Subex Limited
Annual Report 2016-17
Ring in the new.
Win in the digital world.
www.subex.com
info@subex.com
INDIA
Subex Limited
USA
Subex Inc.
UK
Subex (UK) Limited
(CIN: L85110KA1994PLCO16663)
12303 Airport Way,
1st Floor, Rama Apartment,
Regd. office: RMZ Ecoworld,
Bldg. 1, Suite. 390,
17 St Ann’s Road,
Devarabisanahalli, Outer Ring Road
Broomfield, CO 80021
Harrow, Middlesex,
Bangalore - 560103, 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
Free Zone, Sharjah, UAE
Canada, K4M1A8
Tel: +65 6338 1218
Fax: +65 6338 1216
Regional offices: Dubai | Ipswich
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.
200+
Customer
base
900+
Employee
base
357.33
Revenues
(Rs. crore)
95.05
Operating profit
(Rs. crore)
Highlights,
FY2016-17
Contents
Corporate identity ...........................................................2
Board of Directors ........................................................ 19
Message from the MD & CEO ...........................................4
Executive Leadership Team .......................................... 20
Our performance in numbers ..........................................7
Board’s Report.............................................................. 22
Management commentary .............................................8
Corporate Governance Report ..................................... 52
Key numbers - global telecom industry ....................... 10
Management Discussion and Analysis ........................ 66
Operational Leadership Team (OLT) of Subex .............. 11
Standalone Financial Statements ................................ 85
Creating value for 25 years .......................................... 16
Consolidated Financial Statements ............................ 147
Subex Charitable Trust ................................................. 18
Shareholder Information ............................................ 208
Ring in the new.
Win in the digital world.
The time has come for Subex to graduate from one level to
another.
The time to transform from a telecom business optimisation
provider to a telecom analytics solution provider.
The time to graduate from providing limited solutions to
global communication service providers to embracing digital
transformation.
In helping customers transform their business models, Subex is
transforming its own.
Emerging better, stronger and larger. This is Subex 3.0.
Subex is a specialised
telecom solutions provider.
Enjoying focused and
specialised domain
knowledge.
Providing revenue assurance,
fraud management, partner
settlement, asset assurance,
analytics and IoT security.
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.
Awards and accolades
●● Subex and Telefonica Chile won the BSS & OSS Award for
the ‘Best Fraud Prevention Project’ in the ‘Best Revenue
Assurance /Fraud Solution’ category
●● Subex and BTC Botswana awarded the prestigious Global
Telecoms Business Innovation Awards 2016 in the
‘Business Service Innovation’ category
●● Subex was awarded the Pipeline Innovation Award 2016 in
the ‘Security & Assurance’ category
| 2 |
Background
●● Offering cutting-edge solutions
for global telecom companies for
25 years
●● Driven by a team of experienced
professionals, led by Mr. Surjeet
Singh (Managing Director and CEO
●● Leading global telecom analytics
solution provider
●● Pioneered the concept of capex
optimisation
Location
●● Headquartered in Bengaluru,
India
●● Global delivery centres in India,
the US and the UK
●● Subsidiaries in the US, the UK, the
UAE, Singapore and India
Listing
●● Equity shares listed on Bombay
Stock Exchange and National
Stock Exchange. Company’s
securities listed on the London
Stock Exchange and Singapore
Stock Exchange
Clientele
●● More than 200 clients across
more than 90 countries, including
39 of the world’s top 50 telecom
operators
Value pillars
Drive new business models:
Pivot offerings around revenue,
open new revenue streams in
emerging business areas and allied
services, leverage the partner
ecosystem
Enhance customer experience:
Retain existing customers and
acquire new customers using
analytics, leverage business
insights to better understand
customer behaviour for deeper
engagement
Optimise enterprise:
Enable operational excellence by
focusing on maximising revenue
and mitigating business risks,
ensuring y-o-y cost savings that
provide resources for investments
Quality statement
Subexians are committed to achieve total customer satisfaction by delivering high-
quality products that meet the needs and expectations of our customers. We are
committed to adhere to quality management system requirements and continually
improve them.
Customer base
Employee base
Installations
200+
900+
300+
Presence
90+
countries
Presence
25+
years
As on 31st March
2017
As on 31st March
2017
As on 31st March
2017
As on 31st March
2017
As on 31st March
2017
| 3 |
SUBEX LIMITED Annual Report 2016-17 To the
stakeholders
We are standing
at an important
juncture in the
history of Subex.
Over the last four years,
a considerable focus was
invested in transforming
our Company from a
debt-heavy organisation
to a deleveraged Balance
Sheet. From a point in FY13
where we had around
US$100 million in debt, we
progressively equitised our
foreign currency convertible
debt and overseas foreign
currency debt. The result is
that we stand with a debt
of only US$ 28.76 million
and a considerably lighter
Balance Sheet. Subsequent
to 31st March 2017, the
Company has repaid US$
12 million loan thereby,
reducing the outstanding
debt to US$ 16.76 million.
This transformed Balance
Sheet empowered Subex
to improve its operating
performance. During FY17,
Subex reported a 10.81%
improvement in revenues
Message from the MD & CEO
“Subex is uniquely
positioned as a long-
term business partner
in the telecom analytics
space at a time when
telecom players are
embarking on their digital
transformation journeys.”
| 4 |
and a 46.39% growth in
EBIDTA. The Company repaid
H21.1 crore of working
capital debt in 2015-16 and
H18.05 crore in 2016-17,
which strengthened our net
debt-equity ratio from 0.45
in 2015-16 and to 0.36 in
2016-17, translating into
a rating upgrade by India
Ratings IND BBB+ from IND
BBB.
Sectoral changes
The year under review was
marked by exciting realities
across the global telecom
landscape. We have seen
large global telcos acquiring
media companies to launch
new digital services to own
digital content and win the
mindshare of millennial
consumers who expect
a compelling experience
across all walks of life. In
an emerging economy
like India, we saw the
emergence of a digital
service provider who has
disrupted the telecom world
by transforming data into a
commodity service.
Subex has responded to
this reality through a digital
leap. As telcos embark on a
new digital transformation
journey, creating unlimited
opportunities, I foresee
Subex playing a critical
trust-based role in helping
these companies graduate
to stronger business
models, enhanced customer
experience and optimised
costs.
I believe that the coming
together of these
macroeconomic factors and
our responsiveness will
pave the way for a new
chapter in our existence
called ‘Subex 3.0’.
The Subex 3.0
groundwork
Embracing changes
proactively
Globally, the telecom
industry is undergoing a
dramatic transformation.
Revenue models of global
telecom companies
are graduating beyond
traditional avenues like
voice and data. Subscriber
bases have begun to
stagnate following the
commoditisation of voice
and data services and
cannibalisation by over-
the-top players offering
similar services. Hence,
communication service
providers are launching
new digital services
like cloud and hosting,
M2M and IoT, security,
IP communication and
collaboration, data and
analytics, enterprise
mobility, finance and
payments, among others,
with the objective to
enhance customer
experience, improve loyalty
and strengthen revenues.
There is a growing
consensus that digital is
indeed the future. Digital
transformation is enriching
the customer experience
and increasing efficiency.
The advent of digitisation
has transformed the way
telcos work, attracting
engagements with digital
content providers, insurance
players, app developers
and media companies. By
2020, digital services could
account for more than 10%
of the overall revenues of
global telecom players.
I believe that with great
opportunity comes
large challenges. The
emergence of new business
models has widened
and deepened risks. For
instance, Yahoo’s market
share declined following
the leak of a confidential
user base information
arising out of hacking.
The result of this new and
challenging ecosystem
is a growing premium
on ‘end-to-end partner
management’ as opposed
to the conventional ‘partner
settlement’ platform.
Subex is attractively placed
to capitalise on this reality.
Subex enjoys an established
presence in the assurance
space; the Company’s
proven ability to counter
security risks are expected
to enhance visibility and
acceptability in the new
sectoral environment.
As telcos struggle with
emerging business and
technology challenges,
they seek engagements
with service providers
There is a growing consensus that digital is indeed the
future. Digital transformation is strengthening the customer
experience and increasing efficiency. The advent of digitisation
has transformed the way telcos work, attracting engagements
with digital content providers, insurance players, app
developers and media companies.
| 5 |
SUBEX LIMITED Annual Report 2016-17 Our proprietary gold mine
of data, coupled with our
domain knowledge and
technological capabilities
puts us in the best position
to draw meaningful insights
for our telco customers
to help them drive new
business models, enhance
customer experience and
optimise their enterprises.
This is an exciting phase in
Subex’s long and storied
25-year journey and I look
forward to what the future
holds for the Company and
Subexians.
Regards,
Surjeet Singh
Chief Executive Officer and
Managing Director
enjoying access to a
large data quantum and
a corresponding analytics
insight. Subex is best
positioned to leverage
this opportunity. Over
the years, the Company
has aggregated a large
volume of data from diverse
installations, which is mined
to create new revenue
streams, generate critical
insights and graduate the
end-user experience. This
competence in the cutting-
edge area of predictive
analytics positions Subex
as a long-term telecom
analytics business partner.
Offering distinctive
services
There is increasing evidence
to suggest that telcos find
the exercise of generating
data and extracting usable
information difficult on
account of domain-related
challenges and discrete
databases, among other
reasons.
Subex is competently
placed to address this
reality. The Company
possesses a large data
wealth following years
of engagement with
large global telecom
companies. The result is a
competent use of state-
of-the-art analytics to
generate business insights
around Revenue, Product,
Customers and Risk.
With digital transformation,
more devices are being
connected with, Gartner
predicting that 8.4 billion
‘connected things’ will
be in use in 2017, up by
31% from 2016. In such a
scenario, increasing focus
on IoT security. Subex’s IoT
security solution monitors
and generates alerts to
threats in near real-time
Internet of Things (IoT)
environments. The solution
focuses on the concept of
holistic ‘cyber resilience’
from asset and incident
discovery and monitoring
through response and
recovery.
Creating a
well-governed
organisation
Subex is among the few
Indian listed companies
in its niche that is
professionally-managed
around a robust business
model. We created an
operational leadership
team structure capable
of managing business
operations while fostering a
sense of entrepreneurship.
Our simplified
organisational structure
empowers our people with
enhanced accountability
and motivates them to
innovate. The Company has
integrated diverse functions
and I am pleased to state
that, this has resulted in
enhanced organisational
efficiency and helped
deliver a superior customer
experience.
Roadmap for the
future
Subex is optimistic of
entering a larger number
of enduring customer
engagements translating
into larger ticket contracts.
The Subex management
is confident that this
represents the start of an
exciting phase in its journey,
which we call Subex 3.0.
In this exciting Subex
3.0 journey, we will
transition to becoming
a telecom analytics
solution provider from
a business optimisation
provider, which will help
telcos embrace digital
transformation. In line with
this strategy, we unveiled a
new logo, which represents
our vibrancy, energy and
commitment to enhance
value for our customers in
the digital era.
| 6 |
Our performance in numbers
Revenues (H crore)
EBIDTA (H crore)
EBIDTA (%)
.
3
8
9
5
3
.
6
4
2
2
3
.
3
3
7
5
3
5
7
5
8
.
7
2
8
6
.
.
0
0
0
0
1
3
8
3
2
.
7
1
1
2
.
9
9
7
2
.
5
1
-
4
1
0
2
6
1
-
5
1
0
2
7
1
-
6
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
7
1
-
6
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
7
1
-
6
1
0
2
2014-15
2014-15
2014-15
2014-15
2014-15
2014-15
2014-15
2014-15
2014-15
| 7 |
SUBEX LIMITED Annual Report 2016-17 FY2016-17 proved
to be a watershed
for the global
telecom industry
with digitisation
emerging as a
disruptive force.
This might suggest that
the going was easy for
us during the year under
review, but that would be
far from the truth. At a time
when our key customers
were challenged by large
and frequent security
breaches, we repositioned
our business around
the pillars of ‘drive new
business model, enhance
customer experience
and optimise experience’
resulting in the launch of
Subex 3.0.
As revenues from legacy
businesses weakened
following the rise of
digital service providers
and OTT players, telcos
became increasingly
selective in making fresh
business investments. They
recognised the growing
need to carve out new
revenue streams, a superior
customer experience and
optimised operations.
To achieve these daunting
business objectives, an
increasing number of
telecom companies turned
to specialised service
providers like Subex.
At Subex, we needed to
understand emerging
business priorities and
objectives of CSPs to
provide retrofitted solutions
leading to sustainable
revenue streams. We
adopted a consultative
approach; we evolved from
being a product vendor
to solutions provider; we
Management
commentary
Vinod Kumar
Wholetime Director and
Chief Operating Officer
Ashwin Chalapathy
Wholetime Director,
Chief Technology Officer and
Head of Service Delivery
| 8 |
graduated from limited
business engagements to
business-strengthening
propositions like
revenue improvement,
cost reduction and risk
mitigation; we graduated
from one-off customer
engagement to customer
retention and sustainable
revenues.
Subex is evolving it’s
offerings and aligning them
in line with the sweeping
global changes in the
telecom domain. Due to the
emergence of digital risks,
CSPs are seeking proactive
vendor engagements in
risk management, making
systemic security critical to
their existence.
Even as telecom companies
are launching IoT networks,
their security is emerging
as a large responsibility.
Gartner indicates that
40 billion devices will be
connected by 2020; Subex
can play a growing sectoral
role through its proprietary
IoT security solution. At
Subex, we are seeing the
concept of risk management
extending to the security
domain; we are seeing a
greater symbiosis between
telcos and technology
partners during the launch
of innovative digital
services; we see the role of
partners extending from the
conventional interconnect
and settlement spaces. This
represents the basis of the
evolution of our company’s
product offerings towards
solutions.
This landscape also
explains why Subex did
not just select to evolve
its offerings but its
organisation itself. We
enhanced employee skills,
we invested in cutting-edge
technologies, we engaged
a senior consultant who
empowered our sales
team in consultative
selling and we analysed
business processes with
the objective to strengthen
them. The result is that
our customers notified us
prior to venturing into new
transactions; for example,
for our North American
customers, we received
notifications five days
in advance to be able to
competently address frauds.
We established standard
operating procedures in
our new operating areas to
optimise costs and enhance
solutions affordability.
of data that we are using
to convert into meaningful
insights through analytic
layers. These insights
are being used to create
an unmatched customer
experience, forecast
business opportunities
and risks for the telcos,
strengthening our
consultative role. Subex’s
competitiveness is derived
from its deep customer
knowledge and ability
to bring the value of its
analytics to customer
environments, which would
be difficult to replicate by
competitors.
We are under no illusions
that this transformation
critically hinges on the
competence of our people.
Previously, the delivery
team figured last in the
value chain. Following the
integration of the service
package, the delivery team
is engaged in projects from
the outset. This progressive
change has started showing
results: we entered into
a multi-year multi-million
dollar deal with British
Telecom in the partner
settlement domain.
By the virtue of working
with telcos across the
world for more than two
decades, we own a treasure
Our existing assurance
products will help us
address large data swathes;
our judicious investments
in analytics will accelerate
decision making. A prime
example of this will be
in the realm of real-time
revenue management
where we assist a digital
service provider and
disruptor in India to
enhance transparency
while dealing with its vast
customer base.
Over the years, we focused
on building a robust
governance framework
by drawing out detailed
operational plans at the
beginning of each fiscal.
These plans would be
reviewed by the executive
leadership team each
fortnight. We focus on
KPIs through automation,
making appropriate
corrective actions. Our
Board comprises seasoned
independent Directors
drawn from different
sectoral backgrounds. We
are optimistic of attracting
more multi-million dollar
and multi-year contracts
that will enhance value for
our stakeholders.
| 9 |
SUBEX LIMITED Annual Report 2016-17 Key numbers - global telecom industry
73%
Mobile broadband connection of
total connections in 2020
700
Operator capex (US
$ bn) for 2017-20
5.7
Smartphones
(bn) by 2020
1.9
Smartphones
(bn) today
60%
Mobile
penetration by
2020
50
The cost
advantage in
% in remitting
money through
the mobile than
money-transfer
operators
47%
Expected CAGR
growth in mobile
data traffic
between 2016
and 2020
48%
Mobile
penetration in
2016
55%
Mobile
broadband
connection
as% of total
connections in
2016
3.6
(Cumulative
subscribers (bn)
of messaging
platforms, 2016
Source: GSMA - Mobile Economy 2017
| 10 |
Democratisation of strategy
the Operational Leadership Team at Subex
Over the last few months, we were engaged in defining the strategic path for Subex to emerge as a ‘partner of choice’ for
operators seeking to embrace digital transformation. This aspiration warranted broadening the scope of our solutions and
services footprint, encompassing revenues, customer experience and operational optimisation.
Any strategy requires a supporting structure, associated people and enabling processes leading to effective execution. In view
of this, we formed an Operational Leadership Team (OLT) empowered to define and drive organisational strategy. This OLT was
created with a cross-functional mix and diversity, just as in any start-up, expected to define outcomes and deliver tangible
results. This was done to reinforce entrepreneurship, ownership and responsibility. The following are the representative quotes
we received from some OLT members.
“In keeping with Subex’s intrapreneur
genetics, the Operational Leadership
Team (OLT) is a key element in driving the
organisation forward. The OLT is tasked
with ensuring the successful execution
of critical internal and external facing
initiatives. The OLT initiative has fostered a greater sense of
company ownership, while also exposing Subexians from
different teams to a comprehensive understanding of how
the business functions. We look forward to the challenge of
taking this organisation to new heights!”
Ashwin Menon
Associate Director - Business Solutions & Consulting
“OLT (Operational Leadership Team) is a
first-of-its-kind initiative at Subex where
10% of the organisation, under the
guidance of the ELT (Executive Leadership
Team), came together to tackle internal and
external challenges, chart a new course and
realign to LEAP in the new direction. This team has access
to other functions, with an opportunity to step into various
shoes, bring together experiences, analyse and come up
with a way of working to meet various broad objectives like
‘Doubling Order Intake’, ‘Brand Revival’ etc. This initiative
has encouraged the team to emerge as thought leaders and
business owners, going beyond roles and responsibilities to
meet organisational goals.”
Suraj Balachandran
Associate Vice President - Sales and Account
“OLT is a key initiative that gives equal
opportunity for every Subexian in taking the
Company to the next level. This initiative
shows the trust and faith that ELT has in a
Subexian and it demonstrates the true spirit
of corporate democracy. Being a part of the
OLT gives us totally diversified problem areas to work with. It
gives me pride to be a part of the OLT journey.”
Anandakumar K
Director - DBA
“I feel privileged to be a part of the OLT. We
have a great entrepreneurial spirit within
our team and the objective is loud and
clear. We all want to see Subex to ‘LEAP’ (a
nickname for OLT) to new areas, engage
in cooperative creation-led customer
engagement and increase operational efficiency, the result
of which would be new revenue streams, happy customers
and a sound profitable enterprise to serve them and the
community at large across the long-term.”
Jitka Roberts
Director - Sales
| 11 |
SUBEX LIMITED Annual Report 2016-17 Creating value
through data
| 12 |
Innovations like mobility,
cloud computing, social
networks and Big Data have
transformed businesses. Data is
being regarded as a new natural
resource that leading businesses
are seeking to build a competitive
advantage. In the contemporary
dynamic telecom environment, CSPs
are leveraging massive data volumes
through advanced analytics. Through
these new-age methods, CSPs are
optimising processes and enhancing
customer satisfaction.
This is not as easy as it sounds. Just the act of
data processing by applying a series of statistical,
probabilistic and other advanced algorithms require
substantial automation and people resources. As
companies struggle to aggregate resources, an
increasing number seek one-stop solution providers like
Subex.
Subex partners with CSPs, helping identify opportunities
to enhance revenues, operational efficiencies and
customer retention.
Subex’s advanced analytics-as-a-service programme
called ROC Insights, mines Big Data to generate precious
information that is ‘consumable’, ‘actionable’ and
‘contextual’. ROC Insights enables CSPs to effectively
leverage data by delivering timely insights in less than 8
weeks in a consumable manner and with no implications
on their capex. The result: when global CSPs need the
right information to reach the right people at the right
time, they inevitably turn to Subex.
When a Tier-1 American telecommunications and internet service
provider, whose network spans North America, Europe, the
Middle East, Africa, Latin America and the Asia-Pacific, sought
to proactively manage customer disputes, it selected Subex as a
partner.
Even as the operator sought to enhance revenues, its erstwhile
approach was proving inefficient (manually examining disputes
raised and crediting the amount of the dispute when found
genuine). The CSP discovered that a large portion of the amount
was being blocked, moderating realisations.
y
d
u
t
S
e
s
a
C
Subex’s advanced-analytics-as-a-service approach empowered
the operator to create an effective model through customised RFM
(recency, frequency, and monetary) analysis. Subex provided the
operator with an ‘ensemble model’ of invoice risk prediction and
temporal based prediction, allowing the CSP to identify potentially
risky accounts and factors that could trigger disputes.
The result: The CSP registered a 9x improvement in the dispute
resolution strike rate, generating savings of a few million dollars.
| 13 |
SUBEX LIMITED Annual Report 2016-17
Securing the Connected Ecosystem
using a IoT Security Solution
| 14 |
Following the advent of IPv6
and growing Wi-Fi network
ubiquity, Gartner estimates
that by 2020, the number
of active wireless connected
devices could exceed 40 billion.
Although connected devices
provide advantages, they are also
prone to security breaches– from
hackers remotely taking control over
connected cars to turning off power
plants. As per a survey conducted by
the IoT Institute, security continued
to remain the number one threat to
organisations not adopting IoT.
The result is that securing a network of connected
devices is no longer an option, but a necessity. IoT
vulnerabilities impact customers, devices and brands.
Subex Secure, an IoT/ICS security solution, is an
affordable and scalable solution that counters security
breaches. Subex Secure’s three-layered approach of
signature, heuristic and anomaly-based detection
mechanism ensures cyber resilience in the face of
unforeseen hacks. Moreover, Subex Secure can be
deployed in connected ecosystems such as self-driving
cars, smart homes and modern-day industrial setups.
Subex partners government bodies to equip Smart Cities
with zero-day identification capabilities. By capitalising
on its globally-deployed honeypot network, Subex has
helped customers detect vulnerabilities and reduce risks
across IoT/ICS components.
e
s
a
C
e
s
U
Mirai is a malware that turns networked devices running outdated
versions of Linux into remotely controlled ‘bots’, which can be
used as part of a botnet in large-scale network attacks. This
malware hit systems on 21 October 2016 and brought down
sites like Twitter, The Guardian, Netflix, Reddit, CNN and others.
Identifying the attack pattern solely on the basis of behavioural
detection (anomaly-based) proved problematic; the rapid
nature of the Mirai botnet propagation (every 22 seconds) made
mitigation impossible.
Subex Secure’s three-layered detection mechanism didn’t just
rely on anomaly-based detection. It captured Mirai’s attack
signature using its proprietary honeypot network weeks before
the actual attack occurred. Subex’s rule-based detection and
anomaly detection, using Bayesian and Gaussian techniques,
meant that attacks could be detected and mitigated by isolating
the infected elements and not allowing them to propagate
through the network. Subex Secure prevented a potential
catastrophe for clients.
| 15 |
SUBEX LIMITED Annual Report 2016-17
Creating value for
Over the last 25 years, Subex has
continuously worked towards
enhancing customer value. Being one of
the most prominent assurance providers
in the world, Subex is graduating
towards superior solutions for telcos in
the digital era.
Subex at 25
Subex provides cutting-edge
solutions to customers, making
them relevant and with new
technologies quicker than peers.
As sectoral players continue to
build infrastructure necessary
to drive growth, the focus
shifts to driving new business
model, enhancing customer
experience and optimising
enterprise – areas in which
Subex has already carved a
niche. With telcos investing in
digital transformation, significant
investments are being made in
digital services spawning new
risks– areas in which Subex
has already started building its
expertise.
| 16 |
Staying relevant for 25 years
By being capable
Subex enjoys an
established track
record in providing
cutting-edge customer
solutions.
By being
dependable
39 of the top-50 global
telecom players use
Subex’s products,
solution and services.
By being
sustainable
Subex invested in top-
of-the-line systems and
processes to remain
lean and innovative. Its
deleveraged Balance
Sheet promises
enhanced value to
shareholders.
By being flexible
Subex offers a large
basket of solutions–
from software
license-based models
to subscription-based
software-as-a-service.
Subex offers turnkey
operational managed
services with a pay-
for-performance model
based on key business
metrics.
Strength of Subex’s intangibles
Brand
Subex is a sought-after
brand among global
telcos; the Company
addresses the growing
needs of more than
200 customers.
Innovation
Subex invests
in cutting-edge
technologies to provide
new-age solutions
including IoT security,
and advance analytics.
People
Subex empowers
its people by
inculcating a sense of
entrepreneurship and
offering challenging
projects so that the
employees are driven
to foster a ‘make it
happen’ attitude.
| 17 |
SUBEX LIMITED Annual Report 2016-17 Subex Charitable Trust (SCT)
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-disadvantaged
people, among others.
The Company undertook the following initiatives during
2016-17:
●● Organised a blood donation camp was with TTK Bank
which was attended by a 100 people
●● Provided financial aid for paying the electricity and water
bills of Prerana Resource Centre - which provides a home
and vocational training to more than 100+ destitute and
differently-abled girls
●● Visited a governmental higher secondary school in
Avalahalli to celebrate Christmas by interacting with the
students and distributing gifts among them
●● Accumulated a sum of H2,28,022 from 40 Subexians for the
benefit of 30 economically-challenged students under the
aegis of the Nurture Merit programme
●● Celebrated SCT Day on 9th February at Subex, with
participation from students of GHSS Avalahalli School,
visually-impaired women from the Prerana Resource
Centre and sponsored students part of the Vidya Poshak
programme
●● Collected H1,25,300 from 68 Subexians on SCT Day for
utilising the sum for SCT activities in a need-based manner
●● Provided 10 desktops and a water cooler to the GHSS
Avalahalli school in order to make them tech-literate and
ensure access to potable water
●● Channelised a sum of H3,60,000 as a part of the
Foundation’s tieup with the Prerana Resource Centre
to provide vocational training to 25 visually-impaired
and disabled teenaged girls in a phased manner – basic
education, vocational training and employment follow-up
A blood donation camp attracted 100 donors
Inmates at of the Prerana Resource Centre
Visit to government high school in Avalahalli for Christmas celebrations
Volunteers of SCT along with students from the Nurture Merit Programme
| 18 |
Board of Directors
Anil Singhvi
Chairman and Independent Director
Surjeet Singh
Managing Director & Chief Executive
Officer
Vinod Kumar
Wholetime Director and
Chief Operating Officer
Ashwin Chalapathy
Wholetime Director,
Chief Technology Officer and
Head of Service Delivery
Ms. Nisha Dutt
Independent Director
Ms.Poornima Prabhu
Independent Director
| 19 |
SUBEX LIMITED Annual Report 2016-17 Executive Leadership Team
Surjeet Singh
Chief Executive Officer
Vinod Kumar
Chief Operating Officer
Ashwin Chalapathy
Chief Technology Officer and
Head of Service Delivery
Mehernaz Dalal
Chief Financial Officer*
Mohan Sitharam
Chief People Officer
David Halvorson
General Counsel
*Appointed as CFO with effect from 15th June, 2017. Mr. Ganesh KV resigned as CFO and Global Head - Legal and Company
Secretary with effect from 15th June, 2017.
| 20 |
Statutory section
| 21 |
SUBEX LIMITED Annual Report 2016-17 Boards’ Report
Your Directors have pleasure in presenting the 23rd Annual Report of the Company on the business
and operations together with the audited results for the year ended March 31, 2017.
1. FINANCIAL RESULTS
Particulars
Total Revenue
Other Income
Profit Before Interest, Exceptional Items & Taxes (EBIT)
Finance costs
Finance Income
Profit/(Loss) before Exceptional items & tax
Exceptional Items
Loss before tax
Tax expenses
Loss after tax
Other comprehensive income
(i) to be reclassified to profit or loss in subsequent
periods
(ii) not to be reclassified to profit or loss in subsequent
periods
Consolidated
Standalone
Amount in HLakhs
2016-17
35,733.15
1,091.03
9,505.50
2,040.08
62.55
7,527.97
(10,890.00)
(3,362.03)
960.84
2015-16
32,245.77
116.46
6,399.03
6,151.60
66.19
313.62
(6,469.44)
(6,155.82)
1,273.07
2016-17
32,440.62
1,038.24
5,451.37
1,505.47
215.46
4,161.36
2015-16
29,582.30
41.84
4,764.98
5,101.63
254.38
(82.27)
(4,591.06)
(20,381.04)
(429.70)
(20,463.31)
253.80
534.38
(4,322.87)
(7,428.89)
(683.50)
(20,997.69)
(1,343.39)
(1,828.23)
–
–
(32.30)
(5.04)
(33.16)
(5.04)
Total comprehensive income for the year
(5,698.56)
(9,262.16)
(716.66)
(21,002.73)
2. RESULTS OF OPERATIONS
During the financial year ended March 31, 2017, the total
revenue on a standalone basis was H32,440.62 Lakhs as against
the revenue for the previous year which was H29,582.30 Lakhs.
The Company has during the year under review incurred a loss
of H683.50 Lakhs as against loss of H20,997.69 Lakhs in the
previous year.
On a consolidated basis, the total revenue stood at H35,733.15
Lakhs as against H32,245.77 Lakhs during the previous year. The
loss for the financial year 2016-17 is H4,322.87 Lakhs as against
a loss of H7,428.89 Lakhs in the previous year.
With respect to the stand alone financials as at March 31, 2017,
the Company had assessed the carrying value of it’s investment
in its subsidiary viz., Subex Americas Inc., of H7,005.74 Lakhs
(March 31, 2016: H12,495.74 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 H6,070.00 Lakhs (March 31, 2016: H5,490.00 Lakhs) towards
the carrying value of its investment in the said subsidiary. The
management is of the view that, the carrying value of the
aforesaid investment in in the said subsidiary of H935.74 Lakhs,
as at March 31, 2017 is appropriate. Also, during the current year
the Company has made provision for impairment of H100.00
Lakhs (March 31, 2016: HNil) towards the carrying value of its
investment in Subex Technologies Limited.
As at March 31, 2017, the Company has assessed the carrying
value of it’s investment in its wholly owned subsidiary viz.,
Subex (UK) Limited of H64,738.68 Lakhs. 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)
| 22 |
Limited as at March 31, 2017 is appropriate.
With respect to the consolidated financials as at March 31, 2017,
the Company assessed the carrying value of goodwill relating
to its investment in the subsidiary viz. Subex Americas Inc.,
amounting to H9,736.00 Lakhs (March 31, 2016: 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 H6,010.00 Lakhs (March 31,
2016: H8,870.00 Lakhs) towards the carrying value of goodwill
relating to its investment in the said subsidiary. The management
is of the view that, the carrying value of goodwill relating to its
investment in the said subsidiary of H3,726.00 Lakhs as at March
31, 2017 is appropriate.
As at March 31, 2017, the Company assessed the carrying value
of goodwill relating to its investment in the subsidiary viz. Subex
(UK) Limited amounting to H67,036.22 Lakhs (March 31, 2016:
H67,036.22 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 H4,880.00 Lakhs
(March 31, 2016: HNil) towards the carrying value of goodwill
relating to its investment in the said subsidiary. The management
is of the view that, the carrying value of goodwill relating to
its investment in the said subsidiary of H62,156.22 Lakhs as at
March 31, 2017 is appropriate.
3. DIVIDEND
The Directors have not proposed any dividend to be paid for the
financial year 2016-17.
4. SHARE CAPITAL
As at March 31, 2017 and as at the date of this report, the authorised, issued, subscribed and paid-up capital of the Company is as
stated below:
Share Capital
Authorised
At the beginning of the year:
Equity Shares @ H10 each
Preference Shares @ H98 each
Issued
Equity Shares @ H10 each
Preference Shares @ H98 each
Subscribed
Equity Shares @ H10 each
Preference Shares @ H98 each
Fully Paid-up
Equity Shares @ H10 each
Preference Shares @ H98 each
As on April
1, 2016
(in H)
Increase
during the year
As on March
31, 2017
(in H)
Increase after
March 31, 2017
(in H)
As on the date of the
report-June 05, 2017
(in H)
5,450,400,000
19,600,000
Nil
Nil
5,450,400,000
430,000,000#
5,880,400,000
19,600,000
Nil
19,600,000
5,028,116,460
40,962,900*
5,069,079,360
550,949,990#
5,620,029,350
Nil
Nil
Nil
Nil
Nil
5,028,116,460
40,962,900*
5,069,079,360
550,949,990
5,620,029,350
Nil
Nil
Nil
Nil
Nil
5,028,116,460
40,962,900*
5,069,079,360
550,949,990
5,620,029,350
Nil
Nil
Nil
Nil
Nil
* On the conversion of FCCB III -US$ 950,000 into equity shares of
# Subsequent to the Balance Sheet date, the Company allotted 55,094,999 equity shares on a preferential basis. Accordingly, the
Authorized share capital was increased to H5,900,000,000.
| 23 |
SUBEX LIMITED Annual Report 2016-17 To strengthen the long-term capital structure of the Company,
550,94,999 equity shares were allotted on a preferential basis
to the following allottees on the 15th of May, 2017. The allotment
of shares was made at H14 each (including a premium of H4 per
share).
Sl. No.
Investors
1.
2.
3.
QVT Singapore Fund Pte. Ltd
Tonbridge (Mauritius) Limited
Leeds (Mauritius) Limited
Total
No. of shares
27,531,428
17,916,321
9,647,250
55,094,999
The shares were issued in accordance with the provisions of SEBI
(Issue of Capital and Disclosure Requirements) Regulations, 2009
and rank pari passu with the existing shares of the company. The
relevant date for determining the price was March 30, 2017.
Shareholders’ approval to the aforementioned matters were
obtained through Postal Ballot, the voting period for which
was open from March 30, 2017 to April 29, 2017. The special
resolutions were passed with a requisite majority. As on the date
of this report, application for listing has been made to the Stock
Exchanges.
is a
5. BUSINESS
Your Company
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.
business
together
intelligence,
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-brings
domain
knowledge and workflow support. Subex's product portfolio
powers the ROC with its best-in-class solutions such as revenue
assurance, fraud management, asset assurance, capacity
management, data integrity management, route optimization
and partner settlement. Through its ROC Insights advanced
analytics service, Subex provides actionable insights delivered
through consumable storyboards, to help CSPs make the best
use of their data. Subex also offers a scalable Managed Services
program with 35 + customers.
Subex has received numerous awards jointly with its customers.
The recent awards include:
| 24 |
• Pipeline Innovation Award 2017 in the “Innovations in
Managed Services” & in the “Innovations in Security &
Assurance” category.
• Global Telecoms Business Innovation Award 2017 with STC,
Saudi Arabia, under the “Enterprise Service Innovation”
category.
• BSS & OSS Award 2016 with Telefonica Chile for “Best Fraud
Prevention Project”
• Global Telecoms Business Innovation Award 2016 with BTC
Botswana
• Pipeline Innovation Award 2016 in Security and Assurance.
• Telecoms Awards 2015 for “Advances in BSS/OSS category”
• 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.
• Global Telecoms Business Innovation Award 2015 with
Mobily.
• Finance Transformation Best-In Class Financial Solutions
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 90+ countries
*Telecom Operators 500, 2015
#The World’s Largest Telecom Companies 2015 – Forbes.
SEZ III
During the year, the Company has received the approval from
SEZ authorities for setting up a new SEZ unit and is in the process
of completing all the statutory formalities for commencing the
operations from the new unit.
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, 2017, Subex Technologies Limited
earned a net profit of H54.44 Lakhs as against a net loss of H0.46
Lakhs last year.
SUBEX (UK) LIMITED
For the year ended March 31, 2017, the Standalone revenue of
Subex (UK) Limited was H17,618.54 Lakhs as against H16,978.67
Lakhs last year, and the net profit was H1,858.90 Lakhs as against
a net loss of H5,115.44 Lakhs last year.
Subex (Asia Pacific) Pte. Limited is a wholly owned subsidiary
of Subex (UK) Limited. For the year ended March 31, 2017, the
standalone revenue of Subex (Asia Pacific) Pte. Limited was
H2,555.14 Lakhs as against H2,014.51 Lakhs last year, and the
net profit was H892.01 Lakhs as against a net profit of H6.44
Lakhs last year.
Subex Inc.is a wholly owned subsidiary of Subex (UK) Limited.
For the year ended March 31, 2017, the standalone revenue of
Subex Inc. was H10,694.48 Lakhs as against H10,611.84 Lakhs
last year, and the net profit was H116.78 lakhs as against a net
loss of H109.09 Lakhs last year.
SUBEX AMERICAS INC.
For the year ended March 31, 2017, the standalone revenue of
Subex Americas Inc. was H3,186.49 Lakhs as against H2,536.94
lakhs last year, and Net profit was H3,011.66 Lakhs as against a
profit of H17,822.93 Lakhs last year.
Subex Azure Holdings Inc., is a wholly owned subsidiary of Subex
Americas Inc. There were no transactions during the year under
review.
As on March 31, 2017, Subex Limited holds 100 common shares
(92.59%) in the capital of Subex Americas Inc. and Subex (UK)
Limited holds 8 common shares (7.41%) in the capital of Subex
Americas Inc.
SUBEX MIDDLE EAST (FZE)
For the year ended March 31, 2017, the standalone income of
Subex Middle East (FZE) is H1,706.16 Lakhs as against H118.70
Lakhs last year and a profit of H35.36 Lakhs as against a profit of
H12.07 lakhs last year.
7. FINANCE
FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)
During the year, the Company had the following outstanding FCCB’s:
Particulars
(amount in US$ million)
US$ 180,000,000
2.00% coupon
convertible bonds
“FCCB I”
US$ 98,700,000
5.00% convertible
unsecured bonds
“FCCB II”
US$ 127,721,000
5.70% secured
convertible bonds
“FCCB III”
Issue of FCCB I on 8 March 2007
Restructuring of bonds during 2009-10
Discount @ 30%
Balance as on 2 November 2009
Conversion to equity in 2009-10 and 2010-11
Balance on 31st March 2011
Restructuring of bonds during 2012-13
Premium
Balance on 6th July 2012
Mandatory conversion to equity shares on July 17, 2012
Balance after mandatory conversion
Conversion to equity upto 31st March 2016
Balance as on 31 March 2016
Conversion during 2016-17
Redemption on 6 March 2017
Balance as on 31 March 2017
180.00
(141.00)
–
39.00
–
39.00
(38.00)
–
1.00
–
1.00
–
1.00
–
(1.00)
–
–
141.00
(42.30)
98.70
(43.90)
54.80
(53.40)
–
1.40
–
1.40
–
1.40
–
(1.40)
–
–
–
–
–
–
–
91.40
36.32
127.72
(36.32)
91.40
(86.85)
4.55
(0.95)
–
3.60
| 25 |
SUBEX LIMITED Annual Report 2016-17 PUBLIC 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-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
of the scheme was further enhanced by 15,00,000 options
during the financial year 2007-08. The Company has obtained
the requisite in-principle approvals from the stock exchanges for
the purpose of listing of equity shares arising out of exercise of
options granted under the scheme.
The Compensation Committee grants options to the eligible
employees in accordance with the provisions of the scheme. The
options are granted at a price, which is not less than 85% of the
average of the closing price of the equity shares during the 15
trading days preceding the date of grant on the stock exchange
where there is highest trading volume during this period. Unless
otherwise resolved, the options granted vest over a period of 1
to 4 years and can be exercised over a period of 3 years from the
date of vesting.
During the year 2016-17, 52,611 options were terminated under
the ESOP 2005 Scheme.
The tenure for grant of stock options under ESOP 2005 scheme has
expired and the Company is only administering the outstanding
stock options issued under the 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 Securities
and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999. The
Company has obtained the requisite in-principle approvals from
the stock exchanges for the purpose of listing of equity shares
arising out of exercise of options granted under the scheme.
The Compensation Committee grants options to the eligible
employees in accordance with the provisions of the scheme. 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 vests 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 2016-17, 102,199 options were terminated
under the ESOP 2008 Scheme.
Additional information regarding the employee stock options as
at March 31, 2017 is given as “Annexure A” to this report.
8. PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS UNDER SECTION 186
There are no Loans, Guarantees or Investments covered under
Section 186 of the Companies Act 2013. Refer note 35(b)(iii) in
standalone financial statements.
9. MATERIAL CHANGES AND COMMITMENTS
BETWEEN THE END OF FINANCIAL YEAR AND
DATE OF THE REPORT
The Company allotted 550,94,999 equity shares at H14 each
(face value H10 each) on a preferential basis to the following
allottees on May 15, 2017, to strengthen the long-term capital
structure of the Company.
Sl. No.
Investors
1.
2.
3.
QVT Singapore Fund Pte. Ltd
Tonbridge (Mauritius) Limited
Leeds (Mauritius) Limited
Total
No. of shares
27,531,428
17,916,321
9,647,250
55,094,999
The shares were issued in accordance with the provisions of SEBI
(Issue of Capital and Disclosure Requirements) Regulations, 2009
and rank pari- passu with the existing shares of the company.
With respect to the transactions of the subsidiaries of the
Company, the loan of US$ 12 Million, (H7,782.00 Lakhs, Previous
Year : H7,484.05 Lakhs) availed by Subex Americas Inc. and
guaranteed by Subex (UK) Limited was repaid on May 15, 2017
to the respective lenders.
At the meeting of the Board of Subex Limited held on 25
May 2017, the Board decided to acquire the Data Integrity
Management (‘DIM’), Asset Assurance (‘AA’) and Capacity
Management (‘CM’) software products owned by the Company’s
subsidiary, Subex Americas Inc., (“SAI”) (including all related
| 26 |
intellectual property rights, know-how, rights, title and interest),
for a consideration of US$ 9.4 million. The consideration amount
is within the range specified by an independent valuer as the fair
value of the software assets.
10. CORPORATE GOVERNANCE
Your Company strongly believes that the spirit of Corporate
Governance goes beyond the statutory form. Sound Corporate
Governance is a key driver of sustainable corporate growth and
long-term value creation for the stakeholders and protection
of 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 operations. Your Company always strives to
follow the path of good governance through a broad framework
of various processes.
Your Company has complied with the conditions of Corporate
Governance as stipulated in the SEBI (Listing Obligations and
Disclosure Requirements), Regulations, 2015 as amended from
time to time. The Auditor’s certificate on compliance with respect
to the same is annexed herewith as “Annexure B”. In addition,
your Company has documented its internal policies in line
with the Corporate Governance guidelines. The Management
Discussion & Analysis of the financial position of the Company
has been provided as a part of this report.
11. DIRECTORS
As per Section 152 of the Companies Act, 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, Mr. Surjeet Singh retires by
rotation and being eligible, has offered to be re-appointed at the
ensuing Annual General Meeting.
Mr. Surjeet Singh was re-appointed as the Managing Director
& CEO of the Company at the Board Meeting held on August 9,
2016 for a period of one year from October 5, 2016 to October
4, 2017. 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 22nd Annual General Meeting conducted on September 12,
2016 for the year 2015-16.
Pursuant to the recommendations of the Nomination and
Remuneration Committee, the Board at its meeting held on
March 24, 2017 appointed Ms. Poornima Prabhu as an Additional
Independent Director for a tenure of five years subject to the
approval of the shareholders at the 23rd Annual General Meeting.
Detailed profile of Ms. Poornima Prabhu is given in the Corporate
Governance section of this report. The Company has received
a notice from a shareholder proposing the appointment of Ms.
Poornima Prabhu.
During the year, Mr. Sanjeev Aga and Ms. Priyanka Roy,
Independent Directors, resigned from with Board with effect
from October 27, 2016 and March 10, 2017 respectively.
Pursuant to the recommendations of the Nomination and
Remuneration Committee, the Board at its meeting held on
May 25, 2017 appointed Mr. Vinod Kumar Padmanabhan, Chief
Operating Officer of the Company as an Additional Director and
Whole-Time Director. He will hold office as an Additional Director
upto the 23rd Annual General Meeting of the Company. The
Company has received a notice from a shareholder proposing the
appointment of Mr. Vinod Kumar Padmanabhan as Director. His
appointment as Whole-Time Director for a tenure of three years
is subject to the approval of the shareholders at the ensuing 23rd
Annual General Meeting.
Pursuant to the recommendations of the Nomination and
Remuneration Committee, the Board at its meeting held on May
25, 2017 appointed Mr. Ashwin Chalapathy, Chief Technology
Officer and Head of Service Delivery of the Company as an
Additional Director and Whole-Time Director. He will hold
office as an Additional Director upto the 23rd Annual General
Meeting of the Company. The Company has received a notice
from a shareholder proposing the appointment of Mr. Ashwin
Chalapathy as Director. His appointment as Whole-Time Director
for a tenure of three years is subject to the approval of the
shareholders at the ensuing 23rd Annual General Meeting.
