FUTURE MINDTREE Directors Report

Dear Shareholders,


The behalf of the Board of Directors (“Board”) of Mindtree Limited (“Mindtree” or “Company”), We are happy to present the Eighteenth Board’s Report of your Company along with the audited financial statements on consolidated and standalone basis for the year ended March 31, 2017.


Rs. in million


















































































































Financial Particulars



For the year ended March 31



2017



2016



2017



2016



Consolidated



Standalone



Revenue from operations



52,364



46,730



47,526



43,398



Other income



553



839



633



973



Total revenues



52,917



47,569



48,159



44,371



Employee benefits expense



34,125



27,991



30,215



25,732



Finance costs



191



160



190



159



Depreciation and amortization expense



1,858



1,658



1,331



1,318



Other expenses



11,194



10,529



10,106



9,653



Total expenses



47,368



40,338



41,842



36,862



Profit before tax



5,549



7,231



6,317



7,509



Tax expense



1,363



1,706



1,426



1,699



Profit for the year



4,186



5,525



4,891



5,810



Other comprehensive income



(621)



(242)



(11)



(27)



Total comprehensive income



3,565



5,283



4,880



5,783



Your Company’s financial statements for the year ended March 31, 2017 are the first financial statements prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015. Accordingly, numbers for all the comparative periods have been restated.


Company Performance


On consolidated basis, revenue for the year was Rs.52,364 million signifying a growth of 12.1% in Rupee terms. Your Company had 328 active customers as on March 31, 2017 of which 111 customers had revenues in excess of US$ 1 million, 30 customers had revenues in excess of US$ 5 million, 16 customers had revenues in excess of US$ 10 million, 4 customers had revenues in excess of US$ 25 million, 1 customer had revenues in excess of US$ 50 million and 1 customer had revenues in excess of US$ 100 million.


EBITDA margins have dropped from 17.6% in the previous year to 13.7% in the current year mainly due to:


- Increase in onsite revenue by 23% which has lower margins as compared to offshore margins.


- Increase in employee benefits expenses by 22%.


- Lower margin profile of acquired entities.


Our effective tax rate was about 24.6% as compared to about 23.6% in the previous year. PAT has decreased by 24% to Rs.4,186 million as compared to Rs.5,525 million in the previous year on account of drop in EBIDTA margins and also due to foreign exchange loss in FY 16-17 compared to a gain in FY 15-16, due to the sharp drop in exchange rates in the last quarter of FY 16-17.


On standalone basis, revenue for the year was Rs 47,526 million signifying a growth of 9.5% in Rupee terms. EBITDA margins have dropped from 18.5% in the previous year to 15.5% in the current year mainly due to:


- Increase in onsite revenue by 3% which has lower margins as compared to offshore margins.


- Increase in employee costs by 17% and increased investments in selling, general and administrative expenses.


Our effective tax rate for the current year remained at 22.6% as last year. PAT has decreased by 15.8% to Rs.4,891 million as compared to Rs.5,810 million in the previous year on account of drop in EBIDTA margins and also due to foreign exchange loss in FY 16-17 as compared to a gain in FY 15-16 due to the sharp drop in exchange rates in the last quarter of FY 16-17.


Share Capital


Your Company allotted 239,370 equity shares of Rs.10/- each, to various employees (“Mindtree Minds”) and to Directors on exercise of stock options under various Employee Stock Option Plans (ESOPs)/ Mindtree Employee Restricted Stock Purchase Plan 2012 (ESPS/ERSP 2012) during 2016-17. Consequently, the paid-up equity share capital has increased from Rs.1,677,861,760 as on March 31, 2016 to Rs.1,680,255,460 as on March 31, 2017.


Dividend


Your Directors have declared three interim dividends during the year (i) The Board on October 21, 2016, declared an interim dividend of Rs.3/- per equity share of face value of Rs.10/- each, to the Shareholders, who were holding shares on the record date i.e., November 01, 2016 (ii) The Board on January 19, 2017, declared an interim dividend of Rs.2/- per equity share of face value of Rs.10/- each, to the Shareholders, who were holding shares on the record date i.e., January 28, 2017 (iii) The Board on March 27, 2017, declared an interim dividend of Rs.2/- per equity share of face value of Rs.10/- each, to the Shareholders, who were holding shares on the record date i.e., April 10, 2017.


Further, Your Directors have also recommended, a final dividend of Rs.3/- per equity share of face value of Rs.10/- each, for the Financial Year ended March 31, 2017 which is payable on obtaining the Shareholders’ approval at the Eighteenth Annual General Meeting.


The dividend pay-out amount for the current year, inclusive of tax on dividend will be Rs.2,005 million as compared to Rs.2,489 million in the previous year.


