DIRECTORS’ REPORT Dear Members, Your Directors are pleased to present their Sixteenth Annual Report along with the audited annual accounts for the financial year ended March 31, 2016. Year in Retrospect On a standalone basis the total income increased to Rs. 11,057.08 from Rs. 8,183.35 million in the previous year at a growth rate of 35.12%. The EBITDA amounted to Rs. 4,538.61 as against Rs. 2,986.01 million in the previous year. The Company earned Net Profit After Tax (PAT) of Rs. 2,976.44 for the year as against Rs. 2,157.66 million during the previous year. The details regarding consolidated performance of the Company are provided in the Management Discussion and Analysis Report. 2. INFORMATION ON STATE OF AFFAIRS OF THE COMPANY Information on operational and financial performance, etc., is provided in the Management Discussion and Analysis Report, which is annexed to the Directors' Report and has been prepared, inter-alia, in compliance with the terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”). Subject to information contained in Notes to the Financial Statements and ongoing Amalgamation process, no material changes and commitments have occurred after the closure of the FY 2015-16 till the date of this Report, which would affect the financial position of your Company 3. DIVIDEND After considering the Company's profitability, cash flow and overall financial performance, your Directors are pleased to recommend a dividend of Re. 1/- (10%) per share. The total quantum of dividend if approved by the Members will be about Rs. 40.79 million while about Rs. 8.30 million will be paid by the Company towards dividend tax and surcharge on the same. The Company had paid a dividend of Rs. 35/- per share (350%) in the previous year. The Company intends to maintain historical payout ratio and is exploring efficient methods to achieve the same. The historical data of dividend distributed by the Company is as follows: The register of members and share transfer books will remain closed from Thursday, July 7, 2016 to Wednesday, July 13, 2016 (both days inclusive) for the purpose of ascertaining entitlement for the said dividend. The Sixteenth Annual General Meeting of the Company is scheduled to be held on Wednesday, July 13, 2016. 4. BONUS SHARES The Company on December 21, 2015 allotted 10,180,609 Equity Shares of Rs. 10/- each as Bonus Shares to the Shareholders of the Company in the ratio of 1 (One) Equity Share of Rs. 10/- each for every 3 (Three) Equity Shares of Rs. 10/- each held as on the Record Date, i.e. December 18, 2015 5. PUBLIC DEPOSITS During the year, your Company has not accepted any deposits within the meaning of the provisions of Section 73 of the Companies Act, 2013 SUBSIDIARIES / ASSOCIATE COMPANIES The Company has following subsidiaries/associates as on March 31, 2016: PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS Pursuant to Section 136 of the Companies Act, 2013, the Financial Statements including Consolidated Financial Statements, if any, along with relevant documents have been posted on the Company's website www.eClerx.com. The same are open for inspection at the Registered Office of the Company on all working days except Saturday between 11.00 a.m. to 6.00 p.m. A statement containing salient features of performance and financial position of each of the subsidiaries included in the financial statements is attached as Annexure - I to this report in Form AOC -1. 8. SCHEME OF AMALGAMATION BETWEEN AGILYST CONSULTING PRIVATE LIMITED AND THE COMPANY The Board of Directors of the Company at their meeting held on September 11, 2015 have approved the Scheme of Amalgamation between Agilyst Consulting Private Limited and eClerx Services Limited and their respective shareholders (the “Scheme”) which provides for the amalgamation of Agilyst Consulting Private Limited a step down subsidiary, with eClerx Services Limited ('the Company') under sections 391 to 394 and other applicable provisions, if any, of Companies Act, 1956 and other relevant provisions of Companies Act, 2013. The Appointed date of the Scheme is April 1, 2015. The Company has received Observation letter from BSE Ltd. and the National Stock Exchange of India Limited conveying their no-objection in filing the Scheme with the Hon'ble High Court of Bombay ('High Court'). The Scheme of Amalgamation was filed by Agilyst Consulting Private Limited with the Hon'ble High Court. The High Court vide its order dated April 1, 2016, has dispensed with the requirement for filing a separate “Company Summons for Direction and Company Scheme Petition” under Sections 391-394 of the Companies Act, 1956 for eClerx Services Limited and therefore there was no requirement for holding meetings of shareholders or creditors of the Company in this regard. The Scheme is pending before the Hon'ble Court for approval and would be effective only once the order is received from Hon'ble High Court of Bombay and filed with the Registrar of Companies. Thereafter, the Scheme will be given effect to in the books of accounts of the Company. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS As per explanation to Section 134 of the Companies Act, 2013, the Internal Financial Controls (IFC) are reviewed by your management and key areas are subject to various statutory, internal and operational audits based on periodic risk assessment. The findings of the audits are discussed with the management and key findings are presented before the Audit Committee for review of actionable items. The review of the IFC, inter-alia, consists of the following three components of internal controls: A. Entity level controls; B. Key financial reporting controls; and C. Internal controls in operational areas 11. STATUTORY AUDITORS M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, Mumbai, [ICAI Registration No. 101049W / E300004] the Statutory Auditors of the Company, were appointed by the Shareholders at their meeting held on July 10, 2014 for a period of 5 years i.e. upto conclusion of Nineteenth Annual General Meeting subject to ratification by Shareholders at every Annual General Meeting as per the provisions of the Companies Act, 2013 (‘Act’). Pursuant to the Act, Members are requested to consider ratification of their appointment and authorise the Board of Directors including Audit Committee thereof to fix their remuneration for the FY 2016-17. In this regard, the Company has received a Certificate from the Auditors to the effect that their appointment as Auditors continues to be in accordance with the provisions of the Act. The Auditors’ Report does not contain any qualification, reservation or adverse remark. EXTRACT OF ANNUAL RETURN Information as required under Section 134 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014 are given in the Annexure-II forming part of this report. 13. SIGNIFICANT AND MATERIAL ORDERS There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future. 14. DIRECTORS In accordance with the Articles of Association of the Company, Anjan Malik, [DIN: 01698542] retires from office by rotation, and being eligible, offers himself for re-appointment at the forthcoming Annual General Meeting of the Company. The brief resume of Anjan Malik as required, interalia, in terms of Regulation 36 of the Listing Regulations and the required proposal for reappointment of the above Director at the forthcoming Annual General Meeting is included in the Notice convening this Annual General Meeting. Anjan Malik is not a key managerial personnel pursuant to the provisions of Companies Act, 2013. No Director or Key Managerial Personnel have resigned or been appointed during the year under review. 15. DECLARATION BY INDEPENDENT DIRECTOR(S) The Company has received Certificate of Independence from all Independent Directors, interalia, pursuant to Section 149 of the Companies Act, 2013, confirming and certifying that they have complied with all the requirements of being an Independent Director of the Company 16. BOARD, DIRECTORS AND COMMITTEE EVALUATION The Companies Act 2013, rules there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provide that the Annual Report of the Company shall disclose the following: • Manner in which formal performance evaluation of the Board, its Committees, and Individual Directors including independent directors has been carried out; and • Evaluation criteria. To this effect, the Board of Directors had appointed an external expert on Board evaluation, for facilitating and carrying out the said evaluation who carried out the review, analysis, evaluation and submitted its report. This exercise, inter-alia, aimed at evaluation of the Board at a collective level and evaluation of individual board members, including peer review and self-assessment. The individual reports were submitted to respective directors whereas the Board level report was placed before the Nomination and Remuneration Committee as well as the Board of Directors, for review, requisite noting and action items. The said review was carried out, based on pre-defined comprehensive checklist(s) covering evaluation criteria(s), inter-alia, modelled on the following factors: • Accountability towards shareholders; • Critical review of business strategy; • C o n d u c i v e e n v i r o n m e n t f o r c a n d i d communication and rigorous decision making; • Board’s focus on wealth maximisation for shareholders; Board’s ability to demand and foster higher performance; • Business Continuity preparedness; • Skill Set and mix thereof among Board members; • Flow of information so as to enable informed opinions by the Directors; • Adequacy of meetings of directors in terms of frequency as well as the time dedicated for discussions and deliberations. The peer review checklist encouraged the Directors to share their feedback, suggestions and opinions frankly which were then collated and submitted to each of the directors for noting, information and requisite future action, as deemed fit. On the same lines, review of committees of Board of Directors was also conducted based on pre-defined comprehensive checklist(s) covering evaluation criteria(s), inter-alia, modelled on