Optimising
Global
Telecom
Business
Subex Limited
Annual Report 2015-16
2015-16
highlights
(consolidated)
324.52
(H crore)
Revenue
65.42
(H crore)
EBIDTA
200+
Customer
base
900+
Employees
Subex Today
Financial strength
• More than US$ 49M in Revenue
• EBITDA higher than most BSS vendors
Global presence
• Development centres in India, US and UK
• 200+ customers and 300+ installations in over
70 countries
• Customers include 39 of top 50 operators*
and seven of the world’s 10 largest # telecom
companies worldwide
*Telecom Operators 500 2015 ; #Forbes’ – The World’s Largest
Telecom Companies 2015
Intellectual capital
• Prudent combination of global and local professionals
• 900+ Subexians delivering market-leading software
products
Award-winning innovation
• Featured as one of the ’10 companies to watch out
for in 2015’, Frost & Sullivan, March 2015
• Awarded GTB Innovation Award 2016 with BTC
Botswana, for 2015 with Mobily and for 2014 with
Telstra
• Carriers World Award 2015 for Best Security/Fraud
Solution; Telecoms Award 2015
• Conferred Market Leader in Financial Assurance 2012
by Frost & Sullivan
• Pipeline Innovation Award 2016 and 2013
Rapid and far-reaching changes in the
The number of connected objects,
telecommunications landscape are
representing the IoT ecosystem, is
increasing the risk of revenue leakage.
expected to reach 50 billion by 2020.
Today’s operators need to cope with
(Source: Cisco)
complex network systems, converged
service offerings, multiple third party
partners and a rise in outsourcing,
all of which creates the potential for
inaccurate data capture and billing, and
increased fraud. .
(Source: KPMG Global Revenue Assurance
Survey)
The implication is that communication
service providers will need to
continuously invest - 18-20% of
revenues annually - in their networks.
(Source: Ovum - Communications Service
Provider (CSP) Revenue & Capex Forecast:
2014-19)
The conclusion is evident. Communication service companies
will need to increasingly turn to focused solution providers
like Subex.
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
realised, 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 materialise, 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 identity ......................................2
Our performance in numbers ...................4
MD and CEO’s message ............................6
The distinctive Subex edge ......................14
Star Award Winners ................................15
Board of Directors ...................................16
Executive Leadership Team ....................17
Subex Charitable Trust ............................18
Boards Report .........................................20
Corporate Governance Report ................46
Management Discussion and Analysis ...58
Standalone Financial Statement ............82
Consolidated Financial Statement .......123
Shareholder Information .......................163
2
• Subex is a preferred telecom
solutions provider
• Enjoying focused and specialized
domain knowledge
• Mining rich data resident with telcos
• Providing Big Data analytic solutions
• Empowering telcos to embark on
informed strategy
• Helping customers reduce subscriber
churn and enhance user experience
• Enhancing competitiveness and
taking the customer’s business ahead
Background
Subex is among the leading global providers of
Business and Operations Support Systems (B/OSS) that
empower communications service providers (CSPs) to
achieve competitive advantage through business and
capex optimisation.
The distinctive Subex value
proposition
Protected
Revenues
Revenue Assurance
Prevent revenue leakages
Managed
Costs
Cost Management
Reduce unnecessary
expenditure
Assured
Capital
Asset Assurance
Managing and reducing
network capex
Business & CAPEX Optimisation
SUBEX LIMITED Presence
Subex is headquartered in Bengaluru with
global delivery centres in India, US and UK.
The Company has subsidiaries at US, UK,
Singapore and Sharjah apart from branches in
Italy and Dubai.
Listings
Offerings
Subex provides industry-leading B/OSS
solutions to leading global telecom service
providers. Subex’s ground-breaking ROC®
(Revenue Operations Centre®) is globally
respected as a sectoral game-changer.
Subex is respected for its ability to provide
The Company’s equity shares are listed on the Bombay Stock
integrated infrastructure services under
Exchange Limited (BSE Ltd), National Stock Exchange, London
one roof. The ROC® consolidates disparate
Stock Exchange and Singapore Stock Exchange. The market
operations, empowering service providers to
capitalization of the company as on March 31st 2016 was
C 447.50 crore.
monitor revenue chains, identify risks, enhance
returns, strengthen hands-on management
and minimize capital expenditure.
Clientele
The Company’s 200+ client base
is spread across 70 countries.
Subex’s customers include 39 of
top 50 telecom operators* and
seven of the world’s 10 largest#
telecom companies worldwide.
The company has more than 300
installations across 70 countries.
*Telecom Operators 500, 2015
#The World’s Largest Telecom
Companies 2015 – Forbes
Fraud Management
Prevent losses (fraud &
defaulted payments)
Credit Risk Mgmt.
Proactive risk reduction
Partner Settlement
Manage inter-carrier,
partner expenses
Route Optimization
Manage and forecast
network cost information
Capacity Mgmt.
Holistic view of
network capacity
Data Integrity Mgmt.
Network discovery,
reconciliation, analytics
Achievements
• Subex enjoys a conspicuous presence in
industry forums like TM Forum, CANTO,
GSC, CFCA and GSMA
• Subex was the first company to offer
an integrated solution suite for revenue
analytics, cost analytics and network
analytics
• Subex enjoys a first-mover’s advantage
in the asset assurance space, making
it possible to substantially moderate a
customer’s capital expenditure
• Subex was the first to offer a purpose-
built data integrity management suite
• Subex’s pioneering Revenue Operations
Centre® empowers telecom service
providers to coordinate operational control
• Subex was the sector’s first company (in
collaboration with Swisscom) to develop an
operator/vendor risk-reward share model for
fraud management
3
Business & CAPEX Optimisation
2015-16ANNUAL REPORT Our performance
in numbers
Revenues*
(C crore)
EBIDTA
(C crore)
9
4
.
4
4
3
8
6
.
0
6
3
2
5
.
4
2
3
2
7
.
7
6
5
7
.
5
8
2
4
.
5
6
4
1
-
3
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
4
1
-
3
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
4
SUBEX LIMITED PAT
(C crore)
EBIDTA margin
(%)
PAT margin
(%)
)
4
7
6
(
.
1
0
.
5
1
4
7
.
8
5
6
6
.
9
1
7
7
.
3
2
6
1
.
0
2
)
6
9
1
(
.
6
1
.
4
0
1
.
8
1
4
1
-
3
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
4
1
-
3
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
4
1
-
3
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
* Inclusive of other income
5
2015-16ANNUAL REPORT MD and CEO’s message
The global telecom industry continues to grow
through customer acquisitions and new technology
adoption.
The global subscriber penetration is around 63%,
with regional penetration rates ranging between 43%
in sub-Saharan Africa and 85% in Europe.
The global subscriber base is estimated to reach the
5.6 billion-mark by 2020, by which point over 70%
of the world’s population could own a mobile phone
subscription.
The traction in mobile phone ownership
telecom service providers are required
For one, total mobile revenues reached
is being catalysed by 4G, the connection
to sustain the launch of new services,
more than $1 trillion in 2015, an
base for which exceeded the 1 billion
reduce time-to-market and enhance
increase of 1.8% on 2014.
mark in 2015 across 151 countries.
customer experience.
Sub-Saharan Africa has historically been
Interestingly, while there has been a
There is a growing recognition among
the fastest-growing region, but annual
significant subscriber increase, there has
telecom service providers that with the
growth there has almost halved. Europe
been a decline in the average revenue
ability to pass costs on to customers
returned to growth in 2015 after two
per unit on account of increased
through higher tariff no longer possible,
years of decline.
competition. During the last couple
there is an urgency to seek efficiencies,
of years, the entry of a number of
improvements and margins from within.
The proliferation of 3G and 4G
networks reflects the growing ubiquity
OTT players eroded voice and text
revenues of major telecom companies.
There is now a premium on the need
among such companies to enhance
average margin per user through the
optimisation of capital and operating
investments.
The growing concern among telecom
service providers is related to revenue
leakages and the fact that ongoing
network capital expenditure is affecting
their business returns. Even as these
returns are under evident pressure,
6
This recognition is turning the attention
of smartphones. Adoption reached
to specialized players like Subex, who
65% of the connection base in the
enjoy an extensive understanding of
developed world by end of 2015,
how telecom companies work and bring
ranging between 59% in Europe and
that domain insight to helping clients
74% in North America. Interestingly, the
enhance their competitiveness, share
developing world is not too far behind;
and brand.
Sectoral landscape
The overall landscape of the global
telecom sector continues to be
optimistic for Subex.
smartphones accounted for 40% of the
user base in these geographies by the
end of 2015 (up from 5% in 2010).
At a consolidated level, global
connections are expected to grow at
an annual rate of 3.9% by 2020. In line
SUBEX LIMITED with contemporary subscriber trends,
improve customer experience.
In North America and Europe,
we expect that developing countries
will continue driving the growth of the
global telecom sector over the next five
years: an annual growth of 4.3% till
2020 (down from 7.7% during the last
five years), while connections across
the developed world could grow by 2%
annually over the same period.
Over the years, our various products
and solutions have demonstrated
significant savings for global clients. Our
analytics have helped service providers
arrive at a precise understanding of
‘what happened’, understand ‘why it
happened’ and forecast ‘what is likely
to happen’ leading to enhanced value
Telcos monetised data consumption
and viability.
surge by offering a number of
bundled services. The adoption of new
technologies to support data surge is
expected to drive capital investments,
stretching Balance Sheets even further.
The result is that telcos need to find
ways to improve earnings by optimising
operations.
Besides, I am pleased to state that
a large proportion of our revenues
continue to be derived from
longstanding customers, indicating
that through the value of our offerings
we were able to transform one-off
transactions into extended and repeat
engagements. We believe that this
subscribers on an average consume
4.4 and 1.8 gigabytes per month
respectively, compared to around 0.5
gigabytes per subscriber in Africa. By
2020, the average subscriber in North
America and Europe is likely to consume
around 22 gigabytes and 12 gigabytes
of mobile data per month respectively.
By contrast, subscribers in sub-Saharan
Africa could consume 3 gigabytes per
month on average.
In the years ahead, the Asia Pacific and
Latin American nations are expected to
lead the growth and it is expected that
smartphone connections will increase by
2.6 billion by 2020, a significant 90%
plus coming from developing regions.
The reality is that most telecom service
relationship-driven model, where
With limited scope for subscriber
providers are far from achieving their
we acquire a deep insight into the
growth in developed markets, coupled
desired financial targets, with as much
businesses of our customers, makes
with an increase in competition and a
as 30% of their costs incurred on
it possible for us to graduate from
challenging macroeconomic climate
account of reworking and
projects to solutions and from a
in developing markets, growth over
over-processing. This is true not only
position where we deliver what we have
the next five years could be relatively
in saturated markets such as North
been asked towards assuming a larger
modest at best - an annual average rate
America, but also in emerging markets
position of telling clients what would be
of just under 2% to 2020.
like Eastern Europe.
holistically good for their business.
The bottomline is that telcos seek to
moderate capital investments. Around
80% of the operator’s revenues are still
derived from legacy OSS/BSS systems,
which continue to operate as silos,
leading to massive data within the
service provider’s domain remaining
unutilised. Consequently, a number
of service providers lack visibility
when it comes to enterprise-wide and
subscriber-centric revenues, costs and
margins. What most need is a real-
time mechanism to study the impact
of changes in operating parameters on
their profitability.
This is where Subex comes in.
Outlook
The outlook for our business continues
to be optimistic.
At Subex, we believe that growth in
the telecom markets should strengthen
viability and enhance cash flows that
could, in turn, strengthen prospects for
telecom sector-focused service provider
China is the world’s largest smartphone
like ours.
market, India following closely. India
expects to add almost half a billion new
connections over five years catalysed by
a growing traction for smartphones and
data-intensive applications, particularly
video streaming on mobile networks.
The message that I wish to send out is
that Subex is adequately prepared. The
company has built its business
ground-level up and is poised to
perform even better.
The result is that data traffic is likely to
On behalf of the entire Subex team, I
explode, with volumes forecast to grow
would like to thank each stakeholder for
at a sharp CAGR of 49% over the next
supporting us in our journey.
five years – a more than
seven-fold increase equivalent to a
global average of 7 gigabytes per
Regards,
Surjeet Singh,
We streamline operations, minimise
subscriber per month.
costs, help clients moderate capex and
Managing Director and Chief Executive
Officer
7
2015-16ANNUAL REPORT Subex. Enriching
the customer
experience.
Optimising
network
investments.
Following the extensive use of
smartphones and mobile internet
growth, communication service
providers now enjoy access to
unprecedented data - customer profiles,
device data, network data, customer
usage patterns, location data, apps
downloaded, clickstream data and
more.
The effective management of this data
mountain warrants investments. In
just the last five years, global mobile
operators invested more than US$880
8
SUBEX LIMITED billion with the objective to enhance
The need for network intelligence has
deliver better credit norms to contract
capacity and implement mobile
not come a day too soon. A study
subscribers.
broadband networks.
For all such telecom service providers
seeking attractive investment returns,
there is a premium in recognising the
indicates that nearly 20% of all assets
fail to return even the cost of capital;
around 5-15% of network assets are
stranded.
rate of change within networks. This
Subex’s ROC Asset Assurance
knowledge helps companies optimise
solution addresses this reality. The
asset investments while migrating
solution accurately predicts customer
seamlessly to new technologies or
yields, allows telcos to offer high
decommissioning / monetising end-of-
priority customers loyalty bonuses
life assets.
and privileged treatment through
personalised services and helps
This personalization enhances customer
loyalty, which, in turn, increases revenue
visibility leading to business viability.
Subex enhances customer
competitiveness.
Benefits of Subex’s Asset
Lifecycle Management
solution
• Asset management and tracking
– a centralised asset repository that
Case study
US$200 million savings
and counting
A North American network
operator was unable to optimise
covers asset disposition, technical
network capacity utilisation even
and financial details
• Optimised asset purchase
leading to a 5-10% reduction in
underutilised assets
• Superior audit and regulatory
compliance leading to a 40-60%
reduction in the need for manual
audits
• 10-15% reduction in
time-to-market ratios of assets
• Efficient monetization of
end-of-life assets to maximize value
• Superior spare asset
management
• Optimal utilisation through the
reuse of stranded, unutilised and
underutilised assets
as there was a need to enhance
business investments.
The company was expanding from
nine states to 22.
The need of the hour was to
identify and sweat stranded assets.
Subex’s proprietary ROC Asset
Assurance solution proved to be
game-changing. The product
helped identify under-leveraged
assets, comprehend revenue
streams and improve marketing
effectiveness.
The result is that following Subex’s
intervention, the service provider
generated sizable US$200 million
savings across 2 years, transforming
cash flows and right-tracking the
company for solid and sustainable
growth.
Subex transforms.
9
2015-16ANNUAL REPORT Subex.
Enhancing
service quality.
Reinforcing
capacity
planning.
In a competitive telecom sector, service
providers are required to continuously
explore new revenue-enhancing
opportunities even as they focus on
existing B/OSS investments.
The biggest challenge encountered
by telcos is their inability to monetise
network traffic value without being able
to access or interpret traffic data.
This shortcoming can translate into
a number of downsides: the inability
to customise or personalise offerings;
10
SUBEX LIMITED the inability to invest in technologies
improve customer experience,
or opportunities that can generate the
and simplify network control and
highest returns.
operations.
There is a growing recognition within
Subex anticipates network bottlenecks
these service providers that when it
in a more granular and accurate
comes to graduating their business to
manner, making to possible for service
the next growth level, knowledge is
providers to plan network expansions
indeed power.
with science, method and accuracy.
Subex’s new generation of networks
Subex enhances
analytics tools and solutions empowers
service providers to optimise network
builds and upgrades, reduce outages,
Case study
The analytics journey towards long-term revenue visibility
A Tier-I Communications Service
logical circuits. Most of their capacity
Provider (CSP) based out of North
decisions would take place based
America, with annual revenue greater
on incomplete view of the network,
than US$10 billion and around
resulting in an inability to predict
13 million customer connections,
capacity consumption in the future.
offering wireless and residential
To summarize, the CSP was incurring
phones, internet and television
huge costs and making incorrect
services, encountered challenges
decisions since they were ‘operating
to manage their network capacity
blind’.
and accurately predict capacity
requirement.
Subex’s ROC Capacity Management
solution solved these issues by
Due to the pressure of increasing
getting inside the network and
data, the operator was running out of
extracting data in near-real-time,
capacity even before completing their
giving the operator a view into
network upgrades due to changes in
the network ‘as-is’. This extracted
consumption patterns that are not
data was then normalized to be
known/identifi ed during capacity
presented in a meaningful format
planning. As per their existing
across heterogeneous devices that
process, the CSP did not have any
can be easily analysed by the operator
visibility into the ‘as-is’ view of their
to assess the current capacity
network and neither were they able
consumption and predict how long
to receive timely relevant data from
the current capacity will last based on
the network related to the capacity of
current consumption trends.
11
2015-16ANNUAL REPORT Subex.
Sealing leaks
through analytics.
Fraud is probably the single biggest
revenue drain in the global telecom
industry.
The global fraud loss is estimated at
approximately 5% of telecom revenues
a year.
As operators offer new services on 4G
LTE and venture into m-commerce and
IoT, these risks are only likely to increase.
Following the advent of OTT vendors,
competition for telcos is no longer
limited to within conventional spaces.
12
SUBEX LIMITED The result is that an increasing number
and processes, communications service
of telcos are seeking analytics experts to
providers are empowered to quicker
locate and eliminate fraud.
and relevant action.
Subex’s fraid management solution
Subex has helped correlate network
leverages data-mining algorithms
usage, subscriber density, traffic and
to identify and alert telcos about
location data to empower global telcos
suspicious behavior and probable
to monitor customer churn, forecast
customer fraudulence. Subex’s global
network capacity and accurately plan
network of analytic experts apply a
for potential outages.
broad spectrum of analytics-based
assets and market-tested approaches
to locate attractive opportunities. As
insights are integrated into decisions
Subex protects.
Case study
Subex saved the day
Swisscom is Switzerland’s leading
a reward element based on the
telecom service provider with 6.2
extent of prevented fraud with the
million mobile customers, 5 million
objective to moderate up-front capital
dial-up customers and 1.9 million
spending.
broadband customers.
Subex and Swisscom entered into an
Swisscom enjoys a pan-Switzerland
innovative partnership around a RRS
presence offering a range of
(Risk/Reward Share) proposition to
products and services for mobile,
measure the Effective Fraud Loss and
landline and IP-based voice and data
extrapolate the Preventable Fraud
communication.
Loss.
Swisscom desired to upgrade its
The partnership yielded compelling
legacy fraud management system.
benefits, the revenues generated
After extensive evaluation, it selected
under the ‘Payments to the Vendor’
Subex’s ROC Fraud Management.
head for Subex far exceeded by
Swisscom’s senior management
‘Operator Savings’ for Swisscom.
sought to consider a differentiated
commercial model, one that added
Subex enriches.
13
2015-16ANNUAL REPORT The distinctive Subex edge
Distinctive offering
In-depth expertise
Inherent flexibility
Subex’s bouquet of products
Subex has more than 300
Subex provides hope to
and services has enhanced
operating efficiencies and
installations in 70 countries -
customers seeking to
spanning markets, consumer
engage with flexible, open
client satisfaction, graduating
bases, networks and
services. This has allowed the
solution providers. Subex
offers licensed solutions,
it into a trusted partner
for global telecom service
providers.
Company to incorporate best-
software-as-a-service or
in-class practices and stay
end-to-end managed services
ahead of competition.
compatible with service
providers’ existing OSS/BSS
infrastructure eliminating the
need for systemic overhaul.
Gamechanging
identity
Subex is a proponent of
evolutionary change in a
Need-based
solutions
Subex customers can select
Unmatched support
Subex deploys teams
comprising software
from a large services basket –
developers, testing engineers,
sector marked by big-bang
from software license-based
‘transformations’. The
Company’s objective is to
help customers streamline
operations, moderate and
models to subscription-
based software-as-a-services.
release-management
resources and technical
support engineers with
Subex also offers turnkey
proven credentials to provide
operational managed services
support and maintenance
generate a higher return on
with a pay-for-performance
services.
capital expenditure.
model based on key business
metrics.
14
SUBEX LIMITED Star Award Winners
Name of employee
Karthik Boggaram
Manjunath
Ravi Khurana
Sharath H V
Mansi Chouhan
Nishanth Sudhakara
Shetty
Hariharan Ramaraj
Hina Parveen
Lakshman Kumar
Kakumanu
Rahul Muraleedharan
Ashutosh Tripathy
Jayesh Anjaria
Magadumsha Ali Habib
Munshi
Vijay Anand R
Indira T M
Rajshekar Kodavathi
Thammaiah
Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
K Santosh Kumar Patro
5 Years
Name of employee
Years
Name of employee
Chris Sears
Howard Miller
Pankaj Parmar
Alexander Thengumpalli
Srinivas M R
Sanjaya G S
Ranajit Ghanty
Soumia Annie Jose
Subha Chakraborty
Subhadip Duttagupta
Rajesh Kumar Padihary
Premanandan K
Vinay Rajpurohit
Sujatha Chitti
Tintu Joseph
Arthur Ronald Hoglund
Christopher Hapeman
Madhu Packiam
Duraisamy
Ankur Singh
Syed Afroz
Suraj Balachandran
Aditya Vikram Manpuria
Arunkumar K S
Mrutyunjaya Mandal
Karan D
Sumit Saurabh
Srichand V
40 Years
30 Years
25 Years
15 Years
15 Years
15 Years
15 Years
10 Years
10 Years
10 Years
10 Years
10 Years
10 Years
10 Years
10 Years
10 Years
10 Years
10 Years
10 Years
7 Years
7 Years
7 Years
7 Years
7 Years
7 Years
7 Years
7 Years
Tejas K N
Swapna H B
Ajitesh Srinetra
Karthik N
Anu Betty Jose
Rajesh Kumar
Revanth Sharma M
Feeroz Alam
Varun Prabhakara
Shastry
Anusha Chadalavada
Shreyas Jain A
Vineet Jain
Niveditha Ramesh Lalge
Ujjwal Indravadan Dave
Arindam Sen
Sriraman Srinivasan
Iyengar
Sivakumar Vasagar
Bharath Hegde
Pavan Kundgol
Saranya P K
Taher J Talib
Hayssam Kanoun
Suraj Tiwari
Mrudula K
Subhas Bhat
Preetham A Naik
Years
7 Years
7 Years
7 Years
7 Years
7 Years
7 Years
7 Years
7 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
5 Years
15
2015-16ANNUAL REPORT Board of Directors
Surjeet Singh
Managing Director & CEO
Sanjeev Aga
Independent Director
Anil Singhvi
Independent Director
Nisha Dutt
Independent Director
Priyanka Roy
Independent 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 - Legal and Company
Secretory
Mohan Sitharam
Chief People Officer
Aswin Chalapathy
Chief Technology Officer and
Head of Service Delivery
David Halvorson
General Counsel
Charles E. Crenshew
Market Head - Sales and Client
Relations - Americas
17
2015-16ANNUAL REPORT Subex Charitable Trust (SCT).
Extending beyond business.
Subex has always been at the forefront in addressing various social causes. The Company
undertakes initiatives across education, disaster relief and financial assistance to
economically weaker people, among others.
The Company undertook the following initiatives during 2015-16:
• Distribution of relief materials to flood-affected people in Chennai. Subex collected C 86,000 to be spent on school
infrastructure upgradation in Chennai
• The Trust donated C 1 lakh for infrastructure upgradation of a school in Surjapura, Chennai
• Organised a blood donation camp with TTK Bank. The number of donors this year reached 121
• Provided financial aid for electricity and water bills for Prerana Resource Centre - home to more than 100+ differently-abled
destitute girls and a vocational training provider
• Visited Swanthana, a centre for mentally challenged female children on Christmas day with gifts and soft toys for children
• 33 Subexians sponsored 37 economically-challenged rural area students with C 2,22,340 of scholarships. Also initiated a drive
to collect old clothes, toys and books, among others
Blood donation camp at Subex attracted 121 Donors
Distribution of relief materials in Chennai
Financial aid to Prerana Resource Center
Swanthana - Centre for mentally-challenged female children
18
SUBEX LIMITED Statutory Section
19
2015-16ANNUAL REPORT Boards’ Report
Your Directors have pleasure in presenting the 22nd Annual Report of the Company on the business and operations together with
the audited results for the year ended March 31, 2016.
1. FINANCIAL RESULTS
Amount in H lakhs
Particulars
Consolidated
Standalone
2015-16
2014-15
2015-16
2014-15
Continuing Operations:
Total Revenue
Profit Before Interest, Depreciation, Exceptional Items &
Taxes
32,335.47
35,983.31
29624.29
30,567.07
6,542.25
8,575.04
4716.39
2,570.76
Interest, Depreciation & Amortization
5,070.59
6,506.03
3,857.50
5,430.02
Other Income (including interest)
Profit/(Loss) before Exceptional items & tax
Exceptional Items
Profit/(Loss) before tax
Provision for taxes
Profit/(Loss) after tax
Discontinuing Operations:
Loss from discontinuing operations before tax
Tax expenses of discontinuing operations on ordinary
activities attributable to discontinuing operations
Loss after tax
APPROPRIATIONS
Interim Dividend
Preference Dividend
Dividend proposed on equity shares
Provision for tax on Dividends
Transfer to General Reserve
120.63
1,475.94
5,674.85
7,150.79
1,275.97
5,874.82
90.20
234.48
222.93
2,073.59
1,051.53
(2,685.10)
-
(13,712.59)
-
2073.59
(12,661.06)
(2,685.10)
572.34
534.38
154.91
1,501.25
(13,195.44)
(2,840.01)
(5.23)
(2.90)
(474.18)
5.62
(2.33)
(479.80)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Surplus/(Deficit) carried to Balance Sheet
5,872.49
1,021.45
(13,195.44)
(2,840.01)
20
SUBEX LIMITED 2. RESULTS OF OPERATIONS
During the financial year ended March 31, 2016, the total
revenue on a standalone basis was H 29,624.29 lakhs as against
the revenue for the previous year which was H 30,567.07 lakhs.
The Company has during the year under review incurred a loss
of H 13,195.44 lakhs as against loss of H 2,840.01 lakhs in the
previous year.
On a consolidated basis, the total revenue stood at H 32,335.47
lakhs as against H 35,983.31 lakhs during the previous year. The
profit for the financial year 2015-16 was H 5,872.49 lakhs as
against profit of H 1,021.45 lakhs in the previous year.
3. DIVIDEND
The Directors have not proposed any dividend to be paid for the
financial year 2015-16.
4. SHARE CAPITAL
As at March 31, 2016, the authorised share capital of the
Company was H 547,00,00,000 (Rupees Five Hundred and
Forty Seven Crores only) divided into 54,50,40,000 (Fifty four
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 H 98 (Rupees Ninety Eight only) each.
As at March 31, 2016, the paid-up share capital of the Company
stood at H 502,81,16,460 (Rupees Five Hundred and Two
Crores Eighty One lakhs Sixteen Thousand and Four Hundred
and Sixty only) consisting of 50,28,11,646 (Fifty Crores Twenty
Eight lakhs Eleven Thousand Six Hundred and Forty Six only)
equity shares of H 10/- each.
5. BUSINESS
Your Company 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 operational efficiency to deliver
enhanced service 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 optimisation and partner settlement.
Subex also offers a scalable Managed Services program with
30 + customers.
Subex has been awarded the Global Market Share Leader in
Financial Assurance 2012 by Frost & Sullivan and has been the
winner of Carriers World Awards 2015 for Best Security/Fraud
solution, Telecoms Award 2015 for Advances in B/OSS, Pipeline
Innovation Award 2016 for Security & Assurance” and in
2013 for Business Intelligence & Analytics; Capacity Magazine
Best Product/ Service Award 2013. Subex has continued to
innovate with customers and have been jointly awarded the
Global Telecoms Business Innovation Award in 2016 with BTC
Botswana; 2015 with Mobily; in 2014 with Telstra Global; in
2012 with Idea Cellular for Managed Services and in 2011 with
Swisscom for Fraud Management. It has also been conferred
the ‘Finance Transformation Best-in-Class Financial Solution
Services’ 2016 by CIMA.
Subex’s customers include 39 of top 50 operators* and 7 of
the world’s 10 largest# telecom companies worldwide. The
Company has more than 300 installations across 70 countries
(*Telecom Operators 500, 2015 #The World’s Largest Telecom
Companies 2015 – Forbes).
Further details on the business of the Company is provided in
the Management Discussion and Analysis section of the Annual
Report.
6. SUBSIDIARIES
SUBEX TECHNOLOGIES LIMITED
For the year ended March 31, 2016, Subex Technologies
Limited earned a net loss of H 0.46 lakhs as against a net gain
of H 3.67 lakhs last year.
SUBEX (UK) LIMITED
For the year ended March 31, 2016, the Standalone income
of Subex (UK) Limited was H 17,004 lakhs as against H 18,254
21
2015-16ANNUAL REPORT lakhs last year the loss was H 5,099 lakhs as against a net profit
of H 1,856 lakhs last year.
US$ 1,400,000 under its US$ 98,700,000 5% Convertible
Unsecured Bonds (“FCCBs II”) *
Subex (Asia Pacific) Pte. Limited is a wholly owned subsidiary
of Subex (UK) Limited. For the year ended March 31, 2016,
the Standalone income of Subex (Asia Pacific) Pte. Limited was
H 2,015 lakhs as against H 2,352 lakhs last year, and the loss
was H 6.86 lakhs as against a net profit of H 22.70 lakhs last
year.
US$ 4,550,000 under its US$ 127,721,000 5.70% secured
convertible bonds (“FCCBs III”) #
*FCCB I & FCCB II: The maturity period of the un-exchanged
FCCBs I and FCCBs II was extended to March 2017 pursuant to
the RBI Approval dated April 27, 2012 and requisite approvals
under the Trust Deed of the holders of FCCB I & FCCB II.
Subex Inc. is a wholly owned subsidiary of Subex (UK) Limited.
#FCCB III:
For the year ended March 31, 2016, the Standalone income of
Subex Inc. was H 10,630 lakhs as against H 10,747 lakhs last
year, and the net loss was H 99 lakhs as against a net loss of
H 119 lakhs last year.
In July 2012, pursuant to the exchange offer of FCCBs I
and FCCBs II, the Company issued FCCB III bonds with a
maturity period due July 2017.
On July 17, 2012, Principal amount of US$ 36,321,000
SUBEX AMERICAS INC.
For the year ended March 31, 2016, the standalone income
of Subex Americas Inc. was H 2,541.61 lakhs as against
H 3,894.88 lakhs last year, and Net profit was H 17,388.74 lakhs
as against a profit of H 1,499.32 lakhs last year.
were mandatorily converted into equity shares at the
conversion price of H 22.79/-. Further, principal amounts
of US$ 3,250,000 and US$ 6,620,000 were subsequently
converted into equity shares during 2012-13 and 2014-15.
Pursuant to the approval in meeting of the Board held
on May 14, 2015 and the meeting of the shareholders
Subex Azure Holding Inc., is a wholly owned subsidiary of
held on June 19, 2015 as well as meeting of the
Subex Americas Inc. There were no transactions during the year
Bondholders held on August 5, 2015, the conversion
under review.
SUBEX MIDDLE EAST (FZE)
The operations have commenced during the year 2015-16.
For the year ended March 31, 2016, the standalone income of
Subex Middle East (FZE) was H 118.70 lakhs and net profit of
H 12.07 lakhs. Subex Middle East (FZE) is a direct subsidiary of
Subex Limited.
7. BRANCHES
The following non-operative Branches were closed during the
year.
Subex Limited-London Branch
Subex Limited-Denver Branch
Subex Limited-Ontario Branch
8. FINANCE
FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
As on March 31, 2016, the Company had outstanding FCCBs
aggregating to:
price of FCCB III being convertible into equity shares of
the Company was reset to H13.00 from the previous price
of H 22.79.
During the year 2015-16, US$ 6,500,000 were converted
at H 22.79. Further to the reset of conversion price of H13/-
US$ 70,480,000 were converted into equity shares and
US$ 4,550,000 is outstanding as on March 31, 2016.
US$ 950,000 were converted between April 1, 2016 to date
of this Report. Hence principal amount of US$ 3,600,000
of FCCB III are outstanding as on the date of this report.
FIXED DEPOSITS
Your Company has not accepted any deposits from the public.
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
US$ 1,000,000 under its US$ 180,000,000 2% convertible
Foundation with a corpus of 120,000 equity shares initially.
unsecured bonds (“FCCBs I”) *
Since the scheme was formulated prior to the promulgation of
22
SUBEX LIMITED
Securities and Exchange Board of India (Employee Stock Option
of the scheme was further enhanced by 15,00,000 options
Scheme and Employee Stock Purchase Scheme) Guidelines,
during the financial year 2007-08. The Company has obtained
1999, the Company has discontinued the scheme.
the requisite in-principle approvals from the stock exchanges
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.
In accordance with the scheme, a Compensation Committee
was 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 equity shares during
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 2008-09, the Company amended the ESOP
2005 scheme by inclusion of provisions allowing employees to
voluntarily surrender their vested/unvested options at any time
during their employment with the Company.
the 15 trading days preceding the date of grant on the stock
During the year 2011-12, the employees voluntarily surrendered
exchange where there is highest trading volume during this
9,64,969 stock options under ESOP 2005 scheme. Also, the
period. Unless otherwise resolved, the options granted vest
Company issued equivalent stock options to the aforesaid
over a period of 1 to 4 years and can be exercised over a period
eligible employees under ESOP 2005 scheme.
of 3 years from the date of vesting.
The tenure for grant of stock options under ESOP 2005
During the year 2008-09, the Company amended the ESOP
scheme has expired and the Company is only administering the
2000 scheme by inclusion of provisions allowing employees to
outstanding stock options issued under the scheme.
voluntarily surrender their vested/unvested options at any time
during their employment with the Company.
During the year 2011-12, the employees voluntarily surrendered
241,012 stock options under ESOP 2000 scheme. Also, the
Company issued equivalent stock options to the aforesaid
eligible employees under ESOP 2005 and ESOP 2008 scheme.
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 options has
been created for grant to the eligible employees under the
scheme. The Scheme was formulated in accordance with the
The tenure for grant of stock options under ESOP 2000
Securities and Exchange Board of India (Employee Stock Option
scheme has expired and the Company is only administering the
Scheme and Employee Stock Purchase Scheme) Guidelines,
outstanding stock options issued under the scheme.
1999. The Company has obtained the requisite in-principle
EMPLOYEE STOCK OPTION PLAN-2005 (ESOP-III)
Under this scheme, an initial corpus of 5,00,000 options was
created for grant to the eligible employees, with each option
convertible into one fully paid-up equity share of H10/-. This
scheme was formulated in accordance with the Securities and
Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999. The corpus
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
(now with nomenclature
“ESOPS 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
23
2015-16ANNUAL REPORT the closing price of the equity shares during the 15 trading days
Schedule V of the SEBI (Lisging Obligations and Disclosure
preceding the date of grant on the stock exchange where there
Requrements) Regulations, 2015 as amended from time to
is highest trading volume during this period. Unless otherwise
time. The Auditor’s certificate on compliance with Schedule V
resolved, the options granted vests over a period of 1 to 4 years
of the SEBI (LODR), Regulations 2015, is included in the section
and can be exercised over a period of 3 years from the date of
on Corporate Governance in this Annual Report. In addition,
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 regarding the employee stock options
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.
12. DIRECTORS
As per Article 87 of the Articles of Association of the Company
as at March 31, 2016 is given as “Annexure A” to this report.
read with the provisions of section 152 of the Companies Act,
9. PARTICULARS OF LOANS, GUARANTEES
OR INVESTMENTS UNDER SECTION 186
Details of Loans, Guarantees or Investments covered under
2013, at least 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 for re-election. Accordingly,
section 186 of the Companies Act 2013, are given in the
Mr. Surjeet Singh retires by rotation and being eligible, has
note 30 to the Financial Statements.
offered to be re-appointed at the ensuing Annual General
10. MATERIAL CHANGES AND COMMITMENTS
BETWEEN THE END OF FINANCIAL YEAR AND
DATE OF THE REPORT
Principal amount of US$ 950,000 under the Company’s
US$ 127,721,000 5.70% Secured Convertible bonds with a
maturity period due July 2017 (“FCCBs III”) were converted
between the end of the financial year March 31, 2016 and the
date of this report. As such principal amount of US$ 3,600,000
of FCCB III are outstanding as on the date of this report.
Meeting.
Mr. Surjeet Singh was re-appointed as the Managing Director
& CEO of the Company at the Board Meeting held on
August 12, 2015 for a period of one year from October 5, 2015 to
October 4, 2016. In accordance with the provisions of Sections
196, 197, 203 read with Schedule V and other applicable
provisions of the Companies Act, 2013, the said re-appointment
as Managing Director & CEO was placed before the Members
for their approval at the Postal Ballot conducted during the year
2015-16.
11. CORPORATE GOVERNANCE
Your Company strongly believes that the spirit of Corporate
Pursuant to the recommendation of the Nomination and
Remuneration Committee, the Board at its meeting held on
Governance goes beyond the statutory form. Sound Corporate
August 26, 2015 appointed Ms. Priyanka Roy as an additional
Governance is a key driver of sustainable corporate growth and
Independent Director for a tenure of five years subject to the
long-term value creation for the stakeholders and protection of
approval of the shareholders at the 22nd Annual General
their interests. Your Company endeavors to meet the growing
aspirations of all stakeholders including shareholders, employees
and customers. Your Company is committed to maintaining the
highest level of transparency, accountability and equity in its
Meeting. The Company has received a notice from a shareholder
proposing the appointment of Ms. Priyanka Roy.
The details
regarding
the
familiarization program
for
Independent Directors is available on the website of your
operations. Your Company always strives to follow the path
Company under the link http://www.subex.com/corporate-
of good governance through a broad framework of various
governance/.
processes.
Your Company has complied with all the requirements as per
Clause 49 of the listing agreement of the Stock Exchanges,
BOARD MEETINGS
During the year, 7 Board Meetings were convened and held.
24
SUBEX LIMITED The intervening gap between the meetings was within the
period prescribed under the Companies Act 2013. The dates on
which meetings were held are as follows:
1. April 28, 2015
2. May 14, 2015
3. August 12, 2015
4. August 26, 2015
5. November 02, 2015
6. February 10, 2016
7. March 28, 2016
The details of the attendance of the Directors is provided in the
Corporate Governance Report.
PERFORMANCE EVALUATION
Pursuant to the provisions of the Companies Act 2013 and
Regulation 17 (10) of the SEBI (LODR) Regulations, 2015 the
Board at its meeting held on February 10, 2016 carried out
14. AUDITORS
STATUTORY AUDITORS
M/s. S. R. Batliboi & Associates LLP, Chartered Accountants,
Bengaluru (Firm Registration Number 101049W/E300004),
the Statutory Auditors of the Company were appointed
for a term of 5 years in the AGM held on 19th June 2015.
The Auditors have given Audit Report for the financial year
2015-16, commenting on the ‘material weakness’ pertaining to
ICFR and the delays in remittance of withholding tax.
The Board places the said proposal for the ratification of the
appointment of M/s. S. R. Batliboi & Associates LLP, Chartered
Accountants before the shareholders of the Company at the
ensuing Annual General Meeting.
SECRETARIAL AUDITORS
Pursuant to the provisions of section 204 of the Companies
Act 2013 and the Companies (Appointment and Remuneration
of Managerial Personnel) Rules 2014, the Company has
an annual performance evaluation of its own performance, the
appointed M/s. V Sreedharan & Associates, a firm of Company
directors individually as well as the evaluation of the working of
Secretaries in practice to undertake the Secretarial Audit of
its committees. The manner in which the evaluation has been
the Company. The report of the Secretarial Audit is annexed
carried out has been explained in the Corporate Governance
herewith as “Annexure B”. The Secretarial Auditors have given
Report.
an unqualified report for the financial year 2015-16.
POLICY ON DIRECTORS APPOINTMENT AND
REMUNERATION POLICY OF THE COMPANY
The Policy on Appointment of Directors and the Remuneration
15. RESPONSE
OBSERVATIONS
The Auditors in their report have commented on the “material
AUDIT
THE
ON
Policy of the Company forms a part of this report in “Annexure
weakness” pertaining to ICFR and the delays in remmitance
E”. and the Details / Disclosures of Ratio of Remuneration to
each Director to the median employee’s remuneration as
“Annexure G”.
of with holding tax. It is pertinent to note that the Accounts
Receivables and payables were lying dormant for more than
three years and the Company has taken the necessary steps for
writing down the said receivables to the extent permissible,
13. AUDIT COMMITTEE
The Audit Committee presently has 3 Directors as its member’s
apart from provisioning for the doubtful amounts to the extent
considered expedient. It has further approached the Regulators
viz. Mr. Anil Singhvi, Chairman, Mr. Sanjeev Aga and Mr. Surjeet
for permission to net-off the old receivables against the payables
Singh. The role, terms of reference, the authority and power of
attributable to the same entity.
the Audit Committee are in conformity with the provisions of the
On the observation with respect to delays in payment
Companies Act, 2013 and Clause 49 of the Listing Agreement/
of withholding taxes, the management had a different
Regulation 18 of the SEBI (LODR) Regulations, 2015. Further
interpretation of statute which resulted in the same. Definitive
details of the Audit Committee have been provided in the report
measures have already been taken to amend the same.
on Corporate Governance forming part of this Annual Report.
25
2015-16ANNUAL REPORT 16. PARTICULARS OF EMPLOYEES
The particulars of employees required under Section 197 of the
Companies Act, 2013 read with Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is enclosed
hereto in “Annexure C”.
17. CONSERVATION OF ENERGY
The operations of your Company are not energy-intensive.
However, significant measures are taken to reduce energy
consumption by using energy-efficient computers and by
the purchase of energy-efficient equipment. Your Company
constantly evaluates new technologies and invests to make its
infrastructure more energy-efficient. Currently your Company
uses CFL fittings and electronic ballasts to reduce the power
consumption of fluorescent tubes. Air conditioners with energy
efficient screw compressors for central air conditioning and air
conditioners with split air conditioning for localized areas are
used.
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 expenditure 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 to previous
year. During the year 2015-16 total foreign exchange inflow
and outflow is as follows:
i)
Foreign Exchange earnings H 27,794.14 lakhs (Previous
Year H 29,451.56 lakhs)
ii) Foreign Exchange outgo H 4,746.30 lakhs (Previous Year
H 17,093.45 lakhs)
Note: The foreign exchange outgo is inclusive of the
inter-Company charges and the Previous Year’s figure have
been restated accordingly.
18. CORPORATE SOCIAL RESPONSIBILITY
To enable the Company to take required measures to make a
meaningful contribution to society and other stakeholders it
has constituted the Corporate Social Responsibility Committee
(CSR Committee) comprising of the following Directors
Composition
Mr. Anil Singhvi (Chairman)
Mr. Sanjeev Aga
Mr. Surjeet Singh
Category
Independent Director
Independent Director
Managing Director & CEO
Pursuant to CSR Policy adopted by the Board, the Company
proposes to undertake such activities as may be useful and
contributive in nature.
