Ramco Systems Limited, INDIA REPORT OF THE BOARD OF DIRECTORS
The Board has pleasure in presenting the Twentieth Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March 2017.
1. FINANCIAL RESULTS
The standalone and consolidated audited financial results for the year ended 31st March 2017 and 31st March 2016 are as follows:
Standalone for the year ended 31st March 2017 2016 ( Rs. Mln.)
Consolidated for the year ended 31st March 2017 2016 ( Rs. Mln.)
Revenue from Operations
- Changes in Inventories of Finished Goods, Stock-in-process and Stock-in-trade
- Purchase of Stock-in-trade
- Employee Benefits Expense
- Other Expenses
Profit Before Interest, Depreciation & Amortization & Taxes
Depreciation and Amortization Expense
Profit Before Tax
Share of profit/(Loss) of an associate
- Current Tax
- Deferred Tax (including MAT credit)
Net Profit After Tax
Other comprehensive income (OCI)
Total comprehensive income
2. BUSINESS OPERATIONS
The details of the business operations appear in the following pages.
Your Directors had not recommended any dividend for the financial year 2016-17.
4. INFORMATION ON SUBSIDIARIES AND ASSOCIATE
As on 31st March 2017, the Company has eleven subsidiaries (including a step-down subsidiary) viz., Ramco Systems Corporation, USA; Ramco Systems Limited, Switzerland; Ramco Systems Pte. Ltd, Singapore; Ramco Systems Sdn. Bhd., Malaysia; RSL Enterprise Solutions (Pty) Ltd, South Africa; Ramco Systems Canada Inc., Canada (step down subsidiary of Ramco Systems Corporation, USA); Ramco Systems FZ-LLC, Dubai; RSL Software Company Limited, Sudan; Ramco Systems Australia Pty Ltd, Australia; Ramco System Inc, Philippines and Ramco Systems (Shanghai) Co. Ltd., China. The Company has one associate viz., City Works (Pty) Limited, South Africa (Associate of RSL Enterprise Solutions (Pty) Ltd, South Africa).
The Company’s subsidiary in China, Ramco Systems (Shanghai) Co. Ltd. was incorporated on 3rd November 2016. However, capital has yet to be contributed and the business operations have yet to commence.
There has been no material change in the nature of the business of subsidiaries during the year.
Consequent to the opening of a new branch in New Zealand for Ramco Systems Australia Pty Ltd., Australia on 18th November 2015, the already existing branch in New Zealand of Ramco Systems Pte. Ltd., Singapore was closed on 25th October 2016.
In accordance with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial statements of the Company’s Subsidiaries’ and Associates’ (in Form AOC-1) is attached to the financial statements.
5. CONSOLIDATED FINANCIAL STATEMENTS
As per provisions of Section 129(3) of the Companies Act, 2013 and Regulation 34 of SEBI (LODR) Regulations, 2015, Companies are required to prepare consolidated financial statements to be laid before the Annual General Meeting of the Company.
The Audited/Reviewed financial statements of the Subsidiary Companies are available at the Company’s website at the following link at http://www.ramco.com/investor-relations/investor-information/subsidiary-financials.
6. CHANGES IN CAPITAL STRUCTURE
The Share Capital and the Securities Premium of the Company have undergone changes to the extent of allotment of shares to option grantees under the various Employee Stock Option Schemes of the Company, as below:
A total of 414,603 equity shares were allotted to the option grantees of the Company and its Subsidiaries during the year, pursuant to exercise of the vested options under ESOS 2008, ESOS 2009 - Plan A, ESOS 2009 - Plan B, ESOS 2013 and ESOS 2014.
The following table presents the allotment of equity shares by the Allotment Committee of the Board during the year:
Date of allotment
No. of Shares Allotted
29th April 2016
2nd June 2016
4th July 2016
16th August 2016
23rd September 2016
25th November 2016
22nd December 2016
18th January 2017
23rd February 2017
20th March 2017
7. PUBLIC DEPOSITS
Your Company has not accepted any deposits within the meaning of Chapter V - Acceptance of Deposits by Companies under the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 from the public during the year and no deposits are outstanding as at the end of financial year.
8. BOARD OF DIRECTORS AND COMMITTEES
The Board noted with deep regret the sudden demise of Shri P R Ramasubrahmaneya Rajha, Chairman, on 11th May 2017. He had been on the Board of the Company since 1997 and was the Chairman throughout. The Board noted that under the Chairmanship of Shri P R Ramasubrahmaneya Rajha, the Company has become a world class software product and solutions Company. He was known for his business ethics, value systems and philanthropic activities. He was the guiding force for Ramco Group of Companies, which has made the Group one of the most respected industrial houses in the country. Under his Chairmanship, the Group has grown multifold, achieving a turnover of USD 1 billion. The Board placed on record the immense contribution, Shri P R Ramasubrahmaneya Rajha had made to the Company in its growth progress.