the following factors: • Contribution, control and counseling by the Committee on various matters; • Qualitative comments / inputs; • Deficiencies observed, if any; • Qualification of members constituting the Committee; • Attendance of Committee members in the respective meetings; • Frequency of meetings. In addition, the Chairman was also evaluated on the key aspects of his role. In a separate meeting of Independent Directors performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive director and nonexecutive directors. The same was discussed in the subsequent Board Meeting that followed the Meeting of Independent Directors. It is intended to continue with this practice going forward and explore to enhance the scope of this exercise, if and as deemed fit. 17. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS The Company has in place a detailed Nomination and Remuneration Policy, which is also available on the website of the Company dealing with related matters. The introductory familiarisation program is undertaken as and when there is a new induction on the Board of the Company, which, inter-alia, covers the following: a) Introduction and meeting with other Directors on the Board and the Senior Management; b) Brief introduction about the business and nature of industry of the Company in which it operates; c) Roles, rights and responsibilities of directors including independent Director(s); d) Extant Committees of Board of Directors; e) Meetings of Board and Committees, venue, generic dates and timings when such meetings are generally held and the Annual General Meeting of shareholders of the Company; f) The Codes of Conduct which are in place and applicable to the Directors; g) Remuneration payable to Directors pursuant to Shareholders approval to that effect h) Liability Insurances taken by the Company to cover directors. In addition to this, periodic familiarisation programs are conducted for the directors. The details of familiarisation programmes imparted to independent directors have been posted on the website on http://www.eclerx.com/Corporate%20Governance/ Details%20of%20Familiarisation%20Programmes% 20for%20Independent%20Directors.pdf Further, the Directors have access to Management to seek any additional information, clarification and details as may be required. The Non-Executive Independent Directors of the Company were appointed / re-appointed at the Annual General Meeting held on July 10, 2014 and their letter of appointment containing the requisite familiarisation details has been posted on the website on http://www.eclerx.com/Corporate%20Governance/St andard%20terms%20and%20conditions%20of%20a p p o i n t m e n t % 2 0 o f % 2 0 N o n - E x e c u t i v e % 2 0 Independent%20Directors.pdf 18. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to Section 134 of the Companies Act, 2013 and other applicable rules and regulations, the Directors, to the best of their knowledge and ability, confirm that: (a) in the preparation of the annual accounts for the FY 2015-16, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; (b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit or loss of the Company for the year ended on that date; (c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the Directors had prepared the annual accounts on a going concern basis; (e) the Directors had laid down internal financial controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively 19. BOARD MEETINGS The number of committees and particulars of attendance of the Directors at the board and committee meetings are detailed in the Corporate Governance Report of the Company, which forms a part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations. 21. REPORTING OF FRAUD BY THE STATUTORY AUDITORS Pursuant to Section 134 of the Companies Act, 2013 read with Rule 13 of Companies (Audit and Auditors) Rules, 2014, as amended from time to time, if an auditor of a company, in the course of performance of his duties as Statutory Auditor, has reason to believe that an offence of fraud involving individually an amount below rupees one crore, is being or has been committed against the company by its officers or employees, the auditor shall report the matter to the Audit Committee of the Company. There were no such instances of fraud reported by the Statutory Auditor during the FY 2015-16. 