SUBEX CHARITABLE TRUST
Subex Charitable Trust (SCT) extends the outlook of Subex as
a corporate entity into community service. SCT was set up to
provide for welfare activities for under privileged and the needy
in the society. SCT is managed by trustees elected amongst the
employees of the Company. During the year, it has provided
active support for education of economically challenged
meritorious students, conducted blood donation camps,
donated clothes and toys to children, provided financial aid by
way of payment of the water and electricity bills of a Centre
which provides vocational training to destitute girls. Financial
aid was also provided for the upgradation of the infrastructure
of schools, particularly those effected by the Chennai floods. A
gist of activities undertaken by the Trust has been provided as a
separate section in this Annual Report.
19. IMPLEMENTATION OF RISK
MANAGEMENT POLICY
The Company has developed and adopted a Risk Management
Policy. This policy identifies all perceived risk which might impact
the operations and on a more serious level also threaten the
existence of the Company. Risks are assessed department wise
such as financial risks, information technology related risks, legal
risks, accounting fraud, etc. The Risk Management Committee
assists the Board in fulfilling its corporate governance oversight
responsibilities with regard to the identification, evaluation and
mitigation of operational, strategic and external environment
risks. The Committee also ensures that the Company is taking
26
SUBEX LIMITED appropriate measures to achieve prudent balance between risk
matter that required attention was immediately dealt with.
and reward in both ongoing and new business activities.
The Company Secretary reported to the Audit Committee and
20. HUMAN RESOURCE MANAGEMENT
Detailed report on Human Resource management is given in
the Management Discussion and Analysis section of the annual
report.
21. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY
The Company has an Internal Control System, commensurate
with the size, scale and complexity of its operations.
In accordance with the provision of Section 134(5) of the
Companies Act, 2013, and as per the provisions of the SEBI
(LODR), Regulations, 2015, the Company has in consultation
with a reputed independent consultancy firm that specializes in
advising corporates on internal financial controls, strengthened
the existing financial controls of the Company.
Such internal financial controls were found to be adequate
for a Company of this size. However, with regard to the old
Accounts receivables and payables due for over three years,
the Company has taken adequate measures to write-off,
the Board on the overall compliance status of the Company.
In effect, such compliance system was largely found to be
adequate and operating effectively. Further system has been
strengthened to adequately address all the withholding tax
concerns mentioned in the Audit Report. The Directors have in
the Directors Responsibility Statement under paragraph (g) also
confirmed the same to this effect.
The Internal Auditors monitor and evaluate the efficacy and
adequacy of internal control system in the Company, its
compliance with operating systems, accounting procedures
and policies at all locations of the Company and its subsidiaries.
Based on the report of Internal Auditors, process owners
undertake corrective action in their respective areas and
thereby strengthen the controls. Significant audit observations
and corrective actions thereon are presented to the Audit
Committee of the Board.
Subex has been certified
for
ISO 9001:2008
(Quality
Management System) and ISO 27001:2013 (Information
Security Management System). The Company being in the
provisioning and also applied to the Authorities for net-off
IT space conducts internal audits of Information Security,
within the legally permissible limits. Notwithstanding this,
Quality Management System twice a year covering projects
other controls are largely operating effectively since there has
and functional groups. Internal audits of such nature are
not been identification of any major material weakness in the
conducted across all locations of Bengaluru, UK and the US
Company. The Directors have in the Directors Responsibility
regions. A consolidated summary is prepared and strengths and
Statement under paragraph (f) confirmed the same to this
weakness across projects, functional groups is shared with all
effect. The Company has policies and procedures in place
auditee. Reports are shared to the auditee to identify corrective
for ensuring proper and efficient conduct of its business,
and preventive actions. The corrective and preventive actions
the safeguarding of its assets, the prevention and detection
are reviewed by the internal auditors and closed based on the
of frauds and errors, the accuracy and completeness of the
adequacy of evidences provided by the auditee.
accounting records and timely preparations, reliable financial
information. The Company has adopted accounting policies
which are in line with the Accounting Standards and the Act.
These are in accordance with generally accepted accounting
principles in India.
Pursuant to the provisions of the Section 134(5)(e) of the Act,
the Company during the year devised proper systems to ensure
compliance with the provisions of all applicable laws. Each
department of the organization ensured that it had complied
with the applicable laws and furnished its report to the Head
22. VIGIL MECHANISM/ WHISTLE BLOWER
POLICY
The Company has implemented a vigil mechanism policy to deal
with instance of fraud and mismanagement, if any. The policy
also provides for adequate safeguards against victimization
of persons who use such mechanism and makes provision for
direct access to the chairperson of the Audit Committee in all
cases. The details of the policy is posted on the website of the
Company under the link http://www.subex.com/corporate-
governance/. There were no complaints during the year
of department who then along with the Company Secretary
discussed on the compliance status of the department. Any
2015-16.
27
2015-16ANNUAL REPORT 23. POLICY ON SEXUAL HARRASSMENT OF
WOMEN AT WORK PLACE
The Company has zero tolerance towards sexual harassment
at the workplace and towards this end, has adopted a policy
in line with the provisions of Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal) Act,
2013 and the Rules thereunder. All employees (permanent,
contractual, temporary, trainees) are covered under the said
policy. An Internal Complaints Committee has also been set up
to redress complaints received on sexual harassment.
its subsidiaries, based on transfer pricing methodology, for
development and enhancement of RMS products as well as
marketing of its products by the subsidiaries across locations.
The Company also had simultaneously entered into marketing
arrangements with its subsidiaries wherein there is a cross
charge done by the subsidiaries towards its efforts for the same.
The Policy on Related party transactions as approved by the
Board is uploaded on the Company’s website under the link
http://www.subex.com/corporate-governance.
None of the Directors has any pecuniary relationships of
During the financial year under review, the Company has not
transactions vis-à-vis the Company.
received any complaints of sexual harassment from any of the
women employees of the Company.
24. DECLARATION FROM INDEPENDENT
DIRECTORS
All Independent Directors have given declarations under
Section 149 (7) to the effect that they meet the criteria of
independence as laid down under Section 149(6) of the
Companies Act, 2013.
25. RELATED PARTY TRANSACTIONS
All Related party transactions that were entered into during
the financial year were on an arm’s length basis and were
in the ordinary course of business. There were no materially
significant related party transactions made by the Company
with Promoters, Directors, Key Managerial Personnel or other
designated persons which may have a potential conflict with
the interest of the Company at large.
Particulars of Contracts or Arrangements with Related parties
referred to in Section 188(1) in Form AOC- 2 is enclosed to this
report in “Annexure F”.
26. SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed the Regulators/
Courts which would impact the going concern status of the
Company and its future operations.
27. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in
form MGT 9 is annexed herewith as “Annexure D”.
28. LISTING WITH STOCK EXCHANGES
The Company confirms that it has paid the Annual Listing
Fees for the year 2015-16 to National Stock Exchange of India
Ltd. (‘NSE’) and BSE Ltd. (‘BSE’) where the Company’s shares
All related party transactions are placed before the Audit
are listed. The Company has also entered into new Listing
Committee and also the Board for approval. Prior omnibus
Agreements with BSE & NSE in Compliance with Regulation
approval of the Audit committee is obtained for transactions
109 of SEBI (LODR) Regulations, 2015
which are of a foreseen and repetitive nature. A statement
giving details of all related party transactions entered into
pursuant to the omnibus approval so granted are placed before
the Audit Committee and the Board of Directors for their review
on a quarterly basis. The Company has developed a Related
Party Transactions checklist, for identification and monitoring
of such transactions.
During the year, BSE Limited imposed a fine on the Company
under Clause 31 of the Listing Agreement for delay in submission
to the exchange, the Annual Report for 2014-15. The exchange
directed the Company to pay an amount of H 18,240/- towards
fine for late submission to conclude the issue. Except the above
neither any fine, penalty nor any stricture has been passed
by SEBI, Stock Exchanges or any other Statutory Authority on
The Company entered into sub-contracting arrangement with
matters relating to capital markets, in the last three years.
28
SUBEX LIMITED 29. DIRECTORS’ RESPONSIBILITY STATEMENT
In accordance with the provision of Section 134(3)(c) of the
Companies Act, 2013, the Board of Directors affirms:
to be followed by the Company and such internal
financial controls were adequate and were operating
effectively, subject to material weaknesses with respect to
a)
In the preparation of the annual accounts for the financial
inter-company receivables/payables;
year ended March 31, 2016, the applicable accounting
f)
That systems to ensure compliance with the provisions of
standards had been followed along with proper explanation
all applicable laws were in place and such systems were
relating to material departures;
adequate and operating effectively.
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,
2016 and of the profit/ loss of the Company for the year
ended on that date;
c) That proper and sufficient care has been taken for
the maintenance of adequate accounting records in
accordance with the provision of the Companies Act,
2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d) That the accounts for the year ended March 31, 2016 have
been prepared on a going concern basis;
e) That internal financial controls have been laid down
30. APPRECIATION/ACKNOWLEDGEMENTS
Your Directors thank the 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 under the Government
of Karnataka.
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.
For Subex Limited
Anil Singhvi
Director
DIN:00239589
Mumbai, India
August 9, 2016
Surjeet Singh
Managing Director & CEO
DIN:05278780
29
2015-16ANNUAL REPORT
Annexure - A
Additional Information as at March 31, 2016 as per Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014
Sl. No.
Particulars
ESOP 2000
ESOP 2005
ESOP 2008
1.
Net options granted as on March 31, 2016
2,37,703
1,57,418
1,30,500
Options granted during the year
-
-
-
2.
Pricing formula
3.
Options vested but not exercised as on March 31,
2016
As mentioned earlier
in the report
As mentioned earlier
in the report
As mentioned earlier
in the report
0
1,26,429
1,30,500
4.
Options exercised as on March 31, 2016
2,37,703
12,439
-
-
-
-
-
-
-
-
-
-
9,98,869
56,81,500
22,03,037
1,925
5,96,093
3,44,510
None
3
-
-
-
None
192
None
26
-
-
-
-
-
-
Options exercised during the year
5. Money realized by exercise of options during the
year
6.
7.
8.
9.
10.
The total number of shares arising as a result of
exercise of options during the year ended March
31, 2015
Options lapsed/cancelled/ surrendered as on
March 31, 2016
Options lapsed/cancelled/ surrendered during the
year
Variation of terms of options
No. of employees covered
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;
30
SUBEX LIMITED Sl. No.
Particulars
ESOP 2000
ESOP 2005
ESOP 2008
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:
13. Weighted-average exercise prices and weighted-
average fair values of options separately for options
whose exercise price either equals or exceeds or is
less than the market price of the stock. (as per note
35 of standalone financials)
14. Description of the method used during the year to
estimate 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
For Subex Limited
Anil Singhvi
Director
DIN:00239589
Mumbai, India
August 9, 2016
-
-
(4.52)
(4.52)
-
-
Weighted-average
exercise price (range)
is H Nil
Weighted-average
exercise price (range)
is H 10.26 - H 73.90
Weighted-average
exercise price (range)
is H 28.44 - H 53.54
Refer Note 35 in Standalone Financial Statements
Surjeet Singh
Managing Director & CEO
DIN:05278780
31
2015-16ANNUAL REPORT
Annexure - B
Form No. MR-3
SECRETARIAL AUDIT REPORT
[Pursuant to Sub Section (1) of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]
FOR THE FINANCIAL YEAR ENDED: MARCH 31, 2016
To,
The Members,
SUBEX LIMITED
We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate
practices by Subex Limited (hereinafter called ‘the Company’). Secretarial Audit was conducted in a manner that provided us a
reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.
Based on our verification of the Company’s Books, Papers, Minute Books, Forms and Returns filed and other Records maintained
by the Company and also the information provided by the Company, its officers, agents and authorized representatives during
the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the financial year ended on
March 31, 2016 (the audit period) complied with the statutory provisions listed hereunder and also that the Company has proper
Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company during
the audit period according to the provisions of:
(i) The Companies Act, 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct
Investment, Overseas Direct Investment and External Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (Not
Applicable to the Company during the Audit Period);
d. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.
e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;(Not Applicable to the
Company during the Audit Period);
f.
The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding
the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and (Not Applicable to the
Company during the Audit Period);
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (Not Applicable to the Company
during the Audit Period);
32
SUBEX LIMITED
(vi) Other Laws Applicable Specifically to the Company namely:
(a) Information Technology Act, 2000 and the rules made thereunder
(b) Special Economic Zones Act, 2005 and the rules made thereunder
(c) Copy Right Act, 1957
(d) The Patents Act, 1970
(e) The Trade Marks Act, 1999
We have also examined the compliance with the applicable clauses of the following:
a. Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and
General Meeting.
b. Listing Agreements (till November 30, 2015) entered into by the Company with BSE Limited and National Stock Exchange
of India Limited and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (From December 01, 2015 to March 31, 2016).
During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards,
etc. mentioned.
Without qualifying our report, we state that there was a delay of 16 days in submission of Annual Report with Form A for the
year ended March 31, 2015 to BSE and NSE under Clause 31 of the Listing Agreement and the fine of H 18,240/- was paid by the
Company to BSE in this regard.
We have not examined compliance with applicable Financial Laws, like Direct and Indirect Tax Laws, since the same have been
subject to review by statutory financial audit and other designated professionals.
WE FURTHER REPORT THAT:
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and
Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review
were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least
seven days in advance except with respect to those agenda items which the Company deemed to be unpublished price sensitive
information (UPSI), and a system exists for seeking and obtaining further information and clarifications on the agenda items before
the meeting and for meaningful participation at the meeting.
As per the minutes of the meetings duly recorded and signed by the Chairman, the decisions of the Board were unanimous and no
dissenting views have been recorded.
We further report that based on the review of the compliance mechanism adopted by the Company through providing adequate
presentations by the concerned departments’ heads regarding compliance with the applicable laws and its adherence which were
taken on record by the Board of Directors, there are adequate systems and processes in the Company commensurate with the size
and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. We
further report that during the audit period, except for the increase in authorized capital from H 497 Crores to H 547 Crores and
the limits on borrowing to the extent of H 850 Crores, both of which were approved by means of special resolutions at the Annual
General Meeting of the Company held on June 19, 2015, there was no event / action having a major bearing on the Company’s
affairs in pursuance of the above referred laws, rules, regulations, guidelines etc.,
Bengaluru
May 06, 2016
For V. SREEDHARAN & ASSOCIATES
(Pradeep B. Kulkarni)
Partner
FCS: 7260; CP No. 7835
33
2015-16ANNUAL REPORT
Annexure - C
PARTICULARS OF EMPLOYEES
Particulars
Mr. Sekharan Y Menon*
Mr. Vinod Kumar Padmanabhan
Designation of the employee
Remuneration received
Nature of employment, whether
contractual or otherwise
Qualifications and experience of the
employee
Date of commencement of employment
The age of such employee
The last employment held by such
employee before joining the Company
The percentage of equity shares held by
the employee in the Company within
the meaning of clause (iii) of sub-rule (2)
above
Whether any such employee is a relative of
any director or manager of the Company
and if so, name of such director or
manager
Chief People & Admin Officer
H 17,67,101
Permanent
PGISB
30 Yrs
Sep 1, 1996
48 Yrs
Chief Operating Officer
H 1,27,21,362
Permanent
B.Tech
26 Yrs
Oct 15, 1997
46 Yrs
Yokogawa Blue Star
Crompton Greaves
0.01%
NA
0.01%
NA
*Mr. Sekharan Y Menon resigned from the post of Chief People & Admin Officer during the year and was an employee of the
Company till the 30th of April 2015.
34
SUBEX LIMITED Annexure - D
Form No. MGT-9
EXTRACT OF ANNUAL RETURN
As on the financial year ended on 31st March 2016
[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies
(Management and Administration) Rules, 2014]
I. REGISTRATION AND OTHER DETAILS:
i)
ii)
iii)
iv)
v)
CIN:
Registration Date
Name of the Company
Category / Sub Category of the Company
Address of the Registered office and contact details
vi) Whether listed Company (Yes / No)
vii)
Name, Address and Contact details of Registrar and
Transfer Agent, if any
L85110KA1994PLC016663
6th December, 1994
Subex Limited
Company having Share Capital
RMZ Ecoworld, Outer Ring Road, Devarabisanahalli,
Bengaluru-560103
Yes
CANBANK COMPUTER SERVICES LIMITED
J P Royale,1st Floor, No.218
2nd Main, Sampige Road
(Near 14th Cross), Malleswaram
Bengaluru – 560 003
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
(All the business activities contributing 10 % or more of the total turnover of the Company shall be stated)
Sl.
No.
1.
2.
3.
4.
Name and Description of main products /services
NIC Code of the
Product/service
% to total turnover
of the Company
Implementation and customisation
Support Services
Managed Services
Sub contracting
-
-
-
-
11.90
13.05
14.29
54.98
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
Sl.
No.
Name and Address of
the Company
CIN/GLN
Holding/
Subsidiary/
Associate
1.
2.
3.
4.
5.
6.
7.
Subex Technologies
Limited
U74140KA2005PLC035905
Subsidiary
Subex Americas Inc.
Foreign Company
Subex (UK) Limited
Foreign Company
Subex Inc.
Subex (Asia Pacific)
Pte Limited
Foreign Company
Foreign Company
Subex Azure Holdings Inc. Foreign Company
Subex Middle East (FZE)
Foreign Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
% of shares held
Applicable
100
100
100
Ultimate Holding Company
Ultimate Holding Company
Ultimate Holding Company
100
Section
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
35
2015-16ANNUAL REPORT
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
Category of Shareholders
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
% of Total
Demat
Physical
Total
Shares
% of
Total
Shares
% Change
during
the year
A. Promoters
(1) Indian
a) Individual/ HUF
4,52,844
b) Central Govt.
c) State Govt(s)
d) Bodies Corp.
e) Banks / FI
f) Any Other
Sub-total (A)(1)
(2) Foreign
(a) NRIs – Individuals
(b) Other – Individuals
(c) Bodies Corp.
(d) Banks/FI
(e) Any other
Sub-total(A)(2)
-
-
5,21,200
-
-
9,74,044
-
-
-
-
-
0
Total shareholding of
9,74,044
Promoter (A) = (A)(1)+(A)(2)
B. Public Shareholding
-
3,46,001
-
-
-
78,764
94,000
-
-
5,18,765
(1) Institutions
a) Mutual Funds
b) Banks / FI
c) Central Govt.
d) State Govt(s)
e) Venture Capital Funds
f) Insurance Companies
g) FIIs
h) Foreign Venture Capital
Funds
i) Others (specify)
Sub-total (B)(1)
(2) Non-Institutions
a) Bodies Corp.
i) Indian
ii) Overseas
b) Individuals
-
-
-
-
-
-
-
-
-
-
-
-
0
-
-
-
-
-
-
-
-
-
-
-
4,52,844
1.77
4,52,844
-
-
-
-
-
-
5,21,200
2.11
5,21,200
-
-
-
-
-
-
9,74,044
3.88
9,74,044
-
-
-
-
-
0
-
-
-
-
-
0
-
-
-
-
-
0
9,74,044
3.88
9,74,044
-
-
-
3,46,001
0.19
32,74,345
-
-
-
-
-
-
-
-
-
78,764
94,000
0.05
0.06
78,764
9,75,257
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
-
-
-
-
-
-
-
-
-
-
4,52,844
0.09
-1.68
-
-
-
-
-
-
5,21,200
0.10
- 2.01
-
-
-
-
-
-
9,74,044
0.19
-3.69
-
-
-
-
-
0
-
-
-
-
-
0
-
-
-
-
-
0
9,74,044
0.19
-3.69
-
-
32,74,345
0.65
-
-
-
-
-
-
-
0.46
-
-
-
78,764
9,75,257
0.02
0.19
-0.03
0.13
-
-
-
-
-
-
5,18,765
0.11
43,28,366
43,28,366
0.86
0.75
2,05,77,369
400
2,05,76,969
12.16
9,59,94,040
400
9,59,93,640
19.09
-
-
-
-
-
-
-
-
6.93
-
i) Individual shareholders
4,35,08,106
48783
4,34,59,323
22 11,36,85,383
48883 11,36,36,500
23.78
1.78
holding nominal share capital
up to H 1 lakh
ii) Individual shareholders
4,25,16,455
-
4,25,16,455
19.20 15,94,76,335
- 15,94,76,335
23.24
4.04
holding nominal share capital
in excess of H 1 lakh
36
SUBEX LIMITED Category of Shareholders
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
% of Total
Demat
Physical
Total
Shares
% of
Total
Shares
% Change
during
the year
c) Others (specify)
Trusts
Director & their relatives
Foreign Nationals
Escrow Account
Market Maker
3,100
60,000
83,852
-
-
Non Resident Indians
21,75,289
O C Bs
Societies
Clearing Members
Shares in transit
-
-
8,12,368
-
Hindu Undivided Families
45,99,199
NRIs/OCBs
-
Foreign Corporate Bodies
6,62,17,987
Partnership Firms
Custodian of Enemy Property
Foreign Collaborators
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,100
60,000
83,852
-
-
-
2,48,600
0.04
0.06
-
-
60,000
87,352
-
-
21,75,289
0.92
68,39,809
-
-
-
-
-
-
8,12,368
0.29
79,63,057
-
-
-
45,99,199
1.76
1,75,64,643
-
-
-
6,62,17,987
38.22
9,44,12,312
-
-
-
-
-
-
-
-
-
ESOPs/ESOS/ESPS Employee
6,32,834
1670
6,31,164
0.28
9,34,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,48,600
60,000
87,352
-
-
0.05
0.01
0.02
-
-
0.05
-0.03
-0.04
-
-
68,39,809
1.36
0.44
-
-
-
-
79,63,057
1.58
-
-
1,75,64,643
3.49
-
-
-
-
1.29
-
1.73
-
9,44,12,312
18.78
-19.44
-
-
-
-
-
-
-
-
-
9,32,828
0.19
-0.09
shareholders
Sub-Total(B)(2)
18,11,35,706
50,853 18,11,86,559
94.93 41,62,02,603
50,953 41,61,51,650
98.69
-1.43
Total Public Shareholding
18,16,54,471
50,853 18,17,05,324
95.04 42,05,30,969
50,953 42,04,80,016
(B)=(B)(1)+ (B)(2)
C. Shares held by
2,43,207
-
2,43,207
1.08
2,43,207
-
2,43,207
Custodian for GDRs & ADRs
18,28,71,722
50,853 18,29,22,575
100
50,28,11,646
50,953
50,27,60,693
0.05
100
-1.03
-
Grand Total (A+B+C)
ii. Shareholding of Promoters*
Sl.
No.
1.
2.
3.
Shareholding at the beginning of the year
Shareholding at the end of the year
No. of Shares % of total
% of Shares
No. of Shares % of total
% of Shares
Shareholder’s Name
Shares of the
Pledged /
Shares of the
Pledged /
Company
encumbered
Company
encumbered
Kivar Holdings Private Limited
5,21,200
Subash Menon
Sudeesh Yezhuvath
80,601
3,72,243
0.28
0.04
0.20
5,21,200
5,21,200
80,601
80,601
3,72,243
3,72,243
0.10
0.02
0.07
to total
shares
to total
shares
5,21,200
80,601
3,72,243
% change
in share
holding
during the
year
-0.18
-0.02
-0.13
*The reduction in the percentage of shareholding of Promoters is due to the increase in the paid-up capital of the Company on the conversion of
FCCB III. During the year under review, there has not been a change in the number of shares held by the Promoters of the Company
37
2015-16ANNUAL REPORT iii. Change in Promoters’ Shareholding (please specify, if there is no change)
Sl.
No.
Shareholding at the beginning of the year
Shareholding at the end of the year
Shareholder’s name
No. of shares
% of total shares of
the Company
No. of shares
% of total shares of
the Company
1. Kivar Holdings Private Limited
2.
3.
Subash Menon
Sudeesh Yezhuvath
5,21,200
80,601
3,72,243
0.29
0.04
0.20
5,21,200
80,601
3,72,243
0.10
0.02
0.07
There is no change in shareholding as at the end of the year, the % of total shares have reduced due to increase in total
share capital of the Company.
iv. Shareholding Pattern of top ten Shareholders
(other than Directors, Promoters and holders of GDRs and ADRs):
Sl.
No.
For Each of the Top 10
Shareholders
Shareholding at the beginning
of the year
Shareholding at the end
of the year
No. of shares % of total shares
No. of shares % of total shares
1. QVT Mauritius West Fund & Quintessence
1,33,47,888
Mauritius West Fund
2. Deutsche Bank AG London-CB Account
1,08,92,721
3. Goldman Sachs Investments (Mauritius) I
0
Limited-FCCB
4. AKG Finvest Limited
5. Barclays Capital Securities Limited
6. Merrill Lynch Capital Markets Espana SA SV
7. Goenka Sec. Private Limited
8. Uno Metals Limited
9. Angel Fincap Private Limited
10. Vishanji Shamji Dedhia
7,35,940
0
1,01,92,621
0
31,00,000
7,62,680
19,00,000
of the Company
7.36
6.01
0
0.40
0
5.62
0
1.69
0.42
1.04
3,58,29,909
2,15,59,422
1,20,73,276
1,12,97,000
86,23,769
43,11,884
31,50,000
27,25,000
26,50,793
25,00,000
of the Company
7.13
4.29
2.4
2.68
1.72
0.86
0.63
0.54
0.53
0.5
v. Shareholding of Directors and Key Managerial Personnel
Sl.
No.
Shareholding at the beginning
of the year
For Each of the Directors and KMP
No. of shares
% of total
shares of the
Company
Shareholding
at the end of the year
No. of shares % of total
shares of the
Company
At the beginning of the year
Surjeet Singh
1.
2. Anil Singhvi
3.
Sanjeev Aga
4. Karthikeyan Muthuswamy (Resigned w.e.f 19/05/2015)
5.
Subash Menon (Vacated office under Section 167 (1) (b)
w.e.f 14/05/2015)
6. Nisha Dutt
7. Ganesh KV
At the End of the year
There is no change in shareholding as at the end of the
year
38
SUBEX
LIMITED
NIL
60,000
NIL
NIL
80,601
N.A
NIL
-
N.A
0.03
N.A
N.A
0.04
N.A
N.A
-
-
60,000
-
-
80,601
-
-
-
-
0.01
-
-
0.02
-
-
-
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/accrued but not due for
payment
Particulars
Secured Loans
excluding
deposits
(H In lakhs)
Unsecured Loans
(H In lakhs)
Deposits
(H In lakhs)
Total
Indebtedness
(H In lakhs)
Indebtedness at the beginning of the financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i + ii + iii)
Change in Indebtedness during the financial
year
• Reduction (In interest accrued)
• Addition/Reduction (In principal amount)
Net Change
Indebtedness at the end financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
63,462.71
1,500.08
-
8,507.14*
71,969.85
-
-
1,500.08
(7,851.97)*
(50,052.45)
(57,904.42)
-
90.12
90.12
13,410.26
1,590.20#
-
655.17*
17,079.95
-
-
1,590.20
(*The amounts are for both the Secured (FCCB’s III) & Unsecured (FCCB’s I & II) Loans).
(#The increase is due to restatement of loan)
-
-
-
-
-
-
-
-
-
-
-
64,962.79
-
8,507.14
73,469.93
(7,851.97)
(49.962.33)
(57,814.30)
15,000.46
-
655.17
5,259.89
VI. other REMUNERATION OF DIRECTORS AND MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
Sl.
No
1. Gross salary
Particulars of Remuneration
(a)Salary as per provisions contained in section 17(1) of the Income-tax Act,
1961
(b)Value of perquisites u/s 17(2) Income-tax Act, 1961
(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961
2.
3.
Stock Options
Sweat Equity
4. Commission
5 Others, please specify
- Others, specify…
Total
Ceiling as per the Act
Surjeet Singh,
Managing Director &
CEO
(In H lakhs)
16.26
Total Amount
(In H lakhs)
16.26
-
-
-
-
-
-
-
-
1.31 crores p.a as per
Section II of Part II of
Schedule V of the Act
-
-
-
-
-
-
-
16.26
1.31 Crores.
39
2015-16ANNUAL REPORT
B. Remuneration to other Directors:
Sl.
No.
Particulars of Remuneration
1.
Independent Directors
for attending board/
Fee
committee meetings
Name of Directors
Sanjeev Aga
(In H)
Anil Singhvi
(In H)
Nisha Dutt
(In H)
Priyanka Roy
(In H)
Total Amount
22,50,000
22,50,000
6,00,000
3,00,000
54,00,000
Commission
Others, please specify
-
-
-
-
-
-
-
-
-
-
Total (1)
22,50,000
22,50,000
6,00,000
3,00,000
54,00,000
Other Non-Executive Directors
N.A
N.A
for attending board/
Fee
committee meetings
Commission
Others, please specify
Total (2)
Total (B)=(1+2)
Total Managerial Remuneration
Overall Ceiling as per the Act
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,00,000
[H 1,00,000 per meeting for 24
meetings in FY 2015-16]
10,00,000
[H 1,00,000 per
meeting for 10
meetings in FY
2015-16]
3,00,000
[H 1,00,000 per
meeting for 3
meetings in FY
2015-16]
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
Sl.
No
1.
Gross salary
Particulars of Remuneration
(a)Salary as per provisions contained in section 17(1) of the Income-tax
Act, 1961
(b)Value of perquisites u/s 17(2) Income-tax Act, 1961
(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961
2.
3.
4.
Stock Options (granted)
Sweat Equity
Commission
- as % of profit
- others, specify…
5. Others, please specify (Flexible Benefit Plan)
Total (1+2+3+4+5)
Ceiling as per the Act
40
Key Managerial Personnel
Mr. Ganesh K V,
Chief Financial Officer
& Company Secretary
(In H)
66,39,666
Total Amount
(In H)
66,39,666
-
-
10,000
-
-
-
-
-
-
-
-
-
-
-
-
-
1,00,112
67,39,778/-
Not applicable
SUBEX LIMITED VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: N.A
Type
Section of the
Companies Act
Brief
Description
Details of Penalty
/ Punishment/
Compounding fees
imposed
Authority
[RD / NCLT/ COURT]
Appeal made,
if any (give Details)
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
-
-
-
-
-
-
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41
2015-16ANNUAL REPORT Annexure - E
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
A. Criteria for Appointment of Non-Executive
Directors & Independent Directors
a) The Non-Executive Directors shall be of high integrity with
relevant expertise and experience so as to have a diverse
Board with Directors having expertise in the fields of
marketing, finance, taxation, law, governance and general
management.
and Remuneration Committee
b) In case of appointment of Independent Directors, the
(“N&R
Nomination
Committee”) shall satisfy
itself with regard to the
independent nature of the Directors vis-à-vis the Company
so as to enable the Board to discharge its function and
duties effectively.
c) The N&R Committee shall ensure that the candidate
identified
is not
for appointment as a director
disqualified for appointment under Section 164 of the
Companies Act, 2013.
d) The N&R Committee shall consider the following attributes/
criteria, whilst recommending to the Board the candidature
for appointment as Non-Executive Director.
i) Qualification, experience and expertise of
Non-Executive Directors in their respective fields;
the
ii) Personal, professional or business standing;
iii) Diversity of the Board.
e) In case of re-appointment of Non-Executive Directors,
the Board shall take into consideration the performance
evaluation of the Director and his engagement level.
Remuneration of Non-Executive Directors
The Non-Executive Directors shall be entitled to receive
remuneration by way of sitting fees, profit related commission
as may be approved by the members and reimbursement of
expenses for participation in the Board/Committee meetings as
detailed hereunder:
i. A Non-Executive Director shall be entitled to receive sitting
fees for each meeting of the Board or Committee of the
Board attended by him and Commission, of such sum as
may be approved by the Board of Directors within the
overall limits prescribed under the Companies Act, 2013
and The Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014;
ii. The Independent Directors of the Company shall not be
entitled to participate in the Stock Option Scheme of the
Company, if any, introduced by the Company.
B. Criteria for Appointment of Executive
Directors
For the purpose of appointment of any Executive Director, the
N&R Committee shall identify persons of integrity who possess
relevant expertise, experience and leadership qualities required
for the position. The Committee shall also ensure that the
incumbent fulfils such other criteria with regard to age and
other qualifications as laid down under the Companies Act
2013 or other applicable laws.
Remuneration for Executive Director
i. At the time of appointment or re-appointment, the
Executive Director shall be paid such remuneration as may
be mutually agreed between the Company (which includes
the N&R Committee and the Board of Directors) and the
Executive Director within the overall limits prescribed under
the Companies Act, 2013.
ii. The Remuneration shall be subject to the approval of the
Members of the Company in General Meeting.
iii. The remuneration of the Executive Director maybe broadly
divided into fixed and variable components. The fixed
component comprises salary, allowances, perquisites,
amenities and retiral benefits. The variable component
comprises performance bonus.
iv. In determining the remuneration (including the fixed
increment and performance bonus) the N&R Committee
shall ensure/consider the following:
a. The relationship of remuneration and performance
benchmarks is clear;
b. Balance between fixed and incentive pay reflecting short
and long term performance objectives, appropriate to
the working of the Company and its goals;
c. Responsibility required to be shouldered by the Executive
Director, the industry benchmarks and the current
trends;
d. The Company’s performance vis-à-vis the annual budget
achievement and individual performance vis-à-vis the
KRAs / KPIs.
42
SUBEX LIMITED
for
Policy
Senior
(i.e. Executive Leadership
C. Remuneration
Management
Team)
In determining the remuneration of the Senior Management
Employees (Executive Leadership Team Members) the N&R
Committee shall ensure / consider the following:
i) The
relationship of
remuneration and performance
benchmark is clear;
ii) The balance between fixed and incentive pay reflecting
short and long term performance objectives, appropriate to
the working of the Company and its goals;
iii) The remuneration maybe divided into two components
viz. fixed component comprising salaries, perquisites and
retirement benefits and a variable component comprising
performance bonus;
iv) The
remuneration
including annual
increment and
performance bonus is decided based on the criticality of
the roles and responsibilities, the Company’s performance
vis-à-vis the annual budget achievement,
individuals
performance vis-à-vis KRAs/ KPIs, industry benchmark and
current compensation trend in the market.
v) The Managing Director will carry out the individual
performance review based on the standard appraisal matrix
and shall take into account the appraisal score card and
other factors mentioned herein above, whilst recommending
the annual increment and performance incentive to N&R
Committee for its review and approval.
D. Remuneration Policy for Other Employees
In determining the remuneration of the other employees the
Company the Reporting Manager shall ensure / consider the
following:
i) The
relationship of
remuneration and performance
benchmark is clear;
ii) The balance between fixed and incentive pay reflecting
short and long term performance objectives, appropriate to
the working of the Company and its goals;
iii) The remuneration maybe divided into two components
viz. fixed component comprising salaries, perquisites and
retirement benefits and a variable component comprising
performance bonus;
iv) The
remuneration
including annual
increment and
performance bonus is decided based on the criticality of
the roles and responsibilities, the Company’s performance
individuals’
vis-à-vis the annual budget achievement,
performance vis-à-vis KRAs/ KPIs, industry benchmark and
current compensation trend in the market.
v) The Reporting Manager will carry out the individual
performance review based on the standard appraisal matrix
and shall take into account the appraisal score card and other
factors mentioned herein above, whilst recommending the
annual increment and performance incentive.
Annexure - F
FORM NO. AOC.2
Form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in
sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)
Form shall be signed by the persons who have signed the Board’s report.
1
1.
2.
3.
4.
5.
6.
7.
8.
Details of contracts or arrangements or transactions not at arm’s length basis
Name(s) of the related party and nature of relationship
Nature of contracts/ arrangement/ transactions
Duration of the contracts/ arrangements/ transactions
Salient terms of the contracts or arrangements or transactions
including the value, if any
Justification for entering into such contracts or arrangements or
transactions
Date(s) of approval by the Board
Amount paid as advances, if any:
Date on which the special resolution was passed in general meeting as
required under first proviso to section 188
43
2015-16ANNUAL REPORT 2.
Details of material contracts or arrangement or transactions at arm’s length basis
(a) Name(s) of the related party and nature of relationship
(a) Subex Technologies Limited
(b) Subex (UK) Limited
(c) Subex Americas Inc.
(d) Subex (Asia Pacific) Pte Limited
(e) Subex Inc.
(f) Subex Middle East (FZE) (All the
aforementioned entities are wholly owned
subsidiaries of Subex Limited)
(b) Nature of contracts/ arrangements/ transactions
A. Sub-Contracting Transactions
Subex (UK) Limited
Subex (Asia Pacific) Pte Ltd
Subex Americas Inc.
Subex Inc.
Subex Middle East (FZE)
B. Marketing & Allied Services Expense
Transactions
Subex (UK) Limited
Subex (Asia Pacific) Pte Ltd
Subex Americas Inc.
Subex Inc.
Subex Middle East (FZE)
C. Interest Income
Subex Americas Inc.
D. Reimbursement of expenses
Subex (UK) Limited
Subex (Asia Pacific) Pte Ltd
Subex Americas Inc.
Subex Inc.
Subex Middle East (FZE)
The transactions mentioned in 2(b) above are
continuing contracts.
A. Sub-Contracting Transactions
The subsidiary transfers a portion of the revenue
generated by them to the ultimate holding
Company
B. Marketing & Allied Services Expense
Transactions
The subsidiary transfers the cost incurred in
earning the revenue to the ultimate holding
Company
C. Interest Income
The ultimate holding Company charges interest on
loan given to its subsidiaries
D. Reimbursement of expenses
Group entities incur cost on behalf of other
entities for administrative convenience, which is
then cross charged to respective entity on cost-to-
cost basis.
May 14, 2015 and February 10, 2016 (ratification)
NA
(c) Duration of the contracts/ arrangements/ transactions
(d) Salient terms of the contracts or arrangements or transactions
including the value, if any:
(e) Date(s) of approval by the Board, if any:
(f) Amount paid as advances, if any:
44
SUBEX LIMITED Annexure - G
Details / Disclosures of Ratio of Remuneration
(i) the ratio of the remuneration of each director to the median
remuneration of the employees of the Company for the financial
year;
(ii) the percentage increase in remuneration of each director,
Chief Financial Officer, Chief Executive Officer, Company Secretary
or Manager, if any, in the financial year;
(iii) the percentage increase in the median remuneration of
employees in the financial year;
(iv) the number of permanent employees on the rolls of Company;
(v) comparison of the remuneration of the Key Managerial
Personnel (KMP) against the performance of the Company;
(vi) average percentile increase already made in the salaries
of employees other than the managerial personnel in the last
financial year and its comparison with the percentile increase in
the managerial remuneration and justification thereof and point
out if there are any exceptional circumstances for increase in the
managerial remuneration;
(vii) the key parameters for any variable component of
remuneration availed by the directors;
(viii) Affirmation that the remuneration is as per the remuneration
policy of the Company.
2.56:1.00
Nil
6.97%
774
The remuneration of the KMP’s are in line with the remuneration
policy of the Company where their remuneration is determined
based on their performance which is correlated to the performance
of the Company. Further the remuneration of the KMP’s are as
per industry standards also. The comparison data is given in point
(ix) below.
The average percentile increase for employees was 6.90% while
there was no increase for managerial personnel. Variable pay
constitutes an integral part of the remuneration of mainly the
managerial personnel of the Company which is not the case for
other employees. The increase in managerial remuneration was
mainly on account of payment of variable pay which was directly
related to the performance of the individual contributing to
the performance of the Company, measured in predetermined
yardsticks.
Not Applicable
The remuneration of Directors, Senior Management and
Employees is as per the Remuneration Policy of the Company
45
2015-16ANNUAL REPORT Report on Corporate Governance
I. COMPANY’S PHILOSOPHY ON CODE OF
CORPORATE GOVERNANCE
Corporate Governance is about commitment to values and
ethical business conduct. It is about how an organization is
managed. Therefore situation, performance, ownership and
governance of the Company are equally important as regards
the structure, activities and policies of the organization.
Consequently, the organization is able to attract investors, and
enhance the trust and confidence of the stakeholders.
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
of the shareholders to information on the performance of
the Company. The Company ensures, among others, the
accountability of the Board of Directors and the importance of
its decisions to all its participants viz., customers, employees,
investors, regulatory bodies etc.
Subex Limited’s (“Subex / the Company”) compliance with the
Corporate Governance guidelines as stipulated by the stock
II. BOARD OF DIRECTORS
As on March 31, 2016, the Board of Directors of Subex Limited
exchanges and Securities and Exchange Board of India (Listing
comprises 5 directors out of which 1 is an executive director
Obligations and Disclosures Requirements) Regulations, 2015
and 4 are independent directors.
[“SEBI (LODR), Regulations, 2015”] 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.
Details of the composition of the Board of Directors and their
attendance and other particulars are given below. These details
reflect the position as at March 31, 2016 and as such do not
include details of changes in directorships after the end of the
The Company’s Corporate Governance philosophy is based on
financial year.
the following principles:
Satisfy the spirit of the law and not just the letter of the law
Be transparent and maintain high degree of disclosure levels
Communicate externally, in a truthful manner, about how
the Company is run internally
Comply with the laws in all the countries in which the
Company operates
A. Composition and Category of Directors as on March 31,
2016
Category
Independent Directors
Executive Directors
Total
No. of Directors
4
1
5
%
80.00
20.00
100.00
46
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, 2016
Director
Position
No. of
Board
Meetings
Held
No. of
Board
Meetings
Attended
Last AGM
Attended
No. Of Directorships
In Other Listed Entities
Including This Entity
(As Per Reg. 25(1) of The
SEBI (LODR) Regulations,
2015)
No. Of
Board/
Committees
In Which The
Director Is
Chairman
No. Of Board
/Committees
In Which The
Director Is
Member
Mr. Surjeet Singh Managing
Director
and Chief
Executive
Officer
Independent
Director
Independent
Director
Nominee
Director
Independent
Director
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Karthikeyan
Muthuswamy#
Ms. Nisha Dutt
Ms. Priyanka Roy* Independent
Director
7
7
7
2
7
3
5
7
7
-
4
3
Yes
N.A.
No
Yes
-
Yes
-
2
4
2
2
1
-
3
3
-
-
-
2
5
7
2
-
-
Excluding private limited companies & overseas companies.
Includes only Audit Committee and Stakeholders Relationship Committee in line with Regulation 26(1) of SEBI (LODR), 2015.
Memberships in Committees of Subex Limited are included.
# Mr. Karthikeyan Muthuswamy was nominated by the Foreign Currency Convertible Bonds (FCCB’s) Holders and resigned from
Directorship on May 19, 2015.
* Ms. Priyanka Roy was appointed by the Board of Directors as an Additional Independent Director at their meeting held on August
26, 2015.
C. Number and Dates of Board Meetings
7 (Seven) Board meetings were held during the financial year
2015-16. The dates on which meetings were held are as follows:
1. April 28, 2015
2. May 14, 2015
3. August 12, 2015
4. August 26, 2015
5. November 02, 2015
6. February 10, 2016
7. March 28, 2016
There are no inter se relationships between the Board members.
