Robust foundation.
sustainable
gRowth. Subex Limited
Annual Report 2013-14
www.subex.com
info@subex.com
INDIA
Subex Limited
USA
Subex Inc
UK
SINGAPORE
Subex (UK) Limited
Subex (Asia Pacific) Pte Limited
(CIN: L85110KA1994PLCO16663)
12303 Airport Way,
3rd Floor, Finsbury Tower,
175A Bencoolen Street
Regd. office: RMZ Ecoworld,
Bldg. 1, Ste. 390,
103-105 Bunhill Row,
#08-03 Burlington Square
Devarabisanahalli, Outer Ring Road
Broomfield, CO 80021
London, EC1Y 8LZ UK
Singapore 189650
Bangalore - 560037, India
Tel : +91 80 6659 8700
Fax : +91 80 6696 3333
Tel : +1 303 301 6200
Tel :+44 20 7826 5420
Tel : +65 6338 1218
Fax : +1 303 301 6201
Fax : +44 20 7826 5437
Fax: +65 6338 1216
Regional offices: Dubai | Ipswich | Sydney
Forward-looking statement
In this Annual Report we have disclosed forward-
looking information to enable investors to comprehend
our prospects and take informed investment decisions.
This report and other statements - written and oral
- that we periodically make contain forward-looking
statements that set out anticipated results based on
the management’s plans and assumptions. We have
tried wherever possible to identify such statements by
using words such as ‘anticipates’, ‘estimates’, ‘expects’,
‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of
similar substance in connection with any discussion of
future performance.
We cannot guarantee that these forward looking
statements will be realized, although we believe we
have been prudent in assumptions. The achievement
of results is subject to risks, uncertainties and even
inaccurate assumptions. Should known or unknown
risks or uncertainties materialize, or should underlying
assumptions prove inaccurate, actual results could
vary materially from those anticipated, estimated or
projected. Readers should bear this in mind.
We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new
information, future events or otherwise.
Contents
Corporate Idenity
Operational highlights
Managing Director and CEO’s review
Key competitive strengths
COO’s message
Board of directors
Executive leadership team
Subex Charitable Trust
Star awards
Directors’ Report
Corporate Governance
Management Discussion & Analysis
Financial Review-Standalone
Financial Review - Consolidated
02
04
06
09
10
16
17
18
19
20
28
40
63
97
Shareholders’ Information
133
A
Product
info@trisyscom.com
Innovation with customers
Product suite for Business and Operations
Support Systems (B/OSS)
Growing customer base
Strengthening our financials, expanding global
footprint, winning competitive bids
The story of Subex 2.0
Strong foundation. Sustainable growth.
Subex Limited.
A global pioneer in providing Business and
Operations Support Systems (B/OSS).
These services address the growing needs of
telecom operators in 70 countries.
The Company’s solutions enhance customer
efficiency and maximize returns.
The Company’s ROC solutions translate
into enduring multi-project and multi-year
customer engagements.
2
Subex Limited
About us
Established in 1992, Subex Limited is
a leading global provider of Business
and Operations Support Systems
India with branch offices located in
providers. As pioneers of the Revenue
the Broomfield, US, London, UK and
Operations Centre (ROC®), Subex
Singapore with regional offices in
is adequately positioned to provide
Dubai, Ipswich and Sydney.
integrated infrastructural services
(B/OSS) that empowers
Communication Service Providers
(CSPs) to achieve competitive
advantage through Business and
Capex Optimization – thereby
enabling them to improve their
operational efficiency to deliver
enhanced service experience to
subscribers.
Where we are located
Subex is headquartered in Bangalore,
Listing
The Company’s shares are listed
on the Bombay Stock Exchange
(BSE, India) and the National Stock
Exchange (NSE, India). The Company
enjoyed a market capitalization of
H152.48 crores as on 31 March, 2014.
Products and services
Subex provides industry-leading
B/OSS solutions for business and
capex optimization to telecom service
for day-to-day operations. Built to
establish a link between operations
and profitability, the ROC combines
disparate operations and provides
assurance and governance functions
in a synergistic manner. It enables
service providers to monitor and
control the entire revenue chain,
identify revenue risks, resulting in
increased margins, greater customer
satisfaction, proactive management
and reduced capex.
Subex BSS/OSS Portfolio
- Revenue Operations Center
REVENUE ANALYTICS
COST ANALYTICS
NETWORK ANALYTICS
ROC Revenue Assurance
ROC Partner Settlement
ROC Asset Assurance
ROC Fraud Management
ROC Route Optimization
ROC Data Integrity Management
ROC Credit Risk Management
ROC Cost Management
ROC Capacity Management
MANAGED SERVICES
SaaS (SOFTWARE AS A SERVICE)
CONSULTING SERVICES
Revenue
H34,449
Lakhs
2013-14
EBIDTA
H6,999
Lakhs
2013-14
Employees*
Global patents*
860
16
(eight granted,
eight pending)
Global
customer base*
200
* As on 31st March, 2014
Annual Report 2013-14
3
Operational Highlights, 2013-14
.
8
7
8
8
4
.
7
4
1
3
3
.
9
4
4
4
3
.
3
6
0
4
1
4
2
0
4
.
9
9
9
6
.
9
1
5
3
.
.
8
0
6
5
-
6
1
2
-
.
4
8
1
3
.
.
4
9
9
5
-
.
1
6
1
1
-
7
7
8
2
.
4
1
2
1
.
1
3
0
2
.
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
Revenue
EBIDTA
(H crore)
(H crore)
Profit
before
tax
(H crore)
Post-tax
profit
(H crore)
EBIDTA
margin
(%)
4
Subex Limited
1
5
6
.
.
8
0
8
1
-
7
3
3
-
.
3
5
8
8
.
7
1
9
-
.
9
6
6
4
.
9
2
4
.
7
2
6
-
.
4
2
1
-
.
7
2
1
.
1
4
0
.
2
7
0
.
9
5
4
.
0
4
4
-
.
0
7
0
-
.
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
PAT
margin
(%)
Cash
profit
(H crore)
ROCE
(%)
ROGB
(%)
Earnings
per
share
(H)
Annual Report 2013-14
5
w
e
i
v
e
r
s
’
O
E
C
d
n
a
r
o
t
c
e
r
i
D
g
n
i
g
a
n
a
M
Dear shareholders,
The global telecom industry is one of the most
rapidly-evolving and fastest growing industries
the world over. This dynamic sector is marked
by the introduction of new technologies, new
services and new products, making it necessary
for service providers to possess cutting-edge
technologies, knowledge and experience.
Continued connectivity demands growth, persisting security
challenges warran service innovation, representing
some of the biggest trends catalyzing the global
telecommunications industry.
A recent GSMA report indicates that the
However, at a time of shrinking
margins and reduced average
revenue per user (ARPU),
operators are recognizing the
need for capex optimization.
A recent study by Ovum
indicates that operators could
be wasting up to 20% of their
network capex each year. At
the crux of the problem is
the unfortunate reality that
operators have a limited
visibility of what assets and
inventory they already own,
telecom industry is gearing to meet the
and how these assets are being
ever-increasing demand by consumers for
used. The need of the hour is
ubiquitous connectivity. The number of
commercially-available LTE networks is
a solution that provides them
actionable intelligence in near
forecast to increase to more than 500 in 128
real-time for all their network
countries over the next four years and almost
assets that facilitates in capex
four billion mobile broadband connections
optimization.
are expected to be added globally going
forward to 2020. In other words, the rate
of growth in data traffic is likely to outpace
the growth in mobile connections over the
foreseeable future.
In the area of business
optimisation, the concern for
operators has been around
maximizing value out of their
BSS investments. A recent
To support this growth, telecom
KPMG report indicates that a
operators have made huge
shortage of skilled staff and
capital investments
an absence of automation
exceeding US$
1 trillion and
this number is
expected to
increase to
US$ 1.7
tools are some of the reasons
preventing operators from
making the most of their
BSS systems. For operators,
the most effective way to
overcome these challenges is
trillion by
to engage in outcome-based
2020.
Managed Services, which will
not only complement their
existing BSS functions but also
bring to the table industry-best
practices.
Subex Limited
Subex is among select global
provider, Subex leveraged
Company’s initial projects have
telecom service providers
its rich experience of over
yielded superior customer
working at the core of
emerging technologies
– constantly innovating,
customising, delivering and
providing industry-leading
300 implementations across
value. Going forward, it is
multiple geographies covering a
expected that this segment
diverse range of customers. This
would contribute a significant
translated into a strong recall,
portion of annual revenues over
resulting in client accretion
the foreseeable future.
solutions to customers.
in a weak market and the
Subex’s positioning
Over the last 20 years,
Subex has helped telecom
clients adapt with speed
to change while enhancing
competitiveness. As
technologies continue to
evolve rapidly, Subex is
comfortably positioned to take
its business ahead through
cutting-edge solutions, marking
the start of the Company’s next
growth phase in an exciting
journey.
As a prominent telecom
Business and Operations
Support Systems (B/OSS)
Subex introduced the
network analytics
solution suite to
facilitate substantial
capex reduction for
telecom operators.
ability to report a reasonable
performance even at a time
of sectoral weakness. Ever
since our entry into the world
of telecom software a decade
ago, we have continuously
evolved our technology and
revenue model. The result has
been an ever-expanding set
of products and continuing
innovation on every front,
covering technology, products
and delivery.
Subex introduced the
network analytics solution
suite to facilitate substantial
capex reduction for telecom
operators. Asset Assurance,
Data Integrity Management
and Capacity Management
are the three key components
of the solution suite. These
components moderate capex,
discover devices and logical
services in diverse network
environments, engage
analytical functions to provide
actionable intelligence, forecast
scenarios and estimate their
impact on network capacity, in
turn helping CSPs plan capacity
investments better. Subex is
a pioneer in this space; the
Subex is also a key player in
the area of Managed Services.
While operators focus on their
core services, Subex takes
care of the support services
by not only providing software
solutions but also allocating
resources to stabilize and
operate services. This helps in
two ways – it increases Subex’s
share of the customer’s wallet
and provides the Company
with assured revenue visibility
through multi-year contracts.
Subex’s FY14 financial
performance:
A 10.64% growth in
revenues
A 77.7% increase in EBIDTA
A 110.44% growth in profit
after tax (y-o-y)
License & Implementation
at 40%, Managed Services at
27%, Support at 33% of the
total revenue
Subex continues to enjoy
thought leadership in core
areas of Revenue Assurance,
Fraud Management and Partner
Settlement. Continued focus
on product upgradation and
Annual Report 2013-14
7
customisation will evolve products
Business Service Innovation. These
around customer needs and evolving
industry recognitions are testimony
technologies. Going forward, I expect
these initiatives will lead to significant
growth and enhanced value in the
of our sustained focus on product
innovation and strategic growth
areas like ROC Asset Assurance and
hands of our shareholders.
Managed Services. We will strive hard
Message to shareholders
I am pleased to share that with
your strong support, internal
transformation, currency gains and
continued success in managed
services business, we reported a
good performance in FY14 with an
to continue to invest in improving our
solutions to meet the dynamic needs
of the telecom industry.
India Ratings & Research Pvt. Ltd.
accorded Subex an Investment
Grade rating in respect of our bank
borrowings.
improvement in EBITDA of 77.7% and
With a clear prioritization of focus
operating margins of 79% compared
areas for Subex 2.0, we are now
to last year. Our revenues were at
H34,005 lakhs (US$ 58.0 million), up
by 10.64% YoY from H30,734 lakhs
(US$ 57.2 million) and for the quarter
at H8,541 lakhs (US$ 14.20 million).
License & Implementation were at
working on an operating plan for
next three years even as we focu
on delivering a strong 2014-15. As
the industry continues to focus on
enhanced efficiency and reduced
capital expenditure, the prospects of
40%, Managed Services at 27% and
a company like Subex continue to be
Support at 33% of the total revenue
brighter than ever, indicating better
for the year. During the year, we
prospective performance.
competed hard and won key accounts
globally, which will provide impetus to
our growth journey.
I am confident that the foundation of
the business that we collectively re-
created in 2013 will provide us with a
Our Bangalore and London offices
launching pad to create a new Subex.
were certified for ISO 27001
certificate; we were jointly awarded
the prestigious GTB Innovation
Award 2014 along with Telstra for
Regards,
Surjeet Singh
Managing Director & CEO
With a clear
prioritization of focus
areas for Subex 2.0, we
are now working on an
operating plan for next
three years even as
we focus on delivering
a strong 2014-15. As
the industry continues
to focus on enhanced
efficiency and reduced
capital expenditure,
the prospects of a
company like Subex
continue to be brighter
than ever, indicating
better prospective
performance.
8
Subex Limited
Key competitive strengths
Experienced: The Company
Widespread: The
possesses more than 20
years of experience in
the telecom industry; the
key management team
possesses more than 15
Company has more than
300 installations across
70 countries, reducing
its geographic revenue
Comprehensive: The
Company transformed from
a mere license provider
into a complete solutions
provider of managed
concentration and catering
services, imparting training
person-years of aggregate
to a diverse user base.
to CSP employees.
experience.
Pioneering: The Company
pioneered the asset
assurance model, which
analyses asset use and
effectiveness leading to
enhanced capex efficiency.
Intellectual capital: The
Company possesses 16
patents across the globe
(eight approved and eight
pending).
Localized domain
knowledge: The
Company’s presence in
diverse geographies has
helped it acquire localized
consumer insights leading
to the development of
customized solutions.
Product portfolio: Subex’s product portfolio powers the ROC and
best-in-class solutions like revenue assurance, fraud management,
Low-cost: All the R&D,
product development
asset assurance, capacity management, data integrity management,
and engineering activities
credit risk management, cost management, route optimization and
partner settlement.
are carried out from
the Company’s India
Development Centre,
resulting in a low-cost cum
high-quality advantage.
Annual Report 2013-14
9
Q. How would you evaluate the performance
of the Company during the year under
review?
A. Analytics is an integral part of Subex’s business and
capex optimization product offering. Operators, today, are
sitting on a huge pile of data regarding their customers, but
are handicapped by the inability to make use of it. This has
created a world of opportunity for the Company to come
with solutions that analyses these data near real-time for
our customers. Our ROC solution suite harnesses operational
data, transforms it into actionable intelligence and facilitates
business decision. It helps operators solve business problems
as diverse as revenue assurance, fraud detection, asset
management, capacity management, data discovery and
reconciliation and churn reduction.
Looking at the numbers below, we can confidently say that
the last FY has been a phase of stabilized growth for us:
We grew our product revenue 10.64% from H30,734 lakhs
in 2012-13 to H34,005 lakhs in 2013-14
We reported positive EBIDTA for two consecutive years
Our EBIDTA grew 77.7% from H4,882 lakhs in 2012-13 to
H8,678 lakhs in 2013-14
We strengthened our operating profit
ex-forex 79% from H4,455.00 lakhs in
2012-13 to H7,978 lakhs in 2013-14
Our positive numbers validate that we have been able to
innovate and maintain foresight into the industry’s roadmap.
Q. What helped revive the optimism?
A. There are multiple aspects that helped improve
our performance. Firstly, we remained transparent in
communicating our financial stability, the last two years,
which helped stakeholders appraise our operational
consistency.
Secondly, we were able to build the foundations for the next
level of growth, which has begun to reflect in our numbers.
The impact of the global financial crisis and saturation of
telecoms markets across the globe has compelled operators
and investors to look into more profitable revenue streams
such as mobile content and applications. Moderate to large
carriers today have network investments after depreciation
and amortization in excess of US$ 50- 100 billion. With
constant changes in technology, these networks are
expanding at a feverish pace. Annual network spending at
“Subex has created
a robust foundation
for an exciting
future.”
Interview with Mr. Vinod Kumar,
Chief Operating Officer
QA&
10
Subex Limited
these operators is commonly in the
range US$ 0.5-2 billion.
To address this need of network
capex management, Subex introduced
the industry’s first comprehensive
programme, ROC Asset Assurance that
provides CSPs with the ability to save
millions of dollars in network capex
along with helping discover, recapture
and re-deploy stranded and unutilized
assets.
We are also a key player in offering
managed services where the contract
size is bigger and annuity-based.
The result is that we registered a
significant growth in average contract
sizes over the last year, strengthening
our margins.
Thirdly, we implemented SOPs and
provided resources easily accessible
to start new projects. We have
also trained our personnel better
and located them into our support
organization and assigned them on
three-month projects. The increase in
efficiency generated a 25% increase
in EBITDA. Our operating cash flow
was H11.5 million in 2013-14.
Q. What made Subex win
large contracts?
A. A look-back at all the large
contracts that we have won last year
indicates that these wins have been
a result of multiple factors. Some of
these factors are as straight forward
as Subex’s brand value while others
are much complex like deciphering
market needs and appropriate
packaging and positioning of our
offerings.
First and foremost, Subex’s record
of more than 300 installations across
70 countries carries a lot of value
while pursuing large deals. These
numbers represent a rich insight into
consumer behaviour across global
telecom markets, making it possible
to emerge as a preferred vendor for
operators.
The strength and proven ability
of our ROC solution suite has also
been a great influencer in such deals.
Our offerings in the areas of Fraud
Management and Revenue Assurance
are the most comprehensive in the
market and our newer solutions like
Asset Assurance address specific
issues plaguing telecom operators
currently. The easily demonstrable
value delivery and ROI for operators
through our solutions has been the
key factor in helping us pocket many
large deals.
Managed Services contracts are
usually large in size and are more
preferable owing to the recurring
nature of revenues involved. From
an operator’s perspective as well,
there is a clear need for Managed
Services due to higher value delivery.
Realizing this win-win situation for
both the customer and ourselves,
we have significantly strengthened
our Managed Services offering. We
now have a range of flexible and
scalable engagement options that
add both strategic and tactical value
to operators’ business. Many of our
large wins were for Managed Services
contracts and today, around 27% of
our revenues are derived from this
area.
Innovation and forward thinking
have always been a part of Subex’s
culture and this can take the credit for
some large wins in untapped/nascent
domains. While the telecom industry
embraced the increasing CAPEX
investments, we delved deeper and
understood that the need for CAPEX
optimization would soon be realized.
Long before other players in the
market envisioned a similar solution,
we had already established ourselves
as the pioneers in Asset Assurance
in the industry. From an operator’s
perspective, this was the need of the
hour and was well received in the
market.
Q. How are you poised to
grow in the coming years?
A. We believe that companies that
thrive in difficult market conditions
are the ones that go a long way ahead.
Subex has been on course so far with
respect to our growth strategy and we
will continue to focus on executing
our short and long term plans. We
have always been one of the top
players in the BSS market and now
have a strong foothold in the Asset
Assurance space by virtue of being
the prime mover. All our solutions
are constantly evolving to address
changing market needs and we are all
set to reinforce our position at the top.
Emerging markets will continue to
receive a lot of attention as there
still exists a huge potential for BSS in
that market. We understand the need
of CAPEX optimization in developed
markets and our efforts in these
markets will be concentrated around
related solutions.
The focus areas for Subex 2.0 are clear
and a solid plan for the next 3 years
is being worked upon. Our positive
performance in 2014 has given the
required impetus and the outlook
for the next FY looks bright. With the
industry’s focus pinned on increasing
efficiency and reducing CAPEX, the
prospects of Subex continue to
be very positive, indicating better
performance ahead. Our commitment,
achievements and innovation has
given us a perfect launching pad to
excel in the coming financial year.
Annual Report 2013-14
11
12
Subex Limited
Innovative product
offerings
At Subex, effective sustainability
is derived from technological
contemporarisation within a
dynamic industry environment.
The Company’s ROC Asset Assurance is a one-
of-its kind industry solution that reduces capex
while improving network efficiency. This solution
counters low visibility in understanding asset
disposition, poor data integrity, eroding asset
contribution and the need to counter governance
absence. Subex’s ROC Asset Assurance solution
also extends beyond analytics to drive changes
in critical business processes, enhancing data
accuracy-supporting capital decisions, idle
equipment tracking and utilization enhancement
The Company was among the first to
commence data analytics for telecom
players, managing large amounts of data with
corresponding management tools
The ROC facilitates profitable growth through
coordinated operational control
The Company was the first to develop an
operator /vendor risk-reward share model for
fraud management
As CSPs evolve their technology, it becomes
imperative for them to upgrade existing modules.
By catering to their needs, the Company aims to
maximise revenues.
Annual Report 2013-14
13
14
Subex Limited
Growing Managed
Services
Business sustainability is derived
from increasing the proportion
of annuity income, providing
assured revenue visibility over the
foreseeable future.
Subex continues to be one of the leading
players in the business optimisation space with
over 300 customers trusting Subex products for
their B/OSS needs.
Subex possesses extensive experience in
executing some of the largest, complex, multi-
million dollar, multi-year-long managed services
programs across the world. CSPs of varying tiers
and solution portfolios benefited in the form of
efficient, streamlined operations and reduced
costs, thanks to Subex’s sound business process
knowledge in the Managed Services arena.
Subex’s expertise in Managed Services stems
from an entrenched experience of functional
processes and operations and their implications
on the CSP business.
Subex’s commitment to improve operations
does not end with day-to-day delivery of
Managed Services; on the contrary, it translates
into incremental efficiency through the review of
organisational design and rightsizing, analysing
and automating processes to guarantee maximum
B/OSS product utilisation.
Result: The Company has progressively increased
the share of managed services, which now
accounts for 27% of the revenue. This delivery
model is fast emerging as a key differentiator
leading to a considerable increase in contract
sizes while maintaining healthy profit margins.
Going forward, the Company expects a
considerable part of the revenue to be derived
from Managed Services.
Annual Report 2013-14
15
Board of Directors
Sanjeev Aga
(Independent Director)
Surjeet Singh
(Managing Director & CEO)
Anil Singhvi
(Independent Director)
Subash Menon
(Non-executive Director)
Karthikeyan Muthuswamy
(Nominee Director)
16
Subex Limited
Executive Leadership Team
Surjeet Singh
(Managing Director & CEO)
Vinod Kumar
(Chief Operating Officer)
Ganesh K.V.
(Chief Financial Officer, Global Head-
Sekharan Y. Menon
(Chief People and Administrative Officer)
Legal And Company Secretary)
Shankar Roddam
(Market Head-Sales and Client
Relations-Emerging Markets)
Ashwin Chalapathy
(Global Head-Portfolio Management,
Pankaj Parmar
(Global Head, Delivery and
Managed Services and Consulting)
Client Servicing)
David Halvorson
(General Counsel)
Charles E. Crenshew
(Market Head-Sales and Client
Relations-Americas)
Annual Report 2013-14
17
Subex Charitable Trust (SCT)
Updates 2013-14
Strong education focus with SCT believing in empowerment through education
Nurture Merit
Scholarship scheme to support the education of
economically challenged students
Support for 30+ students from rural areas
Scholarships amounting to approximately
H1,20,000
Fund for Anand Marg School
Support to Anand Marg School, Kithandur
Village, Kolar District
This is a school for underprivileged children
from in and around Kithanur village
It comprises eight sections with seven teaching
staff and approximately 120 students
Footwear donation
Donated footwear to 207 students of
Kaggadasapura Government Primary School who
otherwise would come barefoot to school
Providing scholarships to students referred by
fellow Subexians
Organizing periodic old clothes / toys / books
collection drives and distributing them to needy
organizations
18
Subex Limited
STARS - Long Service Awards
Employee Name
Akshatha Kashinath
Suvarna
Alan Forbes
Anandakumar K
Annapoorna R
Arun L
Ashley Hill
Ashwin Chalapathy
Ashwin Menon
Bogdan Zadzilko
Channakeshav Joshi
Chetan P Herkal
Cigy Mathen
David Ross
Dipak Kumar Mondal
G Santosh Kumar Reddy
Graham Ellis
Harish H S
Harsha Burly
Harsha S
Hemanshu Dhingra
Ian Thornton
Jeeson Thekkekara
Jithu Thomas
John Taylor
Kalpana T K
Manu G Nair
Mark Jenkins
Martin Bedford
Mithun Josalyn Gonsalvez
Mohan Kumara P E
Nandagopal R
Nataraja Prathab D
Niranjan B R
Nithin Gangadharan
Om Prakash Agrawal
Parthiban G Pillai
Pavan Kumar GV
Prabhu H
Service Years
Employee Name
Service Years
Prakash S
Praveen Kulkarni
Purushotham Reddy A
Rahul Joseph Alexander
Rajesh Abraham
Rakesh M S
Ramesh S
Ravikanth N
Reji Kumar R V
Roddam Naga Shiva
Shankar
Rohith P
Sandeep Jain
Sandeep Naganur
Santhosh Vellore
Rajendramudaliar
Satyanarayana K
Sham Ummer Kallarakkal
Shankar Nag H S
Siva Koteswara Reddy
Sivannarayana Reddy
Soorej M V
Sreedhanya R
Srihari U S A
Srinath S
Subeer Mitra
Sudarshan T S
Sudha Yeramati
Swagato Patra
Syed Rehan Sajjad
Teresa Orme
Tony Adolphus
Veeresh Kanavalli
Venkatesh N
Chethan Kumar Rai D
James MacEwan
Mohammed Muzammil
7
7
10
15
10
7
7
7
7
10
7
10
7
10
7
7
10
15
7
7
7
7
7
7
7
7
7
10
7
10
10
7
7
15
7
7
7
7
7
10
10
7
7
15
7
7
7
10
7
7
40
7
7
7
7
10
7
10
35
7
7
10
7
7
7
7
10
7
7
7
10
7
7
Annual Report 2013-14
19
Directors’ Report
To
The Members of Subex Limited
Your Directors have pleasure in presenting the Twentieth Annual Report of the Company on the business and operations
together with the audited results for the year ended March 31, 2014.
Financial results
Total Revenue
Total Revenue
Profit/(Loss) Before Interest, Depreciation, Exceptional Items
Profit/(Loss) Before Interest, Depreciation, Exceptional Items
& Taxes
& Taxes
Interest, Depreciation & Amortization
Interest, Depreciation & Amortization
Profit/(Loss) before Exceptional items & tax
Profit/(Loss) before Exceptional items & tax
Exceptional Items
Exceptional Items
Profit/(Loss) before tax
Profit/(Loss) before tax
Provision for taxes
Provision for taxes
Profit/(Loss) after tax
Profit/(Loss) after tax
Discontinuing Operations:
Discontinuing Operations:
Profit/(Loss) from discontinuing operations before tax
Profit/(Loss) from discontinuing operations before tax
Tax expenses of discontinuing operations on ordinary
Tax expenses of discontinuing operations on ordinary
activities attributable to discontinuing operations
activities attributable to discontinuing operations
Profit/(Loss) after tax
Profit/(Loss) after tax
APPROPRIATIONS
APPROPRIATIONS
Interim Dividend Preference Dividend
Interim Dividend Preference Dividend
Dividend proposed on equity shares
Dividend proposed on equity shares
Provision for tax on Dividends
Provision for tax on Dividends
Transfer to General Reserve
Transfer to General Reserve
Surplus/(Deficit) carried to Balance Sheet
Surplus/(Deficit) carried to Balance Sheet
Results of Operations
During the financial year ended March 31, 2014, the total
revenue on a consolidated basis was H34,449.28 Lakhs. The
Company has during the year under review incurred a loss
of H1,161.27 Lakhs as against loss of H5,994.71 Lakhs in the
previous year.
20
Subex Limited
Amount in H Lakhs
Amount in H Lakhs
Consolidated
Consolidated
Standalone
Standalone
2013-14
2013-14
2012-13
2012-13
2013-14
2013-14
2012-13
2012-13
34,449.28
34,449.28
7,215.96
7,215.96
30,823.24
30,823.24
4,623.45
4,623.45
29,669.48
29,669.48
4,680.87
4,680.87
26,677.95
26,677.95
3,338.21
3,338.21
6,953.70
6,953.70
262.26
262.26
-
-
262.26
262.26
936.38
936.38
(674.12)
(674.12)
5,558.63
5,558.63
(935.18)
(935.18)
3,069.92
3,069.92
(4,005.10)
(4,005.10)
386.24
386.24
(4,391.34)
(4,391.34)
5,990.14
5,990.14
(1,309.27)
(1,309.27)
1,497.04
1,497.04
(2,806.31)
(2,806.31)
146.57
146.57
(2,952.88)
(2,952.88)
5,131.07
5,131.07
(1,792.86)
(1,792.86)
1,663.56
1,663.56
(3,456.42)
(3,456.42)
-
-
(3,456.42)
(3,456.42)
(478.71)
(478.71)
(8.44)
(8.44)
(1603.37)
(1603.37)
-
-
(487.15)
(487.15)
(1603.37)
(1603.37)
-
-
-
-
-
-
(1,161.27)
(1,161.27)
-
-
-
-
-
-
-
-
(5,994.71)
(5,994.71)
-
-
-
-
-
-
-
-
(2,952.88)
(2,952.88)
-
-
-
-
-
-
-
-
-
-
(3,456.42)
(3,456.42)
On standalone basis, the total revenue stood at H29,669.48
Lakhs. The loss for the financial year 2013-14 was H2,952.88
Lakhs as against loss of H3,456.42 Lakhs in the previous year.
The Directors have not proposed any dividend to be paid for
the financial year 2013-14.
Business
Your Company is a leading global provider of Business
Support Systems (BSS) that empowers Communications
Service Providers (CSPs) to achieve competitive advantage
through Business Optimisation - thereby enabling them to
improve their operational efficiency to deliver enhanced
service experiences to subscribers.
Company’s pioneering platform, the Revenue Operations
Centre
(ROC®) brings together business
intelligence,
domain knowledge and workflow support. ROC acts as
the underpinning solution on which telcos can build their
processes to achieve several objectives like, lower cost,
higher margin, higher revenue etc. Further, Subex offers
Managed Services around its products which enable the
operators to take advantage of our deep domain expertise
The Company pioneered the concept of a Revenue
to improve their operational efficiency.
Operations Centre (ROC®) – a centralized approach that
sustains profitable growth and financial health through
Share Capital
coordinated operational control. Subex’s product portfolio
powers the ROC and its best-in-class solutions such as
revenue assurance, fraud management, asset assurance,
capacity management, data integrity management, credit
risk management, cost management, route optimization and
partner settlement. Subex also offers a scalable Managed
Services program with 30+ customers. Your Company has
been awarded the Global Market Share Leader in Financial
Assurance 2012 by Frost & Sullivan and has been the winner
of Pipeline Innovation Award 2013 in Business Intelligence
& Analytics; Capacity Magazine Best Product/ Service
2013. Subex has continued to innovate with customers and
have been jointly awarded the Global Telecoms Business
Innovation Award for 2012 with Idea Cellular for Managed
Services and in 2011 with Swisscom for Fraud Management.
The Company’s customers include 29 of top 50 operators
and 33 of the world’s 50 biggest telecommunications
service providers worldwide. The Company has more than
300 installations across 70 countries. Headquartered out of
Bangalore, India, your Company has sales and support offices
in the United States, UK, UAE, India, Singapore and Australia.
Commoditization of the industry is the largest threat that
telecom operators around the world are facing. This, coupled
with the need to roll out new products and services at regular
intervals, is proving to be a tough combination for the telcos.
Subex is well positioned to address the needs of the telecom
carriers and help them to overcome these challenges. The
As at March 31, 2014, the authorized share capital of the
Company was H497,00,00,000 (Rupees Four Hundred and
Ninety Seven Crores only) divided into 49,50,40,000 (Forty
Nine Crores Fifty Lakhs and Forty Thousand only) equity
shares of H10 (Rupees Ten only) each and 2,00,000 (Two
Lakhs only) preference shares of H98 (Rupees Ninety Eight
only) each.
As at March 31, 2014, the paid-up share capital of the
Company stood at H166,63,99,620 (Rupees One Hundred
Sixty Six Crores Sixty Three Lakhs Ninety Nine Thousand
Six Hundred and Twenty only) consisting of 16,66,39,962
(Sixteen Crores Sixty Six Lakhs Thirty Nine Thousand Nine
Hundred Sixty Two) equity shares of H10/- each.
Subsidiaries
Subex Technologies Limited
For the year ended March 31, 2014, Subex Technologies
Limited had NIL income, on a consolidated basis, as against
H2323.68 Lakhs last year and a net loss of H487.15 Lakhs as
against a net loss of H1603.37 Lakhs last year.
Pursuant to the demerger in 2007-08, Subex Technologies
Inc became a direct subsidiary of Subex Technologies
Limited.
Subex (UK) Limited
For the year ended March 31, 2014, the consolidated income
of Subex (UK) Limited was H32,380.87 Lakhs as against
Annual Report 2013-14
21
H32,152.02 Lakhs last year, and the net profit was H714.59
Lakhs as against a net profit of H584.37 Lakhs last year.
Subex (Asia Pacific) Pte Limited and Subex Inc are direct
subsidiaries of Subex (UK) Limited.
Subex Americas Inc
For the year ended March 31, 2014, the consolidated income
of Subex Americas Inc was H2812.88 Lakhs as against
H2,728.40 Lakhs last year, and Net Profit was H66.74 Lakhs
as against a loss of H1,516.70 Lakhs last year.
Subex Azure Holding Inc., is a wholly owned subsidiary of
Subex Americas Inc. There were no transactions during the
year under review.
Compliance under section 212
The Ministry of Corporate Affairs (MCA) has vide General
Circular No: 2/2011 dated February 8, 2011 and General
Circular No: 3/2011 dated February 21, 2011 granted a
general exemption stating that the provisions of section
212 of the Companies Act, 1956 in relation to subsidiaries’
accounts shall not apply subject to compliance of certain
conditions. In accordance with the said circulars, the Board
of Directors of the Company has in its meeting held on May
29, 2014, given the consent for not attaching the balance
sheet of the subsidiaries concerned alongwith the balance
sheet of the Company. However, financial information of
the subsidiary companies, as required to be provided by the
said circulars, are disclosed in Note 39 to the Consolidated
Financial Statements. The Company will make available
the annual accounts of the subsidiary companies and
the related information to any investor of the Company
who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open
for inspection by any investor at the Registered Office of the
Company. The Consolidated Financial Statements presented
issued US$127,721,000 5.70% Secured Convertible Bonds
with a maturity period due July 2017 (“FCCBs III”). Principal
amount of US$ 36,321,000 were mandatorily converted and
US$ 3,250,000 million out of FCCBs III were subsequently
converted into equity shares. Pursuant to the mandatory
and subsequent conversions, US$ 88,150,000 is currently
outstanding under FCCBs III.
The maturity period of the un-exchanged FCCBs I worth
US$ 1,000,000 and the un-exchanged FCCBs II worth US$
1,400,000 was extended to March 2017.
Employee Stock Options Schemes
Your Company has introduced various Stock Option plans for
its employees. Details of these are given below.
Employee Stock Option Plan-1999 (ESOP-I)
This scheme was instituted during 1999 and managed by
Subex Foundation with a corpus of 120,000 equity shares
initially. Since the scheme was formulated prior to the
promulgation of Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, the Company has
discontinued the scheme.
Employee Stock Option Plan-2000 (ESOP-II)
During 1999-2000, your Company established the Employee
Stock Option Plan 2000, under which options have been
allocated for grant to the employees of the Company and
its subsidiaries. The Company has obtained in-principle
approval for listing up to a maximum of 8,83,750 equity
shares to be allotted pursuant to exercise of options granted
under the scheme. This scheme has been formulated in
accordance with the Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999.
by the Company include financial results of its subsidiary
In accordance with the scheme, a Compensation Committee
companies.
Foreign Currency Convertible Bonds (FCCBs)
has been formed, which grants options to the eligible
employees. The options are granted at a price, which is not
less than 85% of the average of the closing price of the
As on March 31, 2014, the Company had outstanding FCCBs
equity shares during the 15 trading days preceding the date
aggregating to US$ 1,000,000 under its US$ 180,000,000
2% Convertible Unsecured Bonds (“FCCBs I”) and US$
1,400,000 under its US$ 98,700,000 5% Convertible
Unsecured Bonds (“FCCBs II”). In July 2012, pursuant to
the exchange offer of FCCBs I and FCCBs II, the Company
of grant on the stock exchange where there is highest trading
volume during this period. Unless otherwise resolved, the
options granted vest over a period of 1 to 4 years and can be
exercised over a period of 3 years from the date of vesting.
22
Subex Limited
During the year 2008-09, the Company amended the ESOP
2000 scheme by inclusion of provisions allowing employees
to voluntarily surrender their vested/unvested options at
any time during their employment with the Company.
Employee Stock Option Plan-2008 (ESOP-IV)
During 2008-09, your Company instituted the Employee
Stock Option Plan-2008 vide approval of shareholders
through the postal ballot mechanism. A corpus of 20,00,000
During the year 2011-12, the employees voluntarily
options has been created for grant to the eligible employees
surrendered 241,012 stock options under ESOP 2000
under the scheme. The Scheme has been formulated in
scheme. Also, the Company issued equivalent stock options
accordance with the Securities and Exchange Board of
to the aforesaid eligible employees under ESOP 2005 and
India (Employee Stock Option Scheme and Employee Stock
ESOP 2008 scheme.
The tenure for grant of stock options under ESOP 2000
scheme has expired and the Company is only administering
the outstanding stock options issued under the scheme.
Employee Stock Option Plan-2005 (ESOP-III)
Purchase Scheme) Guidelines, 1999. The Company has
obtained the requisite in-principle approvals from the stock
exchanges for the purpose of listing of equity shares arising
out of exercise of options granted under the scheme.
The Compensation Committee grants options to the eligible
employees in accordance with the provisions of the scheme.
Under this scheme, an initial corpus of 5,00,000 options
The options are granted at a price, which is not less than
was created for grant to the eligible employees, with each
85% of the average of the closing price of the equity shares
option convertible into one fully paid-up equity share of
H10/-. This scheme has been formulated in accordance
with the Securities and Exchange Board of India (Employee
during the 15 trading days preceding the date of grant on the
stock exchange where there is highest trading volume during
this period. Unless otherwise resolved, the options granted
Stock Option Scheme and Employee Stock Purchase
vests over a period of 1 to 4 years and can be exercised over
Scheme) Guidelines, 1999. The corpus of the scheme was
a period of 3 years from the date of vesting.
further enhanced by 15,00,000 options during the financial
year 2007-08. The Company has obtained the requisite
in-principle approvals from the stock exchanges for the
purpose of listing of equity shares arising out of exercise of
options granted under the scheme.
The Compensation Committee grants options to the eligible
employees in accordance with the provisions of the scheme.
The options are granted at a price, which is not less than
85% of the average of the closing price of the equity shares
during the 15 trading days preceding the date of grant on the
stock exchange where there is highest trading volume during
this period. Unless otherwise resolved, the options granted
vest over a period of 1 to 4 years and can be exercised over
a period of 3 years from the date of vesting.
During the year 2011-12, the employees voluntarily
surrendered 10,19,583 stock options under ESOP 2008
scheme. Also, the Company issued equivalent stock options
to the aforesaid eligible employees under ESOP 2008
scheme.
Additional information as at March 31, 2014 required
to be disclosed as per Securities and Exchange Board of
India (Employee Stock Option Scheme and Stock Purchase
Scheme) Guidelines, 1999 is given as Annexure I to this
report.
Corporate Governance
Your Company strongly believes that the spirit of Corporate
Governance goes beyond the statutory form. Sound
During the year 2008-09, the Company amended the ESOP
Corporate Governance is a key driver of sustainable corporate
2005 scheme by inclusion of provisions allowing employees
growth and long-term value creation for the stakeholders
to voluntarily surrender their vested/unvested options at
and protection of their interests. Your Company endeavors
any time during their employment with the Company.
to meet the growing aspirations of all stakeholders including
During the year 2011-12, the employees voluntarily
surrendered 9,64,969 stock options under ESOP 2005
scheme. Also, the Company issued equivalent stock options
to the aforesaid eligible employees under ESOP 2005
scheme.
shareholders, employees and customers. Your Company is
committed to maintaining the highest level of transparency,
accountability and equity in its operations. Your Company
always strives to follow the path of good governance through
a broad framework of various processes.
Annual Report 2013-14
23
Your Company has complied with all the requirements as per
Auditors
Clause 49 of the listing agreement of the Stock Exchanges,
as amended from time to time. The Auditor’s certificate on
compliance with Clause 49 is included in the section on
Corporate Governance in this Annual Report. In addition,
your Company has documented its internal policies in line
with the Corporate Governance guidelines. The Management
Discussion & Analysis of the financial position of the
Company has been provided as a part of this report.
