The revenues for the year grew by 7.5% from Rs. 54,907 million to Rs.
59,041 million. Total Direct channel revenue grew from Rs. 23,906 million
in the previous year to Rs. 32,989 million in the current year. The
revenues from the HP channel declined on account of the loss of certain
clients by HP and also because of shift of certain businesses to HP''s
captive delivery centres. At the end of the last quarter of this
financial year, the share of HP business is at 40% of the overall
Segment FY 13 % FY12 %
HP channel 26,052 44% 31,001 57%
Mature Market - Direct channel 28,931 49% 17,771 32%
Emerging Market - Direct channel 4,058 7% 6,135 11%
Total 59,041 100% 54,907 100%
Client concentration based on ultimate customer
Given below is the analysis of Client Concentration.
FY 13 FY 12
Revenues from Top Client 9% 9%
Revenues from Top 5 Clients 30% 31%
Revenues from Top 10 Clients 45% 43%
Clients Contributing more than:
$ 1 million Revenues 117 130
$ 5 million Revenues 41 39
$ 10 million Revenues 21 25
$ 20 million Revenues 11 9
During the year, the Company won several large deals with total
contract value of in excess of $250 Mn to be executed over multiple
years. Of the 76 new clients that were added during the year, 42 were
Direct channel clients.
A segment analysis of the revenues for the current financial year is
FY 13 % FY 12 %
Banking and Capital Market 21,308 36% 14,164 26%
Insurance 6,985 12% 6,320 11%
Communication & Entertainment 11,592 20% 14,550 27%
Emerging Industries 19,156 32% 19,873 36%
Total 59,041 100% 54,907 100%
Banking and Capital Markets which is one of the focus areas has grown
by 50% and the contribution to revenue has increased from 26% in 2012
to 36% of the aggregate revenues in 2013. Insurance segment has grown
by 11% during the financial year as we continue to focus on increasing
the wallet share from the existing key clients.
The Information Technology, Communication and Entertainment segment has
declined during the financial year largely because a very significant
portion of revenues from HP-based business which are classified in this
segment had declined. The decline in Emerging Industries is largely
driven by the Company''s decision to exit the India Government business
where the collection timelines are putting a strain on the Company''s
cash-flows and profitability.
Revenues by Geography
FY 13 % FY 12 %
AMERICAS 42,230 72% 35,501 65%
EMEA 7,895 13% 8,146 15%
INDIA 4,871 8% 6,698 12%
ROW 4,045 7% 4,562 8%
Total 59,041 100% 54,907 100%
The acquisition of Digital Risk has increased our presence in the US
market and is reflected in the increase in share of Americas revenue.
The Company has decided to exit from the India Government business
owing to long collection timeline involved which impacts our cash-flows
Revenues by Service Type
Service Type FY 13 % FY 12 %
Application Maintenance & Other
Services 18,505 31% 18,179 33%
Application Development 13,021 22% 14,528 26%
Customer Service 3,105 5% 3,039 6%
Service / Technical Help Desk 2,025 3% 2,127 4%
Transaction Processing Service 2,857 5% 2,890 5%
Infrastructure Management Services 11,527 20% 13,443 24%
Knowledge Processes 7,622 13% 332 1%
License Income 379 1% 369 1%
Total 59,041 100% 54,907 100%
Application Maintenance involves maintenance of existing customer
software and is mostly undertaken on annuity terms.
Application Development refers to customised software development
services based on the requirements and specifications given by
customers and documented in a Statement of Work.
Customer Services include receivables collection support, product
support, enrolment etc. provided to clients through BPO operations.
Service/Technical Help Desk comprise of inbound and outbound customer
interaction programs including technical product support, customer care
and allied services.
Transaction Processing includes claims and mortgage processing, account
opening and maintenance, data processing and management.
Infrastructure Management Services include end-to-end managed mobility
solutions covering workplace management & other support services,
hosting services which comprise of mainframe or midrange, application &
web hosting services and data centre services focused on migration,
automation & other software services.