Dividend Policy


Your Company intends to maintain similar or better levels of dividend payout over the next few years. However, the actual dividend payout in each year will be subject to the investment requirements of the annual operating plan for the year and any other strategic priorities identified by the Company. The Company has formulated a Dividend Policy in accordance with SEBI (Listing obligation and Disclosure Requirement) Regulations, 2015 (hereinafter “LODR Regulations”) and the same is available on your Company’s website: https://www.mindtree.com/dividend-policy.


Mergers and Amalgamations


Your Company had filed a petition with the Hon’ble High Court of Karnataka [which was transfered to National Company Law Tribunal (NCLT)] for the merger of Discoverture Solutions, LLC and Relational Solutions Inc., the wholly owned subsidiaries with your Company. The Company has obtained all necessary approvals and complied with all the procedures. The final Order for the merger is awaited.


Adoption of new Articles of Association


During the year, your Company has amended its Articles of Association in accordance with the provisions of Companies Act, 2013 (hereinafter “the Act”). The approval of the Shareholders for the above amendment was obtained at the Seventeenth Annual General Meeting of the Company. The amended Articles are avaliable on the website of the Company at https://www.mindtree.com/sites/default/files/amended-articles-of-association. pdf.


Subsidiary Companies


Your Company has 5 direct subsidiaries and 7 step down subsidiaries as on March 31, 2017. During the year, the dormant step down subsidiary, Discoverture Solutions Europe Limited was liquidated. The details of the subsidiaries as at the year ended March 31, 2017 are as follows:







































































































Sl. No



Name of Subsidiary



Date of Incorporation/ Acquisition



Country



Business



1



Mindtree Software (Shanghai) Company Limited



January 29, 2013



China



Information Technology Services



2



Discoverture Solutions, LLC



February 13, 20151



USA



Information Technology Services



3



Relational Solutions Inc.



July 16, 2015*



USA



Information Technology Services



4



Bluefin Solutions Limited



July 16, 2015*



UK



Information Technology Services



5



Magnet 360, LLC



January 19, 2016*



USA



Information Technology Services



Step Down (Subsidiaries of Bluefin Solutions limited)



1



Bluefin Solutions Pte. Limited



July 16, 2015*



Singapore



Information Technology Services



2



Bluefin Solutions Inc.



July 16, 2015*



USA



Information Technology Services



3



Bluefin Solutions Sdn Bhd



July 16, 2015*



Malaysia



Information Technology Services



4



Blouvin (Pty) Limited



July 16, 2015*



South Africa



Information Technology Services



Step Down (Subsidiaries of Magnet 360, LLC)



1



Reside, LLC



January 19, 2016*



USA



Information Technology Services



2



Numerical Truth, LLC



January 19, 2016*



USA



Information Technology Services



3



M360 Investments, LLC



January 19, 2016*



USA



Information Technology Services



Date of acquisition


In accordance with Section 129 (3) of the Act, the statement containing salient features of the financial statements of the subsidiaries in Form AOC-1 is given in Annexure 1.


In accordance with Section 136 (1) of the Act, the annual report of your Company containing inter alia, financial statements including consolidated financial statements, have been placed on our website: https://www.mindtree.com/about-us/investors. Further, the financial statements of the subsidiaries have also been placed on our website: https://www.mindtree.com/about-us/investors.


Awards and Recognitions


During the year under review, your Company received the following awards and recognitions:


- Ranked in the NASSCOM Top 20 IT-BPM Employers in India for 2016.


- Recognized in Forbes India’s Super 50 2016 list for the second consecutive year based on consistent shareholder returns, sales growth and return on equity.


- Magnet 360, a Mindtree Company, awarded the Salesforce Marketing Cloud Innovation Award for 2016.


- Recognized as an overall leader in software testing services by NelsonHall, in its Vendor Evaluation and Assessment (NEAT) Report 2016.


- Awarded the ‘Porter Prize for Enabling Smart Connected Products’ by Institute for Competitiveness for reshaping industry boundaries, higher product utilization, transcending traditional product boundaries, building capabilities within enterprises, and rethinking & retooling internal processes.


- Ranked #3 under the categories ‘Best CEO, IR Professional, IR program, Analyst Days, Website’ in the IT sector and recognized as one of the ‘Most Honoured Companies’ in the All - Asia (ex-Japan) Executive Team rankings by Institutional Investor.


- Named as 2016 Azure Innovation Partner of the Year by Microsoft.


- Positioned as a leader for digital services in ‘Zinnov’s Zone for Digital Services’.


- Recognized by the Institute of Company Secretaries of India (ICSI) for excellence in Corporate Governance.


- Magnet 360, a Mindtree Company, included in Gartner’s Market Guide for Salesforce Service Providers.


- Positioned in the leadership zone for product engineering and embedded systems by Zinnov in the Zinnov Zones 2016, Product Engineering Services report.


- Recognized as a Leader in IAOP’s 2016 Global Outsourcing 100 for global excellence.


