Inc., a mobility platform solution provider, based in California and I.B.I.S. Inc., a leading Distribution and Supply Chain solutions provider on Dynamics in the US, to strengthen its footprint as an industry specific digital solutions provider.
• Opening of new SEZ unit in our Global Village campus, Bengaluru;
• Investing in Marketing and Branding;
• Strengthening the Sales, Account Management, Alliances and Product Management processes and teams;
• Further strengthening the Senior Management capabilities through additions in key positions such as –Head of Sales, Head of Competencies, Vertical, etc;
• Rezopia travel platform continued to maintain its salience as a leading travel technology solution with a silver award for online travel booking category at the Travel Weekly Magellan Awards 2015;
• For retail vertical, your Company went live with Brick & Click Retail solution on Microsoft Dynamics AX for both online and offline retailers;
• In ISV vertical your Company launched two new offerings and also started a cloud consulting offerings called Cloud Assessment Services;
• Developed a range of horizontal platforms such as Unified Data Analytics Platform, DevOps and CloudOps platform to offer a base of emerging technology solutions that can be extended and integrated for industry specific applications;
• Participating in various Travel & Retail Industry events across the globe to showcase Company's expertise.
Coming to the results, both on a Standalone and Consolidated basis, your Company has shown growth and placed itself well to handle its increasing scale of operation.
Total income has shown a growth of 8%. The Earnings before Interest, taxes, Depreciation and Amortization (EBITDA) stood at 33% and Net Profit at 23% with Earnings per share at Rs. 11.17.
Total income has shown a growth of 17%, EBIDTA a growth of 26% and Net Profit witnessed a growth of 19% when compared to the previous Financial Year.
Analyzing your Company's consolidated results by the two segments it operates in, International IT services contributed 36% of total revenues and 79% of PAT while Domestic products and services contributed to 64% of the total revenues and 21% of PAT.
International IT Services total revenue is Rs. 707 crores, growth of 17% and $ 108 million in US$ terms with a growth of 10% in revenues, 22% in EBIDTA and 15% in PAT. Your Company has managed to declare good results consistently because of its focus on serving and growing its existing customers, new customer additions of 26 through the Financial Year, and maintaining resource utilization at levels in excess of 85% over the Financial Year under review.
Domestic products and services has showed growth of 14% in revenues, 42% in EBITDA and 34% in PAT. The focus in this business has always been to manage Return on Capital Employed (ROCE), which was approximately 36% for the year under review.
Your Company during the Financial Year under review had a stronger consolidated Balance Sheet and has approximately Rs. 176 crores of cash and cash equivalents, showing Return on Capital employed (ROCE) of 30.40% and growth in Earnings per share from Rs.12.71 per share to Rs. 15.08 per share.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report as required under Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is disclosed separately in the Annual Report.
DIVIDEND / TRANSFER TO RESERVES
Your Company has not declared a final dividend.
Your Company paid first interim dividend of Rs. 3.50/– per equity share and the second interim dividend of Rs. 5.50/– per equity share adds up to a total dividend of Rs. 9/– per equity share (Previous Year – Rs. 7/– per equity share of Rs. 1/– each).
During the year under review, the Board of Directors met six times. The Meetings were held on 19th May, 2015; 5th August, 2015; 2nd November, 2015; 6th November, 2015; 9th February, 2016 and 9th March, 2016.
DIRECTORS AND KEY MANANGERIAL PERSONNEL
Mr. M D Dalal retires by rotation and is eligible for re–appointment. However, Mr. M. D. Dalal has expressed his desire not to seek re–appointment due to personal reasons. The Board has considered not to fill up the vacancy caused thereby.
Your Company has laid down procedures to be followed for familiarizing the Independent Directors with your Company, their roles, rights, responsibilities in your Company and to impart the required information and training to enable them contribute significantly to your Company.