Knowledge Processes refer to the outsourcing of relatively high-level
processes of the customer such as HR processes.
License Income pertains to the income from license sale in the health
care space of the Company''s product,Javelina, developed by its foreign
subsidiary and from Wynsure, a product of Wyde Corporation, acquired by
the Company in 2011.
Revenues by Delivery Location
The following tables give the composition of revenues based on the
location where services are performed.
Delivery Location FY 13 % FY 12 %
Onsite 24,896 42% 17,548 32%
Offshore 34,145 58% 37,359 68%
Total 59,041 100% 54,907 100%
The increase in onsite revenue is on account of acquisition of Digital
Headcount * and Utilization
Management has continued its focus upon delivering quality at lower
cost. A very important element of this is a sharp improvement in
utilization rates which has meant that the same volume of business was
delivered with fewer employees. The table below clearly depicts this
FY 13 FY 12
- Application Services 2,397 2,475
- ITO Services 244 301
- BPO Services 1,909 111
- Application Services 8,868 9,727
- ITO Services 6,631 6,709
- BPO Services 15,525 15,912
Sales and Marketing 363 369
General and Administration 1,119 1,025
Total 37,056 36,629
* Note: Including billable contractors
Utilization Rates FY 13 FY 12
- Application Services 93% 93%
- ITO Services 94% 84%
- Application Services 87% 83%
- ITO Services 92% 86%
- BPO Services 73% 79%
- Application Services 88% 85%
- ITO Services 92% 86%
- BPO Services 73% 79%
- Application Services 93% 93%
- ITO Services 94% 84%
- Application Services 85% 78%
- ITO Services 89% 84%
- BPO Services 62% 70%
- Application Services 86% 81%
- ITO Services 89% 84%
- BPO Services 62% 70%
Revenues by Project Type
FY 13 % FY 12 %
Time and Material 51,230 87% 47,519 87%
Fixed Price 7,811 13% 7,388 13%
Total 59,041 100% 54,907 100%
Significant revenues are generated principally from services provided
on time-and-material (T&M) which are recognised in the period that
services are performed.
Cost of Revenues
Cost of revenues primarily comprise of direct costs to revenues and
includes direct manpower, travel, facility expenses, network and
The consolidated cost of revenues of the Company is '' 43,396 million in
FY 13 representing an increase of 9.1% over FY12 which is mainly due to
Digital Risk. Cost of revenues were 74.9% of revenues compared to 74.3%
during the previous financial year.
Selling expenses of '' 3,052 million for FY13 represented an increase of
'' 170 million or 5.9% from FY12. Increase in selling expenses is on
account of increased focus on Direct channel and reinvestment of the
company profits for sales promotion activities in FY13.
General and Administrative Expenses
General and administrative expenses of '' 2,401 million for the year
FY13 represented an increase of '' 304 million or 14.5% from FY12.
General and administrative expenses in FY13 stood at 4.1% of
revenues.The overall expense increase in current year includes expenses
of Digital Risk.
The operating profit in FY13 increased to '' 8,888 million from '' 8,766
million in FY12.Operating profit improved by '' 122 million in FY13
despite increase in manpower costs due to effective operational
The other income for the year FY13 was '' 1,360 million as compared to ''
1,478 million in FY12. The reduction is due to provision for Mark to
Market loss of '' 118 million made during the year. The gain on foreign
exchange for FY13 was '' 34 million as against a gain of '' 182 million
in FY12. The lower gain was mainly on account of exchange rate
fluctuation arising out of restatement of assets and liabilities.
Interest expense for FY13 was '' 330 million as against '' 147 million
for FY12. The increase in interest expense was mainly on account of
loan taken for the acquisition of Digital Risk.
Income taxes were '' 2,514 million in the year FY13 as compared to ''
2,356 million in the year FY12. The effective tax rate has increased to
25.3% in FY13 from 22.9% in FY12 due to increase in surcharge and 2
units came out of the 100% tax holiday in the current financial year.