D. Details of Shareholding of Non- Executive
Directors:
In terms of Regulation 36 (3) (e) of the SEBI (LODR) Regulations,
2015, the details of shares held by Non- Executive Directors are
as under:
Name
Mr. Anil Singhvi
Mr. Sanjeev Aga
Ms. Nisha Dutt
Ms. Priyanka Roy
No. of Shares Held
as at March 31, 2016
60,000
NIL
NIL
NIL
2015-16 ANNUAL
REPORT
47
E. Familiarization Programme
Directors
for
Independent
function or discharging that function) after assessing the
qualifications, experience and background, etc. of the
Pursuant to Regulation 25(7) of the SEBI (LODR) Regulations,
2015,
the
familiarization programme aims
to provide
Independent Directors with
the
industry scenario,
the
socio-economic environment in which the Company operates,
the business model, the operational and financial performance
of the Company, significant developments so as to enable
candidate
The current charter of the Audit Committee is in line with
provisions of The Companies Act, 2013, the SEBI (LODR)
Regulations, 2015 and regulatory changes formulated by SEBI,
the Listing Agreements with the Stock Exchanges on which
Subex is listed and international best practices.
them to take well informed decisions in a timely manner. The
All members of the Audit Committee are financially literate and
familiarization programme also seeks to update the Directors
have related financial management expertise.
on the roles, responsibilities, rights and duties under The
Companies Act, 2013 and other statutes. The details of the
familiarization programme imparted to Independent Directors
during the year is available on the following link http://www.
subex.com/corporate-governance/
III. AUDIT COMMITTEE
A. Terms of Reference
The Audit Committee has, inter alia, the following mandate
as prescribed under Part C of Schedule II of The SEBI (LODR)
Regulations, 2015 and Section 177 of The Companies Act,
2013 some of which are:
B. Composition of The Committee as at March 31,
2016
Composition
Mr. Anil Singhvi (Chairman)
Mr. Sanjeev Aga
Mr. Surjeet Singh
Category
Independent Director
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.
A. Meetings and Attendance during the Year
During the financial year 2015-16, four Audit Committee
Overseeing the Company’s financial reporting process and
meetings were held on May 14, 2015, August 12, 2015,
disclosure of its financial information to ensure that the
November 02, 2015, and February 10, 2016. The results for
financial statements are correct, sufficient and credible;
the quarter and year ended March 2015, quarterly results for
Recommendation of appointment and removal of external
April-June 2015, July-September 2015 and October-December
auditor, fixation of audit fee and also approval for payment
2015 were taken on record on May 14,2015, August 12, 2015,
for any other services;
November 02, 2015, and February 10, 2016 respectively.
Reviewing, with the management, the quarterly financial
Member
statements before submission to the Board for approval;
Review of annual financial statements before submission to
the Board;
Review of adequacy of internal and operating 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;
No. of Audit
Committee
Meetings Held
No. of Audit
Committee
Meetings
Attended
4
4
3
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Surjeet Singh
4
4
4
Deloitte Haskins & Sells, Chartered Accountants have attended
the Audit Committee Meeting held on May 14, 2015.
Discussion with statutory auditors before the audit
S.R. Batliboi & Associates, LLP, Chartered Accountants, the
commences, about the nature and scope of audit as well as
statutory auditors of the Company have attended all the
post-audit discussion to ascertain any area of concern;
Audit Committee Meetings held during the year, post their
Review of
the Company’s
financial controls,
risk
appointment as Statutory Auditors.
management system and Whistle Blower mechanism
Approval of appointment of CFO (i.e., the whole-time
Finance Director or any other person heading the finance
The Internal Auditors of the Company attended the meetings of
the Audit Committee held on May 14, 2015, August 12, 2015
and November 02, 2015.
48
SUBEX
LIMITED
IV. NOMINATION AND REMUNERATION
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 part of
Remuneration Policy, the recommendation of appointment
of directors, including Managing Director and Whole Time
Director by whatever name called by the Company.
A. Composition of the Committee as at March 31,
2016.
Composition
Mr. Anil Singhvi (Chairman)
Mr. Sanjeev Aga
Ms. Nisha Dutt
Category
Independent Director
Independent Director
Independent Director
B. Details of remuneration to all the Directors paid
during the Year
per meeting for attendance in the Board Meetings/ Meetings of
other Committees of the Board.
The sitting fees payable to Directors for the Board and Audit
Committee Meetings was increased to H 1,00,000 from H
50,000 and the sitting fees payable to Directors for Meetings of
other Committees of the Board was increased to H 50,000 from
H 25,000 vide Board Resolution dated 28 April, 2015.
The Sitting fees payable to Directors for Meetings of other
Committees of the Board was further increased to H 1,00,000
from H 50,000 vide Board Resolution dated 12 August, 2015.
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
The Independent Directors are paid sitting fees of H 1,00,000
Act, 2013 and rules made thereunder.
Details of remuneration paid to the directors are as follows:
Name
Mr. Sanjeev Aga
Ms. Nisha Dutt
Mr. Anil Singhvi
Ms. Priyanka Roy
Mr. Surjeet Singh*
*Benefits Provided to Mr. Surjeet Singh:
Sitting fees
22.5
6
22.5
3
-
Salary and perquisites
-
-
-
-
16.26
(in lakhs)
Commission
-
-
-
-
-
a. Medical Reimbursement: Reimbursement of medical
e. Leave: casual/sick leave and holidays as per the policy of
expenses incurred, including premium paid on health
the Company
insurance policies, whether in India or aboard, for self and
f. Termination:
family as per the policy of the Company or as approved by
the Board of Directors .
i.
The Company or Mr. Surjeet Singh may terminate the
agreement giving either party notice in writing of 90
b.
Insurance: Personal accident insurance and Keyman or
(Ninety) days.
other insurance as per the policy of the Company or as
approved by the Board of Directors.
ii.
If the employment of Mr. Surjeet Singh is terminated
by the Company, without cause, before the expiry of
c. Taxes: All taxes, duties, levies, surcharge etc. shall be borne
1 (One) year from the Appointment Date, he shall be
solely by him.
d. Expenses: Reimbursement of all reasonable 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. He
shall be entitled to travel business class on all Company
related travel which involves travel of more than five hours
at any time.
entitled to receive from the Company, compensation,
being rupee equivalent of USD 25,000 subject to usual
statutory and other deductions.
He does not hold any stock options in the Company
A. Meetings and Attendance during the Year
During the financial year 2015-16, four Nomination and
Remuneration Committee meetings were held on May 14,
2015-16 ANNUAL
REPORT
49
2015, August 12, 2015, August 26, 2015, and February 10,
complaints and grievances. The Committee meets on a periodic
2016.
At its meeting held on 12th August, 2015, the Committee
approved the terms and conditions of the re-appointment
and remuneration of Mr. Surjeet Singh for the period from
October 5, 2015 to October 4, 2016, which was placed before
the Members for their approval at the Postal Ballot conducted
between November 9- December 8, 2015 and the same was
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 investors are provided in the
“Shareholders’ Information” section of this Annual Report.
A. Composition of The Committee as at
March 31, 2016
approved by the majority of the Members.
Composition
Category
Member
No. of
Nomination and
Remuneration
Committee
Meetings Held
Mr. Anil Singhvi
Mr. Sanjeev Aga
Ms. Nisha Dutt*
4
4
4
No. of
Nomination and
Remuneration
Committee
Meetings
Attended
4
4
1
Sanjeev Aga (Chairman)
Independent Director
Mr. Anil Singhvi
Independent Director
Mr. Surjeet Singh
Managing Director & CEO
Mr. Ganesh K V, Chief Financial Officer, Global Head- Legal and
Company Secretary is the Secretary of the Committee and the
Compliance Officer.
B. Meetings and Attendance during the Year
*Ms. Nisha Dutt was appointed as a member of the Nomination
Member
and Remuneration Committee w.e.f. May 19, 2015.
D. Performance Evaluation
Pursuant to the provisions of The Companies Act, 2013 and
Regulation 25 of the SEBI (LODR) Regulations, 2015, the
No. of
Stakeholders
Relationship
Committee
Meetings Held
Board has carried out the annual performance evaluation of
its own performance, the Directors individually as well as the
evaluation of all the Committees of the Board. A structured
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Surjeet Singh
4
4
4
No. of
Stakeholders
Relationship
Committee
Meetings
Attended
4
4
3
questionnaire was prepared after taking into consideration
inputs received from the Directors, covering various aspects of
the Board’s functioning such as adequacy of the composition
of the Board and its Committees, Board culture, execution and
performance of specific duties, obligations and governance. A
separate exercise was carried out to evaluate the performance
of individual Directors, who were evaluated on parameters
During
the
financial year 2015-16,
four Stakeholders
Relationship Committee meetings were held on May 14, 2015,
August 12, 2015, November 02, 2015, and February 10, 2016.
VI. ESOP COMMITTEE (Compensation
Committee)
The Company has instituted Employee Stock Option Schemes
such as level of engagement and contribution, independence
in line with the Securities and Exchange Board of India (Share
of judgement, safeguarding the interest of the Company and
Based Employee Benefits) Regulations, 2014. The Committee
its minority shareholders etc. The performance evaluation of
grants and administers options under the stock options schemes
the Independent Directors was carried out by the entire Board.
to eligible employees.
The performance evaluation of the Non Independent Directors
was carried out by the Independent Directors, The Directors
expressed their satisfaction with the evaluation process.
V. STAKEHOLDERS RELATIONSHIP
COMMITTEE
The Committee is responsible for addressing the investor
A. Composition of The Committee as at
March 31, 2016
Composition
Sanjeev Aga (Chairman)
Mr. Anil Singhvi
Category
Independent Director
Independent Director
50
SUBEX LIMITED B. Meetings and Attendance during the Year
The Committee administers the ESOP schemes of the Company
ongoing and new business activities it has constituted a Risk
Management Committee to review the Internal Financial
by passing resolutions by circulation whenever necessary. These
Controls amongst other matters. The said committee has also
resolutions are tabled before the Board of Directors at their
within its scope, evaluation of significant risk exposures of the
respective meetings which is noted. The committee did not
Company and to assess Management’s actions to mitigate the
meet in the financial year 2015-16.
VII. CORPORATE SOCIAL RESPONSIBILITY
(“CSR”) COMMITTEE
To enable the Company to take required measures to make a
meaningful contribution to society and other stakeholders it
has constituted the Corporate Social Responsibility Committee
exposures in a timely manner. The Company considers activities
at all levels of the organization, Enterprise level, Division level,
Business Unit level and Subsidiary level in the risk management
framework. All these components are interrelated and drive
the Enterprise Wide Risk Management with focus on three
key elements i.e. Risk Assessment, Risk Management and Risk
(“CSR Committee”). The CSR Committee has, inter alia, the
Monitoring.
following mandate:
i.
formulate and recommend to the Board of Directors of
the Company, a Corporate Social Responsibility Policy
which shall indicate the activities to be undertaken by the
Company as specified in Schedule VII of the Companies
Act, 2013
ii.
recommend the amount of expenditure to be incurred on
the activities referred to in clause (a); and
iii. monitor the Corporate Social Responsibility Policy of the
Company from time to time
A. Composition of The Committee as at
March 31, 2016
Composition
Mr. Anil Singhvi (Chairman)
Mr. Sanjeev Aga
Mr. Surjeet Singh
Category
Independent Director
Independent Director
Managing Director & CEO
A. Composition of The Committee as at March
31, 2016
Composition
Mr. Anil Singhvi (Chairman)
Mr. Sanjeev Aga
Mr. Surjeet Singh
Mr. Vinod Kumar
Padmanabhan
Category
Independent Director
Independent Director
Managing Director & CEO
Chief Operating Officer
A. Meetings and Attendance during the Year
Member
No. of Risk
Management
Committee
Meetings Held
No. of Risk
Management
Committee
Meetings
Attended
1
1
1
1
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Surjeet Singh
Mr. Vinod Kumar
1
1
1
1
B. Meetings and Attendance during the Year
Padmanabhan
Member
No. of CSR
Committee
Meetings Held
Mr. Anil Singhvi
Mr. Sanjeev Aga
Mr. Surjeet Singh
4
4
4
No. of CSR
Committee
Meetings
Attended
4
4
3
During the financial year 2015-16, one Risk Management
Committee meeting was held on February 10, 2016.
IX. INDEPENDENT DIRECTOR
During the year under review, the Independent Directors met
on February 10, 2016, inter alia, to:
Review the performance of the Non-Independent Directors
During the financial year 2015-16, four CSR Committee
and the Board of Directors as a whole;
meetings were held on May 14, 2015, August 12, 2015,
Assess the quality, quantity and timeliness of flow of
November 02, 2015, and February 10, 2016.
VIII. RISK MANAGEMENT COMMITTEE
To ensure that the Company is taking appropriate measures
to achieve prudent balance between risk and reward in both
information between the management of the listed entity
and the Board of Directors that is necessary for the Board
to effectively and reasonably perform their duties.
51
2015-16ANNUAL REPORT
X. VIGIL MECHANISM AND WHISTLE
BLOWING POLICY
With the rapid expansion of business in terms of volume, value
and geography, various risks associated with the business have
also increased considerably. One such risk identified is the risk
of fraud & misconduct. The Companies Act, 2013 and the
listing regulations/ SEBI (LODR) Regulations, 2015 requires all
the listed companies to institutionalize the vigil mechanism
and whistle blower policy. The Company since its inception
believes in honest and ethical conduct from all the employees
and others who are associated directly and indirectly with the
Company. The Audit Committee is also committed to ensure
XI. GENERAL BODY MEETINGS
A. Location and Time of the Last Three AGMs
fraud-free work environment. The policy provides a platform
to all the employees, vendors and customers to report any
suspected or confirmed incident of fraud/misconduct through
any of the following reporting protocols:
E-mail: whistleblower@subex.com
Adequate safeguards have been provided in the policy to
prevent victimization of anyone who is using this platform and
direct access to the Chairman of the Audit Committee is also
available in exceptional cases. This policy is applicable to all the
directors, employees, vendors and customers of the Company.
The policy is also posted on the website of the Company.
Year
2012-13
2013-14
2014-15
Date of AGM
August 14, 2013
August 14, 2014
June 19, 2015
Venue
Hotel Lalit Ashok, Bengaluru
Registered office
Registered office
Time
2:00 PM
1:00 PM
1.00 PM
Details of the Special Resolutions passed at the Last Three AGMs
Date of Annual General Meeting
August 14, 2013
August 14, 2014
June 19, 2015
No. of special
resolutions passed
1
3
7
Details of Resolution pertaining too
Re- 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
Re- appointment of Mr. Surjeet Singh as the Managing Director
and CEO of the Company for a period of one year from October
5, 2013 to October 4, 2014
Re-appointment of Mr. Anil Singhvi as an Independent Director
for a period of one year
Re-appointment of Mr. Sanjeev Aga as an Independent
Director for a period of one year
Re- appointment of Mr. Surjeet Singh as the Managing Director
and CEO of the Company for a period of one year from October
5, 2014 to October 4, 2015
Re-appointment of Mr. Anil Singhvi as an Independent Director
for a period of five years
Re-appointment of Mr. Sanjeev Aga as an Independent
Director for a period of five years,
Issuance of shares pursuant to reset of Conversion Price of
FCCB’s,
Increase in Authorised Share Capital of the Company
Alteration of Capital Clause contained in the Memorandum of
Association and
Approval of Borrowing limits of the Company.
52
SUBEX LIMITED A. 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
Registered office
Time
11.30 A M
11.30 A M
11.30 A M
A. Postal Ballot during year 2015-16
Pursuant to the provisions of Section 110 and other applicable provisions, if any, of The Companies Act, 2013, read with the
Companies (Management and Administration) Rules, 2014 (including any statutory modification or re-enactment thereof for the
time being in force) and pursuant to other applicable laws and regulations, the resolutions for Re-appointment of Mr. Surjeet
Singh as Managing Director and CEO of the Company and Creation of charge on the assets of the Company were passed as Special
Resolutions by the Members through physical postal ballot / electronic remote e-voting. The notice of the Postal Ballot dated
November 2, 2015 was dispatched to the members on November 6, 2015 and the Postal Ballot was held between November 09,
2015 - December 08, 2015.
The results of voting on each resolution was determined by consolidating the votes casted by the members through e- voting and
physical Postal Ballot.
Mr. Biswajit Ghosh, Partner, HBP & Co, Practicing Company Secretaries was appointed as the scrutinizer for the above mentioned
remote e-voting process and Postal Ballot submitted the consolidated voting results on the resolutions to Mr. Ganesh K V, Chief
Financial Officer, Global Head-Legal and Company Secretary declared that both the resolutions were passed with requisite majority
as stated in the table below:
Resolution
No.
Particulars
1
2
Re-appointment of Mr. Surjeet
Singh as Managing Director and
CEO of the Company
Creation of Charge on assets of
the Company
Total Number
of shares
voted
1,82,95,718
Voted in
Favour
Voted against
Percentage
(in favour)
Result
1,82,51,524
44,194
99.758
Approved
1,82,87,430
1,81,95,540
91,890
99.498
Approved
The complete results of the voting along with the scrutinizers
XIII. DISCLOSURES
report were made available on the website of the Company
www.subex.com and on the websites of BSE and NSE.
A. RELATED PARTY TRANSACTIONS
All transactions entered into with Related Parties as defined
XII. SUBSIDIARY COMPANIES
The Company has overseas material subsidiaries whose net
under The Companies Act, 2013 and Regulation 23 of the SEBI
(LODR) Regulations, 2015 during the financial year were in the
worth exceeds 20% of the consolidated net worth of the
holding Company in the immediately preceding accounting
year or has generated 20% of the consolidated income of the
Company during the previous financial year. Accordingly, a
policy on materiality of subsidiaries has been formulated. The
policy has been posted on the website of the Company under
the link www.subex.com/corporate-governance/
The Annual financial statements of material subsidiaries are
tabled before the Audit committee and Board meetings.
ordinary course of business and on an arms’ length pricing
basis and do not attract the provisions of Section 188 of The
Companies Act, 2013. There were no materially significant
transactions with related parties during the financial year which
were in conflict with the interest of the Company. Suitable
disclosure as required by the Accounting Standards (AS18) has
been made in the note 30 to the Stand Alone and Note 28 to
the Consolidated Financial Statements. The Board has approved
a policy for related party transactions which has been uploaded
on the Company’s website under the link www.subex.com/
53
2015-16ANNUAL REPORT corporate-governance/
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
None of the independent directors have any material pecuniary
relationship or transactions with its Promoters, its Directors,
of the Company and Subsidiaries. The Code lays down the
standard of conduct which is expected to be followed by
the Directors and the designated employees in their business
dealings and in particular on matters relating to integrity
in the work place, in business practices and in dealing with
stakeholders. The Code gives guidance through examples on
the expected behavior from an employee in a given situation
its senior management or its subsidiaries which may affect
and the reporting structure.
independence. The Company has received the relevant
declarations in this regard from its independent directors Mr.
Anil Singhvi, Mr. Sanjeev Aga, Ms. Nisha Dutt and Ms. Priyanka
Roy.
B. INSIDER TRADING
The Company has adopted a Code of Conduct for prevention of
Insider Trading with a view to regulate trading in securities by
the Directors and designated employees of the Company. The
code requires pre-clearance for dealing in the Company’s shares
and prohibits the purchase or sale of Company’s shares by the
Directors and the designated employees while in possession
of unpublished price sensitive information in relation to the
Company and during the period when the Trading Window
During the Financial Year under review, SEBI revised the
regulations pertaining to Prohibition of Insider Trading and
notified the Securities and Exchange Board of India (Prohibition
of Insider Trading), Regulations 2015. In accordance with the
revised regulations, the Company has, inter alia, adopted a
Code of Conduct duly approved by the Board of Directors in
its meeting held on May 14, 2015 and the Code came into
force with effect from May 15, 2015. All the members of the
Board and the Senior Management Personnel have affirmed
compliance to the Code, as at March 31st, 2016. 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. The Code has been posted on the Company’s website
is closed. The Company Secretary & Compliance officer is
www.subex.com
responsible for implementation of the Code.
C. FINES
During the year, BSE Limited imposed a fine on the Company
under Clause 31 of the Listing Agreement for delay in submission
to the exchange, the annual report for 2014-15. The exchange
directed the Company to pay an amount of H 18,240/- towards
fine for late submission to conclude the issue. Except the above
neither any fine, penalty nor any stricture has been passed
by SEBI, Stock Exchanges or any other Statutory Authority on
matters relating to capital markets, in the last three years.
D. CEO/CFO CERTIFICATION
The Company has obtained a certificate from the CEO/CFO as
required by Regulation 17 (8) (Part B of Schedule II) of the SEBI
(LODR) Regulations, 2015.
E. CODE OF CONDUCT
In compliance with Regulation 17 of the SEBI (LODR)
XIV. 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/Udayavani
(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/ SEBI (LODR) Regulations, 2015 and
updates the website periodically to include information on new
developments and business opportunities.
Being a Company with strong focus on green initiatives, Subex
proposes to send all shareholder communications such as the
notice of General Meetings, Audited Financial Statements,
Directors’ Report, Auditors’ Report, etc., as done in the past,
to shareholders in electronic form to the e-mail id provided by
them and made available to us by the Depositories. Members
Regulations, 2015, the Company has adopted a Code of
are requested to register their e-mail id with their Depository
Conduct (the ‘Code’). This Code is applicable to the Members
Participant and inform them of any changes to the same from
of the Board, Senior Management Personnel and all employees
time to time. However, Members who prefer physical copy to
54
SUBEX LIMITED be delivered may write to the Company at its registered office
qualifications and experience which would be of use to
or send an e-mail to investorrelations@subex.com by providing
the Company and which would enable them to contribute
their DP ID and Client ID as reference.
effectively to the Company in their capacity as Independent
XV. Management’s Discussion and Analysis
This has been separately dealt with in the Annual Report.
Directors.
B. Shareholders’ Rights
The Company communicates with investors regularly through
XVI. General Shareholder information
is provided
General
information
shareholder
e-mails, telephone calls and face to face meetings. The
in
the
Company publishes the quarterly financial results in leading
“Shareholder’s Information” section of the Annual Report.
business newspaper(s) as well as on the Company’s website.
XVII. Practising Company Secretaries
Certificate
This certificate with regard to compliance of conditions of
Corporate Governance as per Clause E of Schedule V of the SEBI
C. Audit Qualifications
The Auditors in their Report have commented on the “Material
Weakness” pertaining to ICFR and the delays in payment of
withholding taxes. The same has been discussed in Para 15 of
(LODR) Regulations, 2015 forms part of this Annual Report.
Board’s Report.
XVIII. Compliance with Discretionary
requirements
provided under Part E of Schedule II of the SEBI (LODR)
Regulations, 2015
Part E of Schedule II of the SEBI (LODR) Regulations, 2015 states
that the discretionary 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
D. Separate Posts of Chairperson and Chief
Executive officer
Presently the Company does not have a Chairman and as such
disclosures on maintenance of Separate Posts of Chairperson
and Chief Executive officer does not arise.
E. Reporting of Internal Auditor
The Internal Auditors report to the audit Committee of the
requirements shall be made in the section on Corporate
Governance in the annual report. The Company has complied
Board of Directors and are present as invitees at the audit
For Subex Limited
committee meetings held every quarter.
with the following non-mandatory requirements:
A. The Board
Presently the Company does not have a Chairman and as
Anil Singhvi
Director
such disclosures on maintenance of office by a Non-Executive
Chairman does not arise. The Company ensures that the
persons appointed as Independent Directors have the requisite
DIN:00239589
Mumbai, India
August 9, 2016
Surjeet Singh
Managing Director & CEO
DIN:05278780
55
2015-16ANNUAL REPORT
DECLARATION BY THE CEO UNDER CLAUSE D OF SCHEDULE V OF THE
SEBI (LODR) REGULATIONS, 2015 REGARDING
ADHERENCE TO THE CODE OF CONDUCT
To,
The Members of Subex Limited
In accordance with Clause D of Schedule V of the SEBI (LODR) Regulations, 2015, 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, 2016.
Place: Mumbai
Date: August 9, 2016
For Subex Limited
Surjeet Singh
Managing Director & CEO
DIN: 05278780
CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE
To,
Members of Subex Limited
We have examined the compliance of conditions of Corporate Governance by Subex Limited (“the Company”), for the purpose of
certifying of the Corporate Governance under Clause 49 of the Listing Agreement with the Stock Exchanges for the period from
April 01, 2015 to November 30, 2015 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 from the
period December 01, 2015 to March 31, 2016. We have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of certification.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance with the conditions of Corporate
Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has
complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement and SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015.
We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or
effectiveness with which the management has conducted the affairs of the Company.
Date:August 9, 2016
56
For HBP & Co
Company Secretaries
Pramod S M
Partner
Membership No. FCS 7834
CP No. 13784
SUBEX LIMITED
To,
The Board of Directors
Subex Limited
Dear Sirs,
CEO/CFO Certification in terms of Regulation 17 (8) of the SEBI (LODR) Regulations, 2015
In terms of Regulation 17 (8) of the SEBI (LODR) Regulations, 2015, we hereby certify to the Board of Directors that:
A) We have reviewed the financial statements and the cash flow statement of the Company for the year ended March 31, 2016
and to the best of our knowledge and belief:
i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might
be misleading;
ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with existing
accounting standards, applicable laws and regulations.
B) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are
fraudulent, illegal or violative of the Company’s Code of Conduct.
C) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated
the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to the
Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are
aware and the steps we have taken or propose to take to rectify these deficiencies.
D) We have indicated to the auditors and the Audit Committee
i)
Significant changes in internal control if any, over financial reporting during the year;
ii) Significant changes in accounting policies during the year if any, and that the same have been disclosed in the notes to the
financial statements; and
iii)
Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or
an employee having a significant role in the Company’s internal control system over financial reporting wherever needed.
Surjeet Singh
Managing Director & CEO
Date: May 24, 2016
Place: Bengaluru
Chief Financial Officer, Global Head- Legal &
Ganesh K V
Company Secretary
Date: May 24, 2016
Place: Los Angeles, USA
2015-16 ANNUAL
REPORT
57
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 BSE Limited. 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% Convertible Unsecured
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
Bonds are listed on the London Stock Exchange (LSE). The
year under review.
Company’s outstanding US$ 1,400,000 out of US$ 98,700,000
5% Convertible Unsecured Bonds and US$ 4,550,000 out of
US$ 127,721,000 5.70% Secured Convertible Bonds are listed
on the Singapore Exchange Securities Trading Limited (SGX). As
a part of the terms and conditions of US$ 127,721,000 5.70%
Secured Convertible Bonds, on July 17, 2012, principal amount
In addition to the historical information contained herein, the
following discussion may include forward looking statements
which involve risks and uncertainties, including 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 discussed in this
of US$ 36,321,000 out of US$ 127,721,000 5.70% were
report
mandatorily converted into equity shares at the conversion
price of H 22.79/-. Pursuant to the mandatory conversion
and subsequent conversion of US$ 86,850,000 currently US$
COMPANY OVERVIEW
We provide software products and related services to
4,550,000 is outstanding under US$ 127,721,000 5.70%
communications
service providers
(“CSPs”) worldwide.
Secured Convertible Bonds as of March 31, 2016. Subsequent
Generally, our revenue comes from licensing, professional
to Balance Sheet date, US$ 9,50,000 were converted to the
services related to installations and configuration activity,
date of this Report, hence pricipal amount of US$ 3,60,000 are
annual support contracts and managed services.
outstanding as of date.
Our pioneering platform, the Revenue Operations Centre
The management of Subex is committed to transparency and
(ROC®) – a centralized approach that sustains profitable
disclosure. In keeping with that commitment, we are pleased
growth and financial health of CSPs through coordinated
to disclose hereunder information about the Company, its
operational control -- brings together business intelligence,
business, operations, outlook, risks and financial condition.
domain knowledge and workflow support. ROC acts as the
The financial statements of the Company have been prepared
in compliance with the requirements of the Companies Act,
underpinning solution on which CSPs can build their processes
to achieve lower cost, higher margins and higher revenue.
2013 and the Generally Accepted Accounting Principles (GAAP)
Our product portfolio powers the ROC and includes best-in-class
in India or as per the Proposal approved by the Honourable
solutions such as revenue assurance, fraud management, asset
High Court of Judicature. The management of Subex accepts
assurance, capacity management, data integrity management,
58
SUBEX LIMITED credit risk management, cost management, route optimisation
(c) our global customer base and (d) an overview on the CSP
and partner settlement.
industry itself is discussed below.
We are proud to be recognized as a leader in our market.
Our awards have included:
2015 for Best Security/Fraud solution
Telecoms Award 2015 for Advances in B/OSS
Pipeline Innovation Award 2013 in Business Intelligence &
Analytics
Pipeline Innovation Award 2016 in Security and Assurance.
Featured by Frost and Sullivan as one of the “10 companies
to watch out for” in 2015
Carriers World Award 2015 for best Security/Fraud solution.
Capacity Magazine Best Product/ Service 2013
Global Market Share Leader in Financial Assurance 2012 by
Frost & Sullivan, the Carriers World Awards
Finance Transformation Best-In Class Financial Solutions
Services, 2016 by CIMA
OPPORTUNITIES
Addressing the challenges of the telecom industry in an effective
way paves way for encouraging opportunities for Subex.
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. Our
pioneering platform, the Revenue Operations Centre (ROC®)
brings together business intelligence, domain knowledge
and workflow support and acts as the underpinning solution
on which telcos can build their processes to achieve several
objectives like, lower cost, higher margin, higher revenue etc.
We are especially proud to have received numerous awards
jointly with our customers including being awarded the
THREATS
Dependence on core areas for a big chunk of the revenue
Global Telecoms Business Innovation Award numerous
can be seen as a threat if unaddressed. Considering the
times including:
In 2016 with BTC Botswana
In 2015 with Mobily
In 2014 with Telstra Global
In 2012 with Idea Cellular for Managed Services
In 2011 with Swisscom for Fraud Management
Our products and services have been chosen by 39 of top 50
telecom operators* and 7 of the world’s 10 largest# telecom
companies worldwide. Being truly a global Company, we have
more than 300 installations across 70 countries.
increasing saturation of markets for Revenue Assurance, Fraud
Management and Partner Settlement, it is essential to nurture
and develop other sustainable sources of revenue that address
some of the growth segments. With ROC Insights, Subex has
made its foray into the analytics market which provides a lot of
head-room for the business to grow and capitalize on the need
for business insights. In the analytics market, it is imperative
for Subex to ensure differentiation based on capabilities. In the
absence of such a differentiation, Subex may face the threat
of being seen as just another analytics player in the market.
However, with the right marketing strategy and direction,
We have a global presence, employing over 900+ people, with
this threat can be turned into a scalable opportunity by
headquarters in Bengaluru, India and offices in Singapore,
demonstrating to the market that Subex stands apart from the
Dubai, London and Denver.
*Telecom Operators 500, 2015
#The World’s Largest Telecom Companies 2015 – Forbes
rest.
OUR REVENUE MODEL
Our revenue generally comes from four streams: (1) licensing; (2)
More information on (a) our revenue model, (b) our products,
professional services related to installations and configuration
59
2015-16ANNUAL REPORT
activity; (3) annual support contracts; and (4) managed services.
our customers experience growth. Importantly, annual support
We generally license our software products on per subscriber
contract revenue tends to be recurring revenue.
or per transaction basis. This means that when our customers
Finally, we have been experiencing increasing success with
experience growth we can also expect to benefit from that
managed service revenue. Like annual support contracts,
growth. Typically, there are significant professional services
managed services provides a relatively predictable recurring
revenues associated with each new software installation as well
revenue stream. At the same time, our managed service offering
as with upgrades.
Our annual support contracts are generally priced as a function
of the total license fees paid by the customer. Thus, our annual
support contracts would also tend to experience growth when
provides us with an opportunity to maintain a continuous
touch point with the customer so we can better understand
their needs and we have opportunity to educate them on our
offerings and skills.
Revenue Composition
100
90
80
70
60
50
40
30
20
10
0
e
g
a
t
n
e
c
r
e
P
Third Party
Managed Services
Support
Customization
License & Addl. License
FY
05
5
0
18
13
64
FY
06
9
0
19
5
67
FY
07
2
9
26
6
57
FY
08
3
8
30
10
49
FY
09
1
11
25
7
56
FY
10
2
10
27
7
54
FY
11
1
14
28
3
54
FY
12
0
18
18
7
57
FY
13
0
24
31
8
37
FY
14
1
27
34
8
30
FY
15
4
34
30
7
25
FY
16
1
36
35
8
20
OUR PRODUCTS
Subex offers the Revenue Operations Centre (ROC®) Solution Suite for Business and CAPEX Optimisation, which has solutions for
Revenue Analytics- ROC Revenue Assurance, ROC Fraud Management and ROC Credit Risk Management; for Cost Analytics - ROC
Partner Settlement, ROC Route Optimisation and ROC Cost Management; and for Network Analytics- ROC Asset Assurance, ROC
Data Integrity Management and ROC Capacity Management. In addition, Subex also offers ROC Insights that provides contextual,
consumable and actionable business insights to CSPs.
All solutions come together to help CSPs prevent fraud losses, collect all revenues, reduce defaulted payments, reduce wasteful
expenditure, manage inter-carrier and partner expenses and optimise CAPEX.
The ROC enables profitable service provider growth through coordinated operational control.
For service providers that aim to optimize their operational and process infrastructure, ROC delivers Business and CAPEX Optimisation
in the most pragmatic manner.
60
SUBEX LIMITED 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.
Supports business and operational innovation programs because of its end-to-end view
Subex BSS/OSS Portfolio
R C - Revenue Operations Center
REVENUE ANALYTICS
COST ANALYTICS
NETWORK ANALYTICS
ROC Revenue Assurance
ROC Partner Settlement
ROC Asset Assurance
ROC Fraud Management
ROC Route Optimisation
ROC Data Integrity Management
ROC Credit Risk Management
ROC Cost Management
ROC Capacity Management
MANAGED SERVICES
ANALYTICS SERVICES
CONSULTING SERVICES
ROC Revenue Assurance
ROC Revenue Assurance is the telecom industry’s first revenue
assurance solution that simplifies RA. It tackles critical challenges
across the entire revenue chain with ease and offers two path
breaking concepts: Revenue Pad and Zen which simplify and
speed up the process of revenue recovery. 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
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 ROC 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
required to implement or extend the coverage of their revenue
Management is built to increased fraud prevention in the
management system and practices.
telecom industry by eliminating known frauds, uncovering new
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
fraud patterns, minimizing 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
61
2015-16ANNUAL REPORT
fraud, and uses the knowledge, thus generated, to upgrade
prudent accrual provisioning. Catering to the need for visibility
and protect against future intrusions.
of each deal’s impact on an operator’s bottom line owing to
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
shrinking margins, the solution provides strong coverage in
all areas from order to cash. It enables operators to manage
costs and revenues on interconnect and partner agreements
with domestic and international operators as well as content
partners on a day-to-day, and hour-to-hour basis.
are made easily accessible through a single window in a fast
New types of complex agreements in areas such as IP and
web-based GUI.
ROC Fraud Management’s high flexibility allows operators of
different sizes to customize rules to suit unique network and
business requirements. A configurable workflow management
tool integrates the investigation process with detection.
With Subex’s comprehensive fraud management system,
operators can detect fraud types in all telecom environments:
Wireline (PSTN, ISP, VoIP), and Wireless (2G, 2.5G, 3G);
content-based services require new system capabilities to ensure
that operators have accurate data available to assure revenues.
ROC Partner Settlement’s flexibility, scalability and ease of use
empower all types of service providers, fixed or mobile, national
incumbent or new entrant, giving them the edge needed to
prosper in today’s market.
ROC Route Optimisation
Telecom operators need to respond quickly to the abrupt and
and across all services: postpaid, Payment, VAS, MMS and
volatile changes in service provider rates in order to remain
M-commerce.
ROC Credit Risk Management
The ROC Credit Risk Management solution empowers operators
to continuously assess and mitigate risk presented by subscribers
throughout their lifecycle. It tracks risk in near real-time during:
Subscriber acquisitioning
Ongoing usage
Collections and recovery
The solution provides the operator with a holistic view that
helps in understanding subscriber risk profile and thereby aids
its management.
competitive. Subex’s ROC Route Optimization solution answers
this need, allowing subscribers to benefit from competitively
priced high quality service.
ROC Route Optimization delivers value through the following
capabilities:
Analyses 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 service
Man-Machine Language commands for switch update
information to provide an accurate picture of the exposure at
any point in time. Allowing the operator to easily, and quickly,
define various risk indicators and controls enables the solution
to adapt to local cultural and regulatory requirements. This also
enables the operator to stay agile in changing socio-economic
conditions that affect the overall 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 and automation, accurate billing and settlement and
These capabilities
round up our comprehensive
route
optimization solution, helping you derive the best breakouts
and cost routes. Our processes also enable communication
service providers to establish focused efficiency-increasing task
automation, thereby reducing data redundancies.
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
62
SUBEX LIMITED
detail records.
NETWORK ANALYTICS
It ensures the profit margins and operational agility through
reduction of service delivery costs. It is built on a highly
integrated platform using components-based technology to
provide striking performance, scalability, interoperability and
reliability.
The solution collects, collates and correlates the information
from switches, inventory, billing, partner invoices, and financial
systems to provide deeper insights about the cost aspects in an
easier to understand format through dashboards & reports. It
enhances margins by optimizing leased circuit costs, reducing
interconnect costs, assuring access costs and by automating
invoice verification process.
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 network intelligence. The components within ROC
Asset Assurance solution includes 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 (show current
states, trending, etc.), 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 program of Asset Lifecycle Management would encompass the continual monitoring and management of
lifecycles associated with the assets. The overall network asset lifecycle is pictured below:
Forcecast
Plan Budget
Purchase
Receive
Deploy
Operate
Redeploy
Retire
ERP Optimization and Focus
Technical OSS Focus
ROC Data Integrity Management
Subex is the pioneer of data integrity management, with
ROC Capacity Management
Subex’s ROC Capacity Management solution enables CSPs
over a decade of experience in data integrity transformations
to prevent an availability or performance impact on business
with the world’s leading service providers. ROC Data Integrity
critical applications due to capacity issues. It provides the critical
Management is the industry’s first Data Integrity Management
link between discovering the network ‘as-is’ and presenting the
solution for improving the quality of data that drives key
data in a normalized and appropriate format. It further engages
service provider processes, resulting in lower costs and higher
analytics functions to provide actionable intelligence and also
service profitability. ROC Data Integrity Management combines
predict scenarios and their impact on network capacity which
three powerful data integrity functions: multi-layer network
would help CSPs to plan capacity investments accordingly. It
and service discovery; data reconciliation; and discrepancy
provides a holistic view of capacity through which it helps CSPs
analytics. Leveraging inherent cross-domain intelligence and
see threshold violations on key links and resolve capacity issues
extensive reliability off-the-shelf network equipment support,
based on near real-time data.
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 Insights
Today, for Communications Service Providers (CSPs), the
volume of data required to be dealt with is enormous. Being
able to store and access such volumes of data is only part of
the problem for them. In order to effectively use the data to
improve and optimize business processes, CSPs need analytics
63
2015-16ANNUAL REPORT & insights to derive actionable intelligence out of it. There
At Subex, our Managed Services offerings are designed to
are numerous solutions that allow analysts to work on huge
drive outcome and protect revenues by enhancing customer
amounts of data and extract information. However, they are
experience. Pillared on four main aspects i.e. Cost, Quality,
limited in the sense that the information that they produce
Time-to-market and Capability, the engagement is aimed
grows linearly with data. Hence, the size of information today
to provide rapid ROI, increase efficiency and in-turn deliver
is equivalent to that of data a few years back. The key here is to
maximum value. Driven by robust technology-led capabilities,
obtain the right information just at the right time.
Subex Managed Services offers a variety of engagement models
ROC Insights is a unique approach to solving the problem with
data growth. The cornerstone of this offering is to leverage
providing complete flexibility to operators based on their
business needs.
big data and generate nuggets of information – which are
Subex Managed Services program is designed to add both
“Consumable”, “Actionable” and “Contextual”. Based on
strategic and tactical value to service providers’ operations
Subex’s two decades of B/OSS expertise, telecom domain
and enable better customer experience while also enhancing
knowledge and telecom analytics experience, the program is
their operational efficiency, service agility and profitability.
built on the pillars of “Domain”, “Analytics” and “Technology”.
With Subex at the helm of its operations, service providers can
ROC Insights helps operators extract valuable information
from data, predict and act upon irregularities, increase overall
redirect critical resources at core business functions generating
more revenue and saving costs.
efficiency and effectively monitor business changes in near-real
Subex understands that no two service provider requirements
time.
are alike and hence offers the flexibility to pick and choose
Managed Services
In an era of intensifying competition, demanding customers,
shrinking margins and near-flat top lines, it is imperative
to manage Business & Operations Support Systems (B/OSS)
effectively. Whether you are a business executive or a functional
leader, we understand your challenges related to running such
operations. There is a dearth of domain experts; Commercial-
Of-The-Shelf (COTS) software products while implemented
are not being utilized to their maximum capabilities; there is a
continuous pressure on managing with limited resources; even
though output expectations are sky high.
services based on:
Scope of Operations: Ranging from standard operations to
large scale transformational programs
BSS / OSS Domains: Drawing from Subex’s established
expertise on various BSS / OSS domains
On-Site Support: High caliber, experienced resources to ensure
functional continuity and high resource efficiency.
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
64
SUBEX LIMITED
Subex Managed Services
SMART services leveraging proven technology
• Product, Domain and Operations Capabilities
• Industry pioneering Revenue Operations
• 30+ Managed Services programs, over 20
billion CDRs processed monthly, applications
running on over 100 servers
Center (ROC*) platform
• Over 300 ROC implementations at 200+
service providers
• Regular industry forum thought leadership
• Automated workflows, future proof roadmap
engagements
SM
Subex Managed
A
Accountable
R
ROC-Enabled
T
Tailored
Services leveraging proven technology
• Stringent SLAs, innovative Risk-Reward Share
Model
• Robust processes and methodologies
• Assured migration up the maturity model
• Flexible, bespoke services based on scope
of operations, BSS 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 (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 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. Subex is recognized as the
the concept of the ROC – the Revenue Operations Center – to
enable profitable growth through coordinated operational
control. The same ROC is delivered as a service to suit the needs
of small and medium telcos in the form of ROC cloud.
OUR GLOBAL CUSTOMER BASE
Subex today serves over 300 installation spread across
70 countries. This includes 39 of the world’s 50 biggest
telecommunications service providers worldwide. A partial list
of customers is given below:
leader in the business optimization space and has pioneered
APAC – Aircel, Astro, Airtel, CAT, Celcom, DTAC, DST Brunei,
65
2015-16ANNUAL REPORT Idea Cellular, Indosat, Maxis, MTS, Optus, Packet One, PLDT,
Telecom, Avea, Azercell, Batelco, Bezeq International, BTC
Reliance Communications, Reliance Jio, Robi Axiata, Starhub,
Botswana, BT, Cell C, Colt, Coolwave, Cyta, Du, Eagle Mobile,
Tata Communications, Tata Teleservices, Telenor, Teletalk,
Econet, Elisa, Ethio Telecom, Etisalat UAE, Etisalat Nigeria,
Telstra, True Move, Telinor India, Vodafone India.
