1. Shares allotted as fully paid up by way of bonus shares during five years preceding the year end
The Company allotted 145,545,781 equity shares as fully paid up bonus shares by utilization of Securities premium account on 2nd March, 2011 pursuant to shareholder’s resolution passed in Extra Ordinary General Meeting held on 15th February, 2011.
2. Rights, preferences and restrictions attached to equity shares
The Company has one class of equity shares having a par value of Rs. 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all liabilities, in proportion to their shareholding.
3. Shares reserved for issue under options
The Company has granted employee stock options under ESOP 2002, 2007 and 2008 schemes and restricted stock units (RSUs) under the ESOP 2008 and 2015 scheme. Each option / RSU entitles the holder to one equity share of Rs. 2 each. 9,264,407 (9,844,513) options / RSUs were outstanding as on 31st December, 2016. (Refer Note no. 26)
4. The Board of Directors, at its meeting held on 7th February, 2017 has declared 50% of interim dividend of Re. 1/- per equity share. Further during the year, the Company has also paid interim dividends aggregating Rs. 4.50/- per share (225%).
5. The Board of Directors, at its meeting held on 25th October, 2016, approved a buyback proposal to which shareholders accorded their consent on 22nd December 2016, for purchase by the Company of up to 5,694,835 shares of Rs. 2 each (representing 1.9% of total issued equity shares) from the shareholders of the Company on a proportionate basis by way of a tender offer route at a price of Rs. 240 per equity share for an aggregate amount not exceeding Rs. 1,366.76 Million in accordance with the provisions of the Companies Act, 2013 and SEBI (Buy Back of Securities) Regulations, 1998. The Buyback offer opens on 2nd February, 2017 and closes on 15th February, 2017.
6. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs. 40.63 million (Previous year Rs. 974.98 million)
7. Contingent Liabilities in respect of
8. Claims not acknowledged as debt Rs. 28.14 million (Previous Year Rs. 28.14 million), being a claim from landlord of a premise occupied by the Company in an earlier year. The Company is confident of successfully contesting the aforesaid matter and does not expect any outflow on this count.
9. Claims for taxes on income
Income taxes of Rs. 9.59 million (Previous year Rs. 9.74 million) in respect of assessments completed in earlier year, arising from certain disallowances by the Income tax authorities. The Company has appealed against the Orders and based on merits, expects favourable outcome. Hence, no provision is considered necessary.
10. The Provision for current income tax is aggregate of the balance tax for three months ended 31st March, 2016 based on the returned income for the tax year ended 31st March, 2016 and the provision based on the taxable income for the remaining nine months up to 31st December, 2016, the actual tax liability, for which, will be determined on the basis of the results for the tax year ending 31st March, 2017.
11. Derivative Instruments
12. Forward exchange contracts to Sell US Dollar 141.82 million, Euro 4.20 million and GBP 4.20 million are outstanding as of 31st December, 2016 (Previous Year US Dollar 156.94 million, Euro 5.60 million and GBP 4.20 million).
Fair value net gain on the derivative instruments identified as cash flow hedges is Rs. 358.12 million as at 31st December, 2016 (Previous Year Rs. 20.85 million ).
Net gain of Rs. 322.77 million recognized in Hedging Reserve as at 31st December 2016 is expected to be recycled to Statement of Profit and Loss over two years.
13. As at the balance sheet date the Company has net receivable foreign currency exposure that are not hedged by a derivative instrument or otherwise amounting to Rs. 2,237.21 million (Previous Year Rs. 2,575.57 million)
14. Share Based Compensation (ESOP)
15. The Remuneration and Compensation Committee (''''Committee’) of the Company administers the stock options plans viz. ESOP 2002, 2007, 2008 and 2015 plan. Under the plans, the employees of the Company as well as its subsidiaries are granted options / Restricted Stock Options (RSU) entitling them to one equity share of Rs. 2/- each for each option granted. Exercise price is the market price of the shares of the Company at the grant date or the price determined by the Committee. The Options / RSU’s vest over a period of 1 to 4 years from the date of grant on the basis of service period and/or performance achievement. The maximum time available to exercise upon vesting is 6 years.
16. The Company has followed the Intrinsic Value-based method of accounting for grants made before April 1, 2015. For the grants made after 1st April, 2015, the Company has recognized compensation cost using fair value method. Had the compensation costs for the grants made before 1st April, 2015 been recognized using fair value method, the income would have been higher by NIL (Previous year higher Rs.7.51 million) and earnings per share (EPS) as reported would be as indicated below:
17. The Company takes on lease office space and accommodation for its employees under various operating leases. The lease rentals towards operating lease agreements recognized in the Statement of Profit and Loss for the year is Rs. 188.69 million (Previous Year Rs. 134.97 million).
The future minimum lease payments and payment profile of the non-cancellable operating leases are as follows:
18. Employee benefit plans
19. Provident Fund and Superannuation Fund
Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employee’s salary. In respect of the Company’s employees enrolled with the Hexaware Technologies Limited Employees Provided Fund Trust (the ''''Trust’), the Company pays a part of the contributions to the Trust. The remaining portion of Company’s contribution in respect of such employees and entire contribution in respect of other employees is contributed to the Government administered employee Provident and Pension Fund.
The interest rate payable by the Trust to the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the short fall, if any, between the return from the investments of the trust and the notified interest rate. The actuary has accordingly provided a valuation and based on the fund position and assumptions mentioned below, there is no shortfall as at 31st December 2016.
Certain employees of the Company are entitled to benefits under the superannuation plan, a defined contribution plan. The Company makes quarterly voluntary contributions under the superannuation plan to LIC based on a specified percentage of each covered employees salary and recognizes such contributions as an expense when incurred and has no further obligation to the plan beyond such contributions.
During the year, the Company has recognized expenses towards contributions to provident fund and other funds and superannuation funds of Rs. 280.85 million (Previous year Rs. 261.42 million) and Rs. 5.04 million (Previous year Rs. 6.03 million) respectively.
20. Gratuity Plan
The Company makes annual contribution to the Employee’s Group Gratuity Assurance Scheme, administered by the Life Insurance Corporation of India (''''LIC’), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment based on completed years of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.
21. Remittance in Foreign currency on account of dividend
The Company has paid dividend in respect of shares held by non - residents on repatriation basis. This inter-alia includes portfolio investment and direct investment, where the amount is also credited to non- resident external account (NRE A/c). The exact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in foreign currency in this respect is given herein below:
22. An amount of '''' 2.48 million towards principal and Rs. Nil towards interest was outstanding to Micro and Small Enterprises as on 31st December 2016. There were no amounts of interest paid or payable during the year. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.
As per Accounting Standard 17 on "Segment Reporting", segment information has been provided under the notes to the Consolidated Financial Statements.
24. Corporate Social Responsibility
25. Gross Amount required to be spent by the Company during the year is Rs. 80.38 million (Previous year Rs. 74.47 million)
26. Amount spent during the year on :
27. Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current years classification / disclosure.