The net profit after taxes was '' 7,438 million for the year FY13, a
decrease of '' 485 million or 6.1% over the net profit of '' 7,923
million in FY12. Cash provided from financing activities
In FY13, the Company paid '' 4,150 million on account of dividend and
dividend tax as against '' 1,587 million in FY12. In FY13, the Company
raised a loan of '' 4,893 Million to part fund the acquisition of
Cash and cash equivalents
The Company''s cash and bank balances are held in various locations
throughout the world. Cash and bank balances comprise of investments in
mutual funds and deposits of any kind with banks. These balances also
include amounts that are restricted in use, either as margin monies
given to banks for guarantees issued in the normal course of business
or amounts held in escrow accounts attributable to acquisitions/
An analysis of restricted cash balances as at 31 October 2013 and 2012
is given below.
As at As at
31 October 2013 31 October 2012
Fixed Deposits - Escrow Account 11 31
Unclaimed Dividends 6 4
Total 17 35
Restricted cash as a % of total
cash balances 0.3% 0.8%
Company''s treasury policy
The Company''s treasury policy calls for investing only in fixed
deposits of highly rated banks, units of debt mutual funds and fixed
maturity plans (FMP) for maturities up to 6 months. Stringent
guidelines have been set for de-risking counter party exposures. The
Company maintains balances both in Indian Rupee and foreign currency
accounts in India and overseas. The investment philosophy of the
Company is to ensure capital preservation and liquidity in preference
Off balance sheet arrangements
As part of its ongoing business, the Company does not participate in
transactions that generate relationships with unconsolidated entities
or financial partnerships, such as entities often referred to as
structured finance or Special Purpose Entities ("SPEs"), which
would have been established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes.
As of 31 October 2013 the Company was not involved in any material
unconsolidated SPE transactions.
We have pleasure in presenting to you the twenty second Annual Report
of your Company for the financial year ended 31 October, 2013.
CONSOLIDATED FINANCIAL PERFORMANCE
Key aspects of the financial performance of MphasiS Group are tabulated
Year Ended Year Ended
Particulars 31 October
2013 31 October 2012
Revenues 59,368 55,254
Profit before taxation 9,952 10,279
Net Profit 7,438 7,923
Provision for Proposed Dividend 3,572 3,572
Tax on Dividend 607 580
Transfer to General Reserve 540 611
A detailed analysis of performance is available in the section headed
Management Discussion and Analysis of Financial Condition and Results
of Operations in this Annual Report.
Your directors are pleased to recommend a final dividend of '' 17 per
equity share of ''10 each for the year ended 31 October 2013, subject to
your approval at the ensuing Annual General Meeting.
Customers are transforming the way they operate in response to the
volatile economic conditions and fast-changing consumer preferences.
As a result, their expectations from their technology spend and
consequently, their service providers are changing to reflect the
business priorities. While they continue to focus on their core
business objectives of revenue growth, cost-efficiency and
asset-efficiency, they are also focusing on enhancing the customer
experience and responding to their changing preferences better.
Emerging technologies like Mobility and Data & Analytics are driving
this transformation. The focus of technology spend is shifting from the
back-end to the Customer, where it is being used on real-time basis to
enhance customer experience and gain insights into customer behavior to
drive growth and differentiation.
Your Company has always been customer-centric and responsive to
changing customer needs. In 2013, your Company made rapid strides in
emerging technologies - formed a dedicated unit and made significant
investments in Mobility and Data & Analytics.
In the Mobility space, we launched Mobile Testing-as-a-Service covering
Mobile Application Security Testing, an offering bundled with tools,
processes and people in a pay-per-use model. In Digital Marketing, we
are building solutions to address the customer experience across
channels ranging from mobility to web and social media. In the
Analytics space, we are building Data Discovery and Visualization
Centre of Excellence and co-investing with our key clients to build
industry specific solutions.