Your Company has received necessary declaration from the Independent Directors under Section 149(7) of the Companies Act, 2013 that they meet the criteria of their Independence laid down in Section 149(6) of the Companies Act, 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
In pursuance of Section 134 (3)© and 134(5) 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 the Companies Act, 2013 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; and
(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.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT
There have been no material changes and commitments affecting financial position between the end of the Financial Year under review and date of report.
The Audit Committee comprises of Mr. B K Syngal (Chairman), Mr. Pradip P Shah and Mr. S B Ghia as its members. The Committee met four times during the year under review and all its recommendations were accepted by the Board.
Your Company has established Vigil Mechanism which provides for direct access to the Chairperson of the Audit Committee in cases that require reporting about the unethical behaviour, actual or suspended fraud or violation of code of conduct laid down by your Company. This mechanism is governed by Vigil Mechanism Policy which covers unethical behaviour, actual or
suspected fraud, theft, bribery, misappropriation of Company funds, financial reporting violations, misuse of intellectual property, mismanagement, significant environmental, safety or product quality issues, discrimination or harassment including sexual harassment, Insider Trading, actual or potential conflicts of interest, violation of Company's rules, Company's Policies or violation of Code of Conduct of the Company.
NOMINATION AND REMUNERATION COMMITTEE & SHAREHOLDERS RELATIONSHIP COMMITTEE
The Nomination and Remuneration Committee comprises of Mr. Suresh Talwar (Chairman), Mr. Viren Raheja, Mr. B K Syngal and Mr. S B Ghia as its members. The Committee has laid down a policy for remuneration of Directors, KMP and other Employees. A copy of the Policy forms part of this Report as ANNEXURE I.
The Stakeholders Relationship Committee comprises of Mr. S B Ghia (Chairman), Mr. P Srikar Reddy and Mr. M D Dalal as its members.
The Consolidated Accounts of your Company and its Subsidiaries viz., Sonata Information Technology Limited, Sonata Software North Amercia Inc., USA (formerly known as Offshore Digital Services Inc), Sonata Software GmbH, Germany, Sonata Europe Limited, UK, Sonata Software FZ LLC, Dubai, Sonata Software (Qatar) LLC and Rezopia Inc, USA, Halosys Technologies Inc., USA and IBIS Inc, USA duly audited are presented as part of this Report in accordance with the Companies Act, 2013, Accounting Standard 21 and the Listing Agreement with the Stock Exchanges, wherever applicable. The statement pursuant to the proviso 129(3) of the Companies Act, 2013, containing salient features of the financial statement of the Company's Subsidiaries in Form AOC–1 is given in ANNEXURE II.
The Accounts of the Subsidiaries audited for the purpose of consolidation shall be placed on your Company's website and made available for inspection by any Shareholder at the Company's Registered Office and at the respective registered offices of the Subsidiary companies. Copies can be made available on request, to the shareholders of the Holding and Subsidiary companies.
Your Company continued to invest in Enterprise Mobility and through its Wholly owned Subsidiary company Sonata Software North America Inc., acquired a 100% stake in Halosys Inc., a California USA headquartered company which provides single unified enterprise mobility enablement technology. The acquisition had been done for an upfront payment of $2 million and earn out of $3 million payable over the period of next 3 years. The acquisition helps the combined entities to deliver comprehensive mobility solution to customers, enhancing the capability to deliver digital transformation initiatives to customers.
Your Company had through its Wholly owned Subsidiary Company Sonata Software North America Inc., acquired a 100% stake in a U.S based I.B.I.S. Inc., a Georgia Corporation which has a strategic partnership with Microsoft for the Dynamics Solution and delivers world – class supply chain solutions, including its proprietary Advanced Supply Chain Software solution. The acquisition was aimed to strengthen your Company's footprint globally in the Retail industry. The acquisition had been done for an upfront payment of $8.6 million in cash and $ 5.4 million as earn–outs payable over two calendar years ending 2017. During the year under review Sonata and I.B.I.S. Inc. jointly showcased its Digital transformation technologies at convergence 2015 EMEA which was held in Barcelona, Spain between 30th November, 2015 and 2nd December, 2015.