The details regarding the familiarization program for Independent
Directors is available on the website of your Company under the
link http://www.subex.com/corporate-governance./
BOARD MEETINGS
During the year, 7 Board Meetings were convened and held. The
intervening gap between the meetings was within the period
prescribed under the Companies Act 2013 and The SEBI (LODR),
Regulations, 2015. The dates on which meetings were held are
as follows:
1. May 24, 2016
| 27 |
SUBEX LIMITED Annual Report 2016-17 2. August 09, 2016
3. September 12, 2016
4. November 10, 2016
5. December 06, 2016
6. February 03, 2017
7. March 24, 2017
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 03, 2017 carried out an
annual performance evaluation of its own performance, the
Directors individually as well as the evaluation of the working
of its committees. The manner in which the evaluation has been
carried out has been explained in the Corporate Governance
Report.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
POLICY OF THE COMPANY
The Policy on Appointment of Directors and the Remuneration
Policy of the Company forms a part of this report in “Annexure
F”. and the Details / Disclosures of Ratio of Remuneration to each
Director to the median employee’s remuneration as “Annexure
H”.
12. AUDIT COMMITTEE
The Audit Committee presently has 4 Directors as its members
viz. Mr. Anil Singhvi, Chairman & Independent Director, Ms.
Nisha Dutt, Independent
Director, Ms. Poornima Prabhu,
Independent Director and Mr. Surjeet Singh, Managing Director
& CEO. The role, terms of reference, the authority and power of
the Audit Committee are in conformity with the provisions of
the Companies Act, 2013 and Regulation 18 of the SEBI (LODR)
Regulations, 2015. Further details of the Audit Committee have
been provided in the report on Corporate Governance forming
part of this Annual Report.
13. AUDITORS
STATUTORY AUDITORS
M/s. S. R. Batliboi & Associates LLP, Chartered Accountants,
Bangalore (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 Board places
the said proposal for the ratification of the appointment of M/s.
S. R. Batliboi & Associates LLP, Chartered Accountants, for 2017-
18 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 appointed
M/s. V Sreedharan & Associates, a firm of Company Secretaries
in practice to undertake the Secretarial Audit of the Company.
The report of the Secretarial Audit is annexed herewith as
“Annexure C”. The Secretarial Auditors have given an unqualified
report for the financial year 2016-17.
14. 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 D”.
15. 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.
The organization consistently follows and implements some of
the best practices impacting the environment. Initiatives are
in place towards optimizing electricity consumption through a
structured reduction in overall carbon foot print.
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 telecommunications domain,
in which your Company
operates, is subject to rapid technological changes, introduction
of new services and intense competition. 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
| 28 |
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
During the year 2016-17 total foreign exchange inflow and
outflow is as follows:
i) Foreign Exchange earnings H30,681.48 Lakhs (Previous Year
H27,794.14 Lakhs)
ii) Foreign Exchange outgo H14,558.23 Lakhs (Previous Year
H11,497.22 Lakhs)
Note: The foreign exchange outgo is inclusive of the inter-
Company charges and the Previous Year’s figures have been
restated accordingly.
16. 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
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Surjeet Singh
Ms. Nisha Dutt
Managing Director & CEO
Independent Director
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. SCT has tied up with Prerana Resource
Centre for providing Vocational Training to visually impaired and
disabled orphan teenage girls. The total budget for this 1 year
long program is H3,60,000. As part of this program, 25 blind and
disabled girls are provided vocational training and employment.
A gist of activities undertaken by the Trust has been provided as
a separate section in this Annual Report as “Annexure I ”.
17. 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 Management also ensures that
the Company is taking appropriate measures to achieve prudent
balance between risk and reward in both ongoing and new
business activities.
18. HUMAN RESOURCE MANAGEMENT
Detailed report on Human Resource management is given in
the Management Discussion and Analysis section of the annual
report.
19. 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. The controls are largely operating
effectively since there has not been identification of any material
weakness in the Company. The Directors have in the Directors
Responsibility Statement under paragraph (e) confirmed the
same to this effect. The Company has policies and procedures in
place for ensuring proper and efficient conduct of its business,
the safeguarding of its assets, the prevention and detection
of frauds and errors, the accuracy and completeness of the
accounting records and timely preparations, reliable financial
information. The Company has adopted accounting policies
which are in line with Indian Accounting Standards (“IndAS”).
Pursuant to the provisions of the Section 134(5)(f) 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
| 29 |
SUBEX LIMITED Annual Report 2016-17 of department who then along with the Company Secretary
discussed on the compliance status of the department. Any
matter that required attention was immediately dealt with. The
Company Secretary reported to the Audit Committee and the
Board on the overall compliance status of the Company. In effect,
such compliance system was largely found to be adequate
and operating effectively. The Directors have in the Directors
Responsibility Statement under paragraph (f) 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 IT space conducts internal
audits of Information Security, Quality Management System twice
a year covering projects and functional groups. Internal audits
of such nature are conducted across all locations of Bangalore,
UK and the US regions. A consolidated summary is prepared
and strengths and weakness across projects, functional groups
is shared with all auditee. Reports are shared to the auditee to
identify corrective and preventive actions. The corrective and
preventive actions are reviewed by the internal auditors and
closed based on the adequacy of evidences provided by the
auditee.
20. 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 are posted on the website of the Company
under the link http://www.subex.com/corporate-governance/.
There were no complaints during the year 2016-17.
21. 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.
During the financial year under review, the Company has not
received any complaints of sexual harassment from any of the
women employees of the Company.
22. 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.
23. 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.
All related party transactions are placed before the Audit
Committee and the Board for approval. Prior omnibus approval of
the Audit committee is obtained for transactions 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 entered into sub-contracting arrangement
with 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 has simultaneously entered into marketing
arrangements with its subsidiaries wherein there is a cross
charge done by the subsidiaries towards its efforts for the same.
| 30 |
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
transactions vis-à-vis the Company.
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 G”.
24. SIGNIFICANT AND MATERIAL ORDERS
PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the
Regulators/Courts which would impact the going concern status
of the Company and its future operations.
25. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in
form MGT 9 is annexed herewith as “Annexure E”.
26. LISTING WITH STOCK EXCHANGES
The Company confirms that it has paid the Annual Listing Fees
for the year 2016-17 to the National Stock Exchange of India
Ltd (‘NSE’) and BSE Ltd (‘BSE’) where the Company’s shares are
listed.
27. DIRECTORS’ RESPONSIBILITY STATEMENT
In accordance with the provision of Section 134(3)(c) of the
Companies Act, 2013, the Board of Directors affirms:
a) In the preparation of the annual accounts for the financial year
ended March 31, 2017, the applicable accounting standards
had been followed along with proper explanation relating to
material departures;
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, 2017
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, 2017 have
been prepared on a going concern basis;
e) That internal financial controls have been laid down to be
followed by the Company and such internal financial controls
were adequate and were operating effectively;
f) That systems to ensure compliance with the provisions of
all applicable laws were in place and such systems were
adequate and operating effectively.
29. 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
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Chairman & Independent Director
DIN:00239589
Place: California, USA
Date: June 5, 2017
Place: Mumbai, India
Date: June 5, 2017
| 31 |
SUBEX LIMITED Annual Report 2016-17 Annexure A
Additional Information as at March 31, 2017 as per Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014.
Sl.No Particulars
1.
Net options granted as on March 31, 2017
Options granted during the year
Pricing formula
Options vested but not exercised as on March 31, 2017
Options exercised as on March 31, 2017
Options exercised during the year
Money realized by exercise of options during the year
The total number of shares arising as a result of exercise of options during the
year ended March 31, 2017
Options lapsed/cancelled/ surrendered as on March 31, 2017
Options lapsed/cancelled/ surrendered during the year
Variation of terms of options
No. of employees covered
2.
3.
4.
5.
6.
7.
8.
9.
10.
Employee wise details of options granted during the year under review to:
(i) Key managerial personnel
(ii) other employee receiving a grant in the year of option amounting to 5% or
more of options granted during that year
(iii) identified employees who were granted option, during the year, equal to
or exceeding 1% of the issued capital (excluding outstanding warrants and
conversions) of the Company at the time of grant;
11.
Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of
option calculated in accordance with Accounting Standard (AS) 20 ‘Earnings
per share’
ESOP 2005
1,04,807
–
ESOP 2008
28,301
–
As mentioned
earlier in the report
As mentioned
earlier in the report
92,368
12,439
–
–
–
57,34,111
52,611
None
192
–
–
–
28,581
0
–
–
–
23,05,236
1,02,199
None
26
–
–
–
(0.13)
(0.13)
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
H22.99
H28.44
separately for options whose exercise price either equals or exceeds or is less
than the market price of the stock.(As per note 36 of the Standalone financials)
| 32 |
Sl.No Particulars
ESOP 2005
ESOP 2008
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
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Place: California, USA
Date: June 5, 2017
Refer note 36 of the Standalone
financials statements.
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN:00239589
Place: Mumbai, India
Date: June 5, 2017
| 33 |
SUBEX LIMITED Annual Report 2016-17 Annexure B
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 Regulation 17 to 27 of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 from the period April 01, 2016 to March 31, 2017. 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 Regulations 17 to 27 of the 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.
For BMP & Co
Company Secretaries
Pramod S M
Partner
FCS 7834 / CP No. 13784
Place: Bangalore,
Date: June 5, 2017
| 34 |
Annexure C
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED: MARCH 31, 2017
[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]
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,
2017 (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;
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);
i. Securities and Exchange Board of
India (Listing
Obligations and Disclosure Requirements) Regulations,
2015
| 35 |
SUBEX LIMITED Annual Report 2016-17 (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 Indian Meetings of the Board of Directors and
General Meeting.
b. Listing Agreements entered into by the Company with BSE
Limited and National Stock Exchange of India Limited.
During the period under review the Company has complied
with the provisions of the Act, Rules, Regulations, Guidelines,
Standards, etc. mentioned.
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 of providing adequate
presentations by the concerned departments' heads at the
Board Meetings, regarding compliance with the applicable laws
and its adherence, 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, 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.,
For V. SREEDHARAN & ASSOCIATES
Place: Bengaluru
Date: May 4, 2017
(Pradeep B. Kulkarni)
Partner
FCS 7260 / CP No. 7835
| 36 |
Annexure D
PARTICULARS OF EMPLOYEES
Particulars
Mr. Vinod Kumar
Padmanabhan
Mr. Ashwin Chalapathy
Mr. Roddam Naga Shiva
Shankar
Designation of the employee
Chief Operating Officer
Remuneration received
Nature of employment, whether
contractual or otherwise
H1,49,39,897
Chief Technology Officer and
Head of Service Delivery
H1,38,48,185
Market Head-Sales and Client
Relations-Emerging Markets
H39,38,136*
Permanent
Permanent
Permanent
Qualifications and experience of the
employee
B.Tech
27 Yrs
M.Sc (Computer Science)
22 Yrs
MBA, BE (AMIETE), BA
22 Yrs
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
Oct 15, 1997
Jan 15, 2007
Oct 19, 2003
47Yrs
Crompton Greaves
45 Yrs
Siemens
43 Yrs
Bharti Telesoft
0.01%
NA
NA
NA
NA
NA
*Mr. Roddam Naga Shiva Shankar resigned from the post of Market Head-Sales and Client Relations-Emerging Markets during the
year and was an employee of the Company till May 6, 2016. The remuneration received by him relates to the period from 1 April
2016 - May 6, 2016.
| 37 |
SUBEX LIMITED Annual Report 2016-17 Annexure E
Form No. MGT-9
EXTRACT OF ANNUAL RETURN
AS ON THE FINANCIAL YEAR ENDED ON 31ST MARCH 2017
[Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the
Companies (Management and Administration) Rules, 2014]
1. REGISTRATION AND OTHER DETAILS:
i)
CIN
ii) Registration Date
iii) Name of the Company
L85110KA1994PLC016663
6th December, 1994
Subex Limited
iv)
v)
Category / Sub Category of the Company
Company having Share Capital
Address of the Registered office and contact details
RMZ Ecoworld, Outer Ring Road, Devarabisanahalli, Bangalore-560103
vi) Whether listed Company (Yes / No)
Yes
vii) Name, Address and Contact details of Registrar and
Transfer Agent, if any
CANBANK COMPUTER SERVICES LIMITED
J P Royale,1st Floor, No.218 2nd Main,
Sampige Road (Near 14th Cross),
Malleswaram Bangalore – 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.
Name and Description of main products /
services
1.
Implementation and customisation
2. Managed services
3.
4.
Support services
Sub-contracting services
NIC Code of the Product/service % to total turnover of the Company
–
–
–
–
11.88
12.44
13.87
57.69
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
Sl.
No.
Name and Address of the
Company
Holding/Subsidiary
/Associate
CIN/GLN
% of shares held
Subex Technologies Limited
U74140KA2005PLC035905 Subsidiary
Subex Americas Inc.
Subex (UK) Limited
Subex Inc.
Foreign Company
Foreign Company
Foreign Company
Subex (Asia Pacific) Pte Limited Foreign Company
Subex Azure Holdings Inc.
Foreign Company
Subex Middle East (FZE)
Foreign Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
1.
2.
3.
4.
5.
6.
7.
| 38 |
Applicable
Section
2 (87)
2 (87)
2 (87)
100
92.59
100
Ultimate Holding Company 2 (87)
Ultimate Holding Company 2 (87)
Ultimate Holding Company 2 (87)
100
2 (87)
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
(i) Category–wise Share Holding
Category of Shareholders
Demat
Physical
Total
% of Total
Shares
Demat
Physical
Total
% of Total
during the
Shares
year
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
% Change
Promoters
A.
Indian
(1)
Individual/ HUF
a)
Central Govt.
b)
c)
State Govt(s)
d) Bodies Corp.
e) Banks / FI
f) Any Other
4,52,844
–
–
5,21,200
Sub–total (A)(1)
9,74,044
–
–
–
–
–
0
9,74,044
–
32,74,345
–
–
–
78,764
9,75,257
–
–
43,28,366
(2) Foreign
(a) NRIs – Individuals
(b) Other – Individuals
(c) Bodies Corp.
(d) Banks/FI
(e) Any other.
Sub–total(A)(2)
Total shareholding
of Promoter (A) = (A)
(1)+(A)(2)
Institutions
B. Public Shareholding
1.
a) Mutual Funds
b) Banks / FI
c)
d)
e) Venture Capital Funds
Insurance Companies
f)
FIIs
g)
Foreign Venture Capital
h)
Central Govt.
State Govt(s)
Funds
i) Others (specify)
Sub–total (B)(1)
2. Non–Institutions
a) Bodies Corp.
Indian
i)
ii) Overseas
b)
i)
Individuals
Individual shareholders
ii)
holding nominal share
capital up to H1 lakh
Individual shareholders
holding nominal share
capital in excess of
H1 lakh
c) Others (specify)
15,94,76,335
Trusts
Director & their
relatives
Foreign Nationals
Escrow Account
2,48,600
60,000
87,352
–
–
–
–
–
–
–
–
–
–
–
0
–
–
–
–
–
–
–
–
–
–
–
4,52,844
–
–
5,21,200
9,74,044
–
–
–
–
–
0
0.09
–
–
0.10
–
–
0.19
–
–
–
–
–
0
4,52,844
–
–
5,21,200
9,74,044
–
–
–
–
–
0
9,74,044
0.19
9,74,044
–
21,64,479
78,764
28,06,956
–
32,74,345
–
–
–
78,764
9,75,257
–
–
–
0.65
––
–
–
0.02
0.19
–
–
43,28,366
0.86
50,50,199
–
–
–
–
–
–
–
–
–
–
0
–
–
–
–
–
–
4,52,844
–
–
5,21,200
0.09
0.10
9,74,044
0.19
0
0
0
–
–
–
–
–
0
–
–
–
–
–
0
9,74,044
0.19
0
–
21,64,479
0.43
–0.24
78,764
28,06,956
0.02
0.55
–
–
0
0.36
50,50,199
1.00
0.14
9,59,93,640
–
400
–
9,59,94,040
–
19.09
–
10,62,60,582
–
400
–
10,62,60,982
–
20.96
–
1.87
–
11,36,36,500
48,883
11,36,85,383
23.78
11,36,82,693
49,811
11,37,32,504
22.43
–1.35
–
–
–
–
–
15,94,76,335
23.24
18,38,05,398
2,48,600
60,000
87,352
–
0.05
0.01
0.02
–
3,88,600
60,000
81,194
0
–
–
–
18,38,05,398
36.26
13.02
3,88,600
60,000
81,194
0.08
0.01
0.02
–
0.03
0
0
–
| 39 |
SUBEX LIMITED Annual Report 2016-17 Market Maker
Non Resident Indians
OCBs
Societies
Clearing Members
Shares in transit
Hindu Undivided
Families
NRIs/OCBs
Foreign Corporate
Bodies
Partnership Firms
Custodian of Enemy
Property
Foreign Collaborators
ESOPs/ESOS/ESPS
Employee shareholders
Sub–Total(B)(2)
Total Public
Shareholding (B)=(B)
(1)+ (B)(2)
Shares held by
Custodian for GDRs
& ADRs
Grand Total (A+B+C)
C.
Category of Shareholders
Demat
Physical
Total
% of Total
Shares
Demat
Physical
Total
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
% Change
–
68,39,809
–
–
79,63,057
–
1,75,64,643
–
9,44,12,312*
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
68,39,809
–
–
79,63,057
–
1,75,64,643
–
–
1.36
–
–
1.58
–
3.49
–
84,97,887
17,79,005
–
2,01,36,829
–
9,44,12,312
18.78
6,52,80,387
–
–
–
–
–
–
–
–
–
–
–
% of Total
during the
Shares
–
1.68
–
–
0.35
–
3.97
–
year
–
0.32
–
–
–1.23
–
0.48
–
84,97,887
17,79,005
–
2,01,36,829
–
6,52,80,387
12.88
–5.9
–
–
–
–
–
–
0.07
0.07
–
–
–
% change
in share
holding
during the
year
0
0
0
9,32,828
1,670
9,34,498
0.19
6,16,030
1,670
6,17,700
0.12
49,72,15,076
50,953
49,72,66,029
98.69
50,05,88,605
51,881
50,06,40,486
98.76
50,15,43,442
50,953
50,15,94,395
99.95
50,56,38,804
51,881
50,56,90,685
99.95
2,43,207
–
2,43,207
0.05
2,43,207
–
2,43,207
0.05
502,760,693
50,953
502,811,646
100
506,856,055
51,881
506,907,936
100
*Includes 8,10,63,426 equity shares allotted consequent to conversion of FCCB’s on March 28, 2016.
II. Shareholding of Promoters
Shareholder’s Name
Shareholding at the beginning of the year
Shareholding at the end of the year
No. of
Shares
% of total
Shares
of the
Company
% of Shares
Pledged /
encumbered to
total shares
No. of
Shares
% of total
Shares
of the
Company
% of Shares
Pledged/
encumbered
to total shares
5,21,200
0.10
5,21,200
5,21,200
0.10
5,21,200
Kivar Holdings Private
Limited
Subash Menon
80,601
Sudeesh Yezhuvath
3,72,243
0.02
0.07
80,601
80,601
3,72,243
3,72,243
0.02
0.07
80,601
3,72,243
Sl.
No.
1.
2.
3.
| 40 |
III. Change in Promoters’ Shareholding
Sl. No Shareholders name
Shareholding at the beginning of the year
Cumulative Shareholding during the Year
No. of shares
% of total shares of the
Company
No. of shares
% of total shares of
the Company
At the beginning of the year
1.
2.
3.
Kivar Holdings Private Limited
5,21,200
Subash Menon
Sudeesh Yezhuvath
80,601
3,72,243
There is no change in shareholding as at the end of the year
0.10
0.02
0.07
5,21,200
80,601
3,72,243
0.10
0.02
0.07
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
1.
2.
3.
4.
5.
6.
7.
8.
9.
QVT Mauritius West Fund & Quintessence Mauritius
West Fund
AKG Finvest Limited
Deutsche Bank AG London- CB Account
Uno Metals Limited
Angel Fincap Private Limited
Vishanji Shamji Dedhia
Dilipkumar Lakhi
Nomura Singapore Limited
Chirag Dilipkumar Lakhi
10. Marudhar Vyapaar Private Limited
v. Shareholding of Directors and Key Managerial Personnel
Sl No.
For Each of the Directors and KMP
At the beginning of the year
1.
2.
3.
4.
5.
6.
7.
Surjeet Singh
Anil Singhvi
Sanjeev Aga
Nisha Dutt
Priyanka Roy
Poornima Prabhu
Ganesh KV
Shareholding at the
beginning of the year
Shareholding at the
end of the year
No. of shares
3,58,29,909
1,12,97,000
2,15,59,422
27,25,000
26,50,793
25,00,000
0
8,81,257
0
0
% of total shares
of the Company
7.13
2.68
4.29
0.54
0.53
0.5
0
0.21
0
0
No. of shares
4,78,43,416
2,00,70,000
1,74,36,426
1,72,52,000
72,27,806
36,00,000
28,36,857
28,06,956
20,96,431
20,00,000
% of total shares
of the Company
9.44
3.96
3.44
3.40
1.43
0.71
0.56
0.55
0.41
0.39
Shareholding at the
beginning of the year
Cumulative Shareholding
during the year
No. of shares
% of total shares
of the Company
No. of shares
% of total shares
of the Company
NIL
60,000
NIL
NIL
NIL
N.A.
NIL
N.A.
0.01
N.A.
N.A.
N.A.
N.A.
N.A.
–
60,000
–
–
–
–
–
–
0.01
–
–
–
–
–
There is no change in shareholding as at the end of the year
Mr. Vinod Kumar Padmanabhan and Mr. Ashwin Chalapathy were appointed as Additional Directors and Whole-Time Directors on May
25, 2017. Since the appointment was made after March 31, 2017, the details pertaining to them have not been included.
| 41 |
SUBEX LIMITED Annual Report 2016-17 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)
ii)
iii)
Principal Amount
Interest due but not paid
Interest accrued but not due
Total (i + ii + iii)
13,410.26
–
651.53*
14,061.79
1,590.20
–
3.64
1,593.84
Change in Indebtedness during the financial year
Addition/ Reduction (In interest
accrued)
Addition/Reduction (In principal
amount)
Net Change
(147.33)*
(3.64)
(2,485.75)
(1,590.20)*
(2,633.08)
(1,593.84)
Indebtedness at the end of the financial year
i) Principal Amount
ii)
iii)
Interest due but not paid
Interest accrued but not due
Total (i+ii+iii)
*Including repayment of FCCB’s I & II
10,924.51
–
504.20*
11,428.71
–
–
–
–
VI. OTHER REMUNERATION OF DIRECTORS AND MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole–time Directors and/or Manager:
–
–
–
–
–
–
–
–
–
–
–
15,000.46
–
655.17
15,655.63
(150.79)
(4,075.95)
(4,226.95)
10,924.51
–
504.20
11,428.71
Sl. No Particulars of Remuneration
Gross salary
1.
2.
3.
4.
5.
(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
Stock Options
Sweat Equity
Commission
– as % of profit
– Others, specify…
Others, please specify
Total
Ceiling as per the Act
Surjeet Singh
Managing Director & CEO
(In H Lakhs)
Total Amount
(In H Lakhs)
16.78
16.78
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16.78
16.78
60 Lakhs p.a as per
Section II of Part II of
Schedule V of the Act
60 Lakhs.
Mr. Vinod Kumar Padmanabhan and Mr. Ashwin Chalapathy were appointed as Additional Directors and Whole-Time Directors on May
25, 2017. Since the appointment was made after March 31, 2017, the details pertaining to them have not been included.
| 42 |
Fee for attending
board/committee
meetings
Commission
Others, please specify
Total (2)
Total (B)=(1+2)
Total Managerial
Remuneration
Overall Ceiling as per
the Act
B. Remuneration to other Directors:
Sl.
No.
Particulars of
Remuneration
1
Independent Directors
Fee for attending
board/committee
meetings
Commission
Others, please specify
Name of Directors
Sanjeev Aga
Anil Singhvi
Nisha Dutt
Priyanka Roy
(In H)
10,00,000
(In H)
22,00,000
(In H)
14,00,000
(In H)
3,00,000
-
-
-
-
-
-
Total (1)
10,00,000
22,00,000
14,00,000
3,00,000
2
Other Non-Executive
Directors
N.A.
N.A.
N.A.
N.A.
Poornima
Prabhu*
(In H)
NIL
Total
Amount
(In H)
49,00,000
-
-
NIL
N.A.
-
-
-
-
-
49,00,000
N.A
-
-
-
-
-
-
-
-
-
10,00,000
[H1,00,000 per
meeting for 10
meetings in FY
2016-17]
22,00,000
[H1,00,000 per
meeting for 22
meetings in FY
2016-17]
14,00,000
[H1,00,000 per
meeting for 14
meetings in FY
2016-17]
3,00,000
[H1,00,000 per
meeting for 3
meetings in FY
2016-17]
[H1,00,000
per meeting]
*Ms. Poornima Prabhu was appointed as an Additional Independent Director with effect from 24th March 2017 and was not paid
sitting fees during the year.
| 43 |
SUBEX LIMITED Annual Report 2016-17
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
Sl.
No
Particulars of Remuneration
1.
Gross salary
(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
Key Managerial Personnel
Mr. Ganesh K V
Chief Financial Officer & Company Secretary
77,41,282
–
–
10,000
–
–
–
–
Total Amount
(In H)
77,41,282
–
–
–
–
–
–
–
Not applicable
77,41,282
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
| 44 |
Annexure F
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.
b) In case of appointment of Independent Directors, the N&R
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 for appointment as a director is not 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 the Non-
Executive Directors in their respective fields;
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, 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;
| 45 |
SUBEX LIMITED Annual Report 2016-17 b.
c.
d.
Balance between fixed and incentive pay reflecting
short and
term performance objectives,
appropriate to the working of the Company and its
goals;
long
Responsibility required to be shouldered by the
Executive Director, the industry benchmarks and the
current trends;
The Company’s performance vis-à-vis the annual
budget achievement and individual performance vis-à-
vis the KRAs / KPIs.
C. REMUNERATION POLICY FOR KEY
MANAGERIAL PERSONNEL
In determining the remuneration of the Key Managerial
Personnel, 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.
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 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 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.
v) The Managing Director will carry out the
individual
| 46 |
Annexure G
FORM NO. AOC.2
(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 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
1. Details of contracts or arrangements or transactions not at arm's length basis
1.
2.
3.
4.
5.
6.
7.
8.
Name(s) of the related party and nature of relationship
Nature of contracts/ arrangements/ 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
NOT APPLICABLE
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)
(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
| 47 |
SUBEX LIMITED Annual Report 2016-17 (b) Nature of contracts/ arrangements/ transactions (contd.)
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)
Subex Technologies Limited
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 24, 2016 - approval.
December 6, 2016, February 03, 2017 and May 25, 2017 -
ratification
(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:
NA
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Place: California, USA
Date: June 5, 2017
| 48 |
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN:00239589
Place: Mumbai, India
Date: June 5, 2017
Annexure H
DETAILS / DISCLOSURES OF RATIO OF REMUNERATION
the ratio of the remuneration of each Director to
the median remuneration of the employees of the
Company for the financial year;
the percentage increase in remuneration of each
Director, Chief Financial Officer, Chief Executive
Officer, Company Secretary or Manager, if any, in
the financial year;
2.82:1.00
CEO:Nil/CFO :15.61%
the percentage
increase
remuneration of employees in the financial year;
the median
in
The median remuneration decreased by 6.54% during the year.
the number of permanent employees on the rolls
of Company;
805
(i)
(ii)
(iii)
(iv)
(v) 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;
(vi) Affirmation that the remuneration is as per the
remuneration policy of the Company.
There was a decrease of 6.20% in the average percentile in the salaries
of employees during the year.
However, there was an increase of 15.61% for the 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.
The remuneration of Directors, Senior Management and Employees is
as per the Remuneration Policy of the Company
| 49 |
SUBEX LIMITED Annual Report 2016-17 Annexure I
ANNUAL REPORT ON CSR ACTIVITIES
Sustainable practices have always been an integral part of
Subex Limited. Corporate Social Responsibility is a large part
of our overall sustainability policy encompassing social action.
Subex Charitable Trust is our primary social responsibility trust.
The objective was enabling education of eligible students from
financially weaker sections of society and vocational training for
women.
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 (CSR
Committee) comprising of the following Directors.
Composition
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt
Mr. Surjeet Singh
Mr. Sanjeev Aga*
Independent Director
Managing Director & CEO
Independent Director
*Resigned with effect from 27th October, 2016
OBJECTIVE AND SCOPE
The objective of the Corporate Social Responsibility (“CSR”) policy
of Subex Limited (“the Company”) is to lay down guidelines to
enable the Company to take the required measures to make a
meaningful contribution to the society and other stakeholders.
For more detail visit http://subex.com/corporate-governance/
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.
FOCUS AREA
• Eradicating extreme hunger and poverty;
• Promotion of education;
• Promoting gender equality and empowering women;
• Reducing child mortality and improving maternal health;
• Combating human immunodeficiency virus, acquired immune
deficiency syndrome, malaria and other diseases;
• Ensuring environmental sustainability;
• Employment enhancing vocational skills;
• Social business projects;
• Contribution to the Prime Minister's National Relief Fund or
any other fund set up by the Central Government or the State
Governments for socio-economic development and relief and
funds for the welfare of the Scheduled Castes, the Scheduled
Tribes, other backward classes, minorities and women; and
ACTIVITIES COVERED DURING THE YEAR
• Organized a blood donation camp with TTK Bank. The number
of donors this year reached 100.
• 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 Government Higher Secondary School for Christmas
celebrations, interacted with the students and distributed
gifts and snacks.
• 40 Subexians sponsored 30 economically-challenged rural
area students with H2,28,022 of scholarships through the
Nurture Merit program.
• SCT Day was celebrated in Subex Auditorium on February 9th
where students from the said Government Higher Secondary
School, blind women from Prerana Resource Centre and
| 50 |
Students from Vidya Poshak sponsored for 2015-16 had
participated. Cultural events by the esteemed guests made
the event more memorable.
• Provided 10 Desktops to Government Higher Secondary
School for education purpose. Also, provided Water Cooler for
providing clean drinking water to the students.
• Have tied up with Prerana Resource Centre for providing
Vocational Training to visually impaired and disabled orphan
teenage girls. Total Budget for this 1 year long program is
H3,60,000. As part of this program, 25 blind and disabled
girls are provided Trainings in 3 phases – Basic Education,
Vocational Training & Employment follow-up.
FINANCIAL DETAILS
Section 135 of the Companies Act , 2013 and Rules made under
it prescribe that every company having a net worth of H500
crore or more, or turnover of H1000 crore or more or a net profit
of H5 crore or more during any financial year shall ensure that
the company spends in every financial year, at least 2% of the
average net profits made during the three immediately preceding
financial years, in pursuance of its corporate social responsibility
policy. Given the company incurred losses during the preceding
3 years though it had Net worth exceeding 500 crores,it is not
mandatory to incur expenditure on CSR activities. However, it has
voluntarily undertaken certain activities as listed below:
The major projects and heads under which the outlay amount was spent during the year 2016-17 are as follows
(2)
(3)
(4)
(5)
Amount
outlay
(budget)
project or
programs
wise
Projects or
programs
1) Local area
or other
2) Specify
the State and
district where
projects or
programs was
undertaken
Bangalore
H3,60,000
(6)
(7)
(8)
Amount
spent on the
projects or
programs
Sub-heads:
l) Direct
expenditure
on projects or
programs
2) Overheads
H3,60,000
Cumulative
expenditure
upto to the
reporting
period
Amount
spent Direct
or through
implementing
agency
H3,60,000
H3,60,000
(1)
S. No
1
CSR project
or activity
identified
Sector in which
the Project is
covered
Providing
Vocational
Training
to visually
impaired and
Disabled Orphan
Teenage Girls
Promoting
employment
enhancing
vocation skills
especially
among children,
women and
differently abled
Total
H3,60,000
H3,60,000
H3,60,000
H3,60,000
We hereby affirm that the CSR Policy, as approved by the Board, has been implemented and the CSR Committee monitors the
implementation of the projects and activities in compliance with our CSR objectives.
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Place: California, USA
Date: June 5, 2017
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN:00239589
Place: Mumbai, India
Date: June 5, 2017
| 51 |
SUBEX LIMITED Annual Report 2016-17 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 with respect to 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 Limited’s (“Subex / the Company”) compliance with the
Corporate Governance guidelines as stipulated by the stock
exchanges and Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015
[“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.
The Company’s Corporate Governance philosophy is based on
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
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.
II. BOARD OF DIRECTORS
As on March 31, 2017, the Board of Directors of Subex Limited
comprises 4 directors out of which 1 is an Executive Director and 3
are Independent Directors. Mr. Vinod Kumar Padmanabhan, Chief
Operating Officer and Mr. Ashwin Chalapathy, Chief Technology
Officer & Head of Service Delivery were appointed as Additional
Directors and Whole-Time Directors of the Company with effect
from May 25, 2017 subject to the approval of the shareholders at
the ensuing annual general meeting.
Details of the composition of the Board of Directors and their
attendance and other particulars are given below. These details
reflect the position as on March 31, 2017 and as such do not
include details of changes in directorships after the end of the
financial year.
• Communicate externally, in a truthful manner, about how the
Company is run internally
A. Composition and Category of Directors as on March 31,
2017
• Comply with the laws in all the countries in which the Company
operates
Subex is committed to good Corporate Governance practices.
Consistent with this commitment, Subex seeks to achieve a
Category
No. of Directors
Independent Directors
Executive Directors
Total
3
1
4
%
75
25
100
| 52 |
B. Attendance of Directors at the Board Meetings and the Last AGM and Details about Directorships and Membership in Committees
during the Financial Year 2016-17 are as follows:
Director
Position
No. of
Board
Meetings
Held
No. of
Board
Meetings
Attended
Last AGM
Attended
No. of
Directorships
In Public
Companies
Mr. Surjeet Singh
Managing Director and
Chief Executive Officer
Mr. Anil Singhvi^^
Independent Director
Mr. Sanjeev Aga*
Independent Director
Ms. Nisha Dutt **
Independent Director
Ms. Priyanka Roy #
Independent Director
7
7
3
7
6
6
7
3
5
3
Ms. Poornima
Prabhu%
Additional Independent
Director
NA
NA
Yes
Yes
Yes
Yes
Yes
NA
2
6
8
1
1
1
Notes:
Includes Directorship in Subex Limited
No. of
Board/
Committees
In Which The
Director Is
Chairman
No. of Board
/Committees
In Which The
Director Is
Member
–
3
3
–
–
–
2
4
6
2
–
1
In line with Regulation 26(1) of SEBI (LODR) Regulations, 2015. Memberships in Committees of Subex Limited are included.
* Mr. Sanjeev Aga resigned from the post of Director of the Company with effect from October 27, 2016. All details of Mr. Sanjeev Aga
in this report, wherever it appears, are up to the date of his resignation.
# Ms. Priyanka Roy resigned from the post of Director of the Company with effect from March 10, 2017. All details of Ms. Priyanka Roy
in this report, wherever it appears, are up to the date of her resignation.
% Ms. Poornima Prabhu was appointed as an Additional Independent Director with effect from March 24, 2017.
^^ Mr. Anil Singhvi was appointed as Chairman of the Company with effect from May 25, 2017.
** Ms. Nisha Dutt was appointed as Chairperson of Nomination and Remuneration Committee with effect from May 25, 2017.
C. Number and Dates of Board Meetings
During the financial year 2016-17, seven Board Meetings were
held. The dates of the meetings held were as follows:
1.
2.
3.
4.
5.
6.
7.
May 24, 2016
August 09, 2016
September 12, 2016
November 10, 2016
December 06, 2016
February 03, 2017
March 24, 2017
D. Disclosure of relationships between directors inter-se:
There are no inter se relationships between the Board members.
E. 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
Ms. Nisha Dutt
Ms. Poornima Prabhu
No. of Shares Held as at
March 31, 2017
60,000
NIL
NIL
the
F. Familiarization Programme for Independent Directors
Pursuant to Regulation 25(7) of the SEBI (LODR) Regulations,
2015,
to provide
familiarization programme aims
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 to enable them to take
well informed decisions in a timely manner. The familiarization
| 53 |
SUBEX LIMITED Annual Report 2016-17
programme also seeks to update the Directors 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:
• Overseeing of the company’s financial reporting process and
the disclosure of its financial information to ensure that the
financial statement is correct, sufficient and credible;
• Recommending to the Board, the appointment, re–appointment,
terms of appointment or reappointment and, if required, the
replacement or removal of the statutory auditor and the fixation
of audit fees;
• Approving the payment to be made to the statutory auditors for
any other services rendered by the statutory auditors;
• Reviewing, with the management, the annual financial
statements before submission to the board for approval, with
particular reference to:
a) Matters
to be
required
included
the Director’s
Responsibility Statement to be included in the Board’s report
in terms of clause (c) of sub–section 3 of section 134 of the
Companies Act, 2013;
in
b) Changes, if any, in accounting policies and practices and
reasons for the same;
c) Major accounting entries involving estimates based on the
exercise of judgment by management;
d) Significant adjustments made in the financial statements
arising out of audit findings;
e) Compliance with listing and other legal requirements relating
to financial statements;
f) Disclosure of any related party transactions;
g) Qualifications in the draft audit report;
• Reviewing, with the management, the quarterly financial
statements before submission to the Board for approval;
• Reviewing, with the management, the statement of uses /
| 54 |
application of funds raised through an issue (public issue, rights
issue, preferential issue, etc.), the statement of funds utilized
for purposes other than those stated in the offer document /
prospectus / notice and the report submitted by the monitoring
agency monitoring the utilization of proceeds of a public or rights
issue, and making appropriate recommendations to the Board to
take up steps in this matter;
• Reviewing and monitoring the auditor’s independence and
performance, and effectiveness of audit process;
• Reviewing, with the management, performance of statutory
and internal auditor’s adequacy of the internal control systems;
• Reviewing the adequacy of internal audit function, if any,
including the structure of the internal audit department, staffing
and seniority of the official heading the department, reporting
structure coverage and frequency of internal audit;
• Discussing with internal auditors any significant findings and
follow up there on;
• Reviewing the findings of any internal investigations by the
internal auditors into matters where there is suspected fraud or
irregularity or a failure of internal control systems of a material
nature and reporting the matter to the board;
• Discussing with statutory auditors before the audit commences,
about the nature and scope of audit as well as post–audit
discussion to ascertain any area of concern;
• Looking into the reasons for substantial defaults in the payment
to the depositors, debenture holders, shareholders (in case of
nonpayment of declared dividends) and creditors;
• Overseeing the vigil mechanism which shall provide for
adequate safeguards against victimization of employees and
directors who avail of the vigil mechanism and also to take
action against repeated frivolous complaints filed by director or
employee;
• Carrying out any other function as is mentioned in the terms of
reference of the Audit Committee.
• Examination of the financial statement and the auditors’ report
thereon;
• Scrutinizing the inter–corporate loans and investments;
• Valuation of undertakings or assets of the company, wherever
it is necessary;
• Evaluating the internal financial controls and risk management
systems;
• Monitoring the end use of funds raised through public offers
and related matters.
• Approving the appointment of CFO (i.e., the Whole–Time Finance
Director or any other person heading the finance function or
discharging that function) after assessing the qualifications,
experience and background, etc. of the candidate;
• Calling for comments of the auditors about internal control
systems, the scope of audit, including the observations of
the auditors and review of financial statement before their
submission to the Board and discussing any related issues with
the internal and statutory auditors and the management of the
company, if any.
• Approving of any subsequent modification of transactions of
the company with related parties;
• Management discussion and analysis of financial condition and
results of operations;
• Statement of significant related party transactions (as defined
by the audit committee) submitted by management;
• Management letters / letters of internal control weaknesses
issued by the statutory auditors;
• Internal audit reports relating to internal control weaknesses;
and
• The appointment, removal and terms of remuneration of the
Chief Internal Auditor shall be subject to review by the Audit
Committee.
• Annual statement of funds utilized for purposes other than
those stated in the offer document/prospectus/notice in terms
of Regulation 32 (7) of the SEBI (LODR) Regulations, 2015.
• Statement of deviation(s) or variation(s) as specified in
Regulation 32(1) of the SEBI (LODR) Regulations, 2015.
The current charter of the Audit Committee is in line with
the provisions of The Companies Act, 2013, the SEBI (LODR)
Regulations, 2015 and regulatory changes formulated by SEBI
and international best practices.
B. Composition of The Audit Committee as on March 31, 2017
Sl. No. Composition
1.
2.
3.
4.
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt**
Mr. Surjeet Singh
Ms. Poornima Prabhu%
Category
Independent Director
Independent Director
Managing Director and
CEO
Additional
Independent Director
Mr. Sanjeev Aga resigned from the post of Director of the
Company and subsequently from the Audit Committee with
effect from October 27, 2016.
** Ms. Nisha Dutt was inducted to the Audit Committee with
effect from November 10, 2016.
% Ms. Poornima Prabhu was inducted to the Audit Committee
with effect from March 24, 2017.
Mr. Ganesh K V, Chief Financial Officer, Global Head – Legal and
Company Secretary is the Secretary of the Audit Committee.
C. Meetings and Attendance of the Committee during the Year
During the financial year 2016-17, six Audit Committee meetings
were held. The dates on which committee meetings were held
are as follows:
1.
2.
3.
4.
5.
6.
May 24, 2016
August 09, 2016
September 12, 2016
December 06, 2016
February 03, 2017
March 24, 2017
The dates on which the Quarterly/Half Yearly/Year ended results
were considered were as follows:
Sl.
No.
1.
2.
3.
4.
Quarterly/ half yearly/
yearly results
Quarter and Year ended
March 31st 2016
Quarter ended June 30th,
2016
Quarter and Half year ended
September 30th ,2016
Quarter and nine months
ended December 31st 2016
Dates on which the
results were considered
May 24, 2016
September 12, 2016
December 06, 2016
February 03, 2017
The Attendance of the Directors at the Audit Committee Meetings
for the Financial Year 2016-17 were as follows:
No. of Audit
Committee
Meetings Held
6
3
6
3
NA
No. of Audit
Committee
Meetings Attended
6
3
6
3
NA
Mr. Anil Singhvi
Mr. Sanjeev Aga*
Mr. Surjeet Singh
Ms. Nisha Dutt **
Ms. Poornima Prabhu%
* Mr. Sanjeev Aga resigned from the post of Director of the
Company with effect from October 27, 2016. The details for
Mr. Sanjeev Aga mentioned above are up to the date of his
resignation.
** Ms. Nisha Dutt was inducted to the Audit Committee with
effect from November 10, 2016.
| 55 |
All members of the Audit Committee are financially literate and
have related financial management expertise.
Member
SUBEX LIMITED Annual Report 2016-17 % Ms. Poornima Prabhu was inducted to the Audit Committee
with effect from March 24, 2017.
S.R. Batliboi & Associates LLP, Chartered Accountants, the
Statutory Auditors of the Company have attended all the Audit
Committee Meetings held during the year.
P.C Chandrashekhar & Co, Chartered Accountants, the Internal
Auditors of the Company have attended the meeting of the Audit
Committee held on May 24, 2016.
IV. NOMINATION AND REMUNERATION
COMMITTEE
The Nomination and Remuneration Committee considers the
performance of the Company as well as general industry trends
while fixing the remuneration of Executive Directors. The said
Committee as a part of the Remuneration Policy considers
the recommendation of appointment of Directors, including
Managing Director and Whole Time Director by whatever name
called by the Company.
A. Composition of the Nomination and Remuneration
Committee as on March 31, 2017 was as follows:
Sl. No. Name of the Director
Category
1
2
3
Mr. Anil Singhvi (Chairman)*
Independent Director
Ms. Nisha Dutt
Ms. Poornima Prabhu%
Independent Director
Additional
Independent Director
Mr. Sanjeev Aga resigned from the post of Director of the Company
and subsequently from the Nomination and Remuneration
Committee with effect from October 27, 2016.
% Ms. Poornima Prabhu was inducted to the Nomination and
Remuneration Committee with effect from March 24, 2017.
* Subsequent to the appointment of Mr. Anil Singhvi as the
Chairman of the Company on May 25, 2017 and in accordance
with Regulation 19 (2) of SEBI (LODR) Regulation, 2015, Mr. Anil
Singhvi resigned from the post of Chairman of the Nomination
and Remuneration Committee and Ms. Nisha Dutt was appointed
as the Chairperson of this Committee with effect from May 25,
2017.