- Named as a leader for Application Outsourcing Capabilities among Midsize Offshore Vendors by Forrester Research.


- Mindtree’s Relational Solutions has been included in the Market Guide for Trade Promotion, Management and Optimization for the Consumer Goods Industry by Gartner.


- SAFA best presented Annual Report Award for 2015 for the communication and Information Technology sector for transparency, accountability and governance in the Annual Report by South Asian Federation of Accountants.


- Awarded the winner of the Silver Shield for the Annual Report including the Financial Statements for the year ended March 31, 2016 by the Institute of Chartered Accountants of India (ICAI)


People Function


Making Mindtree a Great Place to Work


The key differentiator at Mindtree is its unique culture and well thought out people practices which suits the ever changing needs and results in highly engaged Mindtree Minds - starting from pre-joining till exit engagement, the experience is worthwhile.


Orchard - a three month residential program at the Kalinga campus in Bhubaneswar is prudently planned for campus Mindtree Minds and the Arboretum helps in the suave assimilation of lateral Mindtree Minds joining from other organizations. The primary objective of both the assimilation programs is to provide a welcoming ground and support new talent to transition & adapt to the Mindtree way! Homecoming - a program conceptualized and executed to bring back Mindtree Minds who quit due to various reasons resulted in 70 Ex-Mindtree Minds proudly walking back to the place where they belong.


As we attract potential talent to join us, we also are equally focused on nurturing an inclusive talent pool. With a matrix structure the involvement of all Mindtree Minds in decision making and customer interaction is quite high. Their ideas and thoughts add significant value to the business and their energy & ability to question the status quo is the game changer. We have adequately lined up our practices, systems and processes to drive the spirit of inclusivity at Mindtree.


At Mindtree, we celebrate the fact that our workforce just don’t include Millennials, but is dominated by them and hence managers are prepared to engage and retain them in every possible way. A lot of focus is given in grooming managers to be effective in their roles and managing millennials is a key theme in all leadership development programs - one of the program focusses on grooming enterprise leaders and has a module focused on inspiring “Digital Natives”. As part of the module techniques like reverse mentoring is used where leaders worked with campus minds, our millennials as their mentors.


The Diversity story is another feather in the cap! The current workforce comprises of 51 nationalities and 29% of the Company are Lady Mindtree Minds. Learning courses on culture and inclusivity helps understand each other and the customer better. Flagship leadership programs like Enterprise Leadership and Exuberance - an exclusive program for the top 100 Lady Mindtree Minds results in key positions being successfully filled internally.


As we embark on Mindtree 3.0 the in-house talent is gearing up for the journey. 6,200 Mindtree Minds have reskilled themselves to suit the needs of the customer and continuously value add. Full stack engineers and specialists are being home grown and will be the key differentiator in being successful.


Headcount


The total number of Mindtree Minds including subsidiaries as on March 31, 2017 was 16,470 as against 16,623 as on March 31, 2016.


Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013


Your Company believes in providing a healthy environment to all Mindtree Minds and does not tolerate any discrimination or harassment in any form. The Company has in place a gender neutral Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This policy is frequently communicated in assimilation programs and at regular intervals to all Mindtree Minds. Following are some of the awareness programs imparted to train Mindtree Minds and Internal complaints committee (ICC).


1. Every Mindtree Mind is supposed to undergo mandatory e-learning module on “Prevention of Sexual Harassment” at workplace on our learning platform called Yorbit.


2. It is mandatory for every new joiner to undergo a program on ‘Prevention of Sexual Harassment’ during induction program.


3. The Internal Complaints Committee is trained by external agency when the committee members are on-boarded to the committee.


4. Policy of ‘Prevention of Sexual Harassment’ at workplace is available on intranet for Mindtree Minds to access as and when required.


5. The ‘Prevention of Sexual Harassment’ policy is placed in conspicuous places for better visibility and communication of the policy across all the locations.


Mindtree has setup an Internal Complaints Committee (ICC) both at the Head office / Corporate office and at every location where it operates in India. ICC has equal representation of men and women. ICC is chaired by Senior lady mind and has an external women representation.


ICC investigates the case and provides its recommendations to the apex authority. The apex authority upon receiving the recommendations from ICC arrives at the conclusion and acts upon such recommendations.


Penal consequences of Sexual Harassment (“SH”) and the constitution of the ICC is displayed at conspicuous places. The posters are also displayed in regional languages at all Mindtree offices.