Directors
As per Article 87 of the Articles of Association of the Company
read with the provisions of Section 152 of the Companies
Act, 2013 (corresponding to Section 255 and Section 256 of
the Companies Act, 1956), atleast two-third of the Directors
shall be subject to retirement by rotation. One-third of such
Directors must retire from office at each Annual General
Meeting of the shareholders and a retiring director is eligible
M/s. Deloitte Haskins & Sells (ICAI registration number
008072S), the Statutory Auditors of the Company retire at
the ensuing Annual General Meeting. The Statutory Auditors
have communicated their willingness to accept office, if re-
appointed and have confirmed that they are eligible as per
section 141 of the Companies Act, 2013 to be appointed as
statutory auditors of the Company and are not disqualified
to hold office as such in terms of the said section 141.
Pursuant to the provisions of section 139 of the Companies
Act, 2013, M/s. Deloitte Haskins & Sells can be appointed
as the auditors of the Company upto a period of 3 years ie.
upto the conclusion of the 23rd Annual General Meeting of
the Company. However, it is proposed to the shareholders to
appoint M/s. Deloitte Haskins & Sells to hold office from the
conclusion of 20th Annual General Meeting of the Company
up to the conclusion of the 21st Annual General Meeting of
for re-election. Accordingly, Mr. Karthikeyan Muthuswamy
the Company.
retires by rotation and being eligible, has offered to be re-
appointed at the ensuing Annual General Meeting.
Fixed Deposits
Mr. Surjeet Singh was re-appointed as the Managing Director
& CEO of the Company at the Board Meeting held on October
30, 2013 for a period of one year from October 5, 2013
to October 4, 2014. In accordance with the provisions of
Sections 198, 269, 309 read with Schedule XIII and other
applicable provisions of the Companies Act, 1956, the said
re-appointment as Managing Director & CEO is being placed
before the Members for their approval at the ensuing AGM.
Your Company has not accepted any deposits from the
public.
Particulars of Employees
The particulars of employees required under Section 217(2A)
of the Companies Act, 1956 and Companies (Particulars
of Employees) Rules, 1975 as amended by Companies
(Particulars of Employees) Amendment Rules, 2011, read
with General Circular No. 23/2011 dated May 3, 2011
Pursuant to the provisions of section 149 of the Companies
issued by MCA, are given at Annexure II appended hereto
Act, 2013, it is proposed to the members of the Company to
and forming part of this report. In terms of Section 219(1)
appoint Mr. Anil Singhvi and Mr. Sanjeev Aga, Independent
(b)(iv) of the Companies Act, 1956, the report and accounts
Directors of the Company to hold office from the conclusion
are being sent to the shareholders excluding the aforesaid
of the 20th Annual General Meeting upto the conclusion of
annexure. Any shareholder interested in obtaining a copy
the 21st Annual General Meeting.
Audit Committee
The Audit Committee presently has 3 Directors as its
members viz. Mr. Anil Singhvi, Chairman, Mr. Sanjeev Aga and
Mr. Surjeet Singh. The role, terms of reference, the authority
and power of the Audit Committee are in conformity with the
requirements of section 292A of the Companies Act, 1956
and Clause 49 of the Listing Agreement. Further details of
the Audit Committee have been provided in the report on
Corporate Governance forming part of this Annual Report.
of the said annexure may write to Mr. Ganesh K V, Chief
Financial Officer, Global Head – Legal & Company Secretary
at the Registered Office of the Company.
INFORMATION UNDER SECTION 217(1) (e) OF THE COMPANIES
ACT, 1956 READ WITH COMPANIES (DISCLOSURE OF PARTICULARS
IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
A. Conservation of Energy
The operations of your Company are not energy-
intensive. However, significant measures are taken to
24
Subex Limited
reduce energy consumption by using energy-efficient
corporate entity into community service. The trust has been
computers and by the purchase of energy-efficient
set up to provide for welfare activities for under privileged
equipment. Your Company constantly evaluates new
and the needy in the society. The trust is managed by
technologies and invests to make its infrastructure
Trustees elected amongst the employees of the Company.
more energy-efficient. Currently your Company uses
During the year, the Trust has provided active support for
CFL fittings and electronic ballasts to reduce the power
education of economically challenged meritorious students,
consumption of fluorescent tubes. Air conditioners
donated footwear to Government School students, donated
with energy efficient screw compressors for central
baby diapers and milk powder to an orphanage, provided
air conditioning and air conditioners with split air
financial aid by way of payment of the water and electricity
conditioning for localized areas are used.
bills of a Centre which provides vocational training to
B. Technology Absorption, Adoption and
Innovation
Your Company has a strong R&D Division responsible
for developing technologies for its products in the
telecom domain. The Company holds several patents for
its technological innovations. The telecommunications
domain, in which your Company operates, is subject
to high level of obsolescence and rapid technological
changes. Your Company has developed inherent skills to
keep pace with these changes. Since software products
are the significant line of business of your Company, the
Company incurs expenses on product related Research
& Development on a continuous basis. These expenses
are charged to revenue under the respective heads and
are not segregated and accounted separately.
Foreign Exchange Earnings and Outgo
Your Company has over the years shifted its focus from
software services to software products. This has resulted
in substantial foreign exchange earnings as compared
destitute girls and organizing blood donation camps. A gist
of activities undertaken by the Trust has been provided as a
separate section in this Annual Report.
Human Resource Management
Working environment and organization’s culture plays a
key role in attracting right talents into any organization and
retaining them. Your Company continued with it’s focused
effort focus in maintaining such a great working environment
and organization culture that was built and developed over
a period of time, since it’s inception. All senior members of
your Company worked really hard and supported Human
Resource function in maintaining this.
During the year ended March 31, 2014, your Company
surged ahead on a lot of the initiatives that were launched
in the previous year. Continued infusion of fresh talent and
ongoing development and up-skilling of existing talent were
the critical focus areas. Online Learning Management System
called the Subex Academy, has been completely rolled
out. Your Company also refined the Subexians (Employee)
Engagement Programme, which is an extremely critical
to previous year. During the year 2013-14 total foreign
employee retention tool.
exchange inflow and outflow is as follows:
i)
Foreign Exchange earnings H27,867.41 Lakhs (Previous
Year H26,105.91 Lakhs)
ii) Foreign Exchange outgo H17,000.16 Lakhs (Previous
Year H15,079.66 Lakhs)
Note: The foreign exchange outgo is inclusive of the inter
company charges and the Previous Year’s figure have been
restated accordingly.
Corporate Social Responsibility - Subex
Charitable Trust
Subex Charitable Trust extends the outlook of Subex as a
Directors’ Responsibility Statement
In accordance with the provision of Section 217(2AA) of the
Companies Act, 1956, the Board of Directors affirms:
a)
that in the preparation of the annual accounts for the
year ended March 31, 2014, the applicable accounting
standards have been followed. Pursuant to, and in
accordance with, the approval of the Members and
the Hon’ble High Court of Karnataka to a proposal for
reduction of securities premium and capital reserve
obtained during 2009-10, the Company has utilized
the Business Restructuring Reserve for adjustment of
certain expenses/impairments. Such adjustment being
Annual Report 2013-14
25
at variance with applicable accounting standards,
d)
that the accounts for the year ended March 31, 2014
necessary disclosure has been made in the Notes to
have been prepared on a going concern basis.
the accounts in Standalone and Consolidated Financial
Statements.
b)
that the accounting policies have been selected and
applied consistently and it has 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, 2014 and of the loss of the Company for
the year ended on that date.
Appreciation/Acknowledgements
We thank our clients, vendors, investors and bankers for their
continued support during the year. We place on record our
appreciation for the co-operation and assistance provided
by the Central and State Government authorities particularly
SEZ authorities, Customs and Central Excise authorities,
Registrar of Companies, Karnataka,
the
Income Tax
department, Reserve Bank of India and various authorities
c)
that proper and sufficient care has been taken for
under the Government of Karnataka.
the maintenance of adequate accounting records in
accordance with the provision of the Companies Act,
1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
Your Directors also wish to place on record their deep
appreciation to Subexians at all levels for their hard work,
solidarity, co-operation and support, as they are instrumental
in your Company scaling new heights, year after year.
Karthikeyan Muthuswamy
Director
Mumbai, India
May 29, 2014
ANNExURE - I
For Subex Limited
Surjeet Singh
Managing Director & CEO
Mumbai, India
May 29, 2014
Additional Information as at March 31, 2014 as per Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999
Sl. No
Particulars
ESOP 2000
ESOP 2005
ESOP 2008
1. Net options granted as on March 31, 2014
2,40,678
8,76,389
5,67,518
Options granted during the year
-
-
-
2. Pricing formula
3. Options vested but not exercised as on March 31, 2014
As mentioned
As mentioned
As mentioned
earlier in the
earlier in the
earlier in the
report
2,975
report
report
7,09,638
4,98,483
4. Options exercised as on March 31, 2014
2,37,703
12,439
Options exercised during the year
5. Money realized by exercise of options during the year
6. The total number of shares arising as a result of exercise of
options during the year ended March 31, 2014
-
-
-
-
-
-
-
-
-
-
7. Options lapsed/cancelled/ surrendered as on March 31, 2014
9,95,894
49,62,529
17,66,019
26
Subex Limited
Sl. No
Particulars
Options lapsed/cancelled/ surrendered during the year
8. Variation of terms of options
9. No. of employees covered
10. Employee wise details of options granted during the year
under review to:
(i) Senior managerial personnel
(ii) other employee receiving a grant in the year of option
amounting to 5% or more of options granted during that
year
(iii) identified employees who were granted option, during
the year, equal to or exceeding 1% of the issued capital
(excluding outstanding warrants and conversions) of the
Company at the time of grant;
11. Diluted Earnings Per Share (EPS) pursuant to issue of shares on
exercise of option calculated in accordance with Accounting
Standard (AS) 20 ‘Earnings per share’
12. Where
the Company has calculated
the employee
compensation cost using the intrinsic value of the stock
options, the difference between the employee compensation
cost so computed and the employee compensation cost that
shall have been recognized if it had used the fair value of the
options.
The impact of this difference on profits and on EPS of the
Company is:
ESOP 2000
1,695
None
623
ESOP 2005
2,67,197
None
2,291
ESOP 2008
1,63,288
None
273
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13. Weighted-average exercise prices and weighted-average fair
Weighted-
Weighted-
Weighted-
values of options separately for options whose exercise price
average
average exer-
average
either equals or exceeds or is less than the market price of the
stock.
exercise price
is H67
cise price is
H30.78
exercise price
is H28.56
14. Description of the method used during the year to esti-
mate the fair values of options, including the following
weighted-average information :
i. risk-free interest rate
ii. expected life
iii. expected volatility
iv. expected dividends
v. market price on grant date
Karthikeyan Muthuswamy
Director
Mumbai, India
May 29, 2014
Refer Note 27 in Standalone Financial Statements
For Subex Limited
Surjeet Singh
Managing Director & CEO
Mumbai, India
May 29, 2014
Annual Report 2013-14
27
Report on
Corporate Governance
I. COMPANY’S PHILOSOPHY ON CODE OF CORPORATE
of the shareholders to information on the performance
GOVERNANCE
of the Company. The Company’s Corporate Governance
Corporate Governance is about commitment to values and
policies ensures, among others, the accountability of the
ethical business conduct. It is about how an organization is
Board of Directors and the importance of its decisions to
managed. Therefore situation, performance, ownership and
all its participants viz., customers, employees, investors,
governance of the Company are equally important as regards
regulatory bodies etc. Subex Code of Corporate Governance
to the structure, activities and policies of the organization.
has been drafted in compliance with the code of “Corporate
Consequently, the organization is able to attract investors,
Governance” as promulgated by the Securities and Exchange
and enhance the trust and confidence of the stakeholders.
Board of India (SEBI) in its meeting held on January 25, 2000
Subex Limited’s compliance with the Corporate Governance
guidelines as stipulated by the stock exchanges is described
in this section. The Company believes that sound Corporate
Governance is critical to enhance and retain investor’s trust.
Subex respects minority rights in its business decisions.
and amendments made thereto, from time to time.
II. BOARD OF DIRECTORS
As on March 31, 2014, the Board of Directors of Subex
Limited comprises 5 Directors out of which 1 is an Executive
Director, 1 is a Non-executive Director, 2 are Independent
The Company’s Corporate Governance philosophy is based
Directors and 1 is a Nominee Director.
on the following principles:
Details of the composition of the Board of Directors and their
Satisfy the spirit of the law and not just the letter of the
attendance and other particulars are given below. These
law
details reflect the position as at March 31, 2014 and as such
Be transparent and maintain high degree of disclosure
do not include details of changes in Directorships after the
levels
end of the financial year.
Communicate externally, in a truthful manner, about how
A. Composition and Category of Directors as on March 31,
the Company is run internally
Comply with the laws in all the countries in which the
Company operates
Subex is committed to good Corporate Governance practices.
Consistent with this commitment, Subex seeks to achieve a
high level of responsibility and accountability in its internal
systems and policies. Subex respects the inalienable rights
2014
Category
Independent Directors
Executive Directors
Non-Executive
Directors
Nominee Directors
Total
No. of Directors
2
1
1
1
5
%
40
20
20
20
100
28
Subex Limited
B. Attendance of Directors at the Board Meetings and the Last AGM and Details about Directorships and Membership in
Committees as on March 31, 2014
Director
Position
No. of
Board
Meetings
Held
No. of
Board
Meetings
Attended
Last AGM
Atten-
dance
No. of
Directorships
in Other
Companies
No. of Com-
mittees in
Which the
Director is
Chairman
No. of Com-
mittees in
which the
Director is a
Member
Mr. Surjeet Singh
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Karthikeyan
Muthuswamy#
Mr. Subash Menon
Managing
Director and Chief
Executive Officer
Independent
Director
Independent
Director
Nominee Director
Non-Executive
Director
4
4
4
4
4
4
4
4
4
-
Yes
Yes
Yes
Yes
No
1
6
5
1
-
-
2
2
-
-
2
5
7
2
-
Excluding private limited companies & overseas companies.
Includes only Audit Committee and Stakeholders Relationship Committee. Memberships in Committees of Subex Limited are included.
# Mr. Karthikeyan Muthuswamy is nominated by the Foreign Currency Convertible Bonds (FCCB’s) Holders
C. Number and Dates of Board Meetings
Business Planning and Global operations functions. He has
4 (Four) Board meetings were held during the financial year
a successful corporate and entrepreneurial track record of
2013-14. The dates on which meetings were held are as
building organizations and fostering collaboration in large
follows:
1. May 21, 2013
2. August 14, 2013
3. October 30, 2013
4. February 12, 2014
and culturally diverse cross functional teams. He was the
Global Chief Financial officer of Patni Computer Systems
where he played key role in shaping business transformation
including significant improvements in operating metrics and
processes, structuring large platform deals with fortune 500
customers, seamless management transitions, upholding
D. Brief Details of Directors Seeking Appointment/Re-
highest standards of financial and corporate governance. He
appointment:
Mr. Surjeet Singh, Managing Director & CEO
Mr. Surjeet Singh is a seasoned management professional
and business leader with over two decades of multi-industry
global experience in leading Finance, Corporate Development,
was instrumental in helping realize maximum shareholder
value with successful exit of majority shareholders at
Patni. Prior to this, Mr. Surjeet Singh was part of founding
team of Cymbal Corporation, a mid-sized telecom BSS
systems integration boutique out of silicon valley which
was acquired by Patni in 2004 for $68M, which at the time
Annual Report 2013-14
29
was one of the largest cross border services transaction by
role in making of Ambuja Cements. He conceptualized and
an Indian company. In early part of his career, Mr. Surjeet
advised merger of Enam, one of the largest investment
Singh held various finance and operations roles at Ranbaxy
banks in India, with Axis Bank, a deal involving around US$
- a global multinational pharmaceutical company during its
500 million. He is on the Boards of various companies,
internationalization phase in the 90’s. Mr. Surjeet Singh is a
some of which are Hindustan Construction Co. Ltd, HCC
fellow of the Institute of Costs and Works Accountants, India,
Infrastructure Ltd, Capital First Limited and Foundation for
Certified Public Accountant from AICPA, USA. He holds a B.S.
Liberal and Management Education (FLAME).
in Finance from the University of Pune and is a graduate
of Advanced Management Program from Harvard Business
School.
He is the Chairman of the Audit Committee and the
Nomination and Remuneration Committee, a member
of Stakeholders Relationship Committee and a member
He is a member of the Audit Committee, a member of
of Empoyees’ Stock Options Committee of the Board of
Stakeholders Relationship Committee and a member of the
Directors of the Company.
Nomination and Remuneration Committee of the Board of
Directors of the Company.
As on the date of this report, Mr. Surjeet Singh does not hold
any equity shares of the Company.
As on date of this report, he holds 60,000 equity shares of
the Company.
Mr. Sanjeev Aga, Independent Director
Business leader, organization builder, adviser and mentor,
Mr. Karthikeyan Muthuswamy, Nominee Director
Sanjeev Aga’s career has traversed 38 years, and sectors from
Mr. Karthikeyan Muthuswamy is the Managing Director
consumer and services, entertainment and light engineering,
of Trident Advisors Pvt Ltd, a Mumbai based investment
to telecommunications.
advisory firm. Prior to Trident, Mr. Karthikeyan Muthuswamy
has worked as a fund manager with M3 Investments and
Director with Jeetay Investments, both of which are Mumbai
based
investment management firms. Mr. Karthikeyan
Muthuswamy is a BBA from the University of Madras and a
Chartered Financial Analyst.
In a business career commencing 1973, Sanjeev Aga held
senior positions in Asian Paints, Chellarams (Nigeria), and
Jenson & Nicholson. In 1987, he joined Blow Plast to head
the Furniture business, was made Chief Executive of Mattel
Toys in 1990, and in January 1993 was appointed Managing
Director of Blow Plast with multi-business responsibility
He is a member of Stakeholders Relationship Committee, a
including the flagship VIP Luggage business. In November
member of the Nomination and Remuneration Committee
1998, he was appointed CEO of the telecom JV, Birla AT&T.
and a member of the Employees’ Stock Options Committee
He led the company through expansions, mergers and
of the Board of Directors of the Company.
acquisitions to be CEO of Birla Tata AT&T, which was renamed
As on the date of this report, Mr. Karthikeyan Muthuswamy
does not hold any equity shares of the Company.
Mr. Anil Singhvi, Independent Director
Mr. Anil Singhvi is the Chairman of Ican Investments Advisors
Pvt Ltd. Prior to establishing Ican Investments, he was Advisor
to Reliance ADA Group for about 2 years. He has over 30
years of experience in corporate sector, out of which 22
years were spent with Ambuja Cements Ltd, where he rose
from Manager to Managing Director & CEO.
A Chartered Accountant, Mr. Anil Singhvi played a defining
Idea Cellular. In July 2002, Mr. Aga left Idea to be with the
Aditya Birla Group, where from May 2005 until October
2006, he was Managing Director of Aditya Birla Nuvo.
For 2009, Idea Cellular was named the ‘ET Emerging Company
of the Year’, and for 2010, Forbes India magazine shortlisted
Mr. Sanjeev Aga as a ‘Person of the Year’. Mr. Sanjeev Aga is
an Honours graduate in Physics from St. Stephen’s College,
Delhi (1971) and a post graduate from the Indian Institute
of Management, Kolkata (1973). Mr. Sanjeev Aga is based in
Mumbai, and now engages in advisory and consultant roles
for corporates and not-for-profit organizations. He reads
30
Subex Limited
widely, speaks, and occasionally, writes.
Chairman of the Empoyees’ Stock Options Committee of the
He is the Chairman of the Stakeholders Relationship
Board of Directors of the Company.
Committee, a member of the Audit Committee, a member
As on date of this notice, he does not hold any equity shares
of the Nomination and Remuneration Committee and the
of the Company.
E. Details of Directors as on March 31, 2014 seeking appointment/re-appointment at the Twentieth Annual
General Meeting scheduled to be held on August 14, 2014
(Pursuant to Clause 49(IV)(G)(i) of the Listing Agreement)
Name of Director
Surjeet Singh
Anil Singhvi
Sanjeev Aga
Karthikeyan
Muthuswamy
Date of birth
March 8, 1968
June 30, 1959
February 1, 1952
June 6, 1974
Date of appointment
October 5, 2012
April 11, 2011
May 17, 2011
July 6, 2012
Relationship with
Directors
None
None
None
None
Expertise in specific
functional area
Wide managerial
experience
Accounts and wide
managerial experience
Wide managerial
experience
Financial analyst
Board Membership of
other companies as on
March 31, 2014
Subex Technologies
Limited
Foundation For Liberal
And Management
Education
Idea Cellular Limited
Trident Advisors Private
Limited
Subex Americas Inc
Hindustan Construction
Company Limited
Pidilite Industries
Limited
Antony Waste Handling
Cell Private Limited
Subex (UK) Limited
Subex ( Asia Pacific) Pte
Limited
Subex Inc
Subex Azure Holdings
Inc
Subex Technologies Inc
Institutional Investor
Advisory Services India
Limited
Capital First Limited
ING Vysya Bank Limited First Home Realty
Solutions Private Limited
Mahindra Holidays and
Resorts India Limited
RKM Venture Advisory
Private Limited
HCC Infrastructure
Company Limited
Mahindra Logistics
Limited
AG Enviro Infra Projects
Private Limited
Greatship (India) Limited
Lavasa Corporation
Limited
Ican Investments
Advisors Private Limited
(as Chairman)
Anagha Advisors LLP
(Designated Partner)
Antony Revive Ewaste
Private Limited
KL EnviTech Private
Limited
Antony Infrastructure
and Waste Management
Services Private Limited
Antony Lara Enviro
Solutions Private Limited
Annual Report 2013-14
31
Name of Director
Surjeet Singh
Anil Singhvi
Sanjeev Aga
Karthikeyan
Muthuswamy
Chairman/Member of
the Committee of the
Board of Directors of
other companies in
which he is a director as
on March 31, 2014
1. Audit Committee
2. Remuneration/
Compensation
Committee
3. Shareholders’
Grievance Committee
4. Other Committees
1. Hindustan
Construction Company
Limited
2.Capital First Limited
(as Chairman)
3. Lavasa Corporation
Limited
Hindustan Construction
Company Limited
(as Chairman)
Hindustan Construction
Company Limited-
Selection Committee
1. ING Vysya Bank Limited
(as Chairman)
PAE Limited
2. Mahindra Logistics
Limited
Mahindra Logistics Limited PAE Limited
1. Pidilite Industries
Limited
2. Idea Cellular Limited
3. ING Vysya Bank Limited
1. Finance Committee
and Security Allotment
Committee -
Idea Cellular Limited
2. Strategy Committee -
Mahindra Holidays and
Resorts India Limited
3. IT Strategy Committee,
Customer Service
Committee and Corporate
Governance Committee -
ING Vysya Bank Limited
4. MLL Key Executives
Stock Option Scheme
– 2012 Committee –
Mahindra Logistics Limited
Having regard to the expertise in the field of accounts and
with the Company will be of immense benefit. He is eligible
management, it is in the interests of the Company to continue
for reappointment at the ensuing Annual General Meeting.
to avail the services of Mr. Anil Singhvi, independent director.
Detailed profile of these directors forms a part of this report.
It is also in the interests of the Company to continue to avail
the services of Mr. Sanjeev Aga, independent director who
brings his rich managerial experience to the Board of the
Company. Mr. Karthikeyan Muthuswamy, nominee director
Disclosure in terms of Clause 49 (IV) (G) (ia) of the Listing
Agreement
There are no inter-se relationships between the Board
who retires by rotation at the 20th Annual General Meeting
members.
is widely experienced in financial matters and his association
32
Subex Limited
III. AUDIT COMMITTEE
A. Terms of Reference
The Audit Committee has, inter alia, the following mandate:
Overseeing the Company’s financial reporting process
and disclosure of its financial information to ensure that the
financial statements are correct, sufficient and credible;
Recommendation of appointment and removal of external
auditor, fixation of audit fee and also approval for payment
for any other services;
C. Meetings and Attendance during the Year
During the financial year 2013-14, four Audit Committee
meetings were held on May 21, 2013, August 14, 2013,
October 30, 2013, and February 12, 2014. The audited
financial results for the financial year ended March 31,
2014 were taken on record at the meeting held on May 29,
2014. The quarterly results for the quarters April-June 2013,
July-September 2013 and October-December 2013 were
taken on record on August 14, 2013, October 30, 2013, and
February 12, 2014 respectively.
Reviewing, with the management, the quarterly financial
statements before submission to the Board for approval;
D. Attendance of Committee Members at the Audit Committee
Meetings Held During the Financial Year 2013-14:
Review of annual financial statements before submission
Member
to the Board;
Review of adequacy of internal control systems;
Review of adequacy of internal audit function, reporting
structure coverage, frequency of internal audit, and findings
of any internal investigations by the internal auditors;
Discussion with statutory auditors before the audit
commences, about the nature and scope of audit as well as
post-audit discussion to ascertain any area of concern;
Review of the Company’s financial and Whistle Blower
mechanism;
Approval of appointment of CFO (i.e., the whole-time
Finance Director or any other person heading the finance
function or discharging that function) after assessing the
qualifications, experience and background, etc. of the
candidate
The current charter of the Audit Committee is in line with
international best practices and the regulatory changes
formulated by SEBI and the listing agreements with the Stock
Exchanges on which Subex is listed.
No. of Audit
Committee
Meetings Held
No. of Audit
Committee
Meetings
Attended
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Surjeet Singh
4
4
4
4
4
4
Deloitte Haskins & Sells, the statutory auditors of the
Company have attended all the Audit Committee Meetings
held during the year.
The Internal Auditors of the Company attended the meetings
of the Audit Committee held on May 21, 2013 and August
14, 2013.
IV. NOMINATION AND REMUNERATION COMMITTEE
A. Composition of the Committee
Composition
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Sanjeev Aga
Mr. Surjeet Singh
Independent Director
Managing Director and CEO
Nominee Director
All members of the Audit Committee are financially literate
and have related financial management expertise.
Mr. Karthikeyan
Muthuswamy
B. Composition of Audit Committee as at March 31, 2014
Composition
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Sanjeev Aga
Mr. Surjeet Singh
Independent Director
Managing Director and CEO
Mr. Ganesh K V, Chief Financial Officer, Global Head -
Legal and Company Secretary is the Secretary of the Audit
Committee.
The Committee considers the performance of the Company as
well as general industry trends while fixing the remuneration
of Executive Directors. The said Committee have as additional
terms of reference, the recommendation of appointment
of Directors, including Managing Director and Whole Time
Director by whatever name called by the Company.
At its meeting held on October 30, 2013, the Committee
approved the terms and conditions of the remuneration of Mr.
Surjeet Singh, which are being placed before the Members for
their approval at the ensuing Annual General Meeting.
Annual Report 2013-14
33
(Amount in HLakhs)
Total
15.20
B. Details of Remuneration of Directors
Name
Salary
Commission
Benefits
Mr. Surjeet Singh
15.20
–
a. Medical Reimbursement: Reimbursement of medical
expenses incurred, including premium paid on health
insurance policies, whether in India or aboard, for self
and family, including hospitalization, surgical charges,
nursing charges and domiciliary charges for self and for
family, as per the policy of the Company or as approved
by the Board of Directors.
b. Insurance: Personal accident insurance and keyman
or other insurance as per the policy of the Company or
as approved by the Board of Directors.
of
all
Reimbursement
travelling,
entertainment and other similar out of pocket expenses
necessarily and reasonably incurred by him wholly in the
proper performance of his duties and responsibilities.
reasonable
He shall be entitled to travel business class on all
Company related travel which involves travel of more
than five hours at any time.
As per his employment agreement for his appointment
as Managing Director & CEO for the period from
October 5, 2012 to October 4, 2013, Mr. Surjeet Singh
was eligible for grant of a maximum of 1,920,000 stock
options. However as per his employment agreement for
his re-appointment as Managing Director & CEO for the
period from October 5, 2013 to October 4, 2014 he is
not eligible for grant of any stock options.
Mr. Surjeet Singh or the Company may terminate the
Employment Agreement before the expiry of the Term
by giving to the other party notice in writing of Ninety
days.
-
-
-
-
-
-
The Non-Executive Independent Directors are paid sitting
fees of H20,000 per meeting for attendance in the Audit
Committee Meetings, Stakeholders relationship Committee
Meetings, Nomination & Remuneration Committee Meetings
and for attendance at the Board meetings. Details of sitting
fees paid to such directors are as follows:
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Subash Menon
-
-
-
-
-
-
C. Details of Shareholding of Non- Executive Directors:
In terms of Clause 49(IV)(E)(iv) of the Listing Agreement,
the details of shares held by Non- Executive Directors are
as under:
No. of Shares Held
as at March 31, 2014
60,000
NIL
25,80,601
NIL
Name
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Subhash Menon
Mr. Karthikeyan
Muthuswamy
34
Subex Limited
Type of Meeting
Board of Directors
Anil Singhvi
Sanjeev Aga
Audit Committee
Anil Singhvi
Sanjeev Aga
Nomination &
Remuneration Committee
Anil Singhvi
Sanjeev Aga
Stakeholder’s Relationship
Committee
Anil Singhvi
Sanjeev Aga
May 21, 2013
Aug 14, 2013
Oct 30, 2013
Feb 12, 2014
(Amount in H)
10,000
10,000
20,000
20,000
-
-
-
-
20,000
20,000
20,000
20,000
-
-
NIL
20,000
20,000
20,000
20,000
20,000
20,000
20,000
NIL
20,000
20,000
20,000
20,000
20,000
-
-
20,000
20,000
The sitting fee payable to each independent director for attending the meeting of the Board of Directors was revised from
H10,000 to H20,000 with effect from August 14, 2013. Each independent director is paid sitting fee of H20,000 for attending
the meeting of the Audit Committee. For any other meeting of the committee of the Board, sitting fee of H20,000 is paid to
each independent director for attending every such meeting of the committee of the Board with effect from August 14, 2013.
The Nomination and Remuneration Committee determines and recommends to the Board, the compensation payable to
the Executive Directors. All Board level compensation is approved by the shareholders, where necessary, and is separately
disclosed in the financial statements. The compensation, however, is within the parameters set by the provisions of the
Companies Act, 1956.
D. Attendance of Committee Members at the Nomination and Remuneration Committee Meetings Held During the Financial
Year 2013-14:
Member
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Surjeet Singh
Mr.Karthikeyan Muthuswamy
No. of Nomination and
Remuneration Committee
Meetings Held
No. of Nomination and
Remuneration Committee
Meetings Attended
1
1
-
1
1
1
-
1
V. STAKEHOLDERS’ RELATIONSHIP COMMITTEE
A. Composition of the Committee
Mr. Ganesh K V, Chief Financial Officer, Global Head- Legal
and Company Secretary is the Secretary of the Committee
Composition
Category
and the Compliance Officer.
Mr. Sanjeev Aga (Chairman)
Independent Director
Mr. Anil Singhvi
Mr. Surjeet Singh
Mr. Karthikeyan
Muthuswamy
Independent Director
Managing Director & CEO
Nominee Director
The Committee is responsible for addressing the investor
complaints and grievances. The Committee meets on a
periodic basis to address the investor complaints like
transfer of shares, non-receipt of balance sheet, non-receipt
of declared dividends etc. Details of grievances of the
At the Board Meeting held on February 12, 2014, Mr. Anil
investors are provided in the “Shareholders’ Information”
Singhvi, Independent Director was appointed as a member
section of this Annual Report.
of the Stakeholders Relationship Committee.
Annual Report 2013-14
35
B. Attendance of Committee Members at the Stakeholders Relationship Committee Meetings Held During the Financial Year
2013-14:
Member
Mr. Anil Singhvi*
Mr. Sanjeev Aga
Mr. Surjeet Singh
Mr.Karthikeyan Muthuswamy
No. of Stakeholders
Relationship Committee
Meetings Held
No. of Stakeholders
Relationship Committee
Meetings Attended
1
4
4
4
1
4
4
4
*Mr. Anil Singhvi was appointed as a member of the Stakeholders Relationship Committee on February 12, 2014. He attended
the meeting of the said Committee held on February 12, 2014.
VI. ESOP COMMITTEE (Compensation Committee)
necessary. These resolutions are tabled before the Board of
The Company has
instituted Employee Stock Option
Directors at their respective meetings which is taken note of.
Schemes in line with the Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999. The Committee grants
and administers options under the stock options schemes to
eligible employees.
A. Composition of the Committee
Composition
Category
At the Board Meeting held on May 21, 2013, the Sub-
Committee on Borrowings, Allotment Committee, General
Management Committee and Share Transfer Committee
were dissolved and the powers of these committees vests
with the Board of Directors itself.
The Board of Directors approves, inter alia, the transfers/
transmissions/ dematerialisation of equity shares. The
Mr. Sanjeev Aga (Chairman)
Independent Director
Company has appointed M/s. Canbank Computer Services
Mr. Anil Singhvi
Independent Director
Limited, a SEBI registered transfer agent, as its Share Transfer
Mr. Karthikeyan Muthuswamy
Nominee Director
Agent with effect from November 6, 2001.
The Committee administers the ESOP schemes of the
Company by passing resolutions by circulation whenever
VII. GENERAL BODY MEETINGS
A. Location and Time of the Last Three AGMs
Year
2010-11
2011-12
2012-13
Date of AGM
July 27, 2011
September 28, 2012
August 14, 2013
B. Location and Time of the Last Three EGMs
Year
2011-12
2012-13
2012-13
Date of EGM
December 28, 2011
June 28, 2012
August 17, 2012
Venue
Registered office
Registered office
Hotel Lalit Ashok, Bangalore
Venue
Registered office
Registered office
Registered office
Time
12:00 Noon
12:30 PM
2:00 PM
Time
11:30 A M
11:30 A M
11:30 A M
At the AGM held on August 14, 2013, one special resolution was passed for the ratification of appointment of Mr. Surjeet
Singh as the Managing Director and CEO of the Company for a period of one year from October 5, 2012 to October 4, 2013.
36
Subex Limited
VIII. DISCLOSURES
A. There are no significant related party transactions of the
Company of material nature, that may have potential conflict
with the interests of the Company at large
D. The Company has obtained a certificate from the CEO/
CFO as required by Clause 49 (V) of the Listing Agreement.
E. In compliance with Clause 49 (1) (D) of the Listing
Agreement, the Company has adopted a Code of Conduct
Transactions with the related parties are disclosed in Note
(the ‘Code’). This Code is applicable to the Members of the
31 to the standalone financial statements and Note 30 to
Board, Senior Management Personnel and all employees
the consolidated financial statements in the Annual Report.
of the Company and Subsidiaries. All the members of
None of the independent directors have any material
pecuniary relationship or transactions with its Promoters, its
Directors, its senior management or its subsidiaries which
may affect independence. The Company has received the
relevant declarations in this regard from its independent
directors Mr. Anil Singhvi, and Mr. Sanjeev Aga.
B. A proposal for reduction and utilization of Securities
Premium and Capital Reserve under the provisions of
section 78 read with section 100 to 104 of the Companies
the Board and the Senior Management Personnel have
affirmed compliance to the Code, as at March 31st, 2014. A
declaration to this effect, signed by the Managing Director
and CEO is provided in the CEO and CFO certification section
of the Annual Report.
F. In compliance with Clause 47 (c) of the Listing Agreement,
the Company has obtained certificates from Practising
Company Secretary. The same were filed with the Stock
Exchanges within the stipulated period.
Act, 1956 was approved pursuant to the resolution passed
by the Board of Directors on February 8, 2010 and special
G. The Company has not been subjected to any penalties,
strictures by stock exchange(s)/SEBI or any statutory
resolution passed by the Members at the Extraordinary
authorities on any matter related to capital markets, during
General Meeting held on March 4, 2010. The reduction, as
the last three years.
aforesaid, envisages transfer of certain amounts from the
Securities premium and Capital Reserves as on April 1, 2009
and thereafter, to a Business Restructuring Reserve (BRR) to
be utilized from or after April 1, 2009 for certain Permitted
Utilizations as mentioned in the explanatory statement to the
notice of the Extraordinary General Meeting held on March
4, 2010. The petition seeking approval of the reduction
was approved by the Hon’ble High Court of Karnataka vide
its order dated April 21, 2010. The copy of the said order
and the minute confirming the reduction was registered by
the Registrar of Companies, Karnataka at Bangalore vide
its certificate dated May 11, 2010. In accordance with the
Proposal, the BRR has been utilised for adjustment of certain
expenses/impairments. During the financial year 2013-
14, the balance amount of Rs. 80.63 lakhs lying in the BRR
was utilized and thereby closed. Such adjustment being at
H. The Company has complied with the listing conditions
laid down in the Listing agreement of the stock exchanges
where the equity shares of the Company are listed.
Ix. MEANS OF COMMUNICATION
A. Annual/Half Yearly and Quarterly Results
The annual/half yearly/quarterly audited/un-audited results
are generally published in all editions of Financial Express
(English) and Vijay Karnataka (Kannada). The complete
financial statements are posted on the Company’s website
www.subex.com. Subex also regularly provides information
to the Stock Exchanges as per the requirements of the
Listing Agreements and updates the website periodically
to include information on new developments and business
opportunities.
variance with applicable accounting standards, necessary
As part of the “Green Initiative in Corporate Governance”,
disclosure has been made in Note 25 to the accounts in
the Ministry of Corporate Affairs (MCA), Government of
Standalone and Note 24 to the Consolidated financial
India, through its Circular Nos. 17/2011 and 18/2011, dated
statements.
C. The Company has a Risk Management Policy in place
to manage risks inherent in various aspects of its business
which is given in detail in the Management Discussion and
Analysis section of the Annual Report.
April 21, 2011 and April 29, 2011 respectively, has allowed
companies to send official documents to their shareholders
electronically considering
its
legal validity under the
Information Technology Act, 2000. Being a Company with
strong focus on green initiatives, Subex proposes to send
Annual Report 2013-14
37
all shareholder communications such as the notice of
as such disclosures on maintenance of office by a Non-
General Meetings, Audited Financial Statements, Directors’
Executive Chairman does not arise. The Company ensures
Report, Auditors’ Report, etc., henceforth to shareholders in
that the persons appointed as Independent Directors have
electronic form to the E-mail Id provided by them and made
the requisite qualifications and experience which would
available to us by the Depositories. Members are requested
be of use to the Company and which would enable them to
to register their E-mail Id with their Depository Participant
contribute effectively to the Company in their capacity as
and inform them of any changes to the same from time to
Independent Directors.
time. However, Members who prefer physical copy to be
delivered may write to the Company at its registered office
B. Remuneration Committee
or send an E-mail to investorrelations@subex.com by
providing their DP Id and Client Id as reference.
B. Management’s Discussion and Analysis section has been
separately dealt with in the Annual Report.
The Company has a Remuneration Committee which
has during the year renamed as the Nomination and
Remuneration Committee. A detailed note on the Nomination
and Remuneration Committee has been provided earlier in
the report.
x. General shareholder information is provided in the
“Shareholders’ Information” section of the Annual Report.
C. Shareholders’ Rights
xI. As per the requirements of Clause 41 of the Listing
Agreement, the Company has submitted the quarterly/
annual financial results to the Stock Exchanges after the
conclusion of the respective Board Meetings held on May
21, 2013, August 14, 2013, October 30, 2013 and February
12, 2014.
xII. Auditors’ Certificate with regard to compliance of
conditions of Corporate Governance as per Clause 49 of the
Listing Agreement entered into with the Stock Exchanges
forms part of this Annual Report.
xIII. Compliance with non-mandatory requirements of
Clause 49 of the listing agreement
Clause 49 states that the non-mandatory requirements
provided therein may be implemented as per the Company’s
discretion. However, the disclosures of compliance with
mandatory requirements and adoption (and compliance)/
non adoption of non-mandatory requirements shall be
The Company communicates with
investors regularly
through E-mails, telephone calls and face to face meetings.
The Company publishes the quarterly financial results in
leading business newspaper(s) as well as on the Company’s
website.
D. Audit Qualifications
The auditors have expressed an unqualified opinion on the
accounts for the year under review.