Your Company has a "Policy for determining Material Subsidiaries", so that your Company could identify such Subsidiaries and set out a governance framework for them. The Policy is put up on the website at <http://www.sonata–>software.com/corporate governance.
EMPLOYEE STOCK OPTION PLAN "ESOP"
Your Company has an Employee Stock Option Plan, 2013 (Plan) in accordance with the SEBI Guidelines. The principal objectives of this Plan are to:
• Attract, retain and motivate talented and critical Employees;
• Encourage Employees to align individual performance with the Group's objectives;
• Reward Employee performance with ownership in proportion to their contribution; and
• Align Employee interest with those of the Group.
Mr. P Srikar Reddy, Managing Director & CEO who was granted Options to purchase equivalent shares under the Plan, had during the Financial Year under review, exercised 75,000 Options of your Company at an Exercise Price of Rs. 18.10 per share. Further, 75,000 Options of your Company have been vested in him as on 31st March, 2016 which have not as on date of this Report been exercised by him.
During the Financial Year under review, Mr. Prasanna Oke, Chief Financial Officer was granted an Option to purchase 120,000 ESOP shares of the Company to be vested equally over a period of 4 years, subject to terms and conditions as set forth in the ESOP Plan, 2013 of the Company. Accordingly, the first tranche of 30,000 Options shall vest in him for exercise on 19th May, 2016.
Pursuant to the requirements of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, a certificate has been issued by the Auditors of the Company confirming that the Plan has been implemented in accordance with the said Regulations and in accordance with the resolution of the Company in the General Meeting. A copy of the Certificate shall be placed before the Shareholders for inspection at the ensuing Annual General Meeting.
As required under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the applicable disclosures as on 31st March, 2016 are uploaded on the website of the Company www.sonata–software.com .
Secretarial Audit report as provided by Mr. Sriram Parthasarathy, Practising Company Secretary is annexed to this Report as
ANNEXURE III. COST AUDIT
The provisions of Companies (Cost Records and Audit) Rules, 2014 are not applicable to your Company.
QUALIFICATIONS IN AUDIT REPORTS
Your Company confirms that there is no qualification in the Statutory Auditors' Report and the Secretarial Audit report for the year under review.
Your Company has complied with the provisions of the Secretarial Standard 1 & 2 issued by the Institute of Company Secretaries of India.
EXTRACT OF ANNUAL RETURN
As required pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in form MGT 9 is annexed to this Report as ANNEXURE IV.
During the year under review, your Company and its subsidiaries were felicitated with following recognitions:
• Silver Award for online travel booking category at the Travel Weekly Magellan Awards 2015
• Microsoft Best Vendor Award for 2015
• 'Marketing Partner of the Year' for 2014 from SAP
• 'LAR Partner of the Year 2015' award from Microsoft
• Recognized as a leader for product engineering for two categories, Enterprise Software and Consumer Software, by Zinnov, a leading consulting organization
Your Company participated and sponsored events across globe including SAPPHIRE Now, Arabian Travel Market, Etail Core New York and RetechCon to connect with our customers.
Your Company also conducted Annual Communication Meet in Bengaluru and Hyderabad locations with the theme Future Ready.
Your Company also participated in leading events and conferences which included the Microsoft Dynamics Industry Partner Industry Partner Summit at California and the Zinnov Confluence for ISVs at California.
During the year under review the Company participated and sponsored more than dozen events which help to build brand Sonata globally.
Your Company continues to achieve customer delight by adopting best practices from the industry as well as proven quality models. During the year under review, your Company successfully completed the recertification audit of its Quality Management System under ISO 9001:2008 and ISO 20000–1:2011 (IT Service Management). Additionally, your Company underwent organization–wide surveillance audit under ISO 27001:2013 (Information Security).