Geocell, Glo, Go Malta, Interoute, INWI, Jawwal, K Cell, Level
Americas- Alaska Communications, America Movil AT&T,
Cincinnati Bell Wireless, Comcast Cable, Claro Argentina, Claro
Brazil, Claro Colombia, Claro Dominican Republic, Claro Peru,
Claro Puerto Rico, Hawaiian Telcom, Etecsa, Entel Bolivia,
Level 3, Movistar Chile, Movistar Colombia, Millicom, Movistar
Mexico, Movistar Peru, Nextel Brazil, Nextel Chile, ICE, Telcel,
Telmex, Telus, T Mobile.
EMEA- Airtel, Almadar, AST Communications, Atalntique
3, Liberty Global, Life, Mascom, MCCI, Melita Cable, Mobily,
Moldcell, Monaco Telecom, MTN Group, Omantel, One,
Ooredoo Algerie, Ooredoo Kuwait, Ooredoo Tunisia, Ooredoo
Qatar, Orange Mali, Orascom Algeria, Paltel, Sabafon, Sonatel,
STC, Swisscom, Syriatel, Talk Talk, Tcell, Telcom Egypt, Telecom
Romania, Telefonica, Telekom, Slovenjie, Telenor, TeliaSonera,
Teio, Tunise Telecom, Turk Telecom, Ucell, Viva, Vodafone
Ireland, Vodafone Romania, Vodafone Turkey, Zain.
The chart below illustrates the geographical mix of customer base:
Geographical Mix
e
g
a
t
n
e
c
r
e
P
100
80
60
40
20
0
14
34
9
36
52
55
15
35
50
8
37
55
27
36
37
33
50
17
16
40
14
35
44
51
21
26
53
17
20
63
23
20
22
21
57
57
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
FY 12
FY 13
FY 14
FY 15
FY 16
EMEA
Americas
APAC
THE CSP INDUSTRY – the mobile market and
its outlook
A major share of the CSP industry is focused on the mobile
market and that market deserves some discussion.
At the end of 2015, there were 4.7 billion unique mobile
subscribers globally, equivalent to 63% of the world’s
population. By 2020, almost three-quarters of the global
population will have a mobile subscription, with around 1 billion
new subscribers added over the period. As discussed above, our
licensing model is tied to subscriber growth. Thus, this growth
in mobile subscribers is an opportunity for us. However,
developed markets are growing more slowly as penetration
rates approach levels close to saturation. For example, in Europe
and North America, unique subscriber growth was 1.5% and
3.0% between 2010 and 2015 respectively. At the other end
of the spectrum, Sub-Saharan Africa – still the world’s most
under-penetrated region – saw an annual subscriber growth
over the same period of more than 13%, and Asia Pacific –
the world’s largest region in terms of subscribers – grew at an
annual average of more than 10%.
66
SUBEX LIMITED UNIQUE SUBSCRIBERS
2015
4.7bn
2020
5.6bn
2015 - 2020
3.9%
CAGR
2015
63%
72%
2020
PENETRATION RATE
GLOBAL CONNECTIONS*
MOBILE OPERATOR REVENUES
2015
7.3bn
99% PENETRATION RATE
2020
8.9bn
114% PENETRATION RATE
Data growth driving revenues and
operator investments
2015
$1.1tn
$1.2tn
2020
CAGR
3.9%
2015 - 2020
OPERATOR CAPEX
OF UP TO
$900bn
FOR THE PERIOD
2015-2020
2015 - 2020
1.9%
CAGR
ACCELERATING MOVES TO MOBILE BROADBAND NETWORKS
AND SMARTPHONE ADOPTION
Mobile broadband
connections to increase from
47% of total in 2015 to
71%
by 2020
By 2020, there will be
5.8bn
smartphones, growth of
2.6bn from the end of 2015
Data traffic to grow
by a CAGR of
49%
over the period 2015-2020
67
2015-16ANNUAL REPORT Looking out to 2020, there will be a further slowdown in the
political instability in a number of markets. Coupled with the
subscriber growth rate, with an average annual growth rate
challenge of providing coverage to sparsely populated areas,
of 3.9% compared to 7.7% over the last five years. Developed
this will limit subscriber growth in developing countries for the
markets are becoming saturated, with only marginal subscriber
foreseeable future.
growth by 2020. As a result, the developed world will add only
four percentage points of penetration by the end of the decade,
reaching 88% of the population.
In developing markets, the 59% penetration rate suggests
significant room for further growth.
However, various factors will affect the rate of growth for
mobile service providers over the short to medium term. These
include challenging economic conditions, the lower income
and purchasing power of the still unconnected populations,
As a result, subscribers will grow at an annual rate of 4.5%
across the developing world in the next five years, down from
9.2% over the last five years, reaching 70% penetration.
Despite this slowing growth, the developing world will account
for more than 90% of the 1 billion incremental subscribers
expected over the next five years. We have a strong history of
operating successfully in the developing markets and we have a
good understanding of the challenges of this market allowing
uneven distribution and quality of infrastructure, and social and
us to be well positioned to grow as this market grows.
Unique subscriber penetration by region
88%
81%
88%
85%
84%
85%
72%
63%
70%
59%
77%
79%
79%
69%
74%
62%
61%
57%
52%
43%
World
Developed
Developing
Europe
CIS
Northern
Ameria
Latin
Ameria
Asia
Pacific
MENA
Sub - Saharan
Africa
2015
2020
68
SUBEX LIMITED The average revenue per user (ARPU) per month stood at
$10.25 in the year FY15, which declined by 2.3% over FY14.
Consolidation in our customer base
CSPs have gone through considerable consolidation. The
Increasing penetration among some of the world’s poorest
consolidation, or merger, of one CSP with another can have at
countries will inevitably lead to declining ARPU. This poses
least three impacts on us. Firstly, it simply reduces the overall
challenges for us for obvious reasons – any downturn in our
size of the market. Each consolidation effectively reducing
customer’s revenue can be expected to have an impact on us.
the number of potential customers for our products by one.
However, at the same time, this poses opportunities. Decreases
Secondly, it can and does happen that one of our existing
in ARPU necessarily means that CSPs must even more closely
customers can undergo a consolidation. In that event, the other
watch and control their own spending. And, products such as
party to the consolidation may have already have competing
our Asset Assurance product are designed to help CSPs lower
products and the combined Company may choose to continue
Capex expenditures helping our customer’s to control their own
with use of the competing product rather than use our product.
spend.
RISKS AND CONCERNS
As our investor, you already understand that risks are part of any
business. It is not possible to detail every risk to the business.
But, we wanted to provide some information on certain risks
including: (a) reduction in consumer and business purchasing;
(b) consolidation in our customer base; (c) dependence on
communications service providers as our sole customers; (d)
security; (e) improper disclosure of personal data could result
in liability and harm to our reputation; (f) Technology changes
Of course, it can also happen that the two companies both
use our products. While the consolidation of two customers
will not necessarily reduce our revenue by half, it certainly has
an adverse income on our revenue as the combined Company
attempts to reduce their consolidated spending. Thirdly, larger
customers simply have more negotiating power leading to
reduced prices for our products. The Company strives to have
a deep penetration within the accounts that it servesso as to
provide an edge over competitors and be a preferred choice
during such consolidations.
and obsolescence may impact our business; (g) recruiting
and retention of personnel is challenging; (h) adequately
protecting our intellectual property may not be possible; (i)
Dependence on the Communications Service Providers
as our sole customers
We mentioned above our customers are CSPs. We are fully
allegations of infringement of third party intellectual property
dependent on CSPs as our customer base. As a result, we are
poses risks; (j) variability of our quarterly operating results
fully susceptible to any downturns or negative changes in the
makes comparisons difficult; (k) non-compliance with statutory
CSP industry.
obligations may result in fines and penalties; (l) non-compliance
with environmental regulations may lead to fines and penalties;
(m) foreign exchange fluctuations may lead to variability in our
Security
You must be well aware that security threats are prevalent
revenue; (n) SEZ related taxation benefits may be uncertain; (o)
everywhere today. This is, perhaps, especially true in the
failure to fulfill contractual obligation may lead to claims; and
technology industry where we participate. The security
(p) debt obligations. Below, we will discuss each of these risk
vulnerabilities take many forms. Hackers may attempt to
factors in some more detail. There are, of course, additional
compromise computer systems and networks. Fraudsters may
risks faced by us.
attempt to steal the identity of our personnel to gain access
to our computer systems, networks and even banking systems.
Reduction in Consumer and Business Purchasing
We depend on our customers - large communication service
Terror activity could have an adverse impact on our business.
We may fail to adequately design our products leaving our
providers (“CSPs”). If our primary customers face reduced
customers exposed to hacking and other network vulnerabilities.
revenue, we will also face reduced revenue. CSPs primary
Perhaps this concern – of failure to adequately design our
customers are consumers and businesses. Of course, reductions
products leading to exposure of our customer’s information is
in spending by consumers or businesses will reduce revenue of
one of the largest concerns. If one of our customers faced a
CSPs. And, this will result in decreased spending by the CSPs
security breach allegedly as a result of use of our products, it
which means reduced revenue for us.
would cause significant reputational risk to us and may lead to
69
2015-16ANNUAL REPORT claims against us.
We devote significant resources to mitigate security threats
including threats to our internal IT systems, with respect to our
products and with respect to physical security of our buildings.
But, there cannot be any guarantee that these efforts will avoid
security breaches.
Improper disclosure of personal data could result in
liability and harm our reputation
You are probably aware of the global trend toward more
sensitivity regarding improper disclosure of personal data. This
global trend has a number of impacts on us. There are additional
While the rapid technological changes require us to change our
products, launching new products is also a key element of our
growth. An inability to bring new products with high demand
to the market in a timely manner will reduce our growth and
profitability.
We make strong efforts to put in place processes and
methodologies to address these issues and to turn it into a
strategic advantage by being in the forefront of technological
evolution. For example, regular skill upgradation programs and
training sessions that include attending global conferences,
employing specialized consultants etc. are undertaken.
laws and regulations in many jurisdictions. This not only leads
to increased administrative costs of compliance and increased
Recruiting and Retention of Personnel is challenging
Retention of personnel generally and, in particular, skilled
difficulties in doing business but violations of these laws and
software personnel is a major risk we face. To assist with our
regulations involve higher and higher fines and penalties. At
recruiting and retention efforts, we attempt to put in place an
the same time, we are storing and processing increasingly large
empowering atmosphere with opportunity for growth, extensive
amounts of personal data which leads to increased potential
mentoring and career counseling, and the opportunity to work
exposure.
We take what we consider to be appropriate steps to provide
for the security and protection of all data including personal
data. But, despite these efforts, it is possible our practices may
not prevent the improper disclosure of personal data. Improper
disclosure of this information could harm our reputation, lead
to legal exposure, lead to claims against us by customers
including claims for indemnification or subject us to liability
under laws that protect personal data, resulting in increased
costs or loss of revenue.
in cutting edge and challenging technologies. Nonetheless,
a competitive environment for personnel with the skills we
require poses risks and challenges.
Adequately Protecting Our Intellectual Property may
not be possible
We operate in a global environment; protecting our proprietary
technology in the many different jurisdictions we operate
in is challenging. We depend on a combination of technical
innovations, as well as copyrights and trade secrets for
protection of our technology. We also maintain patent and
It is important to note that our potential liability for customer
trademark protection as we deem appropriate. But, some
financial damages associated with losses of personal data
jurisdictions have limited laws protecting technologies. Other
is generally not limited by limitation of liability provisions in
jurisdictions, even if they have laws, have limited or difficult
customer contracts.
Technology changes and obsolescence may impact
our business
We experience rapid technological changes which could make
our technology and services obsolete, less marketable or less
competitive. These changes result in our need to continually
improve the features, functionality, reliability and capability
of our products which poses development challenges and
expenses. We may not be able to adapt to these changes
successfully or in a cost-effective way which may adversely
affect our ability to compete and retain customers or market
share.
70
enforcement systems. And, even in jurisdictions with adequate
laws and enforcement systems, detection of infringement of
our rights may be difficult and, even if detected, engaging in
litigation to enforce our rights would be expensive.
Departure of our personnel, especially to a competitor, is a
particular risk to our technology and intellectual property
rights. We generally require all employees and advisors to sign
agreements which require our information is maintained as
confidential during and after employment. These agreements
also assign or otherwise vest rights in the intellectual property
developed by these employees and advisors in the Company.
Even so, these agreements may not effectively prevent
SUBEX LIMITED disclosure of our information or effectively assign rights to
to our customers could have a material adverse effect on our
us. Further, detection of violation of these agreements may
business, financial condition and results of operations.
be difficult and it may be difficult to enforce these agreements
even when violations are detected. You will understand that
any exposure of our information by former employees or any
failure to adequately have rights assigned to us, may have a
material adverse effect on our business, financial condition and
results of operations.
Allegations of Infringement of Third Party Intellectual
Property Poses Risks
We may face claims by third parties that our products infringe
Variability of Our Quarterly Operating Results Makes
Comparisons Difficult
Our quarterly operating results 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
on their intellectual property rights. Whether or not we prevail
performance. Our management is attempting to mitigate
in any intellectual property dispute, defending the dispute may
this risk through expansion of our client base geographically
be expensive, it may distract our management and other key
and increasing steady annuity revenue such as through
personnel and its outcome is uncertain. Further, if any of our
managed services.
products are found to infringe the intellectual property rights
of others, or if we settle a claim in an adverse manner, it may
restrict or prohibit further development, manufacture and sale
of our products. And, a loss or adverse settlement may require
us to pay substantial damages. We may also be forced to seek
licences to continue to use the intellectual property. These
licences may not be available on commercially acceptable terms
or at all.
Furthermore, we are required to indemnify our customers
against third-party claims of infringement of intellectual
property arising out of customers’ use of our products and
services. Typically, our liability for such indemnification is not
limited by limitation of liability provisions in customer contracts.
Further, we are often in possession of proprietary information
of our customers. This information may be wrongly used or
disclosed or may be misappropriated by employees of the
Non-compliance with Statutory Obligations May
Result in Fines and Penalties
We face certain statutory obligations. Some of these obligation
arise from the fact that we have registered with Special Economic
Zone for software development activities and have availed
Customs Duties, Sales Tax and Central Excise exemptions. The
non-fulfillment of export obligations or other non-compliance
with statutory obligations may result in penalties as stipulated
by the Government and this may have an impact on future
profitability. The company has team of in house attorneys &
engages outside counsel/consultants on an as needed basis
from India & the U.S. An ongoing monitoring mechanism has
been established with respect to applicable taws.
Non-compliance with Environmental Regulations may
lead to fines and Penalties
Company or others. This would result in a breach of our
Software development, being generally a pollution free
contractual obligations to our customers. Any such breach
industry, means we are not subject to significant environmental
may subject us to a significant claim from the customer for
regulations. Nonetheless, non-compliance with applicable
damages and may also significantly damage our reputation.
environment regulations may lead to significant fines and
The company has consistent program of requiring NDAs before
disclosure of company trade secrets/confidential information to
third parties. Employees must sign confidentiality terms as part
of employment.
Allegations of infringement of third party intellectual property
penalties. We do adhere to the guidelines for disposing of
E-wastes as stipulated by the E-Waste (Management and
Handling) Rules.
Foreign Exchange Fluctuations May Lead to Variability
in Our Revenue
rights, against us or our customers with respect to our products,
We have substantial exposure to foreign exchange related
or any allegation of breach of our confidentiality obligations
risks on account of revenue from export of software and
71
2015-16ANNUAL REPORT outstanding liabilities. There is a natural hedge to the extent
*FCCB III:
of expense incurred in same currency. Despite this, particularly
US$ 4,550,000 is outstanding as on March 31, 2016.
given the volatility in the foreign exchange market, there could
US$ 950,000 were converted between April 1, 2016 to date of
be significant variations.
this Report. Hence principal amount of US$ 3,600,000 of FCCB
III are outstanding as on the date of this report. More details on
SEZ Related Taxation Benefits May be Uncertain
FCCB is available in Board Report.
Consequent to the end of STPI related tax benefits for us, we
are now situated at 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.
Failure to Fulfill Contractual Obligation May Lead to
Claims
We enter into contracts with our customers in the ordinary
course of business under which we are obligated to perform
and act according to the contractual terms. Any failure to
fulfill these contractual obligations may expose us to financial,
reputational and other risks.
Our management believes it has taken sufficient measures
to assure it meets its customer contractual obligations.
Nonetheless, there cannot be any assurance that a customer
will not allege a breach by us of our obligations.
Debt Obligations
As on March 31, 2016, the Company had outstanding FCCBs
aggregating to:
US$ 1,000,000 under its US$ 180,000,000 2% convertible
unsecured bonds (“FCCBs I”)
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.
Pursuant to Regulation 17 (8) of the SEBI (LODR) Regulations
(as stated in Part B of Schedule II), the CEO/CFO has to
accept responsibility for establishing and maintaining 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 from time to time and control
deficiencies, if any, identified during the assessments are
addressed appropriately.
US$ 1,400,000 under its US$ 98,700,000 5% Convertible
Further, it is believed that the controls are largely operating
Unsecured Bonds (“FCCBs II”)
effectively since there has not been any identification of any
US$ 4,550,000 under its US$ 127,721,000 5.70% secured
major material weakness in the Company.
convertible bonds (“FCCBs III”)*
72
SUBEX LIMITED DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Key Financials and Ratio Analysis
Financial Highlights / Year ending 31st
2016
2015
2014
March
Total income:
-(Continuing Operations)
-(Discontinuing Operations)
Consolidated
Stand-Alone Consolidated
Stand-Alone Consolidated
Stand-Alone
32,451.82
29,666.13
36,068.93
30,615.84
34,449.28
29,669.48
32,451.82
-
-
-
36,068.93
-
-
-
34,449.28
-
-
-
Operating Profits (EBITDA) before
6,537.76
4,716.39
8,100.86
2570.76
6,549.62
4,377.98
Exceptional items:
-(Continuing Operations)
-(Discontinuing Operations)
Depreciation & Amortization
-(Continuing Operations)
-(Discontinuing Operations)
6,542.25
(4.49)
427.49
427.49
-
-
-
8,575.04
(474.18)
-
-
6,771.84
-
(216.70)
(222.22)
263.46
-
-
402.04
402.04
-
258.54
-
-
248.18
244.18
4.16
161.31
-
-
Profit/(Loss) before tax & after Exceptional
7,145.56
(12,661.06)
1,599.41
(2,685.10)
(216.45)
(2,806.31)
items:
-(Continuing Operations)
-(Discontinuing Operations)
7,150.79
(5.23)
-
-
2,073.59
(474.18)
-
-
262.26
(478.71)
-
-
Profit/(Loss) after tax & Exceptional items:
5,872.49
(13,195.44)
1,021.45
(2,840.01)
(1161.27)
(2,952.88)
-(Continuing Operations)
-(Discontinuing Operations)
Equity Dividend %
Share Capital
Reserves & Surplus
Net Worth
Gross fixed Assets
Net Fixed Assets
Total Assets
Key Indicators
5,874.82
(2.33)
NIL
-
-
NIL
1,501.25
(479.80)
NIL
-
-
NIL
(674.12)
(487.15)
NIL
-
-
NIL
50,281.16
50,281.16
18,292.26
18,292.26
16,664.00
16,664.00
22,418.77
13,203.84
2,611.76
10,600.48
697.90
10,719.72
72,699.93
63,485.00
20,904.02
28,892.74
17,361.90
27,383.72
7,284.82
6,900.35
8,296.39
7,469.02
9,625.76
7,166.04
729.59
402.57
817.85
550.18
597.83
316.50
104,300.29
127,616.91
113,379.78
151,515.33
109,259.59
155,730.84
Earning per Share (Year end)
2.02
(4.54)
Cash Earning per Share (Year end)
Book value per Share
-
-
-
-
Debt (including Working capital) Equity
0.47
0.31
0.59
4.74
12.18
3.47
Ratio
EBITDA / Sales - %
Net Profit Margin - %
Return on year end Net Worth %
Return on year end Capital Employed %
20.23%
18.10%
8.08%
7.62%
15.92%
23.59%
(44.48)%
(20.79%)
(19.84%)
2.84%
4.89%
1.09%
(1.65)
2.80
16.83
2.25
8.07%
(9.29%)
(9.83%)
(3.03%)
(0.70)
3.65
10.42
4.39
19.91%
(3.41%)
(6.69%)
(1.24%)
(1.77)
2.20
16.43
2.52
14.91%
(10.06%)
(10.78%)
(3.06%)
73
2015-16ANNUAL REPORT COMMENTARY ON FINANCIAL STATEMENTS
Share Capital
Consultants, an entity belonging to Promoters/Promoter group,
at H80/- per share.
Of the equity paid-up capital, the Company had issued the
following shares towards consideration other than cash.
During 2009-10, the Company issued 1,91,33,637 equity
shares allotted upon conversion of FCCBs aggregating to
1,15,000 shares of H10/- each, towards the balances in the
principal amount of US$ 31,900,000 out of its US$ 98,700,000
current account of partners, Mr. Subash Menon and Mr.
5% Convertible Unsecured Bonds, in accordance with the terms
Alex J. Puthenchira, on the takeover of Subex Systems, a
and conditions thereof.
partnership firm, by the Company during 1993-94.
46,26,940 Shares of H10/- each to all eligible shareholders
During 2010-11, the Company issued 41,24,254 equity shares
of H10/- each, on a preferential basis, to M/s KBC Aldini Capital
as on March 31, 1999 in the ratio of 1:1 by capitalizing the
Mauritius Limited, at C81/- per share.
General Reserves.
During 2010-11, the Company issued 71,97,607 equity shares
12,840 shares of H10/- each to the erstwhile owners of
allotted upon conversion of FCCBs aggregating to principal
M/s. IVth Generation Inc., towards part consideration of
the cost of acquisition of that Company at H1,023/- per
amount of US$ 12,000,000 out of its US$ 98,700,000 5%
Convertible Unsecured Bonds, in accordance with the terms
share during 1999-2000.
and conditions thereof.
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.
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
11,09,878 Shares of H10/- each to the GDR holders as on
exercise of Stock Options.
April 7, 2006 at C400/-.
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
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.
There are no calls in arrears.
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).
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
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).
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.
During 2009-10, the Company issued 40,00,000 equity shares
of H10/- each, on a preferential basis, to M/s Woodbridge
thereof.
During 2014-15, the Company issued 1,62,82,615 equity
shares allotted upon conversion of FCCBs to principal amount
of US$ 6,620,000, out of its US$ 127,721,000 5.70% Secured
Convertible Bonds, in accordance with the terms and conditions
thereof.
During 2015-16, the Company issued 319,889,071 equity
shares allotted upon conversion of FCCBs to principal amount
of USD 76,980,000 5.70% Secured Convertible bonds, in
accordance with the terms and conditions thereof.
74
SUBEX LIMITED Reserves And Surplus
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.
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 .
During the year 2011-12, the balance in capital reserve of
H346.70 Lakhs was transferred to Business restructuring reserve.
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 Schedule III of
the Act.
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 Schedule III of
the Act.
During the year 2014-15, the balance of Foreign Currency
Translation Reserve of H5,111.22 Lakhs has been included in
the Reserves and Surplus to bring it in line with Schedule III of
the Act.
During the year 2015-16, the balance of Foreign Currency
Translation Reserve of H376.63 lakhs has been included in the
Reserves and Surplus to bring it in line with Schedule III of the
Act.
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.
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.
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
18,87,000 equity shares issued at a premium of H88/- per
consolidated basis.
75
2015-16ANNUAL REPORT 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 utilised 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.
Long Term Borrowings (including current
maturities)
On a consolidated basis and standalone basis:
a. H 662.58 lakhs (Previous Year: H 625.03 lakhs) relating to
Foreign Currency Convertible Bonds issued in fiscal 2006-
07 “FCCB I”. The bonds carry interest of 2% per annum
and are redeemable on March 9, 2017, (the same was
considered under long term borrowings in previous year).
These bonds are listed in the Professional Securities Market
of London Stock Exchange. The premium payable on these
bonds has been accrued and is carried under Current
Liabilities.
b. H 927.62 lakhs (Previous Year: H 875.05 lakhs) relating
to Foreign Currency Convertible Bonds issued in fiscal
2009-10 “FCCB II” as a result of restructuring existing
bonds mentioned in (a) above (the same was considered
under long term borrowings in previous year). 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 premium payable
During 2013-14, H80.63 Lakhs was utilized from BRR
on these bonds has been accrued and is carried under
for making provisions for doubtful debts. The balance in
Business Restructuring Reserve as of March 31, 2014 is H
Nil Lakhs on consolidated basis.
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 the excess
of market price of the underlying equity shares as on the date of
the grant of the option over the exercise price of the option, to
be adjusted over the period of vesting. The net amount carried
in respect of stock options outstanding at March 31, 2015
amounts to H16.30 Lakhs (Previous Year: H78.10 Lakhs).
Short Term Borrowings
On Consolidated & Standalone basis, the Short term borrowings
of H 10,395.74 lakhs (Previous Year: H 12,506.54 lakhs) &
H 10,395.74 lakhs (Previous Year: H 12,506.54 lakhs) respectively
outstanding in the books as at March 31, 2016. Further details
are available in schedule 8 of Notes to financial statements.
Current Liabilities.
c. H 3,014.52 lakhs (Previous Year: H 50,956.17 lakhs)
relating to Foreign Currency Convertible Bonds issued
in fiscal 2012-13 “FCCB III” 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.
c. On consolidated basis, loan taken by Subex Americas Inc.
of H 7,950.5 lakhs (Previous Year: H 7,500 lakhs) guaranteed
by Subex UK Limited.
Fixed Assets
During the year, the Company added H 326.06 lakhs on
consolidated basis and H 117.87 lakhs on standalone basis, to
its gross block. The Company disposed off certain assets no
longer required. The Company’s net block of fixed assets was H
729.59 lakhs (Previous year H 817.85 lakhs) on consolidated basis
and H 402.57 lakhs (Previous year H 550.18 lakhs) on
standalone basis.
76
SUBEX LIMITED 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 subsidiary of
the Company, has been renamed as “Subex 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 H 31,00,00,000. 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 H 3,00,00,000 in settlement of the consideration with the
balance H 28,00,00,000 being treated as unsecured loan taken
by the subsidiary from the Company.
On June 23, 2006, the Company acquired the entire
shareholding of Azure Solutions Ltd, UK. The consideration was
discharged by issue of 1,17,28,728 GDRs each representing one
equity share of H 10/- at a premium of H 522.24 per share and
cash of H 2,145.70 Lakh. As on March 31, 2016, the number of
outstanding GDR’s are 243,207.
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.
During the year 2009-10, the Company recognized an amount
of H 50,000 Lakh as diminution in carrying value of investments
in Subex Americas Inc. Consequently, the investment carrying
value as of March 31, 2010 is H 27,495.70 Lakh.
During the year 2010-11, the Company recognized an amount
of H 15,000 Lakh as diminution in carrying value of investments
in Subex Americas Inc. Consequently, the investment carrying
value as of March 31, 2011 is H 12,495.70 Lakh.
During the year 2010-11, the Company recognized an amount
of H 400 lakh as diminution in carrying value of investments in
Subex Technologies Ltd. Consequently, the investment carrying
value as of March 31, 2011 is H Nil.
During the year 2015-16, the Company recognized an amount
of H 5,490 lakhs as diminution in carrying value of investments
in Subex Americas Inc. Consequently, the investment carrying
value as of March 31, 2016 is H 7,005.74 lakhs.
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.
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.
77
2015-16ANNUAL REPORT The age profile on consolidated basis is as given below:
Period in days
Less than 180 days
More than 180 days
Total
31-Mar-16
Amount in H lakhs
31-Mar-15
Value
%
Value
%
7,913.52
70.99
10,365.11
95.44
3,234.63
29.01
494.77
4.56
11,148.15
100.00
10,859.88
100.00
The age profile on standalone basis is as given below:
Amount in H lakhs
Period in days
Less than 180 days
More than 180 days
Total
31-Mar-16
31-Mar-15
Value
%
Value
%
14,162.30
35,539.12
28.49
71.51
15,523.97
36,701.22
29.73
70.27
49,701.42
100.00
52,225.19
100.00
The management believes that the overall composition and condition of sundry debtors is satisfactory post assessment of doubtful
receivables. The provision for doubtful debts stands at H 2,956.13 lakhs (Previous Year H 5,317.63 lakhs) on consolidated basis
and H 14,202.68 lakhs (Previous Year H 7,288.74 lakhs) on standalone basis. With respect to old receivables and payables due for
over three years the Company has taken adequate measures to write-off, create provision and have approached the regulatory
authorities for netting-off the trade payables/receivables.
Cash and Cash Equivalents
The bank balances includes both rupee accounts and foreign currency accounts. The Margin Money deposit of H 59.31 lakhs
(Previous Year: H 15.65 lakhs) on Standalone basis and H237.67 lakhs (Previous Year: H 751.92 lakhs) on consolidated basis with
the bankers is for establishing bank guarantee.
Long-terms Loans and Advances
Security Deposits represent rent deposit, electricity deposit, telephone deposits and advances of like nature.
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.
Loans due from Group Companies* (Standalone basis)
Amount in H lakhs
Particulars
2015-16
2014-15
Subex (UK) Limited
Subex (Asia Pacific) Pte Ltd
Subex Americas Inc.
Subex Inc.
Subex Technologies Ltd
Net of Provisions
-
-
-
-
-
-
1,844.20
-
5.70
78
SUBEX LIMITED Statement of Profit & Loss
Income
The segment wise break up of income on consolidated basis is given below:
Amount in H lakhs except percentages
Particulars
Software Products
Software Services
Total
Geographically, the Company earns income from export of
software products and related services to USA, EMEA & Asia
Pacific region.
Other Income
Other income consists of income derived by the Company from
event registration fees, interest on deposits from banks, interest
on Inter Company Loans.
Expenditure
The employee benefits expenses increased to H 17,624.83 lakhs
(Previous year: H 16,289.17 lakhs) on consolidated basis and
increased to H 8,041.44 lakhs (Previous year: H 7,405.82 lakhs)
on standalone basis.
The Company incurred administration and other expenses
excluding employee benefit expenses at 25.4% of its total
2015-16
2014-15
Value
%
Value
%
3,117.51
29,217.96
9.64
5,858.73
90.36
30,124.58
16.28
83.72
32,335.47
100.00
35,983.31
100.00
(Previous year: H 6103.99 lakhs) on consolidated basis and
H 3,594.04 lakhs (Previous year: H 5,171.48 lakhs) on standalone
basis. The interest paid/accrued is related to working capital
loan including interest on FCCBs amounting to H 2,276.33 lakhs
(Previous Year: H 3,352.21 lakhs).
Depreciation
The provision for depreciation for the year amounted to
H 427.49 lakhs (Previous year: H 402.04 lakhs) on consolidated
basis and H 263.46 lakhs (Previous year: H 258.54 lakhs) on
standalone basis.
The intangible assets of the Company on standalone basis
i.e. IPRs and goodwill are being depreciated over 5 years in
accordance with the Company’s assessment of useful life
thereof. The asset has been fully depreciated.
Income during the year as compared to 26.54% during the
previous year on consolidated basis and 56.55% of its total
Provision for Tax
The Company has provided for its tax liability in India and
income during the year as compared to 62.41% during the
overseas after considering the exemptions for income from
previous year on a standalone basis.
software services and products under the various applicable tax
Operating Profits
During the year, on consolidated basis, the Company earned
an Operating Profit/(Loss) before Interest, depreciation, tax and
exceptional items of H 6,542.25 lakhs being 20.23% of total
revenue (Excluding other income) as against H 8,575.04 lakhs
at 23.83 % during the previous year. On a standalone basis,
the Company earned Operating Profit/(Loss) before Interest,
depreciation, tax and exceptional items of H 4,716.39 lakhs
being 15.92% of total income as against H 2,570.76 lakhs at
8.41 % during the previous year.
Interest & Bank Charges
The Company incurred an expenditure of H 4643.10 lakhs
enactments.
Net Profit
On consolidated basis, the net profit of the Company amounted
to Profit of H 5,872.49 lakhs, as against a profit of H 1,021.45
lakhs during the previous year. On standalone basis, the net
profit of the Company amounted to loss of H 13,195.44 lakhs
as against a loss of H 2,840.01 lakhs during the previous year.
Exceptional Item
The Company at a consolidated basis, has shown an income of
H 5,674.85 lakhs for the year as Exceptional Item. It comprises
of H 12,574.73 lakhs credit on account of reversal of interest
and related foreign exchange on FCCBs and a credit of
79
2015-16ANNUAL REPORT H 1,970.12 lakhs on account of reversal of interest due on other
loans as reduced by H 8,870 lakhs debit towards impairment of
goodwill on evaluation.
recruitment, total rewards management, talent management,
organizational development, performance management,
change management, learning and development, etc.
At a standalone basis, it has however incurred an expenditure
of H 13,712.50 lakhs mainly due to a debit of H 20,797.32 lakhs
towards provisioning/write-off of inter-company receivables
as well as a debit of H 5,490.00 lakhs on account of an
impairment to the Investment in subsidiary as reduced by a gain
of H 12,574.73 lakhs towards reversal of interest and related
foreign exchange on FCCBs.
Earnings per Share
Basic Earnings/(Loss) per share computed on the basis of
number of common stock outstanding, as on the Balance Sheet
date is of H 2.02 per share (Previous year: H 0.59 per share) on
consolidated basis and loss of H (4.54) per share (Previous year:
H (1.65) 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 Bengaluru, London, Denver, Dubai and
In Subex, we firmly believe that people, when motivated are the
true drivers behind Organizational success. It is important to
create an enjoyable work environment to keep them engaged
and happy. We have reviewed and redefined the HR policies
like work from home, sabbatical, continuous learning and
certification to make it more employee friendly. We have also
introduced special leave policies for our lady employees to be
availed during their maternity period. We have introduced
various other initiatives like fun at work, connect sessions to
understand their personal goals. As a result we have seen our
attrition come down to around 16.7% from 20.6% last year.
The adverse effects on forests, pollution, resultant chemical
elements in the atmosphere have all contributed to global
warming and is harming the environment. As a socially
responsible corporate entity we want to safeguard and protect
our environment. We have initiated some go-green programs.
This varies from encouraging carpooling to handing over
saplings to our new joiners.
Recruitment
During the year, the recruitment team had to execute a well
thought out manpower planning and analysis exercise and adopt
global recruitment best practices to fulfil the organization’s
talent requirements. In addition to the well established
processes like “Coffee with the Hiring Manager”, “Post- offer
feedback”, Subexian referral program, partner feedback,
interviewer feedback, Buddy Programme etc., which are already
entrenched in the Subex way of adding talent to our team, the
Singapore. As of March 31, 2016, we had 900+. Subexians on
focus this year was on optimizing the overall recruitment cost
our rolls globally.
by adopting innovative recruitment approaches.
Human Resources at Subex is centralized at our corporate
The main sources for hires were referrals from Subexians (the best
headquarters in Bengaluru, with regional HR teams providing
bring the best!), direct search, campus recruitments, website
local support aligned to the global HR strategy. The HR team
postings and walk-ins. We explored innovative processes on
provides a competitive edge to the business by enabling and
the campus recruitment side, where we introduced a process
supporting a very unique business model of value based delivery,
of “hiring for learnability”. This process, we believe, will add
processes and programs on global product development and
scalability to our model while continuing to give us great
delivery capabilities on one hand and complex distributed
technical talent like we have had before.
managed services delivery 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
One of the key focus areas that your Company has set, in the
previous year, of adding the capability of doing “just-in-time”
80
SUBEX LIMITED 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.
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 your current job really well.
Keeping the dynamism in the market and the business needs
Lead Competencies focus on the future needs and are the skills
we have also started a program of proactively hiring fresh
required to succeed in leadership roles. Technical Competencies
graduates and junior resources who will go through our
take care of the core areas of the role - knowledge about
comprehensive training programs to be business ready.
Induction and Training
Welcoming new Subexians into our fold continues to be
extremely critical for us. We believe that the quality of induction
that new hires go through determines how successful they are
in the Company and has a huge impact on retention. We have
customized the induction based on the role and function that
new Subexians join in. This has resulted in having more targeted
induction, yielding greater benefits.
our products, the various technologies and domains. These,
along with the KRAs help build and reinforce the performance
oriented culture at Subex.
Productivity and a high performance culture are the games
of today’s corporates. It is important to equip the employees
with right set of tools to help drive the performance culture. In
line with this thought we have migrated to Enterprise solution
(Success Factors) for conducting performance management.
This helps us adopt some of the best practices from the industry
while being flexible to customize the systems as per our internal
On the learning and development side, the focus this year
need. We believe constant coaching and feedback would help
was to customize the training programs to the individual
in maximizing the potentials of the individuals and prepare
business need. A Training Need Analysis was done for each
them for the future.
business unit to align the need to the goals. A competency
matrix of employees is being implemented with the aim
of improving the efficiency through personalized skill and
knowledge development. Subex Academy is a Global Learning
and Development Platform (supporting instructor led training,
Compensation
Compensation at Subex is multi-dimensional and consists
of fixed salary, variable salary, benefits, health and disability
insurance, etc.
on the job learning, as well as e-learning) that enable a role
The Company benchmarks its compensation package against
based curriculum led approach to learning, while streamlining
industry data and strives to achieve a balanced position.
the training process as well as ensuring global reach and
The Company provides robust and comprehensive cash
appropriateness of content. This automated platform added
compensation and benefits as per industry trends. We also arrive
significant value to training identification, design, delivery and
evaluation. L&D Organization delivered 63 different training
programmes in this financial year. All of these sessions were
well received and rated high by Subexians. This process is
at the salary bands of Subexians by conducting comprehensive
job matching, data validation and quality audits.
Your Company focuses a lot on Employee reward and recognition
programme, as this is another important motivational aspect.
expected to improve the retention of talent as well as overall
We have consistently recognized 48% Subexians globally for
skill and knowledge level of Subexians.
their contributions and deliverables through our Rewards and
Recognition Programme “STAR”. This translates to a significant
Subexians receiving awards which are monetary.
81
2015-16ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
To the Members of Subex Limited
Report on the Financial Statements
We have audited the accompanying standalone financial
statements of Subex Limited (“the Company”), which comprise
the Balance Sheet as at March 31, 2016, the Statement of Profit
and Loss and Cash Flow Statement for the year then ended,
and a summary of significant accounting policies and other
explanatory information.
Management’s Responsibility for the Financial Statements
The Company’s Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 (“the Act”)
with respect to the preparation of these standalone financial
statements that give a true and fair view of the financial
position, financial performance and cash flows of the Company
in accordance with accounting principles generally accepted
in India, including the Accounting Standards specified under
section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding of the assets
of the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate
accounting policies; making judgments and estimates that are
reasonable and prudent; and the design, implementation and
maintenance of adequate internal financial controls that were
operating effectively for ensuring the accuracy and completeness
of the accounting records, 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit. While conducting the
audit, we have taken into account the provisions of the Act,
the accounting and auditing standards and matters which are
required to be included in the audit report under the provisions
of the Act and the Rules made thereunder. We conducted our
audit in accordance with the Standards on Auditing issued by
the Institute of Chartered Accountants of India, as specified
under Section 143(10) of the Act. 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.
82
An audit involves performing procedures to obtain audit
evidence about the amounts and 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 financial controls relevant to the
Company’s preparation of the financial statements that give
a true and fair view in order to design audit procedures that
are appropriate in the circumstances. An audit also includes
evaluating the appropriateness of accounting policies used
and the reasonableness of the accounting estimates made
by the Company’s Directors, 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 on the standalone
financial statements.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the standalone 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, of
the state of affairs of the Company as at March 31, 2016, its
loss and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to note 28 to the financial statements
regarding trade receivables and trade payables from/to the
Company’s subsidiaries as at March 31, 2016 and more fully
described therein. As explained to us, the management is in
the process of filing necessary application with the Reserve
Bank of India [‘RBI’] for settlement of these balances by setting
off aforesaid trade payables against trade receivables. Pending
filing of application and requisite approval from the RBI, no
adjustments have been made in these financial statements.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s report) Order,
2016 (“the Order”) issued by the Central Government of
India in terms of sub-section (11) of section 143 of the
SUBEX LIMITED Act, we give in the Annexure 1, a statement on the matters
specified in paragraphs 3 and 4 of the Order.
the operating effectiveness of such controls, refer to
our separate Report in “Annexure 2” to this report;
2. As required by section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and
explanations which to the best of our knowledge and
belief were necessary for the purpose of our audit;
(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, Statement of Profit and Loss, and
Cash Flow Statement dealt with by this Report are in
agreement with the books of account;
(d) In our opinion, the aforesaid standalone financial
statements comply with the Accounting Standards
specified under section 133 of the Act, read with Rule
7 of the Companies (Accounts) Rules, 2014;
(e) The matter described in Emphasis of Matter paragraph
above and the matter described in Qualified Opinion
paragraph of “Annexure 2”, in our opinion, may have
an adverse effect on the functioning of the Company.
(f) On the basis of written representations received from
the directors as on March 31, 2016, and taken on
record by the Board of Directors, none of the directors
is disqualified as on March 31, 2016, from being
appointed as a director in terms of section 164 (2) of
the Act;
(g) With respect to the adequacy of the internal financial
controls over financial reporting of the Company and
(h) With respect to the other matters to be included in
the Auditor’s Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and
according to the explanations given to us:
i.
The Company has disclosed the impact of pending
litigations on its financial position in its financial
statements – Refer Note 10 and Note 33 to the
financial statements;
ii. The Company did not have any long-term
contracts including derivative contracts for which
there were any material foreseeable losses; and
iii. There were no amounts which were required
to be transferred to the Investor Education and
Protection Fund by the Company.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Sunil Bhumralkar
Partner
Membership Number: 035141
Place of Signature: Bengaluru
Date: May 24, 2016
83
2015-16ANNUAL REPORT Annexure 1 referred to in paragraph 1 under the heading “Report on
Other Legal and Regulatory Requirements” of our report of even date
Re: Subex Limited
(i) (a) The Company has maintained proper records showing
full particulars, including quantitative details and
situation of fixed assets.
(b) Fixed assets have been physically verified by the
management during the year and no material
discrepancies were identified on such verification.
(c) According to the
information and explanations
given by the management, there are no immovable
properties included in fixed assets of the Company and
accordingly, the requirements under paragraph 3(i)(c)
of the Order are not applicable to the Company.
(ii) The Company’s business does not involve inventories and,
accordingly, the requirements under paragraph 3(ii) of the
Order are not applicable to the Company.
(iii) According to the information and explanations given
by the management, the Company has not granted any
loans, secured or unsecured to companies, firms, Limited
Liability Partnerships or other parties covered in the register
maintained under section 189 of the Companies Act, 2013.
Accordingly, the provisions of clause 3(iii) (a), (b) and (c) of
the Order are not applicable to the Company and, hence
not commented upon.
(iv) In our opinion and according to the information and
explanations given by the management, the Company has
complied with the provisions of section 185 and 186 of
the Act in respect of grant of loans, making investments
and providing guarantees and securities, as applicable.
In this regard, we also draw attention to note 33(iii) to
the financial statements relating to amounts recoverable
from erstwhile directors of the Company towards excess
managerial remuneration pertaining to the financial year
2012-13, which is under litigation.
(v) The Company has not accepted any deposits from the
public.
