CONTENTS
02
04
06
08
10
13
14
16
20
21
22
23
Six Things You Need To Know About Subex
Subex Value Pillars
Products
Note To Shareholders
24
54
67
85
Board’s Report
Corporate Governance Report
Management Discussion And Analysis
Standalone Financial Statements
A Conversation With Vinod Kumar, Md & Ceo
134
Consolidated Financial Statements
Our Performance In Numbers
182
Shareholder Information
Message From Head Of Strategy And Products
Message From Head Of Iot Security
Subex - Becoming Future-Ready
Subex - Making A Difference Together
Board Of Directors
Leadership Team
Forward-looking statement
In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects
and take informed investment decisions. This report and other statements - written and oral - that we periodically
make, contain forward-looking statements that set out anticipated results based on the management’s plans and
assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipates’,
‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with
any discussion of future performance. We cannot guarantee that these forward-looking statements will be realized,
although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties
and even inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying
assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected.
Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
The global
telecommunications
industry is
developing
dynamically; New
technologies are
making prevailing
technologies
obsolete with
unprecedented
speed.
In such an environment, successful organizations
consistently innovate to stay ahead of the curve.
Subex has progressively differentiated its business
model to emerge as a future-ready organization.
The Company is leveraging its core competence in
the telecom sector, gathering data from customers
to create analytics-based products and solutions.
The Company is also enlarging its presence in the
attractive IoT security market niche.
At Subex, our efforts are mediated towards the
achievement of overarching goal…
MAKING TOMORROW
SUSTAINABLE
6
SIX THINGS YOU NEED
TO KNOW ABOUT SUBEX
02 | SUBEX LIMITED
P E D I G R E E
L E A D E R S H I P
S C A L E
1
Subex is a trusted global
telecom solutions provider
for 75% of the world’s top 50
telcos. Founded in 1992, Subex
has been a part of the evolution
of mobile technologies, playing
the role of a consultant to
global telecom carriers leading
to their operational excellence
and transformation.
2
Subex is led by Mr. Vinod
Kumar (MD & CEO) with a team
of experienced professionals
who have been around for a
while and clearly understands
the strengths, challenges, and
opportunities of Subex. The
company had 900+ employees
as on 31st March 2018.
3
Subex is headquartered in
Bengaluru with global delivery
centers in the US, the UK, the
UAE, Singapore, and India.
Subex has more than 300
installations at 200+ global
telecom enterprises across
90+ countries.
P O R T F O L I O
U N I Q U E P O S I T I O N
4
Subex has a diversified portfolio
across segments and products,
providing revenue assurance,
fraud management, partner
settlement, route Optimisation,
capacity management, network
asset management, analytics,
IoT security, managed services
and consulting & advisory
services.
5
Subex provides telecom
analytics services and telecom
consulting and advisory
services. The Company is
uniquely positioned to serve
as a business assurance
consultant, having turned
around the business viability
of several telcos over the last
quarter of a century.
S T A T E - O F - T H E -
A R T - T E C H N O L O G Y
6
Subex has established a
reputation for developing
next-generation solutions
in emerging business areas
like advanced data analytics,
business intelligence, business
assurance and IoT.
Annual Report 2017-18 | 03
VALUE PILLARS
Drive New Business
Models
Pivot offerings around
revenues, open new
revenue streams in
emerging business
areas and allied services,
leveraging the partner
ecosystem.
Enhance Customer
Experience
Retain existing
customers and acquire
new customers using
analytics and leverage
business insights to
better understand
customer behavior for
deeper engagement.
Optimise Enterprise
Enable operational
excellence by focusing
on maximizing revenues
and mitigating business
risks, ensuring y-o-y cost
savings that provide
resources for business
investments.
HIGHLIGHTS OF 2017-18
Subex was
awarded a new
5-year Framework
Contract with
British Telecom
(BT)
May
29th 2017
Subex was awarded
at the 2017 Pipeline
Innovation Awards
under ‘Innovations in
Managed Services’
& ‘Innovations
in Security &
Assurance’ category
May
3rd 2017
May
31st 2017
Subex
announced
the launch of
Subex 3.0. Also
unveiled its new
brand identity
04 | SUBEX LIMITED
ElevenPaths,
Telefonica
Cybersecurity Unit
and Subex signed
a global framework
agreement to
provide a disruptive
FMaaS solution
July
19th 2017
June
13th 2017
Subex and STC
awarded the
prestigious Global
Telecoms Business
Innovation Awards
2017 in the
‘Enterprise Service
Innovation’ category
Quality statement
Listing
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.
Subex is listed on the
Bombay Stock Exchange
(scrip code: 532348) and the
National Stock Exchange
(scrip code: Subex). The
Company is also listed
on the London Stock
Exchange.
Pod Solutions
and Subex
partnered to
provide advanced
security for
IoT Billing and
Connectivity
Service
February
19th 2018
October 24th
2017
Subex launched
Consulting
and Advisory
Services for
Telecom Business
Assurance
February
26th 2018
Vinod Kumar
appointed as CEO of
Subex Limited
Subex announced
Winner at the 8th
edition of Aegis
Graham Bell Award
in the Data Science
Category
April
1st 2018
Annual Report 2017-18 | 05
PRODUCTS
ROC
Revenue
Assurance
Provides a comprehensive view of any enterprise by ensuring
better visibility into risks surrounding operations, revenue and
margins
Incorporates an integrated risk assessment and process
management framework to address revenue leakage as well as
identify and recover lost revenues from diverse streams
ROC
Fraud
Management
Combines a traditional rules engine, advanced machine learning
capabilities and a scalable architecture to ensure the proactive
detection of fraudulent activities on the network
Ensures that the system can be easily integrated with the
ecosystem by utilizing readily deployable interfaces
ROC
Network
Asset
Management
Provides a framework to audit network assets, evaluate
inventory and make a business case for a network upgrade
Offers an in-depth view of network assets and inventory to
Optimise OpEx as well as CapEx
Drives smarter network capital investment and network asset
lifecycle management
ROC
Capacity
Management
Provides proactive, actionable business intelligence to make
appropriate investments in maximizing network capacity
Gleans insights from network capacity trends
Correlates end-to-end capacity issues stimulates congestion
points due to external events,
Forecasts lead time for capacity exhaustion scenarios
06 | SUBEX LIMITED
ROC
Partner
Settlement
Ensures swift partner onboarding, partner self-care, end-to-
end revenue visibility and seamless communication between
business partners
Offers a 360-degree view of interconnect agreements to help
manage revenues and margins across the partner ecosystem
Enables billing platform to introduce innovative product
bundling and billing mechanisms for IP-based services
ROC
Route
Optimisation
Covers end-to-end processes from dial code/destination
operator rate imports to switch updates
Enhances visibility and control of critical processes
ROC
Insights
Provides actionable business insights that are consumable and
contextual to enable data-enriched decision-making
Enables democratization of insights through the generation of
consumable storyboards
Offers agility by covering all areas of focus: Revenue, Risk,
Customer and Product
Subex
Secure
Offers comprehensive IoT security from real-time discovery and
monitoring to response and recovery
Leverages a one-of-its-kind honeypot network that combines
physical devices and device emulations to generate IoT/ICS
signatures
Evaluates identity and device breaches and updates the Subex
Secure signature repository to safeguard the enterprise from
emerging IoT threats
Annual Report 2017-18 | 07
Note to Shareholders
Dear shareholders,
It is my privilege to
address Subex’s
shareholders for
the first time since
taking on the role of
CEO and Managing
Director of the
Company.