Your Company continues to strive for continual improvement. The focus for the year under review was risk management. Existing risk management processes were enhanced and also a few new processes were introduced. Hierarchy–based risk real time dashboards were introduced so as to facilitate timely intervention of higher level management and remedial action.
Your Company continues to adhere to the high maturity practices of CMMI. Usage of process and prediction models for proactive monitoring and timely corrective action has resulted in timely delivery with optimal effort.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO
(A) Conservation of energy
Though your Company does not have energy intensive operations, every endeavor has been made to ensure the optimal usage of energy, avoid wastage and conserve energy. As an ongoing process the Company continued to undertake the following measures to conserve energy:
• Using energy–efficient computers and equipment with the latest technologies, which would help in conservation of energy.
• Installation of sensors at work space area resulting in lights automatically getting switched off in areas not in use.
• Control measures at HVAC vertical to create advanced air cooling since HVAC contributes 70% of the energy utilization
• Installation of LCD/LED monitors (energy efficient) in place of normal CRT monitors, thereby saving energy
• Usage of LED lighting in common areas
• Turning off air conditioners during non–peak hours and on weekends
• Consolidation of facilities
• Operating only one elevator in buildings having two elevators after 7 pm
During the year under review, some of the steps taken and practices followed by your Company and its employees, towards energy conservation include the following:
• Installation of new technology air conditioners with built in inverter option which has better air circulation and reduces energy consumption up to 20% compared to the normal air conditioners
• Replacing of normal flushing system in washrooms which consumes about 10–15 liters per flush with new technology based ones which consume 1 to 1.5 liters per flush
• As an environment sustainability initiative, UVGI (ultraviolet germicidal irradiation) has been installed in our HVAC systems in Global Village and Hyderabad facilities. This has resulted in the improvement of IAQ (Indoor Air Quality) upwards by 70% and reduction of power consumption up to 10%. The life span of the cooling coil of the AHU increases thereby reducing maintenance costs in the long run
As the cost of energy consumed by your Company forms a very small portion of the total costs, the financial impact of these measures is not material.
(B) Technology absorption
During the Financial Year under review, your Company focused its efforts and built competencies in areas of Mobility, Omni channel commerce, Analytics, Digital and Cloud. Dedicated Competency teams were setup for each of these. Your Company developed a range of horizontal platforms such as Unified Data Analytics Platform, DevOps and CloudOps platform to offer a base of emerging technology solutions that can be extended and integrated for industry specific applications. For an existing travel client in Europe, your Company is providing cloud based maintenance and support services for their SAP Cloud4Customer service for the first time.
(C) Foreign exchange earnings and Outgo
During the Financial Year under review, 88% of the revenue came from exports of developed software and related services to clients in USA, UK, Australia, Germany, UAE, Japan, Singapore, Denmark and Europe.
Foreign Exchange outgo on account of travelling, professional and legal charges, subsistence/living costs, overseas salaries, capital goods, etc was Rs. 65 crores and Foreign Exchange inflow on account of export of software services (net), goods and other operating revenues was Rs. 443 crores.
Customers today seek more efficient and effective operations along with technology based innovation and business transformation before they make any technology investments. Your Company has been successful in growing the size of existing teams, as well as branch into newer divisions within these customers.
During the Financial Year under review, your Company acquired Halosys Technologies Inc. and IBIS Inc in USA to strengthen its footprint as an industry specific digital solutions provider. Your Company leveraged its acquisitions to build and roll out industry speciic IT platforms and solutions such as Brick & Click Retail, Rezopia Travel Experience platform and Advanced Supply Chain Software. During the year the Company also featured a retail and distribution solution on Azure Lifecycle Services platform showcasing its capability to ofier cloud platform based IT solutions. It continued to strengthened its business in France, Australia and other operational geographies by winning several new clients across regions. A robust sales team with Senior leadership at the helm of affairs has been sufficiently enabled to venture into all possible market opportunities across all geographies.