(vi) To the best of our knowledge and as explained, the Central
Government has not specified the maintenance of cost
records under Section 148(1) of the Act for the products/
services of the Company.
(vii) (a) Undisputed statutory dues including provident fund,
employees’ state insurance, income-tax, sales-tax,
service tax, duty of customs, duty of excise, value
added tax, cess and other material statutory dues
have generally been regularly deposited with the
appropriate authorities though there have been slight
delays in remittance of service tax in few cases and
serious delays in remittance of withholding tax in large
number of cases. With regard to withholding tax dues,
we also refer to note 27 to the financial statements.
(b) According to the information and explanations given
by the management, no undisputed amounts payable
in respect of income tax, sales tax, service tax, duty
of customs, duty of excise, value added tax, cess and
other material statutory dues were outstanding, at the
year end, for a period of more than six months from
the date they became payable.
(c) According to the records of the Company, there are no dues of income-tax, sales-tax, wealth-tax, service tax, duty of customs,
duty of excise and value added tax which have not been deposited on account of any dispute except the following:
Name of the Statute
Nature of the dues
Disputed amount
(H in Lakhs)
Amount paid
under protest
(H in Lakhs)
Period to which the
amount relates
(Financial Year)
Forum where dispute is pending
Income Tax Act, 1961
Adjustment for transfer pricing,
disallowances under section 10A and
other disallowances
379.01
1,254.56
504.90
346.47
162.88
79.73
211.28
0.04
-
200.00
-
-
-
60.24*
211.65**
-
2010-11
2009-10
2008-09
2006-07
2005-06
2004-05
2003-04
2001-02
Income Tax Appellate Tribunal, Bangalore
The Company is in the process of filing appeals before
Hon’ble High Court of Karnataka
Commissioner of Income Tax (Appeals), Bangalore
Hon’ble High Court of Karnataka
Hon’ble High Court of Karnataka
Hon’ble Supreme Court of India
Hon’ble High Court of Karnataka
Finance Act, 1994
Service tax
1,003.66
924.12
April 2006 to October
2007
Central Excise and Service Tax Appellate Tribunal, Bangalore
Finance Act, 1994
Service tax
3,607.60
- April 2006 to July 2009 Commissioner of Service Tax, Bangalore
* Represents adjustment of H60.24 Lakhs by the Asst. Commissioner of Income Tax, Bangalore against the refund relating to Financial Year 2007-08.
** includes H55.95 Lakhs adjusted by the Asst. Commissioner of Income Tax, Bangalore against the refund relating to Financial Year 2007-08
84
SUBEX LIMITED
(viii)
In our opinion and according to the information and
explanations given by the management, the Company
has not defaulted in repayment of loans to a financial
institution, bank, debenture holders or government.
(ix) According to the information and explanations given
by the management, the Company has not raised any
money by the way of initial public offer / further public
offer / debt instruments and term loans during the year.
Hence, reporting under paragraph 3(ix) of the Order is not
applicable to the Company and, hence not commented
upon.
(x) Based upon the audit procedures performed for the
purpose of reporting the true and fair view of the
financial statements and according to the information and
explanations given by the management, we report that
no fraud by the Company or no fraud on the Company
by officers and employees has been noticed or reported
during the year.
(xi) According to the information and explanations given
by the management, the managerial remuneration has
been paid / provided in accordance with the requisite
approvals mandated by the provisions of section 197
read with Schedule V to the Act. In this regard, we also
draw attention to note 33(iii) to the financial statements
relating to amounts recoverable from erstwhile directors
of the Company towards excess managerial remuneration
pertaining to the financial year 2012-13, which is under
litigation.
(xii) In our opinion, the Company is not a nidhi company.
Therefore, the provisions of clause 3(xii) of the Order are
not applicable to the Company and, hence not commented
upon.
(xiii) According to the information and explanations given by
the management, transactions with the related parties are
in compliance with section 177 and 188 of Act, where
applicable and the details have been disclosed in the notes
to the financial statements, as required by the applicable
accounting standards.
(xiv) According to the information and explanations given by
the management and on an overall examination of the
balance sheet, the Company has not made any preferential
allotment or private placement of shares or fully or partly
convertible debentures during the year under review and
hence, reporting requirements under clause 3(xiv) of the
Order are not applicable to the Company and hence not
commented upon.
(xv) According to the information and explanations given by
the management, the Company has not entered into any
non-cash transactions with directors or persons connected
with him as referred to in section 192 of the Act.
(xvi) According to the information and explanations given by
the management, the provisions of section 45-IA of the
Reserve Bank of India Act, 1934 are not applicable to the
Company.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Sunil Bhumralkar
Partner
Membership Number: 035141
Place of Signature: Bengaluru
Date: May 24, 2016
85
2015-16ANNUAL REPORT Annexure 2 to the Independent Auditor’s Report of even date on the
Standalone Financial Statements of Subex Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013
(“the Act”)
We have audited the internal financial controls over financial
reporting of Subex Limited (“the Company”) as of March 31,
2016 in conjunction with our audit of the standalone financial
statements of the Company as of and for the year then ended.
Management’s Responsibility for Internal Financial Controls
The Company’s Management is responsible for establishing
and maintaining internal financial controls based on the
internal controls over financial reporting criteria established
by the Company considering the essential components of
internal control stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued
by the Institute of Chartered Accountants of India. These
responsibilities
implementation and
maintenance of adequate internal financial controls that were
operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to the Company’s
policies, the safeguarding of its assets, the prevention and
detection of frauds and errors, the accuracy and completeness
of the accounting records, and the timely preparation of reliable
financial information, as required under the Act.
include the design,
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s
internal financial controls over financial reporting based on our
audit. We conducted our audit in accordance with the Guidance
Note on Audit of Internal Financial Controls Over Financial
Reporting (the “Guidance Note”) and the Standards on Auditing
as specified under section 143(10) of the Companies Act, 2013,
to the extent applicable to an audit of internal financial controls,
both applicable to an audit of Internal Financial Controls and,
both issued by the Institute of Chartered Accountants of India.
Those Standards and the Guidance Note require that we comply
with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether adequate internal
financial controls over financial reporting were established
and maintained and if such controls operated effectively in all
material respects.
Our audit involves performing procedures to obtain audit
evidence about the adequacy of the internal financial controls
over financial reporting and their operating effectiveness. Our
audit of internal financial controls over financial reporting
included obtaining an understanding of internal financial
controls over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the
assessed risk. 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.
We believe that the audit evidence, we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
Company’s internal financial controls over financial reporting.
Meaning of Internal Financial Controls Over Financial
Reporting
A company’s internal financial controls over financial reporting
is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal
financial controls over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made
only in accordance with authorisations of management and
directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorised
acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
86
SUBEX LIMITED Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial controls
over financial reporting, including the possibility of collusion
or improper management override of controls, material
misstatements due to error or fraud may occur and not be
detected. Also, projections of any evaluation of the internal
financial controls over financial reporting to future periods
are subject to the risk that the internal financial controls over
financial reporting may become inadequate because of changes
in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
Qualified Opinion
According to the information and explanations given to us
and based on our audit, the following material weakness has
been identified in the operating effectiveness of the Company’s
internal financial controls over financial reporting as at March
31, 2016:
The Company’s
internal financial controls with respect
to assessment of recoverability of trade receivables from
subsidiaries at regular intervals and timely settlement of trade
receivables from and trade payables to subsidiaries were not
operating effectively, which could potentially result in material
misstatement of such balances.
A ‘material weakness’ is a deficiency, or a combination
of deficiencies, in internal financial controls over financial
reporting, such that there is a reasonable possibility that a
material misstatement of the company’s annual or interim
financial statements will not be prevented or detected on a
timely basis.
In our opinion, the Company has maintained, in all material
respects, adequate internal financial controls over financial
reporting as of March 31, 2016, based on the internal controls
over financial reporting criteria established by the Company
considering the essential components of internal control stated
in the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting issued by the Institute of Chartered
Accountants of India, and except for the possible effects of
the material weakness described above on the achievement of
the objectives of the control criteria, the Company’s internal
financial controls over financial reporting were operating
effectively as of March 31, 2016.
Explanatory paragraph
We also have audited, in accordance with the Standards on
Auditing issued by the Institute of Chartered Accountants
of India, as specified under Section 143(10) of the Act, the
standalone financial statements of the Company, which
comprise the Balance Sheet as at March 31, 2016, Statement
of Profit and Loss and Cash Flow Statement for the year then
ended, and a summary of significant accounting policies and
other explanatory information. The material weakness described
in the earlier paragraph was considered in determining the
nature, timing, and extent of audit tests applied in our audit
of the standalone financial statements of Subex Limited for the
year ended March 31, 2016 and this report does not affect our
report dated March 31, 2016, which expressed an unqualified
opinion on those financial statements.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Sunil Bhumralkar
Partner
Membership Number: 035141
Place of Signature: Bengaluru
Date: May 24, 2016
87
2015-16ANNUAL REPORT Balance Sheet as at 31 March, 2016
Notes
As at
March 31, 2016
As at
March 31, 2015
(H in Lakhs)
Equity and liabilities
Shareholders' funds
Share capital
Reserves and surplus
Non-current liabilities
Long-term borrowings
Other long-term liabilities
Long-term provisions
Current liabilities
Short-term borrowings
Trade payables - other than acceptances
- total outstanding dues of micro enterprises and small enterprises
- total outstanding dues of creditors other than micro enterprises and small enterprises
Other current liabilities
Short-term provisions
Total
Assets
Non-current assets
Fixed assets
Tangible assets
Intangible assets
Non-current investments
Long-term loans and advances
Other non-current assets
Current assets
Trade receivables
Cash and bank balances
Short-term loans and advances
Other current assets
Total
3
4
5
6
7
8
9
9
9
10
11
11
12
13
14
15
16
17
18
50,281.16
13,203.84
63,485.00
3,014.52
610.48
258.36
3,883.36
18,292.26
10,600.48
28,892.74
52,456.25
8,287.45
320.15
61,063.85
10,395.74
12,506.54
4.83
45,166.62
3,924.85
756.51
60,248.55
127,616.91
329.38
73.19
402.57
71,771.48
2,884.89
59.31
75,118.25
49,701.42
195.53
956.64
1,645.07
52,498.66
127,616.91
3.06
45,693.03
2,273.16
324.69
60,800.48
150,757.07
447.00
103.18
550.18
77,234.42
4,745.67
13,062.41
95,592.68
52,225.19
130.72
635.42
2,173.06
55,164.39
150,757.07
Corporate information and significant accounting policies
1 & 2
The accompanying notes are an integral part of the financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
88
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
SUBEX LIMITED
Statement of Profit & Loss for the year ended 31 March, 2016
1
Income
Revenue from operations
Other income
Total income
2
Expenses
Cost of hardware, software and support charges
Employee benefits expense and sub-contract charges
Other expenses
Total expenses
3
4
5
6
7
8
9
Earnings before
exceptional items (EBITDA) (1-2)
interest, tax, depreciation, amortisation and
Interest income
Finance costs
Depreciation and amortisation expense
Profit/(loss) before exceptional items and tax (3+4-5-6)
Exceptional items (net)
Loss before tax (7+8)
10 Tax expense
Current tax expense
11 Loss for the year (9-10)
12 Earnings/(loss) per equity share (nominal value of share H10 (March 31,
2015: H10))
Basic and diluted
Corporate information and significant accounting policies
The accompanying notes are an integral part of the financial statements
Notes
19
20.1
42
21
23
20.2
22
11
24
37
1 & 2
Year ended
March 31, 2016
Year ended
March 31, 2015
(H in Lakhs)
29,624.29
41.84
29,666.13
131.38
8,041.44
16,776.92
24,949.74
30,567.07
48.77
30,615.84
1,530.47
7,405.82
19,108.79
28,045.08
4,716.39
2,570.76
192.64
3,594.04
263.46
174.16
5,171.48
258.54
1,051.53
(2,685.10)
(13,712.59)
-
(12,661.06)
(2,685.10)
534.38
154.91
(13,195.44)
(2,840.01)
(4.54)
(1.65)
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
89
2015-16ANNUAL REPORT
Cash Flow Statement for the year ended 31 March, 2016
A Cash flow from operating activities
Loss before tax and after exceptional items
(12,661.06)
(2,685.10)
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
Adjustments:
Depreciation and amortisation expense
Provision for doubtful debts and advances (including exceptional items)
Bad debts written off (exceptional item)
Provision for diminution in value of investment in subsidiary company
(exceptional item)
Gain on Employee Stock Option Scheme
Finance costs (including exceptional item)
Interest income
Loss/ (profit) on sale of fixed assets (net)
Unrealized foreign exchange loss (net)
Operating profit before working capital changes
Movement in working capital:
Increase/ (decrease) in trade payables
Increase/ (decrease) in provisions
Increase/ (decrease) in other liabilities
Decrease/ (increase) in trade receivables
Decrease/ (increase) in loans and advances
Decrease/ (increase) in other assets
Cash generated from operations
Taxes paid (net)
Net cash flow from operating activities
B
Cash flow from investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Investment in subsidiary company
Movement in deposits (net)
Interest received
263.46
9,914.43
10,475.97
5,490.00
(44.38)
(6,821.49)
(192.64)
1.05
92.01
6,517.35
(563.50)
(23.31)
171.12
(2,611.75)
0.96
576.80
4,067.67
(525.54)
3,542.13
258.54
1,147.73
-
-
(9.68)
5,171.48
(174.16)
(1.19)
2,905.68
6,613.30
(5,260.32)
109.18
1.55
3,070.77
(360.80)
1,275.66
5,449.34
(518.38)
4,930.96
(117.87)
(508.85)
0.97
(27.06)
(43.66)
0.90
8.36
-
29.80
4.81
Net cash flow used in investing activities
(186.72)
(465.88)
90
SUBEX LIMITED Cash Flow Statement for the year ended 31 March, 2016 (contd.)
C
Cash flow from financing activities
Movement in working capital loans (net)
Interest paid
Dividends paid (refer note 44)
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
(2,263.50)
(1,030.48)
-
(2,437.05)
(1,936.14)
(1.31)
Net cash flow used in financing activities
(3,293.98)
(4,374.50)
Net increase in cash and cash equivalents (A+B+C)
Effect of exchange rate changes
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Components of cash and cash equivalents
Balance with banks:
in current accounts
in EEFC accounts
Total cash and cash equivalents (note 16)
Corporate information and significant accounting policies
1&2
The accompanying notes are an integral part of the financial statements
61.43
3.38
130.72
195.53
103.41
92.12
195.53
90.58
0.81
39.33
130.72
57.06
73.66
130.72
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
91
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
1 Corporate information
Subex Limited (”the Company” or ”Subex”) 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 Centre (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 fulfilment, 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 its registered office in Bengaluru and operates through its wholly owned subsidiaries in
India, USA, UK, Singapore, Canada and UAE and branches in USA, UK, Canada, Australia, Italy, UAE and Saudi Arabia.
2 Significant accounting policies
I
Basis of 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 in all material respects with the Accounting Standards notified under Section
133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The financial
statements have been prepared on an accrual basis and 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 judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure
of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best
knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or liabilities in the future periods.
III Revenue recognition
The Company derives its revenues primarily from sale of license and implementation of its proprietary software and
managed/ support services.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue
can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Revenues from licensing arrangements is recognized on transfer of the title in user licenses, except those contracts where
transfer of title is dependent upon rendering of significant implementation and other services by the Company, in which
cases revenue is recognized over the implementation period in accordance with the specific terms of the contracts with
clients.
Revenue from implementation and customisation services is recognised using the percentage of completion method.
Percentage of completion is determined on the basis of completed milestones, which represent the fair value of services
rendered.
Revenue from managed/ support services comprise income from fixed price contracts, time-and-material contracts and
annual maintenance contracts. Revenue from fixed price contracts is recognized over the period of the contracts using the
percentage of completion method. Revenue from time and material contracts is recognized when the services are rendered
in accordance with the terms of contracts. Revenue from annual maintenance contracts is recognised rateably over the
period of the contracts.
The Company collects service tax and sales tax on behalf of the government and therefore it is not an economic benefit
flowing to the Company. Hence it is excluded from revenue.
92
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Revenue from sale of hardware under reseller arrangements is recognized when all the significant risks and rewards of
ownership of the goods have been passed to the buyer, usually on delivery of goods to customers. Revenue is shown as
net of sales tax, value added tax and applicable discounts.
Provisions for estimated losses on contracts are recorded in the period in which such losses become probable based on the
current contract estimates. ‘Unbilled revenue’ included in the current assets represent revenues in excess of amounts billed
to clients as at the balance sheet date. ‘Unearned revenue’ included in the current liabilities represent billings in excess of
revenues recognized.
Interest:
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head “interest income” in the statement of profit and loss.
IV Tangible fixed assets
Tangible fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The
cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the
tangible fixed asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving
at the purchase price.
Subsequent expenditure related to an item of tangible fixed asset is added to its book value only if it increases the future
benefits from the existing tangible fixed asset beyond its previously assessed standard of performance. All other expenses
on existing tangible fixed assets, including day-to-day repairs and maintenance expenditure are charged to the statement
of profit and loss for the period during which such expenses are incurred.
Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition
of depreciable tangible fixed assets are adjusted to the cost of the respective tangible fixed assets and depreciated over
the remaining useful life of such tangible fixed assets. In accordance with MCA circular dated August 09, 2012, exchange
difference adjusted to the cost of tangible fixed asset is the total difference, arising on long-term foreign currency monetary
items pertaining to the acquisition of a depreciable tangible fixed asset, for the period. In other words, the Company does
not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded
as an adjustment to the interest cost and other exchange differences.
Gains or losses arising from derecognition of a tangible fixed assets are measured as the difference between the net
disposal proceeds and the carrying amount of the tangible fixed assets and are recognized in the statement of profit and
loss when the tangible fixed assets are derecognized.
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, borrowing costs if capitalization criteria are met, directly attributable cost of bringing
the intangible asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving
at the purchase price.
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 intangible 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 intangible
asset reliably, in which case such expenditure is added to the cost of the intangible asset.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the intangible asset and are recognised in the statement of profit and loss when the
intangible asset is derecognised.
93
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
VI Depreciation and amortisation
Depreciation on tangible fixed assets:
Depreciable amount for tangible fixed assets is the cost of the asset, or other amount substituted for cost, less its estimated
residual value. Depreciation on tangible fixed assets is calculated on a straight-line method based on the useful lives
estimated by the management.
And, the individual assets costing less than H5,000 are depreciated in full, in the year of purchase.
The Company has used the following useful lives to provide depreciation on its tangible assets:
Computer hardware
Furniture and fixtures*
Vehicles*
Office equipment’s *
Useful lives estimated by the management
3 years
5 years
5 years
5 years
Useful lives as per Companies Act. 2013
3 years
10 years
10 years
3 years
* Based on an internal evaluation, the management believes that the useful lives as given above best represent the period
over which management expects to use these assets. Hence, the useful lives for these assets is different from the useful
lives as prescribed under part C of Schedule II of the Companies Act 2013.
Amortisation of intangible assets:
Intangible assets are amortised on a straight line basis over the estimated useful economic life. The Company uses a
rebuttable assumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is
available for use. If the persuasive evidence exists to the effect that useful life of an intangible asset exceeds ten years, the
Company amortises the intangible asset over the best estimate of its useful life.
The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected
useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly. If
there has been a significant change in the expected pattern of economic benefits from the asset, the amortisation method
is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS 5 Net Profit or Loss for
the Period, Prior Period Items and Changes in Accounting Policies.
A summary of amortisation policies applied to the Company’s intangible assets is as below:
Computer software
Goodwill
Intellectual property rights
4 years
5 years
5 years
VII 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 of leased asset 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 achieve a constant periodic
rate of interest on the outstanding liability for each year. Finance charges are recognised as finance costs in the statement
of profit and loss. Lease management fees, legal charges and other initial direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful life of the asset. However, if there is no reasonable
certainty that the Company will obtain the ownership by the end of the lease term, the capitalised asset is depreciated on
a straight-line basis over the shorter of the estimated useful life of the asset or the lease term.
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 over the lease term.
94
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
VIII Impairment of tangible and intangible assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in
use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. In determining net selling price,
recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately
for each of the Company’s cash-generating unit to which the individual assets are allocated. These budgets and forecast
calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and
applied to project future cash flows after the fifth year.
The impairment loss is recognised as an expense in the statement of profit and loss, except for previously revalued tangible
fixed assets, where the revaluation was taken to revaluation reserve. In this case, the impairment is also recognized in the
revaluation reserve up to the amount of any previous revaluation.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or CGU’s
recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so
that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would
have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the statement of profit and loss unless the asset is carried at a revalued amount, in which case the
reversal is treated as a revaluation increase.
IX Employee share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) for employees of the Company in the form of share
based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled
transactions).
In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and the
Guidance Note on Accounting for Employee Share-based Payments, the cost of equity settled transactions is measured using
the intrinsic value method. 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.
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 regulations, the intrinsic value is amortised on a
straight line basis over the vesting period i.e. the Cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best
estimate of the number of equity instruments that will ultimately vest. The expense or credit recognised in the statement
of profit and loss for a period represents the movement in cumulative expense recognised as at the beginning and end of
that period and is recognised in employee benefits expense.
95
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
X Employee benefits
Employee benefits include provident fund, gratuity, employee state insurance and compensated absences.
(a) 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 and when services are rendered by the employees. These contributions
are paid/payable in accordance with the applicable laws and regulations.
(b) Defined benefit plans:
For defined benefit plans in the form of gratuity, 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.
(c) Short-term employee benefits:
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. Compensated absences, which are expected to be utilised
within the next 12 months, are treated as short-term employee benefits. The Company measures the expected cost
of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
(d) Long-term employee benefits:
Compensated absences which are not expected to occur within twelve months after the end of the period in which
the employees render the related services are treated as long-term employee benefits for measurement purpose. Such
long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit
method at the year end, less the fair value of the plan assets out of which the obligations are expected to be settled.
Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
The Company presents the entire compensated absences balance as a current liability in the balance sheet, since it
does not have an unconditional right to defer its settlement for twelve months after the reporting date. “
XI Foreign currency transactions and translation
Initial recognition:
Transactions in foreign currencies entered into by the Company 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.
Conversion:
Foreign currency monetary items are translated using the exchange rate prevailing at the reporting date. Non-monetary
items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange
rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation
denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
Exchange differences:
The Company accounts for exchange differences arising on translation/ settlement of foreign currency monetary items as
below:
1. Exchange differences arising on a monetary item that, in substance, forms part of the Company’s net investment in a
non-integral foreign operation is accumulated in the foreign currency translation reserve until the disposal of the net
investment. On the disposal of such net investment, the cumulative amount of the exchange differences which have
been deferred and which relate to that investment is recognized as income or as expenses in the same period in which
the gain or loss on disposal is recognized.
96
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
2. Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are
capitalized and depreciated over the remaining useful life of the asset.
3. Exchange differences arising on other long-term foreign currency monetary items are accumulated in the “Foreign
Currency Monetary Item Translation Difference Account” and amortized over the remaining life of the concerned
monetary item.
4. All other exchange differences are recognized as income or as expenses in the period in which they arise.
For the purpose of 2 and 3 above, the Company treats a foreign monetary item as “long-term foreign currency
monetary item”, if it has a term of 12 months or more at the date of its origination.
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.
The financial statements of an integral foreign operation are translated as if the transactions of the foreign operations
have been those of the Company itself.
XII Investments
Investments, which are readily realisable and intended to be held for not more than one year from the date on which such
investments are made, are classified as current investments. All other investments are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable
acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly acquired, by the issue of
shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in
exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference
to the fair value of the investment acquired, whichever is more clearly evident.
Current investments are carried in the financial statements at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize
a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited
to the statement of profit and loss.
XIII Taxes on income
Tax expense comprises current and deferred tax. Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other
applicable tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws
used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income
tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. MAT payment
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 benefits associated with it will
flow to the Company and can be measured reliably, MAT credit is recognised in accordance with the Guidance Note on
Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, by way of credit
to the statement of profit and loss and shown as “MAT Credit Entitlement”.
97
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
The Company reviews the ”MAT Credit Entitlement” asset at each reporting date and writes down the asset to the extent
the Company does not have convincing evidence that it will pay normal tax during the specified period.
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 other items
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 and items relating to capital
losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the assets.
Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit
and loss.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred
tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future
taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying
amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down
is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future
taxable income will be available.
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.
XIV Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprises cash in hand and cash at bank and short-term
investments with an original maturity of three months or less, highly liquid investments that are readily convertible into
known amounts of cash and which are subject to insignificant risk of changes in value.
XV Provisions and contingencies
Provisions:
A provision is recognized when an enterprise has a present obligation as a result of past event 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 of the
amount of the obligation. 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 estimates are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
Contingent liabilities:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present
obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the
obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized
because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence
in the financial statements.
XVI Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax 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 as
98
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
adjusted for dividend, interest (net of any attributable taxes) and other charges to expense or income relating to the dilutive
potential equity shares, by the weighted average number of equity shares considered for computing 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.
XVII 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. The analysis of geographical segments is based on the areas in
which major operating divisions of the Group operate.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. 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.
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total
common costs.
Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on a
reasonable basis have been included under ‘unallocated revenue / expenses / assets / liabilities’.
XVIII 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.
XIX Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected
to present earnings before interest, tax, depreciation and amortisation (EBITDA) as a separate line item on the face of
the statement of profit and loss. The Company measures EBITDA on the basis of profit/(loss) from operations. In its
measurement, the Company does not include depreciation and amortisation expense, interest income, finance costs and
tax expense.
99
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 3
SHARE CAPITAL
Authorised shares (no.)
545,040,000 (March 31, 2015 : 495,040,000) equity shares of H10 each
200,000 (March 31, 2015: 200,000) preference shares of H98 each
Issued, subscribed and fully paid-up shares (no.)
502,811,646 (March 31, 2015: 182,922,575) equity shares of H10 each
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
54,504.00
196.00
54,700.00
50,281.16
50,281.16
49,504.00
196.00
49,700.00
18,292.26
18,292.26
(a) Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting year
March 31, 2016
March 31, 2015
No.
H in Lakhs
No.
H in Lakhs
At the beginning of the year*
182,922,575
18,292.26
166,639,962
16,664.00
Issued during the year - Conversion of FCCBs
(refer note 25(e))
319,889,071
31,988.90
16,282,613
1,628.26
Outstanding at the end of the year
502,811,646
50,281.16
182,922,575
18,292.26
* includes 243,207 (March 31, 2015: 243,207) shares in respect of which Global Depository Receipts of the Company are listed
on London Stock Exchange.
(b) Terms/ right attached to equity shares
The Company has only one class of equity shares having par value of H10 per share. Each holder of equity shares is entitled
to one vote per share and such amount of dividend per share as declared by the Company. The Company declares and pays
dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the
ensuing Annual General Meeting.
During the year ended March 31, 2016, the amount of per share dividend recognised as distribution to equity shareholders was
H Nil ( March 31, 2015: H Nil)
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The distribution will be in proportion to the 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
in the Company
Name of Shareholder
Equity shares of H10 each fully paid
QVT Mauritius West Fund & Quintessence Mauritius
West Fund
March 31, 2016
March 31, 2015
No.
% of holding
in the class
No.
% of holding
in the class
35,829,909
7.13
13,347,888
7.36
Deutsche Bank AG London -CB Account
Merill Lynch Capital Markets Espana SA SV
Nomura Singapore Limited
21,559,422
4,311,884
881,257
4.29
0.86
0.18
10,892,721
10,192,621
10,234,433
Suffolk (Mauritius) Limited & Mansfield(Mauritius) Limited
-
-
17,372,221
6.01
5.62
5.64
9.58
As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.
100
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
(d) Shares reserved for issue under options (no.)
As at March 31, 2016, 20,801,449 shares (March 31, 2015: 202,656,863) were reserved for issuance as follows:
(i) Nil shares (March 31, 2015: 1,925 shares) of H10 each towards outstanding employee stock options scheme under ‘ESOP
2000’ granted/available for grant. Refer note 35
(ii) 144,979 shares (March 31, 2015 : 741,072 shares) of H10 each towards outstanding employee stock options scheme
under ‘ESOP 2005’ granted / available for grant. Refer note 35
(iii) 130,500 shares (March 31, 2015: 475,010 shares) of H10 each towards outstanding employee stock options scheme under
‘ESOP 2008’ granted / available for grant. Refer note 35
(iv) 67,174 shares (March 31, 2015: 67,174 shares) of H10 each towards conversion of foreign currency convertible bonds(FCCB
I) available for conversion. Refer note 25
(v) 839,721 shares (March 31, 2015: 839,721 shares) of H10 each towards conversion of foreign currency convertible bonds
(FCCB II) available for conversion. Refer note 25
(vi) 19,619,075 shares (March 31, 2015: 200,531,961 shares) of H10 each towards conversion of foreign currency convertible
bond (FCCB III) available for conversion. Refer note 25
(e) 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:
March 31, 2016
March 31, 2015
shares allotted as
fully paid-up pursuant
Equity
(no.)*
(In accordance with the terms of FCCBs III, out of the principal face value of
US$ 127.72 Million (H71,592.81 Lakhs), an amount of US$ 36.32 Million
(H20,358.99 Lakhs) were mandatorily converted into equity shares on July 07, 2012.
* also refer note 25(e) regarding conversion of FCCBs III into equity shares of the Company.
to contract
89,335,462
89,335,462
Note - 4 RESERVES AND SURPLUS
General reserve
Securities premium account
Balance as per last financial statements
Add : Additions during the year on conversion of FCCBs
Less: Adjustment towards accrual for redemption premium on FCCBs (net)
Closing balance
Share options outstanding account
Balance as per last financial statements
Less : Compensation on ESOP cancelled/lapsed during the year
Add/ (less) : Deferred stock compensation expenses
Closing balance
Foreign currency monetary item translation difference account (refer note 26)
Balance as per last financial statements (debit)
Add: Effect of foreign exchange rate variation during the year
Less: Amortisation for the year
Closing balance
Surplus / (deficit) in the statement of profit and loss
Balance as per last financial statements
Less: Loss for the year
Less: Transitional adjustment on depreciation ( refer note 11)
Closing balance
Total reserves and surplus
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
1,779.76
1,779.76
12,619.50
11,161.84
(35.82)
23,745.52
78.10
(62.15)
0.35
16.30
(5,111.21)
(3,001.68)
7,736.26
(376.63)
1,234.33
(13,195.44)
-
(11,961.11)
13,203.84
10,561.61
2,082.55
(24.66)
12,619.50
98.96
(20.42)
(0.44)
78.10
(5,801.74)
(2,355.55)
3,046.08
(5,111.21)
4,083.80
(2,840.01)
(9.46)
1,234.33
10,600.48
101
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 5
LONG-TERM BORROWINGS
Bonds
Foreign currency convertible bonds (refer note 25 for details of security and
other terms)
Secured
Unsecured
Note - 6 OTHER LONG-TERM LIABILITIES
Accrual for premium payable on redemption of bonds (refer note 25)
Interest accrued but not due on borrowings (refer note 25(f))
Note - 7
LONG-TERM PROVISIONS
Provision for employee benefits
Provision for gratuity (refer note 36[b])
Note - 8
SHORT-TERM BORROWINGS
Loans repayable on demand from banks (Secured)
Loan type I (refer note 8[i] and [iii])
Loan type II (refer note 8[i], [ii] and [iii])
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
3,014.52
-
3,014.52
50,956.17
1,500.08
52,456.25
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
-
610.48
610.48
596.25
7,691.20
8,287.45
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
258.36
258.36
320.15
320.15
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
6,045.73
4,350.01
10,395.74
6,906.14
5,600.40
12,506.54
(i) The secured loan type I and II from banks are secured by primary charge on trade receivables of the Company and paripassu first
charge on the current assets of the Company, and collateral paripassu first charge on the fixed assets of the Company, collateral
paripassu first charge along with other working capital lenders and FCCB holders to the extent of the FCCB III repayment fund
to be set up with the working capital lenders.
(ii) The Company has also submitted a corporate guarantee by Subex Technologies Limited of H5,570.00 Lakhs ( March 31, 2015:
H6,495.00 Lakhs) and with effect from October 01, 2014 corporate guarantee by Subex (UK) Limited of H5,570.00 Lakhs
(March 31, 2015: H6,495.00 Lakhs) and pledged it’s 100% shares in Subex (UK) Limited.
(iii) Loans repayable on demand from banks consists of Cash Credit (CC) of H1,762.89 Lakhs (March 31, 2015: H4,223.45 Lakhs),
Pre-shipment Credit in Foreign Currency (PCFC) of H3,945.39 Lakhs (March 31, 2015: H2,880.38 Lakhs) and Export Bill
Rediscounting (EBRD) of H4,687.46 Lakhs ( March 31, 2015 : H5,402.71 Lakhs), which carried an average interest rate of
12.91%, 4.05% and 5.89% (March 31, 2015: 14.25%, 5.05% and 8.88%) respectively. These facilities are renewable on a
yearly basis.
102
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 9
TRADE PAYABLES AND OTHER CURRENT LIABILITIES
Trade payables
- total outstanding dues of micro enterprises and small enterprises [refer note 9(i)]
- total outstanding dues of creditors other than micro enterprises and small enterprises
Other current liabilities
Current maturities of long-term borrowings (refer note 25)
Accrual for premium payable on redemption of bonds (refer note 25)
Interest accrued but not due on borrowings
Employee related liabilities
Unearned revenue
Other payables
Statutory remittances (refer note 27)
Rent equalisation reserve
Others
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
4.83
45,166.62
45,171.45
1,590.20
632.07
44.69
652.14
658.83
252.88
54.06
39.98
3,924.85
3.06
45,693.03
45,696.09
-
-
815.94
715.11
452.22
265.38
24.51
-
2,273.16
(i) Details of dues to micro enterprises and small enterprises:
The dues to Micro and Small enterprises as defined in “The Micro, Small & Medium Enterprises Development Act, 2006”
are as follows:
Particulars
(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 during each accounting
year
(iv) The amount of interest due and payable for the period of delay in making
payment (which have been paid but beyond the appointed day during the
year) but without adding the interest specified under the MSMED Act 2006.
(v) The amount of interest accrued and remaining unpaid at the end of the
accounting year
(vi) The amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues as above are
actually paid
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
4.83
-
0.06
-
-
-
3.06
-
0.53
0.06
0.06
-
Dues to micro enterprises and small enterprises have been determined to the extent such parties have been identified on the
basis of information collected by the management.
103
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 10 SHORT-TERM PROVISIONS
Provision for employee benefits
Provision for compensated absences
Provision for gratuity (refer note 36([b])
Other provisions
Provision for litigations (net of tax deducted at source H62.14 Lakhs (March 31,
2015: H62.14 Lakhs) [refer note 10(i)]
Provision for foreign taxes
Provision for wealth tax
Minimum alternative tax ('MAT') payable (net of tax deducted at source H201.82
Lakhs (March 31, 2015: H Nil))
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
128.22
32.43
114.22
7.95
201.70
201.70
212.04
-
182.12
-
0.82
-
756.51
324.69
(i) Provision for litigation consists of matters which are sub-judice. There is no movement in the provisions during the current and
previous year.
Note - 11 FIXED ASSETS
Cost
Tangible assets
Intangible assets
Computer
equipment
Furniture
and fixtures
Vehicles
Office
equipment
Total
Computer
software
Goodwill
Intellectual
property
rights
Total
(H in Lakhs)
Grand
Total
At April 01, 2014
2,034.11
66.19
30.74
264.68
2,395.72
658.70
137.67
3,973.95
4,770.32
7,166.04
Additions
Disposals
393.37
(153.70)
-
-
-
-
23.10
416.47
92.38
(52.17)
(205.87)
-
-
-
-
-
92.38
508.85
-
(205.87)
At March 31, 2015
2,273.78
66.19
30.74
235.61
2,606.32
751.08
137.67
3,973.95
4,862.70
7,469.02
Additions
Disposals
96.47
4.35
0.68
3.03
104.53
13.34
(450.57)
-
-
(3.19)
(453.76)
(232.78)
-
-
-
-
13.34
117.87
(232.78)
(686.54)
At March 31, 2016
1,919.68
70.54
31.42
235.45
2,257.09
531.64
137.67
3,973.95
4,643.26
6,900.35
Depreciation
At April 01, 2014
1,809.25
60.93
30.50
233.80
2,134.48
603.44
137.67
3,973.95
4,715.06
6,849.54
Adjustments (refer note 11[ii])
9.46
-
-
-
9.46
-
Charge for the year
197.22
2.20
0.11
14.55
214.08
44.46
Disposals
(149.62)
-
-
(49.08)
(198.70)
-
-
-
-
-
-
-
-
9.46
44.46
258.54
-
(198.70)
At March 31, 2015
1,866.31
63.13
30.61
199.27
2,159.32
647.90
137.67
3,973.95
4,759.52
6,918.84
Charge for the year
205.69
2.23
0.16
12.05
220.13
43.33
Disposals
(449.71)
-
-
(2.03)
(451.74)
(232.78)
-
-
-
-
43.33
263.46
(232.78)
(684.52)
At March 31, 2016
1,622.29
65.36
30.77
209.29
1,927.71
458.45
137.67
3,973.95
4,570.07
6,497.78
Net block
At March 31, 2015
At March 31, 2016
Notes:
407.47
297.39
3.06
5.18
0.13
0.65
36.34
447.00
103.18
26.16
329.38
73.19
-
-
-
-
103.18
550.18
73.19
402.57
(i) Refer note 8 for the assets given as security.
(ii) During the previous year, the Company has revised certain estimates of economic useful lives of the Fixed assets based on the assessment carried out on account
of the application of Schedule II of the Companies Act, 2013. This has resulted in the depreciation charge and consequently the loss for the year being higher by
H28.48 Lakhs (March 31, 2015: H51.32 Lakhs). The Company has in accordance with the transitional provisions available, adjusted H Nil ( March 31, 2015: H9.46
Lakhs) to retained earnings representing the value of assets whose economic useful life was nil as of April 01, 2014.
104
SUBEX LIMITED Notes to the financial statements for the year ended March 31, 2016
Note - 12 NON-CURRENT INVESTMENTS (at cost, unless otherwise stated)
Trade investment (unquoted equity instruments)
Investments in equity shares in wholly owned subsidiaries
3,999,994 (March 31, 2015: 3,999,994) equity shares of H10 each fully paid up
in Subex Technologies Limited, India (Net of provision for other than temporary
diminution H400.00 Lakhs [March 31, 2015: H400.00 Lakhs])
5,039,565,245 (March 31, 2015: 5,039,565,245) equity shares of GBP 0.00001
each fully paid in Subex (UK) Ltd. (Refer note 8 for the details of investments
given as security and also refer note 29)
100 (March 31, 2015: 100) equity shares fully paid, no-par value, in Subex
Americas Inc., Canada (Net of provision for other than temporary diminution
H70,490.00 Lakhs [March 31, 2015: H65,000.00 Lakhs]) (refer note 24[iii])
Share application money in Subex Middle East (FZE), UAE
Aggregate amount of unquoted investments (at cost)
Aggregate provision for diminution in value of investments
Note - 13 LONG-TERM LOANS AND ADVANCES (Unsecured, considered good)
Security deposits
Balance with related parties (refer note 30)
Unsecured, considered good
Unsecured, considered doubtful
Less: Provision for doubtful loans and advances (refer note 24[ii])
Other loans and advances
Advance recoverable from former directors ( refer note 33[iii])
Advance income-tax (net of provision for taxation H570.45 Lakhs) (March 31,
2015: H569.95 Lakhs)
Balances with statutory/government authorities*
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
-
-
64,738.68
64,738.68
7,005.74
12,495.74
27.06
71,771.48
142,661.48
70,890.00
71,771.48
-
77,234.42
142,634.42
65,400.00
77,234.42
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
722.97
734.41
-
3,665.43
(3,665.43)
233.80
1,661.22
1,849.90
1,705.67
(1,705.67)
233.80
1,660.66
266.90
4,745.67
* Balances with statutory / government authorities represent service tax erroneously paid by the Company during the financial year
2004 to 2008, under reverse charge mechanism, for which refund application has been filled with the service tax department and
the same is under dispute. The Company is contesting the same and the management including its tax advisors are confident of
obtaining the refund.
266.90
2,884.89
105
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 14 OTHER NON-CURRENT ASSETS
Long-term trade receivables (unsecured)
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
Considered good
Considered doubtful
Less: Provision for doubtful trade receivables*
13,046.76
7,288.74
(7,288.74)
13,046.76
15.65
13,062.41
* During the year ended March 31, 2016, the Company has written off bad debts amounting to H998.01 Lakhs (March 31, 2015: H Nil).
-
14,202.68
(14,202.68)
-
59.31
59.31
Non current bank balance (refer note 16)
Note - 15 TRADE RECEIVABLES
(Unsecured)
Outstanding for a period exceeding six months from the date they are due
for payment
Considered good
Other receivables
Considered good
Note - 16 CASH AND BANK BALANCES
Cash and cash equivalents
Balance with banks
In current accounts
In EEFC accounts
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
35,539.12
36,701.22
14,162.30
49,701.42
15,523.97
52,225.19
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
103.41
92.12
195.53
57.06
73.66
130.72
Other bank balances
Margin money deposits*
Amount disclosed under non-current assets (refer note 14)
15.65
(15.65)
-
130.72
* Represents the margin money deposits with banks towards the bank guarantees, having remaining maturity period of more than
59.31
(59.31)
-
195.53
12 months from the balance sheet date.
Note - 17 SHORT-TERM LOANS AND ADVANCES (Unsecured, considered good)
(H in Lakhs)
Loans and advances to employees
Prepaid expenses
Balances with statutory/government authorities
Others
Advance to suppliers
Minimum alternative tax ('MAT') credit entitlement
106
As at
March 31, 2016
As at
March 31, 2015
164.81
386.71
17.60
3.59
383.93
956.64
202.68
198.36
-
234.38
-
635.42
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 18 OTHER CURRENT ASSETS (Unsecured, considered good)
Unbilled revenue
Interest accrued but not due on bank deposits
Others
Note - 19 REVENUE FROM OPERATIONS
Sale of products
Sale of services
Details of products sold
Sale of license
Sale of hardware and software
Details of services rendered
Implementation and customisation
Managed services
Support services
Sub-contracting services
Others
Note - 20.1 OTHER INCOME
Profit on sale of fixed assets (net)
Miscellaneous income
Note - 20.2 INTEREST INCOME
Interest income on
Bank deposits
Inter-company loans and advances
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
1,580.89
3.91
60.27
1,645.07
2,114.63
2.01
56.42
2,173.06
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
1,681.64
27,942.65
29,624.29
1,458.29
223.35
1,681.64
3,524.39
4,233.92
3,865.58
16,287.40
31.36
27,942.65
4,503.56
26,063.51
30,567.07
2,918.10
1,585.46
4,503.56
3,728.70
4,277.71
3,781.29
14,192.75
82.96
26,063.41
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
-
41.84
41.84
1.19
47.58
48.77
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
2.80
189.84
192.64
4.07
170.09
174.16
107
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 21 EMPLOYEE BENEFITS EXPENSE AND SUB-CONTRACT CHARGES
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
Salaries and wages*
Contribution to provident and other funds (refer note 36)
Expense on Employee Stock Option Scheme
Staff welfare expenses
Sub-contract charges
6,575.89
375.46
(9.68)
279.27
184.88
7,405.82
* net of reversal of provision no longer required, in respect of employee incentives amounting to H380.83 Lakhs (March 31, 2015:
7,251.00
354.11
(44.38)
349.22
131.49
8,041.44
H134.87 Lakhs).