Shri P R Venketrama Raja, relinquished the post of Managing Director with effect from the closing hours of 3rd June 2017. He has been appointed as Chairman from 4th June 2017.
Based on the recommendations of Nomination and Remuneration Committee, the Board have:
(a) co-opted Shri P V Abinav Ramasubramaniam Raja as Additional Director, who will hold office till the conclusion of the ensuing Annual General Meeting and
(b) appointed Shri P V Abinav Ramasubramaniam Raja as a whole time key managerial personnel in the position of Manager under Section 203(1)(i) of the Companies Act, 2013, with the designation of Whole Time Director for a period of
5 years from 4th June 2017.
His appointment has been included by way of a Special Resolution in the Notice convening the AGM for Members approval. The brief resume and other details relating to the Director, as stipulated under Regulation 36(3)(a) of the SEBI (LODR) Regulations, 2015 are furnished in the Notice of Annual General Meeting forming part of this Annual Report.
As per the provisions of Companies Act, 2013, Shri P R Venketrama Raja (DIN:00331406), Director retires by rotation at the ensuing Annual General Meeting of the Company and being eligible offers himself for re-appointment. The Board of Directors recommends the above re-appointment for approval of the Members. The brief resume and other details relating to the Director, as stipulated under Regulation 36(3)(a) of the SEBI (LODR) Regulations, 2015 are furnished in the Notice of Annual General Meeting forming part of this Annual Report.
The Independent Directors hold office for a fixed term of 5 years and are not liable to retire by rotation. No Independent Director has retired during the year. Pursuant to Rule 8(5)(iii) of Companies (Accounts) Rules, 2014, it is reported that, there have been no changes in the Directors or Key Managerial Personnel during the year except that Shri G Karthikeyan, Company Secretary resigned on 5th December 2016. The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.
The Audit Committee has three members, out of which two are Independent Directors. Pursuant to Section 177(8) of the Companies Act, 2013, it is reported that there has not been an occasion, where the Board had not accepted any recommendation of the Audit Committee.
As required under Regulation 25(7) of SEBI (LODR) Regulations, 2015, the Company has programmes for familiarization for the Independent Directors about the nature of the industry, business model, roles, rights and responsibilities of Independent Directors and other relevant information. As required under Regulation 46(2) of SEBI (LODR) Regulations, 2015, the details of the Familiarization Programme for Independent Directors are available at the Company’s website, at the following link at http://www.ramco.com/investor-relations/Independent-Directors-Familiarisation-Programme.pdf
The details of the familiarization programme are explained in the Corporate Governance Report also.
9. BOARD EVALUATION
Pursuant to Section 134(3)(p) of the Companies Act, 2013 and Regulation 25(4) of the SEBI (LODR) Regulations, 2015, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters. Pursuant to Schedule II, Part D of SEBI (LODR) Regulations, 2015, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Director at the Board Meeting, which shall be taken into account at the time of re-appointment of Independent Director.
During the year, SEBI has issued a detailed guidance note vide its circular dated 05.01.2017 for the purpose of evaluation of Board and its Directors. Based on the guidance note, the criteria for evaluation of performance of Independent Directors and the Board of Directors the Committee carried out the evaluation of every Directors’ performance. The Committee expressed its satisfaction and appreciation for the performance of the Chairperson of the Company, Independent Directors and Non-Independent Directors in discharging their expected roles.
During the year, four Board Meetings were held. The details of the Meetings of the Board and its various Committees are given in the Corporate Governance Report.
10. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS
Pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, impacting the going concern status and Company’s operations in future.
11. INTERNAL FINANCIAL CONTROLS
In accordance with Section 134(5)(e) of the Companies Act, 2013, the Company has Internal Financial Controls Policy by means of Policies and Procedures commensurate with the size and nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of Companies (Accounts) Rules, 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements.
12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of the loan / guarantees / investments under Section 186(4) of the Companies Act, 2013 are provided under Note Nos.7, 8, 12 & 38 forming part of standalone f inancial statements and Note Nos. 7, 8 and 34 forming part of consolidated financial statements.
(I) STATUTORY AUDIT
M/s.CNGSN & Associates LLP, Chartered Accountants, are the Statutory Auditors of the Company since 2003-2004. As per the provisions of Section 139 of the Companies Act, 2013, their term of off i ce comes to an end at the close of the 20th Annual General Meeting of the Company. The Board of Directors wishes to place on record its sincere appreciation for the services rendered by M/s.CNGSN & Associates LLP, Chartered Accountants, as the Statutory Auditors of the Company.