We are happy to report that our strategy resonates with our Customers
and continues to deliver results. In 2013, our direct business grew 38%
year on year and we added 42 direct clients. The business mix between
HP and direct channel shifted from 57:43 in 2012 to 44:56 in 2013
thereby, reducing the client concentration risk.
While driving growth, your Company has been equally focusing on
sustaining profitability within the band. We have sustained our gross
margins at 25.10%. This has been possible because your Company had
taken several actions to improve the operational efficiencies. These
included consolidation of real estate, better workforce pyramid
management, lean initiative and increased utilization across service
We acquired Digital Risk in February 2013 to strengthen our
capabilities in Mortgage Services in the US. During the year, we
successfully completed the integration of Digital Risk and won 2 large
deals with total contract value greater than $ 200 Million.
During the year, we received recognition from the analyst community on
specific offerings in Capital Markets, Wealth Management, BPO services
in Banking, European Life Insurance Policy Administration, Insurance
Distribution Management Systems for Asia-Pacific region and Insurance
billing and collection management solutions.
As we look at the year ahead, we will continue to improve our
customer-centricity through strategic partnerships and drive growth in
direct business. Towards this, we will;
- Expand service footprint in key clients by understanding their
needs and aligning offerings that meets their business objectives.
- Enhance our focus and investments in strengthening key profitable
portfolios (Testing, Enterprise Resource Planning, Customer
Relationship Management, Mobility, Analytics and Platform Business
Processing Outsourcing) to partner with our clients to drive growth,
efficiency and customer-centricity.
- Transform delivery to enhance customer value and profitability -
through innovation, tools & automation, LEAN and other cost
- Implement "Go-To-Market" transformation initiative aimed at
driving higher sales productivity.
- Invest in grooming customer facing talent (delivery and
Your Company has witnessed early success in delivering above industry
growth in our direct business over the last three years. We are
confident of our strategy delivering our medium term goals. Your
Company will continue to align with our Customer expectations, build
relevant capabilities and engage with employees.
INTELLECTUAL PROPERTY RIGHTS
During the year, your Company has filed its first ever patent
application - "Methods and Systems for Least - Cost Routing of
Transactions for Merchants". This invention is a result of Company''s
focus on Banking and Capital Market solutions and is expected to
strengthen its offering in this vertical.
Merger of MphasiS FinsourcE Limited
The Board had in its meeting held on 27 September 2013, considering the
operational synergies and administrative convenience, approved
amalgamation of MphasiS FinsourcE Limited with the Company effective 1
April 2013. Accordingly, the Company is in the process of submitting
necessary application to the High Court of Karnataka.
MphasiS FinsourcE Limited, a wholly owned subsidiary of the Company,
was formed in June 2006, exclusively for carrying out the outsourcing
services for State Bank of India. The merger is approved consequent to
non-renewal of the contract by State Bank of India.
Completion of Acquisition of Digital Risk
The Company completed the acquisition of Digital Risk and its
subsidiaries in February 2013. The acquisition is the first by MphasiS
in the Banking and Capital Markets Industry vertical. With the
acquisition of Digital Risk, MphasiS is on its way to attain leadership
position in US mortgage services market and has enhanced its on-shore
presence in the US Market.
Digital Risk is headquartered in Florida and has about 1950 employees
Change in the Financial year of the Company
The Companies Act, 2013 mandates a uniform financial year ending 31
March for the companies. The Board approved the change in the financial
year of the Company from November - October to April - March every year
with effect from 1 November 2013, in its meeting held on 27 September
2013. Accordingly, the financial year 2013 -14 will be for a five
months period ending 31 March 2014.
Change in the Registered Office of the Company
Your Company has shifted its Registered Office from Bagmane Technology
Park, Byrasandra, C V Raman Nagar, Bengaluru - 560 093 to Bagmane World
Technology Center, Marathalli Outer Ring Road, Doddanakhundi Village,
Mahadevapura, Bengaluru - 560 048, effective 15 March 2013.