The Financial Year 2017-18 (FY18)
was a dramatic one marked by a
number of challenges. The telecom
BSS market, where we predominantly
operate, reported flat growth and
several countries in emerging markets
encountered geopolitical and forex
challenges. Even though our revenues
were negatively impacted, we
completed the year with an increase
in contracted order bookings and
improved operational profitability.
Our contracted new order booking
increased by 15% over the previous
year and we ended FY18 with
revenues of $50.5Million, EBITDA of
$7.9 Million and PAT of $3.2 Million.
Creditably, we repaid our entire
outstanding FCCB debt and reduced
our working capital debt, which
resulted in significant interest cost
savings.
We also made significant progress to
our products and solutions portfolio.
To appreciate this, it is important to
understand some key trends of our
industry.
Voice revenues are declining: As
we approach the Fourth Industrial
Revolution, the way people
communicate is drastically changing.
Voice calling and text messaging
that dominated the communication
industry, are giving way to internet
messaging and VoIP (Voice Over
Internet Protocol). This substantial
reduction in voice and texting, along
with a reduction in tariff have resulted
in a decline of ARPU (Average
Revenue Per User) and aggregate
revenues for telcos.
15%
Increase in our contracted
order booking over the
previous year
As we approach the Fourth Industrial
Revolution, the way people communi-
cate is drastically changing. Voice call-
ing and text messaging that dominated
the communication industry is giving
way to internet messaging and VoIP
(Voice Over Internet Protocol).
08 | SUBEX LIMITED
Massive telco consolidation: In the
recent past, the communications
industry has been marked by
several mergers and acquisitions.
Commoditization of legacy services
and telcos’ desire to monetize their
data are driving telco consolidation.
By consolidating, they intend to
leverage synergies and operational
efficiencies. We witnessed this in
India when Vodafone India and Idea
Cellular announced their merger.
5G moves from trial to production
phase: Several operators are planning
for a limited 5G launch in the near
future. 5G technology is expected to
bring about new digitized services
in retail, manufacturing, precision
engineering and health verticals.
Unlocking the IoT (Internet of
Things): According to GSMA
Intelligence, the number of global
IoT connections could increase more
than threefold and reach $25 Billion
by 2025. The IoT security space
promises tremendous growth and
Gartner predicts the IoT security
market could grow multi-fold to reach
$3 Billion by 2021.
Artificial intelligence: Artificial
Intelligence (AI) and Machine
Learning (ML) is moulding the future
and poised to unleash the next
wave of digital disruption. Along
with the adoption of technologies
like virtualization, SDN-NFV, and
orchestration, Artificial Intelligence
will be key to business and digital
transformation in telcos, driving an
improved customer experience.
Increasing appetite for open
standards: Major telcos have started
experimenting with open source
software and this trend is gaining
traction as operators mimic the
computing world and deepen their
innovation focus. Further, Blockchain
technology is reducing complexities
in multi-party transactions, thereby
moderating costs and enhancing
digital competitiveness.
It is clear that telcos are transforming
from being Communication Service
Providers (CSP) to Digital Service
Providers (DSP). In line with this, we
took some significant steps last year
to make Subex more relevant to our
customers.
We rebranded Subex as a digital
transformation enabler around three
value pillars: driving new business
models, enhancing the customer
experience and optimising operations.
We incubated a multi-vertical IoT
security solution that differentiates
itself by having 30% more threat
signatures than any other player.
We improved the application of
Artificial Intelligence (AI) and Machine
Learning (ML) capabilities in our
products to solve use cases hitherto
unsolved in the industry.
We engaged with a Tier 1 telco on
Network Analytics and proactively
evolved our solution capabilities to
graduate us ahead of the curve.
We concluded the restructuring of
entities to attract strategic partners
and talents into our relevant business
areas.
It is abundantly clear that we need to
break out from our current revenue
level. Towards this, we plan to build
on the strong foundation laid last year
and aggressively pursue a growth
strategy. The growth strategy will
cover our core, new and emerging
growth areas. We intend to perform
well in our core areas and drive
efficiencies that will help us invest
in new growth areas. The near-term
growth is expected from IoT Security
and Network Analytics. We also plan
to work on one or two new areas
with the intention of bringing a new
product to the market by the end
of this year. During the course of
this year, we expect to maintain our
revenues from core areas, conclude
ongoing trials around new areas
and sign strategic partnerships.
Considering that SaaS-based revenue
models are prevalent in new areas,
we expect revenues from new areas
to kick in from the next year.
The current management team
consists of Subexians who have
been around for a while. They clearly
understand our strengths, challenges
and opportunities. We plan to add
new talents and capabilities to our
teams as and when new areas of
growth are identified. The team is
well aligned and confident to drive
our strategy, leading the Company
out of the past into a bright future
that makes Subex vibrant again.
We are mindful of the fact that
our FCCB resolution resulted in a
significant equity dilution and pain to
our investors. We are indeed thankful
to our investors for their continued
trust and patience. As elaborated
above, we are committed to growing
Subex and are optimistic that this
strategy will enhance value and
benefit our shareholders.
We look forward to your support
during this crucial phase of our
journey.
Vinod Kumar
Managing Director and CEO
Annual Report 2017-18 | 09
A CONVERSATION WITH VINOD KUMAR
What are the emerging trends
in the telecom space?
The telecommunication sector is
going through enormous changes.
With the global adoption of data and
smartphones, legacy communication
services like voice and texting that
contributed to the bulk of telcos
revenues are rapidly declining and
over-the-top services like WhatsApp,
Facebook and Twitter are rapidly
growing. This is forcing telcos to look
at new avenues of revenue growth,
partnerships with OTT players and
take extreme steps to reduce the cost
of legacy operations.
On the network technology front,
most of the telcos have completely
migrated their network to 4G and
LTE or are in the process of doing
so. Some major ones have also
started trialling 5G services. 5G will
provide a 10-fold increase in speed
of data transfer and should act as a
catalyst for high bandwidth and low
latency services like telemedicine and
robotics.
Deployment of technologies like
NFC, Virtualization and Artificial
Intelligence, along with open source
adoption, would be a major disruption
in the telecom industry. These
are being done to reduce time-to-
market, decrease cost, enhance the
customer experience and improve
competitiveness. These primary
disruptions could also result in a
secondary disruption around the skills
needed in the telecom industry and
the workforce will also need to go
through a transformation.
The widespread adoption of IoT
by various industries is expected
to increase the connectivity
requirement; the telcos will slowly
start seeing an increase in revenue
from their IoT business.
As a partner providing software
solutions to this industry, this is an
interesting time with an urgent need
to change with the shift that we are
witnessing in the industry.
How is Subex placed to
capitalize?
Currently, we serve over 150
operators in 90 countries with Subex
solutions deeply embedded within
their network. It is fair to say that
a significant portion of the global
telecom traffic flows through our
platforms. This global presence and
access to data are one of our major
strengths.
We have constantly kept pace with
emerging technologies and emerging
needs of the market by proactively
co-creating solutions with customers.
We migrated our portfolio to support
big data Hadoop stack and also
embedded Artificial Intelligence and
Machine Learning into our products.
Further, we also invested in services
capabilities to assist customers
whenever required to extract the
maximum value from our solutions.
With all these, we possess a very
good base to build on.