Your Company has not accepted any deposits from the public during the year under review.
HUMAN RESOURCES MANAGEMENT
During the Financial Year under review, your Company and its employees were part of following activities:
• Welcoming the employees of the two acquired entities –Halosys Technologies Inc. and IBIS Inc – and ensuring they were assimilated well into Sonata.
• Senior Leadership Development through customised programs on Strategic Business Leadership, key developmental interventions through Executive Coaching, & Sponsoring leaders to Strategic Leadership Programs with B–schools.
• The competency framework created last year was implemented in phases – using it for compensation and performance management this year.
• Organized several employee engagement & CSR events across our facilities enabling employees to engage, participate, contribute and do their bit to our society – the Go Green Initiative in the Global Village Office, mentoring the Entrepreneurship case presenters at CEDI program in NIT Trichy, support to the Chennai / Tamil Nadu flood victims, supporting the NGOs as part of the Daan Utsav program
• Held a case study contest within the organisation to unveil and share the shining examples of excellence that made a huge customer impact
• Upgraded head office with initiatives such as transformer enhancement and external painting; also expanded workstation space in Global Village.
• Conducted ERT training & mock ire drill in Bengaluru facilities for the preparedness for any fire eventualities.
Further, every year your Company organizes an Annual Communications Meet "ACM" where:
• Your Managing Director along with his Leadership team shared the company strategy, plans & key focus areas.
• Unveiled your Company's future way of working under the Sonata Reimagined banner.
The ACM enabled employees to develop a sense of purpose, vision and helped them align and give a deep sense of belonging to the organization's strategy, plans & objectives.
DISCLOSURES AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company is committed to provide a healthy environment to all employees that enables them to work without the fear of prejudice and gender bias. Your Company has in place a Prevention of Sexual Harassment (POSH) Policy in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your Company through this Policy has constituted a committee and has established a grievance procedure for protection against victimization. The Policy is available on intranet for the employees to access as and when required. No complaints were received under this Policy during the Financial Year 2015–16.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Sonata has deployed adequate Internal Control Systems (ICS) in place to ensure a smooth functioning of its business. The processes and the systems are reviewed constantly and changed to address the changing regulatory and business environment.
The Control Systems provide a reasonable assurance of recording the transactions of its operations in all material aspects and of providing protection against misuse or loss of Company's assets. The ERP system has helped in further strengthening the ICS that are in place.
The existing ICS and their adequacy have been reviewed extensively during the year under review by Internal Auditors, Statutory Auditors and External Consultants. They have expressed an opinion that the ICS is adequate and functioning effectively. The Control Systems, related policies and procedures have been tested by the Statutory Auditors and Internal Auditors during the year. They have expressed their satisfaction with regard to the adequacy and effectiveness of the financial control systems in place to address risk management and mitigation strategies.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There is no significant and material order passed by the Regulators or Courts, during the year under review.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the Financial Year under review, your Company had given Inter Corporate Deposits at prevailing bank lending rate to its Wholly owned Subsidiary, Sonata Information Technology Ltd. for meeting its working capital requirements. The balance outstanding as on 31st March, 2016 is Rs. 1.9 crores. The maximum amount outstanding at any point of time during the Financial Year has been Rs. 99.6 crores.
Also, your Company has given Corporate Guarantees on behalf of Subsidiaries for facilitating its business needs. The outstanding amount as on 31st March, 2016 is as below:
Name of the Subsidiary Amount in Rs. Crores
Sonata Software North America Inc., USA 59.6
Sonata Information Technology Limited, India 104.4
Your Company's Risk Management practice seeks to sustain the long term vision and mission of your Company. It continuously evaluates the various risks surrounding the business and seeks to review and upgrade its risk management process. To further endeavour, your Board constantly formulates strategies directed at mitigating these risks which get implemented at the Executive Management level and a regular update is provided to the Board.