B. Meetings and Attendance of the Committee during the Year
During the financial year 2016–17, three Nomination and
Remuneration Committee meetings were held. The dates on
which the committee meetings were held are as follows:
1.
2.
3.
August 09, 2016
February 03, 2017
March 24, 2017
At its meeting held on 09th August, 2016, the Committee
approved the terms and conditions of the re–appointment and
remuneration of Mr. Surjeet Singh for the period from October
05, 2016 to October 04, 2017, which was placed before the
Members for their approval at the 22nd Annual General Meeting
held on September 12, 2016 and the same was approved by the
Members.
Attendance of the Directors at the Nomination and Remuneration
Committee Meetings for the Financial Year 2016-17 were as
follows:
No. of Nomination
and Remuneration
Committee
Meetings Held
No. of Nomination
and Remuneration
Committee
Meetings Attended
3
1
3
1
NA
3
1
3
0
NA
Member
Mr. Anil Singhvi
Mr. Sanjeev Aga*
Ms. Nisha Dutt
Ms. Priyanka Roy#
Ms. Poornima
Prabhu%
* Mr. Sanjeev Aga resigned from the post of Director of the
Company with effect from October 27, 2016. The details for
Mr. Sanjeev Aga mentioned above are up to the date of his
resignation.
# Ms. Priyanka Roy was inducted to the Nomination and
Remuneration Committee with effect from November 10, 2016.
She resigned from the post of Director of the Company with
effect from March 10, 2017.
% Ms. Poornima Prabhu was inducted to the Nomination and
Remuneration Committee with effect from March 24, 2017.
C. Details of remuneration to all the Directors paid during the
Year
The Independent Directors are paid sitting fees of H1,00,000
per meeting for attendance in the Board Meetings/ Meetings of
other Committees of the Board.
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
| 56 |
in the financial statements. The compensation, however, is
within the parameters set by the provisions of The Companies
Act, 2013 and rules made thereunder.
shall be entitled to travel business class on all Company
related travel which involves travel of more than five hours
at any time.
Details of remuneration paid to the directors were as follows:
e. Leave: casual/sick leave and holidays as per the policy of the
(In INR Lakhs)
Company.
Name
Mr. Sanjeev Aga*
Ms. Nisha Dutt
Mr. Anil Singhvi
Ms. Priyanka Roy
Mr. Surjeet Singh**
Ms. Poornima Prabhu#
Sitting
fees
Salary and
perquisites
Commission
$
10.00
14.00
22.00
3.00
NA
Nil
–
–
–
–
16.78
–
–
–
–
–
–
–
* Mr. Sanjeev Aga resigned from the post of Director of the
Company with effect from October 27,2016. All details detailed
above are up to the date of his Resignation.
# Ms. Poornima Prabhu was inducted to the Nomination and
Remuneration Committee with effect from March 24, 2017
$ Remuneration to non-executive directors by way of
commission was approved by the Board at their Meeting held
on May 25, 2017 subject to the approval of the shareholders
at the 23rd Annual General Meeting to an extent of the amount
not exceeding 1% per annum of the net profits of the Company
calculated in accordance with the provisions of Section 198 of
The Companies Act, 2013.
** Benefits provided to Mr. Surjeet Singh:
incurred,
a. Medical Reimbursement: Reimbursement of medical
expenses
including premium paid on health
insurance policies, whether in India or aboard, for self and
family as per the policy of the Company or as approved by
the Board of Directors.
b.
Insurance: Personal accident insurance and Keyman or other
insurance as per the policy of the Company or as approved by
the Board of Directors.
c. Taxes: All taxes, duties, levies, surcharge etc. shall be borne
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
f.
Termination:
i. The Company or Mr. Surjeet Singh may terminate the
agreement giving either party notice in writing of 90
(Ninety) days.
ii. If the employment of Mr. Surjeet Singh is terminated by
the Company, without cause, before the expiry of 1 (One)
year from the Appointment Date, he shall be 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.
D. Performance Evaluation
Pursuant to the provisions of The Companies Act, 2013 and
Regulation 25 of the SEBI (LODR) Regulations, 2015, the 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. An Evaluation criteria for the
Board of Directors, Members of the Committee and Individual
Directors was formulated for such evaluation. The evaluation
criteria included aspects related to composition, effectiveness,
structure of the board/committee, level of engagement and
contribution, independence of judgement etc. The performance
evaluation of the Independent Directors was carried out by
the entire Board. 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
complaints and grievances. The Committee meets on a periodic
basis to address the investor complaints like transfer of shares,
non–receipt of balance sheet, non–receipt of declared dividends
etc. Details of grievances of the investors are provided in the
“Shareholders’ Information” section of this Annual Report.
| 57 |
SUBEX LIMITED Annual Report 2016-17 A. Composition of The Stakeholders Relationship Committee as
on March 31, 2017
Sl. No. Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt**
Mr. Surjeet Singh
Independent Director
Managing Director & CEO
Mr. Sanjeev Aga resigned from the post of Director of the Company
and consequently from the Chairmanship of Stakeholders’
Relationship Committee with effect from October 27, 2016.
** Ms. Nisha Dutt was inducted to the Stakeholders Relationship
Committee with effect from November 10, 2016.
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 of the Committee during the Year
During the financial year 2016-17, four Stakeholders Relationship
Committee meetings were held. The dates on which the
committee meetings were held are as follows:
1.
2.
3.
4.
May 24, 2016
August 09, 2016
December 06, 2016
February 03, 2017
Attendance of the Directors at the Stakeholders Relationship
Committee Meetings for the Financial Year 2016-17 were as
follows:
Member
Mr. Anil Singhvi
Mr. Sanjeev Aga*
Mr. Surjeet Singh
Ms. Nisha Dutt**
No. of Stakeholders
Relationship
Committee
Meetings Held
No. of Stakeholders
Relationship
Committee
Meetings Attended
4
2
4
2
4
2
4
2
* Mr. Sanjeev Aga resigned from the post of Director of the
Company with effect October 27, 2016. The details for Mr. Sanjeev
Aga mentioned above are up to the date of his resignation.
** Ms. Nisha Dutt was inducted to the Stakeholders Relationship
Committee with effect from November 10, 2016.
VI. ESOP COMMITTEE (COMPENSATION
COMMITTEE)
The Company has instituted Employee Stock Option Schemes
in line with the Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014. The Committee
grants and administers options under the stock options schemes
to eligible employees. There were no grants made during the
financial year 2016–17.
A. Composition of The ESOP Committee as on March 31, 2017
Sl. No. Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt**
Independent Director
Ms. Poornima Prabhu%
Additional Independent
Director
Mr. Sanjeev Aga resigned from the post of Director of the
Company and consequently from the Chairmanship of ESOP
Committee with effect from October 27,2016.
** Ms. Nisha Dutt was inducted to the ESOP Committee with
effect from November 10, 2016.
% Ms. Poornima Prabhu was inducted to the Employee Stock
Option Purchase Committee/Compensation Committee with
effect from March 24, 2017.
B. Meetings and Attendance during the Year
The Committee administers the ESOP schemes of the Company
by passing resolutions by circulation whenever necessary. These
resolutions are tabled before the Board of Directors at their
respective meetings which is noted. The committee did not meet
in the financial year 2016–17.
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 (“CSR
Committee”). The CSR Committee has, inter alia, the 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 (i); and
| 58 |
iii. monitor the Corporate Social Responsibility Policy of the
Company from time to time.
A. Composition of The CSR Committee as on March 31, 2017
Sl. No. Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi
(Chairman)
Ms. Nisha Dutt**
Mr. Surjeet Singh
Independent Director
Independent Director
Managing Director & CEO
Mr. Sanjeev Aga resigned from the post of Director of the
Company and consequently from the Committee with effect from
October 27, 2016.
** Ms. Nisha Dutt was inducted to the Corporate Social
Responsibility Committee with effect from November 10, 2016.
B. Meetings and Attendance of the Committee during the Year
During the financial year 2016-17, two CSR Committee meetings
were held. The dates on which the committee meetings were
held are as follows:
1.
2.
May 24, 2016
December 06, 2016
Member
Mr. Anil Singhvi
Mr. Sanjeev Aga*
Ms. Nisha Dutt**
Mr. Surjeet Singh
No. of CSR
Committee
Meetings Held
No. of CSR
Committee
Meetings Attended
2
1
1
2
2
1
1
2
* Mr. Sanjeev Aga resigned from the post of Director of the
Company with effect from October 27, 2016. The details for
Mr. Sanjeev Aga mentioned above are up to the date of his
resignation.
** Ms. Nisha Dutt was inducted to the Corporate Social
Responsibility Committee with effect from November 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
ongoing and new business activities, it has constituted a Risk
Management Committee to review the
Internal Financial
Controls amongst other matters. The said committee has also
within its scope, the evaluation of significant risk exposures of
the Company and to assess Management’s actions to mitigate
the 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 Monitoring.
A. Composition of the Committee as at March 31, 2017
Sl. No. Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Surjeet Singh
Mr. Vinod Kumar
Padmanabhan
Managing Director & CEO
Chief Operating Officer
Mr. Sanjeev Aga resigned from the post of Director of the
Company and consequently from the Committee with effect from
October 27, 2016.
B. Meetings and Attendance during the Year
There were no meetings of the Risk Management Committee
held during the financial year 2016–17.
IX. INDEPENDENT DIRECTOR
During the year under review, the Independent Directors met on
February 3, 2017 inter alia, to:
• Review the performance of the Non–Independent Directors and
the Board of Directors as a whole;
• Assess the quality, quantity and timeliness of flow of 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.
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 SEBI
(LODR) Regulations, 2015 require 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 a fraud–free work environment. The
policy provides a platform to all the employees, vendors and
| 59 |
SUBEX LIMITED Annual Report 2016-17 customers to report any suspected or confirmed incident of fraud/misconduct through any of the following reporting protocols:
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 made available in exceptional cases by sending an email to whistleblower@subex.
com. 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.
XI. GENERAL BODY MEETINGS
A. Location and Time of the Last Three AGMs
Year
2013–14
2014–15
2015–16
Date of AGM
August 14, 2014
June 19, 2015
September 12, 2016
Venue
Registered office
Registered office
Registered Office
Time
1:00 PM
1.00 PM
2:00 PM
Details of the Special Resolutions passed at the Last Three AGMs
Date of Annual General
Meeting
No. of special
resolutions passed
Details of Resolution pertaining too
August 14, 2014
June 19, 2015
3
7
1. Re– appointment of Mr. Surjeet Singh as the Managing Director and CEO of the
Company for a period of one year from October 05, 2013 to October 04, 2014
2. Re–appointment of Mr. Anil Singhvi as an Independent Director for a period of
one year
3. Re–appointment of Mr. Sanjeev Aga as an Independent Director for a period of
one year
1. Re– appointment of Mr. Surjeet Singh as the Managing Director and CEO of the
Company for a period of one year from October 05, 2014 to October 04, 2015
2. Re–appointment of Mr. Anil Singhvi as an Independent Director for a period of
five years
3. Re–appointment of Mr. Sanjeev Aga as an Independent Director for a period of
five years,
4. Issuance of shares pursuant to reset of Conversion Price of FCCB’s,
5. Increase in Authorised Share Capital of the Company
6. Alteration of Capital Clause contained in the Memorandum of Association and
7. Approval of Borrowing limits of the Company.
September 12, 2016
2
1. Alteration of Articles of Association of the Company
2. Reappointment of Mr. Surjeet Singh as Managing Director and CEO of the
Company for a period of one year from October 05, 2016 to October 04, 2017
B. Location and Time of the Last Three EGMs
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
Year
2011–12
2012–13
2012–13
| 60 |
C. Postal Ballot during year 2016–17
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 Increase in Authorised
Share Capital and Issue of Equity Shares on preferential basis
were passed as Special Resolutions by the Members through
physical postal ballot / electronic remote e–voting. The notice
of the Postal Ballot dated 24th March, 2017 was dispatched to
the members on 27th March, 2017 and the Postal Ballot was held
between 30th March, 2017 – 29th April, 2017.
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. Pramod S M, Practicing Company Secretary (Membership
Number. FCS: 7834, CP No. 13784) was appointed as the
scrutinizer for the above mentioned remote e–voting process and
Postal Ballot, and submitted the consolidated voting results on
the resolutions to Mr. Ganesh K V, Chief Financial Officer, Global
Head–Legal and Company Secretary, Mr. Ganesh K V declared
that both the resolutions were passed as special resolution with
requisite majority as stated in the table below:
Resolution
No.
Particulars
Total Number
of shares voted
Voted in
Favour
Voted
against
Percentage
(in favour)
Result
1
2
Increase in Authorised Share Capital
51,364,551
51,003,488
361,063
Issue of Equity Shares on preferential basis
51,238,450
51,054,878
183,572
99.297
99.642
Approved
Approved
The complete results of the voting along with the scrutinizers report were made available on the website of the Company www.subex.
com and on the websites of BSE and NSE.
XII. SUBSIDIARY COMPANIES
The Company has overseas material subsidiaries whose net
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.
XIII. DISCLOSURES
A. RELATED PARTY TRANSACTIONS
All transactions entered into with Related Parties as defined
under The Companies Act, 2013 and Regulation 23 of the SEBI
(LODR) Regulations, 2015 during the financial year were in the
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 disclosures as required
by the IND AS has been made in the Note 33 to the Stand Alone
and Note 33 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/corporate–governance/
There were 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,
its Senior Management or its subsidiaries which may affect
independence. The Company has received the relevant
declarations in this regard from its Independent Directors Mr.
Anil Singhvi, Mr. Sanjeev Aga, Ms. Nisha Dutt, Ms. Priyanka Roy
and Ms. Poornima Prabhu.
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
| 61 |
SUBEX LIMITED Annual Report 2016-17 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
is closed. The Company Secretary & Compliance Officer is
responsible for implementation of the Code.
members of the Board and the Senior Management Personnel
have affirmed compliance to the Code, as at March 31st, 2017. A
declaration to this effect, signed by the Managing Director and
CEO is provided in the certification section of the Annual Report.
The Code has been posted on the Company’s website http://
www.subex.com/corporate–governance/
C. FINES
During the year 2016-17, there was no fine, penalty nor any
stricture passed by SEBI, Stock Exchanges or any other Statutory
Authority on matters relating to capital markets.
During the year 2015-16, BSE Limited imposed a fine on the
Company under Clause 31 of the erstwhile 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 H18,240/- 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 (5) of the SEBI (LODR)
Regulations, 2015, the Company has adopted a Code of Conduct
(the ‘Code’). This Code is applicable to the Members of the
Board, Senior Management Personnel and all employees 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 particularly
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 and the reporting structure.
During the Financial Year under review, to meet the requirements
laid down under the Provisions of Regulation 17(5) of the SEBI
(LODR) Regulations, 2015, the Code of Conduct for all members of
the Board and Senior Management Personnel was revisited and
certain changes were proposed. The same was considered at the
Board meeting held on February 03, 2017 and approved. All the
XIV. MEANS OF COMMUNICATION
A. Annual/Half Yearly and Quarterly Results
The annual audited /half yearly & quarterly un–audited results
are generally published in all editions of Financial Express/
Business Standard (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 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,
Boards’ 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
are requested to register their e–mail id with their Depository
Participant and inform them of any changes to the same from
time to time. However, Members who prefer physical copy to
be delivered may write to the Company at its registered office
or send an e–mail to investorrelations@subex.com by providing
their DP ID and Client ID as reference.
XV. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis forms part of the
Annual Report.
XVI. GENERAL SHAREHOLDER INFORMATION
General shareholder information is provided in the “Shareholder’s
Information” Section of the Annual Report.
XVII. PRACTISING COMPANY SECRETARIES
CERTIFICATE
The certificate with regard to compliance of conditions of
Corporate Governance as per Clause E of Schedule V of the SEBI
(LODR) Regulations, 2015 forms part of this Board Report.
| 62 |
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
requirements shall be made in the section on Corporate
Governance in the Annual Report. The Company has complied
with the following non–mandatory requirements:
A. The Board
The Company appointed Mr. Anil Singhvi, Independent Director
as the Non-Executive Chairman of the Company at its meeting
held on May 25, 2017. The Company reimburses the expenses
incurred by the Chairman for discharge of his duties that are
attributable to the company on a regular basis pursuant to the
provisions of Regulation 27(1) of SEBI (LODR) Regulation, 2015.
B. Shareholders’ Rights
The Company communicates with investors regularly through e–
mails, telephone calls and face to face meetings. The Company
publishes the quarterly financial results in leading business
newspaper(s) as well as on the Company’s website.
C. Modified opinion(s) in Audit Report
The Company did not receive any Modified Opinion in the Audit
Report of the Financial Statements during the financial year.
D. Separate Posts of Chairperson and Chief Executive officer
The Company has created separate positions to be held by
Chairman and Chief Executive officer respectively. The Chairman
of the Company is Mr. Anil Singhvi and the Chief Executive officer
is Mr. Surjeet Singh.
E. Reporting of Internal Auditor
The Internal Auditors report to the Audit Committee of the Board
of Directors and are present as invitees at the Audit Committee
meetings held every quarter.
Surjeet Singh
Managing Director & CEO
DIN: 05278780
Place: California, USA
Date: June 5, 2017
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN:00239589
Place: Mumbai, India
Date: June 5, 2017
| 63 |
SUBEX LIMITED Annual Report 2016-17 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, 2017.
Place: California, USA
Date: June 05, 2017
For Subex Limited
Surjeet Singh
Managing Director & CEO
DIN: 05278780
| 64 |
CEO/CFO CERTIFICATION IN TERMS OF REGULATION 17 (8) OF THE SEBI (LODR) REGULATIONS, 2015
To,
The Board of Directors
Subex Limited
Dear Sirs
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 including the cash flow statement of the Company for the year ended March 31, 2017
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
DIN: 05278780
Place: Bangalore
Date: May 25, 2017
Ganesh K V
Chief Financial Officer, Global Head- Legal & Company Secretary
Place: Bangalore
Date: May 25, 2017
| 65 |
SUBEX LIMITED Annual Report 2016-17
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 US$ 127.721
million 5.70% Convertible Secured Bonds (outstanding amount
of US$ 3.60 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.
The management of Subex is committed to transparency and
disclosure. In keeping with that commitment, we are pleased to
disclose hereunder information about the Company, its business,
operations, outlook, risks and financial condition.
The financial statements of the Company have been prepared in
compliance with the requirements of The Companies Act, 2013
and the Indian Accounting Standards (Ind AS) notified under
the Companies (Indian Accounting Standards) Rules, 2015. The
management of Subex accepts responsibility for the integrity and
objectivity of these financial statements, as well as for various
estimates and judgments used therein. The estimates and
judgments relating to the financial statements have been made
on a prudent and reasonable basis, in order that the financial
statements reflect the form and substance of transactions in a
true and fair manner, and reasonably present the state of affairs
and profits/ losses for the year under review.
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 report.
COMPANY OVERVIEW
We provide software products, solutions and related services
to communications service providers (“CSPs”) worldwide. Our
revenue contributing pie consists of licensing, professional
services related to installations and configuration activity, annual
support contracts and managed services.
Our pioneering platform, the Revenue Operations Centre (ROC®)
– a centralized approach that sustains profitable growth and
financial health of CSPs through coordinated operational control
- brings together business intelligence, domain knowledge
and workflow support. ROC acts as the underpinning solution
on which CSPs can build their processes to drive new business
models, enhance customer experience and optimize operations.
Our product portfolio consists of: revenue assurance, fraud
management, asset assurance,
capacity management,
data integrity management, route optimization and partner
settlement. Through
in advanced analytics,
Subex also enables CSPs to leverage the volumes of data used
to generate business insights, which is delivered through
consumable storyboards, thus empowering them to take quicker
and more decision-based actions.
its expertise
We are proud to be recognized as a leader in our market. We are
especially proud to have received numerous awards jointly with
our customers. Our recent awards include:
• Pipeline Innovation Award 2017 in the ‘Innovations in
Managed Services’ & in the “Innovations in Security &
Assurance” category.
• Global Telecoms Business Innovation Award 2017 with STC,
Saudi Arabia, under the “Enterprise Service Innovation”
category.
• BSS & OSS Award 2016 with Telefonica Chile for “Best Fraud
Prevention Project”.
• Global Telecoms Business Innovation Award 2016 with BTC
Botswana.
• Pipeline Innovation Award 2016 in Security and Assurance.
• Telecoms Awards 2015 for “Advances in BSS/OSS category”.
• 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.
• Global Telecoms Business Innovation Award 2015 with
Mobily.
• Finance Transformation Best-In Class Financial Solutions
Services, 2016 by CIMA.
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 90+ countries.
| 66 |
We have a global presence, employing over 900+ people, with
headquarters in Bengaluru, India and offices in Singapore, UK,
US and UAE.
*Telecom Operators 500, 2015
#The World’s Largest Telecom Companies 2015 – Forbes
More information on (a) our revenue model, (b) our products,
(c) our global customer base and (d) an overview on the CSP
industry itself is discussed below.
OPPORTUNITIES
Data and Voice services are becoming commodity for telecos
and in order to create the sustainable revenue stream, they are
launching new digital services such as mobile banking, digital
content services, wallet services etc. Most of these services
would need new partner ecosystem and they need partners who
can manage this new ecosystem. Subex can play a significant role
due to its firm relationships with global telcos. While telcos are
launching these new digital services, they are exposed to new
risks, security, compliance and regulatory requirements. Subex
can play an important role in managing the digital risks due to
its pivotal position in managing fraud and revenue assurance
domains for more than two decades. Due to digital nature of all
business processes, a lot of data is getting generated. Telcos need
trusted partners who are able to manage this data and derive
meaningful business insights to create competitive advantage.
Our pioneering platform ROC® is able to manage large data,
business intelligence and domain knowledge which can help
global telcos in driving their new business models, enhancing
customer experience and optimize business operations.
THREATS
Core areas of Subex such as fraud management, revenue
assurance, partner settlement are evolving further. For instance,
is evolving
Fraud management is evolving as enterprise risk function;
revenue assurance is becoming a part of revenue management
larger partner
and partner settlement
management in order to manage the digital ecosystem for
telcos. Subex needs to ensure that this evolution becomes much
smoother for itself and for its clients. Subex needs to ensure that
it would create the leadership position in these newer areas to
generate sustainable revenue scheme.
into
On having the new digital services rolled out by telcos and their
efforts to roll out these new services into other verticals, Subex
may have to compete with newer partners of telcos managing
risks and frauds in these new verticals such as banking, insurance,
utilities etc. These verticals may have newer buying centers for
fraud or revenue management and assurance. Subex needs to
cross-sale its products and solutions to new buying centres.
OUR REVENUE MODEL
Our revenue generally comes from sale and implementation of
its licences and implementation of its proprietary software and
managed support services.
We generally license our software products on per subscriber
or per transaction basis. This means that when our customers
experience growth, we can also expect to benefit from that
growth. Typically, there are significant professional services
revenues associated with each new software installation as well
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
our customers experience growth. Importantly, annual support
contract revenue tends to be recurring revenue.
Finally, we have been experiencing increasing success with
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
FY
‘17
1
33
32
7
27
| 67 |
SUBEX LIMITED Annual Report 2016-17 managed service revenue. Like annual support contracts,
managed services provides a relatively predictable recurring
revenue stream. At the same time, our managed service offering
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.
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
optimize CAPEX.
The ROC enables profitable service provider growth through
coordinated operational control.
OUR PRODUCTS
Subex offers the Revenue Operations Centre (ROC®) which has
solutions as Revenue Assurance, Fraud Management and Asset
Assurance, Data Integrity Management, Capacity Management,
Interconnect Billing, and Partner Settlement. On top of these
solutions, Subex also enables CSPs to leverage their harvested
information to take decision-based actions by providing
contextual, consumable and actionable
through
advanced analytics, called ROC Insights. In addition to these,
Subex also offers its IoT Security solution called Subex Secure.
insights
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.
DRIVE NEW
BUSINESS
MODELS
ENHANCE
CUSTOMER
EXPERIENCE
OPTIMISE
ENTERPRISE
CONSULTING & ADVISORY SERVICES
MANAGED SERVICES
REVENUE
ASSURANCE
FRAUD
MANAGEMENT
PARTNER
SETTLEMENT
INSIGHTS
ASSET
ASSURANCE
DATA INTEGRITY
MANAGEMENT
CAPACITY
MANAGEMENT
IOT
SECURITY
ROUTE
OPTIMISATION
ROC
ROC Revenue Assurance
ROC Revenue Assurance is the telecom industry's first revenue
assurance solution that simplifies RA. It helps telecom service
providers transform mountains of data from across business
platforms/systems into valuable actionable insights that aid
revenue maximisation processes. ROC Revenue Assurance has
pioneered the Next Generation RA DNA (Dynamic Network
Analytics) technology where operators can quickly invoke GUI-
driven building blocks to rapidly deploy extensive Revenue
Assurance and Enterprise Business Process controls within their
operations. DNA is network topology agnostic and supports
revenue management for both traditional communication
| 68 |
services and digital services offerings. The solution offers both
pre-built set of controls packaged to reduce time of production,
as well as capabilities to support any business process that aids
revenue management, automating and simplifying complex
revenue and cost processes.
ROC Revenue Assurance also offers two path breaking concepts:
Revenue Pad and Zen. RevPad provides end to end view of all
business process related metrics that helps key stakeholders
derive a view of overall system. ZEN is the industry’s first
virtual analyst that assists operators in investigation and
diagnosis. This enables material increase in analyst productivity,
increased coverage across revenue checkpoints and reduced
time to benefit realisation for a service provider and supports
Revenue Assurance teams to align their successes with broader
organizational goals - such as higher margins and customer
satisfaction.
ROC Fraud Management
ROC fraud management is built to increase fraud prevention in
the telecom industry by eliminating known frauds, uncovering
new 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
fraud, and uses the knowledge, thus generated, to upgrade and
protect against future intrusions.
The solution is characterized by its unique architecture that
harnesses the power of proven rules-based alarms and pattern
matching driven by advanced statistical techniques. Adding
power to this hybrid detection system is a set of potent case
management tools. These tools provide relevant case data that
are made easily accessible through a single window in a fast
web-based GUI.
ROC Fraud Management is highly flexibile, allowing operators
of different sizes to customise 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 & 4G);
and across all services: postpaid, Payment, VAS, MMS and
M-commerce.
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
prudent accrual provisioning. Catering to the need for visibility
of each deal's impact on an operator's bottom line owing to
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.
New types of complex agreements in areas such as IP and
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. This is a comprehensive solution to
help Telecom operators with interconnect, content and digital
settlements giving them the edge needed to prosper in today's
market.
ROC Route Optimization
ROC Route Optimization is designed to provide operators with
tools to manage network cost information supplied by other
operators. Additional analysis on the impact of current operator
tariffs as well as forecasts on potential future operator tariffs is
also featured. The system is capable of taking into account factors
such as call quality, rate information, capacity, and network costs
to arrive at the optimum choice of operators. The solution ensures
that the entire end-to-end processes from dial code/destination
operator rate imports to switch updates are controllable and
auditable. It is fully supported by a comprehensive list of reports
and when generating an optimized routing table, the system
provides an integrated management of the routing table changes
across multiple business functions. This solution helps telcos to
derive the best breakouts and cost routes. The processes also
enable communication service providers to establish focused
efficiency-increasing task automation, thereby reducing data
redundancies.
IoT Security Solution - Subex Secure
Subex Secure solution monitors and alerts to threats in near real-
time Internet of Things (IoT) environments. The Subex security
narrative focuses on the concept of holistic 'cyber resilience' from
asset and incident discovery and monitoring through response
and recovery. In addition to its specialized, agentless software
for heterogeneous IoT environments to extract and analyze data
from IoT edge sources and apply IDS and SIEM capabilities. It also
offers SLA-based 24/7 monitoring services via a global network
of SOCs, honeypots and skilled security analysts. Subex uses an
agent-based model for homogeneous deployments focused on
| 69 |
SUBEX LIMITED Annual Report 2016-17 remote attestation.
The Subex IoT security offering is a managed service that
primarily consists of four distinct Technologies:
- an intrusion detection system,
- a web access firewall,
- a SIEM and
- a contextual anomaly detection system
In addition to monitoring services, Subex works with clients to
develop customized incident response plans in the event of a
breach. Through its partners, Subex also brings private VPN,
encryption, authentication and secure key storage services to its
clients. The combination of Subex's native security capabilities
results in threat detection based on signatures, heuristics and
anomaly detection, allowing the company to identify both
known and unknown threats.
In addition to its capabilities in the telecom and consumer/
enterprise IoT space, Subex also offers its IoT security solution for
industrial control systems and smart city infrastructure domains.
This offering includes cascading policy controls across different
levels in the ICS environment, role-based access control,
privilege control and audit trails.
ROC Asset Assurance
ROC Asset Assurance is a Telecom Asset Lifecycle Management
solution which provides framework and controls to manage
network CAPEX efficiently. The solution ties the financial
parameters of the assets to its current utilization and location,
creating a 360 degree view of the asset, generates accurate
reports for audits and calculates return on assets. Bridging
the gap between network and finance functions, ROC Asset
Assurance uses a state-of-the-art network intelligence for:
- Knowing what you have (Knowing what assets you have and
its utilization).
- Measuring what you have (Setting up controls to monitor
assets location and utilization).
- Optimising what you have (Asset optimisation leading to
CAPEX and OPEX efficiency).
In addition, it simplifies field audits, provides near real-time
capacity views, recommendation to optimise network utilisation
and optimises P2R (Plan-to-retire) and cash-to-cash cycle for
assets and improves overall operational efficiency.
ROC Data Integrity Management
Subex is the pioneer of data integrity management, with
over a decade of experience in data integrity transformations
with the world's leading service providers. ROC Data Integrity
Management is the industry's first solution for improving the
quality of data that drives key service provider processes,
resulting in lower costs and higher service profitability. This
solution combines three powerful data integrity functions: multi-
layer network and service discovery; data reconciliation; and
discrepancy analytics.
ROC Data Integrity Management discovers network resources,
identifies them and reconciles them with OSS/BSS databases
such as between an inventory management system and an order
management system and a billing system or an asset tracking
system based on Service Provider business rules. Leveraging
inherent cross-domain
intelligence and extensive off-the-
shelf network equipment support, 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’s operations, enhancing the
effectiveness and value of service fulfillment, service assurance,
and billing systems.
ROC Capacity Management
ROC Capacity Management solution enables CSPs to prevent
impact on business-critical
an availability or performance
applications due to capacity issues. ROC Capacity Management
provides the critical link between network discovery and
predictive analytics to identify capacity ‘hot-spots’ and predict
‘time-to-exhaustion’. It provides a holistic view of capacity
through which it helps CSPs see threshold violations on key
links and resolve capacity issues based on near real-time data.
It further engages analytics functions to provide actionable
intelligence and predict scenarios and their impact on network
capacity which would help CSPs to plan capacity investments
accordingly. This ensures removal of capacity issues and ensures
smooth operation of business-critical applications thereby
resulting in positive customer experience.
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 eff¬ectively use the data to improve and
optimise business processes, CSPs need analytics & insights
to derive actionable intelligence out of it. Many organisations
in fact have understood the importance of having a Data
Analytics strategy and have made efforts towards harnessing
and leveraging the data available to them. Unfortunately, the
numerous solutions which they are currently using are limited
in terms of providing actionable insights upon which business
| 70 |
decisions can be taken. Due to this, CSPs are not able to generate
ROI from their Data Analytics solution.
Business Insights is a unique approach to solving the problem
with data growth. The cornerstone of this offering is to leverage
big data and generate nuggets of information – which are
“Consumable”, “Actionable” and “Contextual”. Based on Subex’s
two decades of B/OSS expertise, telecom domain knowledge
and telecom analytics experience, the program is built on the
pillars of “Domain”, “Analytics” and “Technology”.
ROC Insights helps operators extract valuable information
from data, predict and act upon irregularities, increase overall
efficiency and effectively monitor business changes in near-
real time. Moreover, through the generation of consumable
and interactive storyboards, ROC Insights transcends beyond
providing mere dashboards to providing insights which can be
consumed by executives across multiple levels.
Consulting & Advisory Services
While telcos are undergoing transformation, and becoming
digital lifestyle service providers, they need trusted partners at
the operational level in order to make sure they have the right
domain, technology and processes. Subex with its more than 25
years of experience in telecom domain, end-to-end experience
in defining strategy to execution and use of relevant tools that
are compliant with global forums such as TM Forum and CFCA; is
the right partner of choice in consulting and assessment services
for global telcos.
Subex offers consulting and advisory services in the following
domains:
• Maturity assessment: Benchmarking of
revenue
assurance and fraud management processes with respect
to global standards and provide metrics across people skills,
processes, technology usage and measurement strategies.
their
• Business operations assessments: Gap analysis of existing
processes and provide the roadmap to close these gaps using
“analyse, evaluate, assess and recommend” framework.
• Risk management: Identify the risks in the revenue chain
and plug leakages in a timely manner, through regular end
to end assessment of the existing business and revenue
streams. Subex’s custom framework is based on a thorough
understanding of risks, creating a Risk Control Matrix utilizing
TM Forum standards, and developing comprehensive standard
operating procedures.
• Business process re-engineering: Review of the existing
business processes and then design and implement the new
business process after considering the best industry practices.
• System integration and IT support operations: While migrating
from legacy OSS/BSS infrastructure Subex provides extensive
checklists and exhaustive test cases making sure that
migration cost is reduced. Subex can also help in carrying out
customized health-check of RA and FM IT operations of telcos.
• Product and service margin assurance: Assessment of the
target market and holistic margin and profitability check for
the entire service and product catalogue.
• Portfolio optimization: Optimising offering portfolio by holistic
assessment of products and offerings considering subscriber
base, price points, usage patterns, revenue share and benefit
comparison with other offerings.
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 it is a business executive or a functional
leader, we understand 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.
At Subex, Managed Services offerings are designed to drive
outcome and protect
revenues by enhancing customer
experience. Pillared on four main aspects i.e. Cost, Quality,
Time-to-market and Capability, the engagement is aimed to
provide rapid ROI, increase e¬fficiency and in-turn deliver
maximum value. Driven by robust technology-led capabilities,
Subex Managed Services offers a variety of engagement models
providing complete flexibility to operators based on their
business needs.
Subex Managed Services program is designed to add both
strategic and tactical value to service providers’ operations
and enable better customer experience while also enhancing
their operational efficiency, service agility and profitability.
With Subex at the helm of its operations, service providers can
redirect critical resources at core business functions generating
more revenue and saving costs.
Subex understands that no two service provider requirements
are alike and hence offers the flexibility to pick and choose
services based on:
• Scope of Operations: Ranging from standard operations to
large scale transformational programs
• BSS / OSS Domains: Drawing from Subex’s established
| 71 |
SUBEX LIMITED Annual Report 2016-17 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.
On-demand, Software-as-a-Service (SaaS) – ROC cloud
Small and medium telcos have business support system (B/OSS)
needs that are 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 leader in the business optimization space and has pioneered
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.
Subex Managed Services
SMART services leveraging proven technology
Product, Domain and Operation Capabilities
30+ Managed Services programs, over 20
billion CDRs processed monthly, applications
running on over 100 servers
Regular industry forum thought leadership
engagements
Industry pioneering Revenue Operations
Center (ROC*) Platform
Over 300 ROC implementations at 200+
service providers
Automated workflows, future proof roadmap
SM
Subex
Managed
A
Accountable
Stringent SLAs, innovative Risk-Reward Share
Model
Robust processes and methodologies
Assured migration up the maturity model
R
T
ROC-Enabled
Tailored
Flexible, bespoke services based on scope of
operations, BSS domains and stage of
evolution
More choice based on your requirements and
budget
Services leveraging proven technology
OUR GLOBAL CUSTOMER BASE
Subex today serves over 300 installation spread across 90 countries. This includes 39 of the world’s 50 biggest telecommunications
service providers worldwide. The chart below illustrates the geographical mix of customer base:
Geographical Mix
14
34
52
9
36
55
15
35
8
37
50
55
27
36
37
FY05
FY06
FY07
FY08
FY09
E
G
A
T
N
E
C
R
E
P
100
80
60
40
20
o
EMEA
AMERICAS
APAC
33
50
17
FY10
16
40
44
14
35
51
21
26
53
17
20
63
23
20
57
22
21
57
23
20
57
FY11
FY12
FY13
FY14
FY15
FY16
FY17
| 72 |
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.
As per GSMA, at the end of 2016, there were 4.8 billion unique
mobile subscribers globally, equivalent to 65% of the world’s
population. By 2020, almost 73% of the global population
will have a mobile subscription, with around 1.3 billion new
subscribers added over the period. As discussed above, our
licensing model is tied to subscriber growth but this growth
would be at risk as it is reaching the saturation level. For example,
in developing countries, unique subscriber growth was 4% and
1% between 2010 and 2020 respectively. For the developing
countries, an annual subscriber growth in 2010 was 16% and
would be about 3% in 2020.
PENETRATION RATE
GLOBAL CONNECTIONS
(Excluding M2M)
GLOBAL
UNIQUE
SUBSCRIBERS
2016
4.8
billion
2020
5.7
billion
2016
65%
2020
73%
I
S
R
E
B
R
C
S
B
U
S
S
N
O
I
T
C
E
N
N
O
C
1
8
5
0
1
5
2
1
4
8
6
4
1
8
7
9
0
1
9
5
1
0
1
0
7
4
4
5
7
5
6
6
9
FIGURES IN PER CENT
SUBSCRIBER AND
CONNECTIONS
PENETRATION BY
REGION 2016
Source: GSMA
7.5bn
2016
100%
PENETRATION RATE
8.8bn
2020
112%
PENETRATION RATE
Multiple SIM ownership:
Increased smartphone ownership and mandatory
SIM registration in developing markets continue to
drive decline in the global SIM ratio:
Global SIMs per subscriber
1.50
2012
1.44
2016
1.43
2020
Mobile revenues in developed nations are going to increase from $652 bn in 2016 to $687 bn in 2020 by CAGR of 1.3%. For the same
period for developing nations, mobile revenues are going to increase from $400 bn to $451bn at the CAGR of 3%.
Mobile still a growth story
MOBILE REVENUES
$652bn
$687bn
$400bn
$451bn
DEVELOPED
DEVELOPING
DEVELOPED
DEVELOPING
2016
2020
GLOBAL MOBILE INTERNET SUBSCRIBERS
s 5
n
o
i
l
l
i
B
4
3
2
1
0
2016
2017
2018
2019
2020
Developed markets
Developing markets
Source: GSMA
1.3%
CAGR 2016-2020
DEVELOPED
3.0%
CAGR 2016-2020
DEVELOPING
By
2020
82%
82% of unique
subscribers
will use mobile
internet (up from
74% in 2016)
Nearly 1 billion new customers
will connect to the internet via
mobile indeveloping countries
| 73 |
SUBEX LIMITED Annual Report 2016-17 Interestingly by 2020, 82% of unique subscribers will use mobile internet up from 74% in 2016. Nearly 1 billion new customers will
connect to internet via mobile in developing countries. This is in line with telcos growing strategies of providing digital services on the
cost-effective data plans and Subex sees this as major opportunity to make most of its evolving portfolio. We also have a strong history
of operating successfully in the developing markets and we have a good understanding of the challenges of this market allowing us to
be well positioned to grow as this market is growing.
Another important trend that we have observed in the telecom domain is 4G-LTW rollout. As of December 2016, 588 operators have
commercially launched 4G-LTE networks across 188 countries.
GLOBAL 4G-LTE FORECASTS : 2012-2020
2016
2020
Source: GSMA
As per GSMA, the number of 4G operators to increase by a third by 2020. In 2016, there were 1.74 billion (exclusing M2M) 4G-LTE
connections which are likey to grow to 3.6 billion (excluding M2M) by 2020. More than 40% of global telecom connections would run
on 4G-LTE networks by 2020, from 23% in Q4 2016.
More than 3.6 billion 4G-LTE connections (excluding M2M) expected worldwide by 2020
Global 4G-LTE connections, in billions
(excluding M2M)
Developing and developed markets;
share of global LTE connections
% of global total connections
(excluding M2M)
3.63
3.21
2.75
2.28
1.74
2020
2016
35% 42%
58%
Developed
>40%
of global total
connections
will run on 4G-LTE
networksby 2020,
from 23% in Q4 2016
41%
1.07
0.50
0.21
0.08
2012
2013 2014 2015 2016 2017 2018 2019 2020
Source: GSMA
65%
Developing
23%
1%
2012
2016
2020
As 4G-LTE connections would give a significant opportunities for telcos to offer digital services, there is a very good opportunity for
Subex to offer its risk and security portfolio for these services. In addition to that, Subex can also offer its asset assurance solution
helping operators in optimising their costs of networks. Lastly, with its advanced analytics and insights solutions, Subex can help global
telcos in enhacing customer experience for digital services rolled out on 4G-LTE networks.
| 74 |
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
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)
allegations of infringement of third party intellectual property
poses risks; (j) variability of our quarterly operating results
makes comparisons difficult; (k) non-compliance with statutory
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
revenue; (n) SEZ related taxation benefits may be uncertain; (o)
failure to fulfill contractual obligation may lead to claims; and (p)
debt obligations. Below, we will discuss each of these risk factors
in some more detail. There are, of course, additional risks faced
by us.
Reduction in Consumer and Business Purchasing
We depend on our customers - large communication service
providers (“CSPs”). If our primary customers face reduced
revenue, we will also face reduced revenue. CSPs primary
customers are consumers and businesses. Of course, reductions
in spending by consumers or businesses will reduce revenue
of CSPs. And, this will result in decreased spending by the CSPs
which means reduced revenue for us.
Consolidation in our customer base
CSPs have gone through considerable consolidation. The
consolidation, or merger, of one CSP with another can have at
least three impacts on us. Firstly, it will simply reduce the overall
size of the market; each consolidation effectively reducing the
number of potential customers for our products. Secondly, it
can and does happen that one of our existing customers can
undergo a consolidation. In that event, the other party to the
consolidation may have already have competing products and
the combined company may choose to continue with the use of
the competing product rather than use our product/ services. Of
course, it can also happen that the two companies as one choose
to use our products. While the consolidation of two customers
will not necessarily reduce our revenue by half, it certainly has
an adverse effect 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 serves so as to
provide an edge over competitors and be a preferred choice
during such consolidations.
Dependence on the Communications Service Providers as our
sole customers
We mentioned above our customers are CSPs. We are fully
dependent on CSPs as our customer base. As a result, we are
fully susceptible to any downturns or negative changes in the
CSP industry.
Security
You must be well aware that security threats are prevalent
everywhere today. This is, perhaps, especially true in the
technology
industry where we participate. The security
vulnerabilities take many forms. Hackers may attempt to
compromise computer systems and networks. Fraudsters may
attempt to steal the identity of our personnel to gain access to
our computer systems, networks and even banking systems.
Terror activity could have an adverse impact on our business. We
may fail to adequately design our products leaving our customers
exposed to hacking and other network vulnerabilities. Perhaps
this concern – of failure to adequately design our products
leading to exposure of our customer’s information is one of the
largest concerns. If one of our customers faced a security breach
allegedly as a result of use of our products, it would cause
significant reputational risk to us and may lead to 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
laws and regulations in many jurisdictions. This not only leads
to increased administrative costs of compliance and increased
difficulties in doing business but violations of these laws and
regulations involve higher and higher fines and penalties. At
the same time, we are storing and processing increasingly large
amounts of personal data which leads to increased potential
exposure.
| 75 |
SUBEX LIMITED Annual Report 2016-17 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.
It is important to note that our potential liability for customer
financial damages associated with losses of personal data
is generally not limited by limitation of liability provisions in
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.
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.
in place processes and
We make strong efforts to put
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.
Recruiting and Retention of Personnel is challenging
The retention of personnel generally and, in particular, skilled
software personnel is a major risk we face. To assist with our
recruiting and retention efforts, we attempt to put in place an
empowering atmosphere with opportunity for growth, extensive
mentoring and career counseling, and the opportunity to work
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 trademark
protection as we deem appropriate. But, some jurisdictions have
limited laws protecting technologies. Other jurisdictions, even if
they have laws, have limited or difficult 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 that 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
disclosure of our information or effectively assign rights to us.
Further, detection of violation of these agreements may 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
on their intellectual property rights. Whether or not we prevail
in any intellectual property dispute, defending the dispute may
be expensive, it may distract our management and other key
personnel and its outcome is uncertain. Further, if any of our
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.
| 76 |
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 Company or others. This would result in a breach of our
contractual obligations to our customers. Any such breach may
subject us to a significant claim from the customer for damages
and may also significantly damage our reputation.
The Company has a 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
rights, against us or our customers with respect to our products,
or any allegation of breach of our confidentiality obligations
to our customers could have a material adverse effect on our
business, financial condition and results of operations.