The Issued Share Capital of the Company as on 31 October 2013 stood at
'' 2,101 million and Reserves and Surplus of the Group stood at '' 47,243
Your Company strongly believes that the spirit of Corporate Governance
fetches beyond the statutory acquiescence. Corporate Governance is a
driver of sustainable corporate growth and long term value enhancement
for the stakeholders. Your Company endeavors to meet the growing
aspirations of the stakeholders and is committed to maintaining highest
standards of transparency, fairness, accountability and equity in its
operations. Your Company has complied with the requirements of Clause
49 of the listing agreement with the Stock Exchanges. A report on
Corporate Governance is annexed to this report.
HR at MphasiS rallied around the foundation of our People
Strategy-Autonomy, Purpose and Mastery. This powered, along with the
support of the Leadership Team and the MphasiS Winning Culture and
Values, us to reach new milestones of success.
Through the course of the year, learning has gone beyond mere learning
hours to focus on the relevance of learning by differentiating between
mandatory learning, role-relevant competency-based learning and other
account / project specific learning. Moreover, there has been an
increased focus on Individual Development Plans and Competency
One of the key organizational differentiators in 2013 has been the
launch of Integrated Leadership Development (ILD) wherein leadership
development and talent management tracks were merged, a holistic
perspective to developing a robust leadership pipeline. This approach
moves away from the traditional manager-driven process of identifying
talent. Leadership credits are earned through an array of leadership
behaviors displayed through Action Learning Projects, Workplace
Mentoring, Championing Competencies etc. These credits qualify leaders
to be assessed on critical competencies to become part of the High
Potential pool. Leaders thus identified go through an Accelerated
Development program that grooms them for larger roles in the
organization. With this approach, the initiative rests with the
individual, thus building greater autonomy and mastery towards the end
goal of joining the High Potential program.
Other leadership programs such as FLP (Future Leaders Program) and
Aarambh have been institutionalized to build a leadership pipelines at
different levels in the organization.
Towards our journey to be people processes organization, we reached a
landmark this year in April 2013 with the PCMM Level 3 certification.
This maturity level signifies that all workforce practices at MphasiS
are based on competencies. The Global Learning Team at MphasiS was also
recognized for its efforts and awarded two Best-in-Class Learning and
Development awards by World HRD Congress: Best eLearning Adopter and
Best Frontline Manager Training.
A major area of focus was the engagement of employees. A structured
approach was designed to create a climate where employees value,
believe-in and enjoy the work they do to help your Company to be
Our total employees strength (inclusive of billable contractors) stands
at 37,056 as at 31 October 2013.
EMPLOYEES STOCK OPTION PLAN AND RESTRICTED STOCK UNITS PLANS
Your Company has stock option schemes with the philosophy of
encouraging the employees to be partners in the business and to support
the growth of the organization by creating value to its stakeholders.
Your Company''s Employee Stock Option Plan is administered through the
BFL Employees Equity Reward Trust and the Restricted Stock Unit Plans
and MphasiS Employee Stock Option Plan - 2012 are administered through
MphasiS Employee Benefit Trust.
The second tranche of Restricted Stock Units granted under Restricted
Stock Units Plan 2010 (RSU 2010 Plan) and the first tranche of Stock
Options granted under MphasiS Employee Stock Option Plan - 2012 (ESOP
2012 Plan) vested during the year. Pursuant to the exercise
applications made by the employees, the Company has transferred, out of
the MphasiS Employees Benefit Trust, 45,125 equity shares towards
exercise of RSUs under RSU 2010 Plan and 2,350 equity shares towards
exercise of options under ESOP 2012 Plan.