As we double down investments
towards growing, we intend to
make customers central to whatever
we do. Rapid technology adoption
by operators will create a new
requirement in our core areas that
we need to fulfill. We also identified
some use cases like monetizing
telecom data, digital identity
and anomaly detection that offer
Revenue growth and a vibrant
Subex will be our immediate focus
areas. These two aspects feed on
each other and one cannot exist
without the other.
Vinod Kumar
MD & CEO
10 | SUBEX LIMITED
significant benefits to our customers.
We started working with a select few
to prove these concepts. These are
exciting areas and we hope to make a
major impact.
Another area that I want to highlight
is our multi-vertical IoT Security
solution that we launched recently.
Leveraging our strengths in the fraud
and risk domain, we have created a
robust solution that currently has 30%
more threat signatures than any other
player in the market.
What makes you optimistic
about the role of IoT?
Internet of Things (IoT) is beginning
to transform businesses, economies
and society. While people build
smart cities and businesses, it is
also important that they remain safe
cities and safe businesses. There
is a growing acceptance of this
need and IoT security is emerging
as a key component in the overall
IoT infrastructure. The global IoT
security market is slated to witness
tremendous growth and expected to
reach about $1.5 Billion in 2018.
Seeing this need we worked for
the last two years to create a multi-
vertical IoT security solution called
Subex Secure. We have an extensive
honeypot network that enables us to
proactively capture threat signatures
that are subsequently packaged and
deployed to protect IoT installations.
Subex Secure already protects over
8 Million IoT devices. The IoT Security
Laboratory and various partnerships
that we have signed will help us to
secure a portion of the expected
multi-fold increase in the IoT Security
market.
We recently announced a
collaboration with a large automobile
Original Equipment Manufacturer
(OEM) to provide cutting-edge
security solutions to secure
Connected Car Domains where
Subex will provide vulnerability
assessment, penetration testing and
security modules incorporated in the
OEM’s new products. The connected
car segment is extremely buoyant
and likely to disrupt the automobile
industry.
Our mission is to secure the digital
world and here we are making good
progress.
Were you pleased with the
Company’s performance in FY
2018?
FY18 was a an interesting year. With
a bulk of the financial and Balance
Sheet clean-up completed, we were
able to start working towards growing
the Company. Within the means
available, we invested in our portfolio
to make it relevant to the times
and also launched the IoT security
product.
From a financial standpoint, we
managed things reasonably well.
Amidst a flat market marked by
geopolitical and forex issues, we
increased our contracted new order
booking by 15% over FY17. We
ended FY 18 with a revenue of $50.5
Million, EBITDA for $7.9 Million and
PAT of $3.2 Million. From the breakup
of revenues, you will notice that the
annuity stream that accounts for over
70% of the total revenue stabilized
and, going forward, we expect it to
continue the same trend. This was the
result of a conscious effort to move
Annual Report 2017-18 | 11
1 telco belonging to major telecom
operator group and the project is near
completion. The progress in terms of
results has been encouraging, which
we intend to promote aggressively.
This should provide us with more
mileage to showcase our NAM
portfolio to other Tier 1 telcos, and we
expect them to adopt this new way of
handling assets.
In the area of IoT security, the market
is expected to grow multifold and we
are positioned to secure a part of this
market expansion. We hope to sign
more strategic partnership contracts,
one similar to what we announced
with Pod Systems during the course
of this year.
Horizon 3 consists of our long-term
growth initiatives. We plan to launch
our new portfolio of products and
services around new high growth
areas such as Customer Journey
Analytics, Digital Identity, Anomaly
Detection etc. We plan to launch one
product during the latter part of this
year and incubate a few more ideas
for market release next year. We
have access to a significant portion
of the global telecom traffic and
the attempt is to see how we can
leverage this access, timing with the
planned opening/ set up of digital
infrastructure like the ‘IndiaStack’.
We are also planning to expand
our assurance offerings to markets
outside the telecom vertical.
On the overall, we plan to invest
actively in our mid-term and long-term
growth areas starting this year.
these areas. However, the business
models, valuations and many other
aspects of these businesses are
different. Hence it was difficult for
us to get attention from the right
partners. Hence a new structure with
different LLPs were created and we
hope this will address the issue.
What are the key focus areas
for Subex?
Revenue growth and a vibrant Subex
will be our immediate focus areas.
These two aspects feed on each
other and one cannot exist without
the other. We have been stuck at the
$50M level for a while and it is critical
for us to break out and accelerate.
Only then we would be able to
report growth and prosperity, for all
stakeholders. I intend to relentlessly
drive the company’s focus on these
two aspects and pursue it with the
required vigor to make them happen.
How does Subex intend to
grow?
We foresee the growth of Subex
from three horizons. Horizon 1 will
focus on the short-term. The objective
here is to perform better in our core
business, which consists of fraud
management, revenue assurance and
interconnect billing solutions for the
telecom segment. The advancements
that we have made in these areas
will allow us to compete better and
attract a higher market share. We will
continue to evolve our products and
improve efficiency.
Horizon 2 will provide the near-term
growth for the Company. We intend
to execute well on our new portfolio,
namely multi-vertical IoT security
and the Network Asset Management
(NAM) solution. Last year, we secured
our first customer for NAM, a Tier
towards managed services to mitigate
the challenges of lumpiness of license
sales and to bring predictability into
revenue and margins. The license
revenue will have variations based on
the structure and when the contract
bookings are done. In Q4 of FY17,
we converted $3 Million revenue
from the contracts booked in that
quarter, whereas in Q4 of FY18 it was
only $600K, even though the total
contract bookings were higher. Even
though on a year-to-year basis, the
revenue showed a decrease, from an
overall competitive and market share
increase perspective, we did better.
What was the rationale behind
the Subex restructuring?
As we expand into new areas
outside our core products of revenue
management, it is necessary to attract
strategic partners and talents to grow
On IoT security, the market is expected
to grow multifold and we are well
positioned to secure a part of this
market expansion. We hope to sign
more strategic partnership contracts,
one similar to what we announced
with Pod Systems, during the course
of this year.
12 | SUBEX LIMITED
OUR PERFORMANCE
IN NUMBERS
Revenues (H crore)
PAT (H crore)
PAT (%)
3
3
.
7
5
3
6
4
.
2
2
3
2
3
.
4
2
3
6
1
-
5
1
0
2
Y
F
7
1
-
6
1
0
2
Y
F
8
1
-
7
1
0
2
Y
F
1
2
8
1
-
7
1
0
2
Y
F
6
1
-
5
1
0
2
Y
F
7
1
-
6
1
0
2
Y
F
)
3
4
(
)
4
7
(
8
3
.
6
8
1
-
7
1
0
2
Y
F
6
1
-
5
1
0
2
Y
F
7
1
-
6
1
0
2
Y
F
)
0
1
.
2
1
(
)
4
0
.
3
2
(
Annual Report 2017-18 | 13
Message from Head of Strategy and Products
A CONVERSATION WITH ROHIT MAHESHWARI
The two key strengths of Subex
comprise access to large amounts of
data and an in-depth understanding of
the telco business.
Rohit Maheshwari
Head of Strategy and Products
T here has been a paradigm shift
in the global telco business in
the last few years.
From mere utility providers of voice
and data services, our customers
have transformed into digital service
providers offering the complete
spectrum of communication and
digital services.