The following are the summary of complaints received and resolved during the Financial Year 2016-17:


In India


a) No. of SH complaints received: 2


b) No. of SH complaints resolved: 2


Rest of the World


a) No. of SH complaints received: 0


b) No. of SH complaints resolved: 0


Branding


Your Company’s brand and logo represent our values and beliefs as an organization. Your Company firmly believes that, it is our identity that gives shape to our vision and communicates to the world what Mindtree stands for. Your Company functions on the principles of Collaborative Spirit, Unrelenting Dedication and Expert Thinking. We have therefore consciously and deliberately incorporated these elements into our branding and logo. Your Company’s brand voice is bright, confident and active. It reflects our forward thinking, confidence, strength and passion. Mindtree’s unique approach balances human perspective with deep strategic thinking that enables to create opportunities to help our clients succeed. Your Company has been successful in building its brand by wielding the right mix of Public Relations, Social Media, Advertisement and Digital Marketing. Additionally, your Company hosts multiple client round tables to collaborate closely with customers for solutions. Your Company’s “Make Digital Real” campaign initiated last year has been pivotal in strengthening our position as a leader in the digital space.


Infrastructure


In the beginning of the year, your Company had 21,82,000 sq.ft of space consisting of 17,873 seats spread across various locations in India apart from Mindtree Kalinga - Training and residential facility for 500 campus minds measuring about 2,72,000 sq.ft . Following are the key changes made during the year:


Bhubaneswar: Your Company added about 263 seats after expansion of existing facility by about 30,000 sq.ft. In addition, your Company has taken up construction of Software Development Block Building measuring about 180,000 sq.ft. This is likely to be ready for occupation by March 31, 2018.


Your Company has sufficient capacity to meet its growth needs over short and medium terms. Your Company has prioritized adopting Sustainable best practices in accordance with LEED green building design for creating & maintaining workplace infrastructure projects.


Deposits


In terms of the provisions of Section 73 read with the relevant rules of the Act, the Company had no opening or closing balances and also has not accepted any fixed deposits during the year under review and as such, no amount of principal or interest was outstanding as on March 31, 2017.


Board of Directors Board Composition


The Board of Directors comprised of three Executive Directors, two Non-Executive & Non- Independent Directors and six Independent Directors including two Women Directors as at the end of March 31, 2017.


Declaration of Independence by Independent Directors


The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Act and LODR Regulations, confirming that they meet the criteria of independence as laid down in Section 149(6) of the Act and that of LODR Regulations.


Policy relating to appointment of Directors


The policy framed by the Nomination and Remuneration Committee (NRC) under the provisions of Section 178(3) & (4) of the Act, is as below:


a. The person to be chosen as a Director shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of information technology, sales / marketing, finance, taxation, law, governance and general management.


b. The NRC considers the following attributes / criteria, whilst recommending to the Board the candidature for appointment as Director:


(i) Qualification, expertise and experience of the Directors in their respective fields;


(ii) Personal, professional or business standing and


(iii) Diversity of the Board.


c. In case of appointment of Independent Directors, the Committee satisfies itself with regard to the criteria for independence of the Directors in order to enable the Board to discharge its function and duties effectively.


d. In case of reappointment of Non-Executive and Independent Directors, the Board takes into consideration the performance evaluation of the Director and his / her engagement level.


Remuneration Policy


Your Company’s remuneration policy framed by NRC, is focused on recruiting, retaining and motivating high talented individuals. It is driven by the success and performance of the individual employees and the Company. Through its compensation programme, your Company endeavors to attract, retain, develop and motivate a high performance workforce. Your Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance of the Company. The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) and performance incentives, commission (variable component) to its Chairman, Managing Director and other Executive Directors. Annual increments are decided by the NRC within the salary scale approved by the Board and Shareholders.


Directors and Key Managerial Personnel (KMP)


Appointment of Directors and KMP


The following appointment of Directors/KMP have taken place during the year:


1. Mr. Rostow Ravanan was appointed as CEO & Managing Director with effect from April 01, 2016 till March 31, 2021.


2. Mr. Krishnakumar Natarajan was appointed as Executive Chairman with effect from April 01, 2016 till June 30, 2017. Mr. Krishnakumar Natarajan has been reappointed by the Board of Directors as Executive Chairman for a further period of three years from July 01, 2017 to June 30, 2020 and the same is placed for the approval of the Shareholders at the ensuing Annual General Meeting.


3. Mr. Milind Sarwate was appointed as Independent Director for a period commencing from July 19, 2016 to July 18, 2021.


4. Mr. N S Parthasarathy was elevated as Executive Vice Chairman for a period commencing from October 21, 2016 to December 31, 2018.


5. Mr. Akshaya Bhargava was appointed as Independent Director for a period commencing from December 12, 2016 to September 30, 2021.


Reappointment of Director, retiring by Rotation


As per the Articles of Association of the Company, one third of the Directors are liable to retire by rotation at the Annual General Meeting of the Company, every year. Mr. Subroto Bagchi retires by rotation and being eligible, offers himself for reappointment at the ensuing Annual General Meeting.


Resignations, Cessations and Changes in Directors


1. Mr. Ramesh Ramanathan has resigned as a Board member with effect from October 21, 2016.


2. Dr. Albert Hieronimus has retired from the Board with effect from April 01, 2017.


There has been no change in the KMP other than mentioned above, during the year.