22. NOMINATION AND REMUNERATION POLICY In terms of provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, the policy on nomination and remuneration of Directors, Key Managerial Personnel (KMP), Senior Management and other employees of the Company had been formulated by the Nomination and Remuneration Committee of the Company and was approved by the Board of Directors vide its resolution dated July 31, 2014. The policy acts as a guideline for determining, inter-alia, qualifications, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of performance of the Directors, Key Managerial Personnel, Senior Management and other employees. The aforesaid policy has also been posted on the Company's website o n h t t p : / / w w w. e c l e r x . c o m / C o r p o r a t e % 2 0 Governance/Nomination%20and%20Remuneration %20policy.pdf 23. D E T A I L S O F E S T A B L I S H M E N T O F V I G I L MECHANISM Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Company has in place Whistle Blower Policy to encourage all employees or any other person dealing with the Company to disclose any wrongdoing that may adversely impact the Company, the Company's customers, shareholders, employees, investors, or the public at large. This policy, inter-alia, also sets forth (i) procedures for reporting of questionable auditing accounting, internal control and unjust enrichment matters and (ii) an investigative process of reported acts of wrongdoing and retaliation from employees, inter-alia, on a confidential and anonymous basis. The aforesaid policy has also been posted on the Company's website on http://www.eclerx.com/ Corporate%20Governance/Whistle Blower Policy and V igilMechanism.pdf 25. PARTICULARS OF TRANSACTIONS, CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: The particulars of the transactions pursuant to the provisions of inter-alia, Section 188 and the Companies (Meetings of Board and its Powers) Rules, 2014 are as under. All the transaction(s) are in the ordinary course of business and at arms' length basis. Further details are also set out in the Notes to Standalone Financial Statements. Pursuant to Related Party disclosure requirements under Part A of Schedule V of Listing Regulations, there are no loans and advances in nature of loans outstanding for the year ended March 31, 2016, from subsidiaries, associate companies or firms/ companies in which directors are interested. 26. SECRETARIAL AUDIT REPORT Pursuant to Section 204 of the Companies Act, 2013, and Rules there under, a Secretarial Audit Report for the FY 2015-16 in Form MR 3 given by M/s. Pramod Shah & Associates, Company Secretary in practice is attached as Annexure-III with this report. The Secretarial Auditors’ Report does not contain any qualification, reservation or adverse remark 27. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information as required, inter-alia, under Section 134 of the Companies Act, 2013, is given in the Annexure IV forming part of this report 28. ENTERPRISE WIDE RISK MANAGEMENT SYSTEM AND RISK MANAGEMENT POLICY Your Company has in place a well-defined Enterprise Wide Risk Management (‘EWRM’) framework and Risk Management Policy which, inter-alia, aims at the following: 1. Alignment of risk appetite and strategy of the organisation by evaluating strategic alternatives, setting related objectives, and developing mechanisms to manage related risks. 2. Enhancement in risk response decisions by identifying and selecting among alternative risk responses – risk avoidance, reduction, sharing, and acceptance. 3. Reduction / elimination of operational surprises and losses by identifying potential events and establishing responses and reducing associated costs or losses. 4. Identification and management of multiple risks by facilitating effective response to the interrelated impacts and integrated responses to such risks. 5. Improvement in deployment of capital by providing robust risk information to the Management so as to effectively assess overall capital needs and prudently manage capital allocation The framework is periodically reviewed by senior management to ensure that the risks are identified, managed and mitigated. The same is also periodically reported to the Audit Committee and the Board of Directors. The Company has also laid down procedures to inform the Board of Directors about risk assessment and minimisation procedures 29. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 The Company has in place an Anti-Sexual Harassment Policy in line with requirements, interalia, of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Compliance Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainee) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the FY 2015-16: • No. of complaints received: Nil • No. of complaints disposed off: Nil The following is a summary of sexual harassment complaints received and disposed off during the FY 2015-16: • No. of complaints received: Nil • No. of complaints disposed off: Nil 30. CORPORATE SOCIAL RESPONSIBILITY Brief outline on the CSR Policy The Company continues to earmark a corpus every year for CSR activities. The eClerx Cares team under the guidance of CSR Committee is responsible for championing all philanthropy and CSR initiatives of the Company. The mission of eClerx Cares is committed to being participants of progress by supporting initiatives in education and child welfare to help measurably improve the lives of underprivileged children. Our partner NGOs are selected for their projects on child rights and education which is one cause, that resonates broadly within the Company. At eClerx, we believe that money is only ever a small part of the solution and our ethos involve the entire organisation heartily contributing to making a difference either through donating clothes and other