While digital services hold significant
prospects, digital service providers
are encountering stiff competition
from OTT players. The verdict is clear:
players can either invest in innovation
or become irrelevant.
The result is that a larger number of
CSPs are making bigger investments
in network augmentation, especially
in rolling out 5G. This has resulted
in a pressure on BSS funding, a
key area where Subex operates.
However, our experience indicates
that following the launch of any new
technology or allied infrastructure
creation, there could be a need to
re-invest in business support systems
comprising revenue assurance,
fraud management and partner
settlements, among others. In view of
this, we are confident that our legacy
business will rebound even as they
were relatively flat during the year
under review.
Building a sustainable future
At Subex, we divide prospects across
the near-term, mid-term and long-
term – the ‘three horizon outlook’.
The most proximate horizon
comprises fraud management,
revenue assurance and interconnect
billing solutions in the telecom
segment. We are geared to perform
>15 Billion
We have worked with
some of the largest telcos,
who generate >15 Billion
transactions per day.
Subex is agile, flexible and open-mind-
ed compatible with rapid changes
across the landscape. Subex expects
to continue empowering customers in
responding with speed to technological
shifts across the foreseeable future.
14 | SUBEX LIMITED
well in this area following investments
in skill building, big data platform
creation and AI cum machine learning
investments. We expect to sustain
product evolution and solutions
efficiency enhancement to address
customer requirements and stabilize
related revenues.
Our second horizon comprises new
areas we nurtured in the last few
years. We expended significant
resources in shoring capabilities
across IoT security, network
analytics and telecom asset lifecycle
management (ALM) solutions. We
expect to sustain business through
the short-term and accelerate during
the mid-term.
I am pleased to communicate that
in FY18, we secured our first ALM
customer, a Tier I telco from a major
telecom operator group and this
project is expected to be completed
by end 2018. The initial results are
encouraging and we expect the
execution to be successful, helping
attract other Tier 1 telcos.
In the area of IoT security solutions,
the market is expected to grow
15-fold to US$1.5 Billion (Source:
Gartner) by 2020. Subex is attractively
positioned to secure a part of this
market growth. We intend to sign
strategic partnership contracts, one
being similar to what we announced
with Pod Systems during the course
of the year under review.
The predominant revenue model
for IoT security solutions would
be subscription-based - different
from the conventional model. In
any subscription model, revenue
accretion will be slow during the initial
period but could ramp up with speed
following increases IoT adoption.
We expect new portfolios to account
for an attractive part of the newly
contracted business with significant
revenues likely from FY20 onwards.
The third or the long-term horizon
comprises high-growth business
areas. Subex’s engagement with
telcos provides access to large
amounts of data. The Company
will examine ways in which it can
monetize this access in line with
growing digitalization the world over.
Subex is respected in the end-to-end
business assurance telco segment.
Since adjacent markets, where
assurance is equally relevant, are not
as evolved, we intend to repurpose
our assurance skills for these markets
outside the telecom segment. Our
proven expertise will provide us the
with the fuel we need to pursue mid-
term and long-term goals.
The Subex edge
The two key strengths of Subex
comprise access to large amounts of
data and an in-depth understanding of
the telco business.
We have worked with some of
the largest telcos, who generate
>15 Billion transactions per day.
These transactions represent data
repositories that can be mined to
generate useful information. We
invested in best-in-class platforms
to leverage big data; we scaled the
business to stay ahead.
Subex is agile, flexible and open-
minded compatible with rapid
changes across the landscape. Subex
expects to continue empowering
customers in responding with speed
to technological shifts across the
foreseeable future.
A transforming Subex
To sustain our growth engine, we
will need to keep innovating while
venturing into new areas. In view
of this, we started focusing on
strengthening our skills, which could
help us transform our revenue profiles
and enter the ever-expanding IoT
segment.
At the 2018 Mobile World Congress
in Barcelona where I was present,
there was a broad consensus that
2018 would be a defining year for IoT.
We expect that our head start should
translate into a growing presence in
this niche. Artificial Intelligence (AI)
has emerged as the next big thing;
many great ideas in AI that had been
languishing in textbooks for decades,
because of a lack of computational
power to apply them, have gained
fruition, thanks to two big changes.
One, the rate at which data is being
collated has increased exponentially.
Two, the arrival of groundbreaking
technologies, such as neural nets,
have allowed AI to ‘evolve’ to solve
complex problems.
AI analytics will help us transform
our existing businesses and allow
us to offer new-age solutions that
are customer-centric and in heavy
demand. In view of these reasons
and realities, we are confident of
replicating our retrospective growth
across a more compressed period of
time.
Annual Report 2017-18 | 15
Message from Head of IoT Security
A CONVERSATION WITH KIRAN ZACHARIAH
By 2020, IoT is expected to aggregate
20 to 50 Billion devices, growing
exponentially from ~6.4 Billion
devices in 2016.
Kiran Zachariah
Head of IoT Security
T he new global connectivity
wave is extending beyond
laptops and smartphones. This
wave is extending towards connected
cars, smart homes, connected
wearables, Smart Cities and
connected healthcare - a connected
life.
Over the past few years, there
has been extensive discussion
around the IoT impact across the
world. Although little has transpired
in reality, the prospects remain
compelling. During the year under
review, we spent the first three
quarters planning and designing IoT
projects; during the last quarter, we
implemented them. Most of these
projects comprised cost Optimisation
while other projects focused on
equipment downtime reduction and
minimized manual interventions in the
areas of monitoring and predictive
maintenance.
Over the next couple of years, we
plan to focus on industrial IoT and
automated cars - two rapidly growing
segments. The automotive IoT market
US$1.5 Billion
In the area of IoT security
solutions, the market is
expected to grow 15-fold
to US$1.5 Billion (source:
Gartner) by 2020.
16 | SUBEX LIMITED
threat intelligence to mitigate risks.
Although IoT attacks can target
individual components, when they
are connected to the entire IT
network, they can affect the entire
infrastructure.
Subex offers solutions for the entire
IoT ecosystem. We use signatures
from honeypots and machine learning
to determine if the device has been
compromised. The result: our threat
responsiveness is 25-35% more
effective than competing alternatives.
The Subex edge is derived from its
first-mover advantage. The Company
has focused singularly on the telecom
sector and now the time has come to
venture into areas like Defense and
education.
Subex is transforming with
speed
By 2020, IoT is expected to aggregate
20 to 50 Billion devices, growing
exponentially from ~6.4 Billion
devices in 2016.
IoT providers will need to address
the increasing stress on their existing
infrastructure and factor this growth
while designing ecosystems. Subex
Secure is built around a framework
that monitors 500 Million devices
and 6 Billion transactions a day on
commodity hardware via 300 global
installations. This telco-grade solution
has been developed using telecom
innovations from across the last two
decades. The framework, deployed
at some of the largest telcos, is
is projected to reach US$ 82.79 Billion
by 2022. By 2020, an estimated 250
Million connected vehicles would
be on roads, enhancing security and
hacking concerns.
The development of Smart Cities and
Smart Nations are at a pilot stage and
we are adapting our business model
around changes in the IoT realm.
Building a sustainable future
At Subex, we selected to develop
inch-wide and mile-deep competence.
Our selection of the IoT security
area was on the grounds that it was
niche and relatively under-populated
by specialized players. Besides, IoT
security is different from the security
solutions that runs on conventional IT
hardware. A normal security solution
is difficult to run on the connected
devices that are part of the IoT
ecosystem.