Details of remuneration to Directors


The information relating to remuneration of Directors as required under Section 197(12) of the Act, is given in Annexure 3.


Board Evaluation


Pursuant to the applicable provisions of the Act and LODR Regulations, the Board has carried out annual evaluation of performance of the following in detail:


(i) Board as a whole;


(ii) Functioning of various Committees;


(iii) Individual Directors including that of Independent Directors;


(iv) Chairman of the Board.


The evaluation was led by the Chairman of the Board. The Board evaluation was conducted through questionnaire having qualitative parameters. The questionnaires were framed in line with the guidance note issued by SEBI on January 05, 2017.


The performance of the Board was evaluated after seeking inputs from all the Directors on the basis of criteria such as Board composition, focus on strategy, organizational matters, effectiveness of Board process, timelines of information, functioning, etc.


The performance of the Committees were evaluated after seeking inputs from the Committee members on the criteria such as Committee composition, frequency of meeting, effectiveness, independence, contributions to Board decisions etc.


The performance of the individual Directors was evaluated after seeking inputs from all the Directors other than the one who is being evaluated. The evaluation was based on the criteria such as commitment, attendance, preparedness, participation, expression of opinions, etc.


The performance of the Board Chairman was evaluated after seeking inputs from all the Directors on the basis of the criteria such as leadership, preparedness, commitment, delegation of responsibilities, protection of shareholders’ interest, etc.


The outcome of the Board evaluation of the individual Directors was discussed individually with the Board members in detail.


The outcome of the evaluation of the Board, Committee and that of Chairman were discussed at NRC and at the Board meeting in detail. The feedback from the evaluation was that many process followed by Mindtree met best practice benchmarks as well as areas where we need to focus on strengthening few processes. The action plans were put in place for incorporating the findings of the evaluation.


Board Meetings


The Board of Directors of the Company met six times during the Financial Year 2016-17. The details of Board Meetings are provided in the Corporate Governance Report. The gap intervening between two meetings of the board is within the stipulated time frame prescribed in the Act and LODR Regulations.


Board Committees


The following are the details of the Board Committees during the year 2016-17:


1 Audit Committee;


2 Nomination and Remuneration Committee;


3 Stakeholders’ Relationship Committee;


4 Administrative Committee;


5 Corporate Social Responsibility Committee and


6 Risk Management Committee


The composition of each of the above Committees, their respective roles and responsibilities are provided in detail in the Corporate Governance Report.


Vigil Mechanism / Whistle Blower Policy


The Company has established a Whistle Blower Policy for Directors and employees to report their genuine concern. The details of the same is explained in the Corporate Governance Report.


Related Party Transactions


All Related Party Transactions that were entered into during the Financial Year were at arm’s length basis and in the ordinary course of business. There were no materially significant related party transactions entered into by the Company with Promoters, Directors or Key Managerial Personnel which may have a potential conflict with the interest of the Company at large. All related party transactions were entered into with prior approval of the Audit Committee. There were no related party transactions that required approval of the Shareholders. The details of Related Party transactions entered into during the quarter were placed before the Audit Committee and the Board.


The policy for determining material related party transactions as approved by the Board is uploaded on the Company’s website and can be accessed at https://www.mindtree.rom/poliry-for-determining-material-related-party-transartions


The details of the related party transactions, referred to in Section 188(1) of the Act, as required under Section 134 (3)(h) read with, Rule 8 of the Companies (Accounts) Rules, 2014, is attached in Form AOC-2 as Annexure 5.


Employee Stock Option Plans and Employee Stock Purchase Scheme


Your Company believes in the policy of absorbing and retaining the best talents by allowing them to participate in the ownership of the Company and share its wealth creation, as they are responsible for the management, growth and financial success of your Company.


Your Company has granted various options under the following Employee Stock Option Plans, viz., ESOP 1999, ESOP 2001, ESOP 2006 (a), ESOP 2006 (b), ESOP 2008 (A), DSOP 2006, ESOP 2010 (A), a Employee Stock Purchase Scheme namely, Mindtree Employee Restricted Stock Purchase Plan 2012 (ESPS or ERSP 2012).


The Employee Stock Option Plans (ESOPs) and ESPS or ERSP 2012 are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 (“Employee Benefit Regulations”) and there has been no material changes to these plans during the Financial Year. The summary information of various ESOPs and ESPS or ERSP 2012 of the Company is provided under Notes to Accounts under Standalone Financial Statements of this Annual Report. The Company has recorded compensation cost for all grants using the fair value- based method of accounting, in line with prescribed SEBI guidelines. Refer to Notes to accounts under Standalone Financial Statements of this Annual Report for details on accounting policy.