E. Whistle Blower Policy
The Company has established a mechanism for employees
to report concerns about unethical behaviours, actual or
suspected fraud or violation of our Code of Conduct. The
mechanism also provides for adequate safeguards against
victimization of employees who avail of the mechanism. The
employees are informed of this policy through appropriate
internal communications. None of the employees have been
denied access to this facility or the Audit Committee to
made in the section on Corporate Governance in the annual
report the aforementioned concerns.
report. The Company has complied with the following non-
mandatory requirements:
A. The Board
Presently the Company does not have a Chairman and
The Directors of the Company are seasoned persons having
expertise and vast experience in their respective fields. As
such the Company has not adopted item (5) and (6) under
Annexure ID to Clause 49 of the Listing Agreement.
For Subex Limited
Karthikeyan Muthuswamy
Director
Mumbai, India
Date : May 29, 2014
38
Subex Limited
Surjeet Singh
Managing Director & CEO
Mumbai, India
Date : May 29, 2014
DECLARATION BY THE CEO UNDER CLAUSE 49(I) (D) OF THE LISTING AGREEMENT
REGARDING ADHERENCE TO THE CODE OF CONDUCT
To,
The Members of Subex Limited
In accordance with Clause 49(I)(D) of the Listing Agreement with the Stock Exchanges, I hereby confirm that, all the Directors
and the Senior Management personnel including me, have affirmed compliance to their respective Codes of Conduct, as
applicable for the Financial Year ended March 31, 2014.
Place : Mumbai
Date : May 29, 2014
For Subex Limited
Surjeet Singh
Managing Director & CEO
AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE
To,
The Members of Subex Limited
1. We have examined the compliance of conditions of Corporate Governance by Subex Limited [‘the Company’] for the
year ended March 31, 2014 as stipulated under Clause 49 of the Listing Agreement of the said Company with the Stock
Exchanges.
2. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination
has been limited to a review of the procedures and implementations thereof, adopted by the Company for ensuring
compliance with the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion of the
financial statements of the Company
3.
In our opinion and to the best of our information and according to the explanations given to us and the representations
made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate
Governance as stipulated in Clause 49 of the above-mentioned Listing Agreement.
4. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency
or effectiveness with which the management has conducted the affairs of the Company.
Place: Mumbai
Date: May 29, 2014
FOR DELOITTE HASKINS & SELLS,
Chartered Accountants
Registration No. 008072S
MONISHA PARIKH
Partner
Membership No. 47840
Annual Report 2013-14
39
Management
discussion and analysis
Overview
Subex Limited (“Subex” or “the Company”) has its Equity
Shares listed on the National Stock Exchange of India
Limited (NSE) and the Bombay Stock Exchange Limited (BSE).
The Global Depositary Receipts (GDRs) of the Company are
listed on the Professional Securities Market of the London
Stock Exchange (LSE). The Company’s outstanding US$
1,000,000 out of US$ 180,000,000 2% Coupon Convertible
Unsecured Bonds are listed on the London Stock Exchange
(LSE). The Company’s outstanding US$ 1,400,000 out of
US$ 98,700,000 5% Convertible Unsecured Bonds and
US$ 88,150,000 out of US$ 127,721,000 5.70% Secured
Convertible Bonds are listed on the Singapore Exchange
The financial statements of the Company have been prepared
in compliance with the requirements of the Companies Act,
1956, and the Generally Accepted Accounting Principles
(GAAP) in India or as per the Proposal approved by the
Hon’ble High Court of judicature. The management of Subex
accepts responsibility for the integrity and objectivity of
these financial statements, as well as for various estimates
and judgments used therein. The estimates and judgments
relating to the financial statements have been made on a
prudent and reasonable basis, in order that the financial
statements reflect the form and substance of transactions in
a true and fair manner, and reasonably present the state of
affairs and profits/ losses for the year under review.
Securities Trading Limited (SGX). As a part of the terms and
In addition to the historical information contained herein,
conditions of US$ 127,721,000 5.70% Secured Convertible
the following discussion may include forward looking
Bonds, principal amount of US$ 36,321,000 out of US$
statements which involve risks and uncertainties, including
127,721,000 5.70% were mandatorily converted into equity
shares at the conversion price of H22.79/-. Pursuant to the
mandatory conversion and subsequent conversion of US$
but not limited to the risks inherent in the Company’s growth
strategy, dependency on certain clients, dependency on
availability of qualified technical personnel and other factors
3,250,000 currently US$ 88,150,000 is outstanding under
discussed in this report.
US$ 127,721,000 5.70% Secured Convertible Bonds.
The management of Subex is committed to improving
the levels of transparency and disclosure. Keeping this in
mind, an attempt has been made to disclose hereunder,
information about the Company, its business, operations,
outlook, risks and financial condition.
Industry
Subex Limited is a leading global provider of Business
and Operations Support Systems (B/OSS) that empowers
communications service providers
(CSPs)
to achieve
competitive advantage
through Business and Capex
Optimisation - thereby enabling them to improve their
40
Subex Limited
operational efficiency
to deliver enhanced service
with the need to roll out new products and services at regular
experiences to subscribers.
The company pioneered the concept of a Revenue
Operations Center (ROC®) – a centralized approach that
sustains profitable growth and financial health through
coordinated operational control. Subex’s product portfolio
powers the ROC and its best-in-class solutions such as
revenue assurance, fraud management, asset assurance,
capacity management, data integrity management, credit
risk management, cost management, route optimization and
partner settlement. Subex also offers a scalable Managed
Services program with 30 + customers.
intervals, is proving to be a tough combination for the telcos.
Subex is well positioned to address the needs of the telecom
carriers and help them to overcome these challenges. Our
pioneering platform, the Revenue Operations Centre (ROC®)
brings together business intelligence, domain knowledge
and workflow support. ROC acts as the underpinning solution
on which telcos can build their processes to achieve several
objectives like, lower cost, higher margin, higher revenue etc.
Further, Subex offers Managed Services around its products
which enable the operators to take advantage of our deep
domain expertise to improve their operational efficiency.
Subex has been awarded the Global Market Share Leader
Opportunities and threats
in Financial Assurance 2012 by Frost & Sullivan and has
been the winner of Pipeline Innovation Award 2013 in
Business Intelligence & Analytics; Capacity Magazine Best
Product/ Service 2013. Subex has continued to innovate
with customers and have been jointly awarded the Global
Telecoms Business Innovation Award 2014 along with Telstra
Global; in 2012 with Idea Cellular for Managed Services and
in 2011 with Swisscom for Fraud Management.
Strategy
Strategy is a critical aspect in any business. The key elements
of our strategy are our offering, positioning and customer
acquisition and retention. We have always been at the
leading edge of technology and have evolved new concepts
to enable our customers to keep pace with changing
scenarios, the latest being the launch of our pioneering ROC
Asset Assurance solution in April 2013. Using our products,
Subex’s customers include 29 of top 50 operators* and
we have structured several industry leading solutions that
33 of the world’s 50 biggest# telecommunications service
address and solve key problems faced by our customers
providers worldwide. The company has more than 300
worldwide. These solutions are offered as a well integrated
installations across 70 countries.
platform called ROC. In addition to this, we also offer ROC
*Total Telecom Top 500 Telecom Brands, 2013
#Forbes’ Global 2000 list, 2014
Commoditization of the industry is the largest threat that
in the form of Managed Services thereby ensuring that our
customers gain significantly from our solutions. This three
pronged strategy has helped us retain customers and gain
further traction in the B/OSS market through new customer
telecom operators around the world are facing. This, coupled
accounts.
Annual Report 2013-14
41
Business segments and industry outlook
Business Segments
Subex operated in two business segments – telecom software
products and telecom software services. The former is the
key focus area for the Company and is being discussed in
detail. The latter is staff augmentation services for Telcos
in the United States which has been losing its significance
as can be seen from the business mix data provided herein,
thus Subex strategically moved out of the services as it
did not align with the primary focus area which is product
business effective beginning of the year.
Revenue Mix
e
g
a
t
n
e
c
r
e
P
36
100
80
60
40
20
0
79
83
75
87
90
93
100
64
64
67
55
54
45
46
36
3
0
-
2
0
0
2
36
33
25
21
17
13
10
4
0
-
3
0
0
2
5
0
-
4
0
0
2
6
0
-
5
0
0
2
7
0
-
6
0
0
2
8
0
-
7
0
0
2
9
0
-
8
0
0
2
0
1
-
9
0
0
2
1
1
-
0
1
0
2
2
1
-
1
1
0
2
Revenue from Products
Revenue from Services
7
3
1
-
2
1
0
2
0
4
1
-
3
1
0
2
Global mobile economy
The mobile industry has scaled dramatically over the last
decade. At the end of 2003, there were a little over one billion
unique subscribers, indicating that one in seven people had
subscribed to a mobile service. By the end of 2013, this figure
had increased to 3.4 billion unique subscribers, equivalent to
almost half of the global population. Globally, there were 6.9
billion SIM connections at the end of 2013 with an average
of 1.8 active SIM cards per unique subscriber.
Global operating revenues in 2013-14 were US$1.2 trillion
and could rise to US$1.4 trillion by 2020; the ecosystem
revenues stood at US$2 trillion for 2013-14 and could move
to US$2.9 trillion by 2020.
While subscriber and connection growth rates are slowing in
developed markets, significant untapped potential remains
across developing markets with forecasts of an addition of
880 million unique subscribers by 2020. In the developed
markets, there is an accelerating technology shift underway
in the global connection base with an increasing proportion
of connections now on higher speed 3G and 4G networks
(globally this proportion is set rise from a third at the end of
2013 to two-thirds by 2020). The number of commercially-
available LTE networks is forecast to increase to more
than 500 in 128 countries across the world over the next
four years, going from covering around a fifth of the global
population today to around half by 2017.
The mobile industry (both directly and indirectly) contributed
around 3.6% of global gross domestic product (GDP) in
2013, equivalent to over US$ 2.4 trillion, and is expected
to increase to 5.1% of global GDP by 2020. There are 10.5
million jobs supported directly by the mobile ecosystem
across the world; while the mobile ecosystem contributed
over US$ 336 billion in public funding in 2013 even before
considering regulatory and spectrum fees.
42
Subex Limited
Global Mobile Connections (m, excluding M2M)
9
3
0
4
,
5
6
6
4
,
9
6
3
5
,
9
2
0
6
,
5
6
4
6
,
6
8
8
6
,
5
8
3
7
,
0
0
8
7
,
3
5
1
8
,
7
5
4
8
,
3
2
7
8
,
0
6
9
8
,
9
7
1
9
,
11.3%
CAGR 2008-2013
4.2%
CAGR 2013-2017
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Sub-Saharan Africa
North America
Midle East and North
Africa
Latin America
Europe
Commonwealth of
Independent States
Asia Pacific
Total mobile industry contribution to global
GDP (2013 GDP impact (US$ Bn)
1325
2367
196
0.3%
174
0.3%
2.0%
3.6%
672
1.0%
MOBILE
OPERATIONS
RELATED
INDUSTRIES
GENERAL
ECONOMY
PRODUCTIVITY
INCREASE
TOTAL IMPACT
MOBILE ECOSYSTEM
SIM penetration: Global SIM penetration stood at 95% and
the figure was already over 124% on average in developed
years since 2008, but are now forecast to grow at a rate of
4.2% per annum for the period to 2020, less than half the
markets. However there was a slowdown in the growth
previous growth rate. This would take the global penetration
rate of connections across all regions of the globe, linked
rate by 2020 to 119%, with connection penetration passing
to slower subscriber penetration growth. SIM connections
through the 100% level before the end of 2014.
grew globally at a CAGR of 11.3% per annum in the five
SIM Penetration by Region
%
4
1
2
%
2
4
1
%
6
9
1
%
4
2
1
%
6
8
1
%
5
4
1
111%
%
5
5
1
%
8
1
1
%
6
3
1
%
0
1
1
%
9
1
1
%
1
8
2008
2012
2017
%
7
9
%
3
7
%
7
7
%
3
5
EUROPE
NORTH
AMERICA
CIS
LATIN
AMERICA
MIDDLE
EAST
ASIA
PACIFIC
AFRICA
OTHER
SOURCE: A.T. Koarnoy, GSMA Wiroless Intelligence
Annual Report 2013-14
43
Technology: According to Ericsson, around 55% of all mobile
phones sold in the second quarter of 2013 were smartphones,
compared to 50% in the first quarter and only 30% in 2012
as a whole. By the end of 2013, there were just under 1.5
billion smartphones in use, of which almost half were in the
Asia-Pacific. Going forward, new smartphone connections will
largely come from the Asia-Pacific region with just under 900
million new smartphones expected in the region in the period
to 2017.
Smartphones Installed Base
2,890m
1,457m
2017
2013
237m
2008
(Source Strategy Analytics)
Average revenue per user: The average revenue per user
(ARPU) per month stood at US$ 12.15 in the year 2013-
14, which declined by 3.97% over 2012-13. Increasing
penetration among some of the world’s poorest countries
will inevitably lead to declining ARPU.
Mobile economy in developing economies
The World Bank estimates that mobile broadband reported
a higher economic impact than fixed line broadband in
emerging markets; a 10% increase in mobile broadband
penetration drove a 1.4% increase in GDP for low-to-middle
income countries.
The top-10 developing economic mobile markets by number
of subscriptions included:
Rank Country
1
2
3
4
5
6
7
8
9
10
China
India
Indonesia
Brazil
Russia
Nigeria
Vietnam
Pakistan
Bangladesh
Philippines
Subscribers
1,246.3 million
893.3 million
285 million
272.6 million
237.1 million
175 million
127.7 million
126.1 million
116 million
109.5 million
Market growth was driven by demand from the developing
Source: International Telecommunication Union 2014
world, led by rapid mobile adoption in China and India,
the world’s most populous nations. There were 5.4 billion
Average revenue per user
mobile subscriptions in the developing world – almost
Though the global ARPU declined by 3.97%, the biggest
78% of global subscriptions – compared with 5.2 billion in
decline was in Africa, where Kenya’s ARPU was US$ 6.2 and
2013, according to ITU. Though mobile penetration in the
Tanzania’s was US$ 4.4, Uganda had an ARPU of US$ 3.5,
developing world stood at 90.2%, there was still potential
which compared to any of the developed economies is far
for growth, particularly in Africa, which had the lowest
less.
mobile penetration worldwide at 69.3%.
44
Subex Limited
Mobile economy in the Indian economy
SIMs in India.
Mobile economy in India, the world’s second largest market
by subscribers, will contribute around US$400 billion to the
country’s GDP and create 4.1 million jobs by 2020 (Source:
GSMA). Mobile telephony continued to be the industry
growth driver with net addition of new subscribers at 1.15
million, taking the total wireless subscriber base to 904.51
Average revenue per user: Prepaid ARPU per month
increased to H98 in December 2013, while postpaid ARPU
per month declined to H456 in December 2013. Monthly
ARPU for CDMA full mobility services increased by 5.48%
to H103.60 in December 2013. ARPU for CDMA increased by
29.58% on a y-o-y basis in this quarter.
million.
The data reported by service providers indicated that rural
87%
penetration
71%
penetration
32%
penetration
India began to emerge as the growth driver. Mobile services
subscriber base in India’s rural areas increased to 377.73
1.26
billion
1.10
billion
million in March 2014 from 374.96 million in February 2014.
On the other hand, urban subscription declined to 555.26
million from 556.99 million during same period.
SIM penetration: India’s 554.8 million unique mobile
phone users use 643.4 million active SIMs, counting multiple
connections being used by them on one/multiple handsets/
tablets. A study estimated that there were 773.9 million live
Total
popula-
tion
(2013)
% of
population
within
mobile
network
coverage
Address-
able
popula-
tion
Unique
mobile
subscrib-
ers
899
million
405
million
1.88
SIM cards
762
million
886
million
2.30
urban
60%
1.25
urban
40%
Average
number of
connec-
tons per
subscriber
Active mobile
connections
Registered
mobile
connec-
tions
Telecom Software Products
Subex offers the Revenue Operations Centre (ROC®) solution
suite for business and capex optimization, offering solutions
for revenue analytics - ROC revenue assurance, ROC fraud
management and ROC credit risk management; for cost
analytics - ROC partner settlement, ROC route optimization
and ROC cost management and for network analytics - ROC
asset assurance, ROC data integrity management and ROC
capacity management.
All solutions come together to help CSPs pevent fraud losses,
collect all revenues, reduce defaulted payments, reduce
wastful expenditure, manage
inter-carrier and partner
expenses and optimise capex.
For service providers that aim to optimize their operational
and process infrastructure, ROC delivers business and capex
optimization in the most pragmatic manner.
Functions of ROC
Creates a direct
linkage between operations and
profitability based on credible and timely cross-functional
data correlation
Brings together, in a synergistic manner, formally disparate
assurance, audit and governance functions
Enables an operations infrastructure that monitors and
controls the entire revenue chain and identifies risks to
margins and customer satisfaction
ROC enables profitable service provider growth through
coordinated operational control.
Supports business and operational innovation programmes
because of its entrenched end-to-end expertise
Annual Report 2013-14
45
Revenue Analytics
ROC Revenue Assurance: ROC Revenue Assurance is the
telecom industry’s first revenue assurance solution that
simplifies the complicated process of revenue assurance.
It tackles critical challenges across the entire revenue
chain with ease and offers two path breaking products
which simplify and speed up the process of revenue
recovery, namely RevenuePad and Zen. It helps customers
in addressing revenue assurance challenges inherent to
individual service verticals: wireless, fixed, cable MSPs, and
MVNOs. It also helps them address revenue assurance issues
across multiple functional areas such as service fulfillment,
usage integrity, retail billing, interconnect/wholesale billing
and content settlement. This in turn enables customers to
dramatically reduce the time required to implement or
extend the coverage of their revenue management system
and practices.
With Subex’s ROC Revenue Assurance, customers can easily
reconfigure or remodel existing solutions to accommodate
changing business requirements. It is designed not only
to detect potential revenue loss, but also to proactively
assist operators with investigation, diagnosis and revenue
recovery. ROC Revenue Assurance is highly effective in both
traditional circuit-switched and Next Generation packet-
switched service environment and is the perfect solution for
telecom revenue assurance.
Subex’s revenue assurance solution detects the symptoms
of leakage, prevents incidents before they reach the
customer’s bill, accelerate resolution times, and enable
revenue assurance teams to align their successes with
broader organizational goals - such as higher margins and
customer satisfaction.
ROC Fraud Management: The fraud management solution
by Subex, ROC Fraud Management is built to minimize
instances of fraud in the telecom industry by eliminating
known threats, uncovering new patterns, minimising fraud
run time, augmenting internal controls and supporting
continuous fraud management process
improvements.
Subex’s telecom fraud management system detects known
fraud types and patterns of unusual behaviour, helps
investigate these unusual patterns for potential fraud and
uses the knowledge, thus generated, to upgrade and protect
against future intrusions.
The solution is characterized by its unique architecture that
harnesses the power of proven rules-based alarms and
pattern matching driven by advanced statistical techniques.
Adding power to this hybrid detection system is a set of
potent case management tools. These tools provide relevant
case data that are made easily accessible through a single
window in a fast web-based GUI.
With Subex’s comprehensive fraud management system,
operators can detect fraud types in all telecom environments:
46
Subex Limited
wireline (PSTN, ISP and VoIP), and wireless (2G, 2.5G, 3G);
them the edge needed to prosper in today’s market.
and across all services: postpaid, payment, VAS, MMS and
m-commerce.
ROC Route Optimization: Telecom operators need to
respond quickly to the abrupt and volatile changes in service
ROC Credit Risk Management: The ROC Credit Risk
Management solution empowers operators to continuously
provider rates in order to remain competitive. Subex’s ROC
Route Optimization solution caters to this need, allowing
assess and mitigate risk presented by subscribers throughout
subscribers to benefit from cost-competitive yet high quality
their lifecycle. The solution tracks risk on a near-real time
service. The solution delivers value through the following
basis during:
Subscriber acquisitioning
Ongoing usage
Collections and recovery
The solution also provides the operator with a holistic view
that helps in understanding subscriber risk profile and
thereby aids its management.
capabilities:
Analyzes various service parameters such as cost, traffic
forecast, network capacity and quality
Uses analysis output to streamline service providers’
routing process
Establishes competitive sales rates for services
Executes the automated routing management system
to establish automatic switch connection and generate
Further, it can quickly and seamlessly accommodate new
Man-machine language commands for switch update
service information to provide an accurate picture of the
exposure at any point in time. Allowing operators to easily
These capabilities round up our comprehensive route
optimization solution, helping operators derive the best
and quickly, define various risk indicators and controls
breakouts and cost routes. Our processes also enable
enables the solution to adapt to local cultural and regulatory
communication service providers to establish focused
requirements. This also enables operators to stay agile in
efficiency-increasing task automation, thereby reducing data
changing socio-economic conditions that affect the overall
redundancies.
level of risk in a region.
Cost Analytics
ROC Partner Settlement: ROC partner settlement allows
operators to quickly and accurately settle charges with their
network and content partners. It helps operators improve
efficiency through light touch automation, accurate billing
settlement and prudent accrual provisioning. Catering to
ROC Cost Management: ROC Cost Management is a state-
of-the-art revenue management offering from Subex, which
helps service providers effectively monitor and manage the
cost of services. It enables operators to efficiently manage
the process of identification, collection and comparison of
cost related data across multiple sources such as partner
invoices, inventory, orders and call detail records.
the need for visibility of each deal’s impact on an operator’s
It ensures the profit margins and operational agility through
bottomline owing to shrinking margins, the solution provides
reduction of service delivery costs. It is built on a highly
strong coverage in all areas from order to cash. It enables
integrated platform using components-based technology
operators to manage costs and revenues on interconnect
to provide striking performance, scalability, interoperability
and partner agreements with domestic and international
and reliability.
operators as well as content partners on a day-to-day and
hour-to-hour basis.
The solution collects, collates and correlates the information
from switches, inventory, billing, partner invoices and
New types of complex agreements in areas such as IP and
financial systems to provide deeper insights about the cost
content-based services require new system capabilities to
aspects in an easy to understand format through dashboards
ensure that operators have accurate data available to assure
& reports. It enhances margins by optimizing leased circuit
revenues. ROC Partner Settlement’s flexibility, scalability
costs, reducing interconnect costs, assuring access costs and
and ease of use empowers all types of service providers,
by automating invoice verification process.
fixed or mobile, national incumbent or new entrant, giving
Annual Report 2013-14
47
Network Analytics
ROC Asset Assurance: ROC Asset Assurance helps operators
in managing and reducing network capex. It provides an
operator a holistic view into current assets, consumption and
placement of the assets, with subsequent recommendations
on what, where, when, and why to spend capex. The
components within ROC Asset Assurance solution are asset
analytics, data integrity management, capacity analytics and
network intelligence. All of these help operators to manage
telecommunications network assets across all dimensions
of the asset life cycle, providing complex analytics that are
not only descriptive (current states, trending, among others),
but also predictive. This facilitates accurate prediction of
asset exhaustion, procurement triggers, necessary asset
warehouse levels, retirement strategies and growth rates on
sparing levels.
A complete asset life cycle management program encompasses the continual monitoring and management of life cycles
associated with the assets. The overall network asset life cycle is pictured below:
Forecast
Plan Budget
Purchase
Receive
Deploy
Operate
Redeploy
Retire
ROC Data Integrity Management: Subex has been the
pioneer in data integrity management, with over a decade of
which would help CSPs to plan capacity investments
accordingly. It provides a holistic view of capacity through
experience with the world’s leading service providers. ROC
which it helps CSPs see threshold violations on key links and
Data Integrity Management is an industry’s first data integrity
resolve capacity-based issues.
management solution for improving the quality of data that
drives key service provider processes, resulting in lower
costs and higher service profitability. The solution combines
three powerful data integrity functions: multi-layer network
and service discovery, data reconciliation and discrepancy
analytics. Leveraging inherent cross-domain intelligence and
extensive off-the-shelf network equipment support, ROC
Data Integrity Management discovers devices and logical
services in diverse network environments and reconciles
this data with the OSS/BSS on a continuous, controlled basis.
The result is consistent, relevant data throughout service
provider operations, enhancing the effectiveness and value
of service fulfillment, service assurance and billing systems.
ROC Capacity Management:
management solution enables CSPs to prevent an availability
capacity
Subex’s
Managed Services: In an era of intensifying competition,
demanding customers, shrinking margins and near-flat
toplines, it is imperative to manage Business Support
Systems (BSS) effectively. Understanding this, Subex offers a
flexible and scalable Managed Services program that enables
Communication Service Providers (CSP) to successfully
meet the ever changing business, technology and customer
requirements. Subex Managed Services program is designed
to add both strategic and tactical value to CSP’s operations
and enable better customer experience while also enhancing
their operational efficiency, service agility and profitability.
Experts from Subex are helping service providers around
the world improve their BSS/OSS operations significantly,
not just in the long term, but also on a day-to-day basis. We
complement existing operations just as much as transform
or performance impact on business critical applications due
their business.
to capacity-related issues. It provides the critical link between
discovering the network ‘as-is’ and presenting the data in
a normalized and appropriate format. It further engages
analytics functions to provide actionable intelligence and
also predict scenarios and their impact on network capacity
ROC Cloud: Small and medium telcos have business support
system (B/OSS) needs very different from those of larger
telcos. In the same vein, most B/OSS products are developed
to address the needs of large telcos. They are loaded with
a host of standard features, not all of which are relevant
48
Subex Limited
to smaller organizations, and necessitate a substantial
stream is the support revenue calculated as a function of
investment in licenses and resources. Quite naturally, it is
the license revenue. Further, we also have an additional
difficult to justify this investment in most small and medium
stream of revenue namely, customization. While the above
organizations. Subex is recognized as the leader in the
mentioned streams are directly related to the license model,
business optimization space and has pioneered the concept
we also have embarked on an additional stream of revenue
of the ROC – the Revenue Operations Center – to enable
namely Managed Services, which has been detailed below.
profitable growth through coordinated operational control.
The same ROC is delivered as a service to suit the needs of
Managed Services
small and medium telcos in the form of ROCcloud.
Recognizing the strategic imperative of outsourcing in
Customer Base
today’s environment, Subex offers a flexible and scalable
Managed Services program that enables service providers to
Subex addresses more than 300 installations across 70
successfully meet the ever changing business, technology and
countries. This includes 33 of the world’s 50 biggest
customer requirements. Subex’s Managed Services offering is
telecommunications service providers worldwide. A partial
designed to offer true competitive advantage by focusing on
list of customers is given below:
strategic, operational and cost benefits that address service
APAC–Aircel, Airtel, Bakrie Telecom, CAT, Celcom, Dtac,
providers’ current and future challenges and risks.
Etisalat, Hutchison Telecom, Idea, Indosat, Maxis, MTNL,
Subex understands that no two operators’ requirements are
Reliance Communications, Starhub, TelBru, Telkom Indonesia,
similar and hence offers the flexibility to pick and choose
Telstra, TM, True, TATA, Vodafone
services based on scope of operations, domains and on-site
Americas–Americatel, America Movil, Bell Canada,
support type.
Centennial, Cincinnati Bell Wireless, Claro, Comcast, Cricket,
Traditional License Model: Typically, this is the model with
Etecsa, Frontier, GVT, Glo, Hawaiian Telcom, Grupo ICE, Level
highest level of CSP involvement. Here, the CSP hosts the
3, Porta, Sprint, Telesur, Telefonica, Telmex, Telus, T Mobile,
application, owns the hardware and operates the software
One, Verizon
while Subex takes onus of the development, deployment,
EMEA- Airtel, AlbTelecom, Atalntique Telecom, Avea, Azercell,
support and maintenance of the product.
Bezeq International, BTC, BT, Cable & Wireless, Cell C, Colt,
Service Bureau/Hosted Model: In this model, Subex takes
Coolwave, Cora, Cyta, Du, Eagle, Econet, ecoop, 8-el, emt,
responsibility of hosting the application, and hardware
Finnet, Goecell, Hot Mobile, iKatel, Interoute, Kcell, Lebara,
along with the development, deployment support and
Mascom, Matrix, Melita, Mirs, Mobinil, Moldcell, Mcel, MTN,
maintenance.
Ncell, Nedjma, O2, One, Orange, Orascom, Ooredoo, Qicomm,
Romtelecom, Roshan, Sabafon, Skanova, Starcomms, STC
Kuwait, Swisscom, Syriatel, Tcell, Telecom Egypt, Telekom
Slovenije, Telenor, Telfort, TeliaSonera, TEO, Totem, TP, Turk
Telecom, UPC, Vodafone, Warid, Wavecrest, Zain, Zong and
End-to-End Managed Services:
This model is perfect for most operators in today’s market as
it results in the highest performance with the lowest Opex
and Capex
Zon
Revenue Model
Subex licenses its software solutions on per subscriber
or per transaction basis for every service stream of our
customers, resulting
in continuous growth
in
license
revenues depending on the growth of the networks where
the solutions are installed. Another sustainable revenue
Annual Report 2013-14
49
Subex Managed Services
SMART services leveraging proven technology
Products, Domain and Operations Expertise
30+ Managed Service Programs, over
20 billion CDRs processed monthly,
applications running on over 100 servers
Regular industry forum thought leadership
engagements
SM
A
Industry pioneering Revenue Operations
Center (ROC) platform
Over 300 ROC implementations at 200+
service providers
Automated workflows,
future
proof
roadmap
R
T
Subex Managed
Accountable
ROC-Enabled
Tailored
services leveraging proven technology
Stringent SLAs,
innovative Risk-Reward
Share Model
Robust processes and methodologies
Assured migration up the maturity model
Flexible, bespoke service based on scope of
operations, BSS/OSS domains and stage of
evolution
More choice based on your requirements
and budget
On-demand, Software-as-a-Service
(SaaS) – ROC Cloud
Small and medium telcos have Business Support System
(BSS) needs that are very different from those of larger
telcos. In the same vein, most BSS products are developed to
address the needs of large telcos. They are loaded with a host
of standard features, not all of which are relevant to smaller
organizations and necessitate a substantial investment in
licenses and resources. Quite naturally, it is difficult to justify
this investment in most small and medium organizations.
50
Subex Limited
The following graph gives the revenue from each of the stream during the past several years:
e
g
a
t
n
e
c
r
e
P
40
100
90
80
70
60
50
40
30
20
10
0
Revenue Composition
5
0
18
13
9
0
19
5
64
67
2
9
26
6
57
3
8
3
10
49
1
11
25
7
2
10
27
7
56
54
1
14
28
3
54
0
18
18
7
57
0
24
31
8
37
1
27
34
8
30
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Third Party
Managed Services
Support
Customization
License & Addl. License
Geographical Mix
We have a dominant presence in both developing and developed markets. This is quite evident from the geographical mix
given below.
e
g
a
t
n
e
c
r
e
P
100
80
60
40
20
0
Geographical Mix
14
34
9
36
52
55
27
36
37
15
35
50
8
37
55
16
40
44
14
35
21
26
51
53
17
20
63
33
50
17
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
EMEA
Americas
APAC
Annual Report 2013-14
51
Risks and concerns
Risks are an inherent part of any business activity. Following
are the risks associated with our business:
The business model of communications service providers
Subex has set up processes and methodologies to address
this threat and to turn it into a strategic advantage by being
in the forefront of technological evolution. Regular skill
upgradation programs and training sessions that include
attending global conferences, employing specialized
is highly dependent on consumer behaviour and any
consultants etc. are undertaken.
reduction on spending by consumers will negatively impact
the fortunes of the telcos. That will result in reduction of
investment by the telcos and a consequent contraction
of market for our products. The communications industry
continues to experience consolidation and an increased
formation of alliances among communications service
providers and between communications service providers
and other entities. Should one of our significant customers
consolidate with a service provider using a competing
product and decide to discontinue the use of our product(s),
this could have a negative material impact on our business.
These consolidations and alliances may cause us to lose
customers or require us to reduce prices as a result of
enhanced customer leverage, which would have a material
adverse effect on our business. We may not be able to offset
the effects of any price reductions. We may not be able to
expand our customer base to make up any revenue declines
if we lose customers.
Retention of software personnel is another major risk being
faced by Subex. Towards this, the Company provides an
empowered atmosphere with extensive mentoring, career
counseling and constant learning opportunities in cutting
edge and challenging technologies.
Intellectual Property
The telecom software industry is characterized to a large
extent by its reliance on proprietary technology. The
Company and its subsidiaries own or have licenses to use
the technologies embedded in its products. The Company
depends on a combination of technical
innovations,
copyrights, trade secrets and non-disclosure agreements
for the protection of this technology. The Company and its
subsidiaries also maintain patent and trademarks, and patent
and trademark applications, as it deems appropriate. The
Company and its subsidiaries also have copyrights vested in
their software products and related materials. However, as
Subex is fully dependant on the telecom industry. As such,
is common industry practice, the Company has not generally
any vagaries in the telecom business environment will
pursued registrations of its copyrights.
considerably impact the fortunes of the Company.
Technology and Personnel
Our industry is characterized by rapid technological changes
and frequent new service offerings. Significant technological
changes could make our technology and services obsolete,
less marketable or less competitive. We must adapt to
our rapidly changing market by continually improving the
features, functionality, reliability and capability of our
products to meet changing customer needs. We may not be
There can, however, be no assurance that the Company’s
claims to any intellectual property rights will successfully
protect what it considers to be the Company’s intellectual
property from third-party use in any or all of the jurisdictions
in which it does business, either now or in the future. To the
extent that the Company’s innovations and products are
not protected by patents, copyrights or other intellectual
property rights, third parties (including competitors) may be
able to make use of the Company’s know-how.
able to adapt to these challenges or respond successfully or
In addition, legal protection of the Company’s intellectual
in a cost-effective way. Our failure to do so would adversely
property rights in one country will not necessarily provide
affect our ability to compete and retain customers or market
protection in other countries. The laws of many countries
share. Launching new products is a key element of our
do not protect intellectual property rights to as great
growth and an inability to bring new products with high
an extent as those of many western countries. Effective
demand to the market in a timely manner will reduce our
protection of the Company’s intellectual property rights may
growth and profitability.
be unavailable or limited in certain countries. For example,
52
Subex Limited
many countries, particularly certain developing countries,
and legal questions and its outcome is uncertain. Any claim
do not favour the aggressive enforcement of trademarks,
relating to infringement of intellectual property rights may
patents and other measures
to protect
intellectual
require it to pay substantial damages and seek licences to
property. Limited intellectual property rights make piracy
continue to use such intellectual property, which licences
and misappropriation, which are endemic to the software
may not be available on commercially acceptable terms
industry, more difficult to prevent. Moreover, even when
or at all. Even if the Company were to be successful, any
the Company has adequate intellectual property rights
intellectual property litigation could be costly and time-
to stop an infringer, it may lack the resources to detect all
consuming, and would divert the attention of management
infringements, to trace the source of the infringement or to
and key personnel from the Company’s business operations.
enforce its rights against the infringer.
As a result of any intellectual property infringement suit
Much of the Company’s technology and many of the
Company’s processes, depend upon
the knowledge,
experience and skills of the Company’s personnel. To
protect rights to the Company’s know-how and technology,
brought against the Company or its customers, the Company
may be forced to stop or delay developing, manufacturing or
selling products that are claimed to infringe a third party’s
intellectual property rights.
the Company generally requires all employees and advisors
Furthermore, the Company is required to indemnify its
to enter into confidentiality agreements that prohibit the
customers against third-party claims of infringement of
disclosure of confidential information. These agreements
intellectual property arising out of the Company’s customers’
also require disclosure and assignment to the Company
use of its products and services. Typically, the Company’s
of ideas, developments, discoveries and inventions. These
liability for such indemnification is not limited by limitation
agreements may not effectively prevent disclosure of the
of liability provision in customer contracts.
Company’s confidential information, provide meaningful
protection for the Company’s confidential information
or assign to the Company all such intellectual property
rights. The enforceability of
these agreements also
varies from jurisdiction to jurisdiction, and it is difficult to
police disclosures by persons who leave the Company’s
employment. Should any of these possibilities occur, it may
have a material adverse effect on the Company’s business,
financial condition and results of operations.
Infringement
The Company and its subsidiaries have not received any
notification of an alleged infringement of any other party’s
proprietary technology. However, the Company and its
subsidiaries may in the future face claims of infringing
the intellectual property rights of others or that their
customers are
infringing such third party
intellectual
property rights through use of the Company’s products.
If any of the Company’s products are found to infringe
the patents or other intellectual property rights of others,
or if the Company settles a claim in a manner adverse to
it, the Company’s development, manufacture and sale of
Further, the Company is often in possession of proprietary
information of its customers. There is a risk that such
information may be wrongly used or disclosed or may be
misappropriated by employees of the Company resulting,
among other things, in a breach by the Company of
contractual obligations to its customers.
Any of these factors could have a material adverse effect on
the Company’s business, financial condition and results of
operations.
Variability of Quarterly Operating Results
The quarterly operating results of the Company have varied
in the past due to reasons like seasonal pattern of hardware
and software capital spending by customers, information
technology investment trends, achievement of milestones
in the execution of projects, hiring of additional staff and
timing and integration of acquired businesses. Hence, the
past operating results and period to period comparisons
may not indicate future performance. The management is
attempting to mitigate this risk through expansion of client
base geographically and increase of steady annuity revenue
such products could be severely restricted or prohibited.
through Managed Services model.
Intellectual property litigation can involve complex factual
Annual Report 2013-14
53
Statutory Obligations
Subex has registered with Special Economic Zone for
US$ 1,400,000 under its US$ 98,700,000 5% Convertible
Unsecured Bonds (“FCCBs II”). In July 2012, pursuant to the
software development activities and has availed Customs
exchange offer of FCCBs I and FCCBs II, the Company issued
Duties, Sales Tax and Central Excise exemptions. The non-
US$ 127,721,000 5.70% Secured Convertible Bonds with a
fulfillment of export obligations may result in penalties as
maturity period due July 2017 (“FCCBs III”). Principal amount
stipulated by the Government and this may have an impact
of US$ 36,321,000 were mandatorily converted and US$
on future profitability.
Environmental Matters
Software development, being a pollution free industry, is not
subject to any environmental regulations.
Foreign Exchange
Subex has substantial exposure to foreign exchange related
3,250,000 out of FCCB III were subsequently converted into
equity shares. Pursuant to the mandatory and subsequent
conversions US$ 88,150,000 is currently outstanding under
FCCBs III.
The maturity period of the un-exchanged FCCBs I worth
US$ 1,000,000 and the un-exchanged FCCBs II worth US$
1,400,000 was extended to March 2017.
risks on account of revenue from export of software and
The ability of the Company to successfully meet the debt
outstanding liabilities. There is a natural hedge to the
obligations under the FCCBs depends on its internal
extent of expense incurred in same currency. Despite this,
accruals, additional fund raising in the form of debt or equity
particularly given the volatility in the foreign exchange
and possible conversion of FCCBs into equity shares prior to
market, there could be significant variations.
redemption.
Taxation
Consequent to the end of STPI related tax benefits for Subex,
we have moved to a Special Economic Zone (SEZ). While tax
protection is expected to continue under the SEZ scheme,
there is a significant amount of uncertainty in the regulatory
environment. This could potentially lead to incidence of
higher tax.
Contractual Obligation
In terms of the contract entered into by Subex with its
customers in the ordinary course of business, it is obliged
to perform and act according to the contractual terms and
Internal control systems and their adequacy
Management maintains internal control systems designed to
provide reasonable assurance that assets are safeguarded,
transactions are executed in accordance with management’s
authorization and properly recorded, and accounting records
are adequate for preparation of financial statements and
other financial information. The internal audit function
also carries out Operations Review Audits to improve the
processes and strengthen control of the existing processes.
The Audit Committee periodically reviews the functions of
internal audit.
regulations. Failure to fulfill the contractual obligations
Pursuant to clause 49 of the Listing Agreement, the CEO/CFO
arising out of such contracts may expose Subex to financial
has to accept responsibility for establishing and maintaining
and other risks.
The management has taken sufficient measures to cover
all of its contractual risks and does not foresee any major
liability due to its non fulfillment of any contractual terms
and conditions.
Debt Obligations
As on March 31, 2014, the Company had outstanding FCCBs
internal controls for financial reporting and that they have
evaluated the effectiveness of internal control systems of
the Company pertaining to financial reporting and that they
have disclosed to the auditors and the Audit Committee,
deficiencies in the design or operation of such internal
controls, if any, of which they are aware and the steps they
have taken or propose to take to rectify these deficiencies.
The adequacy of the Company’s internal controls are tested
aggregating to US$ 1,000,000 under its US$ 180,000,000
from time to time and control deficiencies, if any, identified
2% Coupon Convertible Unsecured Bonds (“FCCBs I”) and
during the assessments are addressed appropriately.