The large cyber-attacks on IoT devices
have vindicated our presence in
this space. We are now monitoring
over 8 Million devices worldwide.
What makes Subex different is its
focus on building threat intelligence
through IoT and ICS and using that
constantly modified to address
escalating network traffic while
reducing the total cost of ownership.
Looking ahead, we would like to triple
the number of devices we monitor
across four years as we carve out a
large slice of the segment. We are
continuing to lay a keen emphasis on
catering to telco customers who are
a part of the IoT; we are planning to
launch Cloud or SaaS-based models.
It is the convergence of these realities
that makes me optimistic of the
Company’s long-term prospects.
Subex Secure is built around a frame-
work that monitors 500 Million devices
and 6 Billion transactions a day on
commodity hardware via 300 global
installations.
Annual Report 2017-18 | 17
MAKING
TOMORROW
SUSTAINABLE
18 | SUBEX LIMITED
Making our presence felt in the niche IoT security space
IoT provides always-connected services to digital subscribers.
IoT ecosystems are complex; a typical deployment comprises multiple systems (platforms,
databases, mobile apps, load balancers, web interfaces and certificate servers, among others).
Since IoT exposes subscribers to identity theft and security breach, an effective IoT security
solution can potentially secure components while comprehending traffic flows across OSI
layers (three to seven).
Subex provides holistic cyber security solutions that protect enterprises, among the first few
companies to provide solutions against unauthorized intrusion.
The market is large and growing. The number of global IoT devices could quintuple between
2016 and 2020. The market could grow to US$ 29.02 Billion by 2020.
Subex Secure offers comprehensive IoT security coverage from real-time discovery and
monitoring to response and recovery. This solution leverages a one-of-its-kind honeypot
network that combines physical devices and device emulations to generate IoT/ICS signatures.
The system evaluates global identity and device breaches, updating the Subex Secure signature
repository to safeguard enterprises from emerging IoT threats.
Subex has an extensive honeypot network that enables the Company to proactively capture
threat signatures that are subsequently packaged and deployed to protect IoT installations.
By transforming the existing assurance business
As digital technologies disrupt traditional internet service providers and telcos, revenues are
shrinking for legacy carriers.
IP-based disruptors are eroding traditionally profitable revenue streams (overseas calls),
affecting telco growth.
The adoption of new technologies entails revenue-related risks. For instance, in the billing
domain, diverse data plans enable subscribers to indulge in an all-you-can-eat buffet of
gigabytes for a flat rate, while other subscribers can cherry-pick plans that suit their needs.
The art of revenue management has been made complex by the addition of virtualized
networks, streaming services, onboarding of new subscribers, renewal of subscriptions and
termination of subscriptions.
Although telcos provisionally moderately their budgets to prepare for 5G, this could re-emerge
as a focus area.
Subex is globally respected for its strong solutions suite that provides real-time assurance to
CSPs. The Company is poised to capitalize on the next wave of sectoral investments; its ability
to mine data, garner actionable information and create customized solutions are expected to
help Subex emerge as the port-of-first-call for global telcos on the one hand and widen revenue
streams on the other.
Subex making its
future sustainable
through continuously
strengthening its
existing businesses
and also through
venturing into the
the high-growth IoT
security space through
offering cutting-edge
solutions.
Annual Report 2017-18 | 19
SUBEX -
BECOMING FUTURE-READY…
Reputed
Over the past
25 years, Subex
has made 300+
global installations; its clients
comprise >75% of the top-
50 global CSPs, reinforcing
its position as one of the
most respected names in the
telecommunication and IoT
spaces.
Integrated
Subex
processes
several
petabytes of data every day.
This data is mined through
advanced analytical tools
that salvage actionable
information and offer
customized solutions.
Balanced
Subex enjoys
an adjusted
mix of revenue
streams (license-based and
subscription-based, among
others).
Focused
Subex helps
clients address
sectoral
challenges, open up new
revenue streams, enable
operational excellence and
enhance their customer
experience.
Differentiated
Subex has
selected to
work in niche
and relatively under-crowded
segments; the foray into
the IoT security segment
is a manifestation of this
approach.
People-oriented
Subex is driven
by 900+ people
working globally
to drive innovation and
product development.
Foresight
Subex has
an extensive
honeypot
network that enables the
Company to proactively
capture threat signatures that
are subsequently packaged
and deployed to protect IoT
installations.
Futuristic
Subex is
leveraging
new-age
technologies like Artificial
Intelligence (AI) and Machine
Learning (ML) to stay relevant
in the evolving industry
space.
20 | SUBEX LIMITED
SUBEX -
MAKING A DIFFERENCE TOGETHER
The Subex Charitable Trust is a non-
profit trust that mobilizes employee
participation in community projects.
SCT supports causes of community
welfare, specifically for the
economically backward and specially-
abled individuals. The Trust supports
initiatives based on requests received
from diverse sources.
ACTIVITIES UNDERTAKEN
DURING 2017-18
Education aid: The Subex Charitable
Trust sponsored 40 economically-
challenged students from rural areas
with scholarships through the Nurture
Merit program.
Education aid: The Company
sponsored tuition fees for the
Vidyaranya Trust Orphanage.
Vocation Training for Women
empowerment: SCT tied up with the
Prerana Resource Centre for providing
vocational training to visually impaired
and disabled orphan teenage girls,
Sponsoring their tuition fees. As part
of this program, 25 blind and disabled
girls were provided training in 3
phases – Basic Education, Vocational
Training & Employment follow-up.
Out of the 25, 22 blind/disabled Girls
were successful in attaining jobs in
different factories – textile industry,
packaging industry, printing and
others.
Received Nurture Merit contribution
from 33 Subexians and more than 20
Subexians are contributing a monthly
amount from their salary for SCT
activities.
Other activities:
• Organized blood and stem cell
donation camp with TTK Bank.
• Visited Bellandur Government
School and Government School,
Kadubisanahalli for checking their
requirements.
• Provided 10 desktop computers to
Government Higher Secondary School
for education purposes. Provided
a water cooler for providing clean
drinking water to the students.
• Donated clothes and toys for
economically challenged children
through Goonj with the help of
Subexian volunteers.
• Vidyaranya Trust Orphanage - SCT
volunteers spent time with children
and donated back packs and water
sippers to children.
• Opportunity School for mentally
challenged: SCT volunteers visited
and spent time with mentally
challenged children and donated back
packs and water sippers.
• Donated cots and mattresses to
Shishu Mandir, a home for destitute
children.
Annual Report 2017-18 | 21
BOARD OF DIRECTORS
Mr. Anil Singhvi
Chairman and Independent Director
Mr. Vinod Kumar
Managing Director and Chief Executive Officer
Ms. Poornima Prabhu
Independent Director
Ms. Nisha Dutt
Independent Director
22 | SUBEX LIMITED
LEADERSHIP TEAM
Mr. Vinod Kumar
Managing Director and Chief
Executive Officer
Mr. Rohit Maheshwari
Head of Strategy & Products
Mr. Suraj Balachandran
Head of Sales – EMEA & APAC
Mr. Mark Bourgoin
Vice President Sales - North America
Mr. Kiran Zachariah
Head of IoT Security
Ms. Mehernaz Dalal
Chief Financial Officer
Mr. Mohan Sitharam
Chief Human Resources Officer
Mr. David Halvorson
General Counsel
Annual Report 2017-18 | 23
Boards’ Report
Your Directors have pleasure in presenting the 24th Annual Report of the Company on the business and operations together with the
audited results for the year ended March 31, 2018.