Further to the Circulars of the Securities Exchange Board of India
dated 17 January 2013 and 13 May 2013 on prohibition of acquisition of
shares from secondary market, the Compensation Committee vide its
resolutions dated 18 March 2013 and 5 June 2013 approved certain
alignments in RSU 2010 Plan and ESOP 2012 Plan. The aligned schemes
provides for allotment of shares upon exercise of RSUs / options by the
employees. However, in respect of the grants already made under RSU
2010 Plan and ESOP 2012 Plan, the trust would continue to transfer the
shares already acquired from the secondary market upon exercise of the
RSUs / options by the employees from time to time. As at the date of
the report, the MphasiS Employees Benefit Trust held 3,08,765 shares.
Your Company currently has three stock option plans in operation,
namely, ESOP 1998 Plan (Version I and II), ESOP 2004 and ESOP 2012 in
addition to RSU 2010 Plan. During the year 18,140 shares were allotted
under ESOP 1998 Plan (Version I and II) and 1,402 shares were allotted
under ESOP 2004, against exercise of options by the employees.
The information to be disclosed as per SEBI (Employees Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed
to this Report.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) is not just philanthropic giving,
but also about values of collaboration and honoring commitments. It is
about setting standards where quality of service and benefit goes
directly to the beneficiary, especially those that are marginalized.
MphasiS'' CSR activities are being carried out through MphasiS F1
Foundation Trust. The CSR at MphasiS focuses on Education,
Employability and Entrepreneurship Development. The Trust has supported
programs that have impacted the lives of the communities which have
remained at the periphery of the development.
The significant CSR initiatives at MphasiS involve programs aimed at
promoting quality education of children, providing skill based
employment opportunities to semi-educated youth in rural and urban
areas and entrepreneurship program aimed at training youth who are
school-dropouts, in urban slums of Bengaluru and Chennai.
During the year, MphasiS was awarded the Disability Matters Asia
Pacific Award, 2013 by Spring Board Consulting.
Prevention of Sexual Harassment
Your Company''s Code of Business Conduct (COBC) provides broad direction
as well as specific guidelines for all business transactions. The
emphasis is on human rights, prevention of fraudulent and corrupt
practices, avoidance of conflict of interest, prevention of Sexual
Harassment and unyielding integrity at all times. MphasiS is committed
to the provision of a workplace, free of Sexual Harassment ("SH")
and to provide a redressal mechanism for all complaints of SH without
fear or threat of reprisals in any form or manner whatsoever. The work
place in context of SH is not restricted to the office but includes
extended work areas such as client place, work related travel,
cafeterias and company sponsored events, to name a few.
In compliance with the Sexual Harassment of women at workplace
(Prevention, Prohibition and Redressal) Act, 2013, the Company has
established an Internal Complaints Committee at all its locations.
In compliance with the Circular of the Ministry of Corporate Affairs
(MCA) and to support the green initiative in Corporate Governance, the
Company proposes electronic delivery of Notices for General Meetings,
Annual Reports and other communication to the members through e-mail.
The e-mail addresses indicated in the respective Depository Participant
(DP) accounts will be deemed to be the registered e-mail address of the
members and shall be used for electronic delivery of the documents.
Full text of the above said documents will also be displayed on the
website of the Company, www.mphasis.com and all other requirements of
the aforesaid MCA circular will be duly complied with.
Members holding shares in electronic mode are therefore requested to
keep their e-mail addresses updated with the Depository Participant.
Members holding shares in physical mode are also requested to
participate and support the Company in this initiative by registering
their e-mails IDs with the Company.
In case any member would like to receive physical copies of these
documents, the same shall be forwarded upon request.
As on 31 October 2013, your Company has subsidiaries in Australia,
Belgium, Canada, France, Germany, India, Indonesia, Ireland, Mauritius,
the Netherlands, Bulgaria, People''s Republic of China, Philippines,
Poland, Singapore, the United Kingdom and the United States of America.
As the business prospects were not forthcoming in Srilanka, during the
year, the Srilankan operations were ramped down. Consequently, after
complying with necessary statutory formalities, it is proposed to close
MphasiS Lanka (Private) Limited.