Disclosure on various plans, details of options granted, shares allotted on exercise, etc. as required under Employee Benefits Regulations read with SEBI circular no. CIR/CFD/POLICYCELL/2/2015 dated June 16, 2015 are available on the Company’s website: https://www.mindtree.com/ sites/default/files/details-under-sebi-regulations-7014.pdf. No employee was granted options / shares (under ESOPs or ESPS/ERSP 2012) during the year, equal to or exceeding 1% of the issued capital.


A Reconciliation Statement of the Equity Shares is attached as Part B - Annexure 2.


Details of unclaimed shares


The details of unclaimed shares as required under LODR Regulations is provided in Part A - Annexure 2.


Liquidity


Your Company maintains sufficient cash to meet its operations and strategic objectives. Our cash and investments (net of short term borrowings) have increased from Rs.3,790 million as on March 31, 2016 to Rs.7,177 million as on March 31, 2017. The balance funds have been invested in deposits with banks, highly rated financial institutions and debt schemes of mutual funds.


Litigation


No material litigation was outstanding as on March 31, 2017. Details of litigation on tax matters are disclosed in the financial statements.


Corporate Governance


Your Company has been practicing the principles of good Corporate Governance. A detailed Report on Corporate Governance is available as a separate section in this Annual Report. Auditor’s Certificate on Corporate Governance obtained from Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) for compliance with LODR Regulations, is provided in Annexure 9 and is a part of this Report.


Shareholder Satisfaction Survey


During the last quarter of FY 2017, Your Company conducted Shareholder Satisfaction Survey to engage more with the Shareholders and to seek your valuable feedback on improving our services. The questionaire was sent to those Shareholders who have registered their e-mail IDs’ with the Company / Registrar and Share Transfer Agent. The survey was also published on social media and Company’s website. The feedback was largely positive, which reflects that the investors / Shareholders services provided by your Company are satisfactory.


The Summary of responses received as below:


Transfer to Investor Education and Protection Fund (IEPF)


Pursuant to Section 124(5) and other applicable provisions of the Act, read with Investor Education and Protection Fund Authority (Accounting, Auditing, Transfer and Refund) Rules, 2016, Dividends that are unpaid/ unclaimed for a period of seven years are required to be transferred to the Investor Education and Protection Fund administered by the Central Government. Once unpaid/ unclaimed dividend/ application money for allotment of any securities and due for refund, is transferred to IEPF, no claim shall lie in respect thereof against the Company. To ensure maximum disbursement of unpaid/ unclaimed dividend, the Company sends reminders to the concerned investors, before transfer of dividend to IEPF.


The Company had transferred unpaid dividend amounts within the statutory period to the IEPF. During the Financial Year 2016-17, unpaid or unclaimed dividend of Rs.476,758/- was transferred to the IEPF.


Attention is drawn that the unclaimed/ unpaid dividend for the Financial Years 2009-10 and 2010-11 is due for transfer to IEPF during September 2017 and December 2017. In view of this, the Members of the Company, who have not yet encashed their dividend warrant(s) or those who have not claimed their dividend amounts, may write to the Company/ Company’s Registrar and Share Transfer Agent, Link Intime India Private Limited. The details of the consolidated unclaimed/unpaid dividend details as required by the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, for all the unclaimed/ unpaid dividend accounts outstanding (drawn up to the date of Seventeenth Annual General Meeting on July 19, 2016) in terms of the Ministry of Corporate Affairs Notification No. G.S.R 352 (E) dated May 10, 2012 has been uploaded under the Company website: https://www.mindtree.com/about-us/ investors/unpaid-dividend-information


Further, Pursuant to the provisions of Section 124(6) of the Act and the Investor Education and Protection Fund Authority (Accounting, Auditing, Transfer and Refund) Rules, 2016, as amended, stipulates that shares on which dividend has not been paid or claimed for seven consecutive years, then such shares are to be transferred in favor of Investor Education and Protection Fund (IEPF).


Accordingly, the Company through individual notices as on March 31, 2017 and a newspaper notice as on April 4, 2017 in Business Standard and Kannada Prabha requested concerned Shareholders to encash their unclaimed dividend warrants on or before May 25, 2017 in order to circumvent their shares being transferred in favor of IEPF Suspense account.


Post the above due date the Company would go ahead and transfer the shares in favor of IEPF Suspense Account on the date and the manner referred in the said rules, without any further notice. Further, no claim shall lie against the Company in respect of unclaimed dividend amount or shares once the same are transferred in favor of IEPF Authority.


Auditors


a) Statutory Auditors:


The Audit Committee and the Board have recommended the proposal to ratify the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S), Statutory Auditors of the Company up to the conclusion of the Nineteenth Annual General Meeting and to authorize the Board of Directors or Committee thereof to fix their remuneration. The Company has received a certificate from the Auditors to the effect that the ratification of appointment, if made, would be in accordance with limits specified by the Act and that, they meet the criteria of independence. The proposal of their ratification is included in the notice of ensuing Annual General Meeting.


b) Secretarial Auditor:


Pursuant to the provisions of Section 204 of the Act and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit has been carried out by Mr. G Shanker Prasad, Practising Company Secretary.