54
Subex Limited
Discussion on financial performance with respect to operational performance
Key Financials and Ratio Analysis
Financial Highlights /
Year ending 31st March
2014
2013
2012
Consolidated
Stand-Alone Consolidated
Stand-Alone Consolidated
Stand-Alone
Amount in H Lakhs
Total income:
34,449.28
29,669.48
33,147.10
26,677.95
48,878.97
33,902.66
– (Continuing Operations)
34,449.28
– (Discontinuing Operations)
–
–
–
Operating Profits (EBITDA)
6,999.26
4,680.87
before Exceptional items:
– (Continuing Operations)
7,215.96
– (Discontinuing Operations)
(216.70)
Depreciation & Amortization
– (Continuing Operations)
– (Discontinuing Operations)
248.34
244.18
4.16
–
–
161.31
–
–
30,823.24
2,323.86
4,024.92
4,623.45
(598.53)
426.77
420.51
6.26
–
–
44,043.24
4,835.73
–
–
3,338.21
14,063.28
9,700.20
–
–
225.92
–
–
13,960.19
103.09
779.60
772.62
6.98
–
–
364.90
–
–
Profit/(Loss) before tax & after
(216.45)
(1,309.27)
(5,608.47)
(3,456.42)
3,519.07
203.65
Exceptional items:
– (Continuing Operations)
– (Discontinuing Operations)
262.26
(478.71)
–
–
(4,005.10)
(1,603.37)
–
–
3,475.01
44.06
–
–
Profit/(Loss) after tax &
(1161.27)
(2,952.88)
(5994.71)
(3,456.42)
3,184.10
239.70
Exceptional items:
– (Continuing Operations)
– (Discontinuing Operations)
Equity Dividend %
Share Capital
Reserves & Surplus
Net Worth
Gross fixed Assets
Net Fixed Assets
Total Assets
Key Indicators
Earning per Share (Year end)
Cash Earning per Share (Year
end)
Book value per Share
Debt (including Working capital)
Equity Ratio
EBITDA / Sales - %
Net Profit Margin - %
Return on year end Net Worth %
Return on year end Capital
Employed %
(674.12)
(487.15)
NIL
–
–
NIL
(4,391.34)
(1,603.37)
Nil
–
–
Nil
3,134.80
49.30
Nil
–
–
Nil
16,664.00
16,664.00
16,664.00
16,664.00
6,931.08
6,931.08
697.90
10,719.72
5,835.68
16,870.39
7,172.35
14,015.80
17,361.90
27,383.72 22,499.68
33,534.39
14,103.43
20,946.88
9,625.76
7,166.04 10,279.57
7,096.86
10,447.13
7,370.52
597.83
316.50
466.74
333.05
772.80
474.80
109,433.04
155,904.29
1,08,797.37
1,47,548.90
1,09,609.37
1,45,873.05
(0.70)
3.65
10.42
4.39
20.31%
(3.41%)
(6.69%)
(1.24%)
(1.77)
(4.40)
(2.54)
2.20
(1.04)
(1.44)
16.43
13.50
2.52
3.25
20.12
1.96
15.94%
(10.06%)
(10.78%)
(3.06%)
12.18%
(18.13%)
(26.64%)
(6.27%)
12.57%
(13.02%)
(10.31%)
(3.48%)
4.59
7.50
20.35
4.27
29.43%
6.66%
22.58%
4.29%
0.35
3.73
30.22
2.80
29.48%
0.73%
1.14%
0.30%
Annual Report 2013-14
55
Commentary on financial statements
Promoter group, at H80/- per share.
1. Share Capital
Of the equity paid-up capital, the Company had issued the
following shares towards consideration other than cash.
1,15,000 shares of H10/- each, towards the balances in
the current account of partners, Mr. Subash Menon and Mr.
Alex J. Puthenchira, on the takeover of Subex Systems, a
partnership firm, by the Company during 1993-94.
46,26,940 Shares of H10/- each to all eligible shareholders
as on March 31, 1999 in the ratio of 1:1 by capitalizing the
General Reserves.
12,840 shares of H10/- each to the erstwhile owners of
M/s. IVth Generation Inc., towards part consideration of the
cost of acquisition of that Company at H1,023/- per share
during 1999-2000.
1,08,78,784 Shares of H10/- each to all eligible shareholders
as on January 6, 2006 in the ratio of 1:1 by capitalizing the
securities premium.
11,09,878 Shares of H10/- each to the GDR holders as on
April 7, 2006 at H400/-.
1,17,28,728 Shares of H10/- each to the GDR holders
as on June 22, 2006 towards consideration of the cost of
acquisition of Azure Solutions Ltd at H532.24 per share
1.1 During 2006-07 the Company issued 2,19,551 (including
Bonus shares, wherever options are eligible) shares of
H10/- each to various Employees on exercise of Stock
Options granted under the Employee Stock Option Plan
(ESOP – II & III).
1.2 During 2007-08, the Company issued 31,364 (including
Bonus shares, wherever options are eligible) shares of
H10/- each to various Employees on exercise of Stock
Options granted under the Employee Stock Option Plan
(ESOP – II & III).
1.3 During 2009-10, the Company issued 1,203 equity
shares of H10/- each under its ESOP III scheme and 1,210
equity shares of H10/- each under its ESOP II scheme to
various Employees on exercise of Stock Options.
1.4 During 2009-10, the Company issued 40,00,000
equity shares of H10/- each, on a preferential basis, to M/s
Woodbridge Consultants, an entity belonging to Promoters/
56
Subex Limited
1.5 During 2009-10, the Company issued 1,91,33,637
equity shares allotted upon conversion of FCCBs
aggregating to principal amount of US$ 31,900,000 out of
its US$ 98,700,000 5% Convertible Unsecured Bonds, in
accordance with the terms and conditions thereof.
1.6 During 2010-11, the Company issued 41,24,254 equity
shares of H10/- each, on a preferential basis, to M/s KBC
Aldini Capital Mauritius Limited, at H81/- per share.
1.7 During 2010-11, the Company issued 71,97,607 equity
shares allotted upon conversion of FCCBs aggregating
to principal amount of US$ 12,000,000 out of its US$
98,700,000 5% Convertible Unsecured Bonds, in accordance
with the terms and conditions thereof.
1.8 During 2010-11, the Company issued 3,765 equity
shares of H10/- each under its ESOP III scheme and 1,260
equity shares of H10/- each under its ESOP II scheme, to
various Employees upon exercise of Stock Options.
1.9 During 2011-12, the Company issued 747 equity shares
of H10/- each under its ESOP III scheme to various Employees
upon exercise of Stock Options.
1.10 There are no calls in arrears.
1.11 During 2012-13, the Company issued 9,73,29,190
equity shares allotted upon conversion of FCCBs to principal
amount of US$ 39,571,000, out of its US$ 127,721,000
5.70% Secured Convertible Bonds, in accordance with the
terms and conditions thereof.
2. Reserves And Surplus
2.1 Capital Reserve of H130 Lakhs was created by credit
of the notional premium on 12,840 equity shares of H10/-
each valued at a price of H1,023/- per share and issued to
the owners of IVth Generation Inc, USA as part consideration
for the transfer of their shareholding to Subex Systems Ltd.
2.2 During the year 2010-11, additions to capital reserve
due to reversal of accrued interest on conversion of FCCBs
into equity shares amounted to H1,598.9 Lakhs, reductions
due to transfer to Business restructuring reserve amount to
H400 Lakhs and deferred interest on restructured FCCBs
amounted to H1,222.7 Lakhs.
2.3 During the year 2011-12, the balance in capital reserve
of H346.70 Lakhs was transferred to Business restructuring
reserve.
2.4 During the year 2012-13, the balance of Foreign
Currency Translation Reserve of H2,765.65 Lakhs has been
included in the Reserves and Surplus to bring it in line with
Revised Schedule VI.
2.5 During the year 2013-14, the balance of Foreign
Currency Translation Reserve of H5,801.74 Lakhs has been
included in the Reserves and Surplus to bring it in line with
Revised Schedule VI.
2.6 Securities Premium Account represents the premium
collected on:
9,71,000 equity shares issued at a premium of H65/- per
share through an Initial Public Offer in 1999-2000.
3,30,800 equity shares issued at a premium of H740/- per
share to Mutual Funds and Bodies Corporate on a preferential
basis during 1999-2000.
18,87,000 equity shares issued at a premium of H88/- per
share to holders of ROCCPS on conversion of preferential
shares at H98/- each, namely Intel Capital, Toronto Dominion
Bank and UTI Venture Funds.
15,38,459 equity shares issued at a premium of H290/-
per share to holders of FCCBs on conversion of the bonds at
a price of H300/- per share.
11,09,878 equity shares issued at a premium of H390/-
per share to holders of GDR at a price of H400/-.
1,17,28,728 equity shares issued at a premium of H522.24
per share to holders of GDR at price of H532.24
2,58,353 (including Bonus shares, wherever options are
eligible) equity shares allotted to the employees under ESOP
II & III Scheme as per the provisions of the Scheme at various
premiums.
2,63,31,244 equity shares were allotted upon conversion
of FCCBs aggregating to principal amount of USD 43.9 Million,
out of its USD 98.7 Million 5% Convertible Unsecured Bonds,
in accordance with the terms and conditions thereof
40,00,000 equity shares were allotted, on a preferential
basis, to M/s Woodbridge Consultants, an entity belonging
to Promoters/Promoter group, at an issue price of H80 per
share including a premium of H70 per share
41,24,254 equity shares of H10/- each, allotted on a
preferential basis, to M/s KBC Aldini Capital Mauritius
Limited, at an issue price of H81 per share including a
premium of H71 per share
747 shares of H10/- each were allotted to the employees
under ESOP III scheme as per the provisions of the scheme
at various premiums.
2.7 Business Restructuring Reserve
During the year 2009-10, H50,000 Lakhs and H17,000
Lakhs were transferred to Business Restructuring Reserve
from securities premium and capital reserve respectively.
Out of the said amount, H64,997.90 Lakhs were utilized and
consequently, the balance in Business Restructuring Reserve
as of March 31, 2010 is H2,002.10 Lakhs on consolidated
basis.
During the year 2010-11, H17,000 Lakhs and H400 Lakhs
were transferred to Business Restructuring Reserve from
securities premium and capital reserve respectively. Out
of the said amount, H18,303.70 Lakhs were utilized and
consequently, the balance in Business Restructuring Reserve
as of March 31, 2011 is H1,098.40 Lakhs on consolidated
basis.
During the year 2011-12, H346.70 Lakhs were transferred
from Capital Reserve and H854.30 Lakhs un-utilized
provisions were transferred back to Business Restructuring
Reserve. Out of the said amount, H629.20 Lakhs were utilized
and consequently, the balance in Business Restructuring
Reserve as of March 31, 2012 is H1,670.20 Lakhs on
consolidated basis.
During 2012-13, H271.10 Lakhs were transferred to
Securities premium Account. Out of the said amount,
H1,318.48 Lakhs were utilized and consequently, the balance
in Business Restructuring Reserve as of March 31, 2013 is
H80.63 Lakhs on consolidated basis.
During 2013-14, H80.63 Lakhs was utilized from BRR
for making provisions for doubtful debts. The balance in
Business Restructuring Reserve as of March 31, 2014 is Nil
on consolidated basis.
3. Employee Stock Options
In accordance with the Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, the Company amortizes
Annual Report 2013-14
57
the excess of market price of the underlying equity shares as
premium payable on these bonds is accrued over the life of
on the date of the grant of the option over the exercise price
the bonds and is carried under Other Long Term Liabilities.
of the option, to be adjusted over the period of vesting. The
net amount carried in respect of stock options outstanding
at March 31, 2014 amounts to H96.29 Lakhs (Previous Year:
H123.78 Lakhs).
4. Short Term Borrowings
On consolidated basis, the Short term borrowings of
H16,015.60 Lakhs (Previous Year: H19,387.91 Lakhs)
outstanding in the books as at March 31, 2014 consists
of H14,817.30 Lakhs from banks secured by the charge
on Fixed/Current Assets and personnel guarantee of the
director of the Company apart from the corporate guarantee
in which the director is interested. as well as guarantee of
Subex Technologies Ltd.
c. H52,815.07 Lakhs (Previous Year: H47,852.27 Lakhs)
relating to Foreign Currency Convertible Bonds issued in
fiscal 2012-13 as a result of restructuring existing bonds
mentioned in (a),((b) above. The bonds carry interest of
5.70% per annum and are redeemable by July 7, 2017.
These bonds are listed on the Singapore Exchange Securities
Trading Limited. The premium payable on these bonds is
accrued over the life of the bonds and is carried under Other
Long Term Liabilities.
6. Fixed Assets
During the year, the Company added H368.00 Lakhs on
consolidated basis and H147.05 Lakhs on standalone basis,
to its gross block. The Company disposed off certain assets
On Standalone basis, the Short term borrowings of H14,817.30
Lakhs (Previous Year: H16,550.46 Lakhs ) outstanding in the
books as at March 31, 2014, H14,817.30 Lakhs from Banks
secured by the charge on Fixed/Current Assets and personnel
no longer required. The Company’s net block of fixed
assets was H597.83 Lakhs (Previous year H466.74 Lakhs) on
consolidated basis and H316.50 lakh (Previous year H333.05
lakh) on standalone basis.
guarantee of the director of the Company apart from the
corporate guarantee in which the director is interested as
well as guarantee of Subex Technologies Ltd.
5. Long Term Borrowings (including current provisions)
On a consolidated basis and standalone basis
7. Investments
During 1999, the Company had acquired the whole of the
outstanding common stocks numbering 3,000 of no par
value of IVth Generation, Inc., New Jersey, USA, Consequent
to the acquisition, IVth Generation Inc, a wholly owned
Current maturities of long term debt as at March 31, 2014
subsidiary of the Company, has been renamed as “Subex
consists of:
a. H599.15 Lakhs (Previous Year: H542.81 Lakhs ) relating to
Foreign Currency Convertible Bonds issued in fiscal 2006-
07. The bonds carry interest of 2% per annum and are
redeemable by March 9, 2017 as a result of re-structure (the
same was considered as current portion in previous year).
These bonds are listed in the Professional Securities Market
of London Stock Exchange. The premium payable on these
bonds is accrued over the life of the bonds and is carried
under Other Long Term Liabilities.
b. H838.81 Lakhs (Previous Year: H759.99 Lakhs ) relating to
Foreign Currency Convertible Bonds issued in fiscal 2009-
10 as a result of restructuring existing bonds mentioned in
(a) above. The bonds carry interest of 5% per annum and
are redeemable by March 9, 2017. These bonds are listed
on the Singapore Exchange Securities Trading Limited. The
Technologies Inc.” During 2007-08, the Company filed
an application with Hon’ble High Court of Karnataka to
transfer the Services Business Division (which included
the investment in Subex Technologies Inc.,) to Subex
Technologies Ltd, a wholly owned subsidiary of Subex Ltd
under a scheme of arrangement. On obtaining the order
from the Hon’ble High Court of Karnataka, the Company has
transferred the Services business to Subex Technologies Ltd
with effect from September 1, 2007 (appointed date) at an
aggregate consideration of H31,00,00,000. In accordance
with the order of the Hon’ble High Court, the Company shall
receive 30,00,000 shares of Subex Technologies Ltd valued
at H3,00,00,000 in settlement of the consideration with the
balance H28,00,00,000 being treated as unsecured loan
taken by the subsidiary from the Company.
7.1 On June 23, 2006, the Company acquired the entire share
holding of Azure Solutions Ltd, UK. The consideration was
58
Subex Limited
discharged by issue of 1,17,28,728 GDRs each representing
one equity share of H10/- at a premium of H522.24 per share
and cash of H2,145.70 Lakh.
7.5 During the year 2010-11, the Company recognized an
amount of H400 lakh as diminution in carrying value of
investments in Subex Technologies Ltd. Consequently, the
7.2 During the year 2007-08, the Company completed the
acquisition of Syndesis Ltd, Canada, a company engaged
in Service Assurance and fulfillment space in the Telecom
service industry. Pursuant to the acquisition, Syndesis
Limited has been renamed as Subex Americas Inc.
7.3 During the year 2009-10, the Company recognized an
amount of H50,000 Lakh as diminution in carrying value
of investments in Subex Americas Inc. Consequently, the
investment carrying value as of March 31, 2010 is H27,495.70
Lakh.
7.4 During the year 2010-11, the Company recognized an
amount of H15,000 Lakh as diminution in carrying value
of investments in Subex Americas Inc. Consequently, the
investment carrying value as of March 31, 2011 is H12,495.70
Lakh.
investment carrying value as of March 31, 2011 is Nil.
8. Trade Receivables
The major customers of the Company are the telecom and
cellular operators overseas and in India. The receivables are
spread over a large customer base. There is no significant
concentration of credit risk on a single customer.
8.1 All the debtors are generally considered good and
realizable and necessary provision has been made for
debts considered to be bad and doubtful. The level of
sundry debtors is normal and is in tune with business trends
requirements
8.2 Sundry Debtors as a percentage of total revenue is
29.19% as against 22.18% in the previous year, on a
consolidated basis.
8.3 The age profile on consolidated basis is as given below:
Amount in H Lakhs
Period in days
March 31, 2014
March 31, 2013
Less than 180 days
More than 180 days
Total
Value
9,011.40
1,046.20
10,057.60
The age profile on standalone basis is as given below:
Period in days
March 31, 2014
Less than 180 days
More than 180 days
Total
Value
56,300.48
15,210.23
71,510.71
%
%
89.60
10.40
100.00
78.73
21.27
100.00
Value
7,230.84
102.00
7,332.84
%
98.60
1.40
100.00
Amount in H Lakhs
March 31, 2013
Value
51,708.28
10,633.30
62,341.58
%
82.94
17.06
100.00
8.4 The management believes that the overall composition
consolidated basis with the bankers is for establishing bank
and condition of sundry debtors
is satisfactory post
guarantee.
assessment of doubtful receivables. The provision for
doubtful debts stands at H4,770.44 Lakhs (Previous Year
H4,727.80Lakhs) on consolidated basis and H6,085.65 Lakhs
(Previous Year H3,886.90 Lakhs) on standalone basis.
9. Cash and Cash Equivalents
The bank balances includes both rupee accounts and
foreign currency accounts. The Margin Money deposit of
H45.45 Lakhs (Previous Year: H296.36 Lakhs) on Standalone
basis and H485.42 Lakhs (Previous Year: H627.91 Lakhs) on
10. Long-terms Loans and Advances
10.1 Security Deposits represent rent deposit, electricity
deposit, telephone deposits and advances of like nature.
10.2 Advance Taxes comprise of Advance Income taxes, net
of provision for taxation represents payments made towards
tax liability pending assessment and refunds due. MAT
credit entitlement represents the net available credit of the
Minimum Alternate tax for future years.
Annual Report 2013-14
59
10.3 Loans due from Group Companies (Standalone basis)
Particulars
Subex Americas Inc
Subex Technologies Ltd
11. Statement of Profit & Loss
11.1 Income
2013-14
1,838.22
1,705.67
Amount in H Lakhs
2012-13
1,706.70
1,705.70
The segment wise break up of revenue on consolidated basis is given below:
Amount in H Lakhs
Particulars
Software Products
Software Services
Total
2013-14
2012-13
Value
34,005.16
-
34,005.16
%
100.00
-
100.00
Value
30,734.27
2,323.68
33,057.95
%
92.97
7.03
100.00
11.2 Geographically, the Company earns income from export
of software products and related services to USA, EMEA &
of total income as against H3,338.21 Lakhs at 12.51% during
the previous year.
Asia Pacific region.
12. Other Income
Other income consists of income derived by the Company
from Interest on income tax refund, interest on deposits
from banks, interest on Inter Company Loans.
13. Expenditure
The employee benefits expenses decreased to H17,929.30
Lakhs (Previous year: H20,669.02 Lakhs) on consolidated
basis and increased to H6,559.83 Lakhs (Previous year:
H6,532.02 Lakhs ) on standalone basis.
The Company incurred administration and other expenses
excluding employee benefit expenses at 24.87% of its total
15. Interest & Bank Charges
The Company incurred an expenditure of H6,747.76 Lakhs
(Previous year: H5,210.00 Lakhs) on consolidated basis
and H5,828.83 Lakhs (Previous year: H4,905.15 Lakhs) on
standalone basis. The interest paid/accrued is related to
working capital loan including interest on FCCBs amounting
to H3,422.30 Lakhs (Previous Year: H2,212.06 Lakhs).
16. Depreciation
16.1 The provision for depreciation for the year amounted
to H248.34 Lakhs (Previous year: H426.77 Lakhs) on
consolidated basis and H161.31 Lakhs (Previous year:
H225.92 Lakhs) on standalone basis.
Income during the year as compared to 23.04% during the
16.2 The intangible assets i.e. IPRs and goodwill are being
previous year on consolidated basis and 60.80% of its total
depreciated over 5 years in accordance with the Company’s
income during the year as compared to 62.09% during the
assessment of useful life thereof. The asset has been fully
previous year on a standalone basis.
depreciated.
14. Operating Profits
During the year, on consolidated basis, the Company earned
17. Provision for Tax
The Company has provided for its tax liability in India and
an Operating Profit/(Loss) before Interest, depreciation, tax
and exceptional items of H6,999.26 Lakhs being 20.32% of
total income as against H4,024.92 Lakhs at 12.14% during
the previous year. On a standalone basis, the Company
earned Operating Profit/(Loss) before Interest, depreciation,
tax and exceptional items of H4,680.87 Lakhs being 15.78%
overseas after considering the exemptions for income from
software services and products under the various applicable
tax enactments.
18. Net Profit
On consolidated basis, the net profit of the Company
60
Subex Limited
amounted to loss of H1,161.27 Lakhs, as against a loss of
H5,994.71 Lakhs during the previous year. On standalone
basis, the net profit of the Company amounted to loss of
H2,952.88 Lakhs as against a loss of H3,456.42 Lakhs during
the previous year.
change management, learning and development, mergers
and acquisitions etc.
Recruitment
During the year, the recruitment team had to execute a
well thought out manpower planning and analysis exercise
19. Earnings per Share
Basic Earnings/(Loss) per share computed on the basis of
and adopt global recruitment best practices to fulfill the
organization’s talent requirements. In addition to the well
number of common stock outstanding, as on the Balance
Sheet date is of H(0.70) per share (Previous year: H(4.40) per
share) on consolidated basis and loss of H(1.77) per share
(Previous year: H(2.54) per share) on standalone basis.
Material developments in human resources/
industrial relations front, including number of
people employed
Subexians
Our greatest assets are our people - Subexians! Subexians
are our biggest differentiator and how we define our
capability requirements, training needs and retention
strategies becomes crucial. The Subex work culture hinges
on our core values of Fairness, Innovation and Commitment
and nurtures initiative and creativity, bringing out the best
in every Subexian. We know that when Subexians realize
their full potential, we can achieve our broader business
goals. The Subex population is spread across the globe in
our multiple offices. The larger centers are our offices in
Bangalore, London, Singapore, Dubai and Denver. As of
March 31, 2014, we had 862 Subexians on our rolls globally.
Human Resources at Subex is centralized at our corporate
established processes like “Coffee with the Hiring Manager”,
“Post- offer feedback”, Subexian referral program, partner
feedback, interviewer feedback, etc., which are already
entrenched in the Subex way of adding talent to our team,
the focus this year was on optimizing the overall recruitment
cost by adopting innovative recruitment approaches.
The main sources for hires were referrals from Subexians
(the best bring the best!), campus recruitments, website
postings and walk-ins. We explored innovative processes on
the campus recruitment side, where we introduced a process
of “hiring for learnability”. This process, we believe, will add
scalability to our model while continuing to give us great
technical talent like we have had before.
One of the key focus areas that your Company has set, in
the previous year, of adding the capability of doing “just-
in-time” recruitment for the managed services part of
the business, has yielded results and this helped a lot on
mobilizing Managed Service projects within the permissible
time, without having to carry a large bench strength.
Induction and Training
Welcoming new Subexians into our fold continues to
headquarters
in Bangalore, with
regional HR
teams
be extremely critical for us. We believe that the quality
providing local support aligned to the global HR strategy.
of induction that new hires go through determines how
The HR team provides a competitive edge to the business
successful they are in the Company and has a huge impact
by enabling and supporting a very unique business model
on retention. We have customized the induction based on
of value based delivery, processes and programs on global
the role and function that new Subexians join in. This has
product development and delivery capabilities on the one
hand and complex distributed managed services delivery
resulted in having more targeted induction, yielding greater
benefits.
capabilities on the other. HR at Subex consistently strives
to adopt leading best practices in designing and deploying
HR process and programs across various areas
like
recruitment, total rewards management, talent management,
organizational development, performance management,
As happened in the previous years, for the new engineering
recruits that we welcomed into Subex this year, we had a
packed agenda spanning across 3 months. In addition to the
regular induction, they also went through additional training
programs tailored to their area of technology. In addition,
Annual Report 2013-14
61
we provided them with out-bound training at Pegasus to
Competencies take care of the core areas of the role -
inculcate in them our Subex values and help them bond as
knowledge about our products, the various technologies and
a team.
On the learning and development side, the focus this year
domains. These, along with the KRAs help build and reinforce
the performance oriented culture at Subex.
was on taking Subex Academy to the next level and improving
Compensation
the efficiency of skill and knowledge development. Subex
Academy is a global Learning and Development Platform
(supporting instructor led training, on the job learning, as
well as e-learning) that enable a role based curriculum led
approach to learning, while streamlining the training process
as well as ensuring global reach and appropriateness of
content. This automated platform added significant value to
training identification, design, delivery and evaluation. This
has been very well received by Subexians globally and is
a giant stride on the path of continuous learning and skill
Compensation at Subex is multi-dimensional and consists
of salary, benefits, stock options, health and disability
insurance.
The Company benchmarks its compensation package against
industry data and strives to achieve a balanced position.
The Company provides robust and comprehensive cash
compensation and benefits as per industry trends. We
also arrive at the salary bands of Subexians by conducting
comprehensive job matching, data validation and quality
development!
audits.
Performance Management System
Foundation Competencies are the basic Values based
competencies required by all in Subex. Excel competencies
are those that are required to do the current job really well.
Lead Competencies focus on the future needs and are the
skills required to succeed in leadership roles. Technical
Your Company focuses a lot on Employee reward and
recognition programme, as this
is another
important
motivational aspect. We have achieved 30% penetration
with our Reward and Recognition Programme “STAR”. In
other words 30% of Subexians were included in STAR, the
Reward and Recognition programme, which carries monetary
benefits.
62
Subex Limited
INDEPENDENT AUDITORS’ REPORT
TO
THE MEMBERS OF SUBEX LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of
SUBEX LIMITED (“the Company”), which comprise the Balance
Sheet as at 31st March , 2014, the Statement of Profit and
Loss and the Cash Flow Statement for the year then ended,
and a summary of the significant accounting policies and
other explanatory information.
is
for
responsible
Management’s Responsibility for the Financial Statements
The Company’s Management
the
preparation of financial statements that give a true and fair
view of the financial position, financial performance and cash
flows of the Company in accordance with the Accounting
Standards notified under the Companies Act, 1956 (“the
Act”) (which continue to be applicable in respect of Section
133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13th September, 2013 of the Ministry of
Corporate Affairs) and in accordance with the accounting
principles generally accepted in India. This responsibility
includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation
of the financial statements that give a true and fair view and
are free from material misstatement, whether due to fraud
or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the
Institute of Chartered Accountants of India. Those Standards
require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in the
financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the Company’s
preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal
control. An audit also includes evaluating the appropriateness
of the accounting policies used and the reasonableness
of the accounting estimates made by the Management, as
well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion
Opinion
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
financial statements give the information required by the
Act in the manner so required and give a true and fair view
in conformity with the accounting principles generally
accepted in India:
(a)
in the case of the Balance Sheet, of the state of affairs of
the Company as at 31st March, 2014;
(b) in the case of the Statement of Profit and Loss, of the
loss of the Company for the year ended on that date; and
(c)
in the case of the Cash Flow Statement, of the cash flows
of the Company for the year ended on that date.
Emphasis of Matter
(a) We draw attention to Note 25 to the financial statements,
as more fully explained therein, during the year the
Company has in accordance with the Proposal approved
by the Hon’ble High Court of Karnataka in prior years,
debited Rs. 80.62 Lakhs to the Business Restructuring
Reserve, instead of recording the same as expense for
the year ended 31st March, 2014, in the Statement of
Profit and Loss, as required by Accounting Standard 5
‘Net Profit or Loss for the Period, Prior Period Items’.
(b) We draw attention to Note 38.9 regarding the
management’s assessment that the amounts recoverable
from one of its subsidiaries are good and that there is no
diminution, other than temporary, in the carrying value
of its investment in the said subsidiary and hence no
provision has been made at this stage for the reasons
stated therein.
Our opinion is not qualified in respect of the above
matters.
Annual Report 2013-14
63
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order,
2003 (“the Order”) issued by the Central Government
in terms of Section 227(4A) of the Act, we give in the
Annexure a statement on the matters specified in
paragraphs 4 and 5 of the Order.
2. As required by Section 227(3) of the Act, we report that:
(a) We have obtained all
information and
explanations which to the best of our knowledge
and belief were necessary for the purposes of our
audit.
the
with the Accounting Standards notified under the
Act (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of
General Circular 15/2013 dated 13th September,
2013 of the Ministry of Corporate Affairs).
(e) On the basis of the written representations received
from the directors as on 31st March, 2014 taken
on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2014
from being appointed as a director in terms of
Section 274(1) (g) of the Act.
(b) In our opinion, proper books of account as required
by law have been kept by the Company so far as it
appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss,
and the Cash Flow Statement dealt with by this
Report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet, the Statement of
Profit and Loss, and the Cash Flow Statement comply
Mumbai
May 29, 2014
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm’s Registration No. 008072S)
Monisha Parikh
Partner
(Membership No. 47840)
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)
1. Having regard to the nature of the Company’s business/
activities/results during the year, clauses vi, viii, xii,
xiii, xiv, xix and xx of paragraph 4 of the Order are not
applicable to the Company.
2.
In respect of its fixed assets:
(a) The Company has maintained proper records
including quantitative
showing full particulars,
details and situation of the fixed assets.
(b) The fixed assets were physically verified during
the year by the Management in accordance with
a programme of verification, which in our opinion
provides for physical verification of all the fixed
assets at reasonable intervals. According to the
information and explanations given to us no material
discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the year, in our
opinion, do not constitute a substantial part of the
fixed assets of the Company and such disposal has,
in our opinion, not affected the going concern status
of the Company.
3.
In respect of its inventories:
64
Subex Limited
(a) As explained to us, the inventories were physically
verified during the year by the Management at
reasonable intervals.
(b) In our opinion and according to the information
and explanation given to us, the procedures of
physical verification of inventories followed by
the Management were reasonable and adequate in
relation to the size of the Company and the nature
of its business.
(c)
In our opinion and according to the information
and explanations given to us, the Company has
maintained proper records of its inventories and
no material discrepancies were noticed on physical
verification.
4. The Company has neither granted nor taken any loans,
secured or unsecured, to/from companies, firms or
other parties covered in the Register maintained under
Section 301 of the Companies Act, 1956.
5.
In our opinion and according to the information
and explanations given to us, having regard to the
explanations that some of the items purchased are
of special nature and suitable alternative sources
are not readily available for obtaining comparable
quotations, there is an adequate internal control system
commensurate with the size of the Company and the
nature of its business with regard to purchases of
inventory and fixed assets and the sale of goods and
services. During the course of our audit, we have not
observed any major weakness in such internal control
system.
6. To the best of our knowledge and belief and according to
the information and explanations given to us, there are
no contracts or arrangements that needed to be entered
in the Register maintained in pursuance of Section 301
of the Companies Act, 1956.
7.
In our opinion, the internal audit functions carried
out during the year by firm of Chartered Accountants
appointed by the Management have been commensurate
with the size of the Company and the nature of its
business.
8. According to the information and explanations given to
us in respect of statutory dues:
(a) The Company has generally been regular
in
depositing undisputed statutory dues, including
Provident Fund, Investor Education and Protection
Fund, Employees’ State
Income-tax,
Sales Tax, Wealth Tax, Service Tax, Customs Duty,
Excise Duty, Cess and other material statutory dues
applicable to it with the appropriate authorities.
Insurance,
(b) There were no undisputed amounts payable in
respect of Provident Fund, Investor Education
and Protection Fund, Employees’ State Insurance,
Income-tax, Sales Tax, Wealth Tax, Service Tax,
Customs Duty, Excise Duty, Cess and other material
statutory dues in arrears as at 31st March, 2014 for
a period of more than six months from the date they
became payable.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty and Cess
which have not been deposited as on 31st March,
2014 on account of disputes are given below:
Statute
Nature of Dues
Forum where dispute is
pending
Period to which the
amount relates
Amount involved
Rs in Lakhs
Income Tax Act, 1961
Income tax (Incl.
Interest)
Hon. High Court of
Karnataka
2002-05
2008-09
2009-10
162.02
1.25
1,216.11
9. The Company does not have accumulated losses at the
end of the financial year and the Company has incurred
cash losses during the financial year covered by our
audit and in the immediately preceding financial year.
10. In our opinion and according to the information and
explanations given to us, the Company has not defaulted
in the repayment of dues to banks, financial institutions
and debenture holders.
11. In our opinion and according to the information and
explanations given to us, the terms and conditions of
the guarantees given by the Company for loans taken
by others from banks and financial institutions are not,
prima facie, prejudicial to the interests of the Company.
12. According to the information and explanations given to
us, the Company has not taken any term loans during the
year.
13. In our opinion and according to the information and
explanations given to us and on an overall examination
MUMBAI
May 29, 2014
of the Balance Sheet of the Company, we report that
funds raised on short-term basis have, prima facie, not
been used during the year for long- term investment.
14. During the year the Company has not made any
preferential allotment of shares to parties and companies
covered in the Register maintained under section 301 of
the Companies Act, 1956.
15. To the best of our knowledge and according to the
information and explanations given to us, no fraud by
the Company and no material fraud on the Company has
been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm’s Registration No. 008072S)
Monisha Parikh
Partner
(Membership No. 47840)
Annual Report 2013-14
65
BALANCE SHEET
A EQUITY AND LIABILITIES
1
SHAREHOLDERS’ FUNDS
(a) Share Capital
(b) Reserves and Surplus
SUB TOTAL - SHAREHOLDERS’ FUNDS
2 NON - CURRENT LIABILITIES
(a) Long-term Borrowings
(b) Other Long-term Liabilities
(c) Long-term Provisions
3
SUB TOTAL - NON CURRENT LIABILITIES
CURRENT LIABILITIES
(a) Short-term Borrowings
(b) Trade Payables - Other than acceptances
(c) Other Current Liabilities
(d) Short-term Provisions
SUB TOTAL - CURRENT LIABILITIES
TOTAL
B
ASSETS
1 NON - CURRENT ASSETS
(a) Fixed Assets
i) Tangible Assets
ii) Intangible Assets
(b) Non Current Investments
(c) Deferred Tax Assets (net)
(d) Long-term Loans and Advances
(e) Other Non - Current Assets
SUB TOTAL - NON - CURRENT ASSETS
2
CURRENT ASSETS
(a) Trade Receivables
(b) Cash and Bank Balances
(c) Short-term Loans and Advances
(d) Other Current Assets
SUB TOTAL - CURRENT ASSETS
TOTAL
NOTE NO.
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
3
4
5
6
7
8
38.5
9
10
11.A
11.B
12
34
13
14
15
16
17
18
16,664.00
10,719.72
27,383.72
54,253.03
5,074.64
601.67
59,929.34
14,817.30
51,448.00
2,318.30
7.63
68,591.23
155,904.29
261.24
55.26
316.50
77,234.42
-
2,472.11
16,793.80
96,816.83
56,989.38
86.09
556.88
1,455.11
59,087.46
155,904.29
16,664.00
16,870.39
33,534.39
49,155.07
533.30
500.61
50,188.98
16,550.46
43,060.04
4,171.77
43.26
63,825.53
147,548.90
251.26
81.79
333.05
77,234.42
133.88
2,418.70
12,688.50
92,808.55
51,708.28
387.65
730.39
1,914.03
54,740.35
147,548.90
Corporate Information and Significant Accounting Policies
See accompanying notes forming part of the financial statements
1 & 2
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
Mumbai
Date: May 29, 2014
66
Subex Limited
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
STATEMENT OF PROFIT AND LOSS
NOTE NO. FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
1
Revenue from Operations
2 Other Income
3
4
Total revenue
Expenses
19
20
(a) Cost of Hardware, Software and Support Charges
38.6
21
22
11
23
24
(b) Employee Benefits Expense
(c) Finance Costs
(d) Depreciation and Amortisation Expense
(e) Other Expenses
Total Expenses
Profit/(Loss) before exceptional items and Tax (3 - 4)
Exceptional Items
Profit/(Loss) before Tax (5 - 6)
Tax expense
(a) Current Tax Expense for current year
(b) MAT credit of prior years reversed
5
6
7
8
(c) Short/(excess) provision for tax relating to prior years
(d) Deferred Tax
Total Tax expense
Profit/(Loss) for the year (7 -8)
9
10 Earnings/(Loss) Per Share (Face value of H10/- each)
(a) Basic
(b) Diluted
Corporate Information and Significant Accounting Policies
1 & 2
See accompanying notes forming part of the financial statements
29,366.59
302.89
29,669.48
389.74
6,559.83
5,828.83
161.31
18,039.04
30,978.75
(1,309.27)
1,497.04
(2,806.31)
110.42
174.13
(271.86)
133.88
146.57
26,555.90
122.05
26,677.95
243.30
6,532.02
4,905.15
225.92
16,564.42
28,470.81
(1,792.86)
1,663.56
(3,456.42)
-
-
-
-
-
(2,952.88)
(3,456.42)
(1.77)
(1.77)
(2.54)
(2.54)
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
Annual Report 2013-14
67
CASH FLOW STATEMENT
A CASH FLOW FROM OPERATING ACTIVITIES
Profit / (Loss) before tax, for the year
Adjustments for :
(a) Depreciation and amortization expense
(b)
Interest Income
(c) Finance costs
(d)
(Profit)/Loss on sale / write off of assets
(e) Expense/(Gain) on employee stock option scheme
(f) Provision for doubtful Trade receivables and advances
(g) Unrealised exchange (Gain)/Loss- Others
Operating profit / (loss) before working capital changes
Changes in working capital
Adjustments for (increase) / decrease in operating assets
(a) Trade receivables
(b) Short-term loans and advances
(c) Long-term loans and advances
(d) Other current assets
(e) Other Non-current assets
Adjustments for increase / (decrease) in operating liabilities
(a) Trade payables
(b) Other current liabilities
(c) Other Long-term liabilities
(d) Short-term provisions
(e) Long-term provisions
Cash generated from / (used in) operations
Net tax (paid) / refunds and others
Net cash flow from / (used in) operating activities (A)
B
CASH FLOW FROM INVESTING ACTIVITIES
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
(2,806.31)
(3,456.42)
161.31
(180.12)
5,828.83
2.29
(27.49)
2,118.13
737.27
5,833.91
225.92
(118.43)
4,905.15
1.43
10.28
1,741.12
(316.31)
2,992.74
(9,430.30)
(4,085.72)
173.51
(7.20)
437.17
(217.27)
7,628.78
(864.69)
102.24
(35.44)
(8.99)
3,611.72
50.96
3,662.68
93.74
(1.08)
570.48
(343.50)
(71.99)
(1,432.44)
15.37
(19.68)
(31.07)
(2,313.15)
(78.42)
(2,391.57)
(a) Capital expenditure on fixed assets, including capital advances
(147.05)
(112.74)
(b) Proceeds from sale of fixed assets
(c)
Interest received - Others
(d)
Interest received- Subsidiaries
(e) Loans given to Subsidiaries
(f)
Investment in deposits
Net cash flow from / (used in) investing activities (B)
-
30.25
171.62
-
250.91
305.73
20.40
18.12
78.46
(103.86)
(145.00)
(244.62)
68
Subex Limited
CASH FLOW STATEMENT
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
C
CASH FLOW FROM FINANCING ACTIVITIES
(a) Net increase/(decrease) in working capital borrowings from banks
(1,733.16)
(b) Repayment of Other short-term borrowings
(c) Repayment of Long-term borrowings
(d) Dividends paid
(e) Finance cost
Net cash flow from / (used in) financing activities (C)
Net increase / (decrease) in Cash and cash equivalents (A+B+C)
Cash or Cash equivalents at the beginning of the year
Cash or Cash equivalents at the end of the year
Cash and Cash equivalents
Cash on hand
Balance with Banks
in Current Accounts
in EEFC accounts
Total
Corporate Information and Significant Accounting Policies 1 & 2
Notes:
(i) See accompanying notes forming part of the financial statements
-
(0.92)
1.61
(2,284.98)
(4,017.45)
(49.04)
88.37
39.33
-
28.91
10.42
39.33
6,647.55
(1,000.00)
-
(1.15)
(2,923.43)
2,722.97
86.78
1.59
88.37
-
78.93
9.44
88.37
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
Annual Report 2013-14
69
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Subex Limited, a public limited company incorporated in 1994, is a leading global provider of Operations and Business
Support Systems (OSS/BSS) to communication service providers (CSPs) worldwide in the Telecom industry.