As per Section 212 of the Companies Act, 1956, companies are required
to attach the directors'' report, balance sheet and the statement of
profit and loss of their subsidiaries. The Ministry of Corporate
Affairs vide its Circular No. 2/2001 dated 8 February 2011 has exempted
companies from complying with Section 212 of the Companies Act, 1956.
Your Company is in compliance of the section read with the provisions
of the circular and will not be attaching the accounts of the
subsidiaries. Your Company has presented the consolidated financial
statements of the Group. The required information regarding each of the
subsidiary is annexed to this report.
The annual accounts of subsidiary companies are available for
inspection to the members at the registered office of the Company. A
copy of the same shall be sent to the members upon request.
The following persons were appointed on the Board of your Company as
(a) Mr. Narayanan Kumar and Mr. James Mark Merritt effective 15
(b) Mr. Lakshmikanth K Ananth effective 28 February 2013; and
(c) Mr. Shankar Maitra effective 5 December 2013
Pursuant to the provisions of Section 260 of the Companies Act, 1956
(presently Section 161 of the Companies Act, 2013), the additional
directors hold office until the date of the ensuing Annual General
Meeting. However, the Company has received notices under Section 257 of
the Companies Act, 1956, from a member along with requisite deposit
proposing the candidatures of the additional directors to the office of
directorship. Accordingly, necessary resolutions in relation to the
appointment of the directors are placed before the members at the
ensuing Annual General Meeting. The Board recommends the appointment of
Mr. Francesco Serafini and Mr. Balu Doraisamy resigned from the Board
effective 14 February 2013. Mr. Francesco Serafini and Mr. Balu
Doraisamy joined the Board in July 2010. Mr. Francesco Serafini was
also the Vice Chairman of the Board. Mr. Antonio F Neri resigned from
the Board effective closing hours of 5 December 2013. Mr. Antonio F
Neri was appointed as a director effective 1 March 2012. He was also
the Vice Chairman of the Board.
The Board places on record its appreciation for the valuable services
rendered by Mr. Francesco Serafini, Mr. Balu Doraisamy and Mr. Antonio
F Neri during their tenure as directors.
Further, in accordance with the Articles of Association of the Company,
Dr. Friedrich Froeschl, Mr. V Ravichandran and Mr. Chandrakant D Patel
will retire by rotation and are eligible for re-election.
The Board of Directors recommends the re-appointment of Dr. Friedrich
Froeschl, Mr. V Ravichandran and Mr. Chandrakant D Patel.
The profiles of the present directors of your Company are provided in
the Annual Report.
There was no interest of the directors in the share capital of the
Company as at 31 October 2013. No director was materially interested in
any contracts or arrangements existing during or at the end of the
financial year that was significant in relation to the business of the
Company. No director holds any shares or stock option in the Company as
on 31 October 2013 except Mr. Balu Ganesh Ayyar, Chief Executive
Officer, who holds 17,010 shares and Restricted Stock Units and Stock
Options aggregating to 58,000 units.
SIGNIFICANT SHARE HOLDINGS
The following shareholders held more than 5% of the Company''s issued
share capital as at 31 October 2013:
Name of the Shareholder Percentage Owned
Hewlett Packard Corporation through its wholly
owned subsidiaries 60.49%
(EDS Asia Pacifc Holdings, EDS World
Corporation (Far East) LLC &
EDS World Corporation (Netherlands)) LLC
Aberdeen Asset Managers Limited A/C
Aberdeen Global Indian Equity (Mauritius) Limited 8.80%
DIRECTORS'' RESPONSIBILITY STATEMENT
Information as per Section 217(2AA) of the Companies Act, 1956 is
annexed and forms part of the Report.
S R Batliboi & Associates LLP (registration No.101049W), Chartered
Accountants, have expressed their willingness to continue in office and
a resolution proposing their re-appointment at remuneration to be fixed
by the Board of Directors and billed progressively, is submitted at the
Annual General Meeting.