material for people in distress, volunteering their time in training, running marathons for a cause, or engaging with children from schools we sponsor through our corporate funding. Employee Engagement There is an increased interest shown by our employees to volunteer and support our partner NGOs. Through Payroll Giving, the Company matches employee’s contribution by 1:1. Employees can choose to contribute a fixed amount deducted monthly through CRY or choose to sponsor annual fees through Nanhi Kali or CRY for primary or secondary education. Employees are also encouraged to participate in the engagement activities laid out across the year . In FY 2015-16, the engagement activities where employees participated enthusiastically are listed below: • A 120-member team of Company’s employees participated in the Standard Chartered Mumbai Marathon pledging their support to the cause of education for the poor and downtrodden; • Annual Learn-and-Fun event for the students of schools sponsored through our corporate funding; • ‘Be a Santa’ – activity where employees donated gifts requested by children of an NGO supported by us at each location; • One day salary contribution drive towards Maharashtra drought relief through Dilasa Sanstha; • Visit to 5 LAHI schools by Senior management during eClerx’s annual day at Pune in ecember 2015 where the school children engaged our Senior Leads in various activities like gardening and agricultural techniques – land preparation and seed plantation, welding and carpentry, wall graffiti on classroom walls, and food processing – preparing and packaging sweets. While the Company continues to provide expert outsourcing options, it has not lost sight of its commitment to play its role as an enlightened corporate citizen. Corporate Social Responsibility had always been on its agenda and it has also seen increasing interest and partnership from our employees to join hands on various initiatives. In U.S.A. and U.K., the Company supports numerous child education and health-related causes for Cancer, etc Other Details: c. Composition of CSR Committee a. Corporate Social Responsibility Policy The Company has in place Corporate Social Responsibility Policy b. Web-link of the CSR Policy and projects or programs CSR Policy is available on the website of the C o m p a n y h t t p : / / w w w . e c l e r x . c o m / Corporate%20Governance/eClerx%20CSR%20po licy%20final%20-%20Jan2016.pdf Prescribed CSR Expenditure (2% of the average profit as in item (d) above):- Rs. 51.31 Million Details of CSR spent during the financial year (a) amount spent during Financial Year: Rs. 51.68 Million (b) amount unspent, if any: Nil Details of implementing Agency(ies): Samparc • eClerx funds support for rural and tribal underprivileged children of Mulshi village; • Project to support SAMPARC school and hostel, Bhambarde; • Project for Higher Education Support for senior girls of SAMPARC; • Special education support for the children of Shel-Pimpalgaon and Poynad Balgram; • Vocational training support to the rural school dropouts; • Capital expenses Project - fencing of girls children’s home (Orphanage) Bhaje and construction of girls hostel at Bhambarde; • Construction of Girls Toilet at Maval & Mulshi Taluka Dist Pune, under the Swachh Bharat Swachh Vidyalaya Scheme Muktangan • eClerx wholly funds 1 school (pre-school to Std. VIII) in Mumbai; • Support for 350+ students (including 26 differently abled children) and 46 teachers at Dr. Ambedkar Municipal School, Parel - children of defunct mill workers and odd job workers; • Apart from academics, the students develop aesthetic skills and appreciation through participation in performing and creative arts (e.g. drama, music, sports etc.). Magic Bus eClerx funds the child education program by Magic Bus which targets to holistically develop the child and implement the behaviour change leading to development of positive attitude and behaviour toward education, gender equality, health elements of the children’s school cycle; • Magic Bus Sports for Development Program implemented in carefully chosen underprivileged communities of Mumbai and Pune; • Children living in shanties in the Mumbra and Kalwa localities in Mumbai and Sanjay Gandhi Nagar and Anand Nagar in Pune. Their economic condition does not permit them to live normal lifestyle Lend-A-Hand-India (LAHI) eClerx funds provides job and life skills training to 6000+ young boys and girls as part of secondary school curriculum under “Project Swadheen” in high schools all over Maharashtra including Mumbai, Thane and Raigad district; • Project Swadheen introduces students to multiple vocational trades; enhancing problem solving skills, and increasing the high school graduation rate and enrollment in technical education courses Sanskriti Samvardhan Mandal - Strengthening Resources for Emerging Excellence (SREE Project Sagroli Ahead - A support project to Quality Education. Objective is to create education friendly atmosphere in Sagroli village by initiating we l l d e s i g n e d va r i o u s c u r r i c u l a r a n d