1. FINANCIAL RESULTS
Particulars
Total Revenue
Share of profit/(loss) net
Other Income
Finance Cost
Profit/ (loss) before exceptional items and tax expense
Exceptional Items
Profit/ (loss) before tax
Tax expenses
Profit/ (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*
2017-18
2016-17
2017-18
2016-17
(H in Lakhs)
32,432
35,733
17,993
-
140
775
2,275
1,166
3,441
1,373
2,068
(240)
(210)
(30)
-
1,154
2,040
7,528
(10,890)
(3,362)
961
(4,323)
(1,376)
(1,344)
(32)
37
66
547
(200)
389
189
157
32
(8)
-
(8)
24
32,441
-
1,253
1,505
4,162
(4,591)
(429)
254
(683)
(33)
-
(33)
(716)
Total comprehensive income for the year
1,828
(5,699)
*Pursuant to the restructuring, the current year’s standalone figures are not comparable to the previous year’s standalone figures. (Also
refer note 31 of the standalone financial statements).
2. RESULTS OF OPERATIONS
During the financial year ended March 31, 2018, the total revenue
on a standalone basis was H17,993 Lakhs as against the revenue
for the previous year which was H32,441 Lakhs. The Company
has during the year under review earned a profit of H32 Lakhs as
against a loss of H683 Lakhs in the previous year.
On a consolidated basis, the total revenue stood at H32,432 Lakhs
as against H35,733 Lakhs during the previous year. The profit for
the financial year 2017-18 is H2,068 Lakhs as against loss of H4,323
Lakhs in the previous year.
3. DIVIDEND
The Directors have not proposed any dividend for the financial year
2017-18.
4. TRANFER TO RESERVES
There is no transfer to general reserves during the year 2017-18.
Pursuant to restructuring, the difference between net assets
transferred and the capital contribution of H2,776 Lakhs has been
transferred to Capital reserve. Also refer note 31 of the standalone
financial statements.
24 | SUBEX LIMITED
5. SHARE CAPITAL
As at March 31, 2018 and as at the date of this report, the authorised, issued, subscribed and paid- up capital of the Company is as below:
(Amount in H)
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 01, 2017
Increase during the year As on March 31, 2018
5,450,400,000
19,600,000
430,000,000
Nil
5,880,400,000
19,600,000
5,069,079,360
Nil
550,949,990#
Nil
5,620,029,350
Nil
5,069,079,360
Nil
550,949,990
Nil
5,620,029,350
Nil
5,069,079,360
Nil
550,949,990
Nil
5,620,029,350
Nil
# On May 15, 2017, the Company made an allotment of 55,094,999 equity shares of the Company on a preferential basis at an issue
price of H14 per equity share (Face value of H10 per equity share). (The proceeds of the equity shares issued on preferential basis, has
been utilized for the acquisition of Intellectual Property Rights viz. DIM from Subex Americas Inc. and to strengthen the long term capital
structure of the Company.)
Sl. No.
i.
ii.
iii.
Investors
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
Subex has received numerous awards jointly with its customers.
The recent awards include:
• Aegis Graham Bell Award 2017 for Innovation in ROC Insights
under “Data Science” Category
• Global Telecoms Business Innovation Award 2017 with Saudi
6. BUSINESS
Subex is a leading telecom analytics solutions provider, enabling a
digital future for global telcos. Founded in 1994, Subex has spent
over two decades in enabling 3/4th of the largest 50 Communication
Service Providers (CSPs) globally achieve competitive advantage.
By leveraging data which is gathered across networks, customers
and systems coupled with
its domain knowledge and the
capabilities of its core solutions, Subex helps CSPs to drive new
business models, enhance customer experience and optimise
enterprises. Subex leverages its award-winning analytics solutions
in areas such as Revenue Assurance, Fraud Management, Asset
Assurance and Partner Management “Revenue Management
Services/RMS business” and complements them through its
newer solutions such as IoT Security “Digital Business”. Subex also
offers scalable Managed Services and Business Consulting services.
It has more than 300 installations across 90+ countries.
Telecom Company
• Pipeline Innovation Awards under “Managed Services” category &
“Innovations in Security & Assurance”
As part of the business restructuring efforts of the Company,
the Company invested in two Limited Liability Partnership (LLP)
entities. Pursuant to this, two LLPs- Subex Digital LLP and Subex
Assurance LLP were incorporated on April 05, 2017. Pursuant to: (i)
the in-principle approval accorded by the Board of Directors of the
Company (“Board”) at its meeting No. 2/2017-18 held on May 25,
2017; (ii) the final approval accorded by the Board at its meeting
No. 5/ 2017-18 held on August 21, 2017; and (iii) the approval
accorded by the members of the Company vide postal ballot on
September 23, 2017;
Annual Report 2017-18 | 25
7. SUBSIDIARIES (WHOLLY OWNED AND OTHER
SUBSIDIARIES)
SUBEX ASSURANCE LLP AND ITS SUBSIDIARIES
For the year ended March 31, 2018, Subex Assurance LLP earned a
net income of H12,818 Lakhs and a net profit of H635 Lakhs.
As at March 31, 2018, Subex Limited held more than 99.99 % of the
capital in Subex Assurance LLP and the balance is held by Subex
Digital LLP.
Pursuant to the business restructuring of the Company, Subex (UK)
Limited became a wholly owned subsidiary of Subex Assurance LLP
with effect from November 01, 2017.
• For the year ended March 31, 2018, the Standalone income
of Subex (UK) Limited was H16,398 Lakhs as against H17,619
Lakhs last year, and the net loss was H5,308 Lakhs as against a
net gain of H1,859 Lakhs last year.
• Subex (Asia Pacific) Pte. Limited is a wholly owned subsidiary
of Subex (UK) Limited. For the year ended March 31, 2018, the
Standalone income of Subex (Asia Pacific) Pte. Limited was
H2,992 Lakhs as against H2,555 Lakhs last year, and the net loss
was H655 Lakhs as against a net gain of H892 Lakhs last year.
During the year Subex (Asia Pacific) Pte. Ltd issued 8 million
shares at SG$1 per share to its holding Company Subex (UK)
Limited to meet its fund requirements.
• Subex Inc.is a wholly owned subsidiary of Subex (UK) Limited.
For the year ended March 31, 2018, the Standalone income of
Subex Inc. was H9,353 Lakhs as against H10,694 Lakhs last year,
and the net gain was H86 Lakhs as against a net gain of H117
Lakhs last year.
• Pursuant to the business restructuring of the Company, Subex
Middle East (FZE) became a wholly owned subsidiary of Subex
Assurance LLP with effect from November 01, 2017. For the
year ended March 31, 2018, the standalone income of Subex
Middle East (FZE) is H1,132 Lakhs as against H1,706 Lakhs last
year and loss of H14 Lakhs as against a gain of H35 lakhs last
year.
SUBEX DIGITAL LLP
For the year ended March 31, 2018, Subex Digital LLP earned a net
income of H33 Lakhs and incurred a net loss of H598 Lakhs.
As at March 31, 2018 Subex Limited held more than 99.99 % of
the capital in Subex Digital LLP and the balance is held by Subex
Assurance LLP.