The Company pioneered the concept of a Revenue Operations Center (ROC) – a centralized approach that sustains profitable
growth and financial health for the CSPs through coordinated operational control. Subex’ s product portfolio powers the
ROC and its best-in-class solutions enable new service creation, operational transformation, subscriber-centric fulfillment,
provisioning automation, data integrity management, revenue assurance, cost management, fraud management and
interconnect / inter-party settlement. Subex also offers a scalable Managed Services Program. The CSPs achieve competitive
advantage through Business Optimization and Service Agility and improve their operational efficiency to deliver enhanced
service experiences to their subscribers. The Company has a development center in India and sales offices in the form of
wholly owned subsidiaries/ branches in UK, USA, Singapore, Australia, Dubai and Canada.
2. SIGNIFICANT ACCOUNTING POLICIES
I. Basis for preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting
Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the
Companies Act, 1956 (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act,
2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate
Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable, except to the extent permitted under
the Proposal approved by the Hon’ble High Court of Karnataka (Refer Note 25). The financial statements have been
prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the previous year.
II. Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates
and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the
reported income and expenses during the year. The Management believes that the estimates used in preparation of the
financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences
between the actual results and the estimates are recognised in the periods in which the results are known / materialised.
III. Revenue recognition
Revenue from Contracts for software product license includes fees for transfer of licenses, installation and commissioning.
This revenue is recognized on the basis of milestones achieved, determined based on percentage of completion of work
completed at each milestone as compared to the work involved in the overall scope of the contract. In the event of any
expected losses on a contract, the entire amount is provided for in the accounting period in which such losses are first
anticipated.
Revenue from sale of software licenses (including additional licenses) are recognized on transfer of such licenses.
In case of composite contracts involving granting of license and support services, license revenues are recognized on
transfer of the license if identified separately and in other cases, they are recognized over the period of the contract
along with revenue from support services.
Revenue from Software development is recognized on the basis of chargeable time or achievement of prescribed
milestones as relevant to each contract.
Sale of hardware under reseller arrangements are recognized on dispatch of goods to customers and are recorded net
of discounts, rebates for price adjustment, projections, shortage in transit, taxes and duties.
Maintenance and service income is recognised on time proportion basis.
IV. Tangible Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of freight, duties, taxes and other direct expenditure incurred.
Assets acquired on hire purchase are capitalised at gross value and interest thereon is charged to revenue.
70
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition
of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful
life of such assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an
increase in the future benefits from such asset beyond its previously assessed standard of performance. Fixed assets
acquired and put to use for project purpose are capitalised and depreciation thereon is included in the project cost till
the project is ready for its intended use.
V.
Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an
intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently
recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its
purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will
enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and
such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the
cost of the asset (Refer Note: 2.XI for accounting for R&D expenses).
VI. Depreciation & Amortisation
Fixed assets and Intangibles are depreciated / amortised using the straight-line method over the useful life of assets.
Depreciation is charged on pro-rata basis for assets purchased / sold during the year.
The rates of depreciation / amortisation adopted are as under:
Particulars
Computers
Software
Furniture & Fixtures
Vehicles
Office equipments
Intellectual Property Rights
Depreciation/ Amortisation Rates (%)
25
25
20
20
20
20
Goodwill
20
Individual assets costing less than H5,000 are depreciated in full, in the year of purchase.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial
year and the amortisation method is revised to reflect the changed pattern.
VII. Employee Stock Option Plans
The Company has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Schemes provide for grant of options to
employees of the Company and its subsidiaries to acquire equity shares of the Company that vest in a graded manner
and that are to be exercised within a specified period. The Company has used intrinsic value method to account for the
compensation cost of stock options. Intrinsic value is the amount by which the quoted market price on the day prior to
the grant of the options under ESOS exceeds the exercise price of the option. In accordance with the SEBI guidelines,
the intrinsic value is amortised on a straight line basis over the vesting period.
VIII. Employee Benefits
Employee benefits include provident fund, gratuity fund, employee state insurance, compensated absences, retention
and performance linked payouts.
Defined contribution plans: The Company’s contribution to provident fund and employee state insurance scheme
is considered as defined contribution plan and is charged as an expense as they fall due based on the amount of
contribution required to be made and when services are rendered by the employees.
Defined benefit plans: For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined
Annual Report 2013-14
71
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial
gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is
recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line
basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the
Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service
cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service
cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in
exchange for the services rendered by employees are recognised during the year when the employees render the
service. These benefits include retention and performance linked payouts and compensated absences which are
expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of such compensated absences is accounted as under:
(a)
in case of accumulated compensated absences, when employees render the services that increase their entitlement
of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
Long-term employee benefits: Compensated absences which are not expected to occur within twelve months after the
end of the period in which the employee renders the related service are recognised as a liability at the present value
of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the
obligations are expected to be settled.
IX. Other income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is
established.
X. Leases
Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest
in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of
the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount.
Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of
interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor
are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and
Loss on a straight line basis.
XI. Research and development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of
products are also charged to the Statement of Profit and Loss. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.
XII. Foreign currency transactions
Initial recognition
Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the
exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the
transaction.
Measurement of foreign currency monetary items at the Balance Sheet date
Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non-integral
foreign operations outstanding at the Balance Sheet date are restated at the year-end rates.
In the case of integral operations, assets and liabilities (other than non-monetary items), are translated at the exchange
rate prevailing on the Balance Sheet date. Non-monetary items are carried at historical cost. Revenue and expenses
72
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
are translated at the average exchange rates prevailing during the year. Exchange differences arising out of these
translations are charged to the Statement of Profit and Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities
of the Company and its integral foreign operations are recognised as income or expense in the Statement of Profit
and Loss. The exchange differences on restatement / settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a “Foreign currency translation reserve” until
disposal / recovery of the net investment.
The exchange differences arising on restatement / settlement of long term foreign currency monetary items are:
•
capitalised, if related to acquisition of depreciable fixed assets, and depreciated over the remaining useful life of
such assets; or
•
amortised over the maturity period of such items in other cases.
The Company has adopted the amendments to Accounting Standard 11 “The Effects of Changes in Foreign Exchange
Rates” that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations
arising on restatement of all long term monetary foreign currency assets and liabilities at rates different from those at
which they were initially recorded or reported in the previous financial statements (whichever is later), are accumulated
in a Foreign Currency Monetary Item Translation Difference account and are amortised over the balance period of such
long term asset / liability (Refer Note 28).
Accounting for Forward contracts: Premium / discount on forward exchange contracts, which are not intended for
trading or speculation purposes, are amortised over the period of the contracts if such contracts relate to monetary
items as at the Balance Sheet date.
Accounting for Derivatives: Derivative contracts in the nature of foreign currency swaps, currency options, forward
contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable forecast
transactions, which are closely linked to the existing assets and liabilities are accounted as per the policy stated for
Forward contracts.
All other derivative contracts are marked-to-market and losses are recognised in the Statement of Profit and Loss. Gains
arising on the same are not recognised, until realised, on grounds of prudence.
XIII. Investments
Long-term investments are stated at cost less diminution in the value of investments that is other than temporary.
XIV. Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the
provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of
adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will
pay normal income tax in the foreseeable future. Accordingly, MAT is recognised as an asset in the Balance Sheet when
it is probable that future economic benefit associated with it will flow to the Company and can be measured reliably.
Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting
income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is
measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income
available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the
extent that reasonable certainty exists that sufficient future taxable income will be available against which these can
be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same
governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at
each Balance Sheet date for their realisability.
Annual Report 2013-14
73
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
XV. Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of
changes in value.
XVI. Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax, is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are segregated based on the available information.
XVII. Provisions and Contingencies
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the
obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current
best estimates. Contingent liabilities are not provided for but disclosed in the notes to the financial statements.
XVIII. Impairment of Assets
The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any
indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if
the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net
selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in
earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the
Statement of Profit and Loss.
XIX. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary
items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share
is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as
adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares,
by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net
profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as
at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the
outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The
number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and
bonus shares, as appropriate.
XX. Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal
organization and management structure. The operating segments are the segments for which separate financial
information is available and for which operating profit/loss amounts are evaluated regularly by the Executive
Management in deciding how to allocate resources and in assessing performance.
XXI. Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their
realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose
of classification of its assets and liabilities as current and non-current.
74
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 3 SHARE CAPITAL
AUTHORISED
49,50,40,000 Equity Shares of H10/- each (Previous Year: 49,50,40,000
Equity Shares of H10/- each)
2,00,000 Preference Shares of H98/- each
Total
ISSUED, SUBSCRIBED AND PAID UP EQUITY SHARES
16,66,39,962 Equity Shares of H10/- each (Previous Year : 16,66,39,962
Equity Shares of H10/- each)
Total
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
49,504.00
49,504.00
196.00
49,700.00
196.00
49,700.00
16,664.00
16,664.00
16,664.00
16,664.00
NOTES
A
Reconciliation of the number of Equity shares at the beginning and at the end of the reporting period
Particulars
Equity Shares (No. of shares)
Year ended March 31, 2014
Year ended March 31, 2013
Opening
Balance
Fresh issue
ESOP Conversion of
FCCB
Closing
Balance
16,66,39,962
6,93,10,772
-
-
-
-
- 16,66,39,962
9,73,29,190 16,66,39,962
Reconciliation of the amount outstanding at the beginning and at the end of the reporting period
Opening
Balance
Fresh issue
ESOP Conversion of
FCCB
H In Lakhs
Closing
Balance
16,664.00
6,931.08
-
-
-
-
-
16,664.00
9,732.92
16,664.00
B
The Company has only one class of Equity Share, having a par value of H10/-. The holder of equity shares is entitled to
one vote per share and such amount of dividend per share as declared by the Company. In the event of liquidation of the
Company, the holders of the equity shares will be entitled to receive any of the remaining assets of the Company, after
distribution to all other parties concerned. The distribution will be in proportion to number of equity shares held by the
shareholders.
C Details of shares held by each shareholder (together with Persons Acting in Concert[PAC]) holding more than 5% shares.
Class of shares / Name of shareholder
AS AT MARCH 31, 2014
AS AT MARCH 31, 2013
No. of shares
held
% holding in
that class of
shares
No. of shares
held
% holding in
that class of
shares
Equity shares
QVT Mauritius West Fund & Quintessence Mauritius
West Fund
Suffolk (Mauritius) Limited & Mansfield (Mauritius) Limited
Deutche Bank AG London -CB Account
Nomura Singapore Limited
Merill Lynch Capital Markets
Promoter and Promoter Group (See Note E below)
1,33,47,888
8.01% 1,33,47,888
8.01%
1,73,72,221
1,08,92,721
1,02,34,433
1,01,92,621
64,74,044
10.43% 1,73,72,221
6.54% 1,08,92,721
6.14% 1,02,34,433
6.12% 1,01,92,621
84,74,044
3.89%
10.43%
6.54%
6.14%
6.12%
5.09%
Annual Report 2013-14
75
Particulars
Equity Share Capital
Year ended March 31, 2014
Year ended March 31, 2013
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 3 SHARE CAPITAL (contd.)
Bank of New York is the depositary of GDRs on behalf of GDR holders holding 17,99,310 shares representing 1.08% of total
shareholding (Previous Year : 69,89,399 shares representing 4.23%).The company does not have details of individual GDR
holders/beneficiaries to determine if anyone holds more than 5% of the beneficial interest individually in the equity shares.
D As at March 31, 2014 21,91,55,913 shares (As at March 31, 2013, 21,95,88,093 shares) were reserved for issuance as
follows:
i) 2,975 shares (As at March 31, 2013, 4,670 shares) of H10/- each towards outstanding employee stock options scheme
under ‘ESOP 2000’ granted / available for grant.
ii) 8,63,950 shares (As at March 31, 2013, 11,31,147 shares) of H10/- each towards outstanding employee stock options
scheme under ‘ESOP 2005’ granted / available for grant.
iii) 5,67,518 shares (As at March 31, 2013, 7,30,806 shares) of H10/- each towards outstanding employee stock options
scheme under ‘ESOP 2008’ granted / available for grant.
iv) 67,174 shares (As at March 31, 2013, 67,174 shares) of H10/- each towards conversion of foreign currency convertible
bonds(FCCB I) available for conversion. Refer note 26
v) 8,39,721 shares (As at March 31, 2013, 8,39,721 shares) of H10/- each towards conversion of foreign currency
convertible bonds (FCCB II) available for conversion. Refer Note 26
vi) 21,68,14,575 shares (As at March 31, 2013 21,68,14,575 shares) of H10/- each towads Conversion of Foreign currency
convertible bond (FCCB III) available for conversion. Refer note 26
E Details of shares held by Promoter and Promoter Group*:
Name of the Shareholder
AS AT MARCH 31, 2014
AS AT MARCH 31, 2013
Subash Menon
Kivar Holdings Private Limited (KHPL) (including
Woodbridge Consulting & Investments Inc, which
merged with KHPL)
Sudeesh Yezhuvath
Total Promoter and promoter group
*as confirmed by the registrar
No. of shares
held
% holding No. of shares
held
% holding
25,80,601
35,21,200
1.55%
2.11%
25,80,601
55,21,200
1.55%
3.32%
3,72,243
6,474,044
0.22%
3.89%
3,72,243
84,74,044
0.22%
5.09%
F
Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received
in cash, bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date:
Particulars
Company had issued Equity shares of H10 each to the GDR holders as
of June 22, 2006 towards consideration of cost of acquisition of Azure
Solutions Limited at H532.24 per share.
In accordance with the terms of FCCBs III, out of the principal face
value of US$ 127.721 Million, an amount of US$ 36.321 Million were
mandatorily converted into equity shares on July 07, 2012.
(Refer note 26)
Aggregate number of shares
AS AT
MARCH 31, 2014
AS AT
MARCH 31, 2013
1,17,28,728
1,17,28,728
8,93,35,462
8,93,35,462
76
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 4 RESERVES AND SURPLUS
General Reserve
Securities Premium Account
Opening Balance
Transferred from Business Restructuring Reserve
Additions during the year on account ESOP and conversion of FCCBs
Write back from/(Accrual for) redemption premium on FCCBs (Net)
Write back of expenses on issue of Shares
Closing Balance
Business Restructuring Reserve
Opening Balance
25
Transferred from/(to) Securities Premium/Capital Reserve
Amounts utilised for Permitted Utilisations (Net) (Refer note 25)
Closing Balance
Share Options Outstanding Account
Opening Balance
Add: Amounts recorded on Grants during the year
Add: Written back to the Statement of Profit and loss / other accounts
during the year
Closing Balance
Less : Deferred Stock Compensation Expenses
Share Options Outstanding Account (Net)
Foreign Currency Monetary Item Translation Difference Account
28
Opening Balance (Debit)/Credit
(Add)/Less: Effect of foreign exchange rate variation during the year
(Add)/Less: Amortisation for the year
Closing Balance
Surplus / (Deficit) in Statement of Profit and Loss
Opening balance
Add : Profit / (Loss) for the year
Closing Balance
Total Reserves and Surplus
NOTE: 5 LONG-TERM BORROWINGS
Foreign Currency Convertible Bonds (Refer Note 26)
Secured
Unsecured
Total
NOTE
NO.
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
1,779.76
1,779.76
10,615.20
-
-
(53.59)
-
316.20
271.10
10,505.40
(574.70)
97.20
10,561.61
10,615.20
80.62
-
(80.62)
-
138.49
-
(39.53)
98.96
(2.67)
96.29
(2,765.65)
(5,097.97)
2,061.88
(5,801.74)
7,036.68
(2,952.88)
4,083.80
10,719.72
1,670.20
(271.10)
(1,318.48)
80.62
197.00
56.60
(115.11)
138.49
(14.71)
123.78
(357.00)
(3,157.10)
748.45
(2,765.65)
10,493.10
(3,456.42)
7,036.68
16,870.39
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
52,815.00
1,438.03
54,253.03
47,852.27
1,302.80
49,155.07
Annual Report 2013-14
77
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 6 OTHER LONG TERM LIABILITIES
Accrual for premium payable on redemption of bonds
Interest accrued but not due on borrowings
Deferred Rent
Unearned Revenue
Total
NOTE: 7 LONG-TERM PROVISIONS
Provision for Employee Benefits
Provision for compensated absences (Refer Note 29 (c)
Provision for gratuity (Refer Note 29(b))
Provision for Tax (Net of Advance Tax of H189.99 Lakhs)
(As at March 31, 2013 H132.90 Lakhs)
Total
NOTE: 8 SHORT-TERM BORROWINGS
From Banks
Secured (Refer Note (i) below)
Total
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
571.59
4,385.44
24.79
92.82
5,074.64
517.93
-
15.37
-
533.30
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
75.83
250.69
275.15
77.55
257.96
165.10
601.67
500.61
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
14,817.30
14,817.30
16,550.46
16,550.46
(i) The secured loans from banks are secured by first charge on receivables, current assets and fixed assets of the company.
First ranking charge on “”FCCB Repayment fund”” on a paripassu basis jointly and equally with bondholders of Company’s
U.S.$127,721,000 5.70% secured Foreign Currency Convertible Bonds due 2017.
Paripassu First Charge by way Hypothecation of Stocks and Book Debts and other Current Assets of the company both
present and future stored at company premises at RMZ Ecoworld,
This is further covered by a personal guarantee of a director of the company apart from corporate guarantee in which a
director is interested as well as a guarantee of Subex Technologies Ltd.
NOTE: 9 OTHER CURRENT LIABILITIES
Current maturities of Long-term borrowings - Hire Purchase Loans from Banks
(Secured) (Refer note (i) below)
Interest accrued but not due on borrowings
Unclaimed Dividends (Refer Note 38.1)
Unearned Revenue
Other Payables
Statutory remittances
Deferred Rent
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
-
0.92
886.36
1.31
1,142.21
2,082.19
2.92
1,724.31
249.45
38.97
2,318.30
348.44
12.99
4,171.77
Total
(i) Secured against the Hypothecation of vehicles financed under these loans. Hire Purchase loans amount to H Nil as at
March 31, 2014 (H0.92 Lakhs as at March 31, 2013). The interest rate on these loans range from 9% to 20%.
78
Subex Limited
10.98
31.08
1.20
43.26
H In Lakhs
NET BLOCK
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 10 SHORT-TERM PROVISIONS
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
Provision for compensated absences (Refer Note 29 (c))
Provision for gratuity (Refer Note 29 (b))
Provision for Tax (Net of Advance Tax of H Nil)
(As at March 31, 2013 H Nil)
Total
5.49
1.13
1.01
7.63
NOTE: 11 FIxED ASSETS
Particulars
Sl.
No.
11A Tangible Fixed Assets
GROSS BLOCK
DEPRECIATION
As at
01-Apr-13
Additions
during the
year
Deletions
during the
year
As at
31-Mar-14
Upto
01-Apr-13
for the
year
Withdrawn
on
Deletions
Upto
31-Mar-14
As at
31-Mar-14
5.26
(7.49)
0.24
(2.55)
30.88
1
Computer Hardware
1,914.72
119.39
-
2,034.11
1,709.02
100.23
-
1,809.25
224.86
(Previous Year balance)
(2,059.36)
(76.26)
(220.90)
(1,914.72)
(1,794.40)
(115.42)
(200.80)
(1,709.02)
(205.70)
2
Furniture & Fixtures
66.19
-
(Previous Year balance)
(65.30)
(0.89)
-
-
66.19
58.70
(66.19)
(55.50)
2.23
(3.20)
-
-
60.93
(58.70)
3
4
Vehicles
84.10
(Previous Year balance)
(241.60)
Office Equipments
275.45
(Previous Year balance)
(271.50)
-
-
13.74
(4.65)
53.36
30.74
81.55
2.34
53.39
30.50
(157.50)
(84.10)
(212.90)
(25.26)
(156.61)
(81.55)
24.51
264.68
239.93
16.06
22.19
233.80
(0.70)
(275.45)
(205.80)
(34.55)
(0.42)
(239.93)
(35.52)
TOTAL TANGIBLE ASSETS
2,340.46
133.13
77.87
2,395.72
2,089.20
120.86
75.58
2,134.48
261.24
(Previous Year balance)
(2,637.76)
(81.80)
(379.10)
(2,340.46)
(2,268.60)
(178.43)
(357.83)
(2,089.20)
(251.26)
11B Intangible Fixed Assets
1
2
3
Computer Software
644.78
13.92
(Previous Year balance)
(621.14)
(23.64)
Goodwill
137.67
(Previous Year balance)
(137.67)
Intellectual Property Rights
3,973.95
(Previous Year balance)
(3,973.95)
-
-
-
-
TOTAL INTANGIBLE ASSETS
4,756.40
13.92
(Previous Year balance)
(4,732.76)
(23.64)
-
-
-
-
-
-
-
-
658.70
562.99
40.45
(644.78)
(515.50)
(47.49)
137.67
137.67
(137.67)
(137.67)
3,973.95
3,973.95
(3,973.95)
(3,973.95)
-
-
603.44
55.26
(562.99)
(81.79)
-
-
-
137.67
(137.67)
-
3,973.95
(3,973.95)
-
-
-
-
4,770.32
4,674.61
40.45
(4,756.40)
(4,627.12)
(47.49)
-
-
4,715.06
55.26
(4,674.61)
(81.79)
Total
7,096.86
147.05
77.87
7,166.04
6,763.81
161.31
75.58
6,849.54
316.50
Previous Year
(7,370.52)
(105.44)
(379.10)
(7,096.86)
(6,895.72)
(225.92)
(357.83)
(6,763.81)
(333.05)
Notes :
(i) The above assets represent assets owned by the company and there are no assets taken on finance lease or given on
operating lease
(ii) Computers (included under office equipment) and Computer Software have been classified between tangible and intangible
assets, respectively in the current year and the prior year comparables have been appropriately reclassified.
Annual Report 2013-14
79
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 12 NON-CURRENT INVESTMENTS (AT COST, UNLESS OTHERWISE STATED)
(Long term, trade, unquoted)
Investments in Equity shares In wholly owned subsidiaries
39,99,994 equity shares of H10 each fully paid up in Subex Technlogies
Limited, India {Net of provision for other than temporary diminution H400
Lakhs (Previous year H400 Lakhs)}
50,39,565,245 Equity shares fully paid, Par Value of GBP 0.00001 each, in
Subex (UK) Ltd.
100 equity shares fully paid, no-par value, in Subex Americas Inc, Canada
{Net of provision for other than temporary diminution H65,000 lakhs
(Previous year H65,000 Lakhs)}
Total
Aggregate amount of unquoted investments (At cost)
Aggregate provision made for other than temporary diminution in value of
long term investments
NOTE: 13 LONG-TERM LOANS AND ADVANCES (UNSECURED, CONSIDERED GOOD)
Advance Tax (net of provision for H1,159.31 Lakhs) (As at March 31,2013
H332.80 Lakhs)
Balances with government authorities - Service Tax Credit Receivable
Security Deposits
MAT credit entitlement
Total
NOTE: 14 OTHER NON - CURRENT ASSETS
Long-term Trade Receivables
(Unsecured)
Outstanding for more than six months from the due date
Considered Good
Considered Doubtful
Less: Provision for Doubtful trade receivables
Unbilled Revenue
Balance with related parties
Unsecured, considered good (Refer Note 31(ii))
Unsecured, considered Doubtful (Refer Note 31(ii))
Less: Provision for doubtful loans and advances
Total
80
Subex Limited
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
-
-
64,738.68
64,738.68
12,495.74
12,495.74
77,234.42
142,634.42
65,400.00
77,234.42
142,634.42
65,400.00
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
1,470.64
1,250.30
266.90
734.57
-
266.90
727.37
174.13
2,472.11
2,418.70
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
14,521.33
6,047.02
(6,047.02)
14,521.33
477.17
1,795.30
1,705.67
(1,705.67)
1,795.30
16,793.80
10,633.30
2,488.00
(2,488.00)
10,633.30
343.50
1,711.70
1,694.66
(1,694.66)
1,711.70
12,688.50
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 15 TRADE RECEIVABLES
(Unsecured)
Outstanding for a period exceeding six months from due date
Considered Good
Other Trade receivables
Considered Good
Considered Doubtful
Less: Provision for Doubtful Trade receivables
Total
NOTE: 16 CASH AND BANk BALANCES
A. Cash and Cash Equivalents
Cash on hand
Balance with Banks
in Current Accounts
in EEFC Accounts
Total Cash and Cash Equivalents A
B. Other bank balances
in Earmarked Accounts
Unclaimed dividend Accounts (Refer Note 38.1)
Margin Money Deposits (Refer Note below)
Total Other Bank Balances B
Total (A+B)
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
688.90
-
56,300.48
38.63
(38.63)
56,300.48
56,989.38
51,708.28
1,398.90
(1,398.90)
51,708.28
51,708.28
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
-
28.91
10.42
39.33
1.31
45.45
46.76
86.09
-
78.93
9.44
88.37
2.92
296.36
299.28
387.65
Note: Balances with Banks- Margin money deposits include deposits with remaining maturity of less than 12 months from
Balance Sheet date.
NOTE: 17 SHORT-TERM LOANS AND ADVANCES (UNSECURED, CONSIDERED GOOD)
Loans and advances to related parties [Refer Note 31(ii)]
Loans and advances to employees
Advance recoverable [Refer Note 38.8]
Prepaid expenses
Balances with government authorities
Service Tax Credit Receivable
Advance to Suppliers
Total
AS AT
MARCH 31, 2014
-
137.81
233.80
183.01
-
2.26
556.88
H In Lakhs
AS AT
MARCH 31, 2013
6.04
183.58
233.80
206.39
43.65
56.93
730.39
Annual Report 2013-14
81
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 18 OTHER CURRENT ASSETS (UNSECURED, CONSIDERED GOOD)
Unbilled Revenue
Interest accrued but not due on deposits
Contractually Recoverable Expenses
Total
NOTE: 19 REVENUE FROM OPERATIONS
Income from Sale of Products (and related services)
Total
NOTE: 20 OTHER INCOME
Interest income
Interest on deposit accounts from banks
Interest on Inter Company loans and advances
Other non-operating income
Provision for Doubtful Trade Receivables
written back/Bad Debts recovered
Miscellaneous Income
Total
NOTE: 21 EMPLOYEE BENEFITS ExPENSE
Salaries & Wages
Contribution to Provident Fund and Other Funds
Expense on Employee Stock Option Scheme (ESOP)
Staff Welfare Expenses
Total
NOTE: 22 FINANCE COSTS
Interest Expenses on:
Foreign Currency Convertible Bonds
Other Borrowings
Other Borrowings Costs - Bank Charges
Total
82
Subex Limited
AS AT
MARCH 31, 2014
1,376.05
2.75
76.31
1,455.11
H In Lakhs
AS AT
MARCH 31, 2013
1,857.50
24.50
32.03
1,914.03
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
29,366.59
29,366.59
26,555.90
26,555.90
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
8.50
171.62
-
122.77
302.89
39.97
78.46
2.17
1.45
122.05
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
6,110.78
268.20
(14.34)
195.19
6,559.83
6,016.28
339.93
5.56
170.25
6,532.02
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
3,422.30
2,188.11
218.42
5,828.83
2,212.06
2,436.94
256.15
4,905.15
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 23 OTHER ExPENSES
Software Purchases
Rent
Power, Fuel and Water Charges
Repairs & Maintenance
Insurance
Communication Costs
Printing & Stationery
Travelling & Conveyance
Rates & Taxes Including Filing Fees
Advertisement & Business Promotion
Consultancy Charges
Payments to Auditors (Refer Note 37)
Marketing & Allied Service Charges (including commission)
Provision for Doubtful trade receivables and loans and advances
Loss on sale of Fixed Assets (Net)
Exchange Fluctuation loss (Net)
Director sitting fees
Miscellaneous Expenses
Total
NOTE: 24 ExCEPTIONAL ITEMS
Provision for Doubtful Trade Receivables
Based on the assessment of receivables an amount of H1,497 lakhs
(31 March, 2013 : H1,664 Lakhs) is provided towards certain doubtful
receivables. Considering that such provision is significant and relevant in
understanding the financial performance, it has been disclosed separately
under exceptional item.
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
26.57
1,081.32
172.32
354.01
123.48
96.04
33.61
1,290.71
80.12
27.62
600.36
97.77
12,823.16
632.10
2.29
570.52
22.82
4.20
18,039.04
40.32
940.95
161.67
320.18
125.39
99.76
33.74
1,204.85
170.25
33.69
88.28
79.23
12,354.25
77.55
1.43
822.61
7.47
2.80
16,564.42
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
1,497.04
1,663.56
Total
1,497.04
1,663.56
NOTE: 25 ACCOUNTING UNDER THE PROPOSAL APPROVED BY THE HON’BLE HIGH COURT
a) During the year ended March 31, 2010, the shareholders of the Company approved the Board’s proposal (hereinafter
referred to as ‘the Proposal’ for transferring amounts from the Securities Premium and Capital Reserves as on or arising
after April 1, 2009) (upto March 31, 2012) to a Business Restructuring Reserve (BRR) to be utilised from April 1, 2009 for
certain Permitted Utilisations as mentioned in the Proposal.
The Proposal was approved by the Hon’ble High court of Karnataka on May 4, 2010 and was registered with the Registrar
of Companies on May 11, 2010, thereby completing all the requirements for the order to be effective.
b) Adjustments in the BRR during the previous year ended March 31, 2011
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2011:
•
•
transfer of H17,400.00 Lakhs during the year from the balances in Securities Premium Account and Capital Reserve to
the BRR ,
utilization of the BRR for permitted utilisations to the extent of H15,503.70 Lakhs (net).
Annual Report 2013-14
83
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 25 ACCOUNTING UNDER THE PROPOSAL APPROVED BY THE HON’BLE HIGH COURT (contd.)
c) Adjustments in the BRR during the previous year ended March 31, 2012
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2012:
•
•
transfer of H346.74 Lakhs during the year from the balances in Capital Reserve to the BRR,
utilization of the BRR for permitted utilisations to the extent of H2,574.93 Lakhs (net of reversals).
d) Adjustments in the BRR during the Previous year ended March 31, 2013
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2013:
•
•
•
•
transfer of H271.10 Lakhs during the year to Securities Premium,
towards FCCB restructuring expenses H359.58 Lakhs,
towards reversal of unbilled revenue H206.00 Lakhs,
towards provision for Doubtful trade Receivables H752.90 Lakhs.
e) Adjustments in the BRR during the current year ended March 31, 2014
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2014
•
towards provision for Doubtful trade Receivables H80.62 Lakhs.
f) Had the Proposal not provided for the above, the effect of accounting under the Accounting Standards referred to in
Section 211(3C) of the Companies Act, 1956 would have been as under
In the Statement of Profit and loss.
Revenue would have been lower by:
The loss under Exceptional items would have been higher as follows:
- One time non-recurring expenses being FCCB restructuring fees
- Provision towards doubtful trade receivables
Sub-Total
Profit/(loss) after Tax would have been lower/higher by
Basic Earnings/(Loss) per share would have been – H
Diluted Earnings/(Loss) per share would have been – H
Amount in H Lakhs except as otherwise indicated
MARCH 31, 2014
MARCH 31, 2013
-
-
-
80.62
80.62
80.62
(1.82)
(1.82)
206
-
359.58
752.90
1,112.48
1,318.48
(3.50)
(3.50)
NOTE: 26 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (FCCB I) aggregating to US$ 180
Million, with an interest rate of 2% p.a. payable semi-annually in arrears, with terms of conversion being :
i) Exchange rate for conversion of FCCB : H44.08/ US1$
ii) Conversion price : H656.20 per share
iii) Redemption date : March 09, 2012
iv) Premium payable on redemption : US$ 14.05 Million.
v) Listing on the London Stock Exchange
The bonds were available for conversion at any point in time during the period prior to the redemption date. During the
year 2009-10, the Company presented to restructure the FCCBs I by offering a discount of ~30% on the face value of the
existing bonds in return for new FCCBs (“FCCBs II”) having a face value of US$ 126 Million.
Pursuant to the offer, the FCCBs I Bondholders, with a face value of US$ 141 Million exchanged their bonds for new FCCBs
84
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 26 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS) (contd.)
with a face value of US$ 98.70 Million. The remaining FCCBs I bondholders holding bonds with a face value of US$ 39
Million (out of the original bondholders holding US$ 180 Million) did not choose the option for restructuring. The terms
and conditions applicable for the new FCCB II bonds, for the US$ 98.70 Million face value, were as under :
Interest rate : 5% p.a. payable semi annually
i.
ii. Exchange rate for conversion of FCCB : H48.17/ US1$
iii. Conversion price : H80.31 per share
iv. Redemption date : March 09, 2012
v. Premium payable on redemption : US$. 23.23 Million.
vi. Listing on the Singapore Exchange Securities Trading Limited
Both the bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue.
Based on an approval received from the Reserve Bank of India and bond holders, the redemption date was extended to
July 09, 2012.
Out of the US$ 98.70 million of FCCBs II, bonds having a face value of US$ 31.90 million were converted into equity
shares as of March 31, 2010 and bonds with a face value of US$ 12 million were converted during the year ending March
31, 2011, retaining a closing balance of US$ 54.80 Million outstanding FCCBs II bonds.
b) Pursuant to the approval of the holders of “US$ 180 Million 2% convertible unsecured bonds”,[of which US$ 39 Million
was outstanding (“FCCBs I”)] and “US$ 98.70 Million 5% convertible unsecured bonds”, [of which US$ 54.80 was
outstanding (“FCCBs II”)], at their respective meetings held on July 5, 2012 and exchange offers received under the
exchange offer memorandum dated June 13, 2012, holders of US$ 38 Million out of FCCBs I and US$ 53.40 Million out of
FCCBs II offered their bonds for exchange and secured bonds with a face value of US$ 127.72 million (“FCCBs III”) were
issued with maturity date of July 7, 2017. The Company has been legally advised that there is no tax incidence arising
from the above restructuring.
c) The terms and conditions of FCCB III are as under:
Interest rate : 5.70% p.a. payable semi annually
i.
ii. Exchange rate for conversion of FCCB : H56.06/ US1$
iii. Equity Conversion price : H22.79 per share
iv. Redemption date : July 07, 2017
v. Listing on the Singapore Exchange Securities Trading Limited
vi. Second ranking paripassu charge in respect of all movable properties, present & future, covered under the Existing
security and First ranking charge in respect of all movable properties, present & future, other than & to the extent
covered by the existing security. First ranking charge on FCCB Repayment fund on a paripassu basis jointly & equally
with SBI & Axis Bank Ltd. The promoters of the company have pledged their share towards securing the repayment of
FCCB III.
vii. Mandatory conversion of bonds with a face value of US$ 36.32 Million into equity shares at the aforesaid conversion
price on July 07, 2012.
For 2012 – 13 FCCB III with face value of US$ 3.25 Million were converted into equity shares of the Company,
retaining a closing balance of US$ 88.15 Million.
During the year, the Company received approvals from the FCCB Holders for deferment of the semiannual interest
due in January 2013, July 2013 and January 2014 to be settled with the principal on the redemption date. These have
accordingly been categorized as long-term liabilities.
d) Pursuant to approval of the RBI dated April 27, 2012 and requisite approvals under the trust deed of the holders of
the Company’s US$ 180 million convertible unsecured bonds and US$ 98.70 million convertible unsecured bonds the
maturity period of the un-exchanged portion of FCCBs I of face value US$ 1 Million and FCCBs II of face value US$ 1.40
Million stands extended to March 9, 2017, with its other terms and conditions remaining unchanged.
Annual Report 2013-14
85
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 26 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs) (contd.)
e) FCCB I: As at March 31, 2014, the face value of the US$ 1 Million FCCBs (Previous Year US$ 1 Million) amounts to H599.15
Lakhs (Previous Year: H542.81 Lakhs) and is included in Note 5 – Long Term Borrowings.
The premium payable on maturity has been accrued by a charge to Securities Premium.
FCCB II: As at March 31, 2014, the face value of the US$ 1.40 Million FCCBs (Previous Year US$ 1.40 Million) amounts to
H838.81 Lakhs (Previous Year: H759.99 Lakhs) and is included in Note 5 – Long Term Borrowings.
The premium payable on maturity has been accrued by a charge to Securities Premium.
FCCB III: As at March 31, 2014, the face value of the US$ 88.15 Million FCCBs (Previous Year US$ 88.15 Million) amounts
to H52,815.07 Lakhs (Previous Year: H47,852.27 Lakhs) and is included in Note 5 – Long Term Borrowings.
NOTE: 27 EMPLOYEES STOCk OPTION PLAN (ESOP)
The Company during the years 1999-2000, 2005-2006 and 2008-09 has established ESOP II, ESOP III and ESOP IV respectively.
These schemes have been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per these schemes, the Compensation Committee grants
the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at
a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock
Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a
period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.
The Company has obtained in-principle approval for listing of shares upto a limit as mentioned below.
ESOP II
: 8,83,750 shares
ESOP III
: 20,00,000 shares
ESOP IV
: 20,00,000 shares
Employees’ Stock Options Details as on the Balance Sheet Date are
Particulars
2013-14
2012-13
Options (No’s)
Weighted
average exercise
price per stock
option (H)
Options (No’s)
Weighted
average exercise
price per stock
option (H)
11,31,147
4,670 82.63
34.04
7,30,806 28.79
12,022 85.22
13,56,086 39.30
10,19,289 28.95
-
-
-
-
-
-
1,695
2,67,197
1,63,288
-
-
-
-
-
-
-
-
-
- -
12.82
1,24,100
-
-
- -
- -
- -
7,352 -
3,49,039 -
2,88,483 -
Options outstanding at the beginning of the year
ESOP – II
ESOP – III
ESOP – IV
Granted during the year
ESOP – II
ESOP – III
ESOP – IV
Exercised during the year
ESOP – II
ESOP – III
ESOP – IV
Cancelled, Surrendered or Lapsed during the year
ESOP – II
ESOP – III
ESOP – IV
86
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 27 EMPLOYEES STOCk OPTION PLAN (ESOP) (contd.)
Particulars
2013-14
2012-13
Options (Nos)
Weighted
average exercise
price per stock
option (H)
Options (Nos)
Weighted
average exercise
price per stock
option (H)
Options outstanding at the end of the year
ESOP – II
ESOP – III
ESOP – IV
Options exercisable at the end of the year
ESOP – II
ESOP – III
ESOP – IV
Options available for Grant at the end of the year
ESOP – II
ESOP – III
ESOP – IV
2,975
8,63,950
5,67,518
2,975
7,09,638
4,98,483
-
11,23,611
14,32,482
67.00
30.78
28.56
4,670 82.63
34.04
28.79
11,31,147
7,30,806
-
-
-
-
-
-
4,670 -
8,64,489 -
4,57,293 -
- -
8,56,414 -
12,69,194 -
[Weighted average remaining contractual life (considering vesting and exercise period)]
ESOP – II
At March 31, 2013: 1.41 Years
At March 31, 2014: 1.02 Years
ESOP – III
At March 31, 2013: 3.08 Years
At March 31, 2014: 2.12 Years
ESOP – IV At March 31, 2013: 3.16 Years
At March 31, 2014: 2.17Years
Fair Value Methodology
The fair value of options used to compute pro-forma net income and earnings per equity share have been estimated on the
date of grant using Black-Scholes model.
The key assumptions used in Black-Scholes model for calculating fair value is: risk-free interest rate of 8% (Previous year 8%),
expected life: 3 years (Previous year: 3 years), expected volatility of share: 54.49% (Previous year 64.85%), and expected
dividend yield: 0% (Previous year 0%) The variables detailed herein represent the average of the assumptions during the
pendency of the grant dates.