extracurricular activities for overall development of the students. • Project Sagroli Sunrise – A project to carve rural athletes. Objective is to carve career of the rural children in sports, athletics in particular. The project has been felicitated as ‘The real Heroes of the Nation’ by CNN IBN in 2006. Project funding for necessary tools & equipment for athletes, diet, coach and other recurring expenses. Vocational Training Center (VTC) ‘Utkarsh’ – Objective is to empower unemployed rural youths with vocational skills making them self-reliant. • School Infrastructure - Updation of infrastructure because of inadequate, irregular and scanty financial support from the Government. Funding for dual desk, science laboratory tools, equipment, apparatus and teaching aids. • Primary School upgrade - Renovation and expansion of 50 year old school. School building is now insufficient for increasing number of students and class room educational activities, so new class rooms need to be provided. Construction of first floor (7 class rooms and 1 recreation hall). Dilasa Sanstha eClerx adopts 4 villages – Bhogji, Adsulwadi, Adhala, and Fakrabad in Kalamb and Washi Block of Osmanabad District in the drive for drought relief; • Drought eradication program through Natural Resource Management (NRM) with community Participation; • Activities conducted related to water and land management - Phad irrigation schemes, Pasture Development, Horticulture - Soil Conservation Watershed Development, Creation of self-help groups, implementation of income generating projects, irrigation through Dam Canals. Amar Bharat Vidyapeeth - Parivaar eClerx works with Parivaar to fund Amar Bharat Vidyapeeth in Bengal; • Working for development of orphans, girl children highly vulnerable to exploitation, victimization, and trafficking, street children, abandoned children, extremely impoverished children from tribal areas at Parivaar Ashram, Village - Barkalikapur, West Bengal; • Each resident child once admitted is under the care and custody of Parivaar till higher education (graduation/post-graduation) and subsequent job placement and settlement into the future phase of life; • Currently 1160 resident children are in the school starting from the age of 4 years Child Rights and You (CRY) • eClerx wholly funds the KMAVGS initiative run by CRY in Maharashtra; • Providing education, healthcare and spreading awareness on child rights Nanhi Kali eClerx supports education for underprivileged girls. We hereby declare that implementation and monitoring of the CSR Policy are in compliance with CSR Policy and in compliance with CSR objectives and Policy of the Company PD Mundhra Deepa Kapoor Mumbai Executive Director Chairperson May 20, 2016 CSR Committee Further, details of the implementing agencies can be accessed on the website of the Company, www.eClerx.com. 31. AWARDS AND ACCOLADES Your Company is proud to have received the following awards and accolades during the period under review: • recognised in CIO 100 – eTMS (Transport Management System) has been selected as an industry best practice in CIO 100 awards recognised at Asia Outsourcing Excellence Awards in the category ‘Use of IT for Operations Excellence’; • won the Dataquest Business Technology Awards; • recognised as a 2015 MAKE (Most Admired Knowledge Enterprise) India winner and the larger 2015 MAKE Asia winner. The 2015 MAKE panel recognized eClerx Services for managing customer/stakeholder knowledge; • won the NetApp Innovation Awards 2015; • recognised as a finalist in four categories at NOA (National Outsourcing Awards), 2015. 32. R E M U N E R A T I O N D E T A I L S P U R S U A N T T O COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 AND OTHER APPLICABLE PROVISIONS • Details of the ratio of the remuneration of each director to the median employee’s remuneration (approx):-Executive Director:1:84; Non-Executive Non Independent Director: NA; Non-Executive Independent Director:1:5.65 (excluding sitting fees); • The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:- Executive Director: 0%, Non Executive Independent Directors: 25%, Chief Financial Officer: 10% and Company Secretary: 11.5%; • The percentage increase in the median remuneration of employees in the financial year:- 5.1%; The number of permanent employees on the rolls of the Company:- On rolls employee count as on March 31, 2016 was 8,550; • The explanation on the relationship between average increase in remuneration and company performance:- Average increase in remuneration is decided based on salary benchmarking done with industry peers to ensure retention of experienced employees. Company performance has indirect linkage to overall compensation of senior management; • Comparison of the remuneration of the Key Managerial Personnel against the performance of the company (KMP includes ED, CFO and CS):- ESOPs granted to CFO and CS have company performance linked vesting conditions i.e. lesser number of options vest if the company does not do well and /or is perceived to have not done well. ED has a significant variable