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 performance.
Our management is attempting to mitigate this risk through
expansion of our client base geographically and increasing
steady annuity revenue such as through managed services.
Non-compliance with statutory obligations may result in fines
and penalties
We face certain statutory obligations. Some of these obligations
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 and
engages outside counsel/consultants on an as-needed basis in
India and the U.S. An ongoing monitoring mechanism has been
established with respect to applicable laws.
Non-compliance with Environmental Regulations may lead to
fines and Penalties
Software development, being generally a pollution free
industry, means we are not subject to significant environmental
regulations. Nonetheless, non-compliance with applicable
environment regulations may lead to significant fines and
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
We have substantial exposure to foreign exchange related risks
on account of revenue from export of software and outstanding
liabilities. There is a natural hedge to the extent of expense
incurred in same currency. Despite this, particularly given
the volatility in the foreign exchange market, there could be
significant variations.
SEZ related taxation benefits may be uncertain
Indian Government is committed towards the most awaited tax
reform i.e. Goods and Services Tax (‘GST’). GST is proposed to be
rolled out with effect from July 1, 2017. We in India operate out of
Special Economic Zone (“SEZ”). SEZ units currently avail various
tax benefits. While tax protection is expected to continue under
the GST regime, there is a significant amount of uncertainty
around its impact on SEZ units.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.
| 77 |
SUBEX LIMITED Annual Report 2016-17 Debt Obligations
As at March 31, 2017, the Company had the following outstanding FCCB’s
Particulars
Issue of FCCB I on 8th March, 2007
Restructuring of bonds during 2009-10
Discount @ 30%
Balance as on 2nd November, 2009
Conversion to equity in 2009-10 and 2010-11
Balance 31st March, 2011
Restructuring of bonds during 2012-13
Premium
Balance on 6th July, 2012
Mandatory conversion to equity shares during
on July 17, 2012
Balance after mandatory conversion
Conversion to equity upto 31st March, 2016
Balance as on 31st March, 2016
Conversion during 2016-17
Redemption on 6th March, 2017
Balance as on 31st March, 2017
US$ 180,000,000
2.00% coupon
convertible bonds
“FCCB I”
180.00
(141.00)
–
39.00
–
39.00
(38.00)
–
1.00
US$ 98,700,000
5.00% convertible
unsecured bonds
“FCCB II”
–
141.00
(42.30)
98.70
(43.90)
54.80
(53.40)
–
1.40
–
1.00
–
1.00
–
(1.00)
–
–
1.40
–
1.40
–
(1.40)
–
(amount in US$ million)
US$ 127,721,000
5.70% secured
convertible bonds
“FCCB III”
–
–
–
–
–
–
91.40
36.32
127.72
(36.32)
91.40
(86.85)
4.55
(0.95)
–
3.60
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 provisions 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 and are largely operating effectively since
there has not been identification of any material weakness in
the Company. The Directors have in the Directors Responsibility
Statement under paragraph (e) confirmed the same to this effect.
The Company has policies and procedures in place for ensuring
proper and efficient conduct of its business, the safeguarding
of its assets, the prevention and detection of frauds and errors,
the accuracy and completeness of the accounting records and
timely preparations, reliable financial information. The Company
has adopted accounting policies which are in line with Indian
Accounting Standards(“Ind AS”).
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
of department who then along with the Company Secretary
discussed on the compliance status of the department. Any
matter that required attention was immediately dealt with. The
Company Secretary reported to the Audit Committee and the
Board on the overall compliance status of the Company. In effect,
such compliance system was largely found to be adequate
and operating effectively. The Directors have in the Directors
Responsibility Statement under paragraph (f) 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.
| 78 |
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 IT space conducts internal
audits of Information Security, Quality Management System twice
a year covering projects and functional groups. Internal audits
of such nature are conducted across all locations of Bangalore,
UK and the US regions. A consolidated summary is prepared and
strengths and weakness across projects, functional groups is
shared with all auditees. Reports are shared to the auditees to
identify corrective and preventive actions. The corrective and
preventive actions are reviewed by the internal auditors and
closed based on the adequacy of evidences provided by the
auditees.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Key Financials and Ratio Analysis
Financial Highlights / Year ending 31st March
Revenue from operations
Total Income
2017
Amount in H Lakhs
2016
Consolidated
Standalone
Consolidated
Standalone
35,733.15
32,440.62
32,245.77
29,582.30
36,824.18
33,478.86
32,362.23
29,624.14
Earnings before interests, taxes and Exceptional items
9,505.50
5,451.37
6,399.03
4,764.98
Loss before tax & after Exceptional items
(3,362.03)
(429.70)
(6,155.82)
(20,463.31)
Loss after tax & Exceptional items
(4,322.87)
(683.50)
(7,428.89)
(20,997.69)
Equity Dividend %
Share Capital
Reserves & Surplus
Net Worth
NIL
NIL
NIL
NIL
50,690.79
50,690.79
50,281.16
50,281.16
17,717.97
13,035.22
23,101.60
13,436.95
68,408.76
63,726.01
73,382.76
63,718.11
Gross property, plant & equipment and intangible assets
1,832.97
1,015.87
1,154.94
Net property, plant & equipment and intangible assets
922.68
481.74
729.59
663.93
402.57
Total Assets
Key Indicators
Loss per Share (Year end)
Debt (including working capital) / Equity - %
EBIT / Sales - %
Net Profit Margin - %
Return on year end Net Worth %
Return on year end Capital Employed %
95,668.82
92,463.00
1,04,210.86
1,27,566.82
2017
2016
Consolidated
Standalone
Consolidated
Standalone
(0.85)
21.42
26.60
(12.10)
(8.60)
13.84
(0.13)
19.39
16.80
(2.11)
(0.85)
8.52
(2.56)
23.71
19.84
(23.04)
(14.65)
8.17
(7.23)
14.57
16.11
(70.98)
(40.70)
7.07
| 79 |
SUBEX LIMITED Annual Report 2016-17 COMMENTARY ON FINANCIAL STATEMENTS
Share Capital
Of the equity paid-up capital, the Company had issued the
following shares towards consideration other than cash during
the previous two financial year’s being 2015-16 and 2016-17.
The details of the same are as follows:
During 2015-16, the Company issued 319,889,071 equity
shares allotted upon conversion of FCCBs to principal amount
of US$ 76,980,000 out of its US$ 127,721,000 5.70% Secured
Convertible Bonds, in accordance with the terms and conditions
thereof.
During 2016-17, the Company issued 4,096,290 equity shares
allotted upon conversion of FCCBs to principal amount of US$
950,000 out of its US$ 127,721,000 5.70% Secured Convertible
Bonds, in accordance with the terms and conditions thereof.
Subsequent to the balance sheet date, the Company allotted
55,094,999 equity shares on preferential basis at H14 per share
to QVT Singapore Fund Pte. Ltd, Tonbridge (Mauritius) Ltd and
Leeds (Mauritius) Ltd (Non-Promoters). The shares were allotted
on May 15, 2017.
Reserves And Surplus
During the year 2015-16, the balance of Foreign Currency
Translation Reserve of H10,266.73 Lakhs has been included in
the Reserves and Surplus to bring it in line with Schedule III of
the Act.
During the year 2016-17, the balance of Foreign Currency
Translation Reserve of H11,610.12 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:
• 15,987,460 equity shares that were allotted during the year
2015-16 at a Premium of H12.79/- per share on conversion of
6.50 Million FCCB III Bonds.
• 303,901,611 equity shares that were allotted during the year
2015-16 at a Premium of H3/- per share on conversion of
70.48 Million FCCB III Bonds.
• 4,096,290 equity shares that were allotted during the year
2016-17 at a premium of H3/- per share on conversion of 0.95
Million FCCB III Bonds.
Employee Stock Options
In accordance with the Securities and Exchange Board of India
(Share Based Employee Benefits) Regulations, 2014 [previously
known as 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, 2017 amounts to H6.44
Lakhs (Previous Year: H16.30 Lakhs).
Short Term Borrowings
On Consolidated & Standalone basis, Short term borrowings of
H8,589.91 Lakhs (Previous Year: H10,395.74 Lakhs) & H8,589.91
Lakhs (Previous Year: H10,395.74 Lakhs) outstanding in the
books as at March 31, 2017 from banks are secured by:
• Primary charge on customer receivables of the Company and
paripassu first charge on the current assets of the Company,
• 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
apart from the corporate guarantee in which the director is
interested, as well as guarantee of Subex Technologies Ltd.
and Subex (UK) Limited.
• Pledge 100% shares in Subex (UK) Limited.
Long Term Borrowings (including current maturities)
On a consolidated basis and standalone basis:
Current maturities of long term debt as at March 31, 2017
consists of:
a. HNIL (Previous Year: H800.01 Lakhs) relating to Foreign
Currency Convertible Bonds issued in fiscal 2006-07 “FCCB
I”. The bonds carry interest of 2% per annum and were
redeemable on March 9, 2017 (the same was considered as
current portion in previous year). These bonds are listed in
the Professional Securities Market of London Stock Exchange.
The premium payable on these bonds is accrued over the life
of the bonds and is carried under Other Long Term Liabilities.
b. HNIL (Previous Year: H1,270.70 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 bonds carry interest of 5% per annum and were
redeemable by March 9, 2017. These bonds are listed on the
| 80 |
Singapore Exchange Securities Trading Limited. The premium
payable on these bonds is accrued over the life of the bonds
and is carried under Other Long Term Liabilities.
c. H2,277.17 Lakhs (Previous Year: H2,860.16 Lakhs) relating to
Foreign Currency Convertible Bonds issued in fiscal 2012-13
“FCCB III” as a result of restructuring existing bonds mentioned
in (a) and (b) above. The bonds carry interest of 5.70% per
annum and are redeemable by July 7, 2017. These bonds are
listed on the Singapore Exchange Securities Trading Limited.
The premium payable on these bonds is accrued over the life
of the bonds and is carried under Other Long Term Liabilities.
d. On Consolidated basis, loan taken by Subex Americas Inc.
of H7,782.00 Lakhs (Previous Year H7,484.05 Lakhs) and
guaranteed by Subex (UK) Limited was repaid on May 15,
2017 to the respective lenders.
Property, plant & equipment and intangible assets
During the year, the Company added H696.34 Lakhs on
consolidated basis and H353.00 Lakhs on standalone basis,
to its gross block. The Company disposed off certain assets no
longer required. The Company’s net block of property, plant &
equipment and intangible assets was H922.68 Lakhs (Previous
year H729.59 Lakhs) on consolidated basis and H481.74 lakhs
(Previous year H402.57 lakhs) on standalone basis.
Investments
During the year 2015-16, the Company recognized an amount of
H5,490.00 lakhs as diminution in carrying value of investments
in Subex Americas Inc. Consequently, the investment carrying
value as of March 31, 2016 is H7,005.74 Lakhs.
During the year 2016-17, the Company recognized an amount of
H6,070.00 lakhs as diminution in carrying value of investments
in Subex Americas Inc. Consequently, the investment carrying
value as of March 31, 2017 is H935.74 Lakhs.
During the year 2016-17, the Company acquired additional
shares in its wholly-owned subsidiary, Subex Technologies
Limited to the extent of H100.00 Lakhs. The shares were acquired
under a rights issue of 1 equity share for every 4 equity shares
held. Consequently, the investment carrying value as of March
31, 2017 is H500.00 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 trade receivable is normal and is in
tune with business trends requirements.
The management believes that the overall composition and
condition of trade receivables is satisfactory post assessment of
doubtful receivables. The provision for doubtful debts stands at
H2,595.60 Lakhs (Previous Year H2,956.13 Lakhs) on consolidated
basis and H10,407.72 Lakhs (Previous Year H14,216.10 Lakhs) on
standalone basis. The Company has netted off trade receivables
amounting to H28,734.61 Lakhs from certain subsidiaries against
trade payables to the respective subsidiaries after obtaining
necessary approvals. The Company has also written off bad
debts from the earlier provision for doubtful debts against the
aforesaid
inter-company trade receivables after obtaining
necessary approvals.
Cash and Cash Equivalents
The bank balance includes both rupee accounts and foreign
currency accounts. The Margin Money deposit of H126.14 Lakhs
(Previous Year: H59.31 Lakhs) on Standalone basis and H257.73
Lakhs (Previous Year: H237.67 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.
STATEMENT OF PROFIT & LOSS
Income
The catagory wise break up of income on consolidated basis is
given below:
Particulars
Software
Products
Software
Services
Total
Amount in H Lakhs except percentages
2016-17
2015-16
Value
%
Value
%
4770.61
13.35
3,117.51
9.67
30,962.54
86.65 29,128.26
90.33
35,733.15 100.00 32,245.77 100.00
Geographically, the Company earns income from sale of software
products and related services to USA, EMEA & Asia Pacific region.
Other Income
Other income mainly consists of income derived by the Company
by write back of withholding taxes paid on interest on FCCB III.
| 81 |
SUBEX LIMITED Annual Report 2016-17 Expenditure
The employee benefits expenses decreased to H15,871.06 Lakhs
(Previous year: H16,034.15 Lakhs) on consolidated basis and
increased to H8,537.03 Lakhs (Previous year: H7,874.77 Lakhs)
on standalone basis.
Lakhs during previous year. On standalone basis, the loss of
the Company amounted to H683.50 lakhs as against a loss of
H20,997.69 Lakhs during the previous year. Total Comprehensive
Loss for the year was H716.66 Lakhs as compared to loss of
H21,002.73 Lakhs during previous year.
The Company incurred administration and other expenses
including employee benefit expenses (excluding finance cost,
taxes and exceptional items) at 74.19% of its total Income
during the year as compared to 80.23% during the previous
year on consolidated basis and 83.72% of its total income during
the year as compared to 83.92% during the previous year on a
standalone basis.
Operating Profits
During the year, on consolidated basis, the Company earned
an operating profit before interest, tax and exceptional items
of H9,505.50 Lakhs being 26.60% of total revenue (Excluding
other income) as against H6,399.03 Lakhs at 19.84% during
the previous year. On a standalone basis, the Company earned
operating profit before Interest, tax and exceptional items
of H5,451.37 Lakhs being 16.80% of total income as against
H4,764.98 Lakhs at 16.11% during the previous year.
Interest & Bank Charges
The Company incurred an expenditure of H2,040.08 Lakhs
(Previous year: H6,151.60 Lakhs) on consolidated basis and
H1,505.47 Lakhs (Previous year: H5,101.63 Lakhs) on standalone
basis. The interest paid/accrued primarily consists of interest on
working capital loan, FCCBs and term loan.
Depreciation and amortisation
Depreciation and amortisation expense for the year amounted to
H494.52 Lakhs (Previous year: H427.49 Lakhs) on consolidated
basis and H272.95 Lakhs (Previous year: H263.46 Lakhs) on
standalone basis.
Provision for Tax
The Company has provided for its tax liability in India and
overseas after considering the exemptions for income from
software services and products under the various applicable tax
enactments.
Net loss
On consolidated basis, the net loss of the Company amounted
to loss of H4,322.87 Lakhs, as against a Loss of H7,428.89 Lakhs
during the previous year. Total Comprehensive Loss for the
year was H5,698.56 Lakhs as compared to loss of H9,262.16
Exceptional Item
The Company at a consolidated basis, has shown an expenditure
of H10,890.00 Lakhs as against H6,469.44 Lakhs during the
previous year towards impairment of goodwill on evaluation of
the future cashflows of the respective cash generating units.
At a standalone basis, Company has incurred an expenditure of
H4,591.06 Lakhs towards investment impairment in subsidiary
for an amount of H6,170 Lakhs (previous year H5,490.00 Lakhs).
This expense has been offset by reversal of provision of inter-
company receivables amounting to H1,578.94 Lakhs.
Loss per Share
Loss per share calculated by dividing the loss for the year by the
weighted average number of equity shares outstanding during
the year is of H0.85 per share (Previous year: H2.56 per share)
on consolidated basis and loss of H0.13 per share (Previous year:
H7.23 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 differentiators and how we define our capability
requirements, training needs and retention strategies therefore
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 our teams realize their full potential, we can
achieve our broader business goals. Our employees are spread
across the globe and the larger centers are our offices located in
Bengaluru, London, Denver, Dubai and Singapore. As of March
31, 2017, we had 836 full time Subexians on our rolls globally.
Our total headcount (global) including contractual staff and
trainees was 967.
Human Resources at Subex is centralized at our corporate
headquarters in Bengaluru, with regional HR teams providing
local support aligned to the global HR strategy. The HR team
provides a competitive edge to the business by enabling and
| 82 |
supporting a very unique business model of value based delivery,
processes and programs on global product development and
delivery capabilities on one hand and complex distributed
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
recruitment, total rewards management, talent management,
organizational development, performance management,
change management, learning and development, etc.
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 amended our maternity policy in line with the resolution
passed by Parliament that provides for an increased maternity
leave for our lady employees. In addition to this we have also
introduced Happy Feet-a day care facility within the premises
for employees to bring their young ones to work and have them
being taken care by a professional team of child care experts.
We have introduced various other initiatives like quizzes, fun at
work, employee-management connect sessions to engage with
the workforce and align the employee goals with goals of the
organization. Attrition for the year stands at 21%.
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 fulfill 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
focus this year was on optimizing the overall recruitment cost by
adopting innovative recruitment approaches.
The main sources for hires were referrals from Subexians (the
best bring the best!), direct search, campus recruitments,
website postings and walk-ins. We explored
innovative
processes on the campus recruitment side, where we introduced
a process of “hiring for learnability”. This process, we believe,
will add scalability to our model while continuing to give us great
technical talent like we have had before.
One of the key focus areas that your company has set, in the
previous year, of adding the capability of doing “just-in-time”
recruitment for the managed services part of the business, has
yielded results and this helped a lot on mobilizing Managed
Services projects within the permissible time, without having to
carry a large bench strength.
Keeping the dynamism in the market and the business needs, we
have also started a program of proactively hiring fresh graduates
and junior resources who will go through our 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.
On the learning and development side, the focus this year was to
customize the training programs to the individual business need.
A Training Need Analysis was done for each 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, on the job learning, as well as e-learning)
that enable a role based curriculum led approach to learning,
while streamlining the training process as well as ensuring
global reach and appropriateness of content. This automated
platform added significant value to training identification,
design, delivery and evaluation. 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 expected to improve the retention of talent as well as
overall skill and knowledge level of Subexians.
Performance Management System
Foundation Competencies are
the basic Values based
| 83 |
SUBEX LIMITED Annual Report 2016-17 competencies required by all in Subex. Excel competencies
are those that are required to do your current job really well.
Lead Competencies focus on the future needs and are the skills
required to succeed in leadership roles. Technical Competencies
take care of the core areas of the role - knowledge about 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
need. We believe constant coaching and feedback would help in
maximizing the potentials of the individuals and prepare them
for the future. Keeping this in mind, we have also tuned our
Performance Management system to factor a quarterly review of
goals and performance.
Compensation
Compensation at Subex is multi-dimensional and consists of fixed
salary, variable salary, benefits, health and disability insurance,
etc.
The Company benchmarks its compensation package against
industry data and strives to achieve a balanced position. The
Company provides robust and comprehensive cash compensation
and benefits as per industry trends. We also arrive at the salary
bands of Subexians by conducting comprehensive job matching,
data validation and quality audits.
Your company focuses a lot on Employee reward and recognition
programme, as this is another important motivational aspect.
We have consistently recognized 48% Subexians globally for
their contributions and deliverables through our Rewards and
Recognition Programme “STAR”. This translates to a significant
number of Subexians receiving awards which are monetary.
| 84 |
Financial section
| 85 |
SUBEX LIMITED Annual Report 2016-17 INDEPENDENT AUDITOR’S REPORT
To the Members of
Subex Limited
Report on the Standalone Ind AS Financial Statements
Ind AS
We have audited the accompanying standalone
financial statements of Subex Limited (“the Company”), which
comprise the standalone Balance Sheet as at March 31, 2017,
the standalone Statement of Profit and Loss, including Other
Comprehensive Income, the standalone Statement of Cash Flows
and the standalone Statement of Changes in Equity 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 Ind
AS financial statements that give a true and fair view of the
standalone financial position, standalone financial performance
including other comprehensive income, standalone cash flows
and standalone changes in equity of the Company in accordance
with accounting principles generally accepted in India, including
the Indian Accounting Standards (Ind AS) specified under section
133 of the Act, read with Rule 7 of the Companies (Accounts)
Rules, 2014 and the Companies (Indian Accounting Standards)
Rules, 2015, as amended. 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 control that were operating
effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation
of the standalone Ind AS 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
Ind AS 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
| 86 |
of the Act and the Rules made thereunder. We conducted our
audit of the standalone Ind AS financial statements 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 standalone Ind AS
financial statements are free from material misstatement.
An audit
involves performing procedures to obtain audit
evidence about the amounts and disclosures in the standalone
Ind AS financial statements. The procedures selected depend
on the auditor’s judgment, including the assessment of the
risks of material misstatement of the standalone Ind AS financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control
relevant to the Company’s preparation of the standalone Ind
AS 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 standalone Ind AS
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 Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the standalone Ind AS 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
standalone state of affairs of the Company as at March 31, 2017,
its standalone loss including other comprehensive income, its
standalone cash flows and the standalone changes in equity for
the year then ended.
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 Act, we give
in the Annexure 1, a statement on the matters specified in
paragraphs 3 and 4 of the Order
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;
the standalone
(c) The standalone Balance Sheet,
Statement of Profit and Loss,
including Other
Comprehensive Income, the standalone Statement of
Cash Flows and the standalone Statement of Changes
in Equity dealt with by this Report are in agreement
with the books of account;
(d) In our opinion, the aforesaid standalone Ind AS
financial statements comply with the Accounting
Standards specified under section 133 of the Act, read
with Rule 7 of the Companies (Accounts) Rules, 2014
Companies (Indian Accounting Standards) Rules, 2015,
as amended;
(e) On the basis of written representations received from
the directors as on March 31, 2017, and taken on
record by the Board of Directors, none of the directors
is disqualified as on March 31, 2017, from being
appointed as a director in terms of section 164 (2) of
the Act;
(f) With respect to the adequacy of the internal financial
controls over financial reporting of the Company and
the operating effectiveness of such controls, refer to
our separate Report in “Annexure 2” 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 Company has disclosed the impact of pending
litigations on its standalone financial position in
its standalone Ind AS financial statements – refer
note 35(b) to the standalone Ind AS financial
statements;
ii.
The Company did not have any long-term contracts
including derivative contracts for which there
were any material foreseeable losses;
iii. There were no amounts which were required
to be transferred to the Investor Education and
Protection Fund by the Company; and
iv. The Company has provided requisite disclosures
in note 43 to these standalone Ind AS financial
statements as to the holding of Specified Bank
Notes on November 8, 2016 and December
30, 2016 as well as dealings in Specified Bank
Notes during the period from November 8,
2016 to December 30, 2016. Based on our audit
procedures and relying on the management
representation regarding the holding and nature
of cash transactions, including Specified Bank
Notes, we report that these disclosures are in
accordance with the books of accounts maintained
by the Company and as produced to us by the
Management.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru
Date: May 25, 2017
| 87 |
SUBEX LIMITED Annual Report 2016-17
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 property, plant and equipment and intangible assets.
(b) Property, plant and equipment 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 property, plant and equipment 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
(“the Act”). 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 35(b)(iii) to the
standalone Ind AS 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) The Company is generally regular in depositing with
appropriate authorities 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 applicable
to it. With regard to withholding tax dues, we also refer to
note 47 to the standalone Ind AS financial statements.
(b) According to the information and explanations given
by the management, no undisputed amounts payable in
respect of 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 were outstanding, at the year end, for a period of more
than six months from the date they became payable.
| 88 |
Forum where dispute is pending
Income Tax Appellate Tribunal,
Bangalore
Income Tax Appellate Tribunal,
Bangalore
Hon’ble High Court of Karnataka
The Company is in the process of
filing an appeal with Commissioner of
Income Tax (Appeals)
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
(c) According to the records of the Company, there are no dues of income-tax, sales-tax, service tax, duty of customs, duty of excise,
value added tax and cess, which have not been deposited on account of any dispute, except the following:
Nature of the dues
Name
of the
Statute
Disputed
amount
( C in
Lakhs)
Amount
paid under
protest
( C in
Lakhs)
Period to
which the
amount
relates
(Financial
Year)
Income
Tax Act,
1961
Adjustment for transfer pricing,
disallowances under section 10A
and other disallowances
1780.76
- 2011-12
379.01
30.00 2010-11
1,254.56
10.03
200.00 2009-10
- 2009-10
504.90
346.47
162.88
79.73
211.28
0.04
1,003.66
3,607.60
Finance
Act, 1994
Finance
Act, 1994
Service tax
Service tax
- 2008-09
- 2006-07
- 2005-06
60.24* 2004-05
211.65** 2003-04
- 2001-02
924.12 April 2006 to
October 2007
- April 2006 to
July 2009
Central Excise and Service Tax
Appellate Tribunal, Bangalore
Commissioner of Service Tax,
Bangalore
* Represents adjustment of C60.24 Lakhs by the Asst. Commissioner of Income Tax, Bangalore against the refund relating to Financial
Year 2007-08.
** includes C55.95 Lakhs adjusted by the Asst. Commissioner of Income Tax, Bangalore against the refund relating to Financial Year
2007-08.
(viii) In our opinion and according to the information and
explanations given by the management, the Company
has not defaulted in repayment of loans or borrowing
to a financial institution, bank or government or dues to
debenture holders.
(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 standalone Ind AS
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 its
officers or 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 35(b)(iii) to the standalone Ind AS 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
| 89 |
SUBEX LIMITED Annual Report 2016-17 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 the Act, where
applicable and the details have been disclosed in the notes
to the standalone Ind AS 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 Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru
Date: May 25, 2017
Annexure 2 to the Independent Auditor’s Report of even date on the Standalone Ind AS 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 and for the
year ended March 31, 2017 in conjunction with our audit of the
standalone Ind AS 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 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 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.
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
internal financial
included obtaining an understanding of
| 90 |
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 standalone Ind AS 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 disposition 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.
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 Company has, 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, 2017,
based on the internal control over financial reporting criteria
established by
the essential
the Company considering
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.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru
Date: May 25, 2017
| 91 |
SUBEX LIMITED Annual Report 2016-17 Standalone balance sheet as at March 31, 2017
(C in Lakhs)
Notes
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Financial assets
Investments
Loans
Other balances with banks
Trade receivables
Other financial assets
Income tax assets (net)
Deferred tax asset
Other non-current assets
Current assets
Financial assets
Loans
Trade receivables
Cash and cash equivalents
Other financial assets
Other current assets
Total assets
EQUITY AND LIABILITIES
Equity
Equity share capital
Other equity
Total equity
Liabilities
Non-current liabilities
Financial liabilities
Borrowings
Other financial liabilities
Provisions
Current liabilities
Financial liabilities
Borrowings
Trade payable
Other financial liabilities
Other current liabilities
Provisions
Income tax liabilities (net)
3
4
5
6
7
8
10
11
12
13
6
8
9
10
13
14
15
16
18
20
16
17
18
19
20
21
Total liabilities
Total equity and liabilities
Corporate information and significant accounting policies
The accompanying notes are an integral part of the standalone financial statements
refer 1 & 2
362.07
119.67
65,701.48
348.98
126.14
-
233.80
1,872.78
478.13
564.33
69,807.38
179.69
18,966.08
151.27
2,536.11
822.47
22,655.62
92,463.00
50,690.79
13,035.22
63,726.01
-
-
249.96
249.96
8,589.91
14,382.81
3,472.44
1,215.89
266.05
559.93
28,487.03
28,736.99
92,463.00
329.38
73.19
71,771.48
313.17
59.31
-
233.80
1,661.22
383.93
616.88
75,442.36
164.81
49,688.01
195.53
1,554.99
521.12
52,124.46
1,27,566.82
50,281.16
13,436.95
63,718.11
2,860.16
571.08
258.36
3,689.60
10,395.74
45,171.45
2,726.42
1,108.99
260.65
495.86
60,159.11
63,848.71
1,27,566.82
447.00
103.18
77,234.42
2,535.07
15.65
7,127.07
233.80
1,660.66
-
266.90
89,623.75
202.68
52,225.19
130.72
1,953.01
532.42
55,044.02
1,44,667.77
18,292.26
8,970.82
27,263.08
49,963.15
6,323.97
320.15
56,607.27
12,506.54
45,696.09
1,531.05
739.05
222.17
102.52
60,797.42
1,17,404.69
1,44,667.77
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 92 |
Standalone statement of profit and loss for the year ended March 31, 2017
(C in Lakhs)
Notes
Year ended
March 31, 2017
Year ended
March 31, 2016
1
2
3
4
5
6
7
8
9
INCOME
Revenue from operations
Other income
Total income
EXPENSES
Cost of hardware, software and support charges
Employee benefits expense
Other expenses
Depreciation and amortization
Total expenses
Earnings before interest, exceptional items and tax (EBIT) (1-2)
Finance Income
Finance costs
Profit/(loss) before exceptional items and tax (3+4-5)
Exceptional items (net)
Loss before tax (6+7)
Tax expense: (note 21)
Current tax
Deferred tax (MAT credit entitlement)
10
LOSS FOR THE YEAR (8-9)
11 Other comprehensive income ('OCI'), net of tax
OCI not to be reclassified to profit or loss in subsequent periods:
Re-measurement loss on defined benefit plans
12
Total comprehensive income for the year attributable to equity holders of
the Company (10+11)
13 Basic and diluted loss per equity share (nominal value of share C10
(March 31, 2016 : C10)
22
23
24
25
26
27
28
29
32,440.62
1,038.24
33,478.86
343.47
8,537.03
18,874.04
272.95
28,027.49
29,582.30
41.84
29,624.14
131.38
7,874.77
16,589.55
263.46
24,859.16
5,451.37
4,764.98
215.46
1,505.47
4,161.36
(4,591.06)
(429.70)
348.00
(94.20)
253.80
(683.50)
254.38
5,101.63
(82.27)
(20,381.04)
(20,463.31)
918.31
(383.93)
534.38
(20,997.69)
(33.16)
(33.16)
(5.04)
(5.04)
(716.66)
(21,002.73)
30
(0.13)
(7.23)
Corporate information and significant accounting policies
The accompanying notes are an integral part of the standalone financial statements
refer 1 & 2
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 93 |
SUBEX LIMITED Annual Report 2016-17
Standalone statement of changes in equity for the year ended March 31, 2017
A. Equity share capital (refer note 14):
Particulars
Equity shares of C10 each issued, subscribed and fully paid
As at April 1, 2015
Issued during the year - Conversion of FCCBs*
As at March 31, 2016
Issued during the year - Conversion of FCCBs*
As at March 31, 2017
No.
C in Lakhs
182,922,575
319,889,071
502,811,646
4,096,290
506,907,936
18,292.26
31,988.90
50,281.16
409.63
50,690.79
(C in Lakhs)
B. Other equity ( refer note 15):
Particulars
As at April 1, 2015
Loss for the year
Less: Other comprehensive income
Less : Compensation on ESOP cancelled/lapsed during the
year
Deferred stock compensation expenses
As at March 31, 2016
Loss for the year
Other comprehensive income
Less : Compensation on ESOP cancelled/lapsed during the
year
Deferred stock compensation expenses
As at March 31, 2017
Attributable to equity holders of the Company
Reserves and surplus
Total
Equity
component
of compound
financial
instruments
Securities
premium
General
reserve
Employee
stock options
reserve
Surplus /
(deficit) in the
statement of
profit and loss
4,648.16
13,215.75
1,779.76
78.10
(10,750.95)
8,970.82
259.40
24,377.59
1,779.76
16.30
(12,996.10)
13,436.95
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(20,997.69)
(20,997.69)
(5.04)
(5.04)
18,757.58
25,530.66
(62.15)
0.35
-
-
(62.15)
0.35
-
-
-
-
-
-
-
-
(10.11)
0.25
6.44
(683.50)
(683.50)
(33.16)
256.06
-
-
(33.16)
324.79
(10.11)
0.25
(13,456.70)
13,035.22
Add/ (less): on account of conversion of FCCBs*
(54.16)
122.89
Add/ (less): On accounts of conversion of FCCBs*
(4,388.76)
11,161.84
205.24
24,500.48
1,779.76
* Refer note 31 regarding conversion of FCCBs into equity shares of the Company.
Corporate information and significant accounting policies (Refer note 1 & 2)
The accompanying notes are an integral part of the standalone financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 94 |
Standalone statement of cash flows for the year ended March 31, 2017
(C in Lakhs)
(A) Operating activities
Loss before tax
Adjustments to reconcile loss before tax to net cash flows:
Depreciation of property, plant and equipment
Amortisation of intangible assets
(Gain)/loss on disposal of property, plant and equipment (net)
Finance income (including fair value changes)
Finance costs (including fair value changes)
Provision for doubtful debts and advances (including exceptional items)
Provisions for doubtful advances no longer required written back (exceptional item)
Bad debts written off (exceptional item)
Impairment of investment in subsidiaries (exceptional item)
Write back of withholding taxes paid earlier
Amortised cost of deposits
Fair value change in financial instruments
Net foreign exchange differences
Operating profit before working capital changes
Working capital adjustments:
(Increase)/decrease in loans
(Increase)/decrease in trade receivables
(Increase)/decrease in other financial assets
(Increase)/decrease in other assets
Increase/(decrease) in trade payables
Increase/(decrease) in other financial liabilities
Increase/(decrease) in other current liabilities
Increase/(decrease) in provisions
Income tax paid (including TDS) (net)
Net cash flows from operating activities
(B) Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Additional investment / investment in subsidiaries
Movement in deposits (net)
Interest received
Net cash flows (used in)/from investing activities
Year ended
March 31, 2017
Year ended
March 31, 2016
(429.70)
(20,463.31)
241.05
31.90
(0.75)
(215.46)
1,505.47
1,094.20
(1,578.94)
-
6,170.00
(1,036.59)
52.95
20.54
576.66
6,431.33
1,551.03
187.16
(1,004.39)
(301.55)
(1,609.69)
42.30
1,143.49
(56.97)
6,382.71
(495.49)
5,887.22
(274.62)
(78.38)
1.63
(100.00)
(66.83)
4.78
(513.42)
220.13
43.33
1.05
(254.38)
5,101.63
4,008.15
-
10,475.97
5,490.00
-
62.63
1,846.23
43.69
6,575.12
(23.89)
(2,611.75)
446.83
20.99
(593.05)
(62.97)
369.94
(53.55)
4,067.67
(525.54)
3,542.13
(104.53)
(13.34)
0.97
(27.06)
(43.66)
0.90
(186.72)
| 95 |
SUBEX LIMITED Annual Report 2016-17 Standalone statement of cash flows (Contd.) for the year ended March 31, 2017
(C in Lakhs)
(C) Financing activities
Movement in working capital loans (net)
Interest paid
Repayment of borrowings (FCCBs I and II)
Net cash flows used in financing activities
(D) Net (decrease)/ increase in cash and cash equivalents (A+B+C)
Net foreign exchange difference
Cash and cash equivalents at the beginning of the year
(E) Cash and cash equivalents at year end
Corporate information and significant accounting policies (Refer notes 1 & 2)
The accompanying notes are an integral part of the standalone financial statements
Year ended
March 31, 2017
Year ended
March 31, 2016
(1,980.52)
(1,189.43)
(2,248.68)
(5,418.63)
(44.83)
0.57
195.53
151.27
(2,263.50)
(1,030.48)
-
(3,293.98)
61.43
3.38
130.72
195.53
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 96 |
Notes to the standalone financial statements for the year ended March 31, 2017
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.
These standalone financial statements for the year ended March 31, 2017 are approved by the Board of Directors on May 25,
2017.
2. Significant accounting policies
a. Basis of preparation
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting
Standards (“Ind AS”) notified under The Companies (Indian Accounting Standards) Rules, 2015 and The Companies (Indian
Accounting Standards) amendment Rules 2016, as amended with effect from April 1, 2016. The standalone financial
statements of the Company have been prepared and presented in accordance with Ind AS. Previous year numbers in the
standalone financial statements have been restated to Ind AS. In accordance with Ind AS 101 First-time Adoption of Indian
Accounting Standards, the Company has presented a reconciliation from the presentation of standalone financial statements
under Accounting Standards notified under The Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”) to Ind
AS of Shareholders’ equity as at March 31, 2016 and April 1, 2015 and of the comprehensive net income for the year ended
March 31, 2016. (refer note 41 for reconciliations and effects of transition).
The standalone financial statements have been prepared on a historical cost basis, except for certain financial instruments
which are measured at fair value at the end of each reporting period, as explained further in the accounting policies below.
The standalone financial statements are presented in INR (‘C’) and all the values are rounded off to the nearest lakhs (INR
00,000) except when otherwise indicated.
b. Use of estimates, assumptions and judgements
The preparation of the standalone financial statements in conformity with Ind AS requires the management to make estimates,
judgements and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities on the date of the standalone financial statements and the reported amounts of revenues and expenses for
the year reported. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and future
periods are affected.
Key source of estimation of uncertainty as at the date of standalone financial statements, which may cause a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of the following:
Revenue recognition
The Company uses the percentage of completion method in accounting for revenue from implementation and customisation
projects. Use of the percentage of completion method requires the Company to estimate the efforts to date as a proportion
of the total efforts. Efforts have been used to measure progress towards completion as there is a direct relationship between
| 97 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the year in which
such losses become probable based on the expected contract estimates at the reporting date.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation
is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market
prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow
(“DCF”) model. The cash flows are derived from the budget for future years and do not include restructuring activities that
the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU
being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future
cash-inflows and the growth rate used for extrapolation purposes.
Impairment of financial assets
The Company assesses impairment of financial assets (‘Financial instruments’) and recognises expected credit losses in
accordance with Ind AS 109. The Company provides for impairment of trade receivables and unbilled revenue outstanding for
more than 1 year from the date they are due for payment and billing respectively. The Company also assesses for impairment
of financial assets on specific identification basis at each period end. Also, refer note 2(h).
The Company provides for impairment of investment in subsidiaries. Impairment exists when there is a diminution in value of
the investment and the recoverable value of such investment is lower than the carrying value of such investment.
Defined benefit plans
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity
obligation is determined using actuarial valuation. An actuarial valuation involves making various assumptions that may
differ from actual developments in the future. These include the determination of the discount rate, future salary increases
and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is
highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date (refer note 37).
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in
India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the
post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables. These mortality tables tend to change only at interval in
response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation
rates.
Fair Value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on
quoted prices in active markets, their fair value is measured using internal valuation techniques. The inputs to these models
are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in
establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes
in assumptions about these factors could affect the reported fair value of financial instruments. Also, refer note 2(k).
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation
model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most
appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and
| 98 |
Notes to the standalone financial statements for the year ended March 31, 2017
making assumptions about them. The assumptions and models used for estimating fair value for share-based payment
transactions are disclosed in note 36.
Taxes
The Company’s tax jurisdiction is India. Significant judgments are involved in determining the provision for income taxes and
tax credits including the amount expected to be paid or refunded. Also refer note 2(q) and note 21.
c. Current/ non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is treated as current when it is:
•
•
•
•
Expected to be realised or intended to be sold or consumed in normal operating cycle
Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period
All other assets are classified as non-current.
A liability is current when:
•
•
•
It is expected to be settled in normal operating cycle
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash
equivalents. The Company has identified twelve months as its operating cycle.
d. Revenue recognition
The Company derives its revenues primarily from sale and implementation of its 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, regardless of when the payment is made. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms of payment. 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 case
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 efforts against the total estimated efforts, which represent
the fair value of services rendered.
| 99 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
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.
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.
In case of multiple element arrangements for sale of software license, related implementation and maintenance services the
Company has applied the guidance in Ind AS18, by applying the revenue recognition criteria for each separately identifiable
component of a single transaction. The arrangements generally meet the criteria for considering the sale of software license,
related implementation and maintain services as separately identifiable components. For allocating the consideration, the
Company has measured the revenue in respect of each separable component of a transaction at its fair value, in accordance
with principles given in Ind AS 18. The price that is regularly charged for an item when sold separately is the best evidence of
its fair value. In cases where the company is unable to establish objective and reliable evidence of fair value for the aforesaid
services, the Company has used a residual method to allocate the arrangement consideration. In these cases the balance
of the consideration, after allocating the fair values of undelivered components of a transaction has been allocated to the
delivered components for which specific fair values do not exist.
The Company collects service tax, sales tax and other taxes as applicable in the respective tax jurisdictions where the
Company operates, on behalf of the government and therefore it is not an economic benefit flowing to the Company. Hence
it is excluded from revenue.
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 other financial 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 recognized as it accrues in the standalone statement of profit and loss using effective interest rate method.
e. Property, plant and equipment
At the date of transition to Ind AS the Company has evaluated the cost of its plant and equipment and has regarded the
carrying value under previous GAAP (‘Indian GAAP’) as at such date as the deemed cost.
Plant and equipment is 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 plant
and equipment to its working condition for the intended use and cost of replacing part of the plant and equipment. When
significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately
based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance
costs are recognised in standalone statement of profit or loss as incurred. The present value of the expected cost for the
decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision
are met.
| 100 |
Notes to the standalone financial statements for the year ended March 31, 2017
Gains or losses arising from derecognition of the assets are measured as the difference between the net disposal proceeds
and the carrying amounts of the assets and are recognized in the standalone statement of profit and loss when the assets are
derecognized.
f.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated
intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in
standalone statement of profit and loss in the period in which the expenditure is incurred.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
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 asset and are recognised in the standalone statement of profit and loss when the
asset is derecognised.
g. Depreciation and amortisation
Depreciation on property, plant and equipment and amortisation on intangible assets with finite useful lives is calculated on
a straight-line basis over the useful lives of the assets estimated by the management.
The Company has used the following useful lives to provide depreciation on plant and equipment and amortisation of
intangible assets:
Asset
Useful lives estimated by the management
Useful lives as per The Companies Act.
2013
Computer hardware
Furniture and fixtures *
Vehicles *
Office equipments *
Computer software
3 years
5 years
5 years
5 years
4 years
3 years
10 years
8 years
3 years
As per Ind AS 38
* Based on an internal evaluation, management believes that the useful lives as given above are realistic and reflect fair
approximation of the period over which the assets are likely to be used. 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.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.
| 101 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
h.
Impairment
Financial Assets:
The Company assesses at each date of balance sheet whether a financial asset or a Group of financial assets is impaired.
Ind AS 109 (‘Financial instruments’) requires expected credit losses to be measured through a loss allowance. The Company
recognises lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a financing
transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected
credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased
significantly since initial recognition.
Impairment of non-financial assets:
Non-financial assets including Property, plant and equipment and intangible assets with finite life are evaluated for
recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication
exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an
individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets.
In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the
asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the standalone statement of profit
and loss.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or 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 standalone 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.
i.
Equity investments in subsidiaries
Investments in subsidiaries are classified as non-current investments. The Company has availed the option available in Ind AS
27 to carry its investment in subsidiaries at cost. Impairment recognized, if any, is reduced from the carrying value.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited
to the standalone statement of profit and loss.
j.
Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the
inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of
a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly
specified in an arrangement.
For arrangements entered into prior to April 1, 2015, the Company has determined whether the arrangement contain lease
on the basis of facts and circumstances existing on the date of transition.
Company as a lessee:
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the
risks and rewards incidental to ownership to the Company is classified as a finance lease.
| 102 |
Notes to the standalone financial statements for the year ended March 31, 2017
Finance leases are capitalised at the commencement of the lease at the inception date at fair value of the leased property or,
if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are recognised in finance costs in the standalone statement of profit and loss, unless they are directly attributable to
qualifying assets, in which case they are capitalized in accordance with the Company’s general policy on the borrowing costs.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company
will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of
the asset and the lease term.
Operating lease payments are recognised as an expense in the standalone statement of profit and loss on a straight-line basis
over the lease term unless the lease escalations are linked to inflation, in such a case the lease expense is recognised as per
the terms of the lease arrangement.
k. Financial instruments
Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
Financial assets and liabilities are recognised when the Company becomes a party to the contract that gives rise to financial
assets and liabilities. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of
financial asset or financial liability.
Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that
are subject to an insignificant risk of change in value and having original maturities of three months or less from the date
of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for
withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose
objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a
business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value
through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of
financial assets at fair value through profit or loss are immediately recognised in standalone statement of profit and loss.
| 103 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent
consideration recognized in a business combination which is subsequently measured at fair value through profit or loss. For
trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value
due to the short maturity of these instruments.
Derecognition of financial assets and liabilities
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or
it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a
financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires. When
an existing financial asset/ liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the
standalone statement of profit and loss.
Embedded derivatives
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the Company does not separate
embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract.
Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their
economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for
trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes
in fair value recognised in profit or loss, unless designated as effective hedging instruments.
Compound financial instruments
Compound financial instruments in the form of Foreign Currency Convertible Bonds (“FCCBs”) are separated into liability and
equity components based on the terms of the contract. On issuance of the Foreign Currency Convertible Bonds, the fair value
of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is
classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or
redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in other equity since
conversion option meets Ind AS 32 criteria for fixed to fixed classification. Transaction costs are deducted from other equity,
net of associated income tax. The carrying amount of the conversion option is not remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the Foreign Currency Convertible Bonds
based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no
reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which
are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets.
Changes to the business model are expected to be infrequent. The Company’s senior management determines change in the
business model as a result of external or internal changes which are significant to the Company’s operations. Such changes
are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform
an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification
prospectively from the reclassification date which is the first day of the immediately next reporting period following the
change in business model. The Company does not restate any previously recognised gains, losses (including impairment
gains or losses) or interest.
| 104 |
Notes to the standalone financial statements for the year ended March 31, 2017
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise
the assets and settle the liabilities simultaneously.
Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are
based on market conditions and risks existing at each reporting date.
Fair value hierarchy:
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the standalone financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
l.
Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing costs.
m. Standalone statement of cash flow
Cash flows are reported using the indirect method, whereby profit/(loss) for the period is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of
income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing
activities of the Company are segregated.
n. Employee share based payments
The Company measures compensation cost relating to employee stock options plans using the fair valuation method in
accordance with Ind AS 102, Share-Based Payment. Compensation expense is amortized over the vesting period of the
option on a straight line basis. The cost of equity-settled transactions is determined by the fair value at the date when the
grant is made using an appropriate valuation model (Black-Scholes valuation model). That cost is recognised, together with
a corresponding increase in employee stock options reserves in other equity, over the period in which the performance
and/or service conditions are fulfilled in employee benefits expense. 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.
| 105 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per
share.
o. Employee benefits
Employee benefits include provident fund, gratuity and compensated absences.
Defined contribution plans
Contributions payable to recognized provident funds, which are defined contribution schemes, are charged to the standalone
statement of profit and loss.
Defined benefit plans
Gratuity, which is a defined benefit plan, is accrued based on an independent actuarial valuation, which is done based on
project unit credit method as at the balance sheet date. The Company recognizes the net obligation of a defined benefit plan
in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/
(asset) are recognized in other comprehensive income. In accordance with Ind AS, re-measurement gains and losses on
defined benefit plans recognised in OCI are not to be subsequently reclassified to the standalone statement of profit and loss.
As required under Ind AS compliant Schedule III, the Company transfers it immediately to “surplus/(deficit) in the statement
of profit and loss”.
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.
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 standalone 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.
p.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency of the Company by applying exchange rates
prevailing on the date of the transaction. For practical reasons, the Company uses an average rate if the average approximates
the actual rate at the date of the transaction. Foreign currency denominated monetary assets and liabilities are restated into
the functional currency using exchange rates prevailing on the balance sheet date.
Gains and losses arising on settlement and restatement of foreign currency denominated monetary assets and liabilities are
included in the standalone statement of profit and loss.
The Company’s standalone financial statements are presented in INR. The Company determines the functional currency as
INR on the basis of primary economic environment in which the entity operates.
| 106 |
Notes to the standalone financial statements for the year ended March 31, 2017
q.
Taxes on income
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year.
Current and deferred tax are recognised in the standalone statement of profit and loss, except when they relate to items that
are recognised in other comprehensive income or directly in other equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in equity, respectively.
Current income tax
Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the
taxation authorities based on the taxable income for that period. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax
Deferred income tax is recognised using the balance sheet approach, deferred tax is recognized on temporary differences
at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the
transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilized.
Deferred income taxes are not provided on the undistributed earnings of branches where it is expected that the earnings of
the branch will not be distributed in the foreseeable future.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset
is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
balance sheet date.
Deferred tax assets include Minimum Alternative Tax (‘MAT’) paid in accordance with the tax laws in India, which is likely
to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is
recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the
future economic benefit associated with the asset will be realized.
r.
Provision and contingencies
A provision is recognized when an enterprise has a present obligation (legal or constructive) 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. If the effect of time value of money is material, provision is discounted using a current
pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting obligations under a contract
exceed the economic benefits expected to be received, are recognized when it is probable that an outflow of resources
embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a
reliable estimate of such obligation.
| 107 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
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 standalone financial
statements.
s.
Earnings/(loss) per share
Basic earnings/(loss) per share is computed by dividing the profit/(loss) after tax attributable to the equity holders of
the Company 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 adjusted for dividend, interest (net of any attributable taxes) 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 or increase the net loss per share. 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.
t.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker.
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 Company 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 the 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’.
u. Measurement of EBIT
As permitted by the Guidance Note on the Schedule III to the Companies Act, 2013, the Company has elected to present
earnings before interest and tax (EBIT) as a separate line item on the face of the standalone statement of profit and loss. The
Company measures EBIT on the basis of profit/(loss) from its operations. In its measurement, the Company does not include,
interest income, finance costs and tax expense.
| 108 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 3. PROPERTY, PLANT AND EQUIPMENT (
Cost
As at April 01, 2015
Additions
Disposals
As at March 31, 2016
Additions
Disposals
As at March 31, 2017
Depreciation
As at April 01, 2015
Charge for the year
Disposals
As at March 31, 2016
Charge for the year
Disposals
As at March 31, 2017
Net block
As at April 01, 2015
As at March 31, 2016
As at March 31, 2017
Note 4. INTANGIBLE ASSETS (
Gross Block
As at April 01, 2015
Additions
Disposals
As at March 31, 2016
Additions
Disposals
As at March 31, 2017
Amortization
As at April 01, 2015
Amortization for the year
Disposals
As at March 31, 2016
Amortization for the year
Disposals
As at March 31, 2017
Net block
As at April 01, 2015
As at March 31, 2016
As at March 31, 2017
Note: Refer note no 16 for the assets given on security.
Computer
equipment
Furniture and
fixtures
Vehicles
Office
equipment
407.47
96.47
(2.56)
501.38
251.35
(1.01)
751.72
-
205.69
(1.70)
203.99
227.15
(0.17)
430.97
407.47
297.39
320.75
3.06
4.35
-
7.41
-
-
7.41
-
2.23
-
2.23
1.91
-
4.14
3.06
5.18
3.27
0.13
0.68
-
0.81
11.09
-
11.90
-
0.16
-
0.16
1.91
-
2.07
0.13
0.65
9.83
36.34
3.03
(1.56)
37.81
12.18
(0.05)
49.94
-
12.05
(0.40)
11.65
10.08
(0.01)
21.72
36.34
26.16
28.22
C in Lakhs)
Total
447.00
104.53
(4.12)
547.41
274.62
(1.06)
820.97
-
220.13
(2.10)
218.03
241.05
(0.18)
458.90
447.00
329.38
362.07
Computer software
C in Lakhs)
Total
103.18
13.34
-
116.52
78.38
-
194.90
-
43.33
-
43.33
31.90
-
75.23
103.18
73.19
119.67
103.18
13.34
-
116.52
78.38
-
194.90
-
43.33
-
43.33
31.90
-
75.23
103.18
73.19
119.67
| 109 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Note 5. INVESTMENTS (
Non-current
Investment carried at cost (unquoted equity instruments)
Investments in equity shares in wholly owned subsidiaries
4,999,994 (March 31, 2016: 3,999,994; April 1, 2015: 3,999,994)
equity shares of C10 each fully paid up in Subex Technologies
Limited, India (Impairment on investment C500.00 Lakhs [March
31, 2016: C400.00 Lakhs; April 1, 2015: C400.00 Lakhs]) (refer
note 29[ii])
5,039,565,245 (March 31, 2016: 5,039,565,245; April 1 2015:
5,039,565,245) equity shares of GBP 0.00001 each fully paid in
Subex (UK) Ltd. (refer note 16 for the details of investments given
as security and refer note 45 for impairment assessment).
100 (March 31, 2016: 100; April 1, 2015: 100) equity shares fully
paid, no-par value, in Subex Americas Inc., Canada (Impairment
on investment C76,560.00 Lakhs [March 31, 2016 C70,490.00
Lakhs; April 1, 2015: C65,000.00 Lakhs]) (Refer note 29[ii]).
1 (March 31, 2016: 1; April 1 2015: Nil) equity shares of AED
150,000 each fully paid, in Subex Middle East (FZE), UAE*.
Aggregate amount of unquoted investments in subsidiaries
Aggregate amount of impairment of investments
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
-
-
-
64,738.68
64,738.68
64,738.68
935.74
7,005.74
12,495.74
27.06
27.06
-
65,701.48
1,42,761.48
77,060.00
65,701.48
71,771.48
1,42,661.48
70,890.00
71,771.48
77,234.42
1,42,634.42
65,400.00
77,234.42
* Investment in Subex Middle East (FZE), UAE as at March 31, 2016 represents share application money.
Note 6. LOANS
Unsecured
Carried at amortised cost
Non-current
Loans to related parties (refer note 33)
Considered good
Considered doubtful
Less: Provision for doubtful loans and advances
Others (considered good)
Security deposit
Current (considered good)
Loans and advances to employees
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
2,094.47
(2,094.47)
-
348.98
348.98
179.69
179.69
-
3,665.43
(3,665.43)
-
313.17
313.17
164.81
164.81
1,849.90
1,705.67
(1,705.67)
1,849.90
685.17
2,535.07
202.68
202.68
| 110 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 7. OTHER BALANCES WITH BANKS (
Non-current
Other bank balances (refer note 9)
Margin money deposits*
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
126.14
126.14
59.31
59.31
15.65
15.65
* 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, these deposits are made for varying periods, depending on the requirements of business and
earn interest at the respective term deposit rates.
Note 8. TRADE RECEIVABLES*
Unsecured
Carried at amortised cost
Non-current
Considered good
Considered doubtful
Less: Provision for doubtful debts **
Current
Considered good
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
10,407.72
(10,407.72)
-
-
14,216.10
(14,216.10)
-
7,127.07
13,208.43
(13,208.43)
7,127.07
18,966.08
18,966.08
49,688.01
49,688.01
52,225.19
52,225.19
* includes dues from related parties. Refer note 33.
** During the year ended March 31, 2017, the Company has written off bad debts amounting to C4,854.64 Lakhs (March 31, 2016 :
C998.01 Lakhs) including inter company receivables.
As at March 31, 2017, the Company has netted off C28,734.61 Lakhs of trade receivables from its subsidiaries against trade payables
to the respective subsidiaries pursuant to approval from its Authorised Dealer.
No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person.
Further, there are no trade or other receivables due from firms or private companies in which any director is a partner, a director or a
member.
Trade receivables are non-interest bearing and are generally on terms of 30 to 180 days.
| 111 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Note 9. CASH AND CASH EQUIVALENTS (
Current
Balance with banks
In current accounts
In EEFC accounts
Non-current
Other balances with banks
Deposits with remaining maturity for more than 12 months
Less: Disclosed under other balances with banks (Non-current)
(Refer note 7)
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
130.14
21.13
151.27
126.14
126.14
(126.14)
103.41
92.12
195.53
59.31
59.31
(59.31)
57.06
73.66
130.72
15.65
15.65
(15.65)
-
-
-
For the purpose of the statement of cash flows, cash and cash equivalents comprise the total of current portion of cash and cash
equivalents as above.
Note 10. OTHER FINANCIAL ASSETS
Unsecured, considered good
Carried at amortised cost
Non-current
Advance recoverable from former directors (Refer note 35[b])
Current
Unbilled revenue
Interest accrued but not due on bank deposits
Note 11. INCOME TAX ASSETS (NET) (
Non-current
Advance income-tax [net of provision for taxation
C664.82 Lakhs (March 31, 2016: C 570.45 Lakhs
(April 1, 2015: C569.95 Lakhs)]
As at
March 31, 2017
As at
March 31, 2016
233.80
233.80
2,525.96
10.15
2,536.11
233.80
233.80
1,551.08
3.91
1,554.99
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
233.80
233.80
1,951.00
2.01
1,953.01
C in Lakhs)
As at
April 1, 2015
1,872.78
1,661.22
1,660.66
1,872.78
1,661.22
1,660.66
| 112 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 12. DEFERRED TAX ASSET (
Non-Current
Minimum alternative tax ('MAT') credit entitlement
Note 13. OTHER ASSETS (
Non-current
Balance with statutory/ government authorities*
Advance recoverable in cash or kind
Prepaid expenses
Current
Advance recoverable in cash or kind
Prepaid expenses
Advance to suppliers
Balance with statutory/ government authorities
Expenses incurred on behalf of customers
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
478.13
478.13
383.93
383.93
-
-
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
266.90
297.43
564.33
537.97
169.15
59.90
55.45
822.47
266.90
349.98
616.88
439.66
3.59
17.60
60.27
521.12
266.90
-
266.90
241.62
234.38
-
56.42
532.42
* Balances represents 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 14. SHARE CAPITAL
Authorised share capital
Equity shares of C10 each
As at April 1, 2015
Increase during the year
As at March 31, 2016
Increase during the year
As at March 31, 2017
Preference shares C98 each
As at April 1, 2015
Increase during the year
As at March 31, 2016
Increase during the year
As at March 31, 2017
No.
C in Lakhs
495,040,000
50,000,000
545,040,000
-
545,040,000
200,000
-
200,000
-
200,000
49,504.00
5,000.00
54,504.00
-
54,504.00
196.00
-
196.00
-
196.00
| 113 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Note 14. SHARE CAPITAL(contd.)
Issued, subscribed and fully paid-up share capital
Equity shares of C 10 each issued, subscribed and fully paid
As at April 1, 2015 *
Issued during the year - Conversion of FCCBs
As at March 31, 2016
Issued during the year - Conversion of FCCBs
As at March 31, 2017
No.
C in Lakhs
182,922,575
319,889,071
502,811,646
4,096,290
506,907,936
18,292.26
31,988.90
50,281.16
409.63
50,690.79
* includes 243,207 (March 31, 2016: 243,207; April 1, 2015: 243,207) shares in respect of which Global Depository Receipts of the
Company are listed on London Stock Exchange.
(a) Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of C10 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.
The Company had not declared any dividend during the year ended March 31, 2017 and March 31, 2016.
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.
(b) Details of shares held by each shareholder (together with Persons Acting in Concert[PAC]) holding more than 5% shares in the
Company
Equity shares of C10 each issued, subscribed and fully paid
Name of the shareholders
As at March 31, 2017
As at March 31, 2016
As at April 1, 2015
QVT Mauritius West Fund &
Quintessence Mauritius West Fund
Deutsche Bank AG London -CB
Account
Nomura Singapore Limited
Merrill Lynch Capital Markets Espana
SA SV
Suffolk (Mauritius) Limited &
Mansfield (Mauritius) Limited
No.
% of total
shares
No.
% of total
shares
No.
% of total
shares
47,843,816
9.44
35,829,909
7.13
13,347,888
17,436,426
3.44
21,559,422
4.29
10,892,721
2,806,956
-
0.55
-
881,257
4,311,884
0.18
0.86
10,234,433
10,192,621
7.36
6.01
5.64
5.62
-
-
-
-
17,372,221
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.
| 114 |
Notes to the standalone financial statements for the year ended March 31, 2017
c) Shares reserved for issue under options (No.)
(i) Outstanding employee stock options scheme under below
schemes, granted/ available for grant: (refer note 36)
ESOP 2000
ESOP 2005
ESOP 2008
(ii) FCCBs (refer note 31)
FCCBs I
FCCBs II
FCCBs III
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
-
92,368
28,301
-
144,979
130,500
1,925
741,072
475,010
-
-
15,522,785
15,643,454
67,174
839,721
19,619,075
20,801,449
67,174
839,721
200,531,961
202,656,863
d) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during
the period of five years immediately preceeding the reporting date:
Equity shares (No.)
Equity shares allotted as fully paid-up pursuant to contract (no.)
(In accordance with the terms of FCCBs III, out of the principal face
value of US$ 127.72 Million (C71,592.81 Lakhs), an amount of US$
36.32 Million (C20,358.99 Lakhs) were mandatorily converted
into equity shares on July 07, 2012. Also refer note 31)
Note 15. OTHER EQUITY (
Equity component of compound financial instruments
Balance as per last financial statements
Less: Conversion of FCCBs
Closing balance
Securities premium
Balance as per last financial statements
Add: Additions during the year on conversion of FCCBs
Closing balance
General reserve
Balance as per last financial statements
Add: Additions during the year
Closing balance
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
89,335,462
89,335,462
89,335,462
C in Lakhs)
As at
March 31, 2017
As at
March 31, 2016
259.40
(54.16)
205.24
24,377.59
122.89
24,500.48
1,779.76
-
1,779.76
4,648.16
(4,388.76)
259.40
13,215.75
11,161.84
24,377.59
1,779.76
-
1,779.76
| 115 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Note 15. OTHER EQUITY (
(contd.)
Employee stock options reserve
Balance as per last financial statements
Less: Compensation on ESOP cancelled/lapsed during the year
Add: Deferred stock compensation expenses
Closing balance
Surplus/(deficit) in the statement of profit and loss
Balance as per last financial statements
Less: Loss for the year
Add: Residual portion of FCCBs conversion
Less: OCI- Remeasurement loss on defined benefit obligations
Closing balance
Summary of other equity: (
Equity component of compound financial instruments
Securities premium account
General reserve
Employee stock options reserve
Surplus/(deficit) in the statement of profit and loss
Total other equity
Note 16. BORROWINGS
Carried at amortised cost
Non -current
Foreign currency convertible bonds (note 31)
Secured*
Unsecured**
Current maturities of long-term borrowings:
Secured*
Unsecured**
Less: Disclosed under other financial liabilities (current) (refer
note 18)
Current
Loans repayable on demand from banks (Secured)
Loan Type - I (refer note [i] & [iii])
Loan Type - II (refer note [i], [ii] & [iii])
C in Lakhs)
As at
March 31, 2017
As at
March 31, 2016
16.30
(10.11)
0.25
6.44
(12,996.10)
(683.50)
256.06
(33.16)
(13,456.70)
As at
March 31, 2017
As at
March 31, 2016
205.24
24,500.48
1,779.76
6.44
(13,456.70)
13,035.22
259.40
24,377.59
1,779.76
16.30
(12,996.10)
13,436.95
As at
March 31, 2017
As at
March 31, 2016
78.10
(62.15)
0.35
16.30
(10,750.95)
(20,997.69)
18,757.58
(5.04)
(12,996.10)
C in Lakhs)
As at
April 1, 2015
4,648.16
13,215.75
1,779.76
78.10
(10,750.95)
8,970.82
(C in Lakhs)
As at
April 1, 2015
-
-
2,860.16
-
48,151.16
1,811.99
2,277.17
-
2,277.17
-
2,071.31
4,931.47
(2,277.17)
-
(2,071.31)
2,860.16
5,216.24
3,373.67
8,589.91
6,045.73
4,350.01
10,395.74
-
-
49,963.15
-
49,963.15
6,906.14
5,600.40
12,506.54
| 116 |
Notes to the standalone financial statements for the year ended March 31, 2017
* Secured FCCBs are carried at amortised cost at an effective interest rate of 9% (March 31, 2016: 9%, April 1, 2015: 9%) with maturity
date July 07, 2017.
** Unsecured FCCBs are carried at amortised cost at an effective interest rate of 10.5% (March 31, 2016: 10.5%, April 1, 2015: 10.5%)
with maturity date March 09, 2017. These FCCBs were repaid on due date.
(i) The secured loan from banks are secured by primary charge on customer receivables of the Company and pari-passu first charge on
the current assets of the Company, and collateral pari-passu first charge on the fixed assets of the Company, collateral pari-passu first
charge along with other working capital lenders and FCCB holders to the extent of the FCCBs 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 C4,205.00 Lakhs (March 31, 2016 :
C5,570.00, April 1, 2015: C6,495.00 Lakhs) and with effect from October 01, 2014 corporate guarantee by Subex (UK) Limited of
C4,205.00 Lakhs (March 31, 2016: C5,570.00 Lakhs; April 1, 2015: C6,495.00 Lakhs) and pledged it’s 100% shares in Subex (UK)
Limited.
(iii) Loans repayable on demand from banks consists of Cash Credit (CC) of C2,933.84 Lakhs (March 31, 2016: C1,762.89 Lakhs, April 1,
2015: C4,223.45 Lakhs), Pre-shipment Credit in Foreign Currency (PCFC) of C1,419.53 Lakhs (March 31, 2016: C3,945.39 Lakhs, April
1, 2015: C2,880.38 Lakhs) and Export Bill Rediscounting (EBRD) of C4,236.54 Lakhs (March 31, 2016: C4,687.46 Lakhs, April 1, 2015:
C5,402.71 Lakhs), which carried an average interest rate of 11.67%, 3.89% and 5.51% (March 31, 2016: 12.91%, 4.05% and 5.89%,
April 1, 2015: 14.25%, 5.05% and 8.88%) respectively. These facilities are renewable on a yearly basis.
Note 17. TRADE PAYABLES*
Carried at amortised cost
Current
Trade payables
- total outstanding dues of micro enterprises and small enterprises
(refer note 17 [i])
- total outstanding dues of creditors other than micro enterprises
and small enterprises*
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
4.83
3.06
14,382.81
45,166.62
45,693.03
14,382.81
45,171.45
45,696.09
* includes dues to related parties. Refer note 33.
Terms and conditions of the above financial liabilities:
- trade payables are non-interest bearing and are normally settled on 30 - 45 day terms.
- for explanations on the Company’s credit risk management, refer to note 40.
| 117 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
17[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.
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
-
-
-
-
-
4.83
-
0.06
-
-
-
3.06
-
0.53
0.06
0.06
-
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.
Note 18. OTHER FINANCIAL LIABILITIES
Carried at amortised cost
Non-current
Interest accrued but not due on borrowings
Current
Employee related liabilities
Interest accrued but not due on borrowings
Current maturities of long-term borrowings (refer note 16)
As at
March 31, 2017
As at
March 31, 2016
-
-
694.44
500.83
2,277.17
3,472.44
571.08
571.08
652.13
2.98
2,071.31
2,726.42
(C in Lakhs)
As at
April 1, 2015
6,323.97
6,323.97
715.11
815.94
-
1,531.05
| 118 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 19. OTHER CURRENT LIABILITIES
Current
Unearned revenue
Statutory remittances (refer note 47)
Note 20. Provisions
Non-current
Provisions for employee benefits
Gratuity (refer note 37 [b])
Current
Provisions for employee benefits
Gratuity (refer note 37 [b])
Leave benefits
Provision for litigations*
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
1,001.07
214.82
1,215.89
856.11
252.88
1,108.99
473.67
265.38
739.05
As at
March 31, 2017
As at
March 31, 2016
(
C in Lakhs)
As at
April 1, 2015
249.96
249.96
31.31
134.74
100.00
266.05
258.36
258.36
32.43
128.22
100.00
260.65
320.15
320.15
7.95
114.22
100.00
222.17
*Provision for litigations consists of matters which are sub-judice. There is no movement in the provisions during the current and
previous year, refer note 35(b) for further details.
Note 21. INCOME TAX LIABILITIES (NET) (
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
Current
Provision for tax [net of advance tax C201.82 Lakhs (March
182.12
182.12
-
31, 2016: 201.82, April 1, 2015: C Nil )]
Provision for wealth tax
Provision for foreign taxes
Provision for litigation [net of tax deducted at source C62.14
Lakhs (March 31, 2016: C62.14 Lakhs; April 1, 2015: C62.14
Lakhs)]*
-
276.11
101.70
-
212.04
101.70
0.82
-
101.70
559.93
495.86
102.52
*Provision for litigation consists of matters which are sub-judice. There is no movement in the provisions during the current and
previous year, refer note 35(b) for further details.
Income tax expense in the statement of profit and loss consist of the following:
Tax expense:
Current tax - income tax charge for the current year
Deferred tax (MAT Credit entitlement)
Total tax expense
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
348.00
(94.20)
253.80
918.31
(383.93)
534.38
| 119 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Notes:
21(i) Provision for foreign withholding taxes represents provision in respect of withholding taxes deducted/deductible by customers.
21(ii) No deferred tax asset, other than MAT credit entitlement has been recognised in the absence of reasonable certainty that
taxable profit will be available against which the unused tax losses, unused tax credit and other deductible temporary differences can
be utilised.
Reconciliation of tax to the amount computed by applying the statutory income tax rate to the income before tax is summarized
below:
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
(429.70)
34.61%
-
(20,463.31)
34.61%
-
253.80
94.20
534.38
383.93
(94.20)
(383.93)
253.80
253.80
534.38
534.38
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
1,331.52
31,109.10
32,440.62
1,167.91
163.61
1,331.52
3,852.78
4,034.61
4,498.55
18,715.24
7.92
31,109.10
1,681.64
27,900.66
29,582.30
1,458.29
223.35
1,681.64
3,482.40
4,233.92
3,865.58
16,287.40
31.36
27,900.66
Loss before tax
Applicable tax rates in India
Computed tax charge (A)
Components of tax expense:
Current tax:
Provision for foreign withholding taxes
MAT payable at 18.5% on the adjusted book profits of the company in accordance with
the provisions of Income Tax Act, 1961
Deferred tax:
MAT credit entitlement available on the MAT payable as mentioned above as per the
provisions of Income Tax Act, 1961
Total adjustments (B)
Total tax expense (A+B)
Note 22. 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
| 120 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 23. OTHER INCOME (
Net gain on disposal of property, plant and equipment
Write back of withholding taxes paid earlier (refer note 47)
Miscellaneous income
Note 24. EMPLOYEE BENEFITS EXPENSE (
Salaries, wages and bonus*
Contribution to provident and other funds
Staff welfare expenses
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
0.75
1,036.59
0.90
1,038.24
-
-
41.84
41.84
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
7,865.25
330.55
341.23
8,537.03
7,251.00
274.55
349.22
7,874.77
* Net of reversal of provision no longer required, in respect of employee incentives amounting to C70.00 Lakhs (March 31, 2016:
C380.83 Lakhs).
Note 25. OTHER EXPENSES (
Purchase of software
Sub-contract charges
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 25 [i])
Marketing and allied service charges
Sales commission*
Provision for doubtful debts
Exchange fluctuation loss (net)
Directors sitting fees
Loss on sale of fixed assets (net)
Miscellaneous expenses
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
230.13
147.91
1,264.44
185.36
108.22
367.77
90.30
98.03
27.12
1,908.65
66.06
128.21
557.81
117.13
11,676.28
37.15
1,094.20
712.77
49.00
-
7.50
18,874.04
358.10
131.49
1,188.00
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)
697.42
54.00
1.05
6.46
16,589.55
* Sales commission for the year ended March 31, 2017 is net of reversal of provision no longer required amounting to CNil (March 31,
2016: C107.68 Lakhs).
| 121 |
SUBEX LIMITED Annual Report 2016-17 Notes to the standalone financial statements for the year ended March 31, 2017
(
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
100.00
4.00
-
13.13
117.13
85.00
4.00
2.50
4.41
95.91
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
241.05
31.90
272.95
220.13
43.33
263.46
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
35.83
11.02
168.61
215.46
61.74
2.80
189.84
254.38
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
494.04
657.43
20.81
333.19
1,505.47
3,753.78
1,003.27
25.20
319.38
5,101.63
Note 25 [i] Payments to the auditor (excluding service tax):
As auditor
Audit fee
Tax audit fee
In other capacity
Other services (certification fees)
Reimbursement of expenses
Note 26. DEPRECIATION AND AMORTISATION (
Depreciation of property, plant and equipment (refer note 3)
Amortization of intangible assets (refer note 4)
Note 27. FINANCE INCOME (
Interest income on:
Security deposits
Bank Deposits
Inter-company loans and advances
Note 28. FINANCE COST (
Interest
Foreign currency convertible bonds (refer note 31)
Other borrowings
Other finance charges
Bank charges
| 122 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 29. EXCEPTIONAL ITEMS (NET) (
(i) Inter company balances (refer note 29[i])
Provision for doubtful advances
Provision for doubtful debts
Bad debts written off
Provision for doubtful advances no longer required written back
(ii) Impairment of investments in subsidiaries (refer note 29 [ii])
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
-
-
-
1,578.94
1,578.94
(6,170.00)
(6,170.00)
(4,591.06)
(1,959.76)
(2,455.31)
(10,475.97)
-
(14,891.04)
(5,490.00)
(5,490.00)
(20,381.04)
29[i] As at March 31, 2016, the Company had assessed the recoverability of its receivables and loans and advances from its overseas
subsidiaries. Based on future operational plan, projected cash flows and the financial position of these subsidiaries, the Company
had made a provision of C2,455.31 Lakhs (net off adjustment towards provision for expected credit loss of C5,906.28 Lakhs) and
C1,959.76 Lakhs towards trade receivables and loans and advances respectively due from these subsidiaries. Further, the Company
had also written off C10,475.97 Lakhs as bad debts towards trade receivables from these subsidiaries as at March 31, 2016. During the
year ended March 31, 2017, provision for doubtful advances amounting to C1,578.94 Lakhs has been written back on collection of the
aforesaid loans and advances.
29[ii] As at March 31, 2017, the Company had assessed the carrying value of it’s investment in its wholly owned subsidiary viz., Subex
Americas Inc., of C7,005.74 Lakhs (March 31, 2016: C12,495.74 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 C6,070.00 Lakhs (March 31, 2016:
C5,490.00 Lakhs) towards the carrying value of its investment in the said subsidiary. The management is of the view that, the carrying
value of the aforesaid investment in in the said subsidiary of C935.74 Lakhs, as at March 31, 2017 is appropriate.
Also, during the current year the Company has made provision for impairment of C100.00 Lakhs (March 31, 2016: CNil) towards the
carrying value of its investment in the Subex Technologies Limited as the said subsidiary is under liquidation.
Note 30. EARNINGS/(LOSS) PER SHARE
Basic earning/(loss) per share (EPS) amounts are calculated by dividing the loss for the year attributable to equity holders of the
Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the loss attributable to equity holders of the Company by the weighted average number
of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion
of all the dilutive potential equity shares into equity shares.
Computation of basic and diluted EPS:
Nominal value per equity share (C per share)
Loss attributable to equity shareholders (C in Lakhs)
Weighted average number of equity shares (No. in Lakhs)
Loss per share basic and diluted (C per share)*
Year ended
March 31, 2017
Year ended
March 31, 2016
10.00
(683.50)
5,063.00
(0.13)
10.00
(20,997.69)
2,904.20
(7.23)
* Foreign currency convertible bonds and employee stock options outstanding as at March 31, 2017 and March 31, 2016 are anti-
dilutive and accordingly have not been considered for the purpose of dilutive EPS.
| 123 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Note 31. FOREIGN CURRENCY CONVERTIBLE BONDS
a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (“FCCBs 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 : C44.08/ US$
ii) Conversion price : C656.20 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 : C48.17/ US$
iii) Conversion price : C80.31 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 FCCBs III are as under :
i)
Interest rate : 5.70% p.a. payable semi annually
ii) Exchange rate for conversion of FCCB : C56.0545/ US$
| 124 |
Notes to the standalone financial statements for the year ended March 31, 2017
iii) Equity Conversion price : C22.79 per share
iv) Redemption date : July 07, 2017
v)
Listing on the Singapore Exchange Securities Trading Limited
vi) Second ranking pari-passu 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 FCCBs 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.
During the year ended March 31, 2017, the FCCBs I and FCCBs II are repaid in full along with the accrual premium applicable on
these bonds on the maturity date.
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 C22.79 to C13.00 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 C13 per share.
As a result of the aforesaid reset of conversion price, the said bonds with outstanding face value of US$ 3.60 Million as at March
31, 2017 would potentially be converted into 15,522,785 equity shares at an exchange rate of C56.0545/US$ with a conversion
price of C13 per equity share.
e)
(i) Of the outstanding FCCBs III of US$ 91.40 Million as of July 2012, US$ 87.80 Million have been converted till year ended March
31, 2017 as detailed below:
Financial year/ period
2012-13
2014-15
2015-16
(i) during quarter ended June 30, 2015
(ii) during June 30, 2015 to March 31, 2016
2016-17
FCCBs
converted US$
Million
Conversion rate
per US$
Conversion
price
No. of equity
shares
3.25
6.62
6.50
70.48
0.95
C56.0545
C56.0545
C56.0545
C56.0545
C56.0545
C22.79
C22.79
C22.79
C13.00
C13.00
7,993,931
16,282,613
15,987,461
303,901,610
4,096,290
| 125 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
(ii) The face value of FCCBs outstanding as on March 31, 2017 is as follows:
Particulars
As at March 31, 2017
C in Lakhs
As at March 31, 2016
C in Lakhs
As at April 1, 2015
C in Lakhs
US$ Million
-
-
3.60
3.60
FCCBs I
FCCBs II
FCCBs III
Total
f) The FCCB holders in their respective meetings have approved the deferral of aggregate interest of US$ 0.73 Million ( C473.41
Lakhs) in respect of outstanding FCCBs III with face value of US$ 3.60 Million ( C2,334.60 Lakhs) for the period July 6, 2012 to
January 5, 2016 till redemption date of the bonds, being July 07, 2017.
625.00
875.00
50,956.25
52,456.25
662.55
927.57
3,014.60
4,604.72
-
-
2,334.60
2,334.60
US$ Million
1.00
1.40
4.55
6.95
US$ Million
1.00
1.40
81.53
83.93
g) Upon extinguishment of liability (i.e. principal and interest accrued), due to conversion of FCCBs III, the portion of liability in excess
of share capital and securities premium as the date of conversion is credited to surplus/ deficit of profit and loss. Refer note 15.
h)
The amortised cost of the borrowings and fair value and equity component of FCCBs outstanding as on March 31, 2017 is as
follows:
I. FCCBs outstanding:
FCCBs I
FCCBs II
FCCBs III
Total
II. Equity component of convertible bonds
Note 32. SEGMENT REPORTING
As at
March 31, 2017
As at
March 31, 2016
-
-
2,277.17
2,277.17
205.24
831.27
1,240.04
2,860.16
4,931.47
259.40
(C in Lakhs)
As at
April 1, 2015
717.88
1,094.11
48,151.16
49,963.15
4,648.16
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors of the Company assesses the financial performance and position of the Company. The Chief Executive Officer has
been identified as the chief operating decision maker.
The Company has identified a single business segment being software products and related services. This being a single segment no
additional segment disclosure has been made for the business segment.
The Company’s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d) APAC
and rest of the World. ‘Americas’ comprises the Company’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, excluding India are
organized under ‘APAC and the rest of the world’. Customer relationships are driven based on customer domicile.
| 126 |
Notes to the standalone financial statements for the year ended March 31, 2017
Segment revenue by geographical location are as follows:* (
Region
Americas
EMEA
India
APAC and rest of the world
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
5,198.78
21,046.84
2,642.46
3,552.54
32,440.62
5,591.71
14,039.36
2,013.55
7,937.68
29,582.30
* Revenues by geographic area are based on the geographical location of the customer.
No external customer individually accounted for more than 10% of the total revenue of the Company for the years ended March 31,
2017 and March 31, 2016. Revenue from certain subsidiaries accounts for more than 10% of the total revenues of the Company. (Refer
note 33).
Non-current operating assets by geographical location are as follows:**
Region
As at
March 31, 2017
India
Outside India
Total non-current operating assets
1,046.07
-
1,046.07
As at
March 31, 2016
1,019.45
-
1,019.45
(C in Lakhs)
As at
April 1, 2015
817.08
-
817.08
** Non-current operating assets includes Property, plant and equipment, Intangible assets, Balance with statutory/ government
authorities and Prepaid expenses.
Note 33. RELATED PARTY TRANSACTIONS
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 Ind AS 24 and as per The Companies Act, 2013
Key management personnel
Surjeet Singh
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Sanjeev Aga
Priyanka Roy
Ganesh KV
Managing Director and Chief Executive Officer
Independent Director
Independent Director
Independent Director - Appointed w.e.f March 24, 2017
Independent Director - Resigned w.e.f October 27, 2016
Independent Director - Resigned w.e.f March 10, 2017
Chief Financial Officer, Global Head- Legal and Company Secretary
| 127 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
iii. Details of the transactions with the related parties during the year ended March 31, 2017: (
Particulars
Year ended
March 31, 2017
C in Lakhs)
Year ended
March 31, 2016
10,586.55
3,322.20
1,885.93
1,479.43
1,441.13
18,715.24
5,153.44
5,148.82
630.68
521.19
222.15
-
11,676.28
168.61
168.61
0.88
0.74
0.17
1.79
34.61
29.22
0.81
4.89
0.93
70.46
8.50
18.96
10.74
0.02
0.29
38.51
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
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
A.
Transactions with wholly owned subsidiaries
Income from software development and 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.
Employee Stock Option expenses allocated to:
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Reimbursement of expenses made to:
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Inc.
Subex Americas Inc.
Subex Technologies Limited
Reimbursement of expenses received from:
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Inc.
Subex Americas Inc.
Subex Middle East (FZE)
| 128 |
Notes to the standalone financial statements for the year ended March 31, 2017
Particulars
Provision for doubtful advances/ debts and (provision no longer required
written back)
Subex Americas Inc.
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Technologies Limited
Bad debts written off:*
Subex (Asia Pacific) Pte. Limited
Subex Inc.
Subex (UK) Limited
Subex Americas Inc.
Net off of trade receivables from subsidiaries against trade payables to
respective subsidiaries during the year:**
Subex (Asia Pacific) Pte. Limited
Subex Inc.
Subex (UK) Limited
Subex Americas Inc.
Loans and advances given during the year:
Subex Technologies Limited
Investments in equity shares in wholly owned subsidiaries:
Subex Technologies Limited
Subex Middle East (FZE)
Impairment on investment during the year:
Subex Americas Inc.
Subex Technologies Limited
B.
Transactions with key managerial personnel
Salary and perquisites***
Surjeet Singh
Ganesh KV
Director sitting fees
Anil Singhvi
Nisha Dutt
Sanjeev Aga
Priyanka Roy
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
(1,578.94)
-
2.56
-
-
(1,576.38)
765.86
-
-
2,637.34
3,403.20
512.79
12,864.41
10,664.54
4,692.87
28,734.61
-
-
100.00
-
100.00
6,070.00
100.00
6,170.00
16.78
77.41
94.19
22.00
14.00
10.00
3.00
49.00
(1,074.54)
4.67
2,738.89
2,734.05
12.00
4,415.07
37.42
102.18
395.68
9,940.69
10,475.97
-
-
-
-
-
6.30
6.30
-
27.06
27.06
5,490.00
-
5,490.00
16.26
67.40
83.66
22.50
6.00
22.50
3.00
54.00
*Bad debts written off during the year ended March 31, 2017 from provision for doubtful debts.
**The Company has netted off trade receivables from its subsidiaries against trade payables to the respective subsidiaries pursuant to approval from its
Authorised Dealer. Also refer note 8.
*** The remuneration to the key managerial personnel does not include the provision/accruals made on best estimate basis as they are determined
for the Company as a whole.
| 129 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
iv. Details of balances receivable from and payable to related parties are as follows: (
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
Balances receivable from and payable to wholly owned
subsidiaries
Trade receivables
Subex Americas Inc. [Net of provision of C770.24 lakhs
(March 31, 2016: C3,407.59 Lakhs, April 1, 2015: C6,429.89
Lakhs.)]
Subex UK Limited [Net of provision of C148.39 lakhs [March
31, 2016: C148.39 Lakhs, April 1, 2015: C143.72 Lakhs.)]
Subex Inc. [Net of provision of C2,965.15 lakhs ([March 31,
2016: C2,962.59 Lakhs, April 1, 2015: C223.70 Lakhs.)]
Subex (Asia Pacific) Pte. Limited [Net of provision of
C4,016.37 lakhs (March 31, 2016: C4,782.27 Lakhs, April 1,
2015: C2,048.21 Lakhs.)]
Subex Middle East (FZE)
Subex Technologies Limited
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 C376.80 lakhs
(March 31, 2016: C1,947.76 Lakhs, April 1, 2015: Nil.)]
Subex Technologies Limited [Net of provision of C1,717.67
lakhs (March 31, 2016: C1,717.67 Lakhs, April 1, 2015:
C1,705.67 Lakhs.)]
Outstanding guarantees taken from:
Subex Technologies Limited
Subex (UK) Limited
2,419.67
7,165.52
13,388.13
6,127.59
18,122.68
17,580.42
877.80
14,097.18
16,604.88
1,187.61
1,764.13
4,076.86
1,029.47
0.93
11,643.07
6,744.92
3,679.44
992.48
1,826.67
0.83
38.56
13,282.90
-
-
-
109.82
-
41,259.33
19,834.71
16,280.38
1,374.13
6,633.28
0.83
4.86
44,128.19
-
-
-
4,205.00
4,205.00
8,410.00
5,570.00
5,570.00
11,140.00
-
-
51,650.29
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
| 130 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 34.
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.
(C in Lakhs)
Particulars
As at March 31, 2017
As at March 31, 2016
As at April 1, 2015
Maximum
balance
outstanding
during the
year
1,947.76
1,717.67
Outstanding
Amount
1,947.76
1,717.67
3,665.43
Maximum
balance
outstanding
during the
year
1,947.76
1,717.67
Outstanding
Amount
1,844.20
1,711.37
3,555.57
Maximum
balance
outstanding
during the
year
1,844.20
1,711.37
Outstanding
Amount
376.80
1,717.67
2,094.47
Subex Americas Inc.*
Subex Technologies Limited**
*
Loans and advances to Subex Americas Inc., is provided as at March 31, 2017: C376.80 Lakhs (March 31, 2016: C1,947.76 Lakhs,
April 1, 2015: C Nil).
** Loans and advances to Subex Technologies Limited is provided as at March 31, 2017: C1,717.67 Lakhs (March 31, 2016: C1,717.67
Lakhs, April 1, 2015: C 1,705.67 Lakhs).
Note 35. COMMITMENTS AND CONTINGENT LIABILITIES
a) Commitments
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 for the year under non-cancellable operating leases
amounted to C697.65 Lakhs (March 31, 2016: C482.11 Lakhs).
Future minimum lease payments under non-cancellable operating lease payable within one year from balance sheet date is
CNil (March 31, 2016: C723.59 Lakhs, April 1, 2015: CNil).
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 for the year under cancellable
operating leases was C566.79 Lakhs (March 31, 2016: C705.89 Lakhs)
b) Contingent liabilities
Particular
Income tax demands (refer note [i])
Service tax demands (refer note [ii])
Others (refer note [iii])
Bank guarantees (furnished to customers)
i. Income tax
Year ended
March 31, 2017
Year ended
March 31, 2016
6,982.23
3,687.15
1,293.44
118.73
4,915.20
3,687.15
1,293.44
123.35
(C in Lakhs)
As at
April 1, 2015
5930.13
3687.15
1293.44
74.47
The Company has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2007 and
from March 31, 2009 to March 31, 2013, 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
| 131 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
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 C1,293.44 Lakhs. The aforesaid claims are
disputed by the Company and the matter is presently under arbitration with the arbitral tribunal. The management is of the view that
these claims are not tenable.
The Company has also claimed the excess managerial remuneration of C123.80 Lakhs (March 31, 2016: C123.80 Lakhs, April 1, 2015:
C123.80 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 directors during the year 2012-13 amounting to C110.00 Lakhs (March 31, 2016: C110.00 Lakhs,
April 1, 2015: C110.00 Lakhs). The aggregate amount of C233.80 Lakhs (March 31, 2016: C233.80 Lakhs, April 1, 2016: C233.80 Lakhs)
is included in ‘Other Financial Assets’ 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 commitments as at balance sheet date except towards the operating lease as disclosed in note
35(a).
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.
Note 36. EMPLOYEE STOCK OPTION PLAN (‘ESOPs’)
The Company 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.
| 132 |
Notes to the standalone financial statements for the year ended March 31, 2017
Employees’ Stock Options details as on the balance sheet date are:
2016-17
2015-16
Options (no.)
Weighted
average
exercise price
per stock
option (C)
Options (no.)