Auditor’s Report and Secretarial Audit Report


The Auditor’s report and Secretarial Audit Report do not contain any qualifications, reservations or adverse remarks. Report of the Secretarial Auditor is annexed as Annexure 8 and is a part of this report.


Particulars of Employees


Information as required under the provisions of Rules 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure 3 to the Directors’ Report. As per the proviso to Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of employees posted and working outside India not being Directors or their relatives, drawing the salary in excess of the prescribed limits under the above rules need not be included in the statement but, such particulars shall be furnished to the Registrar of Companies. Accordingly, the statement included in this report does not contain the particulars of employees who are posted and working outside India. If any Member is interested in obtaining a copy of the same, such Member may write to the Company in this regard.


Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outflow


The particulars as prescribed under Section 134(3) (m) of the Act, read with, Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure 6. The Company has taken several constructive steps to conserve energy through its sustainability initiatives as elaborately disclosed in Business Responsibility Report in this Annual Report.


Directors’ Responsibility Statement


Your Company’s Directors make the following statement in terms of sub-section (5) of Section 134 of the Act, which is to the best of their knowledge and belief and according to the information and explanations obtained by them:


I. The financial statements have been prepared in conformity with the applicable Accounting Standards and requirements of the Act to the extent applicable to Company; on the historical cost convention; as a going concern and on the accrual basis. There are no material departures in the adoption of the applicable Accounting Standards.


II. The Board of Directors have 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 of the Company for that period.


III. The Board of Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.


IV. The Board of Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.


V. The Board of Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


VI. The financial statements have been audited by M/s. Deloitte Haskins & Sells, Chartered Accountants, the Company’s Auditors.


VII. The Audit Committee meets periodically with the Internal Auditors and the Statutory Auditors to review the manner in which the Auditors are discharging their responsibilities and to discuss audit, internal control and financial reporting issues.


VIII. To ensure complete independence, the Statutory Auditors and the Internal Auditors have full and free access to the Members of the Audit Committee to discuss any matter of substance.


Management Discussion and Analysis Report


Management Discussion and Analysis Report as required under LODR Regulations, is disclosed separately in this Annual Report.


Corporate Social Responsibility Initiatives


As part of its Corporate Social Responsibility (CSR) initiatives, Your Company has undertaken several projects in accordance with Schedule VII of the Act. Mindtree implements its CSR initiatives via three channels:


- Directly by Mindtree;


- Through Mindtree Foundation;


- Through “Individual Social Responsibility” programs undertaken by Mindtree Minds and supported by Mindtree as appropriate.


Further, Mindtree’s CSR primarily focuses on programs that:


- Benefit the differently abled;


- Promote education;


- Create sustainable livelihood opportunities.


The Annual Report on CSR activities, is annexed herewith as Annexure 7.


Quality Initiatives and Certifications


Your Company continues its journey of delivering value to its clients through investments in quality programs. Your Company has adopted several external benchmarks and certifications. Your Company is certified under various standards to meet clients’ requirements and enhancing valuable delivery and following is the summary of certifications held by your Company.






































































Certificate Name



Issuing Authority



Certification Date



Certificate Expiry Date



Frequency of Surveillance Audits



Description



PCI-DSS V 3.1



Trustwave



March 01, 2017



February 28, 2018



Annual



The Payment Card Industry Data Security Standard (PCI DSS) is a proprietary information security standard for organizations that handle branded credit cards from the major card schemes including Visa, MasterCard, American Express, Discover, and JCB.



CMMI SVC L3 Ver 1.3



QAI



March 27, 2014



March 27, 2017 (renewal certificate awaited)



Once in 3 years



CMMI for services (CMMI-SVC) model, which is a comprehensive set of guidelines that helps organizations in the Services industry domain, to establish and improve processes for delivering services.



ISO/IEC 200001:2011



BSI



November 28, 2016



November 27, 2019



Once in 3 years



ISO/IEC 20000 is an international IT standard that allows companies to demonstrate excellence and prove best practice in IT management.



ISO 14001:2004



BSI



September 21, 2016



September 14, 2018



Once in 2 years



ISO 14001:2004 specifies requirements for an environmental management system to enable an organization to develop and implement a policy and objectives which take into account legal requirements and other requirements to which the organization subscribes, and information about significant environmental aspects.



BS OHSAS 18001:2007



BSI



September 21, 2016



September 24, 2019



Once in 3 years



BS OHSAS 18001 is a truly international standard which sets out the requirements for occupational health and safety management good practice for any size of organization.



Information Security Management System - ISO/IEC 27001:2013



BSI



May 18, 2015



May 09, 2018



Once in 3 years



ISO/IEC 27001 (ISO 27001:2013) is the international standard that describes best practice for an Information Security Management System (ISMS). Accredited certification to ISO 27001 demonstrates that an organization is following international information security best practices.