(i) The Revenue Maximization Solutions and related businesses
carried out by the Company, was contributed to its subsidiary,
Subex Assurance LLP for a consideration of H615,64,56,051/-
(Rupees Six Hundred Fifteen Crores, Sixty Four Lakhs, Fifty
Six thousand and Fifty one only), in the form of credit to the
Company’s capital account with Subex Assurance LLP
(ii) The Subex Secure and Analytics solutions and related
businesses carried out by the Company, was contributed
to its subsidiary, Subex Digital LLP for a consideration of
H18,68,84,750/- (Rupees Eighteen Crores, Sixty Eight Lakhs,
Eighty Four Thousand, Seven Hundred and Fifty only), in the
form of credit to the Company’s capital account with Subex
Digital LLP.
The purpose of the Restructuring was to achieve the following
commercial reasons, inter alia:
(i) Segregate
the Company’s business
into separate
verticals, facilitating greater focus on each business
vertical and higher operational efficiencies;
(ii) enhance the ability of the Company to enter into business
specific partnerships and to attract strategic investors at
respective business levels;
(iii) improve organizational capabilities, arising from the
segregation of human capital and focus the diverse skills,
talent and experience in specialized fields to compete
successfully in an increasingly competitive industry;
(iv) de-risk various business verticals from each other; and
(v) enhance value for the shareholders of the Company.
The Board at its meeting held on October 04, 2017, approved
November 01, 2017 as the effective date for the restructuring of
the business of the Company.
SEZ I and II
The Company transferred SEZ units I & II to its subsidiary, Subex
Assurance LLP, with effect from November 01, 2017 i.e. the
effective date of the business Restructuring.
SEZ III
During the year the Company completed all its statutory formalities
/ compliances under SEZ Act/Rules in respect of this new unit and
commenced operations from this unit.
Further details on the business of the Company is provided in
the Management Discussion and Analysis section of the Annual
Report.
26 | SUBEX LIMITED
Subex Azure Holding Inc. is a wholly owned subsidiary of Subex
Americas Inc. There were no transactions during the year under
review.
As on March 31, 2018, 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 TECHNOLOGIES LIMITED
Subex Technologies Limited is a wholly owned subsidiary of Subex
Limited. For the year ended March 31, 2018, Subex Technologies
Limited incurred a net loss of H4 Lakhs as against a net profit of H54
Lakhs last year. There are no business operations at present.
SUBEX AMERICAS INC.
For the year ended March 31, 2018, the standalone income of
Subex Americas Inc. was H851 Lakhs as against H3,186 Lakhs last
year, and net profit was H6,264 Lakhs as against a profit of H3,012
Lakhs last year.
8. FINANCE
FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB’s)
The details of the FCCB’s of the Company are summarized below :
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 March 08, 2007
Restructuring of bonds during 2009-10
Discount @ 30%
Balance as on November 02, 2009
Conversion to equity in 2009-10 and 2010-11
Balance March 31, 2011
Restructuring of bonds during 2012-13
Premium
Balance on July 06, 2012
Mandatory conversion to equity shares on July 17, 2012
Balance after mandatory conversion
Conversion to equity up to March 31, 2016
Balance as on March 31, 2016
Conversion during 2016-17
Redemption on March 06, 2017
Balance as on March 31, 2017
Redemption on July 07, 2017
Balance as on March 31, 2018
180.00
(141.00)
-
39.00
-
39.00
(38.00)
-
1.00
-
1.00
-
1.00
-
(1.00)
-
-
Nil
As on March 31, 2018, the Company did not have any outstanding FCCB’s.
-
141.00
(42.30)
98.70
(43.90)
54.80
(53.40)
-
1.40
-
1.40
-
1.40
-
(1.40)
-
-
Nil
-
-
-
-
-
-
91.40
36.32
127.72
(36.32)
91.40
(86.85)
4.55
(0.95)
-
3.60
(3.60)
Nil
Annual Report 2017-18 | 27
9. DEPOSITS
Your Company has not accepted any deposits from the public.
4 years and can be exercised over a period of 3 years from the date
of vesting.
10. EMPLOYEE STOCK OPTION SCHEMES
Details of the Company’s Employee Stock Option Plans are given
below:
a. 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 listing of
equity shares arising out of exercise of options granted under the
scheme.
The Compensation Committee granted options to the eligible
employees in accordance with the provisions of the scheme. The
options were granted at a price, which was 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 was highest trading volume during this period. Unless
otherwise resolved, the options granted vest over a period of 1 to
4 years and could be exercised over a period of 3 years from the
date of vesting.
The tenure for grant of stock options under ESOP 2005 scheme
has expired in 2015 and the Company is only administering the
outstanding stock options issued under the scheme.
b. EMPLOYEE STOCK OPTION PLAN-2008 (ESOP-IV)
During 2008-09, your Company instituted the Employee Stock
Option Plan-2008. A corpus of 20,00,000 options were 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 listing of equity shares arising out of exercise of
options granted under the scheme.
The Compensation Committee granted options to the eligible
employees in accordance with the provisions of the scheme. The
options were 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 was highest trading volume during this period. Unless
otherwise resolved, the options granted vest over a period of 1 to
28 | SUBEX LIMITED
As on March 31, 2018, there are no outstanding options under the
ESOP 2008 Scheme.
Additional information regarding the employee stock options as at
March 31, 2018 is given in “Annexure A” to this report.
11. PARTICULARS OF GUARANTEES UNDER SECTION 186
Details of guarantees covered under Section 186 of the Companies
Act 2013, are given in note number 35 (b) (iv) of the Standalone
Financial Statements.
12. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE
END OF FINANCIAL YEAR AND DATE OF THE REPORT
Mr. Ashwin Chalapathy, Non-Independent, Non-Executive Director,
resigned from the Board with effect from May 04, 2018.
13. 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. It endeavors to meet the growing aspirations of all
stakeholders including shareholders, employees and customers
and is committed to maintaining the highest level of transparency,
accountability and equity in its operations. It 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 in “Annexure B”. In addition,
it 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.
14. 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. Vinod Kumar Padmanabhan, retires by
rotation and being eligible, has offered to be re-appointed at the
ensuing Annual General Meeting.
The Board at its meeting held on May 25, 2017 appointed Mr. Anil
Singhvi, Independent Director, as the Chairman of the Company.
Mr. Vinod Kumar Padmanabhan, Chief Operating Officer of the
Company and Mr. Ashwin Chalapathy, Chief Technology Officer
and Head of Service Delivery of the Company were appointed
as Additional Directors and Whole-Time Directors at the same
meeting. The shareholders approved the appointments of
Mr. Vinod Kumar Padmanabhan and Mr. Ashwin Chalapathy, at the
23rd Annual General Meeting of the Company held on July 28, 2017.
Pursuant to the restructuring of the business of the Company,
the Revenue Maximisation Solutions business was contributed
to Subex Assurance LLP and the Subex Secure and Analytics
solutions and related businesses was contributed to Subex Digital
LLP. Consequent to such business restructuring Mr. Vinod Kumar
Padmanabhan and Mr. Ashwin Chalapathy were appointed in
Subex Assurance LLP and they continued as Non- Executive and
Non-Independent Directors on the Board of the Company with
effect from November 01, 2017, being the effective date of such
business restructuring.
Mr. Surjeet Singh was re-appointed as the Managing Director & CEO
of the Company at the Board Meeting held on October 04, 2017 for
the period from October 05, 2017 to March 31, 2018. The said re-
appointment is being placed before the Members of the Company
at the ensuing Annual General Meeting for their approval.