Weighted
average
exercise price
per stock option
(C)
-
1,44,979
1,30,500
-
52,611
1,02,199
-
92,368
28,301
-
92,368
28,301
-
24.28
28.51
-
-
-
-
22.97
28.44
-
22.99
28.44
1,925
7,41,072
4,75,010
1,925
5,96,093
3,44,510
-
1,44,979
1,30,500
-
1,26,429
1,30,500
67.00
27.99
28.49
-
-
-
-
24.28
28.51
-
22.65
28.51
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
Details of Weighted average remaining contractual life and range of exercise prices for the options outstanding at the balance
sheet date
ESOP – II
ESOP – III
ESOP – IV
* considering vesting and exercise period
Weighted average remaining
contractual life(years)*
2016-17
2015-16
-
1.99
0.67
-
1.49
0.11
Range of exercise prices (C)
2016-17
-
10.26 - 54.83
28.44
2015-16
-
10.26 -73.90
28.44 - 53.54
| 133 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Fair value methodology
There were no new grants during the year ended March 31, 2017. The key assumptions used in Black-Scholes model for calculating
fair value is as below:
March 31, 2017
March 31, 2016
Risk-free interest rate
Expected volatility of share
Expected dividend yield
Expected life(years)
6.00% - 8.00%
6.00% - 8.00%
34.00% - 64.85% 34.00% - 64.85%
0.00% - 1.19%
4
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.
Note 37. EMPLOYMEE BENEFIT PLANS
a) Provident fund
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 C281.33 Lakhs (March 31, 2016: C261.42 Lakhs) for Provident Fund contributions and C Nil
(March 31, 2016: C0.08 Lakhs) for Employee State Insurance scheme contribution in the Statement of profit and loss.
b) Gratuity
The Company offers Gratuity benefits to employees, a defined benefit plan, Gratuity plan is governed by the Payment of Gratuity Act,
1972. 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 table set out the status of gratuity plan:
Disclosure as per Ind AS 19 (
Particular
A
B
C
Change in defined benefit obligation
Obligations at beginning of the year
Service cost
Interest cost
Benefits settled
Actuarial loss (through OCI)
Obligations at end of the year
Change in plan assets
Plan assets at beginning of the year, at fair value
Expected return on plan assets
Actuarial loss (through OCI)
Contributions
Benefits settled
Plan assets at the end of the year
Present value of defined benefit obligation at the end of the year
Fair value of plan assets at the end of the year
Net liability recognised in the balance sheet
| 134 |
As at March 31,
2017
C in Lakhs)
As at March 31,
2016
406.28
56.51
29.78
(100.82)
33.61
425.36
115.49
8.97
0.45
120.00
(100.82)
144.09
(425.36)
144.09
(281.27)
386.40
62.21
30.14
(78.94)
6.47
406.28
58.29
4.94
1.43
130.00
(79.17)
115.49
(406.28)
115.49
(290.79)
Notes to the standalone financial statements for the year ended March 31, 2017
D
E
F
Expenses recognised in standalone statement of profit and loss:
Service cost
Interest cost (net)
Net gratuity cost
Re-measurement gains/(losses) in OCI
Actuarial (gain)/ loss due to financial assumption changes
Actuarial (gain)/ loss due to experience adjustments
Return on plan assets (greater) less than discount rate
Total expenses recognised through OCI
Assumptions
Discount rate
Expected return on plan assets
Salary escalation
Attrition rate
Retirement age
Particular
G
H
Five years pay-outs
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
Contribution likely to be made for the next one year
Year ended March
31, 2017
(C in Lakhs)
Year ended March
31, 2016
56.51
20.81
77.32
11.10
22.52
(0.46)
33.16
7.00%
7.60%
8.00%
18.00%
60 years
62.21
25.20
87.41
2.65
3.82
(1.43)
5.04
7.60%
8.50%
8.00%
18.00%
60 years
As at March 31,
2017
As at March 31,
2016
31.31
60.29
57.00
55.44
50.95
339.67
120.00
32.36
60.32
53.83
47.64
43.19
154.45
120.00
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.
I
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Investment with insurer
J
Sensitivity analysis (
Effect of change in discount rate
Impact on defined benefit obligation increase/
(decrease)
Effect of change in salary
Impact on defined benefit obligation increase/
(decrease)
Effect of change in withdrawal assumption
Impact on defined benefit obligation increase/
(decrease)
As at March 31,
2017
As at March 31,
2016
100%
100%
C in Lakhs)
Year ended March 31, 2017
Year ended March 31, 2016
0.5% increase
(9.29)
0.5% decrease
9.75
0.5% increase
(7.71)
0.5% decrease
8.06
1% increase
15.71
1% decrease
(15.12)
1% increase
9.80
1% decrease
(10.12)
5% increase
(9.18)
5% decrease
8.29
5% increase
0.59
5% decrease
(8.40)
| 135 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
Note 38. CAPITAL MANAGEMENT
The Company’s objective is to maintain a strong capital base to ensure sustained growth in business and to maximise the shareholders
value. The Capital Management focusses to maintain an optimal structure that balances growth and maximizes shareholder
value.
Particulars
A. Total equity attributable to the share holders of the Company
Borrowings - Non-Current
Borrowings - Current
Current maturities of long term borrowings
B. Total loans and borrowings
C. Total capital (A+B)
D. Total loans and borrowings as a percentage of total capital
(B/C)
E. Total equity as a percentage of total capital (A/C)
As at
March 31, 2017
As at
March 31, 2016
63,726.01
-
8,589.91
2,277.17
10,867.08
74,593.09
15%
85%
63,718.11
2,860.16
10,395.74
2,071.31
15,327.21
79,045.32
19%
81%
(C in Lakhs)
As at
April 1, 2015
27,263.08
49,963.15
12,506.54
-
62,469.69
89,732.77
70%
30%
The Company has transformed from a debt dominanted Company to an equity dominanted Company from financial year 2015-16.
Current maturities represent FCCBs III of C2,277.17 Lakhs, due for repayment in July 07, 2017. The current borrowings are in the nature
of working capital loans from banks. The Company has sufficient cash and cash equivalents and other financial assets which are liquid
to meet the aforesaid FCCBs debt and current borrowings.
In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets
financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have been
no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
Note 39. FAIR VALUE HIERARCHY
The carrying value of financial instruments by categories is as follows:
Particulars
Financial assets measured at amortized cost:
Interest accrued but not due on bank deposits*
Trade receivables*
Unbilled revenue*
Security deposit^
Loans and advances to employees*
Advance recoverable from former directors*
Loans to related parties*
Cash and cash equivalents and other balances with banks
Balance with banks#
Margin money deposits#
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
10.15
18,966.08
2,525.96
348.98
179.69
233.80
-
22,264.66
151.27
126.14
277.41
3.91
49,688.01
1,551.08
313.17
164.81
233.80
-
51,954.78
195.53
59.31
254.84
2.01
59,352.26
1,951.00
685.17
202.68
233.80
1,849.90
64,276.82
130.72
15.65
146.37
| 136 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 39. FAIR VALUE HIERARCHY
(contd.)
The carrying value of financial instruments by categories is as follows:
Particulars
Financial liabilities measured at amortized cost:
Employee related liabilities*
Trade payables*
Interest accrued but not due on borrowings^
Borrowings^
As at
March 31, 2017
As at
March 31, 2016
694.44
14,382.81
500.83
10,867.08
26,445.16
652.13
45,171.45
574.06
15,327.21
61,724.85
(C in Lakhs)
As at
April 1, 2015
715.11
45,696.09
7,139.91
62,469.69
1,16,020.80
* The carrying value of these accounts are considered to be the same as their fair value, due to their short term nature. Accordingly,
these are classified as level 3 of fair value hierarchy.
# These accounts are considered to be highly liquid/ liquid and the carrying amount of these are considered to be the same as their fair
value value. Accordingly, these are classified as level 3 of fair value hierarchy.
^ The fair value of these accounts was calculated based on cash flow discounted using a current lending/ borrowing rate, they are
classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.
Note 40. FINANCIAL RISK MANAGEMENT:
The Company’s activities expose it to the following risks:
i. Credit risk
ii. Interest rate risk
iii. Liquidity risk
iv. Market risk
1
Credit risk:
Credit risk is the risk that counter party will not meet its obligations under a financial instruments or customer contract leading to a
financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and unbilled revenue)
from its financing activities including deposits with banks and financial institutions, investments, foreign exchange transactions and
other financial instruments.
a. Trade receivables
Credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer
credit risk management. Outstanding customer receivables are regularly monitored.
The impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of
minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The maximum exposure to credit
risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security.
| 137 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
b. Credit risk exposure
The Company’s credit period generally ranges from 30 – 180 days. The credit risk exposure of the Company is as below:
Particulars
Trade receivables
Unbilled revenue
Total
As at
March 31, 2017
As at
March 31, 2016
18,966.08
2,525.96
21,492.04
49,688.01
1,551.08
51,239.09
(C in Lakhs)
As at
April 1, 2015
59,352.26
1,951.00
61,303.26
The Company evaluates the concentration of risk with respect to trade receivables as low as majority of its customers are reputed
telecom companies and are spread across multiple geographies.
c. Other financial assets and deposits with banks
Credit risk is limited as Company generally invests in deposits with banks with high credit ratings assigned by international and
domestic credit rating agencies. Counter-party credit limits are reviewed by the Company periodically and the limits are set to minimise
the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
ii
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market
interest rates. The Company’s debt obligations are: 1) FCCBs which carry a fixed coupon rate and 2) Short term borrowings in nature of
working capital loans, which carry floating interest rates. Accordingly, the Company’s risk of changes in interest rates relates primarily
to the Company’s debt obligations with floating interest rates.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant. The impact on entity’s loss before tax due to change in the interest rate/ fair value of financial liabilities are as disclosed
below:
Particulars
Working capital loans
iii
Liquidity risk
(C in Lakhs)
Year ended March 31, 2017
Year ended March 31, 2016
Change in
interest rate
+1%
-1%
Effect of profit
before tax
(94.41)
94.41
Change in
interest rate
+1%
-1%
Effect of profit
before tax
(107.85)
107.85
The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The
Company believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is
perceived.
The break-up of cash and cash equivalents, deposits and investments is as below:
(
Particulars
Cash and cash equivalents
Other balances with banks
| 138 |
C in Lakhs)
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
151.27
126.14
277.41
195.53
59.31
254.84
130.72
15.65
146.37
Notes to the standalone financial statements for the year ended March 31, 2017
The table below summarises the maturity profile of the Company’s financial liabilities at the reporting date. The amounts are based
on contractual undiscounted payments.
Particulars
On demand
0-180 Days
180-365 Days
(C in Lakhs)
Total
365 Days and
above
As at March 31, 2017
Trade payables
Borrowings
Other financial liabilities
As at March 31, 2016
Trade payables
Borrowings
Other financial liabilities
iv Market risk
238.17
-
-
238.17
250.63
-
-
250.63
9,398.71
10,924.51
1,198.64
21,521.86
253.14
-
-
253.14
4,492.79
-
-
4,492.80
14,382.81
10,924.51
1,198.64
26,505.96
10,903.64
10,395.74
696.82
21,996.20
322.44
1,590.12
-
1,912.56
33,694.74
3,014.60
610.48
37,319.82
45,171.87
15,000.46
1,307.30
61,479.21
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Company’s exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily
in United States Dollars (‘USD’). Company also has exposures to Great Britain Pound (‘GBP’) and United Arab Emirates Dirham (‘AED’).
The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities and
financing activities.
March 31, 2017
Particulars
Financial assets
Trade receivables
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
USD
8,267.06
2,056.95
10,324.01
2,786.39
6,124.13
2,793.42
11,703.94
(1,379.93)
Currency
GBP
AED
Others
6,124.69
0.32
6,125.01
1,978.76
6,697.41
-
8,676.17
(2,551.16)
1,667.38
42.17
1,709.55
72.74
100.36
2.67
175.77
1,533.78
2,089.84
111.86
2,201.70
818.18
682.47
3.37
1,504.02
697.68
(C in Lakhs)
Total
18,148.97
2,211.30
20,360.27
5,656.07
13,604.37
2,799.46
22,059.90
(1,699.63)
| 139 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
March 31, 2016
Particulars
Financial assets
Trade receivables
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
Sensitivity analysis
USD
Currency
GBP
AED
Others
(C in Lakhs)
Total
23,559.32
1,362.18
24,921.50
20,377.04
0.90
20,377.94
2,112.27
78.29
2,190.56
2,854.18
32.02
2,886.20
48,902.81
1,473.39
50,376.20
6,840.48
23,732.40
2,661.62
33,234.50
(8,313.00)
3,927.41
20,195.73
-
24,123.14
(3,745.20)
66.17
128.13
0.13
194.43
1,996.13
659.10
606.70
0.17
1,265.97
1,620.23
11,493.16
44,662.96
2,661.92
58,818.04
(8,441.84)
Every 1% increase or decrease of the respective foreign currencies compared to functional currency of the Company would cause the
profit before exceptional items in proportion to revenue to decrease or increase respectively by 0.02% (loss before exceptional items
for the year ended March 31, 2016 by 0.27%).
Note 41. ADOPTION OF IND AS
A
First time adoption
These financial statements, for the year ended March 31, 2017, have been prepared in accordance with Ind AS. For the year
ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified
under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014
(‘Indian GAAP’ or ‘ Previous GAAP’).
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ending on March
31, 2017 together with the comparative period data, as described in the summary of significant accounting policies. In
preparing these financial statements, the Company’s opening balance sheet was prepared as at April 1, 2015, the Company’s
date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP
financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended
March 31, 2016.
B
Exemption applied
Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind
AS. The Company has applied the following exemptions:
1
2
The Company has elected to avail exemption under Ind AS 101 to use Indian GAAP carrying value as deemed cost at the date
of transition for all items of property, plant and equipment and intangible assets as per the statement of financial position
prepared in accordance with previous GAAP.
Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that
vested before April 1, 2015.
| 140 |
Notes to the standalone financial statements for the year ended March 31, 2017
C
1
Reconciliation of total equity between previous GAAP and Ind AS
Equity reconciliation:
(a) For the year ended March 31, 2016
Particulars
Equity as reported under previous GAAP
Effect of transition to Ind AS
(i) Impact on measurement of long term borrowings at fair value:
(a) Fair valuation of FCCBs
(ii) Provision for expected credit loss
(iii) Impact of deferral of revenue pertaining to free support services
(iii) Others (net)
Equity as per Ind AS
(b) As at April 01, 2015
Particulars
Equity as reported under previous GAAP
Effect of transition to Ind AS
(i) Impact on measurement of long term borrowings at fair value
(a) Fair valuation of FCCBs
(ii) Provision for expected credit loss
(iii) Impact of deferral of revenue pertaining to free support services
(iii) Others (net)
Equity as per Ind AS
2
Total comprehensive income reconciliation for the year ended March 31, 2016
Particulars
Net loss under previous GAAP
Effect of transition to Ind AS
(i) Measurement of FCCBs at fair value
(a) Impact on finance cost due to effective interest rate and transfer of interest no longer
payable to retained earnings on conversion of FCCBs into equity shares.
(b) Impact on foreign exchange due to change in carrying value of FCCBs and related account
balances and transfer of exchange gain to retained earnings on conversion of FCCBs into
equity shares.
(ii) Provision for expected credit loss
(ii) Impact of deferral of revenue pertaining to free support services
(iv) Others (net)
Net loss after tax as per Ind AS
Other comprehensive income
Total comprehensive income as per Ind AS
Notes
41 D(1)
41 D(2)
41 D(3)
41 D(4) & (5)
Notes
41 D(1)
41 D(2)
41 D(3)
41 D(4) & (5)
Notes
41 D(1)
41 D(2)
41 D(3)
41 D(4) & (5)
41 D(5)
(C in Lakhs)
As at
March 31, 2016
63,485.00
386.61
(13.41)
(187.00)
46.91
63,718.11
(C in Lakhs)
As at
April 01, 2015
28,892.74
4,456.58
(5,919.69)
(185.10)
18.55
27,263.08
(C in Lakhs)
Year ended
March 31, 2016
(13,194.44)
(11,891.15)
(1,846.23)
5,906.28
(1.90)
30.75
(20,997.69)
(5.04)
(21,002.73)
| 141 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
D Notes to reconciliation between Previous GAAP and Ind AS:
1
Fair valuation of foreign currency convertible bonds:
In accordance with the recognition and measurement principles laid down in Ind AS, the Company has revised the accounting
treatment in respect of FCCBs with effect from the transition date. As required by the applicable Ind AS, the Company has identified
FCCBs as compound financial instruments and identified the equity component on the date of inception of the bonds. The fair value
of the liability component is re-evaluated at each date of significant modification. The fair value of the liability is computed by
amortised cost method by discounting the liability using the applicable effective interest rate as at the date of the last significant
modification. The difference between the carrying value as per previous GAAP and as per Ind AS as at April 1, 2015 is adjusted
through ‘Surplus/ (deficit) in the statement of profit and loss’. Subsequently interest cost is recognised at the effective interest
rate in the ‘standalone statement of profit and loss’.
Similarly, the non-current portion of interest accrued but not due on FCCBs is carried at amortised cost by discounting the same to
its fair value and the difference between the carrying value as per previous GAAP and as per Ind AS as at April 1, 2015 is adjusted
through ‘Surplus/ (deficit) in statement of profit and loss’. Subsequently interest cost is recognised at the effective interest rate in
the ‘standalone statement of profit and loss’.
Under the previous GAAP, upon conversion of FCCBs III into equity shares, the interest accrued but not due pertaining to the
converted FCCBs and foreign exchange gain on FCCBs conversion was credited to the ‘standalone statement of profit and loss’ as
‘exceptional item’. Under Ind AS, such conversion is treated as extinguishment of liability and the gain on such extinguishment of
liability of FCCBs is required to be credited to ‘other equity’ and not recognised through the ‘standalone statement of profit and
loss’. Accordingly, the excess of amortised cost of liability (i.e., principle and interest accrued but not due pertaining to converted
FCCBs) over share capital and securities premium on conversion of FCCBs is credited to ‘Surplus/ (deficit) in the statement of profit
and loss’.
Under previous GAAP, exchange gain/ loss on restatement of FCCBs was not immediately charged to the standalone statement
of profit and loss and deferred over the contractual life of the FCCBs, by crediting/ debiting ‘Foreign currency monetary item
translation difference’, under reserves and surplus. Under Ind AS gain/ loss on restatement of FCCBs is immediately recognised in
the standalone statement of profit and loss in the period in which such gain/ loss occurs.
2
Provision for expected credit loss
Under the previous GAAP the Company had provided for trade receivables from its subsidiaries based on managements assessment
regarding recoverability of such balances as at March 31, 2016. Under Ind AS the Company has provided for the expected credit
loss on aged trade receivables from its subsidiaries, by discounting the net trade receivables to its present value on the basis of
expected date of collection and risk free interest rate. The difference between the carrying value and discounted value of such net
trade receivables as at April 1, 2015 was charged to ‘Surplus/ (deficit) in the statement of profit and loss’ as provision for doubtful
receivables (expected credit loss). Accordingly, the provision recognised under previous GAAP during the year ended March 31,
2016 is reduced by such amount.
3 Deferred revenue
Under the previous GAAP, the cost related to free support services was deferred and charged to the ‘standalone statement of profit
and loss’ over the period of the free support services. Under Ind AS, the fair value of revenue in relation to free support services
is deferred and recognised over the period of free support services. Accordingly, the adjustment of deferred revenue as at April
1, 2015 is debited to ‘Surplus/ (deficit) in the statement of profit and loss’ and debited to revenue for the year ended March 31,
2016. Further, the cost deferred under previous GAAP is reversed through the ‘standalone statement of profit and loss’ for the year
ended March 31, 2016 as a transition adjustment.
| 142 |
Notes to the standalone financial statements for the year ended March 31, 2017
4
Security deposits and rent equilisation reserve
Under Ind AS interest free security deposits are carried at amortised cost by, discounting the same using interest rates applicable
to the counter party. The difference between transaction cost and fair value is recognised as prepaid lease and amortised over the
period of the lease on a straight-line basis. Further, interest income is recognised on the amortised cost of the security deposits
over the lease period.
Under pervious GAAP operating lease expenses were recognised in the ‘standalone statement of profit and loss’ on a straight
line basis over the lease term. The difference between lease expense recognised in the ‘standalone statement of profit and
loss’ and contractual lease payments was recognised as ‘rent equalisation reverse’. Under Ind AS when the escalations in lease
payments are linked to inflation, the operating lease expenses are recognised in the ‘standalone statement of profit and loss’ as
per the terms of the lease arrangement. Accordingly, rent equalisation as at April 1, 2015 was reversed to ‘Surplus/ (deficit) in the
statement of profit and loss’ and for the year ended March 31, 2016, the same was reversed through the ‘standalone statement
of profit and loss’.
5
Employee benefits
Under previous GAAP, actuarial gains and losses were recognized in the statement of profit and loss. Under Ind AS, the actuarial
gains and losses form part of remeasurement of net defined benefit liability/asset which is recognized in other comprehensive
income in the respective periods.
Note 42. STANDARDS ISSUED BUT NOT YET EFFECTIVE:
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017,
notifying amendments to Ind AS 7,‘Statement of cash flows’ and Ind AS 102, ‘Share-based payment.’ These amendments are in
accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ‘Statement of cash
flows’ and IFRS 2, ‘Share-based payment,’ respectively. The amendments are applicable to the Company from April 1, 2017.
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate
changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes,
suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from
financing activities, to meet the disclosure requirement.
The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial
statements.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled
awards and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled
awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and
non-vesting conditions are reflected in the ‘fair values’, but non-market performance conditions and service vesting conditions are
reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions
of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based
payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires
the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The
cash payment to the tax authority is treated as if it was part of an equity settlement.
The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial
statements.
| 143 |
SUBEX LIMITED Annual Report 2016-17
Notes to the standalone financial statements for the year ended March 31, 2017
NOTE 43. DETAILS OF SPECIFIED BANK NOTES (SBN):
During the year, the Company had specified bank notes or other denomination notes as defined in the MCA notification G.S.R. 308(E)
dated March 31, 2017 and the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016
to December 30, 2016 is given below:
Particulars
SBN's
Total
Other
denomination
notes
Closing cash in hand as on November 08, 2016
Add: Permitted receipts
Add: Withdrawals from bank accounts
Less: Permitted payments
Less: Amount deposited in bank accounts
Closing cash in hand as on December 30, 2016
0.02
-
-
(0.02)
-
-
0.07
-
1.15
(1.19)
(0.03)
-
0.09
-
1.15
(1.21)
(0.03)
-
For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the
Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the November 08, 2016.
Note 44. COST OF HARDWARE, SOFTWARE AND SUPPORT CHARGES:
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.
Cost of hardware, software and support charges for the year ended March 31, 2017 is net of reversal of provision no longer required
amounting to C Nil (March 31, 2016: C173.46 Lakhs)
Note 45
As at March 31, 2017, the Company has assessed the carrying value of the investment in its wholly owned subsidiary viz., Subex (UK)
Limited of C64,738.68 Lakhs. 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, 2017
is appropriate.
Note 46
Subsequent to balance sheet date, the Company has made an allotment of 55,094,999 equity shares of the Company on a preferential
basis, at an issue price of C14 per equity share (Face value of C10 per equity share) amounting to C7,713.30 Lakhs.
Note 47
The Company had remitted the withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961
amounting to C1,051.60 Lakhs pertaining to FCCBs III which have been converted into equity shares of the Company. Pursuant to such
conversion, the interest accrued but not due is considered no longer payable and the management basis expert advice, is of the view
that the withholding taxes paid by the Company in respect of the aforesaid interest, are recoverable from income tax department and/
or are adjustable against its other withholding taxes obligations. Accordingly, in the current year the Company has revised the returns
of withholding taxes and adjusted withholding taxes of C1,036.59 Lakhs (March 31, 2016: C Nil) on salary, professional services and
others by write-back of withholding taxes on interest on FCCBs paid earlier, and such write back is included under other income.
| 144 |
Notes to the standalone financial statements for the year ended March 31, 2017
Note 48
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, 2017 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 standalone financial statements, particularly on account of tax expense and that of provision for
taxation.
Note 49
As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (‘CSR’) committee has been formed by Subex Limited.
The primary function of the Committee is to assist the Board of Directors in formulating a CSR Policy and review the implementation
and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on
persons with disabilities. The Company has incurred losses during the three immediately preceding financial years and accordingly,
is not required to spend any amount for this purpose. However, during the year ended March 31, 2017, the Company has voluntarily
incurred an expense of C3.60 Lakhs towards CSR activities.
Note 50
The standalone financial information of the Company for transition date i.e. opening standalone balance sheet date being April 01,
2015 included in these standalone financial statements, are based on the previously issued standalone financial statements which
were prepared under previous GAAP and audited by a firm of Chartered Accountants other than S.R. Batliboi & Associates LLP as
adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by
us.
The comparative standalone financial information as at and for the year ended March 31, 2016 have been compiled after making
necessary Ind AS adjustments to the audited standalone financial statements prepared under previous GAAP to give a true and fair
view in accordance with Ind AS.
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 145 |
SUBEX LIMITED Annual Report 2016-17
FORM AOC 1
(Information in respect of each Subsidiary to be presented with amounts in C Lakhs)
Particulars
Reporting period of the
subsidiary concerned
Reporting Currency
Exchange rate as on the last
date of relevant finanacial
year in the case of foreign
subsidiaries
Share Capital
Reserve & Surplus
Total Assets
Total Liabilities
Investments
Turnover*
Profit/ (Loss) before tax
Profit / (Loss) after tax
Proposed Dividend
% of Shareholding
Date of Acquisition
Name of the subsidiary
Subex (Aisa
Pacific) PTE
Ltd
March 31,
2017
SGD
46.41
Subex
(UK)
Limited
March 31,
2017
GBP
80.90
Subex
Americas
Inc
March 31,
2017
USD
64.85
Subex
Incorporated
March 31,
2017
USD
64.85
Subex
Technologies
Ltd.**
March 31, 2017
INR
1.00
Subex
Middle
East
March 31,
2017
AED
17.66
Subex
Technologies
Inc**
March 31, 2017
USD
64.85
0.00
(2,377.59)
4,549.34
(6,926.93)
-
2,555.14
987.36
892.01
-
100%
June 23,
2006
40.60
9,692.47
18,526.15
(8,793.08)
496.35
17,618.54
2,465.75
1,858.90
-
100%
June 23,
2006
38,770.44
(39,951.24)
11,244.46
(12,425.25)
0.88
3,186.49
3,017.63
3,011.66
-
100%
April 1,
2007
0.00
(3,049.73)
5,060.86
(8,110.59)
-
10,694.48
171.43
116.79
-
100%
June 23, 2006
500.00
(470.88)
104.66
(75.54)
-
-
(1.37)
54.44
-
100%
March 28,
2005
27.06
44.37
1,421.92
(1,350.49)
-
1,706.16
35.36
35.36
-
100%
March 25,
2015
-
(2,090.58)
(0.05)
-
-
-
(1.45)
(1.45)
-
100%
Jan 12, 2000
* Turnover includes inter company transactions.
** Non-operating entity.
For and on behalf of the Board of Directors
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 146 |
Consolidated
Financial
Statement
| 147 |
SUBEX LIMITED Annual Report 2016-17 INDEPENDENT AUDITOR’S REPORT
To the Members of
Subex Limited
Report on the Consolidated Ind AS Financial Statements
We have audited the accompanying consolidated Ind AS financial
statements of Subex Limited (hereinafter referred to as “the
Holding Company”) and its subsidiaries (the Holding Company
and its subsidiaries together referred to as “the Group”),
comprising of the consolidated Balance Sheet as at March 31,
2017, the consolidated Statement of Profit and Loss, including
Other Comprehensive Income, the consolidated Statement of
Cash Flows, the consolidated Statement of Changes in Equity for
the year then ended and a summary of significant accounting
policies and other explanatory information (hereinafter referred
to as “the consolidated Ind AS 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 Ind AS 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 including
other comprehensive income, consolidated cash flows and
consolidated changes in equity 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 and
the Companies (Indian Accounting Standard) Rules, 2015, as
amended. 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 consolidated Ind AS 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 Ind AS financial statements by
the Directors of the Holding Company, as aforesaid.
| 148 |
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated
Ind AS 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
consolidated Ind AS financial statements are free from material
misstatement.
An audit
involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated
Ind AS financial statements. The procedures selected depend
on the auditor’s judgment, including the assessment of the
risks of material misstatement of the consolidated Ind AS
financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal financial
control relevant to the Holding Company’s preparation of
the consolidated Ind AS 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 Ind AS 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 Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid consolidated Ind
AS 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, 2017, their consolidated loss including other comprehensive
income, their consolidated cash flows and the consolidated
changes in equity for the year then ended.
Report on Other Legal and Regulatory Requirements
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 Ind AS financial statements;
(b) In our opinion proper books of account as required by law
relating to preparation of the aforesaid consolidated Ind
AS financial statements have been kept so far as it appears
from our examination of those books;
(c) The consolidated Balance Sheet, the consolidated Statement
of Profit and Loss including Other Comprehensive Income,
the consolidated Statement of Cash Flows and consolidated
Statement of Changes in Equity dealt with by this Report are
in agreement with the books of account maintained for the
purpose of preparation of the consolidated Ind AS financial
statements;
(d) In our opinion, the aforesaid consolidated Ind AS financial
statements comply with the Accounting Standards specified
under section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and Companies (Indian
Accounting Standard) Rules, 2015, as amended;
(e) On the basis of the written representations received from
the directors of the Holding Company and its subsidiary
company, incorporated in India as on March 31, 2017 and
taken on record by the Board of Directors of the Holding
Company and the subsidiary company respectively, none of
the directors is disqualified as on March 31, 2017 from being
appointed as a director in terms of Section 164 (2) of the
Act.
(f) With
to
respect
the adequacy and
the operating
effectiveness of the internal financial controls over financial
reporting of the Holding Company and its subsidiary
company, incorporated in India, 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.
ii.
The Group has disclosed the impact of pending
litigations on its consolidated financial position in its
consolidated Ind AS financial statements – refer note
34(b) to the consolidated Ind AS financial statements;
The Group, did not have any long-term contracts
including derivative contracts for which there were any
material foreseeable losses;
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 during the year ended
March 31, 2017; and
in
India, have provided
iv. The Holding Company and its subsidiary company,
incorporated
requisite
disclosures in note 43 to these consolidated Ind AS
financial statements as to the holding of Specified Bank
Notes on November 8, 2016 and December 30, 2016
as well as dealings in Specified Bank Notes during the
period from November 8, 2016 to December 30, 2016.
Based on our audit procedures and relying on the
management representation of the Holding Company
and its subsidiary company regarding the holding
and nature of cash transactions, including Specified
Bank Notes, we report that these disclosures are in
accordance with the books of accounts maintained by
the Group and as produced to us by the Management of
the Holding Company.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru
Date: May 25, 2017
| 149 |
SUBEX LIMITED Annual Report 2016-17
Annexure 1 to the Independent Auditor’s Report of even date on the Consolidated Ind AS 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 company (which are companies incorporated in India),
as of and for the year ended March 31, 2017 in conjunction with
our audit of the consolidated Ind AS financial statements of
Subex Limited and its subsidiary company as of and for the year
then ended.
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
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.
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 consolidated Ind AS 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 the
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 disposition of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of the 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.
| 150 |
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
improper management override of controls, material
or
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 and 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,
2017, 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 Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru
Date: May 25, 2017
| 151 |
SUBEX LIMITED Annual Report 2016-17 Consolidated balance sheet as at March 31, 2017
(C in Lakhs)
Notes
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
ASSETS
Non-current assets
Property, plant and equipment
Goodwill on consolidation
Other intangible assets
Financial assets
Loans
Other balances with banks
Other financial assets
Income tax assets (net)
Deferred tax assets
Other non-current assets
Current assets
Financial assets
Loans
Trade receivables
Cash and cash equivalents
Other financial assets
Other current assets
Total assets
EQUITY AND LIABILITIES
Equity
Equity share capital
Other equity
Total equity
Liabilities
Non-current liabilities
Financial liabilities
Borrowings
Other financial liabilities
Provisions
Current liabilities
Financial liabilities
Borrowings
Trade payable
Other financial liabilities
Other current liabilities
Provisions
Income tax liabilities (net)
Total liabilities
Total equity and liabilities
3
5
4
6
7
10
11
12
13
6
8
9
10
13
14
15
16
18
20
16
17
18
19
20
21
785.05
65,882.22
137.63
398.82
257.73
233.80
1,976.68
478.13
564.33
70,714.39
195.56
11,851.15
7,386.10
4,508.42
1,013.20
24,954.43
95,668.82
50,690.79
17,717.97
68,408.76
-
-
296.79
296.79
8,589.91
1,804.91
11,922.51
3,085.01
676.57
884.36
26,963.27
27,260.06
95,668.82
647.60
76,772.22
81.99
365.48
237.67
234.69
1,665.45
383.93
616.88
81,005.91
198.78
11,148.15
8,599.63
2,551.44
706.95
23,204.95
104,210.86
708.93
85,642.22
108.92
752.23
751.92
233.80
1,680.94
-
266.90
90,145.86
329.69
10,859.88
4,918.08
5,091.65
589.24
21,788.54
111,934.40
50,281.16
23,101.60
73,382.76
18,292.26
6,894.90
25,187.16
4,056.52
571.08
295.47
4,923.07
10,395.74
1,676.58
9,966.75
2,434.87
653.21
777.88
25,905.03
30,828.10
104,210.86
55,275.65
7,354.05
320.16
62,949.86
12,506.54
3,414.50
5,083.94
1,965.30
542.50
284.60
23,797.38
86,747.24
111,934.40
Corporate information and significant accounting policies
The accompanying notes are an integral part of the financial statements
1 & 2
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
| 152 |
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
Consolidated statement of profit and loss for the year ended March 31, 2017
(C in Lakhs)
Notes
Year ended
March 31, 2017
Year ended
March 31, 2016
22
23
24
25
26
27
28
29
1
2
3
4
5
6
7
8
9
Income
Revenue from operations
Other income
Total income
Expenses
Cost of hardware, software and support charges
Employee benefits expense
Other expenses
Depreciation and amortization
Total expenses
Earnings before interest, exceptional items and tax (EBIT) (1-2)
Finance Income
Finance cost
Profit before exceptional items and tax (3+4-5)
Exceptional items (net)
Loss before tax (6+7)
Tax expense: (refer note 21)
Current tax
Deferred tax (MAT credit entitlement)
Loss for the year (8-9)
10
11 Other comprehensive income ('OCI'), net of tax
OCI to be reclassified to profit or loss in subsequent periods:
Net Exchange differences on translation of foreign operations
OCI not to be reclassified to profit or loss in subsequent periods:
Re-measurement losses on defined benefit plans
12
Total comprehensive income for the year attributable to equity holders of
the Company (10+11)
13 Basic and diluted loss per equity share (nominal value of share C10 (March
30
31, 2016 : C10)
Corporate information and significant accounting policies
The accompanying notes are an integral part of the consolidated financial statements
1 & 2
35,733.15
1,091.03
36,824.18
693.81
15,871.06
10,259.29
494.52
27,318.68
9,505.50
62.55
2,040.08
7,527.97
(10,890.00)
(3,362.03)
1,055.04
(94.20)
960.84
(4,322.87)
32,245.77
116.46
32,362.23
41.56
16,034.15
9,460.00
427.49
25,963.20
6,399.03
66.19
6,151.60
313.62
(6,469.44)
(6,155.82)
1,657.00
(383.93)
1,273.07
(7,428.89)
(1,343.39)
(1,828.23)
(32.30)
(1,375.69)
(5,698.56)
(5.04)
(1,833.27)
(9,262.16)
(0.85)
(2.56)
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 153 |
SUBEX LIMITED Annual Report 2016-17
Consolidated statement of change in equity for the year ended March 31, 2017
A. Equity share capital (refer note 14):
Particulars
Equity shares of C10 each issued, subscribed and fully paid up
As at April 1, 2015
Issued during the year - Conversion of FCCBs*
As at March 31, 2016
Issued during the year - Conversion of FCCBs*
As at March 31, 2017
B. Other equity ( refer note 15): (
No.
C in Lakhs
182,922,575
319,889,071
502,811,646
4,096,290
506,907,936
18,292.26
31,988.90
50,281.16
409.63
50,690.79
C in Lakhs)
Attributable to equity holders of the Company
Reserves and surplus
Securities
premium
General
reserve
Employee
stock options
reserve
Equity
component
of compound
financial
instruments
4,648.16
-
-
13,215.75
-
-
1,779.76
-
-
78.10
-
-
OCI
Total
Surplus /
(deficit)
in the
statement
of profit and
loss
(4,388.37)
(7,428.89)
(5.04)
Exchange
reserve on
consolidation
(8,438.50)
-
(1,828.23)
6,894.90
(7,428.89)
(1,833.27)
(4,388.76)
11,161.84
-
-
-
-
-
18,757.58
(62.15)
-
-
-
-
259.40
-
-
-
24,377.59
-
-
-
1,779.76
-
-
0.35
16.30
-
-
-
6,935.28
(4,322.87)
(32.30)
-
(10,266.73)
-
(1,343.39)
(54.16)
122.89
-
-
-
-
-
256.06
(10.11)
-
-
-
25,530.66
(62.15)
0.35
23,101.60
(4,322.87)
(1,375.69)
324.79
(10.11)
-
205.24
-
24,500.48
-
1,779.76
0.25
6.44
-
2,836.17
-
(11,610.12)
0.25
17,717.97
As at April 1, 2015
Loss for the year
Less: Other comprehensive income
Add/ (less): On account of conversion of
FCCBs*
Less : Compensation on ESOP cancelled/
lapsed during the year
Deferred stock compensation expenses
As at March 31, 2016
Loss for the year
Less: Other comprehensive income
Add/ (less): On account of conversion of
FCCBs*
Less : Compensation on ESOP cancelled/
lapsed during the year
Deferred stock compensation expenses
As at March 31, 2017
* Refer note 31 regarding conversion of FCCBs into equity shares of the Company.
Corporate information and significant accounting policies
The accompanying notes are an integral part of the financial statements
(refer note 1 & 2)
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
| 154 |
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
Consolidated statement of cash flows for the year ended March 31, 2017
(C in Lakhs)
(A) Operating activities
Loss before tax
Adjustments to reconcile loss before tax to net cash flows:
Depreciation of property, plant and equipment
Amortization of intangible assets
(Gain)/loss on disposal of property, plant and equipment (net)
Finance income (including fair value changes)
Finance costs (including fair value changes)
Provision for doubtful debts
Impairment of goodwill (exceptional item)
Write back of withholding taxes paid earlier
Amortised cost of deposits
Fair value change in financial instruments
Net foreign exchange differences
Operating profit before working capital changes
Working capital adjustments:
(Increase)/decrease in loans
(Increase)/decrease in trade receivables
(Increase)/decrease in other financial assets
(Increase)/decrease in other assets
Increase/(decrease) in trade payables
Increase/(decrease) in other financial liabilities
Increase/(decrease) in other current liabilities
Increase/(decrease) in provisions
Income tax paid (including TDS) (net)
Net cash flows from operating activities
(B) Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Movement in deposits (net)
Interest received
Net cash flows (used in)/from investing activities
Year ended
March 31, 2017
Year ended
March 31, 2016
(3,362.03)
(6,155.82)
458.32
36.20
(0.75)
(62.55)
2,040.08
1,203.29
10,890.00
(1,036.59)
52.95
20.54
(320.89)
9,918.57
(31.90)
(2,744.99)
(2,173.62)
(308.35)
192.78
(159.36)
1,928.40
8.04
6,629.57
(1,237.57)
5,392.00
(604.27)
(92.07)
1.64
(29.08)
20.37
(703.41)
378.71
48.78
0.34
(66.19)
3,751.04
(439.03)
8,870.00
-
62.63
1,846.23
(1,196.07)
7,100.62
165.42
340.60
2,589.99
(105.36)
(2,414.07)
(283.18)
364.37
32.12
7,790.51
(1,152.14)
6,638.37
(304.46)
(21.60)
1.23
485.65
2.38
163.20
| 155 |
SUBEX LIMITED Annual Report 2016-17 Consolidated statement of cash flows for the year ended March 31, 2017
(C in Lakhs)
(C) Financing activities
Movement in working capital loans (net)
Interest paid
Repayment of borrowings (FCCBs I and II)
Net cash flows used in financing activities
(D) Net (decrease)/ increase in cash and cash equivalents (A+B+C)
Net foreign exchange difference
Cash and cash equivalents at the beginning of the year
Year ended
March 31, 2017
Year ended
March 31, 2016
(1,980.52)
(1,258.28)
(2,248.68)
(5,487.48)
(798.89)
(414.64)
8,599.63
(2,263.50)
(1,372.27)
-
(3,635.77)
3,165.80
515.75
4,918.08
(E) Cash and cash equivalents at year end
7,386.10
8,599.63
Corporate information and significant accounting policies (refer note 1 & 2)
The accompanying notes are an integral part of the consolidated financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 156 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 1. Corporate information
Subex Limited (“the Company” or “Subex” or “holding company”) 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.
The consolidated financial statements for the year ended March 31, 2017 comprise financial statements of Subex Limited and its
subsidiaries (collectively hereafter referred to as “the Group”).
These consolidated financial statements for the year ended March 31, 2017 are approved by the Board of Directors on May 25,
2017.
Following subsidiaries have been considered in the preparation of the consolidated financial statements:
Name of the entity
Country of incorporation
Ownership held by
(Wholly owned Subsidiary)
Subex Americas Inc.
Canada
United Kingdom
United States of America
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited Singapore
Subex Middle East, FZE
Subex Technologies Limited*
Subex Technologies Inc.*
United Arab Emirates
India
United States of America
Subex Azure Holdings Inc.*
United States of America
* Represents non-operating companies.
Subex Limited &
Subex (UK) Limited
Subex Limited
Subex (UK) Limited
Subex (UK) Limited
Subex Limited
Subex Limited
Subex Technologies
Limited
Subex Americas Inc.
% of holding and voting power
either directly or indirectly through
subsidiary as at
March 31, 2017
100
March 31, 2016
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
All the above subsidiaries are under the same management and are engaged in the same principle activities as the holding
company.
Note 2. Significant accounting policies
a. Basis of preparation
In accordance with the notification issued by the Ministry of Corporate Affairs, the Group has adopted Indian Accounting
Standards (‘Ind AS’) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian
Accounting Standards) amendment Rules 2016, as amended with effect from April 1, 2016. The consolidated financial
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SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
statements of the Group have been prepared and presented in accordance with Ind AS. Previous year numbers in the
consolidated financial statements have been restated to Ind AS. In accordance with Ind AS 101 First-time Adoption of Indian
Accounting Standards, the Group has presented a reconciliation from the presentation of consolidated financial statements
under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”) to Ind AS
of Shareholders’ equity as at March 31, 2016 and April 1, 2015 and of the comprehensive net income for the year ended
March 31, 2016. (refer note 41 for reconciliations and effects of transition).
The consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments
which are measured at fair values at the end of each reporting period, as explained further in the accounting policies below.
The consolidated financial statements are presented in INR (‘H’) and all the values are rounded off to the nearest lakhs (INR
00,000) except when otherwise indicated.
b. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at March 31,
2017 as disclosed in note 1. Control exists when the parent has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the subsidiary.
Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events
in similar circumstances. If a member of the group uses accounting policies other than those adopted in the consolidated
financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that
group member’s financial statements in preparing the consolidated financial statements to ensure conformity with the
group’s accounting policies.
The financial statements of all entities used for the purpose of consolidation are drawn up to same reporting date as that of
the parent company, i.e., year ended on March 31. When the end of the reporting period of the parent is different from that of
a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial information as of the same date as the
financial statements of the parent to enable the parent to consolidate the financial information of the subsidiary, unless it is
impracticable to do so.
Consolidation procedure:
i.
Combine like items of assets, liabilities, income, expenses and cash flows of the parent with those of its subsidiaries. For this
purpose, income and expenses of the subsidiary are based on the amounts of the assets and liabilities recognised in the
consolidated financial statements at the acquisition date.
ii. Offset (eliminate) the carrying amount of the parent’s investment in each subsidiary and the parent’s portion of equity of
each subsidiary. 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 subsidiaries 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
| 158 |
Notes to the consolidated financial statements for the year ended March 31, 2017
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 Other equity, 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. Eliminate in full intragroup assets and liabilities, income, expenses and cash flows relating to transactions between entities
of the group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed
assets, are eliminated in full).
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of
the Group.
c. Use of estimates, assumptions and judgements
The preparation of the consolidated financial statements in conformity with Ind AS requires the management to make
estimates, judgements and assumptions that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities on the date of the consolidated financial statements and the reported amounts of revenues
and expenses for the year reported. Actual results could differ from those estimates. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are
revised and future periods are affected.
Key source of estimation of uncertainty as at the date of consolidated financial statements, which may cause a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of the following:
•
Revenue recognition
The Group uses the percentage of completion method in accounting for revenue from implementation and customisation
projects. Use of the percentage of completion method requires the Group to estimate the completed efforts as a proportion
of the total efforts. Efforts have been used to measure progress towards completion as there is a direct relationship between
input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the year in which
such losses become probable based on the expected contract estimates at the reporting date.