Note - 22 FINANCE COSTS
Interest expenses on
Foreign currency convertible bonds (refer note 24[i])
Other borrowings
Bank charges
Note - 23 OTHER EXPENSES
Purchase of software
Rent
Power and fuel
Repairs and maintenance
- Building
- Others
Insurance
Communication costs
Printing and stationery
Traveling and conveyance
Rates and taxes
Advertisement and business promotion
Consultancy charges
Payments to auditors (refer note 23[i])
Marketing and allied service charges
Sales commission (refer note 23[ii])
Provision for doubtful debts
Exchange fluctuation loss (net)
Directors' sitting fees
Provision for free support services
Loss on sale of fixed assets (net)
Miscellaneous expenses
108
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
2,276.33
998.33
319.38
3,594.04
3,352.21
1,638.10
181.17
5,171.48
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
358.10
1,154.91
190.36
108.39
350.82
85.08
106.34
21.95
1,489.60
105.68
46.62
354.65
95.91
11,385.20
219.35
(406.92)
1,009.39
54.00
39.98
1.05
6.46
16,776.92
53.85
1,085.74
208.95
87.78
358.41
122.39
94.32
19.30
1,507.18
72.35
40.21
337.94
97.10
11,323.99
463.81
1,147.73
2,067.51
12.90
-
-
7.33
19,108.79
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 23 OTHER EXPENSES (contd.)
(i) Payments to auditors (net of service tax credit's recognised)*
As auditor:
Audit fee
Tax audit fee
In other capacity:
Certification matters
Reimbursement of expenses
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
85.00
4.00
2.50
4.41
95.91
88.00
1.50
1.50
6.10
97.10
* Previous year audit fee is paid to a firm of Chartered Accountants other than S.R. Batliboi & Associates LLP.
(ii) Sales commission for the year ended March 31, 2016 is net of reversal of provision no longer required amounting to H107.68
Lakhs (March 31, 2015: H Nil).
Note - 24 EXCEPTIONAL ITEMS
(i) FCCBs
Reversal of interest accrued but not due pertaining to converted FCCBs
[refer note 24(i)(a)]
Foreign exchange gain on FCCBs conversion (net) [refer note 24(i)(b)]
(ii) Inter company balances (refer note 24[ii])
Provision for doubtful advances
Provision for doubtful debts
Bad debts written off
(iii) Others
Provision for diminution in value of investment in subsidiary company
(refer note 24[iii])
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
10,415.53
2,159.20
12,574.73
(1,959.76)
(8,361.59)
(10,475.97)
(20,797.32)
(5,490.00)
(5,490.00)
(13,712.59)
-
-
-
-
-
-
-
-
-
-
(i) (a) Interest accrued but not due pertaining to FCCBs III converted during the current year has been written back as the same
is considered no longer payable due to the conversion of FCCBs III into equity shares of the Company (refer note 25 for
details on FCCBs).
(i) (b) FCCBs III have been converted into equity shares at an exchange rate of H56.0545/US$ as per the FCCBs III trust deed,
as against the closing rate on the date of conversion (in the range of H60 - H66) resulting in foreign exchange gain on
conversion amounting to H7,715.50 Lakhs. Further, the Foreign Currency Monetary Item Translation Difference Account
(‘FCMITD’) balance pertaining to FCCBs III converted into equity shares amounting to H5,556.30 Lakhs, has been charged
off in the statement of profit and loss for the year ended March 31, 2016 on the date of conversion.
(ii) As at March 31, 2016, the Company has assessed the recoverability of its receivables and loans and advances from its overseas
subsidiaries. Based on future operational plan, projected cash flows and the current financial position of these subsidiaries, the
Company has made a provision of H8,361.59 Lakhs and H1,959.76 Lakhs towards trade receivables and loans and advances due
from these subsidiaries. Further, the Company has also written off H10,475.97 Lakhs as bad debts towards trade receivables
from these subsidiaries.
109
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 24 EXCEPTIONAL ITEMS (contd.)
(iii) As at March 31, 2016, the Company has assessed the carrying value of it’s investment in its wholly owned subsidiary viz.,
Subex Americas Inc., of H12,495.74 Lakhs. Based on future operational plan, projected cash flows and valuation carried out by
an external valuer, the Company has made a provision of H5,490.00 Lakhs towards diminution, other than temporary, in the
carrying value of its investment in the said subsidiary.
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/ US$
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 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)
Interest rate : 5% p.a. payable semi annually
ii) Exchange rate for conversion of FCCB : H48.17/ US$
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$ 127.721 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.
110
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 25 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
The terms and conditions of FCCB III are as under:
i)
Interest rate : 5.70% p.a. payable semi annually
ii) Exchange rate for conversion of FCCB : H56.0545/ US$
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 and to the extent covered by the
existing security. First ranking charge on FCCB repayment fund on a paripassu basis jointly and equally with SBI and Axis
Bank Ltd. The promoters of the Company have pledged their shares towards securing the repayment of FCCB III.
vii) Mandatory conversion of bonds with a face value of US$ 36.321 Million into equity shares at the aforesaid conversion price
on July 07, 2012.
c) 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.
d) The Board in its meeting held on May 14, 2015, has approved the reset of conversion price of the FCCBs III, which are convertible
into equity shares of the Company, from H22.79 to H13.00 per equity share. Subsequently, the reset of the conversion price has
been approved by the shareholders in the annual general meeting held on June 19, 2015 and the bondholders in their meeting
held on August 5, 2015. The Board in its meeting held on August 26, 2015 has approved August 26, 2015 as the effective date
of reset of conversion price of H13 per share.
As a result of the aforesaid reset of conversion price, the said bonds with outstanding face value of US$ 4.55 Million as at
March 31, 2016 would potentially be converted into 19,619,075 equity shares at an exchange rate of H56.0545/US$ with a
conversion price of H13 per equity share.
Subsequent to balance sheet date, conversion requests from the bondholders of FCCBs III amounting to US$ 0.45 Million have
been received by the Company, which have been approved by the Board of Directors in the Board meeting dated April 28,
2016, and allotted 1,940,348 equity shares at an exchange rate of H56.0545/US$ with a conversion price of H13 per equity
share.
e)
(i) Of the outstanding FCCBs III of US$ 91.40 Million as of July 2012, US$ 86.85 Million have been converted till year ended
March 31, 2016 as detailed below:
Financial year/ period
FCCBs converted
US$ Million
Conversion
rate per US$
Conversion
price
No. of equity
shares
2012-13
2014-15
2015-16
(i) during quarter ended June 30, 2015
(ii) during June 30, 2015 to March 31, 2016
3.25
6.62
6.50
70.48
H56.0545
H56.0545
H56.0545
H56.0545
H22.79
H22.79
H22.79
H13.00
7,993,931
16,282,613
15,987,461
303,901,610
111
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 25 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
(ii) The face value of FCCBs outstanding as on March 31, 2016 is as follows:
Particulars
As at March 31, 2016
As at March 31, 2015
FCCBs I
FCCBs II
FCCBs III
Total
US$ Million
H in Lakhs
US$ Million
in Lakhs
1.00
1.40
4.55
6.95
662.55
927.57
3,014.60
4,604.72
1.00
1.40
625.00
875.00
81.53
50,956.25
83.93
52,456.25
f)
The FCCB bond holders in their respective meetings have approved the deferral of aggregate interest of US$ 0.92 Million
(H610.48 Lakhs) in respect of outstanding FCCBs III of USD 4.55 Million for the period July 6, 2012 to January 5, 2016 till
redemption date of the bonds, being July 07, 2017. Accordingly, interest on FCCBs III included under finance costs in the
statement of profit and loss to the extent of above deferrals is due for payment on July 07, 2017. These amounts have
accordingly been categorised as long-term liabilities.
g) The premium payable on maturity of FCCB I and FCCB II has been accrued by charge to securities premium account, and
exchange fluctuation on restatement of such outstanding balance is also adjusted with securities premium account.
h)
Interest accrued but not due pertaining to FCCBs converted during the current year has been written back as the same is
considered no longer payable due to the conversion of FCCBs III into equity shares of the Company, and FCMITD balance
pertaining to converted bonds till the date of conversion has been charged off to the statement of profit and loss net of foreign
exchange gain on account of conversion of these FCCBs into equity shares of the Company. These amounts have been disclosed
as exceptional items, refer note 24(i) for details.
Note - 26
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 (‘FCMITD’) and are amortised over the balance period of such long term asset/ liability, and/or charged off on
settlement/ conversion of such long term monetary foreign currency assets/ liabilities. Consequently, exchange fluctuation losses
(net) arising on restatement of such items have been deferred to the extent of H376.63 Lakhs as at March 31, 2016 ( March 31,
2015: H5,111.21 Lakhs).
Note - 27
The Company had remitted the withholding taxes in respect of FCCBs in accordance with the provisions of Income Tax Act, 1961
amounting to H1,016.81 Lakhs Pursuant to the conversion of FCCBs III in to equity shares of the Company, the interest accrued
but not due has been reversed as the same is considered no longer payable. The management basis expert advice, is of the view
that the withholding taxes paid by the Company is recoverable from income tax department and/or is adjustible against its other
withholding taxes obligations. The management has initiated necessary steps for revision of withholding tax returns of prior years
and accordingly, H204.98 Lakhs pertaining to withholding taxes on salary, professional services and others have not been paid.
Note - 28
As at March 31, 2016, the Company has trade receivables of H41,272.75 Lakhs (net of provision for doubtful debts of H11,287.42
Lakhs) from its subsidiaries and trade payables of H44,128.19 Lakhs to its subsidiaries. The management is in the process of filing
necessary application with the Reserve Bank of India (‘RBI’) for settlement of these balances by setting off aforesaid trade payables
against trade receivables. Pending filing of application with RBI and requisite approval from RBI, no adjustments have been made
in these financial statements.
112
SUBEX LIMITED Notes to the financial statements for the year ended March 31, 2016
Note - 29
As at March 31, 2016, the Company has an investment of H64,738.68 Lakhs in its wholly owned subsidiary viz., Subex (UK) Limited.
Considering the future operational plan, projected cash flows and the valuation carried out by an external valuer, the management
is of the view that, the carrying value of its aforesaid investment in Subex (UK) Limited as at March 31, 2016 is appropriate.
Note - 30 RELATED PARTY INFORMATION
i) Related parties where control exists
Wholly owned subsidiaries
Subex Americas Inc.
Subex (UK) Limited
Subex Technologies Limited
Subex Azure Holdings Inc.
Subex (Asia Pacific) Pte. Limited
Subex Inc.
Subex Technologies Inc.
Subex Middle East (FZE)
ii) Related parties under AS 18 and as per Companies Act, 2013.
Key management personnel
Surjeet Singh
Managing Director and Chief Executive Officer
Ganesh KV
Chief Financial Officer, Global Head- Legal and Company Secretary
iii) Details of the transactions with the related parties during the year ended March 31, 2016:
(H in Lakhs)
Particulars
I.
Transactions with wholly owned subsidiaries
Income from subcontracting services:
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Americas Inc.
Subex Middle East (FZE)
Marketing and allied service charges:
Subex (UK) Limited
Subex Inc.
Subex Americas Inc.
Subex (Asia Pacific) Pte. Limited
Subex Middle East (FZE)
Subex Technologies Limited
Interest received/ receivable on inter company loans:
Subex Americas Inc.
2015 - 16
2014 - 15
9,591.20
3,789.03
1,432.41
1,363.08
111.68
16,287.40
5,424.12
5,123.71
471.30
360.98
4.90
0.19
11,385.20
189.84
189.84
8,207.86
3,646.08
1,615.29
723.52
-
14,192.75
5,838.72
4,641.62
390.77
452.88
-
-
11,323.99
170.09
170.09
113
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 30 RELATED PARTY INFORMATION
Particulars
Employee Stock Option expenses allocated to:
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Americas Inc.
Reimbursement of expenses made to:
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Inc.
Subex Technologies Limited
Reimbursement of expenses received from:
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Inc.
Subex Americas Inc.
Provision for doubtful advances/debts:
Subex Americas Inc.
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Technologies Limited
Bad debts written off/(written back):
Subex (Asia Pacific) Pte. Limited
Subex Inc.
Subex (UK) Limited
Subex Americas Inc.
Subex Technologies Inc.
Loans and advances given during the year
Subex Technologies Limited
II. Transactions with key managerial personnel
Salary and perquisites*
Surjeet Singh
Ganesh KV
2015 - 16
2014 - 15
(H in Lakhs)
12.06
4.39
0.97
-
17.42
38.92
19.11
26.73
-
84.76
586.51
201.77
32.23
0.76
821.27
2,929.63
4.67
2,953.74
4,421.31
12.00
10,321.35
37.42
102.18
395.68
9,940.69
-
10,475.97
6.30
6.30
16.26
67.40
6.41
1.70
0.38
0.01
8.50
15.23
2.73
10.90
6.07
34.93
2.50
73.63
18.56
-
94.69
928.67
-
-
-
6.76
935.43
-
-
-
-
(55.36)
(55.36)
-
-
15.26
69.14
* The remuneration to the key managerial personnel does not include the provisions/accruals made on best estimate basis as they
are determined for the Company as a whole.
114
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 30 RELATED PARTY INFORMATION
iv) Details of balances receivable from and payable to related parties are as follows:
Particulars
I. Balances receivable from and payable to wholly owned subsidiaries
Trade receivables
Subex Americas Inc. ( net of provision of H3,407.59 Lakhs (March 31, 2015:
H2,425.72 Lakhs)
Subex UK Limited (net of provision of H148.39 Lakhs (March 31, 2015:
H143.72 Lakhs)
Subex Inc. ( net of provision of H2,953.74 Lakhs (March 31, 2015: HNil)
Subex (Asia Pacific) Pte. Limited ( net of provision of H4,777.71 Lakhs (March
31, 2015: H356.40 Lakhs)
Subex Middle East (FZE)
Trade payables
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Americas Inc.
Subex Technologies Limited
Subex Middle East (FZE)
Loans and advances
Subex Americas Inc.( net of provision of H1,947.76 Lakhs (March 31, 2015:
H Nil)
Subex Technologies Limited (net of provision of H1,717.67 Lakhs (March 31,
2015: H1,705.67 Lakhs)
Outstanding guarantees taken from:
Subex Technologies Limited
Subex (UK) Limited
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
7,165.52
17,392.30
18,122.68
17,580.42
14,106.03
1,768.69
109.82
41,272.74
19,834.71
16,280.38
1,374.13
6,633.28
0.83
4.86
44,128.19
-
-
-
5,570.00
5,570.00
11,140.00
16,828.58
5,768.68
-
57,569.98
19,517.22
16,915.56
680.96
6,133.76
0.83
-
43,248.33
1,844.20
5.70
1,849.90
6,495.00
6,495.00
12,990.00
Note - 31 LOANS AND ADVANCES GIVEN TO SUBSIDIARIES
Disclosure as per Regulation 34(3) and Regulation 53(f) read with Para A of Schedule V of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 of the listing agreement with the Stock Exchanges
Loans and advances in the nature of loans given to subsidiaries:
(H in Lakhs)
Name of the party
Relationship
Subex Americas Inc.*
Wholly Owned
Subex Technologies Ltd.**
Subsidiaries
March 31, 2016
March 31, 2015
Outstanding
amount
Maximum balance
outstanding during
the year
Outstanding
amount
Maximum balance
outstanding during
the year
1,947.76
1,717.67
1,947.76
1,717.67
1,844.20
1,711.37
1,844.20
1,711.37
* The Loans and advances to Subex Americas Inc., are fully provided in the current year ( March 31, 2015: H Nil)
** The Loans and advances to Subex Technologies Limited are provided for to the extent of H1,717.67 Lakhs ( March 31, 2015 : H1,705.67 Lakhs)
115
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 32 SEGMENT REPORTING
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 - 33 COMMITMENTS AND CONTINGENT LIABILITIES
Particulars
Income tax demands (Note - [i])
Service tax demands (Note - [ii])
Others (Note - [iii])
Bank guarantees (furnished towards customers)
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
4,915.20
3,687.15
1,293.44
123.35
5,930.13
3,687.15
1,293.44
74.47
i.
Income tax
The Company has received assessment orders for the financial years ended March 31, 2002, March 31, 2003, March 31, 2004,
March 31, 2005, March 31, 2006, March 31, 2007, March 31, 2009, March 31, 2010, March 31, 2011 and March 31, 2012,
wherein certain adjustments were made to the taxable income in relation to various matters including adjustments in respect of
transfer pricing under section 92CA of the Income Tax Act, 1961 and disallowances of certain expenditures. These demands are
disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The
management is of the view that the prices determined by it are at arm’s length, expenditures are deductible based on outcome
of previous litigations, and is confident that the demands raised by the Assessing Officers are not tenable under the Income
Tax Act, 1961. Pending outcome of the aforesaid matters under litigation, no provision has been made in the books of account
towards these tax demands.
ii. Service tax
The Company has received demand order towards the service tax on import of certain services and equivalent amount of
penalties under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006
to July 2009. These demands are disputed by the management and the Company has filed appeals against these orders with
various appellate authorities. The management is of the view that the service tax is not applicable on those import of services,
and is confident that the demands raised by the Assessing Officers are not tenable under law. Pending outcome of the aforesaid
matter under litigation, no provision has been made in the books of account towards these tax demands.
iii. Others
The Company has received certain claims from ex-directors of the Company for an amount of H1,293.44 Lakhs. The aforesaid
claims are disputed by the Company and these matters are presently under arbitration with the tribunal. The management is
of the view that these claims are not tenable. The Company has also claimed the excess managerial remuneration of H123.80
Lakhs paid to the aforementioned ex-directors during the year ended March 31, 2013, in excess of the limits prescribed under
Schedule XIII of the Companies Act, 1956, which has been treated as monies due from the directors, being held by them in trust
for the Company, and other advances paid to such ex-directors during the year 2012-13 amounting to H110.00 Lakhs (March
31, 2015: H110.00 Lakhs). The aggregate amount of H233.80 Lakhs (March 31, 2015: H233.80 Lakhs) is included in ‘Long-term
loans and advances’ in the financial statements. Pending final outcome of the litigations, no provision has been made in the
books of account in this regard.
iv. The Company does not have any other commitments as at balance sheet date except towards the operating lease as disclosed
in note 34.
v. The Company has issued a comfort letter to provide continued financial support to its wholly owned subsidiary viz., Subex
Americas Inc, to ensure that the entity is able to meet its debts, commitments and liabilities as they fall due and it continues as
a going concern.
116
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 34 OPERATING LEASES
The Company is obligated under non-cancellable lease for office and residential space that are renewable on a periodic basis at the
option of both the lessor and lessee. The total rental expenses under non-cancellable operating leases amounted to H449.02 Lakhs
and H Nil for the year ended March 31, 2016 and March 31, 2015 respectively.
Future minimum lease payments under non-cancellable operating lease payable within one year from balance sheet date is H723.59
Lakhs (March 31, 2015: H Nil).
The Company leases office facilities, residential facilities and servers under cancellable operating lease agreements. The Company
intends to renew such leases in the normal course of its business. Total rental expense under cancellable operating leases was
H705.89 Lakhs and H1,085.74 Lakhs for the year ended March 31, 2016 and March 31, 2015 respectively.
Note - 35 EMPLOYEES STOCK OPTION PLAN (ESOP)
The Company during the years 1999-2000, 2005-2006 and 2008-09 has established equity settled ESOP schemes i.e. ESOP II, ESOP
III and ESOP IV respectively. 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 : 883,750 shares
ESOP III : 2,000,000 shares
ESOP IV : 2,000,000 shares
Employees’ Stock Options details as on the balance sheet date are:
Particulars
Options outstanding at the beginning of the year
ESOP – II
ESOP – III
ESOP – IV
Cancelled, surrendered or lapsed during the year
ESOP – II
ESOP – III
ESOP – IV
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
2015 - 16
2014 - 15
Options
(no.)
Weighted average
exercise price per
stock option (H)
Options
(no.)
Weighted average
exercise price per
stock option (H)
1,925
741,072
475,010
1,925
596,093
344,510
-
144,979
130,500
-
126,429
130,500
67.00
27.99
28.49
-
-
-
-
24.28
28.51
-
22.65
28.51
2,975
8,63,950
5,67,518
1,050
122,878
92,508
1,925
741,072
475,010
1,925
666,967
475,010
67.00
30.78
28.56
-
-
-
67.00
27.99
28.49
67.00
31.10
28.49
117
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 35 EMPLOYEES STOCK OPTION PLAN (ESOP)
Details of Weighted average remaining contractual life and range of exercise prices for the options outstanding at the balance sheet date.
Particulars
ESOP – II
ESOP – III
ESOP – IV
* considering vesting and exercise period
Weighted average remaining
contractual life(years)*
Range of exercise prices (H)
2015 - 16
2014 - 15
2015 - 16
2014 - 15
-
1.49
0.11
0.37
1.16
1.17
-
67
10.26 -73.90
10.26 - 152
28.44 - 53.54
28.44 - 53.54
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 as below:
Particulars
Risk-free interest rate
Expected volatility of share
Expected dividend yield
Expected life(years)
As at
March 31, 2016
6.00% - 8.00%
34.00% - 64.85%
0.00% - 1.19%
4
As at
March 31, 2015
6.00% - 8.00%
34.00% - 64.85%
0.00% - 1.19%
4
The expected life of stock options is based on historical data and current expectations and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects assumption that the historical volatility over a period similar to the life of the
options is indicative of future trends, which may also not necessarily be the actual outcome.
The impact on the EPS of the Company if fair value method is adopted is given below:
Particulars
Net loss for the year (as reported)
Less: Stock-based employee compensation expense reversals based on intrinsic
value
Add: Stock-based employee compensation expense reversals based on fair value
Net loss - (pro forma)
Earnings/(loss) per share
Basic & Diluted
- As reported (H per share)
- Pro forma (H per share)
March 31, 2016
(13,195.44)
(44.38)
March 31, 2015
(2,840.01)
(9.68)
119.62
(13,120.20)
27.49
(2,822.20)
(4.54)
(4.52)
(1.65)
(1.64)
Note - 36 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 H261.42 Lakhs (March 31, 2015: H219.18 Lakhs) for Provident
Fund contributions (excluding administration charges) and H0.08 Lakhs (March 31, 2015: H0.55 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. Under gratuity plan, every employee who has
completed at least five years of service gets a gratuity on departure @15 days of last drawn salary for each completed year of
service. The scheme is funded with an insurance company in the form of qualifying insurance policy.
118
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 36 EMPLOYEE BENEFIT PLANS
The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss and the
funded status and amount recognised in the balance sheet.
(Amount in H Lakhs except Assumptions)
Particulars
I. Components of employee benefits expense
Current service cost
Interest cost
Expected return on plan assets
Actuarial losses / (gains)
Total expense recognized in the statement of profit and loss
II. Actual contribution and benefit payments for the year
Actual benefit payments
Actual contributions
III. Net asset / (liability) recognized in balance sheet
Present value of defined benefit obligation
Fair value of plan assets
Funded status [surplus / (deficit)]
Net asset / (liability) recognized in balance sheet
- Current
- Non current
IV. Change in defined benefit obligations during the year
Present value of defined benefit obligation at beginning of the year
Current service cost
Interest cost
Actuarial (gains) / losses
Benefits paid
Present value of defined benefit obligation at the end of the year
V. Change in fair value of assets during the year
Plan assets at beginning of the year
Expected return on plan assets(estimated)
Actuarial gain / (loss)
Actual company contributions
Benefits paid
Plan assets at the end of the year
VI. Actual return on plan assets
VII. Expected contribution in the next year
VIII. Major categories of plan assets as a percentage of the fair value of total
assets are:
Investments with insurer
IX. Actuarial assumptions
Discount rate
Expected return on plan assets
Salary escalation
Attrition rate
March 31, 2016
March 31, 2015
62.21
30.14
(4.94)
5.04
92.45
79.17
130.00
(406.28)
115.49
(290.79)
(290.79)
(32.43)
(258.36)
386.40
62.21
30.14
6.47
(78.94)
406.28
58.29
4.94
1.43
130.00
(79.17)
115.49
6.37
120.00
100%
7.60%
8.50%
8.00%
18.00%
50.95
23.53
(3.62)
85.42
156.28
52.60
80.00
(386.40)
58.29
(328.10)
(328.10)
(7.95)
(320.15)
280.70
50.95
23.53
83.82
(52.60)
386.40
28.88
3.62
(1.60)
80.00
(52.60)
58.29
2.02
100.00
100%
7.80%
8.50%
8.00%
18.00%
119
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 36 EMPLOYEE BENEFIT PLANS
Amounts for the current and previous four periods are as follows:
(H in Lakhs)
Particulars
Defined benefit obligation at the end of
the year
Plan assets at the end of the year
Funded status
Experience gain/(loss) adjustments on
plan liabilities
Experience gain/(loss) adjustments on
plan assets
Actuarial gain/(loss) due to change on
assumptions
Year ending
March 31, 2016 March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012
(286.84)
(406.28)
(296.40)
(280.70)
(386.40)
115.49
(290.79)
(3.76)
58.29
(328.10)
1.09
28.88
(251.82)
(10.25)
7. 36
(289.04)
11.31
7.10
(279.74)
54.12
1.43
(1.60)
0.51
(0.09)
0.31
(2.71)
(84.91)
24.66
(42.73)
12.77
(i) The composition of the plan assets held under the funds managed by the insurer is as follows:
Fund Type
Government securities
Fixed deposits and other assets
March 31, 2016
(%)
March 31, 2015
(%)
39.54
60.46
43.31
56.69
(ii) The discount rate is based on the prevailing bond yields of Government of India securities as at the balance sheet date
corresponding to a term of approximately 5 years which is the expected term of defined benefit obligation.
(iii) The expected rate of return on plan assets is determined after considering several applicable factors such as composition of
plan assets, investment strategy, market scenario, etc. In order to protect the capital and optimise returns within acceptable risk
parameters, the plan assets are well diversified.
(iv) The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other
relevant factors, benefit obligation such as supply and demand in the employment market.
(v) The mortality rate is based on the table as specified by the Indian Assured Lives Mortality (2006-08) (modified) Ult.
Note - 37 EARNINGS PER SHARE (EPS)
The following reflects the profit and share data used in the basic and diluted EPS computations:
(H in Lakhs except as otherwise indicated)
Particulars
Nominal value of equity shares (H per share)
Net loss after tax attributable to shareholders (A)
Weighted average number of equity shares used in computing EPS(B) ( in Lakhs)
Loss per share – Basic and diluted (H per share) (A/B)*
* Foreign currency convertible bonds and Employee stock options outstanding as at March 31, 2016 and March 31, 2015 are
10.00
(13,195.44)
2,904.20
(4.54)
10.00
(2,840.01)
1,716.69
(1.65)
March 31, 2015
March 31, 2016
anti-dilutive and accordingly have not been considered for the purpose of dilutive EPS.
Note - 38 VALUE OF IMPORTS CALCULATED ON CIF BASIS (ACCRUAL BASIS)
(H in Lakhs)
Particulars
Cost of hardware
Capital goods
120
Year ended
March 31, 2016
Year ended
March 31, 2015
73.02
93.20
166.22
1,478.70
378.87
1,857.57
SUBEX LIMITED Notes to the financial statements for the year ended March 31, 2016
Note - 39 EXPENDITURE IN FOREIGN CURRENCY (ACCRUAL BASIS)
Particulars
Marketing and allied service charges
Interest expense (net of reversals of H10,415.53 Lakhs) (March 31, 2015: Nil)
Travelling and conveyance
Purchase of software
Cost of hardware and software (net of reversals of H173.46 Lakhs) (March 31,
2015: H Nil)
Sales commission
Others
Note - 40 EARNINGS IN FOREIGN CURRENCY (ACCRUAL BASIS)
Particulars
Revenue
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
11,385.01
(8,189.23)
897.63
253.62
73.02
88.27
237.98
4,746.30
11,323.99
3,352.21
702.94
39.79
1,478.70
-
195.82
17,093.45
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
27,794.14
29,451.56
Note - 41 UNHEDGED FOREIGN CURRENCY EXPOSURE
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 at the year end. The net foreign currency exposure that has not
been hedged by derivative instruments or otherwise as at March 31, 2016 is H9,353.40 Lakhs (March 31, 2015: H 46,608.80 Lakhs).
Note - 42 COST OF HARDWARE, SOFTWARE AND SUPPORT CHARGES:
(i) The Company purchases hardware and software to fulfil its obligations under contracts for sale of its products or rendering of
its services. There was no inventory of such hardware/software at the beginning and end of the year.
(ii) Cost of hardware, software and support charges for the year ended March 31, 2016 is net of reversal of provision no longer
required amounting to H173.46 Lakhs ( March 31, 2015: H Nil).
Note - 43
The Company has entered into ‘International transactions’ with ‘Associated Enterprises’ which are subject to Transfer Pricing
regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March 31, 2016 in this
regard, to comply with the requirements of the Income Tax Act, 1961. 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.
Note - 44
During the previous year, the Company has transferred the unclaimed dividend outstanding for a period more than 7 years of H1.31
Lakhs to Investor Education and Protection Fund.
Note - 45
The figures of the previous year were audited by a firm of Chartered Accountants other than S.R. Batliboi & Associates LLP. Previous
year figures have been regrouped/ reclassified, wherever necessary to conform to the current year’s classification.
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
121
2015-16ANNUAL REPORT
Form AOC-I
(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of the Companies (Accounts) Rules, 2014
Statement containing salient features of the financial statement of companies/joint ventures
Part “A” : subsidiaries
(Information in respect of each subsidiary to be presented with amounts in H in lakhs)
Sr No.
1
2
3
4
5
6
7
Name of the subsidiary
Reporting period of the
subsidiary concerned
Reporting currency
Exchange rate as on the
last date of the relevant
Financial Year in the case
of foreign subsidiaries
Subex
(Asia Pacific)
Pte Ltd
Subex (UK)
Limited
Subex
Americas Inc.
Subex
Incorporated
Subex
Technologies
Ltd
Subex
Middle East
Subex
Technologies
Inc***
31 March
2016
31 March
2016
31 March
2016
31 March
2016
31 March
2016
31 March
2016
31 March
2016
SGD
49.27
GBP
95.47
USD
66.26
USD
66.26
INR
1.00
AED
18.04
USD
66.26
Share capital
0.00
40.60
38,274.10
0.00
400.00
27.06**
-
Reserves & surplus
(3,453.34)
9,564.26
(43,530.11)
(3,237.92)
(525.32)
11.72
(2,089.15)
5,424.86
31,900.93
16,223.13
18,747.19
5.09
318.89
1.39
(8,878.17)
(22,296.07)
(22,613.86)
(21,984.43)
(130.40)
(280.11)
Total assets
Total Liabilities
Investments
Turnover*
0
0
1
0
2,014.51
17,003.88
2,541.61
10,629.67
Profit before taxation
54.36
(4,834.07)
17,500.24
Profit after taxation
Proposed dividend
% of shareholding
6.86
(5,098.82)
17,388.74
0
100%
0
100%
0
100%
219.98
(98.55)
0
100%
0
-
(3.36)
(0.46)
0
100%
0
118.70
12.07
12.07
0
100%
-
0
-
(1.56)
(1.56)
0
100%
Date of Acquisition
23-Jun-06
23-Jun-06
1-Apr-07
23-Jun-06
28-Mar-05
25-Mar-15
12-Jan-00
*
Turnover includes inter company transactions
** SME - Share Capital includes Share Application Money
*** Subex Technologies Inc. the wholly-owned subsidiary of Subex Technologies Limited has been dissolved vide certificate number 134399117,
dated December 04, 2014, issued by the Department of Treasury of the State of New Jersey.
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
122 SUBEX
LIMITED
Consolidated
Financial
Statement
123
2015-16ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
To the Members of Subex Limited
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial
statements of Subex Limited (hereinafter referred to as “the
Holding Company”), its subsidiaries (the Holding Company and
its subsidiaries together referred to as “the Group”), comprising
of the Consolidated Balance Sheet as at March 31, 2016, the
Consolidated Statement of Profit and Loss and Consolidated
Cash Flow Statement for the year then ended, and a summary
of significant accounting policies and other explanatory
information (hereinafter referred to as ‘the consolidated
financial statements’).
Management’s Responsibility for the Consolidated Financial
Statements
The Holding Company’s Board of Directors is responsible for
the preparation of these consolidated financial statements in
terms of the requirement of the Companies Act, 2013 (“the
Act”) 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 accounting
principles generally accepted in India, including the Accounting
Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014. The respective
Board of Directors of the companies included in the Group are
responsible for maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding
of the assets of the Group and for preventing and detecting
frauds and other irregularities; the selection and application
of appropriate accounting policies; making judgments and
estimates that are reasonable and prudent; and the design,
implementation and maintenance of adequate internal financial
controls that were operating effectively for ensuring the
accuracy and completeness of the accounting records, 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, which have
been used for the purpose of preparation of the consolidated
financial statements by the Directors of the Holding Company,
as aforesaid.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. While conducting the
audit, we have taken into account the provisions of the Act,
the accounting and auditing standards and matters which are
124
required to be included in the audit report under the provisions
of the Act and the Rules made thereunder. We conducted our
audit in accordance with the Standards on Auditing, issued by
the Institute of Chartered Accountants of India, as specified
under Section 143(10) of the Act. 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 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 financial controls relevant to the
Holding Company’s preparation of the consolidated financial
statements that give a true and fair view in order to design
audit procedures that are appropriate in the circumstances.
An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the
accounting estimates made by the Holding Company’s Board
of Directors, as well as evaluating the overall presentation of
the consolidated financial statements. We believe that the audit
evidence obtained by us is sufficient and appropriate to provide
a basis for our audit opinion on the consolidated financial
statements.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the consolidated 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 of
the consolidated state of affairs of the Group as at March 31,
2016, their consolidated profit, and their consolidated cash
flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by section 143 (3) of the Act, we report, to the
extent applicable, that:
(a) We have sought and obtained all the information and
explanations which to the best of our knowledge and
belief were necessary for the purpose of our audit of
the aforesaid consolidated financial statements;
SUBEX LIMITED (b) In our opinion proper books of account as required
by law relating to preparation of the aforesaid
consolidated financial statements have been kept so
far as it appears from our examination of those books;
(c) The Consolidated Balance Sheet, Consolidated
Statement of Profit and Loss, and Consolidated
Cash Flow Statement dealt with by this Report are in
agreement with the books of account maintained for
the purpose of preparation of consolidated financial
statements;
(d) In our opinion, the aforesaid consolidated financial
statements comply with the Accounting Standards
specified under section 133 of the Act, read with Rule
7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of the written representations received
from the directors of the Holding Company and its
subsidiary company as on March 31, 2016 and taken
on record by the Board of Directors of the Holding
Company and its subsidiary company, none of the
directors of the companies incorporated in India
is disqualified as on March 31, 2016 from being
appointed as a director in term of section 164(2) of
the Act.
(f) With respect to the adequacy of the internal financial
controls over financial reporting of the Holding
Company and its subsidiary company incorporated in
India and the operating effectiveness of such controls,
refer to our separate report in “Annexure 1” to this
report;
(g) With respect to the other matters to be included in
the Auditor’s Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and
according to the explanations given to us:
i.
The Group has disclosed the impact of pending
litigations on
its
consolidated financial statements – refer note 10
and 30 to the consolidated financial statements;
financial position
its
in
ii. The Group did not have any long-term contracts
including derivative contracts for which there
were any material foreseeable losses; and
iii. There were no amounts which were required
to be transferred to the Investor Education and
Protection Fund by the Holding Company and its
subsidiary company incorporated in India.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Sunil Bhumralkar
Partner
Membership Number: 035141
Place of Signature: Bengaluru
Date: May 24, 2016
125
2015-16ANNUAL REPORT Annexure 1 to the Independent Auditor’s Report of even date on the
Consolidated Financial Statements of Subex Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013
(“the Act”)
We have audited the internal financial controls over financial
reporting of Subex Limited (“the Holding Company”) and
its subsidiary (which are companies incorporated in India),
as of March 31, 2016 in conjunction with our audit of the
consolidated financial statements of Subex Limited and its
subsidiary companies as of and for the year then ended.
Those Standards and the Guidance Note require that we comply
with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether adequate internal
financial controls over financial reporting were established
and maintained and if such controls operated effectively in all
material respects.
Management’s Responsibility for Internal Financial Controls
The respective Board of Directors of the Holding Company and
its subsidiary company, which are companies incorporated in
India, are responsible for establishing and maintaining internal
financial controls based on the internal financial controls
over financial reporting criteria established by the Holding
Company and its subsidiary company considering the essential
components of internal control stated in the Guidance Note
on Audit of Internal Financial Controls Over Financial Reporting
issued by the Institute of Chartered Accountants of India.
These responsibilities include the design, implementation
and maintenance of adequate internal financial controls
that were operating effectively for ensuring the orderly and
efficient conduct of its business, including adherence to the
respective company’s policies, the safeguarding of its assets,
the prevention and detection of frauds and errors, the accuracy
and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under
the Act.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s
internal financial controls over financial reporting based on our
audit. We conducted our audit in accordance with the Guidance
Note on Audit of Internal Financial Controls Over Financial
Reporting (the “Guidance Note”) and the Standards on Auditing
as specified under section 143(10) of the Companies Act, 2013,
to the extent applicable to an audit of internal financial controls,
both applicable to an audit of Internal Financial Controls and,
both issued by the Institute of Chartered Accountants of India.
Our audit involves performing procedures to obtain audit
evidence about the adequacy of the internal financial controls
over financial reporting and their operating effectiveness. Our
audit of internal financial controls over financial reporting
included obtaining an understanding of internal financial
controls over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the
assessed risk. 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.
We believe that the audit evidence, we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion on the Holding Company and its subsidiary company’s
internal financial controls over financial reporting.
Meaning of Internal Financial Controls Over Financial
Reporting
A company’s internal financial controls over financial reporting
is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal
financial controls over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
126
SUBEX LIMITED accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made
only in accordance with authorisations of management and
directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorised
acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial controls
over financial reporting, including the possibility of collusion
or improper management override of controls, material
misstatements due to error or fraud may occur and not be
detected. Also, projections of any evaluation of the internal
financial controls over financial reporting to future periods
are subject to the risk that the internal financial controls over
financial reporting may become inadequate because of changes
in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
Opinion
In our opinion, the Holding Company, its subsidiary company,
which are companies incorporated in India, have, maintained
in all material respects, adequate internal financial controls
over financial reporting and such internal financial controls
over financial reporting were operating effectively as at
March 31, 2016, based on the internal controls over financial
reporting criteria established by the Holding Company and
its subsidiary company considering the essential components
of internal controls stated in the Guidance Note on Audit of
Internal Financial Controls Over Financial Reporting issued by
the Institute of Chartered Accountants of India.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Sunil Bhumralkar
Partner
Membership Number: 035141
Place of Signature: Bengaluru
Date: May 24, 2016
127
2015-16ANNUAL REPORT Consolidated Balance Sheet as at 31 March, 2016
(H in Lakhs)
Notes
As at
March 31, 2016
As at
March 31, 2015
Equity and liabilities
Shareholders' funds
Share capital
Reserves and surplus
Non-current liabilities
Long-term borrowings
Other long-term liabilities
Long-term provisions
Current liabilities
Short-term borrowings
Trade payables - other than acceptances
- total outstanding dues of micro enterprises and small enterprises
- total outstanding dues of creditors other than micro enterprises and small enterprises
Other current liabilities
Short-term provisions
Total
Assets
Non-current assets
Fixed assets
Tangible assets
Intangible assets
Goodwill on consolidation (refer note 23 (iii) & 27)
Long-term loans and advances
Other non-current assets
Current assets
Trade receivables
Cash and bank balances
Short-term loans and advances
Other current assets
Total
3
4
5
6
7
8
9
9
9
10
11
11
12
13
14
15
16
17
50,281.16
22,418.77
72,699.93
4,339.52
610.48
295.47
5,245.47
18,292.26
2,611.76
20,904.02
57,768.75
9,319.76
320.16
67,408.67
10,395.74
12,506.54
4.83
1,671.75
12,851.08
1,431.49
26,354.89
104,300.29
647.60
81.99
729.59
76,772.22
2,941.47
238.56
80,681.84
11,148.15
8,599.63
1,169.48
2,701.19
23,618.45
104,300.29
3.06
3,411.44
7,058.81
827.10
23,806.95
112,119.64
708.93
108.92
817.85
85,642.22
2,983.11
751.92
90,195.10
10,859.88
4,918.08
868.77
5,277.81
21,924.54
112,119.64
Corporate information and significant accounting policies
1 & 2
The accompanying notes are an integral part of the financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
128
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
SUBEX LIMITED
Consolidated Statement of Profit & Loss for the year ended 31 March, 2016
(H in Lakhs)
Notes
Year ended
March 31, 2016
Year ended
March 31, 2015
I
1
Continuing operations
Income
Revenue from operations
Other income
Total income
2
Expenses
Cost of hardware, software and support charges
Employee benefits expense and sub-contract charges
Other expenses
Total expenses
Earnings before
exceptional items (EBITDA) (1-2)
interest, tax, depreciation, amortisation and
Interest income
Finance costs
Depreciation and amortisation expense
Profit before exceptional items and tax (3+4-5-6)
Exceptional items (net)
Profit before tax (7+8)
3
4
5
6
7
8
9
10 Tax expense
Current tax expense
11 Profit for the year from continuing operations (9-10)
II
Discontinuing operations
12 Loss before tax from discontinuing operations
13 Tax expense/ (expense reversal) of discontinuing operations
14 Loss from discontinuing operations (12-13)
III
Total operations
15 Profit for the year (11+14)
16 Earnings per equity share (nominal value of share H10 (March 31, 2015:
H10))
Basic and diluted
Continuing operations
Total operations
18
19.1
38
20
22
19.2
21
11
23
32
32
35
32,335.47
116.35
32,451.82
41.56
17,624.83
8,243.18
25,909.57
6,542.25
4.28
4,643.10
427.49
1,475.94
5,674.85
7,150.79
1,275.97
5,874.82
(5.23)
(2.90)
(2.33)
35,983.31
85.62
36,068.93
1,663.83
16,289.17
9,540.89
27,493.89
8,575.04
4.58
6,103.99
402.04
2,073.59
-
2,073.59
572.34
1,501.25
(474.18)
5.62
(479.80)
5,872.49
1,021.45
2.02
2.02
0.87
0.59
Corporate information and significant accounting policies
1 & 2
The accompanying notes are an integral part of the financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
129
2015-16ANNUAL REPORT
Consolidated Cash Flow Statement for the year ended 31 March, 2016
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
7,150.79
(5.23)
7,145.56
427.49
(439.03)
8,870.00
(61.80)
(7,741.64)
(4.45)
0.34
(1,130.38)
7,066.09
(2,377.12)
62.76
(48.58)
340.60
117.70
2,629.06
7,790.51
(1,152.14)
6,638.37
(326.06)
1.23
485.65
2.38
163.20
2,073.59
(474.18)
1,599.41
402.04
577.47
-
(18.19)
6,104.63
(4.58)
(1.62)
279.08
8,938.24
805.36
94.83
(779.89)
(1,440.92)
(164.18)
(164.27)
7,289.17
(907.09)
6,382.08
(631.13)
9.36
(245.19)
11.06
(855.90)
A Cash flow from operating activities
Profit before tax and after exceptional items from continuing operations
Loss before tax and after exceptional items from discontinued operations
Profit before tax and after exceptional items
Adjustments:
Depreciation and amortisation expense
Provision for doubtful debts
Loss on impairment of goodwill (exceptional item)
Gain on Employee Stock Option Scheme
Finance costs (including exceptional items)
Interest income
Loss/ (profit) on sale of fixed assets (net)
Unrealized foreign exchange (gain)/ loss (net)
Operating profit before working capital changes
Movement in working capital:
Increase/ (decrease) in trade payables
Increase/ (decrease) in provisions
Increase/ (decrease) in other liabilities
Decrease/ (increase) in trade receivables
Decrease/ (increase) in loans and advances
Decrease/ (increase) in other assets
Cash generated from operations
Taxes paid (net)
Net cash flow from operating activities
B
Cash flow from investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Movement in bank deposits (net)
Interest received
Net cash flow from/ (used) in investing activities
130
SUBEX LIMITED Consolidated Cash Flow Statement for the year ended 31 March, 2016 (contd.)