component which is determined by Board based on various financial metrics of the company including revenue, profitability and reduction of risk. Further the details of performance of the Company are elaborated in this Annual Report; • Variations in the market capitalisation of the company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer: *Following are details of bonus shares issued by the Company: (i) bonus shares in the ratio of one Equity Share for every two Equity Shares of Rs. 10 each held in July, 2010. (ii) bonus shares in the ratio of one Equity Share for every three Equity Shares of Rs. 10 each held in December, 2015. • Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and reasons for any exceptional circumstances for increase in managerial remuneration:- 10.2% for employees other than senior managerial personnel v/s 9.2% percentile increase in the senior managerial remuneration. The increase is determined based on salary benchmarking done with industry peers to ensure retention of experienced employees. Company performance has indirect linkage to overall compensation of senior management; The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid director during the year:- No such employee (excluding ESOP gain); • The key parameters for any variable component of remuneration availed by the directors:- There is no variable component for Non Executive Independent Directors. The Non Executive Non Independent Directors are not paid any remuneration by the Company. As regards the remuneration of Executive Director, pursuant to the corresponding shareholders resolution, annual performance bonus is decided by the Board of Directors, on merit based and takes into account the Company’s performance while factoring key parameters like: - Profitability (PAT, PBT, OPM) - Return on shareholders investment - Statutory compliances - Revenue and revenue quality • Salary details of employees employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than Rs. 60 Lakhs are given in the Annuxure-V forming part of this report; • Salary details of an employee employed for a part of the financial year, was in receipt of remuneration for any part of that year which, in the aggregate, was not less than Rs. 5 Lakhs per month are given in the Annuxure-V forming part of this report; • The Company affirms that the remuneration is as per the remuneration policy of the Company. 33. EMPLOYEES’ STOCK OPTION PLAN Pursuant to the applicable requirements of the erstwhile Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the SEBI guidelines'), your Company had framed and instituted Employee Stock Option Plan 2008 ('ESOP 2008') & Employee Stock Option Plan 2011 ('ESOP 2011') to attract, retain, motivate and reward its employees and to enable them to participate in the growth, development and success of the Company. Further, during the year under review, your Company has also instituted Employee Stock Option Scheme/ Plan 2015 as per the SEBI (Share Based Employee Benefits) Regulations, 2014 pursuant to the special resolution passed by the shareholder at the Fifteenth Annual General Meeting on July 17, 2015 and approved a total number of 1,600,000 options under this scheme The Scheme envisages an ESOP Trust which is authorised for secondary market acquisition. However, no options have been granted under the Scheme as on March 31, 2016 and the Company is in the process of instituting the ESOP trust post which rest of activities for implementation thereof, would follow. Your Company has granted stock options from time to time under the said ESOP Schemes to its employees and also to employees of its subsidiaries. The following table sets forth the particulars of stock options granted under ESOP 2008 and ESOP 2011 as on March 31, 2016:- Requisite disclosures pertaining to ESOPs as per Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are provided in the Annual report of the Company,as also on the weblink: http://www.eclerx.com/Pages/Corp_Investors_Financials.aspx. For determination of expected volatility the Company followed Black and Scholes formula. During the year, the Nomination and Remuneration Committee has approved the closure of ESOP Scheme 2005 and ESOP Scheme 2008 and there will not be any further dilution under the said Schemes /Plans for fresh grants/options not granted/subsequently forfeited. Also, there will be no grant of shares under ESOP Scheme 2011 henceforth. Further, under ESOP Scheme 2015, the number of grantees has been reduced and is restricted to top senior management. The other employees who were being granted ESOPs earlier, will now receive deferred cash incentives. Thus the expected dilution for fresh grants will be reduced to about 0.8% of then equity capital as against about 2% in the past Pursuant to SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, and SEBI (Share based Employee Benefits) Regulations, 2014, the number of options have been adjusted, as required, for Bonus issue in December 2015 in the ratio of 1:3, that is, one bonus option for every three options held. The difference between the intrinsic value of the shares underlying the options granted on the date of grant of option and the option price is expensed as Employees Compensation over the period of vesting. Accordingly, the impact of the same was Rs. (3.40) million on the Statement of profit and loss account for the year ended on March 31, 2016 as employee compensation cost. The equity shares to be issued and allotted under the ESOP schemes i.e. ESOP 2008 and ESOP 2011 of the Company shall rank pari-passu in all respects including dividend with the existing equity shares of the Company. 