•
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is
the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based
on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices
less incremental costs for disposing of the asset. The value in use calculation is based on a Discounted Cash Flow model.
The cash flows are derived from the budget for future years and do not include restructuring activities that the Group is not
yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The
recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and
the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill recognized by the Group. The
key assumptions used to determine the recoverable amount for the different CGUs, are disclosed and further explained in
note 5.
•
Impairment of financial assets
The Group assesses impairment of financial assets (‘Financial instruments’) and recognises expected credit losses in
accordance with Ind AS 109. The Group provides for impairment of trade receivables and unbilled revenue outstanding for
| 159 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
more than 1 year from the date they are due for payment and billing respectively. The Group also assesses for impairment of
financial assets on specific identification basis at each period end. Also, refer note 2(j).
•
Defined benefit plans
The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity
obligation is determined using actuarial valuation. An actuarial valuation involves making various assumptions that may
differ from actual developments in the future. These include the determination of the discount rate, future salary increases
and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is
highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date (refer note 36).
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in
India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the
post-employment benefit obligation.
The mortality rate is based on publicly available mortality tables. These mortality tables tend to change only at interval in
response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation
rates.
•
Fair Value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the consolidated balance sheet cannot be measured
based on quoted prices in active markets, their fair value is measured using internal valuation techniques. The inputs to these
models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required
in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes
in assumptions about these factors could affect the reported fair value of financial instruments. Also refer note 2(l).
•
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation
model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most
appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and
making assumptions about them. The assumptions and models used for estimating fair value for share-based payment
transactions are disclosed in note 35.
•
Taxes
The Group’s two major tax jurisdictions are India and the United Kingdom, though the Group also files tax returns in other
foreign jurisdictions. Significant judgments are involved in determining the provision for income taxes, tax credits including
the amount expected to be paid or refunded. Also refer note 2(r) and note 21.
d. Current/ non-current classification
The Group presents assets and liabilities in the consolidated balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
Expected to be realised or intended to be sold or consumed in normal operating cycle
Held primarily for the purpose of trading
Expected to be realised within twelve months after the reporting period, or
•
•
•
| 160 |
Notes to the consolidated financial statements for the year ended March 31, 2017
•
•
•
•
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period
All other assets are classified as non-current.
A liability is current when:
It is expected to be settled in normal operating cycle
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash
equivalents. The group has identified twelve months as its operating cycle.
e. Business combination and goodwill
In accordance with Ind AS 101 provisions related to first time adoption, the Group has elected to apply Ind AS accounting for
business combinations prospectively from April 1, 2015. As such, Indian GAAP balances relating to business combinations
entered into before that date, including goodwill, have been carried forward with no adjustment.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and
liabilities assumed. After initial recognition, Goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of
the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
A cash generating unit to which goodwill has been allocated is tested for impairment annually as at March 31 or more
frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit
is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated
to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any
impairment loss for goodwill is recognised in the consolidated statement of profit and loss. An impairment loss recognised is
not reversed in subsequent periods.
f.
Revenue recognition
The Group derives its revenues primarily from sale and implementation of its 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, regardless of when the payment is made. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms of payment. 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.
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SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Revenue from implementation and customisation services is recognised using the percentage of completion method.
Percentage of completion is determined on the basis of completed efforts against the total estimated efforts, 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.
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.
In case of multiple element arrangements for sale of software license, related implementation and maintenance services
the Group has applied the guidance in Ind AS18, by applying the revenue recognition criteria for each separately identifiable
component of a single transaction. The arrangements generally meet the criteria for considering the sale of software license,
related implementation and maintain services as separately identifiable components. For allocating the consideration, the
Group has measured the revenue in respect of each separable component of a transaction at its fair value, in accordance
with principles given in Ind AS 18. The price that is regularly charged for an item when sold separately is the best evidence
of its fair value. In cases where the Group is unable to establish objective and reliable evidence of fair value for the aforesaid
services, the Group has used a residual method to allocate the arrangement consideration. In these cases the balance of the
consideration, after allocating the fair values of undelivered components of a transaction has been allocated to the delivered
components for which specific fair values do not exist.
The Group collects service tax, sales tax and other 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.
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 other financial assets represent revenues in excess of amounts
billed to clients as at the balance sheet date. ‘Unearned revenue’ included in other current liabilities represent billings in
excess of revenues recognized.
Interest:
Interest income is recognized as it accrues in the consolidated statement of profit and loss using effective interest rate
method.
g. Property, plant and equipment
At the date of transition to Ind AS the Group has evaluated the cost of its plant and equipment and has regarded the carrying
value under previous GAAP (‘Indian GAAP’) as at such date as the deemed cost.
Plant and equipment is 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 plant
and equipment to its working condition for the intended use and cost of replacing part of the plant and equipment. When
significant parts of plant and equipment are required to be replaced at intervals, the Group depreciates them separately
based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying
| 162 |
Notes to the consolidated financial statements for the year ended March 31, 2017
amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance
costs are recognised in the consolidated statement of profit and loss as incurred. The present value of the expected cost for
the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a
provision are met.
Gains or losses arising from derecognition of the assets are measured as the difference between the net disposal proceeds
and the carrying amounts of the assets and are recognized in the consolidated statement of profit and loss when the assets
are derecognized.
h.
Intangible assets (excluding goodwill on consolidation)
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated
intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in
consolidated statement of profit and loss in the period in which the expenditure is incurred.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
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 asset and are recognised in the consolidated statement of profit and loss when the
asset is derecognised.
i. Depreciation and amortisation
Depreciation on property, plant and equipment and amortisation on intangible assets with finite useful lives is calculated on
a straight-line basis over the useful lives of the assets estimated by the management.
The Group has used the following useful lives to provide depreciation on plant and equipment and amortisation of intangible
assets
Asset
Useful lives estimated by the management
Useful lives as per Companies Act. 2013
Computer hardware
Furniture and fixtures *
Vehicles *
Office equipments *
Computer software
3 years
5 years
5 years
5 years
4 years
3 years
10 years
8 years
3 years
As per Ind AS 38
* Based on an internal evaluation, management believes that the useful lives as given above are realistic and reflect fair
approximation of the period over which the assets are likely to be used. 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.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.
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SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
j.
Impairment
Financial Assets:
The Group assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS
109 (‘Financial instruments’) requires expected credit losses to be measured through a loss allowance. The Group recognises
lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For
all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or
at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly
since initial recognition.
Impairment of non-financial assets
Non-financial assets including Property, plant and equipment and intangible assets with finite life are evaluated for
recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication
exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an
individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets.
In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the
asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the consolidated statement of profit
and loss.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or 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.
k.
Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the
inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of
a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly
specified in an arrangement.
For arrangements entered into prior to April 1, 2015, the group has determined whether the arrangement contain lease on
the basis of facts and circumstances existing on the date of transition.
Group as a lessee:
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the
risks and rewards incidental to ownership to the Group is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if
lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are recognised in finance costs in the consolidated statement of profit and loss, unless they are directly attributable
| 164 |
Notes to the consolidated financial statements for the year ended March 31, 2017
to qualifying assets, in which case they are capitalized in accordance with the Group’s general policy on the borrowing costs.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will
obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the
asset and the lease term.
Operating lease payments are recognised as an expense in the consolidated statement of profit and loss on a straight-line
basis over the lease term unless the lease escalations are linked to inflation, in such a case the lease expense is recognised
as per the terms of the lease arrangement.
l.
Financial instruments
Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
Financial assets and liabilities are recognised when the Group becomes a party to the contract that gives rise to financial
assets and liabilities. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of
financial asset or financial liability.
Cash and cash equivalents
The Group considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that
are subject to an insignificant risk of change in value and having original maturities of three months or less from the date
of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for
withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose
objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a
business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value
through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of
financial assets at fair value through profit or loss are immediately recognised in the consolidated statement of profit and loss.
Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent
consideration recognized in a business combination which is subsequently measured at fair value through profit or loss. For
| 165 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value
due to the short maturity of these instruments.
De recognition of financial assets and liabilities
The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it
transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a
financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires. When
an existing financial asset/ liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the
statement of profit and loss.
Embedded derivatives
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the group does not separate
embedded derivatives. Rather, it applies the classification requirements contained in Ind AS 109 to the entire hybrid contract.
Derivatives embedded in all other host contracts are accounted for as separate derivatives and recorded at fair value if their
economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for
trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes
in fair value recognised in profit or loss, unless designated as effective hedging instruments.
Compound financial instruments
Compound financial instruments in form of Foreign Currency Convertible Bonds are separated into liability and equity
components based on the terms of the contract. On issuance of the Foreign Currency Convertible Bonds, the fair value of
the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is
classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or
redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity since conversion
option meets Ind AS 32 criteria for fixed to fixed classification. Transaction costs are deducted from equity, net of associated
income tax. The carrying amount of the conversion option is not remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the Foreign Currency Convertible Bonds
based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
Reclassification of financial assets
The group determines classification of financial assets and liabilities on initial recognition. After initial recognition, no
reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which
are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets.
Changes to the business model are expected to be infrequent. The group’s senior management determines change in the
business model as a result of external or internal changes which are significant to the group’s operations. Such changes are
evident to external parties. A change in the business model occurs when the group either begins or ceases to perform an
activity that is significant to its operations. If the group reclassifies financial assets, it applies the reclassification prospectively
from the reclassification date which is the first day of the immediately next reporting period following the change in business
| 166 |
Notes to the consolidated financial statements for the year ended March 31, 2017
model. The group does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there
is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to
realise the assets and settle the liabilities simultaneously.
Fair value of financial instruments
In determining the fair value of its financial instruments, the Group uses following hierarchy and assumptions that are based
on market conditions and risks existing at each reporting date.
Fair value hierarchy:
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the consolidated financial statements on a recurring basis, the Group
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
m. Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing costs.
n. Consolidated statement of cash flow
Cash flows are reported using the indirect method, whereby profit/(loss) for the period is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of
income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing
activities of the Group are segregated.
o. Employee share based payments
The Group measures compensation cost relating to employee stock option plan using the fair valuation method in accordance
with Ind AS 102, Share-Based Payment. Compensation expense is amortized over the vesting period of the option on a
straight line basis. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made
using an appropriate valuation model (Black-Scholes valuation model). That cost is recognised, together with a corresponding
| 167 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
increase in employee stock options reserves in other equity, over the period in which the performance and/or service
conditions are fulfilled in employee benefits expense. 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 dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per
share.
p. Employee benefits
Employee benefits include provident fund, pension fund, employee state insurance gratuity and compensated absences.
(a) Defined contribution plans:
Contributions payable to recognized provident funds and employee state insurance which are defined contribution schemes,
are charged to the consolidated statement of profit and loss.
(b) Defined benefit plans:
Gratuity, which is a defined benefit plan, is accrued based on an independent actuarial valuation, which is done based on
project unit credit method as at the balance sheet date. The Group recognizes the net obligation of a defined benefit plan
in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/
(asset) are recognized in other comprehensive income. In accordance with Ind AS, re-measurement gains and losses on
defined benefit plans recognised in OCI are not to be subsequently reclassified to the consolidated statement of profit and
loss. As required under Ind AS compliant Schedule III, the Group transfers it immediately to ‘Surplus/(deficit) in the statement
of profit and loss’.
(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 consolidated balance sheet, since
it does not have an unconditional right to defer its settlement for twelve months after the reporting date.
q. Foreign currencies
The Group’s consolidated financial statements are presented in INR, which is also the parent company’s functional currency.
For each entity the Group determines the functional currency and items included in the financial statements of each entity
are measured using that functional currency.
| 168 |
Notes to the consolidated financial statements for the year ended March 31, 2017
The functional currency of the Company and its Indian subsidiaries is Indian Rupee whereas the functional currency of foreign
subsidiaries is the currency of their countries of domicile. Foreign currency transactions are initially recorded in the functional
currency of the Company by applying exchange rates prevailing on the date of the transaction. For practical reasons, the
Company uses an average rate if the average approximates the actual rate at the date of the transaction. Foreign currency
denominated monetary assets and liabilities are restated into the functional currency using exchange rates prevailing on the
balance sheet date.
Gains and losses arising on settlement and restatement of foreign currency denominated monetary assets and liabilities are
included in the consolidated statement of profit and loss.
Assets and liabilities of entities with functional currency other than presentation currency have been translated to the
presentation currency using exchange rates prevailing on the balance sheet date. The statement of profit and loss have been
translated using weighted average exchange rates. The exchange differences arising on translation for consolidation are
recognised in OCI as ‘Exchange reserve on consolidation’. On disposal of a foreign operation, the component of OCI relating
to that particular foreign operation is recognised in the consolidated statement of profit and loss.
r.
Taxes on income
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year.
Current and deferred tax are recognised in the consolidated statement of profit and loss, except when they relate to items
that are recognised in other comprehensive income or directly in other equity, in which case, the current and deferred tax are
also recognised in other comprehensive income or directly in other equity, respectively.
Current income tax
Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the
taxation authorities based on the taxable income for that period. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax
Deferred income tax is recognised using the balance sheet approach, deferred tax is recognized on temporary differences
at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the
transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilized.
Deferred income taxes are not provided on the undistributed earnings of subsidiaries and branches where it is expected that
the earnings of the subsidiary or branch will not be distributed in the foreseeable future.
| 169 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset
is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
balance sheet date.
Deferred tax assets include Minimum Alternative Tax (‘MAT’) paid in accordance with the tax laws in India, which is likely
to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT
is recognized as deferred tax asset in the consolidated balance sheet when the asset can be measured reliably and it is
probable that the future economic benefit associated with the asset will be realized.
s. Provision and contingencies
Provision is recognized when an enterprise has a present obligation (legal or constructive) 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. If the effect of time value of money is material, provision is discounted using a current
pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting obligations under a contract
exceed the economic benefits expected to be received, are recognized when it is probable that an outflow of resources
embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a
reliable estimate of such obligation.
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 consolidated financial statements.
t.
Earnings/ (loss) per share
Basic earnings/ (loss) per share is computed by dividing the profit / (loss) after tax attributable to the equity holders of
the Group 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 adjusted for dividend, interest (net of any attributable taxes) 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 or increase the net loss per share. 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.
u. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker.
The Group identifies primary segments based on the dominant source, nature of risks and returns and the internal organization
| 170 |
Notes to the consolidated financial statements for the year ended March 31, 2017
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 the 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’.
v. Measurement of EBIT
As permitted by the Guidance Note on the Schedule III to the Companies Act, 2013, the Group has elected to present earnings
before interest and tax (‘EBIT’) as a separate line item on the face of the consolidated statement of profit and loss. The Group
measures EBIT on the basis of profit/(loss) from its operations. In its measurement, the Group does not include, interest
income, finance costs and tax expense.
Note 3. PROPERTY, PLANT AND EQUIPMENT (
Computer
equipment
Furniture and
fixtures
Vehicles
Office
equipment
Cost
As at April 01, 2015
Additions
Disposals
Exchange differences
As at March 31, 2016
Additions
Disposals
Exchange differences
As at March 31, 2017
Depreciation
As at April 01, 2015
Charge for the year
Disposals
Exchange differences
As at March 31, 2016
Charge for the year
Disposals
Exchange differences
As at March 31, 2017
Net block
As at April 01, 2015
As at March 31, 2016
As at March 31, 2017
623.69
281.63
(2.56)
12.73
915.49
569.49
(1.01)
(11.29)
1,472.68
-
351.38
(2.39)
0.92
349.91
429.57
(0.16)
(8.94)
770.38
623.69
565.58
702.30
15.58
6.43
-
0.59
22.60
11.39
-
(1.09)
32.90
-
5.12
-
(0.02)
5.10
6.59
-
(0.10)
11.59
15.58
17.50
21.31
0.26
0.68
-
-
0.94
11.09
-
-
12.03
-
0.16
-
-
0.16
1.91
-
-
2.07
0.26
0.78
9.96
69.40
15.72
(1.34)
1.34
85.12
12.30
(0.05)
(4.53)
92.84
-
22.05
(0.46)
(0.21)
21.38
20.25
(0.01)
(0.26)
41.36
69.40
63.74
51.48
C in Lakhs)
Total
708.93
304.46
(3.90)
14.66
1,024.15
604.27
(1.06)
(16.91)
1,610.45
-
378.71
(2.85)
0.69
376.55
458.32
(0.17)
(9.30)
825.40
708.93
647.60
785.05
| 171 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 4. INTANGIBLE ASSETS (
Gross block
As at April 01, 2015
Additions
Disposals
Exchange differences
As at March 31, 2016
Additions
Disposals
Exchange differences
As at March 31, 2017
Amortization
As at April 01, 2015
Amortization for the year
Disposals
Exchange differences
As at March 31, 2016
Amortization for the year
Disposals
Exchange differences
As at March 31, 2017
Net block
As at April 01, 2015
As at March 31, 2016
As at March 31, 2017
Computer
softwares
C in Lakhs)
Total
108.92
21.60
-
0.27
130.79
92.07
-
(0.34)
222.52
-
48.78
-
0.02
48.80
36.20
-
(0.11)
84.89
108.92
81.99
137.63
108.92
21.60
-
0.27
130.79
92.07
-
(0.34)
222.52
-
48.78
-
0.02
48.80
36.20
-
(0.11)
84.89
108.92
81.99
137.63
Note: Refer note 16 for the assets given on security.
Note 5. GOODWILL ON CONSOLIDATION
Following is the movement of carrying value of Goodwill
Carrying value as per last financial statement
Less: Impairment of goodwill (refer note 29)
Closing balance
As at
March 31, 2017
As at
March 31, 2016
76,772.22
(10,890.00)
65,882.22
85,642.22
(8,870.00)
76,772.22
(C in Lakhs)
As at
April 1, 2015
85,642.22
-
85,642.22
| 172 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Below is the Cash Generating Unit (‘CGU’) wise break-up of goodwill:
Revenue Management Solutions ('RMS')
Data Integrity Management ('DIM')
Goodwill impairment testing
As at
March 31, 2017
As at
March 31, 2016
62,156.22
3,726.00
65,882.22
67,036.22
9,736.00
76,772.22
(C in Lakhs)
As at
April 1, 2015
67,036.22
18,606.00
85,642.22
The Group tests whether goodwill has suffered any impairment on an annual basis as at March 31. The recoverable amount of a CGU is
determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based
on financial budgets approved by the management. An average of the range of each assumption used is mentioned below.
Growth rate
Operating margins
Discount rate
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
8% to 28%
23% to 29%
13% to 14%
19% to 60%
24% to 25%
12% to 14%
6% to 56%
26% to 48%
11% to 12%
The above discount rate is based on the Weighted Average Cost of Capital (WACC) which represents the weighted average return
attributable to all the assets of the CGU. These estimates are likely to differ from future actual results of operations and cash flows.
Based on the above assessment, there has been impairment of goodwill amounting to C4,880.00 Lakhs (March 31, 2016: CNil) in
relation to RMS CGU and C6,010.00 Lakhs (March 31, 2016:C8,870.00 Lakhs) in relation to DIM CGU, and such impairment is on account
of decline in operations. The aforesaid impairment has been reflected as ‘exceptional item’ (refer note 29)
Note 6. LOANS
(Unsecured, considered good)
Carried at amortised cost
Non-Current
Security deposit
Current
Loans and advances to employees
As at
March 31, 2017
As at
March 31, 2016
398.82
398.82
195.56
195.56
365.48
365.48
198.78
198.78
(C in Lakhs)
As at
April 1, 2015
752.23
752.23
329.69
329.69
| 173 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 7. OTHER BALANCES WITH BANKS (
Non-current
Other bank balances (refer note 9)
Margin money deposits*
Restricted bank balance
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
257.73
-
257.73
237.42
0.25
237.67
751.92
-
751.92
* Represents margin money deposits with banks towards the bank guarantees, having remaining maturity period of more than 12
months from the balance sheet date, these deposits are made for varying periods, depending on the requirements of business and
earn interest at the respective term deposit rates.
Note 8. TRADE RECEIVABLES
Unsecured
Carried at amortised cost
Non-current
Considered doubtful
Less: Provision for doubtful debts **
Current
Considered good
As at
March 31, 2017
As at
March 31, 2016
2,595.60
(2,595.60)
-
11,851.15
11,851.15
2,956.13
(2,956.13)
-
11,148.15
11,148.15
(C in Lakhs)
As at
April 1, 2015
5,317.63
(5,317.63)
-
10,859.88
10,859.88
* During the year ended March 31, 2017, the Group has written off bad debts amounting to C1,571.95 Lakhs (March 31, 2016 :
C1,975.31 Lakhs).
No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person.
Further, there are no trade or other receivable due from firms or private companies in which any director is a partner, a director or a
member.
Trade receivables are non-interest bearing and are generally on terms of 30 to 180 days
(This space is intentionally left blank)
| 174 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 9. CASH AND CASH EQUIVALENTS (
Current
Balance with banks
In current accounts
In EEFC accounts
Cash on hand
Non-current
Other balances with banks
Deposits with remaining maturity for more than 12 months
Less: Disclosed under other balances with banks (Non-
current) (Refer note 7)
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
7,364.18
21.13
0.79
7,386.10
257.73
257.73
(257.73)
-
8,506.69
92.12
0.82
8,599.63
237.67
237.67
(237.67)
-
4,843.65
73.66
0.77
4,918.08
751.92
751.92
(751.92)
-
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the total of current portion of cash
and cash equivalents as above .
Note 10. OTHER FINANCIAL ASSETS
Unsecured, considered good
Carried at amortised cost
Non-current
Interest accrued but not due on bank deposits
Advance recoverable from former directors (refer note 34(b))
Current
Unbilled revenue
Interest accrued but not due on bank deposits
Note 11. INCOME TAX ASSETS (NET) (
Non-current
Advance income-tax [net of provision for taxation C706.44
Lakhs (March 31, 2016: C622.15 Lakhs (April 1, 2015:C581.57
Lakhs)]
As at
March 31, 2017
As at
March 31, 2016
-
233.80
233.80
4,497.12
11.30
4,508.42
0.89
233.80
234.69
2,547.38
4.06
2,551.44
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
233.80
233.80
5,088.77
2.88
5,091.65
C in Lakhs)
As at
April 1, 2015
1,976.68
1,976.68
1,665.45
1,665.45
1,680.94
1,680.94
| 175 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 12. DEFERRED TAX ASSET (
Non-Current
Minimum alternative tax ('MAT') credit entitlement
Note 13. OTHER ASSETS (
Non-current
Balance with statutory/ government authorities*
Advance recoverable in cash or kind
Prepaid expenses
Current
Advance recoverable in cash or kind
Prepaid expenses
Advance to suppliers
Balance with statutory/ government authorities
Expenses incurred on behalf of customers
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
478.13
478.13
383.93
383.93
-
-
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
266.90
297.43
564.33
671.25
192.95
79.78
69.22
1,013.20
266.90
349.98
616.88
580.87
41.25
17.60
67.23
706.95
266.90
-
266.90
329.43
252.91
-
6.90
589.24
* Balances represents service tax erroneously paid by the Group 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 Group is
contesting the same and the management including its tax advisors are confident of obtaining the refund.
Note 14. SHARE CAPITAL
Authorised share capital
Equity shares of C10 each
As at April 1, 2015
Increase during the year
As at March 31, 2016
Increase during the year
As at March 31, 2017
Preference shares C98 each
As at April 1, 2015
Increase during the year
As at March 31, 2016
Increase during the year
As at March 31, 2017
| 176 |
No.
C in Lakhs
49,50,40,000
5,00,00,000
54,50,40,000
-
54,50,40,000
2,00,000
-
2,00,000
-
2,00,000
49,504 .00
5,000 .00
54,504.00
-
54,504.00
196.00
-
196 .00
-
196 .00
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 14. SHARE CAPITAL(contd.)
Issued, subscribed and fully paid-up share capital
Equity shares of C10 each issued, subscribed and fully paid up
As at April 1, 2015 *
Issued during the year - Conversion of FCCBs
As at March 31, 2016
Issued during the year - Conversion of FCCBs
As at March 31, 2017
No.
C in Lakhs
18,29,22,575
31,98,89,071
50,28,11,646
40,96,290
50,69,07,936
18,292.26
31,988.90
50,281.16
409.63
50,690.79
* includes 243,207 (March 31, 2016: 243,207; April 1, 2015: 243,207) shares in respect of which Global Depository Receipts of the
Company are listed on London Stock Exchange.
(a) Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of C10 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.
The Group had not declared any dividend during the year ended March 31, 2017 and March 31, 2016.
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.
(b) Details of shares held by each shareholder (together with Persons Acting in Concert [PAC]) holding more than 5% shares in
the Company
Equity shares of C10 each issued, subscribed and fully paid up
Name of the shareholders
As at March 31, 2017
As at March 31, 2016
As at April 1, 2015
QVT Mauritius West Fund &
Quintessence Mauritius West Fund
Deutsche Bank AG London -CB
Account
Nomura Singapore Limited
Merrill Lynch Capital Markets Espana
SA SV
Suffolk (Mauritius) Limited &
Mansfield(Mauritius) Limited
No.
% of total
shares
No.
% of total
shares
No.
% of total
shares
47,843,816
9.44
35,829,909
7.13
13,347,888
17,436,426
2,806,956
3.44
0.55
21,559,422
881,257
4.29
0.18
10,892,721
10,234,433
-
-
-
-
4,311,884
0.86
10,192,621
-
-
17,372,221
7.36
6.01
5.64
5.62
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.
| 177 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
c) Shares reserved for issue under options (No.)
(i) Outstanding employee stock options under below schemes,
granted/ available for grant: (refer note 35)
ESOP 2000
ESOP 2005
ESOP 2008
(ii) FCCBs (refer note 31)
FCCBs I
FCCBs II
FCCBs III
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
-
92,368
28,301
-
144,979
130,500
1,925
741,072
475,010
-
-
15,522,785
15,643,454
67,174
839,721
19,619,075
20,801,449
67,174
839,721
200,531,961
202,656,863
d) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during
the period of five years immediately preceeding the reporting date:
Equity shares (No.)
Equity shares allotted as fully paid-up pursuant to contract (no.)
(In accordance with the terms of FCCBs III, out of the principal face
value of US$ 127.72 Million (C71,592.81 Lakhs), an amount of US$
36.32 Million (C20,358.99 Lakhs) were mandatorily converted
into equity shares on July 07, 2012). (Also refer note 31)
Note 15. OTHER EQUITY (
Equity component of compound financial instruments
Balance as per last financial statements
Less: Conversion of FCCBs
Closing balance
Securities premium
Balance as per last financial statements
Add: Additions during the year on conversion of FCCBs
Closing balance
General reserve
Balance as per last financial statements
Add: Additions during the year
Closing balance
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
8,93,35,462
8,93,35,462
8,93,35,462
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
259.40
(54.16)
205.24
24,377.59
122.89
24,500.48
1,779.76
-
1,779.76
4,648.16
(4,388.76)
259.40
13,215.75
11,161.84
24,377.59
1,779.76
-
1,779.76
| 178 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 15. OTHER EQUITY (
(contd.)
Employee stock options reserve
Balance as per last financial statements
Less : Compensation on ESOP cancelled/lapsed during the year
Add : Deferred stock compensation expenses
Closing balance
Exchange reserve on consolidation
Balance as per last financial statements
Add: Effect of foreign exchange rate variations during the year
Closing balance
Surplus/(deficit) in the statement of profit and loss
Balance as per last financial statements
Less: Loss for the year
Add: Residual portion of FCCB's conversion
Less: OCI- Remeasurement Losses of defined benefit obligations
Closing balance
Summary of other equity: (
Equity component of compund financial instruments
Securities premium account
General reserve
Employee stock options reserve
Exchange reserve on consolidation
Surplus/(deficit) in the statement of profit and loss
Total other equity
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
16.30
(10.11)
0.25
6.44
78.10
(62.15)
0.35
16.30
(10,266.73)
(1,343.39)
(11,610.12)
(8,438.50)
(1,828.23)
(10,266.73)
6,935.28
(4,322.87)
256.06
(32.30)
2,836.17
As at
March 31, 2017
As at
March 31, 2016
205.24
24,500.48
1,779.76
6.44
(11,610.12)
2,836.17
17,717.97
259.40
24,377.59
1,779.76
16.30
(10,266.73)
6,935.28
23,101.60
(4,388.37)
(7,428.89)
18,757.58
(5.04)
6,935.28
C in Lakhs)
As at
April 1, 2015
4,648.16
13,215.75
1,779.76
78.10
(8,438.50)
(4,388.37)
6,894.90
(This space is intentionally left blank)
| 179 |
SUBEX LIMITED Annual Report 2016-17 Notes to the consolidated financial statements for the year ended March 31, 2017
Note 16. BORROWINGS
Carried at amortised cost
Non -current
Foreign currency convertible bonds (refer note 31)
Secured*
Unsecured**
Current maturities of long-term borrowings:
Secured*
Unsecured**
Term loans***
Unsecured
Current maturities of long-term borrowings (unsecured)
Less: Disclosed under other financial liabilities (current) (note 18)
Current
Loans repayable on demand from banks (Secured)
Loan Type - I (refer note [i] & [iii])
Loan Type - II (refer note [i], [ii] & [iii])
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
-
2,860.16
-
48,151.16
1,811.99
2,277.17
-
-
2,071.31
-
-
-
7,782.00
10,059.17
(10,059.17)
-
5,216.24
3,373.67
8,589.91
1,196.36
6,287.69
12,415.52
(8,359.00)
4,056.52
6,045.73
4,350.01
10,395.74
5,312.50
2,187.50
57,463.15
(2,187.50)
55,275.65
6,906.14
5,600.40
12,506.54
* Secured FCCBs are carried at amortised cost at an effective interest rate of 9% (March 31, 2016: 9%, April 1, 2015: 9%) with maturity
date July 07, 2017.
** Unsecured FCCBs are carried at amortised cost at an effective interest rate of 10.5% (March 31, 2016: 10.5%, April 1, 2015: 10.5%)
with maturity date March 09, 2017. These FCCBs were repaid on due date.
*** Represents loan taken by Subex Americas Inc., which has been guaranteed by Subex (UK) Limited. The repayment terms vary from
17-28 months. These loans are carried at amortised cost at an effective interest rate of 9.5% (March 31, 2016: 9.5%, April 1, 2015:
10.5%). These loans were due for repayment by June 30, 2017. Subsequent to the year end, the entire loan of US$ 12 Million have
been repaid on May 15, 2017. Refer note 29(ii) for further details.
(i) The secured loan from banks are secured by primary charge on customer 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 FCCBs 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 C4,205.00 Lakhs (March 31, 2016 :
C5,570.00 Lakhs, April 1, 2015: C6,495.00 Lakhs) and with effect from October 01, 2014 corporate guarantee by Subex (UK)
Limited of C4,205.00 Lakhs (March 31, 2016: C5,570.00 Lakhs; April 1, 2015: C6,495.00 Lakhs) and pledged it’s 100% shares in
Subex (UK) Limited.
(iii) Loans repayable on demand from banks consists of Cash Credit (CC) of C2,933.84 Lakhs (March 31, 2016: C1,762.89 Lakhs, April
1, 2015: C4,223.45 Lakhs), Pre-shipment Credit in Foreign Currency (PCFC) of C1,419.53 Lakhs (March 31, 2016: C3,945.39 Lakhs,
April 1, 2015: C2,880.38 Lakhs) and Export Bill Rediscounting (EBRD) of C4,236.54 Lakhs (March 31, 2016: C4,687.46 Lakhs, April
1, 2015: C5,402.71 Lakhs), which carried an average interest rate of 11.67%, 3.89% and 5.51% (March 31, 2016: 12.91%, 4.05%
and 5.89%, April 1, 2015: 14.25%, 5.05% and 8.88%) respectively. These facilities are renewable on a yearly basis.
| 180 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 17. TRADE PAYABLES
Carried at amortised cost
Current
Trade payables
- total outstanding dues of micro enterprises and small
enterprises (refer note 17 [i])
- total outstanding dues of creditors other than micro
enterprises and small enterprises
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
4.83
3.06
1,804.91
1,804.91
1,671.75
1,676.58
3,411.44
3,414.50
Terms and conditions of the above financial liabilities:
- Trade payables are non-interest bearing and are normally settled on 30 - 45 day terms.
- For explanations on the Group’s liquidity risk management, refer note 40.
17 [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.
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
-
-
-
-
-
-
4.83
3.06
-
-
0.06
0.53
-
-
-
0.06
0.06
-
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.
| 181 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 18. OTHER FINANCIAL LIABILITIES
Carried at amortised cost
Non-current
Interest accrued but not due on borrowings
Current
Employee related liabilities
Interest accrued but not due on borrowings
Current maturities of long-term borrowings (refer note 16)
Note 19. OTHER CURRENT LIABILITIES
Current
Unearned revenue
Statutory remittances (refer note 46)
Note 20. Provisions
Non-current
Provisions for employee benefits
Gratuity (refer note 36 [b])
Current
Provisions for employee benefits
Gratuity (refer note 36 [b])
Leave benefits
Provision for litigations*
As at
March 31, 2017
As at
March 31, 2016
-
-
1,362.51
500.83
10,059.17
11,922.51
571.08
571.08
1,604.77
2.98
8,359.00
9,966.75
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
7,354.05
7,354.05
1,848.64
1,047.80
2,187.50
5,083.94
(C in Lakhs)
As at
April 1, 2015
2,120.17
964.84
3,085.01
1,295.53
1,139.34
2,434.87
923.00
1,042.30
1,965.30
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
296.79
296.79
42.93
533.64
100.00
676.57
295.47
295.47
41.98
511.23
100.00
653.21
320.16
320.16
26.75
415.75
100.00
542.50
*Provision for litigation consists of matters which are sub-judice. There is no movement in the provisions during the current and
previous year, refer note 34(b) for further details.
| 182 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 21. INCOME TAX LIABILITIES (NET) (
Provision for tax [net of advance tax C367.32 Lakhs (March 31,
2016: C853.81 Lakhs; April 1, 2015: C689.92 Lakhs)]
Provision for wealth tax
Provision for foreign taxes
Provision for litigation [net of tax deducted at source C62.29 Lakhs
(March 31, 2016: C62.29 Lakhs; April 1, 2015: C62.14 Lakhs)*
As at
March 31, 2017
As at
March 31, 2016
C in Lakhs)
As at
April 1, 2015
235.41
-
486.98
161.97
884.36
266.13
-
349.78
161.97
777.88
121.66
(0.82)
-
162.12
284.60
*Provision for litigation consists of matters which are sub-judice. There is no movement in the provisions during the current and
previous year, refer note 34(b) for further details.
Income tax expense in the statement of profit and loss consist of the following:
Tax expense:
Current tax - income tax charge for the current year
Deferred tax (MAT credit entitlement)
Total tax expense
Notes:
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
1,055.04
(94.20)
960.84
1,657.00
(383.93)
1,273.07
21(i) Provision for foreign withholding taxes represents provision in respect of withholding taxes deducted/ deductible by customers.
21(ii) No deferred tax asset, other than MAT credit entitlement has been recognised in the absence of reasonable certainty that
taxable profits will be available against which the unused tax losses, unused tax credit and other deductible temporary differences
can be utilized.
(This space is intentionally left blank)
| 183 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Reconciliation of tax to the amount computed by applying the statutory income tax rate to the income before taxes is summarized
below:
Loss before tax
Applicable tax rates in India
Computed tax charge (A)
Components of tax expenses:
Current taxes:
Tax expense on taxable income of profitable subsidiaries
Provision for foreign withholding taxes
MAT provision at 18.5% on the adjusted book profits of the company in accordance with
the provisions of Income Tax Act, 1961
Deferred tax:
MAT credit entitlement available on the MAT provision as mentioned above as per the
provisions of Income Tax Act, 1961
Total adjustments (B)
Total tax expense (A+B)
Note 22. 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 23. OTHER INCOME (
Net gain on disposal of property, plant and equipment
Write back of withholding taxes paid earlier (refer note 46)
Miscellaneous income
| 184 |
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
(3,362.03)
34.61%
-
(6,155.82)
34.61%
-
148.98
811.86
94.20
(94.20)
960.84
960.84
27.03
1,246.04
383.93
(383.93)
1,273.07
1,273.07
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
4,770.61
30,962.54
35,733.15
4,487.66
282.95
4,770.61
8,656.07
10,913.06
11,138.09
255.32
30,962.54
3,117.51
29,128.26
32,245.77
2,873.47
244.04
3,117.51
6,510.29
11,334.29
11,200.45
83.23
29,128.26
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
0.75
1,036.59
53.69
1,091.03
-
-
116.46
116.46
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 24. EMPLOYEE BENEFITS EXPENSE (
Salaries and wages*
Contribution to provident and other funds
Staff welfare expenses
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
14,210.04
1,127.08
533.94
15,871.06
14,237.88
1,187.52
608.75
16,034.15
* Net of reversal of provision no longer required, in respect of employee incentives amounting to C700.00 Lakhs (March 31, 2016:
C1064.70 Lakhs).
Note 25. OTHER EXPENSES (
Purchase of software
Sub-contract charges
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 25 [i])
Sales commission*
Provision for doubtful debts
Exchange fluctuation (Gain)/loss (net)
Directors sitting fees
Loss on sale of fixed assets (net)
Miscellaneous expenses
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
249.33
1,602.62
1,803.39
200.54
-
159.37
500.06
111.93
331.03
34.32
3,082.12
109.48
399.72
789.71
185.98
123.42
1,203.29
(698.28)
52.52
-
18.74
10,259.29
360.44
1,555.51
1,793.75
208.83
-
153.11
515.97
104.13
354.82
31.52
2,711.42
156.44
290.45
685.71
158.13
228.02
(439.03)
515.18
59.13
0.34
16.13
9,460.00
* Sales commission for the year ended March 31, 2017 is net of reversal of provision no longer required amounting to CNil (March 31,
2016: C213.77 Lakhs).
25 [i] Payments to the auditor (excluding service tax):
(a) Statutory auditor
As auditor
Audit fee
Tax audit fee
In other capacity:
Other services (certification services)
Reimbursement of expenses
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
102.00
4.00
-
13.67
119.67
87.00
4.00
2.50
4.41
97.91
| 185 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
64.73
1.58
66.31
185.98
57.00
3.22
60.22
158.13
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
458.32
36.20
494.52
378.71
48.78
427.49
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
35.83
26.72
62.55
61.74
4.45
66.19
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
494.04
463.63
657.43
22.94
402.04
2,040.08
3,753.78
973.63
1,003.27
25.20
395.72
6,151.60
25 [i] Payments to the auditor (excluding service tax):
(contd.)
(b) Other auditors for the subsidiaries
As auditor
Audit fee
Reimbursement of expenses
Total
Note 26. DEPRECIATION AND AMORTISATION (
Depreciation of property, plant and equipment (refer note 3)
Amortization of other intangible assets (refer note 4)
Note 27. FINANCE INCOME (
Interest income on:
Security deposits
Bank deposits
Note 28. FINANCE COST (
Interest
Foreign currency convertible bonds (refer note 31)
Term loan
Other borrowings
Other finance charges
Bank charges
| 186 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 29. EXCEPTIONAL ITEMS (NET) (
Impairment of goodwill (refer note 29 [i][a] & [b])
Reversal of interest accrued but not due pertaining to term loans (refer note 29[ii])
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
(10,890.00)
-
(10,890.00)
(8,870.00)
2,400.56
(6,469.44)
29[i][a] As at March 31, 2017, the Company assessed the carrying value of goodwill relating to its investment in the subsidiary viz.
Subex Americas Inc., amounting to C9,736.00 Lakhs (March 31, 2016: C18,606.00 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 C6,010.00 Lakhs (March
31, 2016: C8,870.00 Lakhs) towards the carrying value of goodwill relating to its investment in the said subsidiary. The management
is of the view that, the carrying value of goodwill relating to its investment in the said subsidiary of C3,726.00 Lakhs as at March 31,
2017 is appropriate.
29[i][b] As at March 31, 2017, the Company assessed the carrying value of goodwill relating to its investment in the subsidiary viz.
Subex (UK) Limited amounting to C67,036.22 Lakhs (March 31, 2016: C67,036.22 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 C4,880.00 Lakhs (March
31, 2016: CNil) towards the carrying value of goodwill relating to its investment in the said subsidiary. The management is of the
view that, the carrying value of goodwill relating to its investment in the said subsidiary of C62,156.22 Lakhs as at March 31, 2017 is
appropriate.
29[ii] During the year ended March 31, 2016, pursuant to the QVT Interest Waiver Letter dated March 26, 2016, the lenders of term
loan of US$ 12.00 Million to Subex Americas Inc. had waived the interest liability up to the date of such letter and interest accruing
thereafter upto August 22, 2016. Further, interest rate has been revised from 10.5% per annum to 5% per annum, effective August
22, 2016. Consequently, accrued outstanding interest of US$ 2.90 Million (C1,970.12 Lakhs) has been written back and impact on
measurement of such long term borrowings at fair value resulted in reduction in carrying value by C430.44 Lakhs as at March 31, 2016.
During the current year ended March 31, 2017, such interest waiver has been extended till June 30, 2017 and subsequent to the year
end, the entire loan of US$ 12.00 Million has been repaid as on May 15, 2017.
Note 30. EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share (EPS) amounts are calculated by dividing the loss for the year attributable to equity holders of the
Company by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the loss attributable to equity holders of the Company by the weighted average number
of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion
of all the dilutive potential equity shares into equity shares.
Computation of basic and diluted EPS:
Nominal value per equity share (C per share)
Loss attributable to equity shareholders
Weighted average number of equity shares (No. in Lakhs)
Loss per share basic and diluted (C per share)*
Year ended
March 31, 2017
Year ended
March 31, 2016
10.00
(4,322.87)
5,063.00
(0.85)
10.00
(7,428.89)
2,904.20
(2.56)
* Foreign currency convertible bonds and employee stock options outstanding as at March 31, 2017 and March 31, 2016 are anti-
dilutive and accordingly have not been considered for the purpose of dilutive EPS.
| 187 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 31. FOREIGN CURRENCY CONVERTIBLE BONDS
a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (“FCCBs 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 : C44.08/ US$
ii) Conversion price : C656.20 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 FCCBs II : C48.17/ US$
iii) Conversion price : C80.31 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 FCCBs III are as under :
i) Interest rate : 5.70% p.a. payable semi annually
ii) Exchange rate for conversion of FCCB : C56.0545/ US$
| 188 |
Notes to the consolidated financial statements for the year ended March 31, 2017
iii) Equity Conversion price : C22.79 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 FCCBs 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.
During the year ended March 31, 2017, the FCCBs I and FCCBs II are repaid in full along with the redemption premium applicable
on these bonds on the maturity date.
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 C22.79 to C13.00 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 C13 per share.
As a result of the aforesaid reset of conversion price, the said bonds with outstanding face value of US$ 3.60 Million as at March
31, 2017 would potentially be converted into 15,522,785 equity shares at an exchange rate of C56.0545/US$ with a conversion
price of C13 per equity share.
e)
(i) Of the outstanding FCCBs III of US$ 91.40 Million as of July 2012, US$ 87.80 Million have been converted till year ended March
31, 2017 as detailed below:
Financial year/ period
2012-13
2014-15
2015-16
(i) during quarter ended June 30, 2015
(ii) during June 30, 2015 to March 31, 2016
2016-17
FCCBs
converted US$
Million
Conversion rate
per US$
Conversion
price
No. of equity
shares
3.25
6.62
6.50
70.48
0.95
C56.0545
C56.0545
C56.0545
C56.0545
C56.0545
C22.79
C22.79
C22.79
C13.00
C13.00
7,993,931
16,282,613
15,987,461
303,901,610
4,096,290
| 189 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
(ii) The face value of FCCBs outstanding as on March 31, 2017 is as follows:
Particulars
As at March 31, 2017
C in Lakhs
As at March 31, 2016
Cin Lakhs
As at April 1, 2015
C in Lakhs
US$ Million
-
-
3.60
3.60
FCCBs I
FCCBs II
FCCBs III
Total
f) The FCCB holders in their respective meetings have approved the deferral of aggregate interest of US$ 0.73 Million ( C473.41
Lakhs) in respect of outstanding FCCBs III with face value of US$ 3.60 Million ( C2,334.60 Lakhs) for the period July 6, 2012 to
January 5, 2016 till redemption date of the bonds, being July 07, 2017.