The impact on the EPS of the Company if fair value method is adopted is given below:
Particulars
Amount in H Lakhs except as otherwise indicated
MARCH 31, 2014
MARCH 31, 2013
Net Profit for the year (as reported)
Add : Stock-based employee compensation relating to grants after Apr 1,
2006
Less : Stock-based compensation expenses determined under fair value based
method for the above grants
Net Profit / (loss) - (proforma)
Basic earnings per share (as reported) - H
Basic earnings per share (proforma) - H
- H
Diluted earnings per share (as reported)
- H
Diluted earnings per share (proforma)
(2,952.88)
(14.34)
(3,456.42)
5.56
20.71
30.80
(2,987.93)
(1.77)
(1.79)
(1.77)
(1.79)
(3,481.66)
(2.54)
(2.56)
(2.54)
(2.56)
Annual Report 2013-14
87
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 28
The Company adopted the amendments to Accounting Standard 11 “The Effects of Changes in Foreign Exchange Rates”
that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on
restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were
initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency
Monetary Item Translation Difference account and are amortised over the balance period of such long term asset/liability.
Consequently, exchange fluctuation losses (net) arising on restatement of such items have been deferred to the extent of
H5,801.74 Lakhs (PY H2,765.65 Lakhs) at March 31, 2014 and the loss for the year is lower by a corresponding amount.
NOTE: 29 EMPLOYEE BENEFIT PLANS
a) Defined Contribution Plans
The Company makes contributions to Provident Fund, Employee State Insurance scheme contributions which are defined
contribution plan for qualifying employees. Under the Scheme, the Company is required to contribute a specified
percentage of the payroll costs to fund the benefits. The Company recognized H209.42 Lakhs (Year ended March 31, 2013
H231.63 Lakhs) for Provident Fund contributions H1.89 Lakhs (Year ended March 31, 2013 H2.04 Lakhs) for Employee
state insurance scheme contribution in the Statement of Profit and Loss.
b) Defined Benefit Plans
The Company offers Gratuity benefits to employees, a defined benefit plan. The following table sets out the funded status
of Gratuity liability and the amounts recognised in the financial statements:
I
1
2
3
4
5
6
7
8
II
1
2
Components of employer expense
Current Service cost
Interest cost
Expected return on plan assets
Curtailment cost / (credit)
Settlement cost / (credit)
Past Service Cost
Actuarial Losses / (Gains)
Total expense recognized in the Statement of Profit and Loss
Actual Contribution and Benefit Payments for the year
Actual benefit payments
Actual Contributions
III Net asset / (liability) recognized in Balance Sheet
1
2
3
Present value of Defined Benefit Obligation (DBO)
Fair value of plan assets
Funded status [Surplus / (Deficit)]
4 Unrecognized Past Service Costs
5 Net asset / (liability) recognized in Balance Sheet
- Current
- Non current
Estimated contribution in the Immediate next year
88
Subex Limited
Amount in H Lakhs except assumptions
Gratuity
MARCH 31, 2014
MARCH 31, 2013
54.24
20.91
(1.45)
-
-
-
(14.92)
58.78
76.39
96.00
(280.70)
28.88
(251.82)
-
(251.82)
(1.13)
(250.69)
Nil
56.77
20.63
(0.59)
-
-
-
31.51
108.32
99.31
98.84
(296.40)
7.36
(289.04)
-
(289.04)
(31.08)
(257.96)
31.08
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 29 EMPLOYEE BENEFIT PLANS (contd.)
IV Change in Defined Benefit Obligations during the year
1
2
3
4
5
6
7
8
9
Present Value of DBO at beginning of year
Current Service cost
Interest cost
Curtailment cost / (credit)
Settlement cost / (credit)
Plan amendments
Acquisitions
Actuarial (gains) / losses
Benefits paid
Amount in H Lakhs except assumptions
Gratuity
MARCH 31, 2014
MARCH 31, 2013
296.35
54.24
20.91
-
-
-
-
(14.41)
(76.39)
286.84
56.77
20.63
-
-
-
-
31.42
(99.31)
10 Present Value of DBO at the end of year
280.70
296.35
V
1
2
3
4
5
6
7
Change in Fair Value of Assets during the year
Plan assets at beginning of year
Acquisition Adjustment
Expected return on plan assets(estimated)
Actuarial Gain / (Loss)
Actual Company contributions
Benefits paid
Plan assets at the end of period
VI Actuarial Assumptions
1 Discount Rate
2
3
4
Expected Return on plan assets
Salary escalation
Attrition Rate
7.31
-
1.45
0.51
96.00
(76.39)
28.88
9.25%
8.50%
6.00%
9.00%
7.10
-
0.59
0.09
98.84
(99.31)
7.31
8.10%
8.50%
6.00%
9.00%
(H In Lakhs)
Five Year Data
Period ending
Defined Benefit Obligation at end of the
period
Plan Assets at end of the period
Funded Status
Experience Gain/(Loss)adjustments on
Plan Liabilities
Experience Gain/(Loss)adjustments on
Plan Assets
Actuarial Gain/(Loss) due to change on
assumptions
March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013 March 31, 2014
(193.23)
(299.41)
(286.84)
(296.40)
(280.7)
50.84
(142.39)
3.86
33.04
(266.37)
(4.83)
7.10
(279.74)
54.12
7. 36
(289.04)
11.31
28.88
(251.82)
(10.25)
-
0.38
0.31
(0.09)
0.51
6.84
-
12.77
(42.73)
24.66
Annual Report 2013-14
89
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 29 EMPLOYEE BENEFIT PLANS (contd.)
•
The composition of the plan assets held under the funds managed by the Insurer is as follows:
Fund Type
Equity Instruments
Debt Instruments
FD and Other Asset
%
2014
4.93
78.12
16.95
2013
5.22
79.73
15.05
•
•
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date
for the estimated term of the obligations.
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and
other relevant factors.
c) Actuarial Assumption for long-term compensated absences
Discount rate
Expected return on plan asset
Salary escalation rate
Attrition
MARCH 31, 2014
9.25%
NA
6.00%
9.00%
MARCH 31, 2013
8.10%
NA
6.00%
9.00%
•
•
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date
for the estimated term of the obligations.
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and
other relevant factors.
Total Liabilities Estimated
Current Portion
Non Current portion
NOTE: 30
MARCH 31, 2014
(81.32)
(5.49)
(75.83)
H In Lakhs
MARCH 31, 2013
(88.53)
(10.98)
(77.55)
Since the Company prepares consolidated financial statements in addition to these financial statements, both of which
form part of the annual report of the Company, as permitted by Accounting Standard 17 “Segment reporting”, the segment
information is presented on the basis of the consolidated financial statements.
NOTE: 31 RELATED PARTY INFORMATION
i) Related Parties
Wholly Owned Subsidiaries
Subex Americas Inc.
Subex (UK) Ltd
Subex Technologies Ltd
Subex Azure Holdings Inc.
Subex (Asia Pacific) Pte Ltd
Subex Inc.
Subex Technologies Inc.
Key Management Personnel
Surjeet Singh, Managing Director & CEO, 5th October, 2012 onwards
Subash Menon, Managing Director & CEO upto 27th September, 2012
Sudeesh Yezhuvath, Wholetime Director & Chief Operating Officer upto 5th October, 2012
90
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 31 RELATED PARTY INFORMATION (contd.)
ii. Details of the transactions with the related parties:
Particulars
Subsidiaries
Key Management Personnel
2013-14
2012-13
2013-14
2012-13
H In Lakhs
Marketing and Allied Service Charges and
reimbursement (including software development
charges)*
i) Subex (UK) Ltd
ii) Subex Inc.
iii) Subex Americas Inc.
iv) Subex (Asia Pacific) Pte Ltd
Income from Software Development and Services:
i) Subex (UK) Ltd
ii) Subex Inc.,
iii) Subex (Asia Pacific) Pte Ltd
iv) Subex Americas Inc.
Salary and Perquisites (Also refer Note 38.8)
Subash Menon
SudeeshYezhuvath
Surjeet Singh
Interest received on Inter Company Loans and advances
i) Subex UK Ltd
ii) Subex Americas Inc.
iii) Subex, Inc.
iv) +Subex (Asia Pacific) Pte Ltd
Expenses allocated to / (from):
i) Subex (UK) Ltd
ii) Subex, Inc.
iii) Subex (Asia Pacific) Pte Ltd
iv) Subex Americas Inc.
As at :
Amount due as at year end from
i) Subex UK Ltd
ii) Subex Inc.
iii) Subex (Asia Pacific) Pte Ltd
iv) Subex Americas Inc.##
v) Subex Technologies Ltd
vi) Surjeet Singh
Amount due as at year end to
i) Subex UK Ltd
ii) Subex Inc.
iii) Subex (Asia Pacific) Pte Ltd
iv) Subex Americas Inc.##
v) Subex Technologies Inc.
Loans / advances outstanding as at year end from
/ (to)
i) Subex Americas Inc.
ii) Subex Technologies Ltd#
Outstanding Guarantees taken/ given from / (to)
i) Subex Technologies Limited
ii) Subex Technologies Inc.
6,212.75
5,471.83
342.48
822.03
8,163.93
3,746.50
1,869.60
1,109.46
-
171.62
-
-
8.87
3.40
0.48
0.06
5,655.11
5,676.42
278.65
709.42
8,005.93
4,175.86
1,480.44
1,533.05
-
78.46
-
-
(2.60)
-
(0.41)
(1.60)
-
-
15.07
107.69
108.39
6.64
H In Lakhs
March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013
-
5.97
22,162.91
17,068.67
7,496.54
21,429.94
6.76
23,643.91
18,394.05
2,279.27
5,501.89
53.92
1,838.22
1,705.67
6,850.00
-
16,493.73
15,310.12
6,532.69
20,929.48
-
17,391.66
17,101.54
1,333.89
5,169.60
53.92
1,706.70
1,705.70
7,500.00
(2,171.40)
* Amount paid/ payable in Foreign Currency.
# Loans and Advances to Subex Technologies Ltd has been provided during the financial year 2010-11 to an extent of H1,694.66 Lakhs out
of utilisation of BRR and the remaining H11.01 Lakhs has been provided for as provision for Bad debts during the financial year 2013-14.
## Receivables of H1,497.04 Lakhs from Subex Americas Inc. have been provided for during the year.
Annual Report 2013-14
91
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 32 OPERATING LEASES
The Company had non-cancellable leasing arrangement for its office premises which on renewal during the year got converted
into cancellable operating lease arrangement. Rental expenses for operating leases included in the Statement of Profit and
Loss for the year is H1,081.32 Lakhs (Previous year - H940.95 Lakhs).
NOTE: 33 EARNINGS PER SHARE (EPS)
Amount in HLakhs except as otherwise indicated
MARCH 31, 2013
MARCH 31, 2014
Profit after Tax attributable to shareholders (A)
(2,952.88)
(3,456.42)
Add : Interest on FCCBs
Add/(Less) : Exchange Fluctuation on FCCB
Adjusted Profits after Tax for Diluted EPS (B)
Weighted Average Number of Shares (in Lakhs) for Basic EPS (C)
Effect of Existence of Dilutive Instruments (FCCBs and ESOPs) – (in Lakhs)
Weighted Average Number of Shares (in Lakhs) for Diluted EPS (D)
Earnings per Share – Basic [(A)/(C)] - H
Earnings per Share - Diluted [(B)/(D)] - H(Refer Note below).
Face value of shares: H10/- each
-
-
(2,952.88)
1,666.40
-
1,666.40
(1.77)
(1.77)
-
-
(3,456.42)
1,362.43
0.10
1,362.53
(2.54)
(2.54)
Note: FCCBs outstanding as at March 31, 2014 are anti-dilutive and hence have not been considered for purposes of Dilutive
EPS in year ended March 31, 2014.
Certain FCCBs as at March 31, 2013 were anti-dilutive and hence were not considered for purposes of Dilutive EPS in year
ended March 31, 2013.
NOTE: 34 DEFERRED TAx
The deferred tax asset recognised comprises of the tax impact arising from timing differences on:
Particulars
Leave Encashment and Gratuity
Differences between the book balance and tax balance of Fixed assets
Total
MARCH 31, 2014
-
-
-
H In Lakhs
MARCH 31, 2013
62.80
71.08
133.88
The Company has a net deferred tax asset as at March 31, 2014 significantly arising from brought forward unabsorbed
depreciation and tax losses, which has not been recognized as a matter of prudence.
NOTE: 35 COMMITMENTS AND CONTINGENT LIABILITIES
(a) Claims against the Company not acknowledged as debt:
I. Current Year - H1,379.37 Lakhs (Previous year – H163.26 Lakhs). These claims relate to Income Tax demands
significantly pertaining to transfer pricing and other adjustments which are being contested by the company.
These cases are pending at various forum with the respective authorities. Outflows, if any, arising out of these claims
would depend upon the outcome of the decision of the appellate authority and the Companies right for future
appeals before Judiciary. No reimbursements are expected
II. Others : Current year – H956.84 Lakhs (Previous Year – H956.84 Lakhs)
(b) Guarantees given to Subex Technologies Inc H Nil Lakhs (Previous year – H2,171.40 Lakhs)
92
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 35 COMMITMENTS AND CONTINGENT LIABILITIES (contd.)
(c) The Company has received a demand of service tax of H3,607.60 Lakhs and equivalent amount of penalties under the
provisions of the Finance Act, 1994 along with the consequential interest, for the period from April, 2006 to July, 2009
towards service tax payable on import of certain services. The Company has filed an appeal contesting the demand before
the Central Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore. During the year, CESTAT without expressing
any opinion, has remanded the appeal back to the adjudication authority and dispensed with the requirement of Pre-
deposit.
(d) Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid)
Nil (Previous year - H Nil)
NOTE: 36 OTHER INFORMATION PURSUANT TO SCHEDULE VI OF THE COMPANIES ACT, 1956.
CIF Value of Imports :
Import of systems and solutions
Capital goods
Expenditure in foreign currency (on accrual basis)
Travelling expenses & Other related expenses
Interest expense
Product marketing expense and other expenditure incurred overseas for
software development.
YEAR ENDED
MARCH 31, 2014
205.49
117.68
728.65
3,422.30
0.12
H In Lakhs
YEAR ENDED
MARCH 31, 2013
124.41
60.72
541.71
2,212.12
6.23
Marketing and allied services
12,849.09
12,319.60
Earnings in foreign exchange (on accrual basis)
Income from software development services and products
NOTE: 37 PAYMENTS TO AUDITORS (Net of Service tax credit’s recognised)
Particulars
As Auditors – Statutory audit
For Taxation matters
For Certification matters
For Other assurance services
For Reimbursement of expenses
Total
27,867.41
2013-14
75.00
1.50
1.20
14.69
5.38
97.77
26.105.91
H In Lakhs
2012-13
65.00
1.50
-
10.00
2.73
79.23
NOTE: 38 OTHERS
1. Unclaimed dividend of H1.31 Lakhs as at March 31, 2014 (Previous Year - H2.92 Lakhs) represent dividends not claimed
for the period from 2006-2007. No part thereof has remained unpaid or unclaimed for a period of seven years from the
date they become due for payment requiring a transfer to the ‘Investor Education and Protection Fund’. During the current
year, the Company has transferred H1.60 Lakhs (Previous Year - H0.59 Lakhs) to Investor Protection Fund.
2. Net Cash Flow Statement comprises outflows on account of permitted utilizations from the BRR of H Nil Lakhs (Previous
Year - H359.58 Lakhs).
3. Personnel Cost for the year includes expenditure on Research and Development of H1,665.37 Lakhs (Previous year -
H1,108.71 Lakhs). This is as certified by the management and relied upon by the auditors.
4. The Company does not have any outstanding foreign exchange forward contracts or other derivative instruments for the
purposes of hedging the risks associated with foreign exchange exposures as at the year end.
Annual Report 2013-14
93
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 38 OTHERS (contd.)
The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given
below:
(a) The amounts receivable in foreign currency on account of:
H In Lakhs
Particulars
Receivable towards Export of Goods &
Services(Including receivables from wholly owned
subsidiaries)
MARCH 31, 2014
MARCH 31, 2013
Amount (H)
Foreign
currency
Amount (H)
Foreign
currency
46,365.57
USD 773.86
42,232.30
USD 778.41
22,163.19
GBP 222.15
16,493.72
GBP 199.43
7,496.54
SGD 157.55
6,532.71
SGD 149.42
795.53
231.34
114.02
84.78
EUR 9.62
AED 14.18
QAR 6.93
CHF 1.25
241.87
AUD 4.37
329.93
1.81
53.52
71.32
-
EUR 4.72
AED 0.11
QAR 3.63
CHF 1.31
-
Loans/Advances to wholly owned subsidiaries
524.95
CAD 9.67
516.80
CAD9.71
Bank Balance
1,313.27
USD 21.91
1,189.90
USD 21.90
11.19
USD 0.19
10.36
USD 0.19
(b) The amounts payable in foreign currency on account of:
H In Lakhs
Particulars
Payable towards Import of Goods &
Services(Including payables to wholly owned
subsidiaries)
Capital goods (including intangibles)
MARCH 31, 2014
MARCH 31, 2013
Amount (H)
Foreign
currency
Amount (H)
Foreign
currency
29,291.85
USD 488.89
16,881.23
USD 311.02
23,644.2
GBP 237.00
15,409.21
GBP187.41
5.72
EUR 0.07
1,140.52
SGD 26.12
2,279.28
SGD 47.90
5.00
CAD 0.12
5.09
CAD 0.09
-
-
-
-
0.22
1.43
SGD 0.10
GBP 0.11
20.91
EUR 0.31
15.42
CHF 0.22
Towards interest on Foreign Currency loans
5,271.80 USD 87.99
2,082.19
USD 40.61
Towards Foreign Currency Convertible Bonds (FCCB's)
54,253.03
USD 905.50
49,155.07
USD 886.51
Redemption premium accrued on FCCB's
571.59
USD 9.54
517.93
USD 9.66
Loan (being other amounts payable in foreign
currency)
4,695.61
USD 17.95
2,766.26
USD 30.29
GBP 26.57
EUR 0.50
SGD 19.50
GBP 13.78
EUR 0.18
94
Subex Limited
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
5. The dues to Micro and Small enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006, The
details of same are as follows :
Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
Particulars
AS AT
MARCH 31, 2014
AS AT
MARCH 31, 2013
H In Lakhs
(i) Principal amount remaining unpaid to any supplier as at the end of the
accounting year
(ii) Interest due thereon remaining unpaid to any supplier as at the end of
the accounting year
(iii) The amount of interest paid along with the amounts of the payment
made to the supplier beyond the appointed day
(iv) The amount of interest due and payable for the year
(v) The amount of interest accrued and remaining unpaid at the end of
the accounting year
4.56
-
-
0.22
0.53
1.20
-
-
0.20
0.31
(vi) The amount of further interest due and payable even in the succeeding
year, until such date when the interest dues as above are actually paid
-
-
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis
of information collected by the Management. This has been relied upon by the auditors.
6. The Company purchases hardware and software to fulfill its obligations under contracts for sale of its Products. There
were no inventory of such hardware/software at the beginning and end of the year.
The breakup of balances included in line 4(a) in the Statement of Profit and Loss is as under –
Particulars
Software charges
Purchased hardware/ Software
Total
FOR THE YEAR ENDED
MARCH 31, 2014
-
389.74
389.74
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
19.81
223.49
243.30
7. The Company has ‘International transactions’ with ‘Associated Enterprises which are subject to Transfer Pricing regulations
in India. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at
arm’s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the
financial statements, particularly on account of tax expense and that of provision for taxation.
8. a)
In view of the losses incurred by the Company during the year ended March 31, 2014, the excess of the managerial
remuneration paid to the directors during the FY 2012-13 over the limits prescribed under Schedule XIII of the
Companies Act, 1956 has been treated as monies due from the directors, being held by them in trust for the Company,
and is included under ‘Short-term loans and advances’ amounting to H123.80 Lakhs ((Previous year H123.80 Lakhs) .
b) Other advances to directors paid during FY 2012-13 H110.00 Lakhs (Previous year H110.00 Lakhs) .
The Company has taken necessary steps for recovery of the above amounts and these items along with other claims
are a subject matter of arbitration which is in progress.
Annual Report 2013-14
95
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTE: 38 OTHERS (contd.)
9. During the year, the Company has rescheduled the terms of repayment of dues from its subsidiary viz. Subex Americas Inc.
In the opinion of the management, considering the future operational plans and cash flows, the net outstanding, classified
under Note 14 “Other Non-current Assets” of H14,521.33 Lakhs (Previous Year : H10,633.30 lakhs) of trade receivables
and H1,838.22 Lakhs (Previous Year H1,706.73) of advances are considered good and recoverable. Further, based on the
management’s assessment, there is no diminution, other than temporary, in the carrying value of its investment in the said
subsidiary of H12,495.74 Lakhs included in Note 12 “Non-current investments” and accordingly, no provision is required
to be made at this stage.
10. Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges
Loans and advances in the nature of loans given to subsidiaries:
Name of the party
Relationship
Subex Americas Inc.
Wholly Owned Subsidiaries
Subex Technologies Ltd.
Wholly Owned Subsidiaries
Note : Figures in brackets relate to previous year.
NOTE: 39
Amount outstanding
as at March 31, 2014
1,838.22
(1,706.73)
1,705.67
(1,705.70)
H In Lakhs
Maximum balance
outstanding during
the year
1,959.59
(1,841.87)
1,705.70
(1,705.70)
Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s
classification / disclosures.
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
96
Subex Limited
INDEPENDENT AUDITORS’ REPORT
TO
THE BOARD OF DIRECTORS OF SUBEX LIMITED
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial
statements of SUBEX LIMITED ( the “Company”), and its
subsidiaries (the Company and its subsidiaries constitute “the
Group”), which comprise the Consolidated Balance Sheet as
at 31st March, 2014, the Consolidated Statement of Profit
and Loss and the Consolidated Cash Flow Statement for the
year then ended, and a summary of the significant accounting
policies and other explanatory information.
is
for
responsible
Management’s Responsibility for the Consolidated Financial
Statements
The Company’s Management
the
preparation of consolidated financial statements that give
a true and fair view of the consolidated financial position,
consolidated
financial performance and consolidated
cash flows of the Group in accordance with the accounting
principles generally accepted in India. This responsibility
includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation
of the consolidated financial statements that give a true and
fair view and are free from material misstatement, whether
due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We
conducted our audit in accordance with the Standards on
Auditing issued by the Institute of Chartered Accountants of
India. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in the
consolidated financial statements. The procedures selected
depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the Company’s preparation and presentation of
the consolidated financial statements that give a true and fair
view in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal
control. An audit also includes evaluating the appropriateness
of the accounting policies used and the reasonableness of
the accounting estimates made by the Management, as well
as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid consolidated
financial statements give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a)
in the case of the Consolidated Balance Sheet, of the
state of affairs of the Group as at 31st March, 2014;
(b) in the case of the Consolidated Statement of Profit and
Loss, of the loss of the Group for the year ended on that
date; and
(c)
in the case of the Consolidated Cash Flow Statement, of
the cash flows of the Group for the year ended on that
date.
Emphasis of Matter
(a) We draw attention to Note 24 to the consolidated
financial statements, as more fully explained therein,
during the year the Company has in accordance with
the Proposal approved by the Hon’ble High Court of
Karnataka in prior years, debited Rs.80.63 Lakhs to the
Business Restructuring Reserve, instead of considering
the same as expense for the year ended 31st March,
2014, as required by Accounting Standard 5 ‘Net Profit
or Loss for the Period, Prior Period Items’.
(b) We draw attention
to Note 38
the
management’s assessment that the goodwill arising
from the consolidation of one of its subsidiaries is not
impaired and hence no provision has been made at this
stage for the reasons stated therein.
regarding
Our opinion is not qualified in respect of the above
matters.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm’s Registration No. 008072S)
Monisha Parikh
Partner
(Membership No. 47840)
Annual Report 2013-14
97
MUMBAI
May 29, 2014
CONSOLIDATED BALANCE SHEET
A EQUITY AND LIABILITIES
1
SHAREHOLDERS’ FUNDS
(a) Share Capital
(b) Reserves and Surplus
SUB TOTAL - SHAREHOLDERS’ FUNDS
2 NON - CURRENT LIABILITIES
(a) Long-term Borrowings
(b) Other Long-term Liabilities
(c) Long-term Provisions
3
SUB TOTAL - NON CURRENT LIABILITIES
CURRENT LIABILITIES
(a) Short-term Borrowings
(b) Trade Payables - Other than acceptances
(c) Other Current Liabilities
(d) Short-term Provisions
SUB TOTAL - CURRENT LIABILITIES
TOTAL
B
ASSETS
1 NON - CURRENT ASSETS
(a) Fixed Assets
i) Tangible Assets
ii) Intangible Assets
(b) Goodwill on Consolidation
(c) Deferred Tax Assets (net)
(d) Long-term Loans and Advances
(e) Other Non - Current Assets
SUB TOTAL - NON - CURRENT ASSETS
2
CURRENT ASSETS
(a) Trade Receivables
(b) Cash and Bank Balances
(c) Short-term Loans and Advances
(d) Other Current Assets
SUB TOTAL - CURRENT ASSETS
TOTAL
NOTE NO.
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
3
4
5
6
7
8
9
10
11
33
12
13
14
15
16
17
16,664.00
697.90
17,361.90
60,244.53
5,546.12
601.67
66,392.32
16,015.60
5,253.34
4,060.67
349.21
25,678.82
109,433.04
532.40
65.43
597.83
85,642.22
-
2,411.95
1,424.60
90,076.60
10,057.60
4,793.37
948.59
3,556.88
19,356.44
109,433.04
16,664.00
5,835.68
22,499.68
53,769.37
533.30
553.41
54,856.08
19,387.91
4,864.48
6,841.52
347.70
31,441.61
108,797.37
372.73
94.01
466.74
85,642.22
141.20
2,645.76
1,313.94
90,209.86
7,332.84
5,082.66
997.94
5,174.07
18,587.51
108,797.37
Corporate Information and Significant Accounting Policies
See accompanying notes forming part of the financial statements
1 & 2
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
Mumbai
Date: May 29, 2014
98
Subex Limited
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
NOTE NO. FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
A CONTINUING OPERATIONS
1 Revenue from Operations
2 Other Income
3 Total revenue
4 Expenses
(a) Cost of Hardware, Software and Support Charges
(b) Employee Benefits Expense and Sub-contract Charges
(c) Finance Costs
(d) Depreciation and amortisation expense
(e) Other Expenses
Total Expenses
5 Profit/(Loss) before exceptional items and Tax (3 - 4)
6 Exceptional Items
7 Profit/(Loss) before Tax (5 - 6)
8 Tax expense
(a) Current tax expense for current year
(b) MAT credit of prior years reversed
(c) Short/(excess) provision for tax relating to prior years
(d) Deferred Tax
Net Tax expense
9 Profit/(Loss) from continuing operations for the year
(7 - 8)
B DISCONTINUING OPERATIONS
10 Profit/ (Loss) from discontinuing operations (before tax)
11 Add/ (Less): Tax expense of discontinuing operations
on ordinary activities attributable to the discontinuiing
operations
12 Profit/ (Loss) from discontinuing operations (10-11)
C TOTAL OPERATIONS
13 Profit/ (Loss) for the year (9 + 12)
14 Earnings/(Loss) Per Share (Face value of H10/- each)
18
19
20
21
11
22
23
33
35
35
(a) Basic
(b) Diluted
Corporate Information and Significant Accounting Policies
See accompanying notes forming part of the financial
statements
32
32
1 & 2
34,005.16
444.12
34,449.28
955.32
17,778.58
6,709.52
244.18
8,499.42
34,187.02
262.26
-
262.26
613.10
174.13
5.33
143.82
936.38
(674.12)
30,734.26
88.98
30,823.24
817.16
17,955.80
5,138.12
420.51
7,426.83
31,758.42
(935.18)
3,069.92
(4,005.10)
354.08
-
32.16
-
386.24
(4,391.34)
(478.71)
(8.44)
(1,603.37)
-
(487.15)
(1,603.37)
(1,161.27)
(5,994.71)
(0.70)
(0.70)
(4.40)
(4.40)
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
Annual Report 2013-14
99
CONSOLIDATED CASH FLOW STATEMENT
A CASH FLOW FROM OPERATING ACTIVITIES
Profit / (Loss) before tax, for the year
Adjustments for :
(a) Depreciation and amortization expense
(b)
Interest Income
(c) Finance costs
(d)
(Profit) / Loss on sale / write off of assets- net
(e) Expense / (Gain) on employee stock option scheme
(f) Provision for doubtful Trade and other receivables
(g) Unrealised exchange (Gain) / Loss
(h) Goodwill Written off
Operating profit / (loss) before working capital changes
Adjustments for (increase) / decrease in operating assets
(a) Trade receivables
(b) Short-term loans and advances
(c) Long-term loans and advances
(d) Other current & non-current assets
Adjustments for increase / (decrease) in operating liabilities
(a) Trade payables
(b) Other current liabilities
(c) Other Long Term Liabilities
(d) Short-term provisions
(e) Long-term provisions
Cash generated from / (used in) operations
Net tax (paid) / refunds and others
Net cash flow from / (used in) operating activities (A)
B
CASH FLOW FROM INVESTING ACTIVITIES
(a) Capital expenditure on fixed assets, including capital advances
(b) Proceeds from sale of fixed assets
(c)
Interest received - Others
(d)
Investment in deposit
Net cash flow from / (used in) investing activities (B)
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
(216.45)
(5,608.47)
248.34
(9.45)
6,747.75
7.10
(27.16)
(240.03)
737.27
-
7,247.37
970.07
177.69
(21.95)
2,194.85
(1,985.11)
(2,094.94)
102.24
(45.73)
(8.99)
6,535.50
(454.89)
6,080.61
(369.14)
-
30.58
250.91
(87.65)
426.77
(40.02)
5,210.00
40.49
10.28
3,240.43
143.76
926.70
4,349.94
(2,900.94)
227.48
24.69
3,646.39
(2,861.01)
(3,622.20)
-
70.15
31.09
(1,034.41)
(702.53)
(1,736.94)
(132.86)
20.40
21.87
(440.94)
(531.53)
100
Subex Limited
CONSOLIDATED CASH FLOW STATEMENT
C
CASH FLOW FROM FINANCING ACTIVITIES
(a) Net increase / (decrease) in working capital borrowings
(b) Repayment of Short-term borrowings
(c) Proceeds / (repayments) from Long-term borrowings
(d) Dividends paid
(e) Finance cost
Net cash flow from / (used in) financing activities (C)
Net increase / (decrease) in Cash and cash equivalents (A+B+C)
Effect of Exchange Differences on restatement / translation of foreign
currency cash and cash equivalents
Cash or Cash equivalents at the beginning of the year
Cash and Cash equivalents at the end of the year (Refer Note 15A)
*Cash and cash equivalents
Cash on hand
Balance with Banks
in Current Accounts
in EEFC accounts
Total
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
(1,733.16)
(927.04)
(0.92)
1.61
(3,336.53)
(5,996.04)
(3.08)
(142.11)
4,451.83
4,306.64
7,855.61
(1,000.00)
4,616.78
(1.15)
(3,077.32)
8,393.92
6,125.45
(1,725.87)
52.25
4,451.83
0.94
0.77
4,295.28
10.42
4,306.64
4,441.62
9.44
4,451.83
Corporate Information and Significant Accounting Policies 1 & 2
Notes:
(i) The consolidated cash flow statement reflects the combined cash flows
pertaining to continuing and discontinuing operations.
(ii)See accompanying notes forming part of the financial statements
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
Annual Report 2013-14
101
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Subex Limited, a public limited company incorporated in 1994, is a leading global provider of Operations and Business
Support Systems (OSS/BSS) to communication service providers (CSPs) worldwide in the Telecom industry.
The Company pioneered the concept of a Revenue Operations Center (ROC) – a centralized approach that sustains
profitable growth and financial health for the CSPs through coordinated operational control. Subex’ s product portfolio
powers the ROC and its best-in-class solutions enable new service creation, operational transformation, subscriber-
centric fulfillment, provisioning automation, data integrity management, revenue assurance, cost management, fraud
management and interconnect / inter-party settlement. Subex also offers a scalable Managed Services Program. The
CSPs achieve competitive advantage through Business Optimization and Service Agility and improve their operational
efficiency to deliver enhanced service experiences to their subscribers. The Company has a development center in India
and sales offices in the form of wholly owned subsidiaries/ branches in UK, USA, Singapore, Australia, Dubai and Canada.
2. SIGNIFICANT ACCOUNTING POLICIES
I. Basis for preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting
Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the
Companies Act, 1956 (“1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act,
2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate
Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable, except to the extent permitted under
the Proposal approved by the Hon’ble High Court of Karnataka (Refer Note 24). The financial statements have been
prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the previous year.
II. Principles of Consolidation
The consolidated financial statements relate to Subex Limited (the ‘Company’) and its subsidiary companies. The
consolidated financial statements have been prepared on the following basis:
(i) The financial statements of the subsidiary companies used in the consolidation are drawn upto the same reporting
date as that of the Company i.e., March 31, 2014.
(ii) The financial statements of the Company and its subsidiary companies have been combined on a line-by-line
basis by adding together like items of assets, liabilities, income and expenses, after eliminating intra-group
balances, intra-group transactions and resulting unrealised profits or losses, unless cost cannot be recovered.
(iii) The excess of cost to the Group of its investments in the subsidiary companies over its share of equity of
the subsidiary companies, at the dates on which the investments in the subsidiary companies were made, is
recognised as ‘Goodwill’ being an asset in the consolidated financial statements and is tested for impairment on
annual basis. Alternatively, where the share of equity in the subsidiary companies as on the date of investment
is in excess of cost of investments of the Group, it is recognised as ‘Capital Reserve’ and shown under the head
‘Reserves & Surplus’, in the consolidated financial statements.
(iv) Goodwill arising on consolidation is not amortised but tested for impairment.
102
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
(v) Following subsidiary companies have been considered in the preparation of the consolidated financial statements:
Name of the entity
Country of Incorporation Ownership held by
Subex Technologies Limited India
Subex Limited
Subex Technologies Inc.
United States of America Subex Technologies Limited
Subex (UK) Limited
United Kingdom
Subex Limited
Subex Inc.
United States of America Subex (UK) Limited
Subex (Asia Pacific) Pte. Ltd, Singapore
Subex Americas Inc.
Canada
Subex (UK) Limited
Subex Limited
Subex Azure Holdings Inc.
United States of America Subex Americas Inc.
% of Holding and voting
power either directly
or indirectly through
subsidiary as at
March 31,
2014
March 31,
2013
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(vi) The consolidated financial statements have been prepared using uniform accounting policies for like transactions
and other events in similar circumstances and are presented to the extent possible, in the same manner as the
Company’s separate financial statements.
III. Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates
and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the
reported income and expenses during the year. The Management believes that the estimates used in preparation of the
financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences
between the actual results and the estimates are recognised in the periods in which the results are known / materialised.
IV. Revenue recognition
Revenue from Contracts for software product license includes fees for transfer of licenses, installation and commissioning.
This revenue is on the basis of milestones achieved, determined based on percentage of completion of work completed
at each milestone as compared to the work involved in the overall scope of the contract. In the event of any expected
losses on a contract, the entire amount is provided for in the accounting period in which such losses are first anticipated.
Revenue from sale of software licenses (including additional licenses) are recognized on transfer of such licenses.
In case of composite contracts involving granting of license and support services, license revenues are recognized on
transfer of the license if identified separately and in other cases, they are recognized over the period of the contract
along with revenue from support services.
Revenue from Software development is recognized on the basis of chargeable time or achievement of prescribed
milestones as relevant to each contract.
Sale of hardware under reseller arrangements are recognized on dispatch of goods to customers and are recorded net
of discounts, rebates for price adjustment, projections, shortage in transit, taxes and duties.
Maintenance and service income is recognised on time proportion basis.
V. Tangible Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of freight, duties, taxes and other direct expenditure incurred.
Assets acquired on hire purchase are capitalised at gross value and interest thereon is charged to revenue.
Exchange differences arising on restatement / settlement of long term foreign currency borrowings relating to acquisition
of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful
life of such assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an
increase in the future benefits from such asset beyond its previously assessed standard of performance. Fixed assets
Annual Report 2013-14
103
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
acquired and put to use for project purpose are capitalised and depreciation thereon is included in the project cost till
the project is ready for its intended use.
VI. Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an
intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently
recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its
purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will
enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and
such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the
cost of the asset (Refer note: 2.XII for accounting for R&D expenses).
VII. Depreciation & Amortisation
Fixed assets and Intangibles are depreciated / amortised using the straight-line method over the useful life of assets.
Depreciation is charged on pro-rata basis for assets purchased/sold during the year.
The rates of depreciation / amortisation adopted are as under:
Particulars
Computers
Software
Furniture & Fixtures
Vehicles
Office equipments
Intellectual Property Rights
Depreciation/ Amortisation Rates (%)
25
25
20
20
20
20
Goodwill
20
Individual assets costing less than H5,000 are depreciated in full, in the year of purchase.
The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial
year and the amortisation method is revised to reflect the changed pattern.
VIII. Employee Stock Option Plans
The Group has formulated Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Schemes provide for grant of options to
employees of the Company and its subsidiaries to acquire equity shares of the Company that vest in a graded manner
and that are to be exercised within a specified period. The Company has used intrinsic value method to account for the
compensation cost of stock options. Intrinsic value is the amount by which the quoted market price on the day prior to
the grant of the options under ESOS exceeds the exercise price of the option. In accordance with the SEBI guidelines,
the intrinsic value is amortised on a straight line basis over the vesting period.
IX. Employee Benefits
Employee benefits include provident fund, gratuity fund, compensated absences, retention and performance linked
payouts.
Defined contribution plans: The Group’s contribution to provident fund is considered as defined contribution plan and
is charged as an expense as they fall due based on the amount of contribution required to be made and when services
are rendered by the employees.
Defined benefit plans: For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined
using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial
gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is
recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line
basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the
104
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service
cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service
cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in
exchange for the services rendered by employees are recognised during the year when the employees render the
service. These benefits include retention and performance linked payouts and compensated absences which are
expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of such compensated absences is accounted as under:
(a)
in case of accumulated compensated absences, when employees render the services that increase their entitlement
of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
Long-term employee benefits: Compensated absences which are not expected to occur within twelve months after the
end of the period in which the employee renders the related service are recognised as a liability at the present value
of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the
obligations are expected to be settled.
X. Other income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is
established.
XI. Leases
Assets leased by the Group in its capacity as lessee where substantially all the risks and rewards of ownership vest in
the Group are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the
fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount.
Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of
interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor
are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and
Loss on a straight line basis.
XII. Research and development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of
products are also charged to the Statement of Profit and Loss. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.
XIII. Foreign currency transactions
Initial recognition
i.
Transactions in foreign currencies (other than the entity’s functional currency) entered into by the Group are
accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the
rate at the date of the transaction.
ii.
Integral foreign operations: Transactions in foreign currencies entered into by the Company’s integral foreign
operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
iii. Net investment in non-integral foreign operations: Net investment in non-integral foreign operations is accounted
at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the
date of the transaction.
iv. Non-integral foreign operations: Transactions of non-integral foreign operations are translated at the exchange
rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the
transaction.
Annual Report 2013-14
105
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
Measurement at the Balance Sheet date
i.
Foreign currency monetary items (other than derivative contracts) of the Group, outstanding at the Balance Sheet
date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.
ii.
Integral foreign operations: Foreign currency monetary items (other than derivative contracts) of the Company’s
integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates. Non-monetary
items of the Company’s integral foreign operations are carried at historical cost.
iii. Net investment in non-integral foreign operations: Foreign currency monetary items (other than derivative contracts)
of the Company’s net investment in non-integral foreign operations outstanding at the Balance Sheet date are
restated at the year-end rates.
iv. Non-integral foreign operations: All assets and liabilities of non-integral foreign operations are translated at the
year-end rates.
v. Goodwill on consolidation entirely attributable to foreign operations is restated at the exchange rate prevailing on
the Balance Sheet date.
Treatment of exchange differences
i.
Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and
liabilities of the Company are recognised as income or expense in the Consolidated Statement of Profit and Loss.
ii.