As regards the observation made by the Auditors, your directors would
like to clarify that the following :
- Management has already taken necessary steps to strengthen the
internal control system by integrating the operations of infrastructure
business with the mainstream, thereby introducing controls which are
applicable for the entire organization.
- The Automated Teller Machine (ATM) thefts have been done by third
parties and no employees were involved. Management has taken additional
precautions to prevent such thefts. All the ATMs are fully insured
against risk of theft.
- The investigation regarding the supply of the leased assets in
deviation of the purchase order is in progress and appropriate action
will be taken after conclusion of the investigation. Moreover, the
vendor who has not supplied items as per specification has agreed to
make good the loss to the Company.
- The representations of the vendor to the Income Tax Department
regarding the amounts owed by the Company are false and suitable legal
proceedings have been initiated against the vendor.
- The investigation regarding the observations on the purchase order
pertaining to infrastructure services business in India are currently
under progress. As a matter of good governance, the management has
initiated an investigation on receipt of observations and the same is
PARTICULARS OF EMPLOYEES'' REMUNERATION
Information as per Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules, 1975 forms part of this
Report. However, in terms of Section 219(1)(b)(iv) of the Companies
Act, 1956, the Report and Accounts are being sent to the shareholders
excluding the aforesaid annexure. Any shareholder interested in
obtaining a copy of the said annexure may write to the Company
Secretary at the Registered Office of the Company
In terms of the Notification No.G.S.R.212(E) dated 24 March 2004 issued
by the Department of Company Affairs, Ministry of Finance, Information
Technology companies have been exempted from providing the particulars
of employees including their remuneration, if they have been posted /
working in a country outside India.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO
Your Company''s operations involve low energy consumption. MphasiS is
committed on conserving energy. The key facilities have been awarded 5
star, 4 star or 3 star rating by Bureau of Energy Efficiency,
Government of India (BEE). The rating is nationally accepted industry
benchmark and MphasiS has been the twelfth Company in India to be
certified by BEE. The Company has installed lighting energy savers,
occupancy sensors, enthalpy system, automatic operation of AC system at
data center and solar inverters at certain facilities to minimize power
consumption. The carbon foot prints are monitored on a monthly basis
and reported to Carbon Disclosure Project (CDP), an international, not-
for-profit organization providing the only global system for companies
and cities to measure, disclose, manage and share vital environmental
Particulars relating to technology absorption are not applicable.
Information relating to foreign exchange earnings or outgo during the
year under review is as follows:
(a) Activities relating to Export Export of Computer Software related
services to Americas, Europe, Asia and Australia
(b) Initiatives taken to increase the exports Marketing efforts are
being made through the subsidiaries and branches to increase exports.
(c) Development of new export market for product and services Marketing
efforts are being made in emerging markets
(d) Total Foreign Exchange used ('' million) 6,585
(e) Total Foreign Exchange Earnings ('' million) 28,999
Your Company has not accepted any deposits from the public and as such
no amount of principal or interest was outstanding as on the date of
the Balance Sheet.
Your directors acknowledge with thanks the continued support and
valuable co-operation extended by the business constituents, investors,
vendors, bankers and shareholders of the Company. Your directors wish
to thank Hewlett-Packard Company for their continued support. The
directors place on record their appreciation for the support from the
Software Technology Parks of India, the Department of Electronics, the
Government of India, Governments of Karnataka, Maharashtra, Tamil Nadu,
Gujarat, Madhya Pradesh, Chhattisgarh, Pondicherry, Orissa, Reserve
Bank of India, other governmental agencies, Trade Associations and
Your directors would like to place on record their appreciation for the
contribution made by the employees of the Company and its subsidiaries
For and on behalf of the Board of Directors
Bengaluru FRIEDRICH FROESCHL
5 December 2013 Chairman