625.00
875.00
50,956.25
52,456.25
662.55
927.57
3,014.60
4,604.72
-
-
2,334.60
2,334.60
US$ Million
1.00
1.40
81.53
83.93
US$ Million
1.00
1.40
4.55
6.95
g) Upon extinguishment of liability (i.e. principal and interest accrued), due to conversion of FCCBs III, the amortised cost of the
liability in excess of share capital and securities premium as the date of conversion is credited to surplus/ (deficit) in the statement
of of profit and loss. Refer note 15.
h) The amortised cost of borrowings and fair value of equity component of FCCBs outstanding as on March 31, 2017 is as
follows:
I. FCCBs outstanding:
FCCBs I
FCCBs II
FCCBs III
Total
II. Equity component of convertible bonds
Note 32. SEGMENT REPORTING
As at
March 31, 2017
As at
March 31, 2016
-
-
2,277.17
2,277.17
205.24
831.27
1,240.04
2,860.16
4,931.47
259.40
(C in Lakhs)
As at
April 1, 2015
717.88
1,094.11
48,151.16
49,963.15
4,648.16
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The board of directors of the Group assesses the financial performance and position of the Group. The Chief Executive
Officer has been identified as the chief operating decision maker.
The Group has identified a single business segment being software products and related services. This being a single segment no
additional segment disclosure has been made for the business segment.
The Group’s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d)
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, excluding
India are organized under ‘APAC and the rest of the world’. Customer relationships are driven based on customer domicile.
| 190 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Segment revenue by geographical location are as follows:* (
Region
Americas
EMEA
India
APAC and rest of the world
C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
6,554.53
20,392.00
2,835.33
5,951.29
35,733.15
6,567.54
18,017.37
2,013.55
5,647.31
32,245.77
* Revenues by geographic area are based on the geographical location of the customer.
No customer individually accounted for more than 10% of the total revenue of the group for the year ended March 31, 2017. Revenue
from one customer of EMEA region amounting to H3,498.75 (year ended March 31, 2016: H3,537.63) is more than 10% of the total
revenue of the group for the year ended March 31, 2016.
Non-current operating assets by geographical location are as follows**
Region
As at
March 31, 2017
India
Outside India
Unallocated ***
Total non-current operating assets
1,046.07
440.94
65,882.22
67,369.23
As at
March 31, 2016
1,019.45
327.02
76,772.22
78,118.69
(C in Lakhs)
As at
April 1, 2015
817.08
267.67
85,642.22
86,726.97
** Non-current operating assets includes Property, plant and equipment, Other intangible assets and Balance with statutory/
government authorities and Prepaid expenses.
*** Unallocated represents Goodwill on consolidation. The management is of the view is that it is not practically feasible to allocate
such goodwill to various regions.
Note 33. RELATED PARTY TRANSACTIONS
Related parties under Ind AS 24 and as per Companies Act, 2013.
Key management personnel of the Company
Surjeet Singh
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Sanjeev Aga
Priyanka Roy
Ganesh KV
Managing Director and Chief Executive Officer
Independent Director
Independent Director
Independent Director - Appointed w.e.f March 24, 2017
Independent Director - Resigned w.e.f October 27, 2016
Independent Director - Resigned w.e.f March 10, 2017
Chief Financial Officer, Global Head- Legal and Company Secretary
| 191 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Details of the transactions with the key management personnel
Particulars
Salary and perquisites:*
Surjeet Singh
Ganesh KV
(C in Lakhs)
Year ended
March 31, 2017
Year ended
March 31, 2016
571.53
77.41
648.94
557.05
67.40
624.45
Director sitting fees
Anil Singhvi
Nisha Dutt
Sanjeev Aga
Priyanka Roy
22.50
6.00
22.50
3.00
54.00
*The remuneration to the key managerial personnel does not include the provisions/accruals made on estimate basis as they are
determined for the Group as a whole
22.00
14.00
10.00
3.00
49.00
Note 34. COMMITMENTS AND CONTINGENT LIABILITIES
a) Commitments
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 for the year under non-cancellable operating leases amounted
to C761.78 Lakhs (March 31, 2016: C536.93 Lakhs).
Future minimum lease payments under non-cancellable operating leases are as follows:
Within one year
After one year but not more than five years
More than five years
As at
March 31, 2017
63.71
5.44
-
(C in Lakhs)
As at
March 31, 2016
753.61
70.65
-
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 for the year under cancellable operating leases was
C1,041.61 Lakhs (March 31, 2016: C1,256.82 Lakhs).
| 192 |
Notes to the consolidated financial statements for the year ended March 31, 2017
b) Contingent liabilities
Particulars
Income tax demands (refer Note - [i])
Service tax demands (refer Note - [ii])
Others (Note - [iii])
Bank guarantees (furnished to customers)
Corporate guarantee issued by Subex Technologies Limited and
Subex (UK) Limited (refer note 16)
i. Income tax
As at
March 31, 2017
As at
March 31, 2016
8,196.31
3,687.15
1,293.44
248.89
9,217.35
3,687.15
1,293.44
317.48
(C in Lakhs)
As at
April 1, 2015
9,008.77
3,687.15
1,337.64
803.48
4,205.00
5,570.00
6,495.00
The Group has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2013, 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.
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 C 1,293.44 Lakhs. The aforesaid claims are
disputed by the Group and the matter is presently under arbitration with the arbitral tribunal. The management is of the view that
these claims are not tenable.
The Group has also claimed the excess managerial remuneration of C123.80 Lakhs (March 31, 2016: C 123.80 Lakhs, April 1, 2015:
C123.80 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 C110.00 Lakhs (March 31, 2016: C110.00 Lakhs,
April 1, 2015: C110.00 Lakhs). The aggregate amount of C233.80 Lakhs (March 31, 2016:C233.80 Lakhs, April 1, 2015: C 233.80 Lakhs)
is included in ‘Other Financial Assets’ in the consolidated 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 34(a).
| 193 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 35. EMPLOYEE STOCK OPTION PLAN (‘ESOPs’)
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.
Employees’ Stock Options details as on the balance sheet date are:
2016-17
2015-16
Options (no.)
Weighted
average
exercise price
per stock
option (C)
Options (no.)
Weighted
average
exercise price
per stock option
(C)
-
1,44,979
1,30,500
-
52,611
1,02,199
-
92,368
28,301
-
92,368
28,301
-
24.28
28.51
-
-
-
-
22.97
28.44
-
22.99
28.44
1,925
7,41,072
4,75,010
1,925
5,96,093
3,44,510
-
1,44,979
1,30,500
-
1,26,429
1,30,500
67.00
27.99
28.49
-
-
-
-
24.28
28.51
-
22.65
28.51
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
| 194 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Details of Weighted average remaining contractual life and range of exercise prices for the options outstanding at the balance
sheet date:
Weighted average remaining
contractual life(years)*
2016-17
2015-16
-
1.99
0.67
-
1.49
0.11
Range of exercise prices (C)
2016-17
-
10.26 - 54.83
28.44
2015-16
-
10.26 -73.90
28.44 - 53.54
ESOP – II
ESOP – III
ESOP – IV
* considering vesting and exercise period
Fair value methodology
There were no new grants during the year ended March 31, 2017. The key assumptions used in Black-Scholes model for calculating
fair value is as below:
March 31, 2017
March 31, 2016
Risk-free interest rate
Expected volatility of share
Expected dividend yield
Expected life(years)
6.00% - 8.00%
6.00% - 8.00%
34.00% - 64.85% 34.00% - 64.85%
0.00% - 1.19%
4
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.
Note 36. EMPLOYEE BENEFIT PLANS
a) Provident fund
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 C 989.77 Lakhs (March 31, 2016: C 973.02 Lakhs) for Provident Fund and Pension
Fund contributions and C Nil (March 31, 2016: C 0.08 Lakhs) for Employee State Insurance scheme contribution in the consolidated
Statement of profit and loss.
b) Gratuity
The Group offers Gratuity benefits to employees, a defined benefit plan, Gratuity plan is governed by the Payment of Gratuity Act,
1972. 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.
| 195 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
The following tables set out the status of the gratuity plan:
Disclosure as per Ind AS 19 (
Change in defined benefit obligation
Obligations at beginning of the year
Past Service cost
Service cost
Interest cost
Benefits settled
Actuarial loss (through OCI)
Currency translation adjustment
Obligations at end of the year
Change in plan assets
Plan assets at beginning of the year, at fair value
Expected return on plan assets
Actuarial loss (through OCI)
Contributions
Benefits settled
Plan assets at the end of the year
Present value of defined benefit obligation at the end of the year
Fair value of plan assets at the end of the year
Net liability recognised in the consolidated balance sheet
Expenses recognised in statement of profit and loss:
Service cost
Past service cost
Interest cost (net)
Net gratuity cost
Re-measurement gains/(losses) in OCI
Actuarial loss due to financial assumption changes
Actuarial loss due to experience adjustments
Acturial gain-return on plan assets greater than discount rate
Total expenses recognised through OCI
Assumptions
Discount rate
Expected return on plan assets
Salary escalation*
Attrition rate
Retirement age
A
B
C
D
E
F
| 196 |
As at March 31,
2017
C in Lakhs)
As at March 31,
2016
452.94
-
75.39
31.91
(107.67)
32.75
(1.51)
483.81
115.49
8.97
0.45
120.00
(100.82)
144.09
(483.81)
144.09
(339.72)
405.20
15.10
74.97
30.14
(78.94)
6.47
-
452.94
58.29
4.94
1.43
130.00
(79.17)
115.49
(452.94)
115.49
(337.45)
(C in Lakhs)
Year ended March
31, 2017
Year ended March
31, 2017
75.39
-
22.94
98.33
12.90
19.85
(0.45)
32.30
7.00%
7.60%
8.00%
18.00%
60 years
74.97
15.10
25.20
115.27
2.65
3.82
(1.43)
5.04
7.60%
8.50%
8.00%
18.00%
60 years
Notes to the consolidated financial statements for the year ended March 31, 2017
G Five years payouts
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
Contribution likely to be made for the next one year
H
As at March 31,
2017
(C in Lakhs)
As atMarch 31,
2016
43.10
70.07
65.11
62.16
56.52
365.67
120.00
42.04
70.64
62.02
54.14
48.35
166.54
120.00
* 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.
I
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Investment with insurer
J
Sensitivity analysis (
As at March 31, 2017
100%
As at March 31, 2016
100%
C in Lakhs)
Year ended March 31, 2017
Year ended March 31, 2017
Effect of change in discount rate
Impact on defined benefit obligation increase/(decrease)
Effect of change in salary
Impact on defined benefit obligation increase/(decrease)
Effect of change in withdrawal
Impact on defined benefit obligation increase/(decrease)
0.5% increase
(10.35)
1% increase
17.93
5% increase
(11.59)
0.5% decrease
10.85
1% decrease
(17.21)
5% decrease
8.73
0.5% increase
(8.53)
1% increase
11.53
5% increase
0.74
0.5% decrease
8.91
1% decrease
(11.74)
5% decrease
(8.56)
Note 37.
Additional information pursuant to para 2 of general instructions for the preparation of consolidated financial statements:
(a) Contribution of net assets/(liability) in the consolidated financial statements:
Name of the entity
Parent
Subex Limited
Indian Subsidiaries
As at March 31, 2017
As at March 31, 2016
Amount % of total
Amount % of total
(C in Lakhs)
As at April 1, 2015
Amount % of total
65,110.94
95% 71,038.21
97% 24,935.23
Subex Technologies Limited
42.05
0%
(114.15)
0%
(116.13)
Foreign Subsidiaries
Subex (Asia Pacific) Pte Ltd.
Subex (UK) Ltd.
Subex Americas Inc.
Subex Inc.,
Subex Technologies Inc.
Subex Middle East
Total
2,575.01
6,575.07
(7,814.80)
603.72
(0.05)
1,316.82
68,408.76
4%
9%
1,620.76
6,962.84
-11% (7,826.01)
1,385.69
1.39
314.03
100% 73,382.76
1%
0%
2%
2,132.64
2%
10%
5,756.99
-11% (9,317.61)
1,788.99
2.79
4.26
100% 25,187.16
2%
0%
0%
99%
0%
8%
23%
-37%
7%
0%
0%
100%
| 197 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
(b) Contribution of profit/(loss) in the consolidated financial statements: (
Name of the entity
Year ended
March 31, 2017
C in Lakhs)
Year ended
March 31, 2017
Amount
% of total
Amount
% of total
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
(13,987.30)
324%
(14,566.71)
51.67
-1%
(0.46)
1,445.86
7,203.94
42.01
(330.61)
(1.45)
1,253.01
(4,322.87)
-33%
-168%
-1%
8%
0%
-29%
100%
1,091.95
5,014.71
1,657.71
(743.18)
(0.52)
117.61
(7,428.89)
196%
0%
-15%
-67%
-22%
10%
0%
-2%
100%
Note: The balances have been considered after eliminating all inter-company balances and transactions.
Note 38. CAPITAL MANAGEMENT
The Group’s objective is to maintain a strong capital base to ensure sustained growth in business and to maximise the shareholders
value. The capital management focusses to maintain an optimal structure that balances growth and maximizes shareholder
value.
A. Total equity attributable to the share holders of the Company
Borrowings - Non-Current
Borrowings - Current
Current maturities of long term borrowings
B. Total loans and borrowings
C. Total capital (A+B)
D. Total loans and borrowings as a percentage of total capital
(B/C)
E. Total equity as a percentage of total capital (A/C)
As at
March 31, 2017
As at
March 31, 2016
68,408.76
-
8,589.91
10,059.17
18,649.08
87,057.84
21%
79%
73,382.76
4,056.52
10,395.74
8,359.00
22,811.26
96,194.02
24%
76%
(C in Lakhs)
As at
April 1, 2015
25,187.16
55,275.65
12,506.54
2,187.50
69,969.69
95,156.85
74%
26%
The Company has transformed from a debt dominanted Company to an equity dominanted Company from financial year 2015-16.
Current maturities of term loans of US$ 12.00 Million (C7,782.00 Lakhs) has been repaid as on May 15, 2017. Balance current maturities
represent FCCBs III of C2,277.17 Lakhs, due for repayment in July 07, 2017. The current borrowings are in the nature of working capital
loans from banks. The Group has sufficient cash and cash equivalents and other financial assets which are liquid to meet the aforesaid
FCCBs debt and current borrowings.
In order to achieve this overall objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial
covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have been no
breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.
| 198 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 39. FAIR VALUE HIERARCHY
The carrying value of financial instruments by categories is as follows:
Particulars
Financial assets measured at amortized cost:
Interest accrued but not due on bank deposits*
Trade receivables*
Unbilled revenue*
Security deposits^
Loans and advances to employees*
Advance recoverable from former directors*
Cash and cash equivalents and other balances with banks
Cash on hand#
Balance with banks#
Margin money deposits#
Financial liabilities measured at amortized cost:
Employee related liabilities*
Trade payables*
Interest accrued but not due on borrowings^
Borrowings^
As at
March 31, 2017
As at
March 31, 2016
(C in Lakhs)
As at
April 1, 2015
11.30
11,851.15
4,497.12
398.82
195.56
233.80
17,187.75
0.79
7,385.31
257.73
7,643.83
1,362.51
1,804.91
500.83
18,649.08
22,317.33
4.95
11,148.15
2,547.38
365.48
198.78
233.80
14,498.54
0.82
8,599.06
237.42
8,837.30
1,604.77
1,676.58
574.06
22,811.26
26,666.67
2.88
10,859.88
5,088.77
752.23
329.69
233.80
17,267.25
0.77
4,917.31
751.92
5,670.00
1,848.64
3,414.50
8,401.85
69,969.69
83,634.68
* The carrying value of these accounts are considered to be the same as their fair value, due to their short term nature. Accordingly,
these are classified as level 3 of fair value hierarchy.
# These accounts are considered to be highly liquid/ liquid and the carrying amount of these are considered to be the same as their fair
value value. Accordingly, these are classified as level 3 of fair value hierarchy.
^ The fair value of these accounts was calculated based on cash flow discounted using a current lending/ borrowing rate, they are
classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.
Note 40. FINANCIAL RISK MANAGEMENT:
The Group’s activities expose it to the following risks:
i. Credit risk
ii. Interest rate risk
iii. Liquidity risk
iv. Market risk
i
Credit risk:
Credit risk is the risk that counter party will not meet its obligations under a financial instruments or customer contract leading to a
financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables and unbilled revenue) from
its financing activities including deposits with banks, foreign exchange transactions and other financial instruments.
| 199 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
a. Trade receivables
Credit risk is managed by each business unit as per the groups established policy, procedures and control relating to customer credit
risk management. Outstanding customer receivables are regularly monitored.
The impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of
minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The maximum exposure to credit
risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security.
b. Credit risk exposure
The Groups credit period generally ranges from 30 – 180 days. The credit risk exposure of the group is as below.
Particulars
Trade receivables
Unbilled revenue
Total
As at
March 31, 2017
As at
March 31, 2016
11,851.15
4,497.12
16,348.27
11,148.15
2,547.38
13,695.53
(C in Lakhs)
As at
April 1, 2015
10,859.88
5,088.77
15,948.65
The Group evaluates the concentration of risk with respect to trade receivables as low, since majority of its customers are reputed
telecom companies and are spread across multiple geographies.
c. Other financial assets and deposits with banks
Credit risk is limited as Group generally invest in deposits with banks with high credit ratings assigned by international and
domestic credit rating agencies. Counterparty credit limits are reviewed by the Group periodically and the limits are set to minimise
the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
ii. Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market
interest rates. The Group’s debt obligations are: 1) FCCBs and term loans which carry a fixed coupon rate and 2) Short term
borrowings in nature of working capital loans, which carry floating interest rates. Accordingly, the Group’s risk of changes in
interest rates relates primarily to the Group’s debt obligations with floating interest rates.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant. The impact on entity’s profit before tax due to change in the interest rate/ fair value of financial liabilities are as
disclosed below:
(
Particulars
Working capital loans
iii
Liquidity risk
C in Lakhs)
Year ended March 31, 2017
Year ended March 31, 2016
Change in
interest rate
+1%
-1%
Effect of profit
before tax
(94.41)
94.41
Change in
interest rate
+1%
-1%
Effect of profit
before tax
(107.85)
107.85
The Group’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Group
believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is perceived.
| 200 |
Notes to the consolidated financial statements for the year ended March 31, 2017
The break-up of cash and cash equivalents and deposits and investments is as below.
Particulars
Cash and cash equivalents
Other balances with banks
As at
March 31, 2017
As at
March 31, 2016
As at
April 1, 2015
7,386.10
257.73
7,643.83
8,599.63
237.67
8,837.30
4,918.08
751.92
5,670.00
The table below summarises the maturity profile of the Company’s financial liabilities at the reporting date. The amounts are based
on contractual undiscounted payments.
Particulars
As at March 31, 2017
Trade payables
Borrowings
Other financial liabilities
As at March 31, 2016
Trade payables
Borrowings
Other financial liabilities
On demand
0-180 Days
180-365 Days
365 Days and above
542.12
-
-
542.12
514.08
-
-
514.08
999.99
18,701.11
1,866.71
21,567.81
808.44
14,702.32
1,649.46
17,160.22
262.80
-
-
262.80
354.06
3,909.04
-
4,263.10
-
-
-
-
-
4,339.60
610.48
4,950.08
(C in Lakhs)
Total
1,804.91
18,701.11
1,866.71
22,372.73
1,676.58
22,950.96
2,259.94
26,887.48
iv Market risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Group’s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Group
has exposures to United States Dollars (‘USD’), Great Britain Pound (‘GBP’), Euro (‘EUR’), United Arab Emirates Dirham (‘AED’) and
other currencies. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating
activities and financing activities.
Below is the summary of foreign currency exposure of Group’s financial assets and liabilities.
March 31, 2017
Particulars
Financial assets
Trade receivables
Cash and cash equivalents and other bank
balances
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
Denominated Currency
USD
GBP
EUR
Others
(C in Lakhs)
Total
6,631.05
-
1,586.91
1,670.23
9,888.19
4,694.29
3,069.75
14,395.09
2,786.39
3,277.47
6,063.86
8,331.23
-
0.32
0.32
1,978.76
-
1,978.76
(1,978.76)
582.36
186.06
2,355.33
72.74
191.58
264.32
2,091.01
339.46
84.80
2,094.49
818.18
264.90
1,083.08
1,276.31
5,616.11
3,340.93
18,845.23
5,656.07
3,733.95
9,390.02
9,455.21
| 201 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
March 31, 2016
Particulars
Financial assets
Trade receivables
Cash and cash equivalents and other bank
balances
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
Denominated Currency
USD
GBP
EUR
Others
(C in Lakhs)
Total
6,144.42
-
1,238.77
2,458.88
9,842.07
2,690.39
1,792.40
10,627.21
6,840.48
3,272.07
10,112.55
514.66
-
0.90
0.90
3,927.41
18.17
3,945.58
(3,944.68)
2,982.73
76.74
4,298.24
66.17
67.46
133.63
4,164.61
257.88
112.28
2,829.04
5,931.00
1,982.32
17,755.39
659.08
158.20
817.29
2,011.76
11,493.14
3,515.90
15,009.04
2,746.35
Sensitivity analysis
Every 1% increase or decrease of the respective foreign currencies compared to functional currency of the each of the group entities
would cause the profit before exceptional items in proportion to revenue to increase or decrease respectivey by 0.29% (year ended
March 31, 2016 by 0.09%).
Note 41. ADOPTION OF IND AS
A
First time adoption
These consolidated financial statements, for the year ended March 31, 2017, have been prepared in accordance with Ind AS.
For the year ended March 31, 2016, the Group prepared its consolidated financial statements in accordance with accounting
standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts)
Rules, 2014 (‘Indian GAAP’ or ‘Previous GAAP’).
Accordingly, the Group has prepared consolidated financial statements which comply with Ind AS applicable for year ending
on March 31, 2017 together with the comparative period data, as described in the summary of significant accounting policies.
In preparing these consolidated financial statements, the Group’s opening balance sheet was prepared as at April 1, 2015,
the Group’s date of transition to Ind AS. This note explains the principal adjustments made by the Group in restating its Indian
GAAP financial statements, including the balance sheet as at April 1, 2015 and the consolidated financial statements as at
and for the year ended March 31, 2016.
B
Exemption applied
Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind
AS. The Group has applied the following exemptions:
The Group has elected to avail exemption under Ind AS 101 to use Indian GAAP carrying value as deemed cost at the date
of transition for all items of property, plant and equipment and intangible assets as per the statement of financial position
prepared in accordance with previous GAAP.
Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, which are considered businesses
under Ind AS that occurred before April 1, 2015. Use of this exemption means that the Indian GAAP carrying amounts of assets
and liabilities, that are required to be recognised under Ind AS, is their deemed cost at the date of the transition. After the
date of the transition, measurement is in accordance with respective Ind AS.
Ind AS 102 Share-based payment has not been applied to equity instruments in share-based payment transactions that
vested before April 1, 2015.
1
2
3
| 202 |
Notes to the consolidated financial statements for the year ended March 31, 2017
C
1
Reconciliation of total equity between previous GAAP and Ind AS
Equity reconciliation:
(a) For the year ended March 31, 2016:
Particulars
Equity as reported under previous GAAP
Effect of transition to Ind AS
(i) Impact on measurement of long term borrowings at fair value:
(a) Fair valuation of FCCBs
(b) Other term loans
(ii) Impact of deferral of revenue pertaining to free support services
(iii) Others (net)
Equity as per Ind AS
(b) As at April 01, 2015: (
Particulars
Equity as reported under previous GAAP
Effect of transition to Ind AS
(i) Impact on measurement of long term borrowings at fair value:
(a) Fair valuation of FCCBs
(ii) Impact of deferral of revenue pertaining to free support services
(iii) Others (net)
Equity as per Ind AS
Total comprehensive income reconciliation for the year ended March 31, 2016: (
2
Particulars
Net profit under previous GAAP
Effect of transition to Ind AS:
(i) Measurement of FCCBs at fair value
(a) Impact on finance cost due to effective interest rate and transfer of interest
no longer payable to retained earnings on conversion of FCCBs into equity shares.
(b) Impact on foreign exchange due to change in carrying value of FCCBs and
related account balances and transfer of exchange gain to retained earnings
on conversion of FCCBs into equity shares.
(ii) Impact of deferral of revenue pertaining to free support services
(iii) Impact on measurement of other long term borrowings at fair value
(iv) Others (net)
Net loss after tax as per Ind AS
Other comprehensive income
Total comprehensive income as per Ind AS
Notes
(C in Lakhs)
As at
March 31, 2016
72,699.93
41 D(1)
41 D(2)
41 D(3)
41 D(4)&(5)
Notes
386.61
466.49
(233.27)
63.00
73,382.76
C in Lakhs)
As at
April 01, 2015
20,904.02
41 D(1)
41 D(3)
41 D(4)&(5)
4,456.58
(200.73)
27.29
25,187.16
Notes
C in Lakhs)
As at
March 31, 2016
5,872.49
41 D(1)
(11,891.15)
41 D(3)
41 D(2)
41 D(4)&(5)
41 D(5)&(6)
(1,846.23)
(32.54)
431.00
37.54
(7,428.89)
(1,833.27)
(9,262.16)
| 203 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
D Notes to reconciliation between Previous GAAP and Ind AS:
1
Fair valuation of foreign currency convertible bonds:
In accordance with the recognition and measurement principles laid down in Ind AS, the Group has revised the accounting
treatment in respect of FCCBs with effect from the transition date. As required by the applicable Ind AS, the Group has identified
FCCBs as compound financial instruments and identified the equity component on the date of inception of the bonds. The fair value
of the liability component is re-evaluated at each date of significant modification. The fair value of the liability is computed by
amortised cost method by discounting the liability using the applicable effective interest rate as at the date of the last significant
modification. The difference between the carrying value as per previous GAAP and as per Ind AS as at April 1, 2015 is adjusted
through ‘Surplus/ (deficit) in the statement of profit and loss’. Subsequently interest cost is recognised at the effective interest
rate in the ‘consolidated statement of profit and loss’.
Similarly, the non-current portion of interest accrued but not due on FCCBs is carried at amortised cost by discounting the same to
its fair value and the difference between the carrying value as per previous GAAP and as per Ind AS as at April 1, 2015 is adjusted
through ‘Surplus/ (deficit) in the statement of profit and loss’. Subsequently interest cost is recognised at the effective interest
rate in the ‘consolidated statement of profit and loss’.
Under the previous GAAP, upon conversion of FCCBs III into equity shares, the interest accured but not due pertaining to the
converted FCCBs and foreign exchange gain on FCCBs conversion was credited to the consolidated statement of profit and loss as
‘exceptional item’. Under Ind AS, such conversion is treated as extinguishment of liability and the gain on such extinguishment of
liability of FCCBs is required to be credited to ‘other equity’ and not recognised through ‘consolidated statement of profit and loss’.
Accordingly, the excess of amortised cost of liability (ie., principle and interest accrued but not due pertaining to converted FCCBs)
over share capital and securities premium on conversion of FCCBs is credited to ‘Surplus/ (deficit) in the statement of profit and
loss’.
Under previous GAAP, exchange gain/ loss on restatement of FCCBs was not immediately charged to the ‘consolidated statement
of profit and loss’ and deferred over the contractual life of the FCCBs, by crediting/ debiting ‘Foreign currency monetary item
translation difference’, under reserves and surplus. Under Ind AS gain/ loss on restatement of FCCBs is immediately recognised in
the ‘consolidated statement of profit and loss’ in the period in which such gain/ loss occurs.
2
Fair valuation of term loan
Under the previous GAAP extinguishment of liability due to waiver of interest accrued but not due was charged to the ‘consolidated
statement of profit and loss’. Further, the borrowings were carried at transaction value in the books of accounts. Under Ind AS
on the date of such substantial modification to the terms of borrowing, the term loan is accounted at fair value, by amortised
cost method by discounting the loan to its fair value using effective interest rate. The difference between the carrying value
of the borrowings and interest accrued under previous GAAP and the fair value under Ind AS as at the date of such substantial
modification is credited to the ‘consolidated statement of profit and loss’.
3 Deferred revenue
Under the previous GAAP, the cost related to free support services was deferred and charged to the ‘consolidated statement of
profit and loss’ over the period of the free support services. Under Ind AS, the fair value of revenue in relation to free support
services is deferred and recognised over the period of free support services. Accordingly, the adjustment of deferred revenue is
debited to ‘Surplus/ (deficit) in the statement of profit and loss’ as at April 1, 2015 and debited to revenue for the year ended
March 31, 2016. Further, the cost deferred under previous GAAP is reversed through the ‘consolidated statement of profit and loss’
for the year ended March 31, 2016 as a transition adjustment.
| 204 |
Notes to the consolidated financial statements for the year ended March 31, 2017
4
Security deposits and rent equilisation reserve
Under Ind AS interest free security deposits are carried at amortised cost by, discounting the same using interest rates applicable
to the counter party. The difference between transaction cost and fair value is recognised as prepaid lease and amortised over the
period of the lease on a straight-line basis. Further, interest income is recognised on the amortised cost of the security deposits
over the lease period.
Under pervious GAAP operating lease expenses were recognised in the ‘consolidated statement of profit and loss’ on a straight
line basis over the lease term. The difference between lease expense recognised in the ‘consolidated statement of profit and
loss’ and contractual lease payments was recognised as ‘rent equlisation reverse’ Under Ind AS when the escalations in lease
payments are linked to inflation, the operating lease expenses are recognised in the ‘consolidated statement of profit and loss’
as per the terms of the lease arrangement. Accordingly, rent equalisation is as at April 1, 2015 was reversed to ‘surplus/ (deficit)
in the statement of profit and loss’ and for the year ended March 31, 2016, the same was reversed through the ‘consolidated
statement of profit and loss’.
Employee benefits
Under previous GAAP, actuarial gains and losses were recognized in the ‘consolidated statement of profit and loss’. Under Ind
AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability/asset which is recognized in other
comprehensive income in the respective periods.
Exchange differences on translation of foreign operations
Under Ind AS the net movement in exchange differences arising on translation of foreign subsidiaries from a reporting date to the
immediate next reporting date is recognised as ‘OCI to be reclassified to profit or loss in subsequent periods’ and forms part of the
disclosure for ‘Total Comprehensive Income’ in the ‘consolidated statement of profit and loss’.
5
6
Note 42. STANDARDS ISSUED BUT NOT YET EFFECTIVE
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017,
notifying amendments to Ind AS 7,‘Statement of cash flows’ and Ind AS 102, ‘Share-based payment.’ These amendments are in
accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ‘Statement of cash flows’
and IFRS 2, ‘Share-based payment,’ respectively. The amendments are applicable to the Group from April 1, 2017.
Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in
liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion
of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to
meet the disclosure requirement.
The Group is currently evaluating the requirements of the amendment and has not yet determined the impact on the consolidated
financial statements.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards
and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled awards
is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting
conditions are reflected in the ‘fair values’, but non-market performance conditions and service vesting conditions are reflected in the
estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled
share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the
transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net
settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority
is treated as if it was part of an equity settlement.
The Group is currently evaluating the requirements of the amendment and has not yet determined the impact on the consolidated
financial statements.
| 205 |
SUBEX LIMITED Annual Report 2016-17
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 43. DETAILS OF SPECIFIED BANK NOTES (SBN):
During the year, the Company had specified bank notes or other denomination notes as defined in the MCA notification G.S.R. 308(E)
dated March 31, 2017 and the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016
to December 30, 2016 is given below:
Particulars
Closing cash in hand as on November 08, 2016
Add: Permitted receipts
Add: Withdrawals from bank accounts
Less: Permitted payments
Less: Amount deposited in bank accounts
Closing cash in hand as on December 30, 2016
SBN's
Other
denomination
notes
0.02
-
-
(0.02)
-
-
0.07
-
1.15
(1.19)
(0.03)
-
(C in Lakhs)
Total
0.09
-
1.15
(1.21)
(0.03)
-
For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the
Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the November 08, 2016.
Note 44. COST OF HARDWARE, SOFTWARE AND SUPPORT CHARGES:
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.
Cost of hardware, software and support charges for the year ended March 31, 2017 is net of reversal of provision no longer required
amounting to C Nil (March 31, 2016: C386.38 Lakhs).
Note 45
Subsequent to balance sheet date, the Company has made an allotment of 55,094,999 equity shares of the Company on a preferential
basis, at an issue price of C14 per equity share (Face value of C10 per equity share) amounting to C7,713.30 Lakhs.
Note 46
The Group had remitted the withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961
amounting to C1,051.60 Lakhs pertaining to FCCBs III which have been converted into equity shares of the Company. Pursuant to such
conversion, the interest accrued but not due is considered no longer payable and the management basis expert advice, is of the view
that the withholding taxes paid by the Group in respect of the aforesaid interest, are recoverable from income tax department and/
or are adjustable against its other withholding taxes obligations. Accordingly, in the current year the Group has revised the returns
of withholding taxes and adjusted withholding taxes of C1,036.59 Lakhs (March 31, 2016: C Nil) on salary, professional services and
others by write back of withholding taxes on interest on FCCBs paid earlier, and such write back is included under ‘Other income’.
| 206 |
Notes to the consolidated financial statements for the year ended March 31, 2017
Note 47
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, 2017 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 48
As per Section 135 of The Company’s Act, 2013, a Corporate Social Responsibility (‘CSR’) committee has been formed by Subex Limited.
The primary function of the Committee is to assist the Board of Directors in formulating a CSR Policy and review the implementation
and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on
persons with disabilities. The Company has incurred losses during the three immediately preceding financial years and accordingly,
is not required to spend any amount for this purpose. However, during the year ended March 31, 2017, the Company has voluntarily
incurred an expense of C3.6 Lakhs towards CSR activities.
Note 49
The consolidated financial information of the Group for transition date i.e. opening consolidated balance sheet date being April 01,
2015 included in these consolidated financial statements, are based on the previously issued consolidated financial statements which
were prepared under previous GAAP and audited by a firm of Chartered Accountants other than S.R. Batliboi & Associates LLP as
adjusted for the differences in the accounting principles adopted by the Group on transition to Ind AS, which have been audited by us.
The comparative consolidated financial information as at and for the year ended March 31, 2016 have been compiled after making
necessary Ind AS adjustments to the audited consolidated financial statements prepared under previous GAAP to give a true and fair
view in accordance with Ind AS.
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Surjeet Singh
Managing Director & CEO
DIN : 05278780
Anil Singhvi
Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership number: 213803
Place: Bengaluru, India
Date : May 25, 2017
Poornima Prabhu
Director
DIN : 03114937
Place: Bengaluru, India
Date : May 25, 2017
Ganesh K.V
CFO & Global Head- Legal & Company
Secretary
| 207 |
SUBEX LIMITED Annual Report 2016-17
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 23RD ANNUAL
GENERAL MEETING (AGM)
Date
July 28, 2017 (Friday)
Venue
Le Meridien, ”Coronet” hall, No. 28 Sankey Road,
Bengaluru, Karnataka- 560052
Time
3 PM
DATES OF BOOK CLOSURE
From July 22, 2017 to July 28, 2017 (both days inclusive)
BOARD MEETINGS & FINANCIAL CALENDAR
Financial year : April 01, 2017 to March 31, 2018
Calendar of Board Meetings to adopt the accounts
For quarter ending June 30,
2017
For quarter ending
September 30, 2017
For quarter ending December
31, 2017
For the year ending March
31, 2018
4th week of July 2017
2nd week of November 2017
2nd week of February 2018
4th week of May 2018
DIVIDEND
The Directors have not proposed any dividend to be paid for the
financial year 2016-17.
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 2016-17 in accordance with the
provisions of the SEBI (LODR) Regulations, 2015
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 outstanding US$ 1,000,000 out of US$
180,000,000 2% Convertible Unsecured Bonds listed on the
London Stock Exchange (LSE) with maturity date of March 9, 2017
was redeemed on March 6, 2017. The Company’s outstanding
US$ 1,400,000 out of US$ 98,700,000 5% Convertible Unsecured
Bonds which were listed on the Singapore Exchange Securities
Trading Limited (SGX) with maturity date of March 9, 2017 was
redeemed on March 6, 2017.
The Company’s US$ 127.721 million 5.70% Convertible Secured
Bonds (outstanding amount of US$ 3.60 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.
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
2EUB
(SUBEX US$127.721
million 5.70% bonds)
International Securities
The
Identification Number (ISIN)
for the Company’s Equity Shares in dematerialized form is
INE754A01014.
| 208 |
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 2016-17 to NSDL and CDSL on the basis of the number of beneficial accounts
maintained by them as on March 31, 2016.
STOCK MARKET DATA RELATING TO EQUITY SHARES LISTED IN INDIA
Monthly high and low quotes during each month in the financial year 2016-17 as well as the volume of shares traded on NSE and BSE
are as under:
NSE
BSE
Index Close Price
Month
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
High* H
Low* H
High H
9.85
9.74
10.34
13.45
12.52
12.47
11.69
10.38
10
9.93
11.45
11.21
9.34
9.21
9.76
12.67
11.83
11.84
11.27
9.82
9.60
9.56
10.84
10.76
9.84
9.72
10.33
13.43
12.52
12.47
11.69
10.39
9.98
9.91
11.45
11.21
Low H
9.35
9.22
9.78
12.67
11.85
11.85
11.26
9.84
9.61
9.57
10.86
10.76
Sensex
(Closing price)
Nifty
(closing price)
25,441.47
25,693.69
26,717.74
27,713.41
28,006.90
28,502.55
28,001.69
26,718.09
26,372.93
27,165.46
28,457.40
29,269.49
7,786.52
7,871.86
8,191.20
8,505.61
8,640.42
8,783.33
8,666.75
8,250.75
8,114.03
8,386.2
8,813.34
9,047.06
*The monthly high and low quotes are calculated based on the average high and low prices of the month respectively.
SUBEX LIMITED SHARE PRICE VERSUS NSE S&P CNX NIFTY AND SENSEX
40000
35000
30000
25000
20000
15000
10000
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Sensex
Subex
25
20
15
10
5
0
| 209 |
SUBEX LIMITED Annual Report 2016-17 15000
10000
5000
0
25
20
15
10
5
0
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
S&P CNX Nifty
Subex
CREDIT RATING
India Ratings and Research (Ind-Ra) has rated Subex Limited’s bank facilities as BBB +.
SHAREHOLDING PATTERN
(As per records of the RTA)*
Distribution of Shareholding:
No. of Equity shares
held
1 – 5000
5001 – 10000
10001 – 20000
20001 –30000
30001 – 40000
40001 – 50000
50001 – 100000
100001 and above
TOTAL
As on March 31, 2017
As on March 31, 2016
No. of share holders
% to total share holders
No. of share holders
% to total share holders
56,308
17,686
11,422
4,938
2,468
3,585
4,863
5,164
52.90
16.62
10.73
4.64
2.32
3.37
4.57
4.85
57,307
17,555
11,501
5,024
2,615
3,428
4,833
5,030
53.41
16.36
10.72
4.68
2.44
3.20
4.50
4.70
1,06,434
100.00
1,07,297
100.00
Categories of Shareholders:
Category
Public & Other (includes GDR’s and
Foreign Corporate Bodies)
As on March 31, 2017
As on March 31, 2016
No. of share
holders
Voting
strength %
No. of shares
held
No. of share
holders
Voting
strength %
No. of shares
held
105,041
78.17
396,248,254
105,713
76.77
322,870,381
Companies/ Indian Bodies Corporate
1,348
20.96
106,260,982
1,536
22.76
95,994,040
Core Promoters
Mutual Funds
ESOPs/Employee shareholders
FII
TOTAL
3
Nil
41
1
0.19
Nil
0.12
0.56
974,044
Nil
617,700
2,806,956
3
Nil
44
1
0.23
Nil
0.22
0.02
974,044
Nil
934,498
9,75,257
1,06,434
100.00
506,907,936
1,07,297
100.00
421,748,220
| 210 |
R & T AGENTS AND SHARE TRANSFER SYSTEM
Canbank Computer Services Limited, J P Royale, 1st Floor, No.218,
2nd Main, Sampige Road (Near 14th Cross), Malleswaram,
Bangalore - 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 05, 2001 in respect of shares held with NSDL and a
tripartite agreement dated November 27, 2001 in respect of
shares held with CDSL.
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 05, 2012 has reduced the timeline for registering the transfer
of shares to 15 days with effect from October 01, 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, Bangalore - 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, 2017, 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, 2017, the outstanding GDR’s were 2,43,207.
Details of the Company’s outstanding FCCB’s as on March 31, 2017 is as under:
Particulars
Issue of FCCB I on 8th March, 2007
Restructuring of bonds during 2009-10
Discount @ 30%
Balance as on 2nd November, 2009
Conversion to equity in 2009-10 and 2010-11
Balance 31st March, 2011
Restructuring of bonds during 2012-13
Premium
Balance on 6th July, 2012
Mandatory conversion to equity shares during
on July 17, 2012
Balance after mandatory conversion
Conversion to equity upto 31st March, 2016
Balance as on 31st March, 2016
Conversion during 2016-17
Redemption on 6th March, 2017
Balance as on 31st March, 2017
US$ 180,000,000
2.00% coupon
convertible bonds
“FCCB I”
180.00
(141.00)
–
39.00
–
39.00
(38.00)
–
1.00
US$ 98,700,000
5.00% convertible
unsecured bonds
“FCCB II”
–
141.00
(42.30)
98.70
(43.90)
54.80
(53.40)
–
1.40
–
1.00
–
1.00
–
(1.00)
–
–
1.40
–
1.40
–
(1.40)
–
(amount in US$ million)
US$ 127,721,000
5.70% secured
convertible bonds
“FCCB III”
–
–
–
–
–
–
91.40
36.32
127.72
(36.32)
91.40
(86.85)
4.55
(0.95)
–
3.60
| 211 |
SUBEX LIMITED Annual Report 2016-17 LOCATIONS
• Broomfield, CO 80021, USA
• Harrow, Middlesex, HA1 1JU, UK
• Burlington Square, Singapore
• Sharjah Airport International Free Zone, Sharjah, UAE
LEGAL PROCEEDINGS
There are no legal proceedings against the Company which are
material in nature
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
Details of the investor grievances received from the Registrar
and Transfer agent (RTA) for the period from April 01, 2016 to
March 31, 2017 are as stated below. Additionally, the Company
has attended to all the investor grievances/correspondence
received through E-mails or telephone on a timely manner.
Nature of complaints (excluding the
grievances received through e-mail
or telephone)
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 Cleared
0
0
0
0
0
0
0
0
0
0
0
0
ADDRESS FOR CORRESPONDENCE
For any queries, please write to:
Mr. Arjun Makhecha
Associate Company Secretary
Subex Limited, RMZ Ecoworld, Outer Ring Road,
Devarabisanahalli, Bengaluru – 560 103, 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,
financials 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.
| 212 |
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.
357.33
Revenues
(Rs. crore)
95.05
Operating profit
(Rs. crore)
Highlights,
FY2016-17
200+
Customer
base
900+
Employee
base
Contents
Corporate identity ...........................................................2
Board of Directors ........................................................ 19
Message from the MD & CEO ...........................................4
Executive Leadership Team .......................................... 20
Our performance in numbers ..........................................7
Board’s Report.............................................................. 22
Management commentary .............................................8
Corporate Governance Report ..................................... 52
Key numbers - global telecom industry ....................... 10
Management Discussion and Analysis ........................ 66
Operational Leadership Team (OLT) of Subex .............. 11
Standalone Financial Statements ................................ 85
Creating value for 25 years .......................................... 16
Consolidated Financial Statements ............................ 147
Subex Charitable Trust ................................................. 18
Shareholder Information ............................................ 208
Subex Limited
Annual Report 2016-17
Ring in the new.
Win in the digital world.
www.subex.com
info@subex.com
INDIA
USA
UK
Subex Limited
(CIN: L85110KA1994PLCO16663)
Regd. office: RMZ Ecoworld,
Devarabisanahalli, Outer Ring Road
Bangalore - 560103, India
Tel: +91 80 6659 8700
Fax: +91 80 6696 3333
Subex Inc.
12303 Airport Way,
Bldg. 1, Suite. 390,
Broomfield, CO 80021
Tel: +1 303 301 6200
Fax: +1 303 301 6201
Subex (UK) Limited
1st Floor, Rama Apartment,
17 St Ann’s Road,
Harrow, Middlesex,
HA1 1JU
Tel: +44 0207 8265300
Fax: +44 0207 8265352
Singapore
Middle East
Canada
Subex (Asia Pacific) Pte Limited
175A Bencoolen Street
#08-03 Burlington Square
Singapore - 189650
Tel: +65 6338 1218
Fax: +65 6338 1216
Regional offices: Dubai | Ipswich
Subex Middle East (FZE)
Executive Desk Q1-04-098/B,
P.O. Box: 513156,
Sharjah Airport International
Free Zone, Sharjah, UAE
Subex Americas Inc.
C/O BDO Canada LLP,
5494, Manotick Main Street
Box. 918, Manotick, Ontario
Canada, K4M1A8