34. HUMAN RESOURCE MANAGEMENT Learning is a sustainable, participative process that facilitates the development of people through their own processing of information into knowledge and skills that can be effectively utilised on the job. Recognising people development as a true differentiator over competitors, the Company significantly invested in high-value training and development programs this year. Business Analytics being identified as a key focus area, the Company sponsored employees to undergo hands-on analytics programs from some of the best institutes in India. Additionally, in-house trainers were certified on new analytics tools and platforms, which were then internalised for employees as part of the on-going capability development program. To ensure a good success rate of managers in jobs of higher complexity, it is vital to assess their readiness for such roles, prior to assigning greater responsibilities to them. As an integral part of its HIPO (high potential) program, the Company runs in house Potential Development Centres for competency assessment and development. A team of seasoned practitioners from the organization and industry are involved in assessing the competencies of select managers through multiple, validated evaluation techniques. The output is a list of strengths and development needs that are then leveraged and worked upon through individual development plans, thereby creating a pool of high-potential, high performing managers who are ready to take on the next role. As a testament to our pledge for continuous learning and development, in January 2016, the Company was named a MAKE (Most Admired Knowledge Enterprise) India winner for the fifth straight year. Additionally, this is the third year that the Company has won the MAKE Asia award; and this time, the Company ranked first on the dimension ‘creating value from customer / stakeholder knowledge 35. CORPORATE GOVERNANCE The Securities and Exchange Board of India (SEBI) has prescribed certain corporate governance standards vide regulations 24 and 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Your Directors reaffirm their commitments to these standards and a detailed Report on Corporate Governance together with the Auditors’ Certificate on its compliance is annexed hereto. 36. SUCCESSION PLANNING The Company has succession plan in place for orderly succession for appointments to Board and to senior management 37. GREEN INITIATIVE BY THE MINISTRY OF CORPORATE AFFAIRS The Ministry of Corporate Affairs (‘MCA’) has taken a Green Initiative in Corporate Governance by permitting electronic mode for service of documents to members after considering relevant provisions of the Information Technology Act, 2000 and Companies Act, 2013 and rules made there under (‘the Act’). Pursuant to provisions of Act, service of documents to members can be made by electronic mode on the email address provided for the purpose of communication. If a member has not registered an email address, other permitted modes of service would continue to be applicable. Your Company sincerely appreciates shareholders who have contributed towards furtherance of Green Initiative. We further appeal to other shareholders to contribute towards furtherance of Green Initiative by opting for electronic communication. This initiative will ease the burden on corporates (and the environment) for sending physical documents such as notices, annual reports etc. The members who have not provided their email address will continue to receive communications, dissemination, notice(s), documents etc. via permitted mode of service of documents. Further the shareholders, who request for physical copies, will be provided the same at no additional cost to them. 38. ACKNOWLEDGEMENT Your Directors take this opportunity to express their sincere appreciation to the Company’s customers, vendors, investors, consultants, business associates, bankers and employees for their support and cooperation to the Company. Your Directors are also thankful to the Government of India, the Government of various countries, the concerned State Governments and regulatory agencies for their co-operation. Your Directors also acknowledge the hard work and effort made by every member of the eClerx family across the world and express their sincere gratitude to the Members for their continuing confidence in the Company. For and on behalf of the Board of Directors eClerx Services Limited V. K. Mundhra Chairman Place: Mumbai Date: May 20, 2016 |