C
Cash flow from financing activities
Movement in working capital loans (net)
Interest paid
Dividends paid (refer note 40)
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
(2,263.50)
(1,372.27)
-
(2,437.05)
(2,249.25)
(1.31)
Net cash flow used in financing activities
(3,635.77)
(4,687.61)
Net increase in cash and cash equivalents (A+B+C)
Effect of exchange rate changes
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Components of cash and cash equivalents
Cash on hand
Balance with banks:
in current accounts
in EEFC accounts
Total cash and cash equivalents (note 15)
Corporate information and significant accounting policies
1&2
The accompanying notes are an integral part of the financial statements
3,165.80
515.75
4,918.08
8,599.63
838.57
(227.13)
4,306.64
4,918.08
0.82
0.77
8,506.69
92.12
8,599.63
4,843.65
73.66
4,918.08
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
131
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 1 CORPORATE INFORMATION
Subex Limited (“the Company” or “ Subex”) 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 Centre (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 fulfilment, 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 its registered office in Bengaluru and operates through its wholly owned subsidiaries in India, USA, UK, Singapore, Canada and
UAE and branches in USA, UK, Canada, Australia, Italy, UAE and Saudi Arabia.
Note - 2 BASIS OF CONSOLIDATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting and preparation of consolidated financial statements
I
The consolidated financial statements of the Company and its subsidiaries (together “the Group”) have been prepared in
accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply in all material respects with
the Accounting Standards notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the
Companies (Accounts) Rules, 2014. The consolidated financial statements have been prepared on an accrual basis under the
historical cost convention. The accounting policies adopted in the preparation of the consolidated financial statements are
consistent with those followed in the previous year.
II
Principles of consolidation
The consolidated financial statements have been prepared on the following basis:
(i) The consolidated financial statements of the Group have been prepared based on a line-by-line consolidation of the
balance sheets, the statements of profit and loss and the cash flow statements of the Company and its subsidiaries. All
inter company transactions, balances and unrealised surplus and deficit on transactions between the entities in the Group
are eliminated unless cost cannot be recovered.
(ii) The excess of cost to the Company of its investments in the subsidiary companies over its share of equity of the subsidiary
companies, at the date on which the investment in the subsidiary companies were made, is recognised as ‘Goodwill’ being
an intangible asset in the consolidated financial statements and is tested for an impairment on an annual basis. On the
other hand, where the share of equity in the subsidiary companies as on the date of investment is in excess of cost of
investments of the Company, it is recognised as ‘ Capital Reserve’ and shown in ‘ Reserves and Surplus’, in the consolidated
financial statements. The ‘Goodwill’ is determined separately for each subsidiary company and such amounts are not set
off between different entities.
(iii) The consolidated financial statements have been prepared using uniform 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.
(iv) 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, 2016.
(v) Following subsidiary companies have been considered in the preparation of the consolidated financial statements:
132
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Name of the entity
(wholly owned subsidiary)
Country of
Incorporation
Ownership
held by
% of holding and voting power either directly
or indirectly through subsidiary as at
March 31, 2016
March 31, 2015
Subex Americas Inc.
Canada
Subex Limited
Subex (UK) Limited
United Kingdom
Subex Limited
Subex Inc.
United States of America
Subex (UK) Limited
Subex (Asia Pacific) Pte. Limited
Singapore
Subex (UK) Limited
Subex Technologies Limited
India
Subex Limited
Subex Technologies Inc.
United States of America
Subex Technologies Limited
Subex Azure Holdings Inc.
United States of America
Subex Americas Inc.
Subex Middle East, FZE
United Arab Emirates
Subex Limited
100
100
100
100
100*
**
100***
100#
100
100
100
100
100*
**
100***
100#
* The Group has discontinued the operations of Subex Technologies Limited with effect from April 01, 2013. Refer note 32 for
details of discontinued operations.
** Subex Technologies Inc. the wholly owned subsidiary of Subex Technologies Limited has been dissolved vide certificate number
134399117, dated December 04, 2014, issued by the Department of Treasury of the State of New Jersey.
*** Subex Azure Holdings Inc. does not have operations during the current and previous years.
# Subex Middle East (FZE) was incorporated on February 03, 2015.
III Use of estimates
The preparation of the consolidated financial statements in conformity with Indian GAAP requires the management to
make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities
and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the
management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could
result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in the future periods.
IV Revenue recognition
The Group derives its revenues primarily from sale of license and implementation of its proprietary software and managed/
support services.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
Revenues from licensing arrangements is recognized on transfer of the title in user licenses, except those contracts where
transfer of title is dependent upon rendering of significant implementation and other services by the Group, in which cases
revenue is recognized over the implementation period in accordance with the specific terms of the contracts with clients.
Revenue from implementation and customisation services is recognised using the percentage of completion method.
Percentage of completion is determined on the basis of completed milestones, which represent the fair value of services
rendered.
Revenue from managed/ support services comprise income from fixed price contracts, time-and-material contracts and
annual maintenance contracts. Revenue from fixed price contracts is recognized over the period of the contracts using the
percentage of completion method. Revenue from time and material contracts is recognized when the services are rendered
in accordance with the terms of contracts. Revenue from annual maintenance contracts is recognised rateably over the
period of the contracts.
133
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
The Group collects service tax, sales tax and other applicable taxes as applicable in the respective tax jurisdictions where the
group operates, on behalf of the government and therefore it is not an economic benefit flowing to the Group. Hence it
is excluded from revenue.
Revenue from sale of hardware under reseller arrangements is recognized when all the significant risks and rewards of
ownership of the goods have been passed to the buyer, usually on delivery of goods to customers. Revenue is shown as
net of sales tax, value added tax, other taxes and applicable discounts.
Provisions for estimated losses on contracts are recorded in the period in which such losses become probable based on the
current contract estimates. ‘Unbilled revenue’ included in the current assets represent revenues in excess of amounts billed
to clients as at the balance sheet date. ‘Unearned revenue’ included in the current liabilities represent billings in excess of
revenues recognized.
Interest:
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable
interest rate. Interest income is included under the head “interest income” in the statement of profit and loss.
V Tangible fixed assets
Tangible fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The
cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the
tangible fixed asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving
at the purchase price.
Subsequent expenditure related to an item of tangible fixed asset is added to its book value only if it increases the
future benefits from the existing tangible fixed asset beyond its previously assessed standard of performance. All other
expenses on existing tangible fixed assets, including day-to-day repairs and maintenance expenditure are charged to the
consolidated statement of profit and loss for the period during which such expenses are incurred.
Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition
of depreciable tangible fixed assets are adjusted to the cost of the respective tangible fixed assets and depreciated over
the remaining useful life of such tangible fixed assets. In accordance with MCA circular dated August 09, 2012, exchange
difference adjusted to the cost of tangible fixed asset is the total difference, arising on long-term foreign currency monetary
items pertaining to the acquisition of a depreciable tangible fixed asset, for the period. In other words, the Group does not
differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost and other exchange differences.
Gains or losses arising from derecognition of tangible fixed assets are measured as the difference between the net disposal
proceeds and the carrying amounts of the tangible fixed assets and are recognized in the consolidated statement of profit
and loss when the tangible fixed assets are derecognized.
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, borrowing costs if capitalization criteria are met, directly attributable cost of bringing
the intangible asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving
at the purchase price.
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 intangible 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 intangible
asset reliably, in which case such expenditure is added to the cost of the asset.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the intangible asset and are recognised in the consolidated statement of profit and
loss when the intangible asset is derecognised.
134
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
VII Depreciation and amortisation
Depreciation on tangible fixed assets:
Depreciable amount for tangible fixed assets is the cost of the tangible fixed asset, or other amount substituted for cost,
less its estimated residual value. Depreciation on tangible fixed assets is calculated on a straight-line method based on
the useful lives estimated by the management. And, the individual tangible fixed assets costing less than H5,000 are
depreciated in full, in the year of purchase.
The Group has used the following useful lives to provide depreciation on its tangible fixed assets:
Computer hardware
Furniture and fixtures*
Vehicles*
Office equipment’s *
Useful lives estimated by the management
3 years
5 years
5 years
5 years
Useful lives as per Companies Act. 2013
3 years
10 years
10 years
3 years
* Based on an internal evaluation, the management believes that the useful lives as given above best represent the period
over which management expects to use these tangible fixed assets. Hence, the useful lives for these tangible fixed assets
is different from the useful lives as prescribed under part C of Schedule II of the Companies Act 2013.
Amortisation of intangible assets:
Intangible assets are amortised on a straight line basis over the estimated useful economic life. The Group uses a rebuttable
assumption that the useful life of an intangible asset will not exceed ten years from the date when the intangible asset is
available for use. If the persuasive evidence exists to the effect that useful life of an intangible asset exceeds ten years, the
Group amortises the intangible asset over the best estimate of its useful life.
The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected
useful life of the intangible asset is significantly different from previous estimates, the amortisation period is changed
accordingly. If there has been a significant change in the expected pattern of economic benefits from the intangible asset,
the amortisation method is changed to reflect the changed pattern. Such changes are accounted for in accordance with
AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.
A summary of amortisation policies applied to the Group’s intangible assets is as below:
Computer software
Goodwill
Intellectual property rights
4 years
5 years
5 years
VIII 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
of leased asset 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 achieve a constant periodic rate of
interest on the outstanding liability for each year. Finance charges are recognised as finance costs in the consolidated
statement of profit and loss. Lease management fees, legal charges and other initial direct costs of lease are capitalised.
A leased asset is depreciated on a straight-line basis over the useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain the ownership by the end of the lease term, the capitalised asset is depreciated on a
straight-line basis over the shorter of the estimated useful life of the asset or the lease term.
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 consolidated statement of profit
and loss on a straight line basis over the lease term.
135
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
IX
Impairment of tangible and intangible assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) net selling price and its value in
use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. In determining net selling price,
recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate
valuation model is used.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately
for each of the Group’s cash-generating unit to which the individual assets are allocated. These budgets and forecast
calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and
applied to project future cash flows after the fifth year.
The impairment loss is recognised as an expense in the statement of profit and loss, except for previously revalued tangible
fixed assets, where the revaluation was taken to revaluation reserve. In this case, the impairment is also recognized in the
revaluation reserve up to the amount of any previous revaluation.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s
recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so
that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would
have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the consolidated statement of profit and loss unless the asset is carried at a revalued amount, in
which case the reversal is treated as a revaluation increase.
X Employee share based payments
The Group has formulated Employee Stock Option Schemes (ESOS) for employees of the Group in the form of share
based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled
transactions).
In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and the
Guidance Note on Accounting for Employee Share-based Payments, the cost of equity settled transactions is measured using
the intrinsic value method. 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.
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 regulations, the intrinsic value is amortised on a
straight line basis over the vesting period i.e. the Cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best
estimate of the number of equity instruments that will ultimately vest. The expense or credit recognised in the statement
of profit and loss for a period represents the movement in cumulative expense recognised as at the beginning and end of
that period and is recognised in employee benefits expense.
136
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
XI Employee benefits
Employee benefits include provident fund, gratuity, employee state insurance and compensated absences.
(a) Defined contribution plans:
The Group’s contribution to provident fund, pension 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. These contributions are paid/payable in accordance
with the applicable laws and regulations.
(b) Defined benefit plans:
For defined benefit plans in the form of gratuity, 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.
(c) Short-term employee benefits:
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. Compensated absences, which are expected to be utilised
within the next 12 months, are treated as short-term employee benefits. The Group measures the expected cost
of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
(d) Long-term employee benefits:
Compensated absences which are not expected to occur within twelve months after the end of the period in which
the employees render the related services are treated as long-term employee benefits for measurement purpose. Such
long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit
method at the year end, less the fair value of the plan assets out of which the obligations are expected to be settled.
Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
The Group presents the entire compensated absences balance as a current liability in the balance sheet, since it does
not have an unconditional right to defer its settlement for twelve months after the reporting date.
XII Foreign currency transactions and translation
Initial recognition:
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency at the date of transaction.
Conversion:
Foreign currency monetary items are translated using the exchange rate prevailing at the reporting date. Non-monetary
items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange
rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation
denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
Exchange differences:
The Group accounts for exchange differences arising on translation/ settlement of foreign currency monetary items as
below:
1. Exchange differences arising on a monetary item that, in substance, forms part of the Group’s net investment in a
non-integral foreign operation is accumulated in the foreign currency translation reserve until the disposal of the net
investment. On the disposal of such net investment, the cumulative amount of the exchange differences which have
been deferred and which relate to that investment is recognized as income or as expenses in the same period in which
the gain or loss on disposal is recognized.
137
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
2. Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are
capitalized and depreciated over the remaining useful life of the asset.
3. Exchange differences arising on other long-term foreign currency monetary items are accumulated in the “Foreign
Currency Monetary Item Translation Difference Account” and amortized over the remaining life of the concerned
monetary item.
4. All other exchange differences are recognized as income or as expenses in the period in which they arise.
For the purpose of 2 and 3 above, the Group treats a foreign monetary item as “long-term foreign currency monetary
item”, if it has a term of 12 months or more at the date of its origination.
The Group 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.
Translation of integral and non-integral foreign operation:
The Group classifies all its foreign operations as either “integral foreign operations” or “non-integral foreign operations.”
The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have
been those of the Company itself.
The assets and liabilities of a non-integral foreign operation are translated into the reporting currency at the exchange rate
prevailing at the reporting date. Statement of profit and loss of non-integral foreign operations are translated at average
exchange rates which approximate to the exchange rates on the dates of transactions. The exchange differences arising on
translation are accumulated in the foreign currency translation reserve. On disposal of a non-integral foreign operation,
the accumulated Foreign Currency Translation Reserve relating to that foreign operation is recognized in the consolidated
statement of profit and loss.
When there is a change in the classification of a foreign operation, the translation procedures applicable to the revised
classification are applied from the date of the change in the classification.
XIII Taxes on income
Tax expense comprises current and deferred tax. Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other
applicable tax laws prevailing in the respective tax jurisdictions where the Group operates. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax
relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. MAT payment
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 Group 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 benefits associated with it will flow to
the Group and can be measured reliably, MAT credit is recognised in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, by way of credit to the
statement of profit and loss and shown as “MAT Credit Entitlement”.
The Group reviews the “MAT Credit Entitlement” asset at each reporting date and writes down the asset to the extent the
Group does not have convincing evidence that it will pay normal tax during the specified period.
138
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
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 other items
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 and items relating to capital
losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the assets.
Deferred tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and
loss.
At each reporting date, the Group re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax
asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future
taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Group writes-down the carrying
amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down
is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future
taxable income will be available.
Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws
and the Group has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date
for their realisability.
XIV Cash and cash equivalents
Cash and cash equivalents for the purpose of cash flow statement comprises cash in hand and cash at bank and short-term
investments with an original maturity of three months or less, highly liquid investments that are readily convertible into
known amounts of cash and which are subject to insignificant risk of changes in value.
XV Provisions and contingencies
Provisions:
A provision is recognized when an enterprise has a present obligation as a result of past event 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 of the
amount of the obligation. 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 estimates are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
Contingent liabilities:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present
obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the
obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized
because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in
the financial statements.
XVI 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
139
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for
dividend, interest (net of any attributable taxes) 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.
XVII Segment reporting
The Group 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. The analysis of geographical segments is based on the areas in
which major operating divisions of the Group operate.
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.
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total
common costs.
Revenue, expenses, assets and liabilities which relate to the Group as a whole and are not allocable to segments on a
reasonable basis have been included under ‘unallocated revenue / expenses / assets / liabilities’.
XVIII Operating cycle
Based on the nature of products / activities of the Group and the normal time between acquisition of assets and their
realisation in cash or cash equivalents, the Group has determined its operating cycle as 12 months for the purpose of
classification of its assets and liabilities as current and non-current.
XIX Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Group has elected to
present earnings before interest, tax, depreciation and amortisation (EBITDA) as a separate line item on the face of the
statement of profit and loss. The Group measures EBITDA on the basis of profit/(loss) from continuing operations. In its
measurement, the Group does not include depreciation and amortisation expense, interest income, finance costs and tax
expense.
140
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 3 SHARE CAPITAL
Authorised shares (no.)
545,040,000 (March 31, 2015 : 495,040,000) equity shares of H10 each
200,000 (March 31, 2015: 200,000) preference shares of H98 each
Issued, subscribed and fully paid-up shares (no.)
502,811,646 (March 31, 2015: 182,922,575) equity shares of H10 each
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
54,504.00
196.00
54,700.00
50,281.16
50,281.16
49,504.00
196.00
49,700.00
18,292.26
18,292.26
(a) Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting year
March 31, 2016
March 31, 2015
No.
H in Lakhs
No.
H in Lakhs
At the beginning of the year*
182,922,575
18,292.26
166,639,962
16,664.00
Issued during the year - Conversion of FCCBs
(refer note 24(e))
319,889,071
31,988.90
16,282,613
1,628.26
Outstanding at the end of the year
502,811,646
50,281.16
182,922,575
18,292.26
* includes 243,207 (March 31, 2015: 243,207) shares in respect of which Global Depository Receipts of the Company are listed
on London Stock Exchange.
(b) Terms/ right attached to equity shares
The Company has only one class of equity shares having par value of H10 per share. Each holder of equity shares is entitled
to one vote per share and such amount of dividend per share as declared by the Company. The Company declares and pays
dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the
ensuing Annual General Meeting.
During the year ended March 31, 2016, the amount of per share dividend recognised as distribution to equity shareholders was
H Nil ( March 31, 2015: H Nil)
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The distribution will be in proportion to the 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
in the Company
Name of Shareholder
Equity shares of H10 each fully paid
QVT Mauritius West Fund & Quintessence Mauritius
West Fund
Deutsche Bank AG London -CB Account
Merill Lynch Capital Markets Espana SA SV
Nomura Singapore Limited
Suffolk (Mauritius) Limited & Mansfield(Mauritius)
Limited
March 31, 2016
March 31, 2015
No.
% of holding
in the class
No.
% of holding
in the class
35,829,909
7.13
13,347,888
21,559,422
4,311,884
881,257
4.29
0.86
0.18
10,892,721
10,192,621
10,234,433
-
-
17,372,221
7.36
6.01
5.62
5.64
9.58
As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.
141
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
(d) Shares reserved for issue under options (no.)
As at March 31, 2016, 20,801,449 shares (March 31, 2015: 202,656,863) were reserved for issuance as follows:
(i) Nil shares (March 31, 2015: 1,925 shares) of H10 each towards outstanding employee stock options scheme under ‘ESOP
2000’ granted/available for grant. Refer note 33
(ii) 144,979 shares (March 31, 2015 : 741,072 shares) of H10 each towards outstanding employee stock options scheme
under ‘ESOP 2005’ granted / available for grant. Refer note 33
(iii) 130,500 shares (March 31, 2015: 475,010 shares) of H10 each towards outstanding employee stock options scheme under
‘ESOP 2008’ granted / available for grant. Refer note 33
(iv) 67,174 shares (March 31, 2015: 67,174 shares) of H10 each towards conversion of foreign currency convertible bonds(FCCB
I) available for conversion. Refer note 24
(v) 839,721 shares (March 31, 2015: 839,721 shares) of H10 each towards conversion of foreign currency convertible bonds
(FCCB II) available for conversion. Refer note 24
(vi) 19,619,075 shares (March 31, 2015: 200,531,961 shares) of H10 each towards conversion of foreign currency convertible
bond (FCCB III) available for conversion. Refer note 24
(e) 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:
March 31, 2016
March 31, 2015
shares allotted as
fully paid-up pursuant
Equity
(no.)*
(In accordance with the terms of FCCBs III, out of the principal face value of
US$ 127.72 Million (H71,592.81 Lakhs), an amount of US$ 36.32 Million
(H20,358.99 Lakhs) were mandatorily converted into equity shares on July 07, 2012.
* also refer note 24(e) regarding conversion of FCCBs III into equity shares of the Company.
to contract
89,335,462
89,335,462
Note - 4 RESERVES AND SURPLUS
General reserve
Securities premium account
Balance as per last financial statements
Add : Additions during the year on conversion of FCCBs
Less: Adjustment towards accrual for redemption premium on FCCBs (net)
Closing balance
Share options outstanding account
Balance as per last financial statements
Less : Compensation on ESOP cancelled/lapsed during the year
Add/ (less) : Deferred stock compensation expenses
Closing balance
Foreign currency monetary item translation difference account (refer note 25)
Balance as per last financial statements (debit)
Add: Effect of foreign exchange rate variation during the year
Less: Amortisation for the year
Closing balance
Exchange reserve on consolidation
Balance as per last financial statements
Add: Effect of foreign exchange rate variations during the year
Closing balance
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
1,779.76
1,779.76
12,619.50
11,161.84
(35.82)
23,745.52
78.10
(62.15)
0.35
16.30
(5,111.21)
(3,001.68)
7,736.26
(376.63)
(8,438.50)
(1,864.28)
(10,302.78)
10,561.61
2,082.55
(24.66)
12,619.50
98.96
(20.42)
(0.44)
78.10
(5,801.74)
(2,355.55)
3,046.08
(5,111.21)
(6,610.14)
(1,828.36)
(8,438.50)
142
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 4 RESERVES AND SURPLUS
Surplus in the consolidated statement of profit and loss
Balance as per last financial statements
Add: Profit for the year
Less: Transitional adjustment on depreciation ( refer note 11)
Closing balance
Total reserves and surplus
Note - 5
LONG-TERM BORROWINGS
Bonds
Foreign currency convertible bonds (refer note 24 for details of security and
other terms)
Secured
Unsecured
Term loans
Unsecured (refer note 5[i])
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
1,684.11
5,872.49
-
7,556.60
22,418.77
672.12
1,021.45
(9.46)
1,684.11
2,611.76
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
3,014.52
-
1,325.00
4,339.52
50,956.17
1,500.08
5,312.50
57,768.75
(i) Represents loan taken by Subex Americas Inc, which has been guaranteed by Subex (UK) Limited. The repayment terms vary
from 17-28 months. During the year ended March 31, 2016, the loan carried an interest rate of 10.5% (March 31, 2015:
10.5%) compounded semi-annually. Refer note 23(ii) for further details.
Note - 6 OTHER LONG-TERM LIABILITIES
Accrual for premium payable on redemption of bonds (refer note 24)
Interest accrued but not due on borrowings (refer note 24[f])
Rent equalisation reserve
Note - 7
LONG-TERM PROVISIONS
Provision for employee benefits
Provision for gratuity (refer note 34[b])
Note - 8
SHORT-TERM BORROWINGS
Loans repayable on demand from banks (Secured)
Loan type I (refer note 8[i] and [iii])
Loan type II (refer note 8[i], [ii] and [iii])
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
-
610.48
-
610.48
596.25
8,721.28
2.23
9,319.76
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
295.47
295.47
320.16
320.16
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
6,045.73
4,350.01
10,395.74
6,906.14
5,600.40
12,506.54
143
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 8
SHORT-TERM BORROWINGS
(i) The secured loan type I and II from banks are secured by primary charge on trade receivables of the Company and paripassu
first charge on the current assets of the Company, and collateral paripassu first charge on the fixed assets of the Company,
collateral paripassu first charge along with other working capital lenders and FCCB holders to the extent of the FCCB III
repayment fund to be set up with the working capital lenders.
(ii) The Subex Limited has also submitted a corporate guarantee by Subex Technologies Limited of H5,570.00 Lakhs (March 31,
2015: H6,495.00 Lakhs) and with effect from October 01, 2014 corporate guarantee by Subex (UK) Limited of H5,570.00 Lakhs
(March 31, 2015: H6,495.00 Lakhs) and pledged it’s 100% shares in Subex (UK) Limited.
(iii) Loans repayable on demand from banks consists of Cash Credit (CC) of H1,762.89 Lakhs (March 31, 2015: H4,223.45 Lakhs), Pre-
shipment Credit in Foreign Currency (PCFC) of H3,945.39 Lakhs (March 31, 2015: H2,880.38 Lakhs) and Export Bill Rediscounting
(EBRD) of H4,687.46 Lakhs ( March 31, 2015 : H5,402.71 Lakhs), which carried an average interest rate of 12.91%, 4.05% and
5.89% (March 31, 2015: 14.25%, 5.05% and 8.88%) respectively. These facilities are renewable on a yearly basis.
Note - 9
TRADE PAYABLES AND OTHER CURRENT LIABILITIES
Trade payables
- Total outstanding dues of micro enterprises and small enterprises [refer note 9(i)]
- Total outstanding dues of creditors other than micro enterprises and small enterprises
Other current liabilities
Current maturities of long-term borrowings (refer note 9(ii))
Accrual for premium payable on redemption of bonds (refer note 24)
Interest accrued but not due on borrowings
Employee related liabilities
Unearned revenue
Other payables
Statutory remittances (refer note 26)
Rent equalisation reserve
Others
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
4.83
1,671.75
1,676.58
8,215.70
632.07
44.69
1,604.77
1,087.30
1,139.34
70.22
56.99
12,851.08
3.06
3,411.44
3,414.50
2,187.50
-
1,047.80
1,848.64
901.53
1,042.30
31.04
-
7,058.81
(i) Details of dues to micro and small enterprises:
The dues to Micro and Small enterprises as defined in “The Micro, Small & Medium Enterprises Development Act, 2006”
(H in Lakhs)
are as follows:
Particulars
(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 during each accounting year
(iv) The amount of interest due and payable for the period of delay in making
payment (which have been paid but beyond the appointed day during the
year) but without adding the interest specified under the MSMED Act 2006.
(v) The amount of interest accrued and remaining unpaid at the end of the
As at
March 31, 2016
As at
March 31, 2015
4.83
-
0.06
-
-
3.06
-
0.53
0.06
0.06
accounting year
144
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 9
TRADE PAYABLES AND OTHER CURRENT LIABILITIES
Particulars
(vi) The amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues as above are
actually paid
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
-
-
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.
ii) Current maturities of long term borrowings consists of H1,590.20 Lakhs (March 31, 2015: H Nil) of outstanding FCCBs
and H6,625.50 Lakhs (March 31, 2015: H2,187.50 Lakhs) of term loans with a maturity period less than 12 months as at
Balance Sheet date. refer note 5 long term borrowings for further details.
Note - 10 SHORT-TERM PROVISIONS
Provision for employee benefits
Provision for compensated absences
Provision for gratuity ( refer note 34[b])
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
511.63
41.98
261.97
349.78
182.12
415.75
26.75
262.12
-
-
Other provisions
Provision for litigations [net of tax deducted at source H62.29 Lakhs (March 31,
2015: H62.14 Lakhs)] (refer note 10[i])
Provision for foreign taxes
Minimum alternative tax ('MAT') payable [net of tax deducted at source H201.82
Lakhs ( March 31, 2015: Nil)]
Provision for tax [net of advance tax H651.99 Lakhs ( March 31, 2015: H689.92 Lakhs)]
Provision for wealth tax
121.66
0.82
827.10
(i) Provision for litigation consists of matters which are sub-judice. There is no movement in the provisions during the current and
84.01
-
1,431.49
previous year.
The space has been intentionally left blank
145
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
8
3
.
2
9
8
2
.
1
)
9
9
.
3
5
(
6
3
.
8
7
9
0
6
.
1
2
-
8
1
.
1
9
9
.
8
4
)
9
9
.
3
5
(
4
4
.
9
6
8
8
7
.
8
4
)
s
h
k
a
L
n
i
H
(
d
n
a
r
G
l
a
t
o
T
s
t
e
s
s
a
l
i
e
b
g
n
a
t
n
I
s
t
e
s
s
a
l
i
e
b
g
n
a
T
l
a
t
o
T
l
a
u
t
c
e
l
l
e
t
n
I
l
l
i
w
d
o
o
G
r
e
t
u
p
m
o
C
l
a
t
o
T
l
d
o
h
e
s
a
e
L
e
c
i
f
f
O
s
e
l
c
i
h
e
V
e
r
u
t
i
n
r
u
F
r
e
t
u
p
m
o
C
y
t
r
e
p
o
r
p
s
t
h
g
i
r
s
t
n
e
m
e
r
a
w
t
f
o
s
-
e
v
o
r
p
m
i
t
n
e
m
p
u
q
e
i
s
e
r
u
t
x
i
f
d
n
a
t
n
e
m
p
u
q
e
i
6
7
.
5
2
6
,
9
5
5
.
0
1
6
,
3
9
1
.
4
3
5
,
2
7
6
.
7
3
1
9
6
.
8
3
9
1
2
.
5
1
0
,
6
0
6
.
7
0
2
8
3
.
3
7
5
0
8
.
0
3
5
9
.
2
3
1
.
8
4
0
7
0
5
,
3
1
.
1
3
6
8
3
.
2
9
)
6
3
.
5
4
1
(
8
2
.
1
)
4
1
.
5
1
8
,
1
(
)
9
9
.
3
5
(
-
-
-
-
-
-
6
0
.
6
2
3
0
6
.
1
2
8
8
.
0
1
1
6
7
.
2
1
)
1
5
.
8
4
4
,
1
(
)
8
2
.
0
8
2
(
-
-
-
-
-
-
9
3
.
6
9
2
,
8
2
2
.
0
5
6
,
3
9
1
.
4
3
5
,
2
7
6
.
7
3
1
)
8
2
.
0
8
2
(
)
3
2
.
8
6
1
,
1
(
6
7
.
2
1
2
1
.
8
9
8
5
.
1
6
4
.
4
0
3
7
1
.
6
4
6
,
4
2
4
.
8
4
7
5
.
0
1
3
2
7
.
5
1
)
8
4
.
5
3
(
6
6
.
3
5
7
.
8
3
5
-
3
4
.
7
5
)
4
6
.
6
4
1
(
)
9
1
.
5
1
(
)
4
7
.
8
1
(
)
5
1
.
1
6
7
,
1
(
)
9
9
.
3
4
1
(
)
0
5
.
1
0
3
(
-
-
-
-
-
8
6
.
0
0
8
.
0
3
2
8
.
4
8
2
,
7
0
3
.
4
0
4
,
3
9
1
.
4
3
5
,
2
7
6
.
7
3
1
4
4
.
2
3
7
2
5
.
0
8
8
,
3
0
0
.
0
5
7
4
.
4
9
2
8
4
.
1
3
0
9
.
2
1
)
3
9
.
2
(
2
4
.
8
6
4
)
8
7
.
9
0
1
(
)
9
1
.
9
4
(
)
7
4
.
6
6
2
,
1
(
3
4
.
6
3
7
3
9
.
8
2
.
1
)
9
8
.
3
(
5
5
7
9
.
.
5
6
2
6
1
4
,
0
6
.
1
9
3
6
.
1
8
2
)
6
8
.
8
2
1
,
1
(
.
2
0
7
0
4
3
,
3
2
.
5
5
5
,
6
1
3
.
2
2
3
,
3
9
1
.
4
3
5
,
2
7
6
.
7
3
1
5
4
.
0
5
6
2
9
.
2
3
2
,
3
0
0
.
0
5
3
7
.
0
3
2
0
7
.
0
3
5
8
.
7
1
8
9
5
.
9
2
7
9
9
.
1
8
2
9
.
8
0
1
-
-
-
-
9
9
.
1
8
2
9
.
8
0
1
3
9
.
8
0
7
0
6
.
7
4
6
-
-
0
4
.
9
6
4
7
.
3
6
6
2
.
0
8
7
.
0
3
9
.
7
2
0
,
9
2
1
.
5
4
5
,
3
9
1
.
4
3
5
,
2
7
6
.
7
3
1
6
2
.
3
7
8
1
8
.
2
8
4
,
5
0
6
.
7
0
2
6
4
.
0
4
5
1
5
.
0
3
8
4
.
7
2
1
.
6
7
6
7
5
4
,
6
4
.
9
-
)
9
4
.
3
5
1
(
8
1
.
1
4
0
.
2
0
4
9
9
.
8
4
)
0
4
.
7
0
8
,
1
(
)
9
9
.
3
5
(
-
-
-
-
-
-
9
4
.
7
2
4
8
7
.
8
4
4
8
.
6
9
1
5
.
2
1
)
4
6
.
7
4
4
,
1
(
)
8
2
.
0
8
2
(
-
-
-
-
-
-
4
5
.
8
7
4
,
7
0
3
.
1
4
5
,
3
9
1
.
4
3
5
,
2
7
6
.
7
3
1
)
8
2
.
0
8
2
(
)
6
3
.
7
6
1
,
1
(
1
5
.
2
1
3
3
.
4
8
8
5
.
1
1
7
.
8
7
3
4
2
.
7
3
9
,
3
2
4
.
8
4
7
1
.
1
4
2
5
0
.
2
2
)
1
6
.
4
3
(
2
1
.
2
-
-
6
1
.
0
4
5
.
0
3
)
7
6
.
4
5
1
(
)
9
1
.
5
1
(
)
9
5
.
8
1
(
6
4
.
9
-
-
-
5
0
.
3
5
3
-
1
7
.
7
1
3
0
.
0
-
9
7
.
2
)
3
9
.
2
(
6
4
.
9
2
5
.
2
3
3
)
6
9
.
7
1
1
(
)
1
4
.
3
5
7
,
1
(
)
9
9
.
3
4
1
(
)
1
4
.
8
9
2
(
-
)
9
1
.
9
4
(
)
2
8
.
1
6
2
,
1
(
2
1
.
5
5
1
8
7
.
7
6
.
0
)
9
8
.
3
(
5
0
0
8
.
8
5
5
1
.
0
5
7
1
.
.
6
9
8
3
5
3
,
6
9
.
9
7
8
3
.
1
5
3
)
6
8
.
8
2
1
,
1
(
.
4
4
1
4
8
2
,
.
9
6
3
2
6
.
8
5
5
6
5
-
-
-
-
s
e
c
n
e
r
e
f
f
i
d
e
g
n
a
h
c
x
E
4
1
0
2
,
1
0
l
i
r
p
A
t
A
s
n
o
i
t
i
d
d
A
5
1
0
2
,
1
3
h
c
r
a
M
t
A
s
l
a
s
o
p
s
i
D
t
s
o
C
s
e
c
n
e
r
e
f
f
i
d
e
g
n
a
h
c
x
E
6
1
0
2
,
1
3
h
c
r
a
M
t
A
4
1
0
2
,
1
0
l
i
r
p
A
t
A
n
o
i
t
a
i
c
e
r
p
e
D
s
n
o
i
t
i
d
d
A
s
l
a
s
o
p
s
i
D
)
]
i
i
[
1
1
e
t
o
n
r
e
f
e
r
(
s
t
n
e
m
t
s
u
d
A
j
s
e
c
n
e
r
e
f
f
i
d
e
g
n
a
h
c
x
E
r
a
e
y
e
h
t
r
o
f
e
g
r
a
h
C
s
l
a
s
o
p
s
i
D
5
1
0
2
,
1
3
h
c
r
a
M
t
A
r
a
e
y
e
h
t
r
o
f
e
g
r
a
h
C
s
l
a
s
o
p
s
i
D
s
e
c
n
e
r
e
f
f
i
d
e
g
n
a
h
c
x
E
6
1
0
2
,
1
3
h
c
r
a
M
t
A
5
1
0
2
,
1
3
h
c
r
a
M
t
A
6
1
0
2
,
1
3
h
c
r
a
M
t
A
l
k
c
o
b
t
e
N
:
s
e
t
o
N
S
T
E
S
S
A
D
E
X
I
F
1
1
-
e
t
o
N
146
-
p
a
,
1
3
h
c
r
a
M
(
s
h
k
a
L
2
1
.
7
7
H
e
h
t
f
o
t
n
u
o
c
c
a
n
o
t
u
o
d
e
i
r
r
a
c
6
4
.
9
H
N
H
e
h
t
g
n
i
t
n
e
s
e
r
p
e
r
i
s
g
n
n
r
a
e
i
d
e
n
a
t
e
r
o
t
)
s
h
k
a
L
:
5
1
0
2
,
1
3
h
c
r
a
M
(
l
i
d
e
t
s
u
d
a
j
l
,
e
b
a
l
i
a
v
a
s
n
o
i
s
i
v
o
r
p
l
a
n
o
i
t
i
s
n
a
r
t
e
h
t
h
t
i
w
e
c
n
a
d
r
o
c
c
a
n
i
s
a
h
p
u
o
r
G
e
h
T
.
)
s
h
k
a
L
.
6
7
2
8
H
:
5
1
0
2
y
b
r
e
h
g
h
i
g
n
e
b
i
r
a
e
y
e
h
t
r
o
f
s
s
o
l
e
h
t
,
y
l
t
n
e
u
q
e
s
n
o
c
d
n
a
e
g
r
a
h
c
n
o
i
t
a
i
c
e
r
p
e
d
e
h
t
n
i
d
e
t
l
u
s
e
r
s
a
h
s
i
h
T
.
3
1
0
2
i
,
t
c
A
s
e
n
a
p
m
o
C
e
h
t
f
o
I
I
l
e
u
d
e
h
c
S
f
o
n
o
i
t
a
c
i
l
p
t
n
e
m
s
s
e
s
s
a
e
h
t
n
o
d
e
s
a
b
s
t
e
s
s
a
e
h
t
f
o
s
e
v
i
l
l
u
f
e
s
u
c
i
m
o
n
o
c
e
f
o
s
e
t
a
m
i
t
s
e
i
n
a
t
r
e
c
d
e
s
i
v
e
r
s
a
h
p
u
o
r
G
e
h
t
,
5
1
0
2
,
1
3
h
c
r
a
M
d
e
d
n
e
r
a
e
y
e
h
t
g
n
i
r
u
D
)
i
i
(
.
y
t
i
r
u
c
e
s
s
a
n
e
v
i
g
s
t
e
s
s
a
e
h
t
r
o
f
8
e
t
o
n
r
e
f
e
R
)
i
(
.
4
1
0
2
,
1
0
l
i
r
p
A
f
o
s
a
l
i
N
s
a
w
s
e
v
i
l
l
u
f
e
s
u
c
i
m
o
n
o
c
e
e
s
o
h
w
s
t
e
s
s
a
f
o
e
u
a
v
l
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 12 LONG-TERM LOANS AND ADVANCES (Unsecured, considered good)
Security deposits
Other loans and advances
Advance recoverable from former directors ( refer note 30[iii])
Advance income taxes [net of provision for taxation H622.15 Lakhs (March
31, 2015: H581.57 Lakhs)]
Balances with statutory/government authorities*
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
775.32
801.47
233.80
1,665.45
266.90
2,941.47
233.80
1,680.94
266.90
2,983.11
* Balances with statutory/ government authorities represent service tax erroneously paid by the Company during the financial year
2004 to 2008, under reverse charge mechanism, for which refund application has been filed with the service tax department and
the same is under dispute. The Company is contesting the same and the management including its tax advisors are confident of
obtaining the refund.
Note - 13 OTHER NON-CURRENT ASSETS
Long-term trade receivables (unsecured)
Considered good
Less: Provision for doubtful trade receivables*
Interest accrued but not due on bank deposits ( refer note 15[ii])
Non current bank balance (refer note 15)
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
2,956.13
(2,956.13)
-
0.89
237.67
5,317.63
(5,317.63)
-
-
751.92
751.92
* During the year ended March 31, 2016, the Company has written off bad debts amounting to H1,975.31 Lakhs (March 31, 2015: H
238.56
Nil).
Note - 14 TRADE RECEIVABLES (Unsecured, considered god)
Outstanding for a period exceeding six months from the date they are due
for payment
Considered good
Other receivables
Considered good
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
3,234.63
494.77
7,913.52
11,148.15
10,365.11
10,859.88
147
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 15 CASH AND BANK BALANCES
Cash and cash equivalents
Balance with banks
In current accounts
In EEFC accounts
Cash on hand
Other bank balances
Margin money deposits (refer note 15[i])
Restricted bank balance (refer note 15[ii])
Less: Amount disclosed under non-current assets ( refer note 13)
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
8,506.69
4,843.65
92.12
0.82
237.42
0.25
(237.67)
8,599.63
73.66
0.77
751.92
-
(751.92)
4,918.08
(i) Represents the margin money deposits with banks towards the bank guarantees, having remaining maturity period of more
than 12 months from the balance sheet date.
(ii) Relates to balance of Subex Technologies Limited, which has been attached by the Income Tax Department towards certain
Income Tax dues.
Note - 16 SHORT-TERM LOANS AND ADVANCES (Unsecured, considered good)
(H in Lakhs)
Loans and advances to employees
Prepaid expenses
Balances with statutory/government authorities
Others
Advance to suppliers
Minimum alternative tax ('MAT') credit entitlement
Note - 17 OTHER CURRENT ASSETS (Unsecured, considered good)
Unbilled revenue
Interest accrued but not due on bank deposits
Others
As at
March 31, 2016
As at
March 31, 2015
198.78
527.92
17.60
41.25
383.93
1,169.48
329.69
286.17
-
252.91
-
868.77
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
2,629.90
5,268.03
4.06
67.23
2,701.19
2.88
6.90
5,277.81
148
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 18 REVENUE FROM OPERATIONS
Sale of products
Sale of services
Details of products sold
Sale of license
Sale of hardware and software
Details of services rendered
Implementation and customisation
Managed services
Support services
Others
Note - 19.1 OTHER INCOME
Profit on sale of fixed assets (net)
Liabilities no longer required written back
Miscellaneous income
Less: Other income from discontinuing operations (refer note 32)
Note - 19.2 INTEREST INCOME
Interest income on
Bank deposits
Less: Interest income from discontinuing operations (refer note 32)
Note - 20 EMPLOYEE BENEFITS EXPENSE AND SUB-CONTRACT CHARGES
Salaries and wages*
Contribution to provident fund and other funds (refer note 34)
Expense on Employee Stock Option Scheme
Staff welfare expenses
Sub-contract charges
Less: Employee benefit expense and sub-contract charges from discontinuing
operations (refer note 32)
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
3,117.51
29,217.96
32,335.47
2,873.47
244.04
3,117.51
6,599.99
11,334.29
11,200.45
83.23
29,217.96
5,858.73
30,124.58
35,983.31
4,215.32
1,643.41
5,858.73
7,011.60
12,036.29
10,926.89
149.80
30,124.58
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
-
-
116.46
116.46
(0.11)
116.35
1.62
6.85
84.37
92.84
(7.22)
85.62
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
4.45
4.45
(0.17)
4.28
4.58
4.58
-
4.58
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
14,237.88
1,284.49
(61.80)
608.75
1,555.51
17,624.83
-
13,123.00
1,308.56
(18.19)
511.18
1,451.00
16,375.55
(86.38)
16,289.17
* net of reversal of provision no longer required, in respect of employee incentives amounting to H1,064.70 Lakhs (March 31, 2015:
17,624.83
H1,191.11 Lakhs).