Integral foreign operations: Exchange differences arising on settlement / restatement of short-term foreign currency
monetary assets and liabilities of the Company’s integral foreign operations are recognised as income or expense in
the Consolidated Statement of Profit and Loss.
iii. Net investment in non-integral foreign operations: The exchange differences on restatement of long-term
receivables / payables from / to non-integral foreign operations that are considered as net investment in such
operations is accounted as per policy for long-term foreign currency monetary items stated in para (v) below until
disposal / recovery of such net investment, in which case the accumulated balance in “Foreign currency translation
reserve” is recognised as income / expense in the same period in which the gain or loss on disposal / recovery is
recognised.
iv. Non-integral foreign operations: The exchange differences relating to non-integral foreign operations are accumulated
in a “Foreign currency translation reserve” until disposal of the operation, in which case the accumulated balance
in “Foreign currency translation reserve” is recognised as income / expense in the same period in which the gain or
loss on disposal is recognised.
v. Exchange difference on long-term foreign currency monetary items: The exchange differences arising on settlement
/ restatement of long-term foreign currency monetary items are capitalised as part of the depreciable fixed assets
to which the monetary item relates and depreciated over the remaining useful life of such assets. If such monetary
items do not relate to acquisition of depreciable fixed assets, the exchange difference is amortised over the
maturity period / upto the date of settlement of such monetary items, whichever is earlier, and charged to the
Consolidated Statement of Profit and Loss except in case of exchange differences arising on net investment in
non-integral foreign operations, where such amortisation is taken to “Foreign currency translation reserve” until
disposal / recovery of the net investment. The unamortised exchange difference is carried under Reserves and
surplus as “Foreign currency monetary item translation difference account” net of the tax effect thereon, where
applicable.
Change in classification of foreign operation
When a foreign operation that is integral to the operations of the Company is reclassified as a non-integral operation,
exchange differences arising on the translation of non-monetary items at the date of such reclassification are
accumulated in the “Foreign currency translation reserve” account.
When a non-integral foreign operation is reclassified as an integral foreign operation, the translated amounts for non-
monetary items at the date of the change are treated as the historical cost for those items in the period of change and
106
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
subsequent periods. Exchange differences that have been deferred are not recognised as income or expense until the
disposal of the operation.
Subsequent to the date of change in classification of the foreign operation, transactions and balances in such operations
are accounted as per the accounting policy applicable to the new classification.
Accounting for Forward contracts:
Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are
amortised over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.
Accounting for Derivatives:
Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated
for forward contracts.
All other derivative contracts are marked-to-market and losses are recognised in the Consolidated Statement of Profit
and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence.
XIV. Investments
Long-term investments, are carried individually at cost less provision for diminution, other than temporary, in the value
of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments
include acquisition charges such as brokerage, fees and duties.
XV. Taxes on income
Current tax is determined on the basis of taxable income and tax credits computed for each of the entities in the Group
in accordance with the provisions of applicable tax laws of the respective jurisdictions where the entities are located.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form
of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the entity will
pay normal income tax. Accordingly, MAT is recognised as an asset in the Consolidated Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to the entity.
Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting
income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is
measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items
other than unabosrbed depreciation and carry forward losses only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed
depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if
such items relate to taxes on income levied by the same governing tax laws and the entity has a legally enforceable right
for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.
The Group offsets deferred tax assets and deferred tax liabilities, and advance income tax and provision for tax, if it has
a legally enforceable right and these relate to taxes in income levies by the same governing taxation laws.
Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the
Consolidated Statement of Profit and Loss.
XVI. Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of
changes in value.
XVII. Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax, is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are segregated based on the available information.
Annual Report 2013-14
107
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
XVIII. Provisions and Contingencies
A provision is recognised when the Group has a present obligation as a result of past events and it is probable that
an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.
Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the
best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date
and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets
are not recognised in the financial statements.
XIX. Impairment of Assets
The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any
indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if
the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net
selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in
earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the
Consolidated Statement of Profit and Loss, except in case of revalued assets.
XX. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary
items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share
is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as
adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares,
by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net
profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as
at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the
outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The
number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and
bonus shares, as appropriate.
XXI. Segment reporting
The Group identifies primary segments based on the dominant source, nature of risks and returns and the internal
organisation and management structure. The operating segments are the segments for which separate financial
information is available and for which operating profit / loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Group. Segment
revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of
their relationship to the operating activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair
value factors.
Revenue, expenses, assets and liabilities which relate to the Group as a whole and are not allocable to segments on
reasonable basis have been included under ‘unallocated revenue / expenses / assets / liabilities.
XXII. Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their
realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose
of classification of its assets and liabilities as current and non-current.
108
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 3 SHARE CAPITAL
AUTHORISED
49,50,40,000 Equity Shares of H10/- each (Previous Year: 49,50,40,000
Equity Shares of H10/- each)
2,00,000 Preference Shares of H98/- each
Total
ISSUED, SUBSCRIBED AND PAID UP EQUITY SHARES
16,66,39,962 Equity Shares of H10/- each (Previous Year : 16,66,39,962
Equity Shares of H10/- each)
Total
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
49,504.00
49,504.00
196.00
49,700.00
196.00
49,700.00
16,664.00
16,664.00
16,664.00
16,664.00
NOTES
A
Reconciliation of the number of Equity shares at the beginning and at the end of the reporting period
Particulars
Equity Shares (No. of shares)
Year ended March 31, 2014
Year ended March 31, 2013
Opening
Balance
Fresh issue
ESOP Conversion of
FCCB
Closing
Balance
16,66,39,962
6,93,10,772
-
-
-
-
- 16,66,39,962
9,73,29,190 16,66,39,962
Reconciliation of the amount outstanding at the beginning and at the end of the reporting period
Opening
Balance
Fresh issue
ESOP Conversion of
FCCB
H In Lakhs
Closing
Balance
16,664.00
6,931.08
-
-
-
-
-
16,664.00
9,732.92
16,664.00
B
The Company has only one class of Equity Share, having a par value of H10/-. The holder of equity shares is entitled to
one vote per share and such amount of dividend per share as declared by the Company. In the event of liquidation of the
Company, the holders of the equity shares will be entitled to receive any of the remaining assets of the Company, after
distribution to all other parties concerned. The distribution will be in proportion to number of equity shares held by the
shareholders.
C Details of shares held by each shareholder (together with Persons Acting in Concert[PAC]) holding more than 5% shares.
Class of shares / Name of shareholder
AS AT MARCH 31, 2014
AS AT MARCH 31, 2013
Equity shares
QVT Mauritius West Fund & Quintessence Mauritius
West Fund
Suffolk (Mauritius) Limited & Mansfield(Mauritius)
Deutche Bank AG London -CB Account
Nomura Singapore Limited
Merill Lynch Capital Markets
Promoter and Promoter Group (See Note E below)
No. of shares
held
% holding No. of shares
held
% holding
1,33,47,888
8.01% 1,33,47,888
8.01%
1,73,72,221
1,08,92,721
1,02,34,433
1,01,92,621
64,74,044
10.43% 1,73,72,221
6.54% 1,08,92,721
6.14% 1,02,34,433
6.12% 1,01,92,621
84,74,044
3.89%
10.43%
6.54%
6.14%
6.12%
5.09%
Annual Report 2013-14
109
Particulars
Equity Share Capital
Year ended March 31, 2014
Year ended March 31, 2013
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 3 SHARE CAPITAL (contd.)
Bank of New York is the depositary of GDRs on behalf of GDR holders holding 17,99,310 shares representing 1.08% of
total shareholding (Previous Year : 69,89,399 shares representing 4.23%). The company does not have details of individual
GDR holders/ beneficiaries to determine if anyone holds more than 5% of the beneficial interest individually in the equity
shares.
D As at March 31, 2014 21,91,55,913 shares (As at March 31, 2013, 21,95,88,093 shares) were reserved for issuance as
follows:
i) 2,975 shares (As at March 31, 2013, 4,670 shares) of H10 each towards outstanding employee stock options scheme
under ‘ESOP 2000’ granted / available for grant.
ii) 8,63,950 shares (As at March 31, 2013, 11,31,147 shares) of H10 each towards outstanding employee stock options
scheme under ‘ESOP 2005’ granted / available for grant.
iii) 5,67,518 shares (As at March 31, 2013, 7,30,806 shares) of H10 each towards outstanding employee stock options
scheme under ‘ESOP 2008’ granted / available for grant.
iv) 67,174 shares (As at March 31, 2013, 67,174 shares) of H10 each towards conversion of foreign currency convertible
bonds(FCCB I) available for conversion. Refer note 25
v) 8,39,721 shares (As at March 31, 2013, 8,39,721 shares) of H10 each towards conversion of foreign currency
convertible bonds (FCCB II) available for conversion. Refer Note 25
vi) 21,68,14,575 shares ( As at March 31, 2013 21,68,14,575 shares) of H10 each towads Conversion of Foreign currency
convertible bond (FCCB III) avaibale for conversion. Refer note 25
E Details of shares held by Promoter and Promoter Group*:
Name of the Shareholder
AS AT MARCH 31, 2014
AS AT MARCH 31, 2013
Subash Menon
Kivar Holdings Private Limited (KHPL) (including
Woodbridge Consulting & Investments Inc, which
merged with KHPL)
Sudeesh Yezhuvath
Total Promoter and promoter group
*as confirmed by the registrar
No. of shares
held
% holding in
that class of
shares
No. of shares
held
% holding in
that class of
shares
25,80,601
1.55%
25,80,601
1.55%
35,21,200
2.12%
55,21,200
3.32%
3,72,243
64,74,044
0.22%
3.89%
3,72,243
84,74,044
0.22%
5.09%
F
Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received
in cash, bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date:
Particulars
Company had issued Equity shares of H10 each to the GDR holders as
of June 22, 2006 towards consideration of cost of acquisition of Azure
Solutions Limited at H532.24 per share.
In accordance with the terms of FCCBs III, out of the principal face value
of US$ 127.72 Million, an amount of US$ 36.32 Million were mandatorily
converted into equity shares on July 17, 2012. (Refer note 25)
Aggregate number of shares
AS AT
MARCH 31, 2014
AS AT
MARCH 31, 2013
1,17,28,728
1,17,28,728
8,93,35,462
8,93,35,462
110
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 4 RESERVES AND SURPLUS
General Reserve
Securities Premium Account
Opening Balance
Transferred from / (to) Business Restructuring Reserve
Add : Additions due to conversion of FCCBs, ESOP and preferential
placement of equity shares
Write back from / (Accrual for) redemption premium on FCCBs (net)
Less / Add: Expenses on issue of Shares
Closing Balance
Business Restructuring Reserve
Opening Balance
Transferred from / (to) Securities Premium / Capital Reserve
Amounts utilised for Permitted Utilisations
Closing Balance
Share Options Outstanding Account
Opening Balance
Add : Amounts recorded on Grants during the year
Less : Written back to the Statement of Profit and loss / other accounts
during the year
Closing Balance
Less : Deferred Stock Compensation Expenses
Share Options Outstanding Account (net)
Foreign Currency Monetary Item Translation Difference Account
Opening Balance -(Debit) / Credit
Add / (Less) : Effect of foreign exchange rate variation during the year
(Add) / Less: Amortisation for the year
Closing Balance
Exchange Reserve on Consolidation
Opening Balance
Effect of Foreign exchange rate variations during the year
Closing Balance
Surplus / (Deficit) in Statement of Profit and Loss
Opening balance
Add : Profit / (Loss) for the year
Closing Balance
Total Reserves and Surplus
NOTE: 5 LONG-TERM BORROWINGS
Foreign Currency Convertible Bonds (Refer Note 25)
Secured
Unsecured
From Others (Refer note (i))
Unsecured
Total
NOTE
NO.
AS AT
MARCH 31, 2014
1,779.76
H In Lakhs
AS AT
MARCH 31, 2013
1,779.76
24
27
10,615.20
-
-
(53.59)
-
10,561.61
80.63
-
(80.63)
-
138.49
-
(39.53)
98.96
(2.67)
96.29
(2,765.65)
(5,097.99)
2,061.88
(5,801.74)
(5,831.43)
(778.71)
(6,610.14)
1,833.39
(1,161.27)
672.12
697.90
316.20
271.10
10,505.40
(574.70)
97.20
10,615.20
1,670.21
(271.10)
(1,318.48)
80.63
197.00
56.59
(115.10)
138.49
(14.71)
123.78
(357.00)
(3,157.10)
748.45
(2,765.65)
(4,178.42)
(1,653.01)
(5,831.43)
7,828.10
(5,994.71)
1,833.39
5,835.68
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
52,815.00
1,438.03
5,991.50
60,244.53
47,852.27
1,302.80
4,614.30
53,769.37
(i) Represents loan taken by Subex Americas Inc, which has been guaranteed by Subex (UK) Limited. The repayment terms
varies from 18 to 42 months carrying interest rate of 10.5% compounded semiannually.
Annual Report 2013-14
111
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 6 OTHER LONG TERM LIABILITIES
Accrual for premium payable on redemption of bonds
Interest accrued but not due on borrowings
Deferred rent
Unearned Revenue
Total
NOTE: 7 LONG-TERM PROVISIONS
Provision for Employee Benefits
Provision for compensated absences (Refer Note 28(c ))
Provision for gratuity (Refer Note 28(b))
Provision for Tax (Net of Advance Tax of H189.99 Lakhs
As at March 31, 2013 H934.90 Lakhs)
Total
NOTE: 8 SHORT-TERM BORROWINGS
From Banks / Financial Instituitions
Secured (Refer note (i) below)
Unsecured (Refer note (ii) below)
From Others
Unsecured (Refer note (iii))
Total
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
571.59
4,854.31
24.79
95.43
5,546.12
517.93
-
15.37
-
533.30
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
75.83
250.69
275.15
77.55
257.96
217.90
601.67
553.41
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
14,817.30
-
1,198.30
16,015.60
16,550.46
937.55
1,899.90
19,387.91
(i) The secured loans from banks are secured by first charge on receivables, current assets and fixed assets of the company,
jointly and equally with first ranking charge on “FCCB Repayment fund” on a paripassu basis with bondholders of
Company’s U.S.$127,721,000 5.70% secured Foreign Currency Convertible Bonds due 2017, carrying interest rates
ranging from 14% to 17%.
Paripassu First Charge by way of Hypothecation of Stocks and Book Debts and Other Current Assets of the company both
present and future stored at company premises at RMZ Ecoworld, Bangalore.
This is further covered by a personal guarantee of a director of the company apart from corporate guarantee in which a
director is interested as well as a guarantee of Subex Technologies Ltd.”
(ii) Represents loan taken from Subex Technologies Inc which is secured by a corporate guarantee from Subex Limited.
(iii) Represents loan taken by Subex Americas Inc, which has been guaranteed by Subex (UK) Limited. The repayment terms
varies from 18 to 24 months carrying interest rate of 10.5% compounded semiannually.
112
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 9 OTHER CURRENT LIABILITIES
Current maturities of Long-term borrowings - Hire Purchase Loans from Banks
(Secured) (Refer note (i) below)
Interest accrued but not due on borrowings
Unclaimed Dividends (Refer Note 37(1))
Unearned Revenue
Other Payables
Statutory remittances
Deferred rent
Total
AS AT
MARCH 31, 2014
-
H In Lakhs
AS AT
MARCH 31, 2013
0.92
1,059.39
1.31
2,418.79
542.21
38.97
4,060.67
2,282.16
2.92
3,905.43
637.10
12.99
6,841.52
(i) Secured against the Hypothecation of vehicles financed under these loans. Hire Purchase loans amount to HNil as at
March 31, 2014 (H0.92 Lakhs as at March 31, 2013). The interest rate on these loans range from 9% to 20%.
NOTE: 10 SHORT-TERM PROVISIONS
Provision for Employee Benefits
Provision for compensated absences (Refer Note 28(c ))
Provision for gratuity (Refer Note 28(b))
Provision for Tax (Net of advance tax HNil) (As at March 31, 2013 HNil)
Total
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
306.31
41.89
1.01
349.21
263.30
83.20
1.20
347.70
H In Lakhs
NOTE: 11 FIxED ASSETS
Particulars
Sl.
No.
11A Tangible Fixed Assets
1
Computer Hardware
(Previous Year balance)
Furniture & Fixtures
(Previous Year balance)
Vehicles
(Previous Year balance)
Office Equipments
(Previous Year balance)
Lease Hold Improvements
(Previous Year balance)
2
3
4
5
2
TOTAL TANGIBLE ASSETS
(Previous Year balance)
11B Intangible Fixed Assets
Computer Software
1
(Previous Year balance)
Goodwill
(Previous Year balance)
Intellectual Property Rights
(Previous Year balance)
TOTAL INTANGIBLE ASSETS
(Previous Year balance)
Total
Previous Year
3
GROSS BLOCK
DEPRECIATION
As at
01-Apr-13
Adjust-
ments *
Additions
during the
year
Deletions
during the
year
As at
31-Mar-14
Upto
01-Apr-13
Adjust-
ments *
for the
year
NET BLOCK
Upto
31-Mar-14
As at
31-Mar-14
Withdrawn
on
Deletions
4,348.59
(4,414.00)
142.27
(136.50)
84.10
(241.60)
533.64
(524.80)
171.10
(169.50)
5,279.70
(5,486.40)
888.25
(849.10)
137.67
(137.67)
2,534.19
(3,973.95)
3,560.11
(4,960.72)
8,839.81
(10,447.12)
434.19
(63.39)
8.03
(4.88)
-
-
50.14
(4.89)
36.50
(1.60)
528.86
(74.76)
33.34
(11.06)
-
-
-
-
33.34
(11.06)
562.20
(85.82)
336.80
(92.10)
-
(0.89)
-
-
14.10
(4.65)
-
-
49.10
(220.90)
17.35
-
53.30
(157.50)
24.50
(0.70)
-
-
5,070.48
(4,348.59)
132.95
(142.27)
30.80
(84.10)
573.38
(533.64)
207.60
(171.10)
4,027.70
(3,895.04)
131.06
(120.70)
81.55
(212.90)
495.56
(453.90)
171.10
(169.50)
418.40
(49.62)
7.60
(4.52)
-
-
49.50
(4.68)
36.50
(1.60)
176.60
(283.84)
4.70
(5.84)
2.30
(25.26)
17.59
(37.27)
-
-
45.94
(200.80)
15.88
-
53.34
(156.61)
22.19
(0.29)
-
-
4,576.76
(4,027.70)
127.48
(131.06)
30.51
(81.55)
540.46
(495.56)
207.60
(171.10)
493.72
(320.89)
5.47
(11.21)
0.29
(2.55)
32.92
(38.08)
-
-
350.90
(97.64)
144.25
4,906.97
6,015.21
(379.10) (5,279.70) (4,852.04)
512.00
(60.42)
201.19
(352.21)
137.35
5,482.81
(357.70) (4,906.97)
532.40
(372.73)
17.10
(28.09)
-
-
-
-
17.10
(28.09)
368.00
(125.73)
938.69
(888.25)
137.67
(137.67)
2,534.19
794.24
-
(710.66)
-
137.67
-
(137.67)
-
-
2,534.19
- (3,973.95) (3,973.95)
-
3,466.10
- (4,999.87) (4,822.28)
9,625.76
8,373.07
(10,279.57) (9,674.32)
3,610.55
144.25
(379.10)
31.87
(9.02)
-
-
-
-
31.87
(9.02)
543.87
(69.44)
47.15
(74.56)
-
-
-
-
47.15
(74.56)
248.34
(426.77)
873.26
-
(794.24)
-
137.67
-
(137.67)
-
-
2,534.19
- (3,973.95)
-
3,545.12
- (4,905.86)
9,027.93
(357.70) (9,812.83)
137.35
65.43
(94.01)
-
-
-
-
65.43
(94.01)
597.83
(466.74)
Note: (i) The above assets represent assets owned by the company and there are no assets taken on finance lease or given on operating lease
(ii) Computers (included under office equipment) and Computer Software have been classified between tangible and intangible assets, respectively in
the current year and the prior year comparables have been appropriately reclassified.
* Adjustments represent exchange fluctuation arising on account of translation from foreign currency to reporting currency
Annual Report 2013-14
113
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 12 LONG-TERM LOANS AND ADVANCES (UNSECURED, CONSIDERED GOOD)
Advance Taxes (Net of Provision of H3617.18 Lakhs)
(As at March 31, 2013 H176.50 Lakhs)
Balances with government authorities - Service Tax Credit Receivable
Security Deposits
MAT credit entitlement
Total
NOTE: 13 OTHER NON - CURRENT ASSETS
Long-term Trade Receivables
(Unsecured)
Outstanding for a period exceeding six months from due date
Considered Doubtful
Less: Provision for Doubtful trade receivables
Unbilled Revenue
Total
NOTE: 14 TRADE RECEIVABLES
(Unsecured)
Outstanding for a period exceeding six months from due date
Considered Good
Considered Doubtful
Less: Provision for Doubtful Debts receivables
Other debts
Considered Good
Considered Doubtful
Less: Provision for Doubtful trade receivables
Total
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
1,342.22
1,430.30
266.90
802.83
-
266.90
774.43
174.13
2,411.95
2,645.76
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
4,731.81
(4,731.81)
-
1,424.60
1,424.60
4,080.60
(4,080.60)
-
1,313.94
1,313.94
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
1,046.20
-
-
1,046.20
9,011.40
38.63
(38.63)
9,011.40
10,057.60
102.00
647.20
(647.20)
102.00
7,230.84
-
-
7,230.84
7,332.84
114
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 15 CASH AND BANk BALANCES
A. Cash and Cash Equivalents
Cash on hand
Balance with Banks
in Current Accounts
in EEFC Accounts
B. Other bank balances
in Earmarked Accounts
Total Cash and Cash Equivalents A
Unclaimed dividend Accounts (Refer Note 37.1)
Margin Money Deposits (Note(i))
Total Other Bank Balances B
Total (A+B)
AS AT
MARCH 31, 2014
H In Lakhs
AS AT
MARCH 31, 2013
0.94
0.77
4,295.28
10.42
4,306.64
1.31
485.42
486.73
4,793.37
4,441.62
9.44
4,451.83
2.92
627.91
630.83
5,082.66
Note
(i) Margin money deposits include deposits with a remaining maturity period of less than 12 months from the Balance Sheet
date.
NOTE: 16 SHORT-TERM LOANS AND ADVANCES (UNSECURED, CONSIDERED GOOD)
Advance recoverable (Refer Note 37.6)
Loans and advances to employees
Prepaid expenses
Balances with government authorities
Service Tax Credit Receivable
Others
Advance to Suppliers
Total
NOTE: 17 OTHER CURRENT ASSETS
Unbilled Revenue
Interest accrued on deposits
Contractually Recoverable Expenses
Total
NOTE: 18 REVENUE FROM OPERATIONS
Income from Sale of Products (and related services)
Income from Sale of Services
less: Income from Discontinuing Operations (Refer Note 35)
Total
SUB TOTAL
AS AT
MARCH 31, 2014
233.80
280.99
325.96
H In Lakhs
AS AT
MARCH 31, 2013
233.80
342.07
311.33
-
43.67
107.84
948.59
67.07
997.94
AS AT
MARCH 31, 2014
3,494.30
9.33
53.25
3,556.88
H In Lakhs
AS AT
MARCH 31, 2013
5,135.91
29.92
8.24
5,174.07
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
34,005.16
-
34,005.16
-
34,005.16
30,734.27
2,323.68
33,057.95
(2,323.69)
30,734.26
Annual Report 2013-14
115
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 19 OTHER INCOME
Interest income
Interest on deposit accounts from banks
Other non-operating income
Miscellaneous Income
Reversal of provision for doubtful trade receivables/bad debts recovered
SUB TOTAL
less: Other Income from Discontinuing Operations (Refer Note 35)
Total
NOTE: 20 EMPLOYEE BENEFITS ExPENSE AND SUB-CONTRACT CHARGES
Salaries & Wages
Contribution to Provident Fund and Other Funds
Expense on Employee Stock Option Scheme (ESOP)
Staff Welfare Expenses
Sub-contract Charges
less: Employee Benefit Expense and Sub-contract Charges from Discontinuing
Operations (Refer Note 35)
SUB TOTAL
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
9.45
200.16
240.03
449.64
(5.52)
444.12
40.02
46.96
2.17
89.15
(0.17)
88.98
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
16,137.10
1,161.35
(27.16)
655.50
17,926.79
2.51
17,929.30
(150.72)
17,972.37
1,254.64
11.27
864.49
20,102.77
566.25
20,669.02
(2,713.22)
Total
17,778.58
17,955.80
NOTE: 21 FINANCE COSTS
Interest Expenses on:
Foreign Currency Convertible Bonds
Other Borrowings
Other Borrowings Costs - Bank Charges
less: Finance Costs from Discontinuing Operations (Refer Note 35)
Total
SUB TOTAL
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
3,422.30
3,025.60
299.86
6,747.76
(38.24)
6,709.52
2,212.06
2,611.50
386.44
5,210.00
(71.88)
5,138.12
116
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 22 OTHER ExPENSES
Software Purchases
Rent
Power, Fuel and Water Charges
Repairs & Maintenance
Insurance
Communication Costs
Printing & Stationery
Travelling & Conveyance
Rates & Taxes Including Filing Fees
Advertisement & Business Promotion
Consultancy Charges
Payments to Auditors (Refer Note 36)
Commission on Sales
Provision for Doubtful trade and other receivables
Director sitting fees
Loss on sale of Fixed assets (Net)
Exchange Fluctuation Loss (Net)
Miscellaneous Expenses
less: Other Expenses from Discontinuing Operations (Refer Note 35)
Total
SUB TOTAL
NOTE: 23 ExCEPTIONAL ITEMS (REFER NOTE 37(7))
Impairment of goodwill from Subex Technologies Limited
Provision for Doubtful trade and other receivables
less: Exceptional Items from Discontinuing Operations (Refer Note 35)
SUB TOTAL
Total
FOR THE YEAR ENDED
MARCH 31, 2014
51.14
1,540.70
198.31
676.48
152.90
469.03
45.85
2,213.60
150.71
309.04
900.70
120.42
20.09
-
4.20
7.10
1,676.98
32.77
8,570.02
(70.60)
8,499.42
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
54.23
1,426.53
193.12
681.90
184.60
500.55
46.42
2,540.43
186.92
247.34
392.67
80.53
182.25
170.51
2.80
40.49
654.51
50.20
7,636.00
(209.17)
7,426.83
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
-
219.61
219.61
(219.61)
-
926.70
3,069.92
3,996.62
(926.70)
3,069.92
NOTE: 24 ACCOUNTING UNDER THE PROPOSAL APPROVED BY THE HON’BLE HIGH COURT
a) During the year ending March 31, 2010, the shareholders of the Company approved the Board’s proposal (hereinafter
referred to as ‘the Proposal’ for transferring amounts from the Securities Premium and Capital Reserves as on or arising
after April 1, 2009 (upto March 31, 2013) to a Business Restructuring Reserve (BRR) to be utilised from April 1, 2009 for
certain Permitted Utilisations as mentioned in the Proposal.
The Proposal was approved by the Hon’ble High court of Karnataka on May 4, 2010 and was registered with the Registrar
of Companies on May 11, 2010, thereby completing all the requirements for the order to be effective.
b) Adjustments in the BRR during the previous year ended March 31, 2011
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2011:
•
Transfer of H17,400.00 Lakhs during the year from the balances in Securities Premium Account and Capital Reserve
to the BRR
• Utilization of the BRR for permitted utilisations to the extent of H15,503.70 Lakhs (net)
Annual Report 2013-14
117
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 24 ACCOUNTING UNDER THE PROPOSAL APPROVED BY THE HON’BLE HIGH COURT (contd.)
c) Adjustments in the BRR during the previous year ended March 31, 2012
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2012:
•
•
Transfer of H346.74 Lakhs during the year from the balances in Capital Reserve to the BRR,
Reversals of the provisions to the BRR for an aggregate amount of H225.07 Lakhs (net of reversals).
d) Adjustments in the BRR during the previous year ended March 31, 2013
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2013:
•
•
•
transfer of H271.10 Lakhs during the year to Securities Premium,
towards FCCB restructuring expenses H359.58 Lakhs,
towards reversal of unbilled revenue H958.90 Lakhs,
e) Adjustments in the BRR during the current year ended March 31, 2014
In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year
ended March 31, 2014
•
towards provision for doubtful trade receivables H80.63 Lakhs.
f) Had the Proposal not provided for the above, the effect of accounting under the Accounting Standards referred to in
Section 211(3C) of the Companies Act, 1956 would have been as under:
In the Statement of Profit and loss.
Revenue would have been lower by:
The loss under Exceptional items would have been higher as follows:
- One-time non-recurring expenses, being FCCB restructuring fees
- Provision towards doubtful trade receivables
Sub-Total
Profit/(loss) after Tax would have been lower/higher by
Basic Earnings/(Loss) per share would have been – H
Diluted Earnings/(Loss) per share would have been – H
Amount in H Lakhs except as otherwise indicated
MARCH 31, 2014
MARCH 31, 2013
-
-
-
80.63
80.63
80.63
(0.75)
(0.75)
958.90
-
359.58
-
359.58
1,318.48
(5.36)
(5.36)
NOTE: 25 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS)
a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (FCCB I) aggregating to US$ 180
Million, with an interest rate of 2% p.a. payable semi-annually in arrears, with terms of conversion being :
i) Exchange rate for conversion of FCCB : H44.08/ US1$
ii) Conversion price : H656.20 per share
iii) Redemption date : March 09, 2012
iv) Premium payable on redemption : US$. 14.05 Million.
v) Listing on the London Stock Exchange
The bonds were available for conversion at any point in time during the period prior to the redemption date. During the
year 2009-10, the Company presented to restructure the FCCBs I by offering a discount of ~30% on the face value of the
existing bonds in return for new FCCBs (“FCCBs II”) having a face value of US$ 126 Million.
118
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 25 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS) (contd.)
Interest rate : 5% p.a. payable semi annually
Pursuant to the offer, the FCCBs I Bondholders, with a face value of US$ 141 Million exchanged their bonds for new FCCBs
with a face value of US$ 98.70 Million. The remaining FCCBs I bondholders holding bonds with a face value of US$ 39
Million (out of the original bondholders holding US$ 180 Million) did not choose the option for restructuring. The terms
and conditions applicable for the new FCCB II bonds, for the US$ 98.70 Million face value, were as under :
i.
ii. Exchange rate for conversion of FCCB : H48.17/ US1$
iii. Conversion price : H80.31 per share
iv. Redemption date : March 09, 2012
v. Premium payable on redemption : US$. 23.23 Million.
vi. Listing on the Singapore Exchange Securities Trading Limited
Both the bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue.
Based on an approval received from the Reserve Bank of India and bond holders, the redemption date was extended to
July 09, 2012.
Out of the US$ 98.70 million of FCCBs II, bonds having a face value of US$ 31.90 million were converted into equity
shares as of March 31, 2010 and bonds with a face value of US$ 12 million were converted during the year ending March
31, 2011, retaining a closing balance of US$ 54.80 Million outstanding FCCBs II bonds.
b) Pursuant to the approval of the holders of “US$ 180 Million 2% convertible unsecured bonds”,[of which US$ 39 Million
was outstanding (“FCCBs I”)] and “US$ 98.70 Million 5% convertible unsecured bonds”, [of which US$ 54.80 Million
was outstanding (“FCCBs II”)], at their respective meetings held on July 5, 2012 and exchange offers received under the
exchange offer memorandum dated June 13, 2012, holders of US$ 38 Million out of FCCBs I and US$ 53.40 Million out of
FCCBs II offered their bonds for exchange and secured bonds with a face value of US$ 127.72 million (“FCCBs III”) were
issued with maturity date of July 7, 2017. The Company has been legally advised that there is no tax incidence arising
from the above restructuring.
c) The terms and conditions of FCCB III are as under:
Interest rate : 5.70% p.a. payable semi annually
i.
ii. Exchange rate for conversion of FCCB : H56.06/ US1$
iii. Equity Conversion price : H22.79 per share
iv. Redemption date : July 07, 2017
v. Listing on the Singapore Exchange Securities Trading Limited
vi. Second ranking paripassu charge in respect of all movable properties, present & future, covered under the Existing
security and First ranking charge in respect of all movable properties, present & future, other than & to the extent
covered by the existing security. First ranking charge on FCCB Repayment fund on a paripassu basis jointly & equally
with SBI & Axis Bank Ltd. The promoters of the company have pledged their share towards securing the repayment of
FCCB III.
vii. Mandatory conversion of bonds with a face value of US$ 36.32 Million into equity shares at the aforesaid conversion
price on July 07, 2012.
For 2012-13 FCCB III with face value of US$ 3.25 Million were converted into equity shares of the Company, retaining a
closing balance of US$ 88.15 Million.
During the year, the Company received approvals from the FCCB Holders for deferment of the semi annual interest
due on January 2013, July 2013 and January 2014 to be settled with the principal on the redemption date. These have
accordingly been categorized as long-term liabilities.
d) Pursuant to approval of the RBI dated April 27, 2012 and requisite approvals under the trust deed of the holders of
the Company’s US$ 180 million convertible unsecured bonds and US$ 98.70 million convertible unsecured bonds the
maturity period of the un-exchanged portion of FCCBs I of face value US$ 1 Million and FCCBs II of face value US$ 1.40
Million stands extended to March 9, 2017, with its other terms and conditions remaining unchanged.
Annual Report 2013-14
119
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 25 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS) (contd.)
e) FCCB I: As at March 31, 2014, the face value of the US$ 1 Million FCCBs (Previous Year US$ 1 Million) amounts to H599.15
Lakhs (Previous Year: H542.81 Lakhs) and is included in Note 5 – Long Term Borrowings.
The premium payable on maturity has been accrued by a charge to Securities Premium
FCCB II: As at March 31, 2014, the face value of the US$ 1.40 Million FCCBs (Previous Year US$ 1.40 Million) amounts to
H838.81 Lakhs (Previous Year: H759.99 Lakhs) and is included in Note 5 – Long Term Borrowings.
The premium payable on maturity has been accrued by a charge to Securities Premium.
FCCB III: As at March 31, 2014, the face value of the US$ 88.15 Million FCCBs (Previous Year US$ 88.15 Million) amounts
to H52,815.07 Lakhs (Previous Year: H47,852.27 Lakhs) and is included in Note 5 – Long Term Borrowings.
NOTE: 26 EMPLOYEES STOCk OPTION PLAN (ESOP)
The Company during the years 1999-2000, 2005-2006 and 2008-09 has established ESOP II, ESOP III and ESOP IV respectively.
These schemes have been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per these schemes, the Compensation Committee grants
the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at
a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock
Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a
period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.
The difference between the market price of the share underlying the options granted on the date of grant of option and the
exercise price of the option are expensed over the vesting period as per the SEBI guidelines.
The Company has obtained in-principle approval for listing of shares upto a limit as mentioned below.
ESOP II
: 8,83,750 shares
ESOP III
: 20,00,000 shares
ESOP IV
: 20,00,000 shares
Employees’ Stock Options Details as on the Balance Sheet Date are
Particulars
2013-14
2012-13
Options (Nos)
Weighted
average exercise
price per stock
option (H)
Options (Nos)
Weighted
average exercise
price per stock
option (H)
4,670
11,31,147
7,30,806
82.63
34.04
28.79
-
-
-
-
-
-
1,695
2,67,197
1,63,288
-
-
-
-
-
-
-
-
-
12,022
13,56,086
10,19,289
-
1,24,100
-
-
-
-
7,352
3,49,039
2,88,483
85.22
39.30
28.95
-
12.82
-
-
-
-
-
-
-
Options outstanding at the beginning of the year
ESOP – II
ESOP – III
ESOP – IV
Granted during the year
ESOP – II
ESOP – III
ESOP – IV
Exercised during the year
ESOP – II
ESOP – III
ESOP – IV
Cancelled, Surrendered or Lapsed during the year
ESOP – II
ESOP – III
ESOP – IV
120
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 26 EMPLOYEES STOCk OPTION PLAN (ESOP) (contd.)
Particulars
2013-14
2012-13
Options (Nos)
Weighted
average exercise
price per stock
option (H)
Options (Nos)
Weighted
average exercise
price per stock
option (H)
Options outstanding at the end of the year
ESOP – II
ESOP – III
ESOP – IV
Options exercisable at the end of the year
ESOP – II
ESOP – III
ESOP – IV
Options available for Grant at the end of the year
ESOP – II
ESOP – III
ESOP – IV
2,975
8,63,950
5,67,518
2,975
7,09,638
4,98,483
-
11,23,611
14,32,482
67.00
30.78
28.56
4,670
11,31,147
7,30,806
82.63
34.04
28.79
-
-
-
-
-
-
4,670
8,64,489
4,57,293
-
8,56,414
12,69,194
-
-
-
-
-
-
[Weighted average remaining contractual life (considering vesting and exercise period)]
ESOP – II
At March 31, 2013: 1.41 Years
At March 31, 2014: 1.02 Years
ESOP – III
At March 31, 2013: 3.08 Years
At March 31, 2014: 2.12 Years
ESOP – IV At March 31, 2013: 3.16 Years
At March 31, 2014: 2.17Years
Fair Value Methodology
The fair value of options used to compute proforma net income and earnings per equity share have been estimated on the
date of grant using Black-Scholes model.
The key assumptions used in Black-Scholes model for calculating fair value is: risk-free interest rate of 8% (Previous year: 8%),
expected life: 3 years (Previous year: 3 years), expected volatility of share: 54.49% (Previous year: 64.85%), and expected
dividend yield: 0% (Previous year: 0%) The variables detailed herein represent the average of the assumptions during the
pendency of the grant dates.
The impact on the EPS of the Company if fair value method is adopted is given below:
Particulars
Amount in H Lakhs except as otherwise indicated
MARCH 31, 2014
MARCH 31, 2013
Net Profit for the year (as reported)
Add : Stock-based employee compensation relating to grants after Apr 1,
2006
Less : Stock-based compensation expenses determined under fair value based
method for the above grants
Net Profit (proforma)
- H
Basic earnings per share (as reported)
- H
Basic earnings per share (proforma)
Diluted earnings per share (as reported) - H
- H
Diluted earnings per share (proforma)
(1,161.27)
(27.16)
(5,994.71)
11.27
20.71
30.80
(1,209.14)
(0.70)
(0.73)
(0.70)
(0.73)
(6,014.24)
(4.40)
(4.41)
(4.40)
(4.41)
Annual Report 2013-14
121
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 27
The Company adopted the amendments to Accounting Standard 11 “The Effects of Changes in Foreign Exchange Rates”
that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on
restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were
initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency
Monetary Item Translation Difference account and are amortized over the balance period of such long term asset / liability.
Consequently, exchange fluctuation losses (net) arising on restatement of such items has been deferred to the extent of
H5,801.74 Lakhs (PY H2,765.65 Lakhs) at March 31, 2014 and the loss for the year are lower by a corresponding amount.
NOTE: 28 EMPLOYEE BENEFIT PLANS
a) Defined Contribution Plans
The Group makes contribution to Provident Fund and Employee State Insurance scheme which are defined contribution
plan, in respect of employees in India. In respect of employees in overseas subsidiaries, the Group makes contributions
to certain defined contribution plans, based on respective local laws. Under these plans, a specified percentage of
payouts are required to be contributed by the Group. The Group recognized H1,087.16 Lakhs (Year ended March 31, 2013
H1,094.39 Lakhs) for Provident Fund contributions H1.89 Lakhs (Year ended March 31, 2013 H2.04 Lakhs) for Employee
state insurance scheme contribution in the Statement of Profit and Loss.
b) Defined Benefit Plans
The group offers the Gratuity benefits to employees, a defined benefit plan. The following table sets out the funded
status of Gratuity liability in respect of parent company and its domestic subsidiaries and the amounts recognised in the
consolidated financial statements:
I
1
2
3
4
5
6
7
8
II
1
2
Components of employer expense
Current Service cost
Interest cost
Expected return on plan assets
Curtailment cost / (credit)
Settlement cost / (credit)
Past Service Cost
Actuarial Losses / (Gains)
Total expense recognized in the Statement of Profit and Loss
Actual Contribution and Benefit Payments for the year
Actual benefit payments
Actual Contributions
III Net asset / (liability) recognized in Balance Sheet
1
2
3
Present value of Defined Benefit Obligation (DBO)
Fair value of plan assets
Funded status [Surplus / (Deficit)]
4 Unrecognized Past Service Costs
IV Net asset / (liability) recognized in Balance Sheet
- Current
- Non current
122
Subex Limited
Amount in H Lakhs except assumptions
Gratuity
MARCH 31, 2014
MARCH 31, 2013
69.65
20.91
(1.45)
-
-
-
(14.92)
74.19
76.39
96.00
321.46
28.88
(292.58)
-
(292.58)
(41.89)
(250.69)
108.70
20.63
(0.59)
-
-
-
31.51
160.25
99.31
98.84
348.47
7.31
(341.16)
-
(341.16)
(83.20)
(257.96)
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 28 EMPLOYEE BENEFIT PLANS (contd.)