Subject to the approval of the Members of the Company at the ensuing 20th Annual General Meeting, the Board of Directors have recommended the appointment of M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants as the Statutory Auditors of the Company, pursuant to Section 139 of the Companies Act, 2013. The proposal relating to their appointment has been included in the notice convening the 20th Annual General Meeting of the Company. They shall hold office from the conclusion of 20th Annual General Meeting to the conclusion of 25th Annual General Meeting and the matter relating to the Auditors’ appointment will be placed before the Members for their ratification at every intervening Annual General Meeting.
The reports of both Standalone and Consolidated financial statements issued by M/s.CNGSN & Associates LLP, Chartered Accountants, viz. the Statutory Auditors for the year ended 31st March 2017 does not contain any qualification, reservation or adverse remark.
(II) INTERNAL AUDIT
The Board appointed M/s. SRSV & Associates, Chartered Accountants, (FRN015041S) as new Internal Auditors of the Company in the place of M/s. M.S. Jagannathan & N. Krishnaswami, Chartered Accountants.
(III) SECRETARIAL AUDIT
M/s. S.Krishnamurthy & Co., Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company. Pursuant to Section 204(1) of the Companies Act, 2013, the Secretarial Audit Report submitted by the Secretarial Auditors for the year ended 31st March 2017 is attached herewith as Annexure A. The report does not contain any qualification, reservation or adverse remark.
14. EXTRACT OF ANNUAL RETURN
In Accordance with Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form MGT-9 is attached herewith as Annexure B.
15. CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee and adopted a CSR Policy, in accordance with Schedule VII of the Companies Act, 2013. The CSR obligations pursuant to Section 135(5) of the Companies Act, 2013, for the year 2016-17 was Rs.9 lakhs, which has been spent as per the CSR Policy.
The Annual Report on CSR activities as prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure - C.
16. VIGIL MECHANISM / WHISTLE BLOWER POLICY
In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of the SEBI (LODR) Regulations,
2015, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The policy is available at the Company’s website.
17. RISK MANAGEMENT POLICY
Pursuant to Section 134(3)(n) of the Companies Act, 2013 and Regulation 17(9) of SEBI (LODR) Regulations, 2015, the Company has developed and implemented a Risk Management Policy. The Policy envisages identification of risk and procedures for assessment and minimization of risk thereof.
18. RELATED PARTY TRANSACTIONS
Prior approval / omnibus approval have been obtained from Audit Committee for all Related Party Transaction and these transactions are periodically placed before the Audit Committee. All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business and not attracting Section 188(1) of the Companies Act, 2013. No transaction with the related party is material in nature, in accordance with Company’s “Related Party Transaction Policy” and Regulation 23 of SEBI (LODR) Regulations, 2015. In accordance with Ind AS-24, the details of the transactions with the related parties are set out in the Disclosures forming part of Financial Statements.
As required under Regulation 46(2)(g) of SEBI (LODR) Regulations, 2015, the Company’s Related Party Transaction Policy is disclosed in the Company’s website and its we blink is: http://www.ramco.com/investor-relations/ramco-related-party- transaction-policy.pdf.
As required under Regulation 46(2)(h) of SEBI (LODR) Regulations, 2015, the Company’s Material Subsidiary Policy is disclosed in the Company’s website and its we blink is: http://www.ramco.com/investor-relations/Ramco-Material-Subsidiary-policy.pdf.
19. INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS
The Ministry of Corporate Affairs vide its notification dated 16th February 2015 has notified the Companies (Indian Accounting Standards) Rules, 2015. In pursuance of this notification, the Company, its subsidiaries and associate companies had adopted Ind AS with effect from 1st April 2015 (the transition date). The Company’s financial results for the previous year ended 31st March 2016 had also been recast in accordance with Ind AS.
The Company had, for the first time, adopted Indian Accounting Standards (Ind AS) from 1st April 2016, notif ed under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016. Accordingly, the financial results (including for all the periods presented in this Annual Report in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards) have been prepared in accordance with the recognition and measurement principles in Ind AS 34 - Interim Financial Reporting, prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and the other accounting principles generally accepted in India (Indian GAAP). Reconciliation of the net profit of the previous year ended 31st March 2016 between previous Indian GAAP and Ind AS is given along with the financial statements in this Annual Report.
20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Pursuant to Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are annexed to, and forms part of, this report as Annexure D.