149
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
2,276.33
973.63
998.33
395.72
4,644.01
(0.91)
4,643.10
3,352.21
850.06
1,638.10
264.26
6,104.63
(0.64)
6,103.99
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
360.44
1,768.08
208.83
153.11
515.97
104.13
354.82
31.52
62.02
2,027.52
234.76
191.90
595.11
147.11
331.71
28.50
2,711.42
2,627.56
156.44
290.45
685.71
158.13
228.02
(439.03)
56.99
827.15
59.13
0.34
16.13
8,247.78
(4.60)
8,243.18
135.11
331.35
696.83
155.83
521.95
577.47
-
1,250.09
12.90
-
7.55
9,935.27
(394.38)
9,540.89
Note - 21 FINANCE COSTS
Interest expenses on
Foreign currency convertible bonds (refer note 23[i])
Interest on term loans
Other borrowing cost
Bank charges
Less: Finance costs from discontinuing operations (refer note 32)
Note - 22 OTHER EXPENSES
Purchase of software
Rent
Power and fuel
Repairs and maintenance
- Buildings
- Others
Insurance
Communication costs
Printing and stationery
Travelling and conveyance
Rates and taxes
Advertisement and business promotion
Consultancy charges
Payments to auditors (refer note 22[i])
Sales commission (refer note 22[ii])
Provision for doubtful debts
Provision for free support services
Exchange fluctuation loss (net)
Director sitting fees
Loss on sale of fixed assets (net)
Miscellaneous expenses
Less: Other expenses from discontinuing operations (refer note 32)
150
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 22 OTHER EXPENSES (contd.)
(i) Payments to auditors (net of service tax credit's recognised)*
(a) Statutory auditors*
As auditor:
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
Audit fee
Tax audit fee
In other capacity:
Certification matters
Reimbursement of expenses
(b) Other auditors for the subsidiaries
As auditor:
Audit fee
Reimbursement of expenses
87.00
4.00
2.50
4.41
97.91
57.00
3.43
60.43
90.00
1.50
-
1.50
6.10
99.10
55.49
1.24
56.73
* Previous year audit fee is paid to a firm of Chartered Accountants other than S.R. Batliboi & Associates LLP.
(ii) Sales commission for the year ended March 31, 2016 is net of reversal of provision no longer required amounting to H213.77
Lakhs (March 31, 2015: H Nil).
Note - 23 EXCEPTIONAL ITEMS
(i) FCCBs
Reversal of interest accrued but not due pertaining to converted FCCBs
[refer note 23(i)(a)]
Foreign exchange gain on FCCBs conversion (net) [refer note 23(i)(b)]
(ii) Reversal of interest accrued but not due pertaining to term loans
(refer note 23[ii])
(iii) Loss on impairment of goodwill (refer note 23[iii])
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
10,415.53
2,159.20
12,574.73
1,970.12
(8,870.00)
(6,899.88)
5,674.85
-
-
-
-
-
-
-
(i) (a) Interest accrued but not due pertaining to FCCBs III converted during the current year has been written back as the same
is considered no longer payable due to the conversion of FCCBs III into equity shares of the Company (refer note 24 for
details on FCCBs).
(i) (b) FCCBs III have been converted into equity shares at an exchange rate of H56.0545/US$ as per the FCCBs III trust deed,
as against the closing rate on the date of conversion (in the range of H60 - H66) resulting in foreign exchange gain on
conversion amounting to H7,715.50 Lakhs. Further, the Foreign Currency Monetary Item Translation Difference Account
(‘FCMITD’) balance pertaining to FCCBs III converted into equity shares amounting to H5,556.30 Lakhs, has been charged
off in the consolidated statement of profit and loss for the year ended March 31, 2016 on the date of conversion.
(ii) During the year ended March 31, 2016, certain lenders of term loans have waived interest liability outstanding till March 26,
2016 and interest liability accruing thereafter upto August 22, 2016, pursuant to the interest waiver agreement dated March
26, 2016 subject to the fulfilment of certain conditions. Consequent to fulfilment of such conditions, the accrued interest of
US$ 2.9 Million (H1,970.12 Lakhs) on outstanding term loan balance of US$ 12 Million (H7,950.60 Lakhs) as at March 31, 2016
has been written back, as the same is no longer payable. Further, pursuant to the aforesaid agreement, the interest rate has
been revised from the existing interest rate of 10.5% per annum to 5% per annum, effective August 22, 2016.
(iii) As at March 31, 2016, the Company has assessed the carrying value of goodwill relating to its investment in the subsidiary viz.
Subex Americas Inc., amounting to H18,606.00 Lakhs. Based on future operational plan, projected cash flows and valuation
carried out by an external valuer, the Company has made an impairment provision of H8,870.00 Lakhs towards the carrying
value of goodwill relating to its investment in the said subsidiary.
151
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 24 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 :
Exchange rate for conversion of FCCB : H44.08/ US$
i)
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 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/ US$
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$ 127.721 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.
The terms and conditions of FCCB III are as under :
i)
Interest rate : 5.70% p.a. payable semi annually
ii) Exchange rate for conversion of FCCB : H56.0545/ US$
iii) Equity Conversion price : H22.79 per share
iv) Redemption date : July 07, 2017
v) Listing on the Singapore Exchange Securities Trading Limited
152
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 24 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
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 and to the extent covered by the
existing security. First ranking charge on FCCB repayment fund on a paripassu basis jointly and equally with SBI and Axis
Bank Ltd. The promoters of the company have pledged their shares towards securing the repayment of FCCB III.
vii) Mandatory conversion of bonds with a face value of US$ 36.321 Million into equity shares at the aforesaid conversion price
on July 07, 2012.
c) 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.
d) The Board in its meeting held on May 14, 2015, has approved the reset of conversion price of the FCCBs III, which are convertible
into equity shares of the Company, from H22.79 to H13.00 per equity share. Subsequently, the reset of the conversion price has
been approved by the shareholders in the annual general meeting held on June 19, 2015 and the bondholders in their meeting
held on August 5, 2015. The Board in its meeting held on August 26, 2015 has approved August 26, 2015 as the effective date
of reset of conversion price of H13 per share.
As a result of the aforesaid reset of conversion price, the said bonds with outstanding face value of US$ 4.55 Million as at
March 31, 2016 would potentially be converted into 19,619,075 equity shares at an exchange rate of H56.0545/US$ with a
conversion price of H13 per equity share.
Subsequent to balance sheet date, conversion requests from the bondholders of FCCBs III amounting to US$ 0.45 Million have
been received by the Company, which have been approved by the Board of Directors in the Board meeting dated April 28,
2016, and allotted 1,940,348 equity shares at an exchange rate of H56.0545/US$ with a conversion price of H13 per equity
share.
e)
(i) Of the outstanding FCCBs III of US$ 91.40 Million as of July 2012, US$ 86.85 Million have been converted till year ended
March 31, 2016 as detailed below:
Financial year/ period
FCCBs converted
US$ Million
Conversion
rate per US$
Conversion
price
No. of equity
shares
2012-13
2014-15
2015-16
(i) during quarter ended June 30, 2015
(ii) during June 30, 2015 to March 31, 2016
3.25
6.62
6.50
70.48
H56.0545
H56.0545
H56.0545
H56.0545
H22.79
H22.79
H22.79
H13.00
7,993,931
16,282,613
15,987,461
303,901,610
(ii) The face value of FCCBs outstanding as on March 31, 2016 is as follows:
Particulars
As at March 31, 2016
As at March 31, 2015
FCCBs I
FCCBs II
FCCBs III
Total
US$ Million
H in Lakhs
US$ Million
H in Lakhs
1.00
1.40
4.55
6.95
662.55
927.57
3,014.60
4,604.72
1.00
1.40
625.00
875.00
81.53
50,956.25
83.93
52,456.25
153
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 24 FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
f)
The FCCB bond holders in their respective meetings have approved the deferral of aggregate interest of US$ 0.92 Million
(H610.48 Lakhs) in respect of outstanding FCCBs III of USD 4.55 Million for the period July 6, 2012 to January 5, 2016 till
redemption date of the bonds, being July 07, 2017. Accordingly, interest on FCCBs III included under finance costs in the
consolidated statement of profit and loss to the extent of above deferrals is due for payment on July 07, 2017. These have
accordingly been categorised as long-term liabilities.
g) The premium payable on maturity of FCCB I and FCCB II has been accrued by charge to securities premium account, and
exchange fluctuation on restatement of such outstanding balance is also adjusted with securities premium account.
h)
Interest accrued but not due pertaining to FCCBs converted during the current year has been written back as the same is
considered no longer payable due to the conversion of FCCBs III into equity shares of the Company, and FCMITD balance
pertaining to converted bonds till the date of conversion has been charged off net of foreign exchange gain on account of
conversion of these FCCBs into equity shares of the Company. These have been disclosed as exceptional items, refer note 23(i)
for details.
Note - 25
The Group 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 (‘FCMITD’) and are amortised over the balance period of such long term asset/ liability, and/or charged off on
settlement/ conversion of such long term monetary foreign currency assets/ liabilities. Consequently, exchange fluctuation losses
(net) arising on restatement of such items have been deferred to the extent of H376.63 Lakhs as at March 31, 2016 ( March 31,
2015: H5,111.21 Lakhs).
Note - 26
The Group had remitted the withholding taxes in respect of FCCBs in accordance with the provisions of Income Tax Act, 1961
amounting to H1,016.81 Lakhs. Pursuant to the conversion of FCCBs III in to equity shares of the Company, the interest accrued
but not due has been reversed as the same is considered no longer payable. The management basis expert advice, is of the view
that the withholding taxes paid by the Group is recoverable from income tax department and/or is adjustable against its other
withholding taxes obligations. The management has initiated necessary steps for revision of withholding tax returns of prior years
and accordingly, H204.98 Lakhs pertaining to withholding taxes on salary, professional services and others have not been paid..
Note - 27
As at March 31, 2016, the Group has assessed the carrying value of goodwill relating to its investment in the subsidiary viz. Subex
(UK) Limited, amounting to H67,036.00 Lakhs. Based on the future operational plan, projected cash flows and the valuation carried
out by an external valuer, the management is of the view that, the aforesaid carrying value of goodwill as at March 31, 2016 relating
to its investment in the said subsidiary is appropriate.
Note - 28 RELATED PARTY INFORMATION
Key management personnel
Surjeet Singh
Ganesh KV
Managing Director and CEO
Chief Financial Officer, Global Head- Legal and Company Secretary
Details of the transactions with the related parties:
Particulars
Salary and perquisites:*
Surjeet Singh
Ganesh KV
2015 - 16
(Amount H in Lakhs)
2014 - 15
557.05
67.40
518.81
69.14
* The remuneration to the key managerial personnel does not include the provision/ accruals made on best estimate basis as
they are determined for the Group as a whole.
154
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 29 SEGMENTAL REPORTING
The Group has identified a single primary segment being software products and related services. This being a single segment no
additional segmental disclosure has been made for the primary segment. 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.
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’. The Group has identified its secondary segment to be geographical.
Segment revenue by geographical location are as follows:
Particulars
Americas
EMEA
APAC and rest of the world
2015 - 16
6,590.04
18,041.36
7,704.07
32,335.47
(Amount H in Lakhs)
2014 - 15
7,076.67
20,688.90
8,217.74
35,983.31
Assets and additions to tangible fixed assets and intangible fixed assets by geographical area:
The following table shows the carrying amount of segment assets and additions to tangible fixed assets and intangible fixed assets
by geographical area in which the assets are located:
(H in Lakhs)
Particulars
Americas
EMEA
APAC and rest of the world
Unallocable
2015 - 16
2014 - 15
Carrying amount of
segment assets
Cost to acquire
fixed assets
Carrying amount of
segment assets
Cost to acquire
fixed assets
2,239.06
8,251.14
5,861.75
87,948.34
104,300.29
157.91
50.28
117.87
2,367.77
9,964.93
6,523.76
-
93,263.18
326.06
112,119.64
73.54
48.74
508.85
-
631.13
(H in Lakhs)
Note - 30 COMMITMENTS AND CONTINGENT LIABILITIES
Particulars
Income tax demands (Note - [i])
Service tax demands (Note - [ii])
Others (Note - [iii])
Bank guarantees (furnished towards customers)
Corporate guarantee issued by Subex Technologies Limited and Subex (UK) Limited
(refer note 8 )
March 31, 2016
March 31, 2015
9,217.35
3,687.15
1,293.44
317.48
5,570.00
9,008.77
3,687.15
1,337.64
803.48
6,495.00
i.
Income tax
The Group has received assessment orders for the financial years ended March 31, 2002, March 31, 2003, March 31, 2004,
March 31, 2005, March 31, 2006, March 31, 2007, March 31, 2008, March 31, 2009, March 31, 2010, March 31, 2011
and March 31, 2012, wherein certain adjustments were made to the taxable income in relation to various matters including
adjustments in respect of transfer pricing under section 92CA of the Income Tax Act, 1961 and disallowances of certain
expenditures. These demands are disputed by the management and the Group has filed appeals against these orders with
various appellate authorities. The management is of the view that the prices determined by it are at arm’s length, expenditures
are deductible based on outcome of previous litigations, and is confident that the demands raised by the Assessing Officers are
not tenable under the Income Tax Act, 1961. Pending outcome of the aforesaid matters under litigation, no provision has been
made in the books of account towards these tax demands.
155
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 30 COMMITMENTS AND CONTINGENT LIABILITIES
ii. Service tax
The Group has received demand order towards the service tax on import of certain services and equivalent amount of penalties
under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006 to July 2009.
These demands are disputed by the management and the Group has filed appeals against these orders with various appellate
authorities. The management is of the view that the service tax is not applicable on those import of services, and is confident
that the demands raised by the Assessing Officers are not tenable under law. Pending outcome of the aforesaid matter under
litigation, no provision has been made in the books of account for these tax demands.
iii. Others
The Group has received certain claims from ex-directors of the Company for an amount of H1,293.44 Lakhs. The aforesaid
claims are disputed by the Group and the matter is presently under arbitration with the tribunal. The management is of the
view that these claims are not tenable.
The Group has also claimed the excess managerial remuneration of H123.80 Lakhs paid to the aforementioned ex-directors
during the year ended March 31, 2013, in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956
which has been treated as monies due from the directors, being held by them in trust for the Group, and other advances paid
to directors during the year 2012-13 amounting to H110.00 Lakhs (March 31, 2015: H110.00 Lakhs). The aggregate amount
of H233.80 Lakhs (March 31, 2015: H233.80 Lakhs) is included in ‘Long-term loans and advances’ in the financial statements.
Pending final outcome of the litigations, no provision has been made in the books of account in this regard.
iv. The Group does not have any commitments as at balance sheet date except towards the operating lease as disclosed in note
31.
Note - 31 OPERATING LEASES
The Group is obligated under non-cancellable lease for office and residential space that are renewable on a periodic basis at the
option of both the lessor and lessee. The total rental expenses under non-cancellable operating leases amounted to H511.26 Lakhs
and H8.53 Lakhs for the year ended March 31, 2016 and March 31, 2015 respectively.
Future minimum lease payments under non-cancellable operating leases are as follows:
Period
Within one year
After one year but not more than five years
More than five years
(H in Lakhs)
As at
March 31, 2016
As at
March 31, 2015
786.78
70.65
-
50.99
123.30
-
The Group leases office facilities, residential facilities and servers under cancellable operating lease agreements. The Group intends
to renew such leases in the normal course of its business. Total rental expense under cancellable operating leases was H1,256.82
Lakhs and H2,018.99 Lakhs for the year ended March 31, 2016 and March 31, 2015 respectively.
Note - 32 DISCONTINUING OPERATIONS
During the year ended March 31, 2014, pursuant to the approval of the Board of Directors, the Group has discontinued the
operations of two of its subsidiaries viz. Subex Technologies Limited and Subex Technologies Inc., with effect from April 01, 2013.
The details of the discontinued businesses are as under:
156
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 32 DISCONTINUING OPERATIONS
Particulars
1
2
3
4
5
6
7
8
Income
Other income
Total income
Expenses
Employee benefits expense
Other expenses*
Total expenses
Earnings before interest, tax, depreciation and amortisation (EBITDA)
(1-2)
Interest income
Finance costs
Loss before tax (3+4-5)
Tax expenses/ (credit)
Loss for the year from discontinued operations (6-7)
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
0.11
0.11
-
4.60
4.60
(4.49)
0.17
0.91
(5.23)
(2.90)
(2.33)
7.22
7.22
86.38
394.38
480.76
(473.54)
-
0.64
(474.18)
5.62
(479.80)
* includes an amount of H Nil ( March 31, 2015: H383.23 Lakhs) of exchange loss on consolidation written off pertaining to Subex
Technologies Inc., on account of its liquidation.
Carrying amount of total assets and liabilities to be disposed off / settled as at March 31, 2016 and March 31, 2015 are as follows:
(H in Lakhs)
Total assets
Total liabilities
Net liabilities
Net cash flows attributable to the discontinued operations are as follows:
Net cash flow from/(used in) operating activities
Net cash flow from investing activities
Net cash flow used in financing activities
Net cash inflows/ (outflows)
As at
March 31, 2016
As at
March 31, 2015
5.64
118.40
(112.76)
6.78
120.12
(113.34)
(H in Lakhs)
Year ended
March 31, 2016
Year ended
March 31, 2015
(7.74)
0.02
(0.90)
(8.62)
2.66
5.87
(0.63)
7.90
Note - 33 EMPLOYEES STOCK OPTION PLAN (ESOP)
The Group during the years 1999-2000, 2005-2006 and 2008-09 has established equity settled ESOP schemes of ESOP II, ESOP III
and ESOP IV respectively. 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 Group has obtained in-principle approval for listing of shares up to a limit as mentioned below.
ESOP II : 883,750 shares
ESOP III : 2,000,000 shares
ESOP IV : 2,000,000 shares
157
2015-16ANNUAL REPORT Notes to the financial statements for the year ended March 31, 2016
Note - 33 EMPLOYEES STOCK OPTION PLAN (ESOP)
Employee Stock Options details as on the balance sheet date are:
Particulars
Options outstanding at the beginning of the year
ESOP – II
ESOP – III
ESOP – IV
Cancelled, surrendered or lapsed during the year
ESOP – II
ESOP – III
ESOP – IV
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
2015 - 16
2014 - 15
Options
(no.)
Weighted average
exercise price per
stock option (H)
Options
(no.)
Weighted average
exercise price per
stock option (H)
1,925
741,072
475,010
1,925
596,093
344,510
-
144,979
130,500
-
126,429
130,500
67.00
27.99
28.49
-
-
-
-
24.28
28.51
-
22.65
28.51
2,975
863,950
567,518
1,050
122,878
92,508
1,925
741,072
475,010
1,925
666,967
475,010
67.00
30.78
28.56
-
-
-
67.00
27.99
28.49
67.00
31.10
28.49
Details of Weighted average remaining contractual life and rage of exercise prices for the options outstanding at the balance sheet date.
Particulars
ESOP – II
ESOP – III
ESOP – IV
* considering vesting and exercise period
Weighted average remaining
contractual life(years)*
Range of exercise prices (H)
2015 - 16
2014 - 15
2015 - 16
2014 - 15
-
1.49
0.11
0.37
1.16
1.17
-
67.00
10.26 -73.90
10.26 - 152.00
28.44 - 53.54
28.44 - 53.54
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 as below:
Particulars
Risk-free interest rate
Expected volatility of share
Expected dividend yield
Expected life(years)
March 31, 2016
6.00% - 8.00%
34.00% - 64.85%
0.00% - 1.19%
4
March 31, 2015
6.00% - 8.00%
34.00% - 64.85%
0.00% - 1.19%
4
The expected life of stock options is based on historical data and current expectations and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects assumption that the historical volatility over a period similar to the life of the
options is indicative of future trends, which may also not necessarily be the actual outcome.
158
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
Note - 33 EMPLOYEES STOCK OPTION PLAN (ESOP)
The impact on the EPS of the Group, if fair value method is adopted is given below:
(H in Lakhs except as otherwise indicated)
Particulars
Net profit for the year (as reported)
Less: Stock-based employee compensation expense reversals based on intrinsic
value
Add: Stock-based employee compensation expense reversals based on fair value
Net profit - (proforma)
Earnings per share
Basic & Diluted
- As reported (H per share)
- Pro forma (H per share)
March 31, 2016
March 31, 2015
5,872.49
(61.80)
166.58
5,977.27
1,021.45
(18.19)
59.24
1,062.50
2.02
2.06
0.59
0.62
Note - 34 EMPLOYEE BENEFIT PLANS
a) Defined contribution plans
The Group makes contributions to Provident Fund, Pension Fund, Employee State Insurance scheme and other funds which
are defined contribution plan for qualifying employees. Under the scheme, the Group is required to contribute a specified
percentage of the payroll costs to fund the benefits. The Group recognized H973.02 Lakhs (March 31, 2015: H956.21 Lakhs)
for Provident Fund and Pension Fund contributions (excluding administration charges) and H0.08 Lakhs (March 31, 2015: H0.55
Lakhs) for Employee State Insurance scheme contribution in the consolidated Statement of profit and loss.
b) Defined benefit plans
The Group offers Gratuity benefits to employees, a defined benefit plan. Under gratuity plan, every employee who has completed
at least five years of service gets a gratuity on departure @15 days of last drawn salary for each completed year of service. The
scheme is funded with an insurance company in the form of qualifying insurance policy.
The following tables summarise the components of net benefit expenses recognised in the statement of profit and loss and the
funded status and amount recognised in the balance sheet.
Total expense recognized in the consolidated statement of profit and loss
Interest cost
Expected return on plan assets
Past service cost
Particulars
I. Components of employee benefits expense
1 Current service cost
2
3
4
5 Actuarial losses / (gains)
6
II. Actual contribution and benefit payments for the year
1 Actual benefit payments
2 Actual contributions
III. Net asset / (liability) recognized in Consolidated balance sheet
1
2
3
4 Net asset / (liability) recognized in Consolidated balance sheet
Present value of defined benefit obligation (DBO)
Fair value of plan assets
Funded status [surplus / (deficit)]
- Current
- Non current
IV. Change in defined benefit obligations during the year
Present Value of DBO at beginning of the year
1
2
Past service cost
3 Current Service cost
4
Interest cost
(Amount in H Lakhs except Assumptions)
March 31, 2016
March 31, 2015
74.97
30.14
(4.94)
15.10
5.04
120.31
79.17
130.00
(452.94)
115.49
(337.45)
(337.45)
(41.98)
(295.47)
405.20
15.10
74.97
30.14
65.36
23.53
(3.62)
-
85.42
170.69
52.60
80.00
(405.20)
58.29
(346.91)
(346.91)
(26.75)
(320.16)
321.46
-
65.36
23.53
159
2015-16ANNUAL REPORT
Notes to the financial statements for the year ended March 31, 2016
Note - 34 EMPLOYEE BENEFIT PLANS
Plan assets at beginning of the year
Expected return on plan assets(estimated)
Particulars
5 Actuarial (gains) / losses
6 Currency translation adjustment
7 Benefits paid
Present value of DBO at the end of the year
8
V. Change in fair value of assets during the year
1
2
3 Actuarial gain / (loss)
4 Actual company contributions
5 Benefits paid
6
VI. Actual return on plan assets
VII. Expected contribution in the next year
VIII. Major categories of plan assets as a percentage of the fair value of total
Plan assets at the end of the year
assets are:
Investments with insurer
IX. Actuarial assumptions
1 Discount rate
2
3
4 Attrition rate
Expected return on plan assets
Salary escalation
(Amount in H Lakhs except Assumptions)
March 31, 2016
March 31, 2015
6.47
-
(78.94)
452.94
58.29
4.94
1.43
130.00
(79.17)
115.49
6.37
120.00
100%
7.60%
8.50%
8.00%
18.00%
83.82
(36.37)
(52.60)
405.20
28.88
3.62
(1.60)
80.00
(52.60)
58.29
2.02
100.00
100%
7.80%
8.50%
8.00%
18.00%
Amounts for the current and previous four periods are as follows:
(H in Lakhs)
Particulars
Defined benefit obligation at the end of
the year
Plan assets at the end of the year
Funded status
Experience gain/(loss) adjustments on
plan liabilities
Experience gain/(loss) adjustments on
plan assets
Actuarial gain/(loss) due to change on
assumptions
Year ending
March 31, 2016 March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012
(348.50)
(348.47)
(452.94)
(405.20)
(321.46)
115.49
(337.45)
(3.76)
58.29
(346.91)
1.09
28.88
(292.58)
(10.25)
7. 31
(341.16)
11.31
7.10
(341.40)
54.12
1.43
(1.60)
0.51
(0.09)
0.31
(2.71)
(84.91)
24.66
(42.73)
12.77
(i) The composition of the plan assets held under the funds managed by the insurer is as follows:
Fund Type
Government securities
Fixed deposits and other assets
March 31, 2016
(%)
March 31, 2015
(%)
39.54
60.46
43.31
56.69
(ii) The discount rate is based on the prevailing bond yields of Government of India securities as at the balance sheet date
corresponding to a term of approximately 5 years which is the expected term of defined benefit obligation.
(iii) The expected rate of return on plan assets is determined after considering several applicable factors such as composition of
plan assets, investment strategy, market scenario, etc. In order to protect the capital and optimise returns within acceptable risk
parameters, the plan assets are well diversified.
(iv) The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other
relevant factors, benefit obligation such as supply and demand in the employment market.
(v) The mortality rate is based on the table as specified by the Indian Assured Lives Mortality (2006-08) (modified) Ult.
160
SUBEX LIMITED
Notes to the financial statements for the year ended March 31, 2016
(H in Lakhs except as otherwise indicated)
Note - 35 EARNINGS PER SHARE (EPS)
Particulars
Nominal value of equity shares (H per share)
I. Total operations for the year
Profit after tax attributable to shareholders (A)
Weighted average number of equity shares used in computing EPS(B) ( in Lakhs)
Earnings per share – Basic and diluted (H per share) (A/B)*
II. Continuing operations
Profit after tax attributable to shareholders (A)
Weighted average number of equity shares used in computing EPS(B)
Earnings per share – Basic and diluted (H per share) (A/B)*
* Foreign currency convertible bonds and Employee stock options outstanding as at March 31, 2016 and March 31, 2015 are
5,872.49
2,904.20
2.02
5,874.82
2,904.20
2.02
March 31, 2015
March 31, 2016
10.00
1,021.45
1,716.69
0.59
1,501.25
1,716.69
0.87
10.00
anti-dilutive and accordingly have not been considered for the purpose of dilutive EPS.
Note - 36 UNHEDGED FOREIGN CURRENCY EXPOSURE
The Group 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 at the year end. The net foreign currency exposure that has not
been hedged by derivative instruments or otherwise as at March 31, 2016 is H8,404.75 Lakhs (March 31, 2015: H62,912.08 Lakhs).
The aforesaid unhedged foreign currency exposure does not include exposure on intra group balances which are eliminated on
consolidation.
Note - 37 ADDITIONAL INFORMATION PURSUANT TO PARA 2 OF GENERAL INSTRUCTIONS FOR THE PREPARATION OF
CONSOLIDATED FINANCIAL STATEMENTS
(a) For the current year ended March 31, 2016:
Name of the Entity
Parent
Subex Limited
Indian Subsidiaries
Subex Technologies Limited
Foreign Subsidiaries
Subex (Asia Pacific) Pte Ltd.
Subex (UK) Ltd.
Subex Americas Inc.
Subex Inc.,
Subex Technologies Inc
Subex Middle East
Total
(b) For the previous year ended March 31, 2015:
Name of the Entity
Parent
Subex Limited
Indian Subsidiaries
Subex Technologies Limited
Foreign Subsidiaries
Subex (Asia Pacific) Pte Ltd.
Subex (UK) Ltd.
Subex Americas Inc.
Net assets
Share in profit and loss
as % of
consolidated
net assets
Amount
as % of
consolidated
profit and loss
Amount
(H in Lakhs)
97%
70,845.09
-14%
(851.32)
0%
(114.15)
2%
10%
-11%
2%
0%
0%
100%
1,620.76
6,954.25
(8,300.92)
1,379.48
1.39
314.03
72,699.93
0%
19%
87%
20%
-13%
0%
2%
100%
(0.46)
1,095.69
5,086.72
1,160.14
(735.37)
(0.52)
117.61
5,872.49
(H in Lakhs)
Net assets
Share in profit and loss
as % of
consolidated
net assets
Amount
as % of
consolidated
profit and loss
Amount
99%
20,645.20
-486%
(4,968.79)
-1%
10%
28%
-45%
(116.13)
2,137.80
5,762.95
(9,313.10)
-39%
139%
523%
-79%
(399.64)
1,417.18
5,339.21
(810.05)
161
2015-16ANNUAL REPORT Notes to the financial statements for the year ended March 31, 2016
Note - 37 ADDITIONAL INFORMATION PURSUANT TO PARA 2 OF GENERAL INSTRUCTIONS FOR THE PREPARATION OF
CONSOLIDATED FINANCIAL STATEMENTS
(b) For the previous year ended March 31, 2015:
Name of the Entity
Net assets
Share in profit and loss
as % of
consolidated
net assets
Amount
as % of
consolidated
profit and loss
Amount
(H in Lakhs)
Subex Inc.,
Subex Technologies Inc
Subex Middle East
Total
Note: The balances have been considered after eliminating all inter-company balances and transactions.
1,780.25
2.79
4.26
20,904.02
9%
0%
0%
100%
51%
-9%
0%
100%
523.83
(80.16)
(0.13)
1,021.45
Note - 38 COST OF HARDWARE, SOFTWARE AND SUPPORT CHARGES:
(i) The Group purchases hardware and software to fulfil its obligations under contracts for sale of its products or rendering of its
services. There was no inventory of such hardware/software at the beginning and end of the year.
(ii) Cost of hardware, software and support charges for the year ended March 31, 2016 is net of reversal of provision no longer
required amounting to H386.38 Lakhs ( March 31, 2015: H Nil).
Note - 39
The Group Companies has entered into ‘International transactions’ with ‘Associated Enterprises’ which are subject to Transfer
Pricing regulations in India, as well as in the other geographies. The Group is in the process of carrying out transfer pricing study for
the year ended March 31, 2016 in this regard, to comply with the requirements of the Income Tax Act, 1961 and other applicable
laws in other countries. The Management of the Group, 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
consolidated financial statements, particularly on account of tax expense and that of provision for taxation.
Note - 40
During the previous year, the Group has transferred the unclaimed dividend outstanding for a period more than 7 years of H1.31
Lakhs to Investor Education and Protection Fund.
Note - 41
The figures of the previous year up to March 31, 2015 were audited by a firm of Chartered Accountants other than S.R. Batliboi &
Associates LLP. Previous year figures have been regrouped/ reclassified, wherever necessary to confirm to current year’s classification.
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
ICAI Firm registration number: 101049W/E300004
Chartered Accountants
Surjeet Singh
Managing Director & CEO
DIN:05278780
Bengaluru, India
Anil Singhvi
Director
DIN:00239589
Bengaluru, India
per Sunil Bhumralkar
Partner
Membership No.: 035141
Bengaluru, India
Date: May 24, 2016
Sanjeev Aga
Director
DIN:00022065
Bengaluru, India
Date: May 24, 2016
Ganesh K.V
Chief Financial Officer,
Global Head Legal
and Company Secretary
Los Angeles, USA
162
SUBEX LIMITED
“SHAREHOLDERS’ INFORMATION”
REGISTERED OFFICE
The Registered office of the Company is at RMZ Ecoworld, Outer Ring Road, Devarabisanahalli, Bengaluru – 560 103.
DATE AND VENUE OF THE ANNUAL GENERAL MEETING (AGM)
Date
Venue
Bengaluru – 560 103
Time
: September 12, 2016
: Subex Limited, RMZ Ecoworld, Outer Ring Road, Devarabisanahalli,
: 2 PM
DATES OF BOOK CLOSURE
From September 6, 2016 to September 12, 2016 (both days inclusive)
BOARD MEETINGS & FINANCIAL CALENDAR
Financial year
: April 1, 2016 to March 31, 2017
Calendar of Board Meetings to adopt the accounts
For quarter ending June 30, 2016
– 2nd week of September 2016
For quarter ending September 30, 2016 – 2nd week of December 2016
For quarter ending December 31, 2016 – 2nd week of February 2016
For the year ending March 31, 2017
– 4th week of May 2017
DIVIDEND
The Directors have not proposed any dividend to be paid for the financial year 2015-16.
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 2015-16 in accordance with the provisions
of the Listing Agreement/ SEBI (LODR) Regulations, 2015 with NSE and BSE.
The 2,43,207 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 US$ 180 million, 2% Coupon Convertible Unsecured Bonds (outstanding amount US$ 1 Million) are listed on the
London Stock Exchange since March 9, 2007.
The Company’s US$ 98.7 million 5% Convertible Unsecured Bonds (outstanding amount US$ 1.4 Million), 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.
The Company’s US$ 127.721 million 5.70% Convertible Secured Bonds (outstanding amount of US$ 4.55 Million), 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.
163
2015-16ANNUAL REPORT
The stock codes of the Company at the Stock Exchanges are as follows:
Name and address of the Stock Exchange
National Stock Exchange of India Limited,
Exchange Plaza, 5th Floor, Plot No. C/1, G Block
Bandra Kurla Complex,
Bandra (East)
Mumbai- 400051
BSE Limited,
Phiroze Jeejeebhoy Towers
Dalal Street, Mumbai 400001
London Stock Exchange
10 Paternoster Square
London
EC4M 7LS
Singapore Exchange Securities Trading Limited
2 Shenton Way #19-00
SGX Centre 1
Singapore 068804
Stock code
SUBEX
532348
SUBX
4AFB
(SUBEX US$ 98.7 million 5% bonds)
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, 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. Further, for the financial year 2015-16, the Company has paid the custodial fees within
the prescribed timelines.
STOCK MARKET DATA RELATING TO EQUITY SHARES LISTED IN INDIA
Monthly high and low quotes during each month in the financial year 2015-16 as well as the volume of shares traded on NSE and
BSE are as under:
Month
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
NSE
BSE
Index Close Price
High*
H
12.86
12.51
11.88
15.86
15.11
12.08
11.34
11.75
13.12
11.50
9.78
9.18
Low*
H
11.88
11.67
11.09
14.72
13.82
11.42
10.92
10.74
12.30
10.65
9.09
8.80
High
H
12.90
12.49
11.82
15.85
15.09
12.07
11.32
11.74
13.12
11.49
9.76
9.19
Low
H
11.89
11.72
11.07
14.73
13.80
11.43
10.92
10.76
12.29
10.67
9.10
8.82
Sensex
(Closing price)
28,113
27,426
27,138
28,016
27,387
25,705
27,012
26,014
25,658
24,780
23,688
24,812
Nifty
(closing price)
8,524
8,301
8,196
8,479
8,310
7,815
8,172
7,888
7,803
7,536
7,200
7,550
*The monthly high and low quotes are calculated on the basis of the closing prices of the month.
164
SUBEX LIMITED SUBEX LIMITED SHARE PRICE VERSUS NSE S&P CNX NIFTY AND SENSEX
15000
10000
5000
0
y
t
f
i
N
X
N
C
P
&
S
40000
35000
30000
x
e
s
n
e
S
25000
20000
15000
0
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
S&P CNX Nifty
Subex
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Sensex
Subex
25
20
15
10
5
0
25
20
15
10
5
0
e
c
i
r
p
e
r
a
h
S
x
e
b
u
S
e
c
i
r
p
e
r
a
h
S
x
e
b
u
S
165
2015-16ANNUAL REPORT
CREDIT RATING
India Ratings and Research (Ind-Ra) has upgraded the ratings on Subex Limited’s bank facilities from BBB – to BBB+
SHAREHOLDING PATTERN
(As per records of the RTA)*
Distribution of Shareholding:
No. of Equity shares held
As on March 31, 2016
As on March 31, 2015
No. of share
holders
% to total share
holders
No. of share
holders
% to total share
holders
57,307
17,555
11,501
5,024
2,615
3,428
4,833
5,030
1,07,297
53.41
16.36
10.72
4.68
2.44
3.20
4.50
4.70
100.00
44,454
8,173
4,887
1,865
998
1,074
1,570
1,503
64,525
68.89
12.67
7.57
2.89
1.55
1.66
2.43
2.34
100.00
1 – 5000
5001 – 10000
10001 – 20000
20001 –30000
30001 – 40000
40001 – 50000
50001 – 100000
100001 and above
TOTAL
Categories of Shareholders:
Category
No. of share
holders
As on March 31, 2016
Voting
strength %
No. of shares
held
No. of share
holders
As on March 31, 2015
Voting
strength %
No. of shares
held
Public & Others#
Companies/
Bodies Corporate
Core Promoters
Mutual Funds
ESOPs/ Employee
shareholders
FII
TOTAL
105,713
1,536
76.77
22.76
32,28,70,381
9,59,94,040
63,478
996
87.71
11.35
159,045,582
20,577,369
3
Nil
44
1
1,07,297
0.23
Nil
0.22
0.02
100
974,044
Nil
934,498
3
Nil
47
9,75,257
421,748,220
1
64,525
0.54
Nil
0.35
0.05
100
974,044
Nil
632,834
94,000
181,323,829
* The difference in paid-up share capital as per the Company’s records and the records of the RTA is due to allotment of 8,10,63,426
equity shares consequent to conversion of FCCB’s on March 28, 2016. The same was not recorded in the books of RTA as on March 31,
2016.
#Includes Foreign Bodies Corporate.
R & T AGENTS AND SHARE TRANSFER SYSTEM
Canbank Computers Services Limited, J P Royale, 1st Floor, No.218, 2nd Main, Sampige Road (Near 14th Cross), Malleswaram,
Bengaluru - 560 003, were appointed as ‘Registrar and Transfer Agent’ both in respect of shares held in physical form and
dematerialized form vide a tripartite agreement dated December 5, 2001 in respect of shares held with NSDL and a tripartite
agreement dated November 27, 2001 in respect of shares held with CDSL.
166
SUBEX LIMITED A. 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 timeline 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.
B. 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,
Bengaluru - 560 003
Tel Nos. +91 80-23469661/62, 23469664/65
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, 2016, 99.99% 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, 2016, 2,43,207 GDRs were outstanding.
As on March 31, 2016, the Company had outstanding FCCBs aggregating to:
US$ 1,000,000 under its US$ 180,000,000 2% convertible unsecured bonds (“FCCBs I”)*
US$ 1,400,000 under its US$ 98,700,000 5% Convertible Unsecured Bonds (“FCCBs II”)*
US$ 4,550,000 under its US$ 127,721,000 5.70% secured convertible bonds(“FCCBs III”)#
*FCCB I & FCCB II: The maturity period of the un-exchanged FCCBs I and FCCBs II was extended to March 2017 pursuant to the RBI
Approval dated April 27, 2012 and requisite approvals under the Trust Deed of the holders of FCCB I & FCCB II.
#FCCB III: In July 2012, pursuant to the exchange offer of FCCBs I and FCCBs II, the Company issued FCCB III bonds with a maturity
period due July 2017. Principal amount of US$ 36,321,000 were mandatorily converted into equity shares at the conversion price of
H 22.79/-. Further, principal amounts of US$ 9,870,000 were converted until March 31, 2015. Pursuant to the approval in meeting
of the Board held on May 14, 2015, the meeting of the shareholders held on June 19, 2015 and the meeting of the Bondholders
held on August 5, 2016, the conversion price of FCCB III being convertible into equity shares of the Company was reset to H13.00
from the previous price of H 22.79. Principal amounts of US$ 76,980,000 were converted during 2015-2016 and US$ 950,000 were
converted between April 1, 2016 to date of this Report. Hence principal amount of US$ 3,600,000 of FCCB III are outstanding as
on the date of this report.
LOCATIONS
Broomfield, CO 80021, USA
Harrow, Middlesex, HA1 1JU, UK
Burlington Square, Singapore
Sharjah Airport International Free Zone, Sharjah, UAE
167
2015-16ANNUAL REPORT
LEGAL PROCEEDINGS
There are no legal proceedings against the Company which are material in nature except those disclosed in the standalone financial
statements vide Note 33.
NOMINATION
Pursuant to the provisions of Section 72 of The Companies Act, 2013, members may file nomination in respect of their shareholdings.
Any member willing to avail this facility may submit to the Company the prescribed Form SH 13 (in duplicate), if not already filed.
Form SH 13 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.
COMMODITY PRICE RISK / FOREIGN EXCHANGE RISK AND HEDGING ACTIVITIES
Company is exposed to foreign exchange risk on account of import and export transactions entered. The Company is not doing any
hedging activities, as there is a natural hedge between exports and imports.
INVESTOR GRIEVANCES
Investor grievances received from April 1, 2015 to March 31, 2016:
Nature of complaints
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
Received
2
Cleared
2
1
-
-
-
3
1
-
-
-
3
During the year ended March 31, 2016, the Company has attended to all the investors’ grievances/correspondence
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,
Bengaluru – 560103, 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.
168
SUBEX LIMITED www.subex.com
info@subex.com
INDIA
USA
UK
Subex Limited
Subex Inc.
Subex (UK) Limited
(CIN: L85110KA1994PLCO16663)
12303 Airport Way,
1st Floor, Rama,
Regd. office: RMZ Ecoworld,
Bldg. 1, Ste. 390,
17 St Ann’s Road,
Devarabisanahalli, Outer Ring Road
Broomfield, CO 80021
Harrow, Middlesex,
Bangalore - 560037, India
Tel : +91 80 6659 8700
Fax : +91 80 6696 3333
Tel : +1 303 301 6200
HA1 1JU
Fax : +1 303 301 6201
Tel : +44 0207 8265300
Fax : +44 0207 8265352
SINGAPORE
MIDDLE EAST
CANADA
Subex (Asia Pacific) Pte Limited
Subex Middle East (FZE)
Subex Americas Inc.
175A Bencoolen Street
Executive Desk Q1-04-098/B,
C/O BDO Canada LLP,
#08-03 Burlington Square
P.O. Box: 513156,
5494, Manotick Main Street
Singapore 189650
Sharjah Airport International
Box. 918, Manotick, Ontario
Tel : +65 6338 1218
Fax: +65 6338 1216
Regional offices: Dubai | Ipswich
Free Zone, Sharjah, UAE
Canada, K4M1A8