CMMI Dev L5 Ver 1.3



QAI



June 08, 2016



June 09, 2019



Once in 3 years



CMMI for development contains practices that cover project management, process management, systems engineering, hardware engineering, software engineering and other supporting processes used in development and maintenance.



Business Responsibility Report


Your Company has prepared Business Responsibility Report in line with LODR Regulations, which is annexed to this Annual Report. The said report comprehensively covers your Company’s philosophy on Corporate Social Responsibility, its sustainability activities pertaining to efforts on conservation of environment, conducting green awareness events, its commitment towards society, enhancing primary education, initiatives and activities taken up as part of this philosophy for the year 2016-17.


Code of Conduct for Prevention of Insider Trading in Mindtree securities


Your Company has formulated Code of Conduct for Prevention of Insider Trading in Mindtree Securities (“Code”) in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015. The objective of this Code is to protect the interest of Shareholders at large, to prevent misuse of any price sensitive information and to prevent any insider trading activity by dealing in shares of the Company by its Directors, Designated Persons and other Mindtree Minds. Mr. Jagannathan Chakravarthi, CFO, continues to act as Compliance Officer under the Code.


Internal Control Systems and Adequacy of Internal Financial Controls


Your Company has a proper and adequate system of internal controls. Adequate internal controls ensures transactions are authorized, recorded and reported correctly and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition, there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls.


An extensive programme of internal audits and management reviews supplements the process of internal financial control framework. Documented policies, guidelines and procedures are in place for effective management of internal financial controls. The internal financial control framework design ensures that the financial and other records are reliable for preparing financial and other statements. In addition, the Company has identified and documented the key risks and controls for each process that has a relationship to the financial operations and reporting. At regular intervals, internal teams test identified key controls. The internal auditors also perform an independent check of effectiveness of key controls in identified areas of internal financial control reporting.


The Audit Committee, which comprises of professionally qualified Directors, interacts with the statutory auditors, internal auditors and management in dealing with matters within its terms of reference.


The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit committee defines the scope and authority of the internal auditor. To maintain its objectivity and independence, the internal auditor reports to the Chairman of the Audit Committee of the Board. The internal auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions proposed to fix the observations are presented to the Audit Committee of the Board.


Any other material changes and commitments


Any material changes and commitments affecting the financial position of the Company, occurred between April 1, 2017 and the date of signing this Report has been reported in the financial statements.


Audit Committee Recommendation


During the year, all recommendations of the Audit Committee were accepted by the Board. The Composition of the Audit Committee is as described in the Corporate Governance Report.


Extract of Annual Return


The details forming part of extract of Annual Return in Form MGT-9 is annexed herewith, as Annexure 4.


Significant & Material Orders passed by Regulators or Courts


There are no significant and material orders passed by Regulators or Courts, during the year under review.


Particulars of Loans, Guarantees and Investments u/s 186


Pursuant to Section 186 of the Act and LODR Regulations, disclosure on particulars relating to loans, guarantees and investments are provided in the financial statements.


Risk Management Policy


At Mindtree, Enterprise Risk Management (ERM) is an organization wide function looking into the risks which can have an adverse impact on Mindtree’s business. ERM encompasses areas of organizational exposure to risk (financial, strategic, operational and compliance). ERM also provides a structured process for management of risks whether those risks are quantitative or qualitative in nature.


Our risk framework is based on standards such as COSO, ISO 31000:2009 and IRM Risk Management Standard which enable us to structure our systems and mechanisms of risk management effectively. ERM involves risk identification, assessment and risk mitigation planning for strategic, operational, compliance and financial related risks across business units, functions and geographies.


Listing Fees


The Company affirms that the annual listing fees for the year 2017-18 to both National Stock Exchange of India Limited (NSE) and BSE Limited (Bombay Stock Exchange) has been paid.


Acknowledgements


The Board places on record, their deep sense of appreciation to all the Mindtree Minds, support staff, for adopting to the values of the Company, viz., collaborative sprit, unrelenting dedication and expert thinking, for making Mindtree an expertise led organization and the Company’s customers for letting us deliver the Company’s Mission statement, to engineer meaningful technology solutions to help the businesses and societies flourish. The Board also immensely thank all the Departments of Government of India, Central Government, State Government, Tax Authorities, Reserve Bank of India, Ministry of Corporate Affairs, Securities and Exchange Board of India, Stock Exchanges and other governmental/ Semi-governmental bodies and look forward to their continued support in all future endeavors . The Board also would like to thank our Shareholders, investors, vendors, service providers, bankers and academic institutions and all other stakeholders for their continued and consistent support to the Company during the year.


For and on behalf of the Board of Directors


Place: Bengaluru Krishnakumar Natarajan


Date: April 20, 2017 Chairman

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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