21. EMPLOYEE STOCK OPTION PLAN/ SCHEME AND EMPLOYEE STOCK PURCHASE SCHEME
The growth of the Company has, in large measure, been possible owing to the wholehearted support, commitment and teamwork of its personnel. Accordingly, the Company had instituted various Employee Stock Option Schemes / Plans (ESOS/ESOP) for the benefit of employees. The following schemes have been established by the Company:
(A) Employee Stock Option Plan, 2000 (ESOP 2000)
(B) Employee Stock Option Scheme, 2003 (ESOS 2003)
(C) Employee Stock Option Scheme, 2004 (ESOS 2004)
(D) Employee Stock Option Scheme, 2008 (ESOS 2008)
(E) Employee Stock Option Scheme, 2009 - Plan A (ESOS 2009-Plan A)
(F) Employee Stock Option Scheme, 2009 - Plan B (ESOS 2009-Plan B)
(G) Employee Stock Option Scheme, 2013 (ESOS 2013)
(H) Employee Stock Option Scheme, 2014 (ESOS 2014)
The Company has implemented Employee Share Purchase Plan, 1999 (ESPP 1999) and Employee Stock Purchase Scheme, 2004 (ESPS 2004).
The above schemes/plans are in compliance with the SEBI Regulations. During the year under review, no changes were made in the above said schemes. Details regarding the above mentioned schemes along with their status are annexed to, and forms part of, this report as Annexure E. In addition, the following details are disclosed in the said Annexure.
a. Relevant disclosures in terms of the ‘Guidance note on accounting for employee share-based payments’ issued by ICAI and
b. Diluted EPS on issue of shares pursuant to all the schemes covered under the regulations shall be disclosed in accordance with ‘Ind AS 33 - Earnings Per Share’ issued by ICAI.
The above information forms part of the Annual Report. The we blink to access the Annual Report is http://www.ramco.com/ investor-relations/ramco_annual_report_2017.pdf.
Further, a certificate from Statutory Auditors, with respect to implementation of the above Employee’s Stock Option Schemes in accordance with SEBI Guidelines and the resolution passed by the Members of the Company, would be placed before the Members at the ensuing AGM, and a copy of the same shall be available for inspection at the Corporate Office of the Company during normal business hours on any working day.
22. CORPORATE GOVERNANCE REPORT & AUDITOR’S CERTIFICATE
The Company has complied with the requirements regarding Corporate Governance as stipulated in SEBI (LODR) Regulations, 2015.
A detailed Corporate Governance Report of the Company as required under Schedule V(C) of SEBI (LODR) Regulations, 2015 along with the declaration on Code of Conduct and Statutory Auditor’s Certificate confirming Compliance with the conditions on Corporate Governance as stipulated under Schedule V (E) of SEBI (LODR) Regulations, 2015, is annexed to and forms part of, this report as Annexure F, G & H.
23. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of requirement of Regulation 34(2)(e) read with Part B of SEBI (LODR) Regulations, 2015, a Management Discussion and Analysis Report elaborating upon the operations of the Company is annexed to and forms part of, this report as Annexure I.
24. BUSINESS RESPONSIBILITY REPORT
As required by Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015, since the Company is one of the top 500 listed companies based on the market capitalization as on 31st March 2017, a Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective, is enclosed as Annexure J, in the format prescribed by SEBI vide its Circular No: CIR/CFD/CMD/10/2015 dated 4th November 2015. The Corporate Social Responsibility Committee of the Board of Directors is entrusted with the authority to review the Business Responsibility performance and the various policies annually or as and when the need arises.
25. PARTICULARS OF REMUNERATION TO DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES
The disclosures in terms of provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1), (2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to remuneration, are provided in the Report as Annexure K.
Having regard to the first proviso to Section 136(1) of the Companies Act, 2013, the physical copy of the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their email addresses and is also available on the Company’s website.
26. DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013, the Directors confirm that:
(a) in the preparation of the annual accounts for the year ended 31st March 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2017 and of the profit of the Company for the year ended on that date;
(c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) they had prepared the annual accounts on a going concern basis;
(e) they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
27. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY AFTER 31st MARCH 2017
There are no material changes and commitments affecting the financial position of the Company which have occurred between the 31st March 2017 and the date of this report, except as otherwise disclosed in this Report.
Your Directors take this opportunity to convey their appreciation for the support and co-operation received during the year under review, from all the Government Authorities, Shareholders, Clients, Vendors, Partners, Bankers and other Business Associates. Your Directors wish to place on record their deep sense of appreciation for the dedicated and sincere services rendered by the Employees at all levels.
For and on Behalf of the Board
Place : Rajapalayam P R VENKETRAMA RAJA
Date : 4th June 2017 CHAIRMAN