V
1
2
3
4
5
6
7
8
9
Change in Defined Benefit Obligations during the year
Present Value of DBO at beginning of year
Current Service cost
Interest cost
Curtailment cost / (credit)
Settlement cost / (credit)
Plan amendments
Acquisitions
Actuarial (gains) / losses
Currency translation adjustment
10 Benefits paid
11 Present Value of DBO at the end of year
VI Change in Fair Value of Assets during the year
1
2
3
4
5
6
7
Plan assets at beginning of year
Acquisition Adjustment
Expected return on plan assets(estimated)
Actuarial Gain / (Loss)
Actual Company contributions(less risk premium, ST)
Benefits paid
Plan assets at the end of period
VII Actuarial Assumptions
1 Discount Rate
2
3
4
Expected Return on plan assets
Salary escalation
Attrition Rate
Five Year Data
Defined Benefit Obligation at end of the
period
Plan Assets at end of the period
Funded Status
Experience Gain/(Loss)adjustments on
Plan Liabilities
Experience Gain/(Loss)adjustments on
Plan Assets
Actuarial Gain/(Loss) due to change on
assumptions
Amount in H Lakhs except assumptions
Gratuity
MARCH 31, 2014
MARCH 31, 2013
348.47
69.65
20.91
-
-
-
-
(14.41)
(26.77)
(76.39)
321.46
342.00
108.70
20.63
-
-
-
-
31.42
(54.97)
(99.31)
348.47
7.31
7.10
-
1.45
0.51
96.00
(76.39)
28.88
9.25%
8.50%
6.00%
9.00%
-
0.59
0.09
98.84
(99.31)
7.31
8.10%
8.50%
6.00%
9.00%
Period ending (H In Lakhs)
March 31, 2010 March 31, 2011 March 31, 2012 March 31, 2013 March 31, 2014
(193.23)
(299.41)
(348.50)
(348.47)
(321.46)
50.84
(142.39)
3.85
33.04
(266.37)
(4.83)
7.10
(341.40)
54.12
7. 31
(341.16)
11.31
28.88
(292.58)
(10.25)
-
0.38
0.31
(0.09)
0.51
6.84
-
12.77
(42.73)
24.66
Annual Report 2013-14
123
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 28 EMPLOYEE BENEFIT PLANS (contd.)
•
The composition of the plan assets held under the funds managed by the Insurer is as follows:
Fund Type
Equity Instruments
Debt Instruments
FD and Other Asset
%
2014
4.93
78.12
16.95
2013
5.22
79.73
15.05
•
•
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date
for the estimated term of the obligations.
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and
other relevant factors.
c) Actuarial Assumption for long-term compensated absences
Discount rate
Expected return on plan asset
Salary escalation rate
Attrition
MARCH 31, 2014
9.25%
NA
6.00%
9.00%
MARCH 31, 2013
8.10%
NA
6.00%
9.00%
•
•
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date
for the estimated term of the obligations.
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and
other relevant factors.
Total Liabilities Estimated
Current Portion
Non Current portion
NOTE: 29 SEGMENTAL REPORTING
MARCH 31, 2014
(382.14)
(306.31)
(75.83)
MARCH 31, 2013
(340.85)
(263.30)
(77.55)
The Group has identified business segment as its Primary reporting segment with Secondary segments reported geographically.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Group outlined in Note
2. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis
of their relationship to the operating activities of the segment.
Revenue, expenses, assets and liabilities which are not allocable to segments on reasonable basis have been included under
“unallocated revenue / expenses / assets / liabilities.”
Information about Primary Business Segment:
The Group’s operations comprise two Business segments viz, (a) Software Products and (b) Services. Under the business
segment of Software products, the Group provides Software Products (and related services) in the Revenue Assurance space
to Communication Service providers (CSPs) who operate in the Telecom industry.
The Staff Augmentation business of the Group is organized under the Services segment and is carried out through its
subsidiaries Subex Technologies Limited and Subex Technologies Inc.The Group has discontinued the service segment
entirely, refer Note 35 for more information
124
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 29 SEGMENTAL REPORTING (contd.)
Products
Services
Consolidated
2013-14
2012-13
2013-14
2012-13
2013-14
2012-13
H In Lakhs
Revenues
34,005.16
30,734.27
-
2,323.68
34,005.16
33,057.95
Segment results before interest,
taxes & exceptional item
Exceptional Items
Interest expense
Profit/(Loss) before tax
Tax expenses (Net)
Profit/(Loss) After Tax
6,971.78
4,202.94
(220.86)
(604.79)
6,950.92
3,598.15
-
(3,069.92)
(219.61)
(926.70)
(219.61)
(3,996.62)
(6,709.52)
(5,210.00)
(38.24)
-
(6,747.75)
(5,210.00)
6,971.78
1,133.02
(478.71)
(1,531.49)
(216.45)
(5,608.47)
-
-
-
-
(944.82)
(386.24)
(1,161.27)
(5,994.71)
Amount H In Lakhs
Consolidated
Particulars of Segment Assets & Liabilities
Products
Services
Unallocable
2013-14
2012-13
2013-14
2012-13
2013-14
2012-13
2013-14
2012-13
Segment Assets
1,08,090.82 1,06,545.70
-
506.00
-
- 1,08,090.82 1,07,051.70
Unallocable Assets:
Total Assets
-
-
Segment Liabilities
8,928.03
9,345.44
Unallocable Liabilities:
-
-
-
-
-
-
1,342.22
1,745.67
1,342.22
1,745.67
1,09,433.04 1,08,797.37
772.65
-
-
8,928.03 10,118.09
- 83,143.11 76,179.60 83,143.11 76,179.60
Total Liabilities
92,071.14 86,297.69
Segment assets include all assets relating to the segment and consist principally of Fixed assets, Receivables, Other current
assets and non-current assets and Goodwill (on consolidation). Unallocable asset includes income tax balances and deferred
taxes.
Segment liabilities include all liabilities relating to the segment and consist principally of Trade payables and other operating
liabilities. Unallocable liabilities include loans and tax.
Addition to assets
Particulars
Products
Services
2013-14
368.00
-
Amount H In Lakhs
2012-13
122.90
2.83
Total amount of expense included in the segment result for depreciation and amortisation in respect of segment assets for
the period.
Particulars
Depreciation
Products
Services
Amount H In Lakhs
Consolidated
2013-14
2012-13
2013-14
2012-13
2013-14
2012-13
244.18
420.51
4.16
6.26
248.34
426.77
Annual Report 2013-14
125
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 29 SEGMENTAL REPORTING (contd.)
Total amount of significant non-cash expenses, other than depreciation and amortization in respect of segment assets that are
included in segment expense and, therefore, deducted in measuring segment result.
Expense on Employee Stock Option Scheme (ESOPs)
(net)*
Exceptional Items
Products
Services
Amount H In Lakhs
Consolidated
2013-14
2012-13
2013-14
2012-13
2013-14
2012-13
(27.16)
11.27
-
-
(27.16)
11.27
- Provision for doubtful trade and other receivables
- Impairment of goodwill
-
-
Provision for Doubtful trade and other receivables
(240.03)
168.34
3,069.92
219.61
-
219.61
3,069.92
-
-
-
926.70
-
-
(240.03)
926.70
168.34
Total
(267.19)
3,249.53
219.61
926.70
47.58
4,176.23
* Amount in bracket indicates balance credited to Statement of Profit and Loss (net of expenses).
Information about Secondary Business Segment
The Group operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA and (c) APAC and
rest of the World. ‘Americas’ comprises the Group’s operations in North America, South America and Canada. ‘EMEA’ comprises
the Group’s operations in Europe, Middle East and Africa and the Group’s operations in the rest of the world are organized
under ‘APAC and the rest of the world’. Segment revenue by geographical location are as follows:
AMERICAS
EMEA
APAC and rest of the world
Total
H In Lakhs
Products
Services
Consolidated
2013-14
2012-13
2013-14
2012-13
2013-14
2012-13
6,758.41
8,009.78
21,393.84 16,386.44
5,852.91
6,338.05
34,005.16 30,734.27
-
-
-
-
2,323.68
6,758.41 10,333.46
- 21,393.84 16,386.44
-
5,852.91 6,338.05
2,323.68 34,005.16 33,057.95
Assets and additions to tangible and intangible fixed assets by geographical area: The following table shows the carrying
amount of segment assets and additions to tangible and intangible fixed assets by geographical area in which the assets are
located:
H In Lakhs
Location
2013-14
2012-13
Carrying Amount
of Segment
Assets
3,516.64
8,046.22
96,527.96
1,08,090.82
Additions to
Fixed assets and
Intangible assets
216.33
4.44
147.23
368.00
Carrying Amount
of Segment
Assets
3,314.99
7,215.82
96,395.19
1,06,926.00
Additions to
Fixed assets and
Intangible assets
12.55
2.13
111.05
125.73
AMERICAS
EMEA
APAC,and rest of the world
Total
126
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 30 RELATED PARTY INFORMATION
Related Parties
Key Management Personnel
Surjeet Singh, Managing Director & CEO, 5th October, 2012 onwards
Subash Menon, Managing Director & CEO upto 27th September, 2012
Sudeesh Yezhuvath, Wholetime Director & Chief Operating Officer upto 5th October, 2012
Details of the transactions with the related parties:
a) Salary and Perquisites (Also refer Note 37.6)
Subash Menon
Sudeesh Yezhuvath
Surjeet Singh
b) Amount due as at year end from/(to)
Surjeet Singh
NOTE: 31 OPERATING LEASES
H In Lakhs
Key Management Personnel
2013-14
2012-13
-
-
512.53
-
107.69
108.39
224.60
(70.00)
The Group had entered into non-cancellable leasing arrangement for its India office premises which on renewal this year
became cancellable. Rental expenses for operating leases included in the Statement of Profit and Loss for the year is H1,540.70
Lakhs (Previous year H1,426.53 Lakhs). The Current year balance includes H57.53 Lakhs towards Subex (UK) Limited paid as
part of rental service charges.
NOTE: 32 EARNINGS PER SHARE (EPS)
Profit after Tax attributable to shareholders (A)
Add : Interest on FCCBs
Add/(Less) : Exchange Fluctuation on FCCB
Adjusted Profits after Tax for Diluted EPS (B)
Weighted Average Number of Shares (in Lakhs) for Basic EPS (C)
Effect of Existence of Dilutive Instruments (FCCBs and ESOPs) – (in Lakhs)
Weighted Average Number of Shares (in Lakhs) for Diluted EPS (D)
Earnings per Share – Basic [(A)/(C)] - H
Earnings per Share - Diluted [(B)/(D)] - H
Face value of shares: H10/- each
Amount in HLakhs except as otherwise indicated
MARCH 31, 2013
(5,994.71)
-
-
(5,994.71)
1,362.43
0.10
1,362.53
(4.40)
(4.40)
MARCH 31, 2014
(1,161.27)
-
-
(1,161.27)
1,666.40
-
1,666.40
(0.70)
(0.70)
Note: FCCBs outstanding as at March 31, 2014 are anti-dilutive and hence have not been considered for purposes of Dilutive
EPS in year ended March 31, 2014.
Certain of the FCCBs as at March 31, 2013 were anti-dilutive and hence were not considered for purposes of Dilutive EPS in
year ended March 31, 2013.
NOTE: 33 DEFERRED TAxES
The deferred tax asset and liability recognised comprises of the tax impact arising from timing differences on:
Particulars
Leave Encashment and Gratuity
Differences between the book balance and tax balance of Fixed assets
Total
MARCH 31, 2014
-
-
-
H In Lakhs
MARCH 31, 2013
62.80
78.40
141.20
The Group has a net deferred tax asset as at March 31, 2014 significantly arising from brought forward unabsorbed depreciation
and tax losses, which has not been recognized as a matter of prudence.
Annual Report 2013-14
127
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 34 CONTINGENT LIABILITIES
Claims against the Company not acknowledged as debt:
Particulars
Income Tax Demands significantly pertaining to transfer pricing and other
adjustments which are being contested by the company
These cases are pending at various forum with the respective authorities.
Outflows, if any, arising out of these claims would depend upon the outcome
of the decision of the appellate authority and the Companies right for future
appeals before Judiciary. No reimbursements are expected
MARCH 31, 2014
H In Lakhs
MARCH 31, 2013
4,514.57
3,298.47
Value Added Taxes & Central Sales Tax
Nil
27.80
Others
The Company has received a demand of service tax of H3,607.60 lakhs and equivalent amount of penalties under the provisions
of the Finance Act, 1994 along with the consequential interest, for the period from April, 2006 to July, 2009 towards service
tax payable on import of certain services. The Company has filed an appeal contesting the demand before the Central
Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore. During the year, CESTAT without expressing any opinion, has
remanded the appeal back to the adjudication authority and dispensed with the requirement of Pre-deposit.
1,001.04
1,001.04
NOTE: 35 DISCONTINUING OPERATIONS
During the year, pursuant to the approval of the Board of Directors, the Company has discontinued the operations of two of its
subsidiaries with effect from April 01, 2013. The two subsidiaries represented and were reported as services segment of the
Company. The results of the discontinued business during the year until discontinuation were as under:
Particulars
Profit / (Loss) from ordinary activities
Sale of services
Other Income
Total revenue (A)
Cost of Material Consumed
Employee benefits expense
Finance costs
Depreciation and amortization expense
Other expenses
Exceptional Item
Total expenses (B)
Profit / (Loss) before tax from ordinary activities (A-B)
Add / (Less): Gain / (Loss) on disposal of assets / settlement of liabilities
attributable to the discontinuing operations
Tax expense
Profit / (Loss) after tax of discontinuing operations
Carrying amount of assets as at the Balance Sheet date relating to the
discontinued business to be disposed off
Carrying amount of liabilities as at the Balance Sheet date relating to the
discontinued business to be settled
Net cash flow attributable to the discontinued business
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
128
Subex Limited
FOR THE YEAR ENDED
MARCH 31, 2014
H In Lakhs
FOR THE YEAR ENDED
MARCH 31, 2013
-
5.52
5.52
0.90
150.72
38.24
4.16
70.60
219.61
482.23
(478.71)
-
(478.71)
8.44
(487.15)
32.43
2,323.69
0.17
2,323.86
-
2,713.22
71.88
6.26
209.17
926.70
3,927.23
(1,603.37)
-
(1,603.37)
-
(1,603.37)
506.00
151.57
883.49
894.62
0.45
(969.37)
(757.91)
(2.67)
866.02
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 36 PAYMENTS TO AUDITORS INCLUDE
A. Statutory Auditors
Particulars
As Auditors – Statutory audit
For Taxation matters
For Certification matters
For Other assurance services
For Reimbursement of expenses
Total
B. Other auditors for the Subsidiaries
Particulars
Audit fees
For Taxation matters
For Other services
For Reimbursement of expenses
Total
2013-14
75.00
1.50
1.20
15.00
5.38
98.08
2013-14
22.34
-
-
-
22.34
H In Lakhs
2012-13
65. 00
1.50
-
10.00
2.73
79.23
H In Lakhs
2012-13
1.30
-
-
-
1.30
NOTE: 37 OTHERS
1. Unclaimed dividend of H1.31 Lakhs as at March 31, 2014 (Previous Year - H2.92 Lakhs) represent dividends not claimed
for the period from 2006-2007. No part thereof has remained unpaid or unclaimed for a period of seven years from the
date they become due for payment requiring a transfer to the ‘Investor Education and Protection Fund’. During the current
year, the Company has transferred H1.60 Lakhs (Previous Year - H0.59 Lakhs) to Investor Protection Fund.
2. Net cash flow from operating activities in the Cash Flow Statement comprises outflows on account of permitted utilisations
from the BRR of HNil Lakhs (Previous Year - H359.58 Lakhs).
3. Personnel Cost for the year includes expenditure on Research and Development of H1,665.37 Lakhs (Previous year -
H1,108.71 Lakhs). This is as certified by the management and relied upon by the auditors.
4. The Company does not have any outstanding forward foreign exchange contracts or other derivative instruments for the
purposes of hedging the risks associated with foreign exchange exposures as the year end.
The year-end foreign currency exposures that have not been hedged by derivative instruments or otherwise are given
below.
Note: The above does not include exposure on intra-group balances, being eliminated on consolidation.
Particulars
MARCH 31, 2014
MARCH 31, 2013
(a) Receivables towards export of goods and services
Amount (H)
6.82
326.88
84.78
Foreign
currency
AED 0.42
AUD 5.91
CHF 1.25
1,454.07
EUR 17.59
178.69
71.69
114.02
MYR 9.74
OMR 0.46
QAR 6.93
10.74
SGD 0.23
Amount (H)
Foreign
currency
475.35
71.25
735.29
252.15
73.87
43.31
53.52
9.93
23.90
AUD 8.39
CHF 1.25
EUR 10.58
GBP 3.07
MYR 4.22
OMR 0.31
QAR 3.59
SEK 1.19
SGD 0.55
10,462.68
USD 174.63
9,719.16
USD 179.04
Annual Report 2013-14
129
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 37 OTHERS (contd.)
Particulars
MARCH 31, 2014
MARCH 31, 2013
(b) Payables towards import of goods and services
(c) Loan (being other amounts payable in foreign
currency)
Amount (H)
5,363.15
0.29
1.62
17.30
5.21
10.09
1.32
3.04
7.40
4,695.61
(d) Capital goods (including intangibles)
-
Foreign
currency
USD 89.51
GBP 0.003
OMR 0.01
EUR 0.21
AUD 0.09
CAD 0.19
SAR 0.08
AED 0.19
MYR 0.40
USD 17.95
GBP 26.57
EUR 0.50
SGD 19.50
-
(e) Towards interest on Foreign Currency loans
Towards Foreign Currency Convertible Bonds (FCCB’s)
Redemption premium accrued on FCCB’s
(f) Bank Balances
5,271.80
54,253.03
571.59
2,161.69
53.30
62.23
25.53
225.60
USD 87.99
USD 905.50
USD 9.54
USD 36.08
AED 3.27
AUD 1.13
CAD 0.47
EUR 2.73
Amount (H)
22.71
5.00
Foreign
currency
USD 0.41
CAD 0.12
2,766.25
USD 30.29
GBP 13.77
EUR 0.18
SGD 0.10
GBP 0.11
EUR 0.31
CHF 0.22
USD 40.61
USD 886.51
USD 9.54
USD 45.15
AED 4.38
AUD 0.001
CAD 0.51
EUR 0. 55
0.22
1.43
20.91
15.42
2,213.42
49,155.07
517.93
2,451.41
64.86
0.07
27.56
38.68
5. The Company has ‘International transactions’ with ‘Associated Enterprises which are subject to Transfer Pricing regulations
in India. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at
arm’s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the
financial statements, particularly on account of tax expense and that of provision for taxation.
6. a)
In view of the losses incurred by the Company during the year ended March 31, 2014, the excess of the managerial
remuneration paid to the directors during the FY 2012-13 over the limits prescribed under Schedule XIII of the
Companies Act, 1956 has been treated as monies due from the directors, being held by them in trust for the Company,
and is included under ‘Short-term loans and advances’ amounting to H123.80 Lakhs (Previous Year H123.80 Lakhs)
b) Other advances to directors during the FY 2012-13: H110.00 Lakhs (Previous year H110.00 Lakhs)
The Company has taken necessary steps for recovery of the above amounts and these items along with other claims
are a subject matter of arbitration which is in progress.
7. Exceptional items include an amount of H219.61 lakhs pertaining to provision for doubtful trade receivables arising from
the discontinuance of the services segment. The management has decided to classify the same as exceptional item being
non-recurring in nature.
130
Subex Limited
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 37 OTHERS (contd.)
During the year ended March 31, 2013,
a.
b.
the Company had carried out an assessment of its receivables and an amount of H3,069.92 lakhs had been provided
towards doubtful receivables. Considering that the amount of provision towards doubtful receivables was significant and
relevant in understanding the financial performance, it had been disclosed separately under exceptional item.
the Company had impaired goodwill outstanding in books pertaining to its services business for an amount of H926.70
Lakhs. As an impairment in goodwill is not considered to be regular adjustment in the results, the same had been
categorised as an exceptional item.
NOTE: 38
During the year, the Company has assessed the carrying value of goodwill arising from its investment in its subsidiary viz Subex
Americas Inc, amounting to H18,606.00 Lakhs. Based on management’s assessment there is no impairment of goodwill taking
into account the future operational plans and cash flows as prepared by the management and accordingly no impairment loss
is required to be recognized at this stage.
Capital
Reserves*
Total Assets
NOTE: 39 DETAILS OF THE SUBSIDIARIES CONSOLIDATED FOR THE YEAR ENDED MARCH 31, 2014
Particulars
Subex
(Asia Pacific)
Pte Ltd
Subex (UK)
Limited
Subex
Americas Inc.
Subex
Incorporated
Subex
Technologies
Inc.
(Note 1 below) (Note 1 below)
(Note 1 & 2
below)
(Note 1 below) (Note 1 below)
Country of Incorporation
Singapore
UK
Canada
-
40.60
38,274.10
USA
-
USA
2,090.54
(3,364.94)
13,439.47
(59,318.54)
(2,714.37)
(2,134.95)
12,006.62
40,852.85
38,937.30
22,005.72
Total Liabilities
15,371.56
27,372.79
59,981.74
24,720.09
Details of investment (other
than Subsidiaries)
-
-
-
-
Turnover
3,131.70
17,514.12
2,812.88
11,735.05
Profit / (Loss) before taxation
156.06
1,084.67
Provision for taxation
Profit after taxation
Proposed Dividend
Base Currency
Exchange Rate
80.04
76.02
-
SGD
47.58
230.53
854.15
-
GBP
99.77
*Inclusive of exchange reserve on consolidation
81.46
14.73
66.74
-
USD
59.92
257.38
472.96
(483.56)
-
(215.58)
(483.56)
-
USD
59.92
-
USD
59.92
(4.66)
39.76
-
-
H In Lakhs
Subex
Technologies
Limited
India
400.00
671.48
284.32
12.84
-
-
(3.59)
-
(3.59)
-
INR
1.00
Note:
1. The information in respect of these entities are extracted from the financial summary considered in the consolidated
financial statements, which have been subject to audit, by the statutory auditors solely for the purpose of the inclusion
of these balances in the consolidated financial statements.
2. The details given in respect of Subex Americas Inc. are on a consolidated basis. The subsidiaries of Subex Americas Inc.
that have been consolidated are as follows:
Subsidiary
Country of Incorporation
Subex Azure Holding Inc.
United Sates of America
Annual Report 2013-14
131
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE: 40
Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s
classification / disclosures.
In terms of our report attached
For Deloitte Haskins & Sells
Chartered Accountants
Monisha Parikh
Partner
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
Karthikeyan Muthuswamy
Director
Anil Singhvi
Director
Sanjeev Aga
Director
Mumbai
Date: May 29, 2014
Mumbai
Date: May 29, 2014
Ganesh K.V
Chief Financial Officer,
Global Head-Legal and Company Secretary
132
Subex Limited
SHAREHOLDERS’ INFORMATION
REGISTERED OFFICE
The Registered office of the Company is at RMZ Ecoworld,
Outer Ring Road, Devarabisanahalli, Bangalore – 560 037.
DATE AND VENUE OF THE ANNUAL GENERAL MEETING
(AGM)
Date
: August 14, 2014
Venue : Subex Limited, RMZ Ecoworld, Outer Ring Road,
Devarabisanahalli, Bangalore - 560 037
Time
: 1 PM
DATES OF BOOk CLOSURE
From August 7, 2014 to August 14, 2014 (both days inclusive)
The Company’s US$ 127.721 million 5.70% Convertible
Secured Bonds, issued pursuant to the restructuring of US$
180 million 2% Convertible Unsecured Bonds and US$ 98.7
million 5% Convertible Unsecured Bonds, have been listed
on the Singapore Exchange Securities Trading Limited since
July 10, 2012.
The stock codes of the Company at the Stock Exchanges
are as follows:
Name and address of the Stock
Exchange
Stock code
National Stock Exchange of
India Limited,
SUBEX
BOARD MEETINGS & FINANCIAL CALENDAR
Financial year
: April 1, 2014 to March 31, 2015
Exchange Plaza, 5th Floor, Plot
No. C/1, G Block
Calendar of Board Meetings to adopt the accounts (tentative
and subject to change):
For quarter ending June
30, 2014
For quarter ending
September 30, 2014
For quarter ending
December 31, 2014
For the year ending
March 31, 2015
– 3rd week of August, 2014
– 2nd week of November, 2014
– 2nd week of February, 2015
– 4th week of May, 2015
DIVIDEND
The Directors have not proposed any dividend to be paid for
the financial year 2013-14.
LISTING ON STOCk ExCHANGES
Equity Shares of the Company are quoted on the National
Stock Exchange of India Limited (NSE) since September 5,
2003 and on the BSE Limited (BSE) since July 31, 2000.
The Company has paid listing fees for the year 2014-15 in
accordance with the provisions of the Listing Agreement
with NSE and BSE.
The Global Depositary Receipts (GDRs) of the Company are
listed on the Professional Securities Market of London Stock
Exchange since March 9, 2007.
The Company’s outstanding US$ 180 million 2% Coupon
Convertible Unsecured Bonds are listed on the London Stock
Exchange since March 9, 2007.
The Company’s outstanding US$ 98.7 million 5% Convertible
Unsecured Bonds, issued pursuant to the restructuring of
US$ 180 million 2% Coupon Convertible Unsecured Bonds,
have been listed on the Singapore Exchange Securities
Trading Limited since November 6, 2009.
Bandra Kurla Complex,
Bandra (East)
Mumbai- 400051
BSE Limited,
532348
Phiroze Jeejeebhoy Towers
Dalal Street, Mumbai 400001
London Stock Exchange
SUBX
10 Paternoster Square
London
EC4M 7LS
Singapore Exchange Securities
Trading Limited
4AFB (SUBEX US$ 98.7
million 5% bonds)
2 Shenton Way #19-00
SGX Centre 1
Singapore 068804
2EUB (SUBEX
US$127.721 million
5.70% bonds)
The International Securities Identification Number (ISIN)
for the Company’s Equity Shares in dematerialized form is
INE754A01014.
CUSTODIAL FEE
Pursuant to the Securities and Exchange Board of India (SEBI)
Circular No. MRD/DoP/SE/Dep/Cir-4/2005 dated January
28, 2005 issuer companies are required to pay custodial
fees to the depositories with effect from April 1, 2005. The
said circular has been partially modified vide SEBI’s Circular
No. MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009.
The Company has, in accordance with the aforesaid circulars,
paid custodial fees for the year 2014-15 to NSDL and CDSL
on the basis of the number of beneficial accounts maintained
by them as on March 31, 2014.
Annual Report 2013-14
133
STOCk MARkET DATA RELATING TO EQUITY SHARES LISTED IN INDIA
Monthly high and low quotes during each month in the financial year 2013-14 as well as the volume of shares traded on NSE
and BSE are as under:
Month
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
TOTAL
High
H
11.35
9.75
7.2
6.3
5.95
5.1
8.4
7.85
10.15
10.65
10.35
9.3
NSE
BSE
Low
H
9.05
7.05
5.8
4.85
4.4
4.45
5.05
6.9
6.65
8.85
8.8
8.15
Volume
Nos.
7160007
7404075
3324816
3032827
6029913
9038636
10552119
7168971
11598649
10656285
5825799
4125450
85917547
High
H
11.39
9.73
7.16
6.26
5.93
5.14
8.59
7.88
10.13
10.71
10.43
9.28
TOTAL
Low
H
9.09
7.05
5.80
4.85
4.43
4.44
5.08
6.80
6.68
8.82
8.82
8.15
Volume
Nos.
3376903
3006104
1333028
1407400
2071915
2786277
6158773
2108052
6562130
5037062
3081200
1670876
38599720
*The monthly high and low quotes are calculated on the basis of the closing prices of the month.
SUBEx LIMITED SHARE PRICE VERSUS NSE S&P CNx NIFTY AND SENSEx
7500.00
6000.00
4500.00
3000.00
1500.00
0.00
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
S&P CNX Nifty
Subex
134
Subex Limited
15.00
10.00
5.00
0.00
25000.00
20000.00
15000.00
10000.00
5000.00
0.00
15.00
10.00
5.00
0.00
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Sensex
Subex
SHAREHOLDING PATTERN
Distribution of Shareholding:
No. of Equity shares held
As on March 31, 2014
As on March 31, 2013
1 – 5000
5001 – 10000
10001 – 20000
20001 –30000
30001 – 40000
40001 – 50000
50001 – 100000
100001 and above
TOTAL
Categories of Shareholders:
No. of share
holders
% to total share
holders
No. of share
holders
% to total share
holders
48,218
7,653
4,412
1,591
789
788
1,134
1,084
65,669
73.43
11.65
6.72
2.42
1.20
1.20
1.73
1.65
100.00
52,850
8,112
4,332
1,547
742
723
1,028
882
70,216
75.27
11.55
6.17
2.20
1.06
1.03
1.46
1.26
100.00
Category
As on March 31, 2014
As on March 31, 2013
No. of share
holders
Voting
strength %
No. of shares
held
No. of share
holders
Voting
strength %
No. of shares
held
Public & Others
Companies/ Bodies Corporate
64,661
952
83.61 139,807,211
12.16
20,261,298
69,009
1,147
Core Promoters
Mutual Funds
ESOPs/Employee shareholders
FII
TOTAL
3
Nil
51
2
3.88
Nil
0.29
0.06
6,474,044
Nil
474,265
97,409
3
Nil
50
7
83.99 138,917,848
7.48
12,380,644
5.12
8,474,044
Nil
0.25
3.16
Nil
418,235
5,219,387
65,669
100 166,639,962
70,216
100.00 165,410,158
Annual Report 2013-14
135
R & T AGENTS AND SHARE TRANSFER SYSTEM
aggregating to US$ 1 million under its US$ 180,000,000
Canbank Computers Services Limited, J P Royale, 1st
2% Coupon Convertible Unsecured Bonds (“FCCBs I”) and
Floor, No.218, 2nd Main, Sampige Road (Near 14th Cross),
US$ 1.4 million under its US$ 98,700,000 5% Convertible
Malleswaram, Bangalore - 560 003, were appointed as
Unsecured Bonds (“FCCBs II”). The details of impact of the
‘Registrar and Transfer Agent’ both in respect of shares held
aforesaid instruments on the equity of the Company have
in physical form and dematerialized form vide a tripartite
been provided under the shareholding pattern for the year
agreement dated December 5, 2001 in respect of shares
ended March 31, 2014 available on the Company’s website
held with NSDL and a tripartite agreement dated November
under the Investors section.
27, 2001 in respect of shares held with CDSL.
Process for Transfer of Shares:
With a view to expedite the transfer process in the interest of
investors, SEBI vide its Circular No. CIR/MIRSD/8/2012 dated
July 5, 2012 has reduced the time-line for registering the
transfer of shares to 15 days with effect from October 1, 2012.
Share transfers would be registered and returned within
a period of fifteen days from the date of receipt, if the
documents are clear in all respects.
Share transfers and other communication regarding Share
certificates, updation of records, e-mail ids, etc. may be
addressed to:
M/s Canbank Computer Services Limited,
J P Royale, 1st Floor,
No.218, 2nd Main,
Sampige Road (Near 14th Cross),
Malleswaram,
Bangalore - 560 003
In July 2012, pursuant to the exchange of US$ 38 million
out of FCCBs I and US$ 53.40 million out of FCCBs II under a
cashless exchange offer, the Company issued US$ 127.721
million 5.70% Secured Convertible Bonds (“FCCBs III”) with
a maturity period due July 2017 with a conversion price of Rs.
22.79 per equity share. As a part of the terms and conditions
of FCCBs III, principal amount of US$ 36.321 million out of
FCCBs III were mandatorily converted into equity shares at
the aforesaid conversion price. Pursuant to the mandatory
conversion and subsequent conversion of US$ 3.25 million
of FCCBs III, currently US$ 88.15 million is outstanding under
FCCBs III. Also, the maturity period of the un-exchanged
FCCBs I worth US$ 1 million and the un-exchanged FCCBs II
worth US$ 1.40 million now stands extended to March 2017.
LEGAL PROCEEDINGS
There are no legal proceedings against the Company which
are material in nature except those disclosed in Note no. 35
in the notes to the standalone financial statements.
Tel Nos. +91 80-23469661/62, 23469664/65
NOMINATION
Fax Nos. +91 80-23469667/68
E-mail: canbankrta@ccsl.co.in
Website: www.canbankrta.com
SHARES HELD IN PHYSICAL AND DEMATERIALISED
FORM
As on March 31, 2014, 99.97 % of the Company’s shares
were held in dematerialized form and the rest in physical
form.
OUTSTANDING GDRS/ADRS/WARRANTS/
CONVERTIBLE INSTRUMENTS AND THEIR
IMPACT ON EQUITY
As on March 31, 2014, 1,799,310 GDRs were outstanding.
As on March 31, 2014, the Company had outstanding FCCBs
Pursuant to the provisions of Section 109A of the Companies
Act, 1956, members may file nomination in respect of their
shareholdings. Any member willing to avail this facility may
submit to the Company the prescribed Form 2B (in duplicate),
if not already filed. Form 2B can be obtained with the help
of M/s Canbank Computer Services Limited, the R&T Agents.
Members holding shares in electronic form are requested to
give the nomination request to their respective Depository
Participants directly.
UPDATION OF E-MAIL ADDRESS
As part of the “Green Initiative in Corporate Governance”,
the Ministry of Corporate Affairs (MCA), Government of
India, through its Circular Nos. 17/2011 and 18/2011, dated
April 21, 2011 and April 29, 2011 respectively, has allowed
136
Subex Limited
companies to send official documents to their shareholders
The Company declared bonus at 1:1 in the years 2000-01
electronically considering
its
legal validity under the
and 2005-06.
Information Technology Act, 2000. Being a Company with
strong focus on green initiatives, Subex has been sending all
shareholder communications such as the notice of General
Meetings, Audited Financial Statements, Directors’ Report,
Auditors’ Report, etc., to shareholders in electronic form to
* The final dividend for the financial years 2003-04,
2004-05 and 2005-06 and the interim dividend declared
for the financial years 2004-05, 2005-06 and 2006-07
which were unclaimed for 7 years from the date of payment
being due, were transferred to the Investor Education and
the E-mail Id provided by them and made available to us by
Protection Fund.
the Depositories. Members are requested to register their
E-mail Id with their Depository Participant and inform them
of any changes to the same from time to time. However,
Members who prefer physical copy to be delivered may write
to the Company at its registered office or send an E-mail to
investorrelations@subex.com by providing their DP Id and
Client Id as reference.
PROCEDURE FOR CLAIMING UNPAID DIVIDEND
In terms of Section 205A(5) of the Companies Act, 1956,
monies transferred to the Unpaid Dividend Account of the
Company, which remain unpaid or unclaimed for a period
of seven years from the date of such transfer, shall be
Members can claim the unpaid dividend from the Company
before transfer to the Investors Education and Protection
Fund. It may be noted that the unpaid dividend cannot be
claimed from the Company after it has been transferred to
the Investors Education and Protection Fund.
Pursuant to the provisions of Investor Education and
Protection Fund (Uploading of information regarding unpaid
and unclaimed amounts lying with companies) Rules, 2012,
the Company will be making available the requisite details
of unpaid dividend to the MCA and will also be uploading
the same on its website. The Investors may refer to these
details in order to ascertain the unpaid dividend standing to
transferred by the Company to the Investor Education and
their credit.
Protection Fund established by the Central Government.
Brief particulars of dividend declared on the equity share
capital are given below:
Year to
Which
Dividend
Pertains
Declared at
the AGM/Board
Meeting Held
on
2003-04
2004-05
2004-05
August 24,
2004
January 27,
2005
July 28,
2005
2006-07
2005
August 28,
2006
January 29,
2007
July 26,
2007
Nature of
Dividend
% of
Dividend
Final
Interim
Final
Final
20
10
20
15
10
Interim
15
Due
date for
Transfer to
the Fund
See note
below*
See note
below*
See note
below*
See note
below*
See note
below*
See note
below*
Final
20
September
1, 2014
2005-06 October 28,
Interim
INVESTOR GRIEVANCES
Investor grievances received from April 1, 2013 to March 31,
2014:
Nature of complaints
Received Cleared
Non-receipt of share certificates/
refund orders/call money notice/
allotment advice/dividend warrant/
annual report
Letters from NSDL, Banks etc.
Correction/change of bank mandate
of refund order/Change of address
Postal returns of cancelled stock
invests / refund orders/ share
certificates / dividend warrants
Other general query
Total
4
-
-
-
-
4
4
-
-
-
-
4
During the year ended March 31, 2014, the Company has
attended to all the investors’ grievances/correspondence
within a period of 10 days from the date of receipt of the
same, if the requisite documents, if any, were clear and
complete in all respects.
Annual Report 2013-14
137
ADDRESS FOR CORRESPONDENCE
For any queries, please write to:
Ganesh K V
Chief Financial Officer, Global Head- Legal and Company Secretary
Subex Limited, RMZ Ecoworld, Outer Ring Road, Devarabisanahalli,
Bangalore – 560 037, India.
Telephone: +91 80 6659 8700 Fax: +91 80 6696 3333
Email: investorrelations@subex.com
WEBSITE
Company’s website www.subex.com contains comprehensive information about the Company, products, press releases and
investor relations. It serves as a source of information to the shareholders by providing key information like Board of Directors
and the committees, financial results, shareholding pattern, distribution of shareholding, dividend etc.
138
Subex Limited
NOTES
Annual Report 2013-14
139
140
Subex Limited
Forward-looking statement
In this Annual Report we have disclosed forward-
looking information to enable investors to comprehend
our prospects and take informed investment decisions.
This report and other statements - written and oral
- that we periodically make contain forward-looking
statements that set out anticipated results based on
the management’s plans and assumptions. We have
tried wherever possible to identify such statements by
using words such as ‘anticipates’, ‘estimates’, ‘expects’,
‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of
similar substance in connection with any discussion of
future performance.
We cannot guarantee that these forward looking
statements will be realized, although we believe we
have been prudent in assumptions. The achievement
of results is subject to risks, uncertainties and even
inaccurate assumptions. Should known or unknown
risks or uncertainties materialize, or should underlying
assumptions prove inaccurate, actual results could
vary materially from those anticipated, estimated or
projected. Readers should bear this in mind.
We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new
information, future events or otherwise.
Contents
Corporate Idenity
Operational highlights
Managing Director and CEO’s review
Key competitive strengths
COO’s message
Board of directors
Executive leadership team
Subex Charitable Trust
Star awards
Directors’ Report
Corporate Governance
Management Discussion & Analysis
Financial Review-Standalone
Financial Review - Consolidated
02
04
06
09
10
16
17
18
19
20
28
40
63
97
Shareholders’ Information
133
A
Product
info@trisyscom.com
Robust foundation.
sustainable
gRowth. Subex Limited
Annual Report 2013-14
www.subex.com
info@subex.com
INDIA
Subex Limited
USA
Subex Inc
UK
SINGAPORE
Subex (UK) Limited
Subex (Asia Pacific) Pte Limited
(CIN: L85110KA1994PLCO16663)
12303 Airport Way,
3rd Floor, Finsbury Tower,
175A Bencoolen Street
Regd. office: RMZ Ecoworld,
Bldg. 1, Ste. 390,
103-105 Bunhill Row,
#08-03 Burlington Square
Devarabisanahalli, Outer Ring Road
Broomfield, CO 80021
London, EC1Y 8LZ UK
Singapore 189650
Bangalore - 560037, India
Tel : +91 80 6659 8700
Fax : +91 80 6696 3333
Tel : +1 303 301 6200
Tel :+44 20 7826 5420
Tel : +65 6338 1218
Fax : +1 303 301 6201
Fax : +44 20 7826 5437
Fax: +65 6338 1216
Regional offices: Dubai | Ipswich | Sydney