CORPORATE SOCIAL RESPONSIBILTY (CSR)
Your Company has in pursuance to the provisions of Section 135 and Schedule VII of the Companies Act, 2013, during the Financial Year under review, constituted a CSR Committee of the Board of Directors to (a) formulate and recommend a CSR policy, (b) recommend the amount of expenditure to be incurred on the CSR activities and (c) monitor implementation of the CSR policy from time to time.
Accordingly, your Company has adopted a Policy on CSR and as part of its implementation program, identified and participated in the following initiatives during the year under review:
• Remained committed to NIT Trichy CEDI to promote entrepreneurship and innovation amongst students reached multiple colleges and received over a hundred applications for incubation support.
• Developed an e–commerce platform to facilitate direct interaction between craftspeople and their customers for the INDUSTREE Foundation, who operate the Mother Earth chain with an aim improve the livelihood of artisans with the latest technologies.
• "I Go Green for Sonata" initiative of planting trees at our Global Village campus – large number of Sonatians participated in the event demonstrating company's commitment to the environment and society.
The Annual Report on CSR in the prescribed format is enclosed to this Report as ANNEXURE V.
RELATED PARTY TRANSACTIONS
The Policy on Related Party Transactions is available on the Company's website at <http://www.sonata–>software.com/corporate governance.
Particulars of the Contracts or Arrangements with Related Parties referred to in Section 188(1) in the format specified as Form AOC– 2 forms part of this Report as ANNEXURE VI.
JUSTIFICATION FOR ENTERING INTO RELATED PARTY TRANSACTIONS
All the Related Party Transactions entered into by your Company with the Related Parties including rendering of services, sharing of expenses, providing of inter–corporate loans and guarantees to its Subsidiaries are in the ordinary course of business and are carried out at arm's length pricing.
FORMAL ANNUAL EVALUATION
During the Financial Year under review, as mandated by the Companies Act, 2013, your Company conducted an exercise to evaluate the performance of the Board, Committees of the Board, Chairman of the Board, Individual Directors and the Independent Directors. As part of the evaluation process, individual criteria for each of the exercise was formulated. From these, formal questionnaire listing various parameters on which each of the categories were required to be evaluated was shared with each member of the Board / Committee / Director. They were then required to rate individually on each of the parameters on a performance scale of 1–4. The average scores were then arrived at to conclude the performance/ contributions of the relevant evaluation.
The outcome of the process was used to list out areas and categorize them as exemplary, satisfactory, or areas that required improvement. Thereafter, corrective measures were recommended for implementation with immediate effect.
REMUNERATION TO DIRECTOR AND EMPLOYEES
Details / Disclosures of ratio of Remuneration to each Director to the median employee's remuneration and details of remuneration paid to Employees is given as ANNEXURE VII.
LISTING WITH STOCK EXCHANGES
The Company confirms that it has paid the Annual Listing Fees for the year 2015–16 to NSE and BSE where the Company's Shares are listed.
Your Company has taken adequate steps to adhere to all the stipulations laid down in SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015. A report on Corporate Governance is provided elsewhere in this Annual Report.
Certificate from Mr. P Sriram, a practising Company Secretary, Proprietor of P. Sriram & Associates, confirming the compliance with the conditions of Corporate Governance as stipulated under the said Regulations Agreement is attached to this report.
M/s Deloitte Haskins & Sells, Chartered Accountants, (ICAI Registration No. 008072S), Bengaluru, Statutory Auditors of the Company retire at the conclusion of the forthcoming AGM and are eligible for re–appointment.
Your Directors would like to place on record their gratitude for all the guidance and co–operation received from all its clients, vendors, bankers, financial institutions, business associates, advisors, regulatory and government authorities. Your Directors also take this opportunity to thank all its Shareholders and stakeholders for their continued support and all the Sonatians for their valuable contribution and dedicated service.
FOR AND ON BEHALF OF THE BOARD
SONATA SOFTWARE LIMITED
PRADIP P SHAH
Place : Mumbai
Date : 23rd May, 2016