The Board at its meeting held on March 21, 2018, took note, that
pursuant to the terms of the employment agreement of Mr. Surjeet
Singh with the Company, his tenure as Managing Director & CEO of
the Company concluded on March 31, 2018.
In view of the conclusion of tenure of Mr. Surjeet Singh as the
Managing Director & CEO of the Company and pursuant to the
recommendation of the Nomination and Remuneration Committee,
the Board at its meeting held on March 21, 2018, appointed Mr.
Vinod Kumar Padmanabhan as the Managing Director & CEO of
the Company effective from April 01, 2018, for a tenure of three
years. The said appointment is being placed before the Members
of the Company at the ensuing Annual General Meeting for their
approval.
Mr. Ashwin Chalapathy, Non-Independent, Non-Executive Director,
resigned from the Board with effect from May 04, 2018.
The details regarding the familiarization program for Independent
Directors is available on the website of your Company under the
link https://www.subex.com/shareholder-services/.
15. BOARD MEETINGS
During the year, 10 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 Board meeting number and the dates on
which the meetings were held are as follows:
Board Meeting Number
Date of Meeting
1/2017-18
2/2017-18
3/2017-18
4/2017-18
5/2017-18
6/2017-18
7/2017-18
8/2017-18
9/2017-18
10/2017-18
May 25, 2017
May 25, 2017
June 05, 2017
July 28, 2017
August 21, 2017
October 04, 2017
November 10, 2017
December 21, 2017
January 29, 2018
March 21, 2018
The details of the attendance of the Directors is provided in the
Corporate Governance Report.
16. 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 January 29, 2018 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.
17. 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 in “Annexure H”.
18. AUDIT COMMITTEE
As on March 31, 2018, the Audit Committee had 4 Directors as
its members viz. Mr. Anil Singhvi, Chairman, 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.
Mr. Surjeet Singh ceased to be the member of the Audit Committee
as on March 31, 2018. Mr. Vinod Kumar Padmanabhan has been
appointed as a member of the Committee with effect from April
01, 2018.
Annual Report 2017-18 | 29
19. AUDITORS
STATUTORY AUDITORS
M/s. S. R. Batliboi & Associates LLP, Chartered Accountants,
Bengaluru (Firm Registration Number 101049W/E300004), the
Statutory Auditors of the Company were appointed for a term of 5
years at the AGM held on June 19, 2015.
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 in “Annexure C”.
The Secretarial Auditors have in their report for the financial
year 2017-18 mentioned that while the Company has appointed
an Acting Company Secretary, the same does not comply with
the provisions of Section 203 (4) of the Companies Act, 2013
wherein the Company is required to appoint a Company Secretary
as whole time Key Managerial Person. The Board have noted the
same and takes this opportunity to assure the Members and other
stakeholders of the Company that it is looking out for a suitable
candidate for the position of Company Secretary and till such
time Mr. Arjun Makhecha, a member of the Institute of Company
Secretaries of India would continue as the Acting Company
Secretary of the Company.
20. 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”.
21. CONSERVATION OF ENERGY
Your Company is committed to the continual development of its
products in a sustained environment, helping its customers to
operate their businesses more efficiently and enabling them to
reduce their use of scarce resources and minimize waste.
As a software product Company, the impact that Subex has on
the environment from its own operations is relatively low when
compared to companies in other industries. However, Subex
recognizes that it still has a role to play in reducing the impact that
global business has on the environment. Subex is committed and
targets towards following the best practices to reduce utilization of
power, natural resources like water and limited E-Waste disposal,
executed through government recognized agencies. Though
Subex does not fall under the category of manufacturing products
and services impacting the environment, we implement few of the
best practices with minimal investments through a five-year plan
30 | SUBEX LIMITED
- agreement with an industry stalwart having expertise in energy
conservation. This investment thereby results in monetary benefits
/ savings month on month, helping us recover the invested amount
in few months, ensuing continued savings through this initiative.
Suppliers delivering the products to Subex with regard to lighting,
diesel generators etc, abide by the guidelines laid out by the
government.
Subex aims to reduce its impact on the environment by:
i. Monitoring the level of water and energy used along with the
waste produced.
ii.
Targeting a reduction in the use of water and energy reduction
in waste along with an increase in amount of waste that is
recycled/ reused etc.
iii.
Increasing the awareness on environment safety and
engagement of employees.
iv. Adopting sustainable practices designed to ensure the health
and safety of Subex’s employees, stakeholders and the
environment.
v. Operating its business in compliance of environmental laws
and regulations.
22. TECHNOLOGY ABSORPTION, ADOPTION AND
INNOVATION
Your Company has a strong Research & Development 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 related Research & Development on a continuous basis.
These expenses are charged to revenue under the respective
heads and are not segregated and accounted separately.
23. FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
During the year 2017-18 total foreign exchange earnings and
expenditure is as follows:
i)
Foreign Exchange earnings H16,240 Lakhs (Previous Year
H29,930 Lakhs)
ii) Foreign Exchange expenditure H9,592 Lakhs (Previous Year
H18,231 Lakhs)
Note: The foreign exchange expenditure is inclusive of the inter-
Company charges and the Previous Year’s figures have been
restated accordingly.
24. 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.
27. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
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 an Internal Control System,
commensurate with the size, scale and complexity of its operations.
Composition
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Surjeet Singh
Ms. Nisha Dutt
Managing Director & CEO
Independent Director
Mr. Surjeet Singh ceased to be the member of the Committee as on
March 31, 2018.
Mr. Vinod Kumar Padmanabhan has been appointed as a member
of the Committee with effect from April 01, 2018.
Pursuant to the 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 the 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 the education of economically challenged meritorious
students as part of the Nurture Merit Programme, conducted blood
and stem donation camps, donated clothes and other essentials
to Government schools. SCT has tied up with the Prerana Resource
Centre for providing Vocational Training to visually impaired and
disabled orphan teenage girls. As part of this program, 25 blind and
disabled girls were provided vocational training and employment
and 22 of them have been successfully attained jobs across various
industries. A gist of activities undertaken by the Trust has been
provided as a separate section in this Annual Report in “Annexure I ”
25. IMPLEMENTATION OF RISK MANAGEMENT POLICY
The Company has developed and adopted a Risk Management
Policy. This policy identifies all perceived risks 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.
26. HUMAN RESOURCE MANAGEMENT
Detailed report on Human Resource management is given in the
Management Discussion and Analysis section of the annual report.
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(“Ind AS”).
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
of department who then along with the Chief Financial Officer
discussed on the compliance status of the department. Any
matter that required attention was immediately dealt with. The
Chief Financial Officer 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 is certified for ISO 9001:2008 (Quality Management
System) and ISO 27001:2013 (Information Security Management
System). Internal audits are conducted periodically for projects
and support functions to adhere to these international standards.
These audits are conducted across Bengaluru, UK and US locations
to ensure processes are followed to provide a better customer
experience. Summary of the audits are shared across organization
to help understand strengths and weaknesses in the system.
People involvement in organization process initiatives is one that
Annual Report 2017-18 | 31
approaches towards achieving better compliance, standardizing
activities to consistently achieve better customer satisfaction.
Company at large. Further, none of the Directors had any pecuniary
relationships of transactions vis-à-vis the Company.
This year, the emphasis was more towards information security
including the privacy aspects of customer data where applicable.
Focused effort on data privacy, align with customer’s strategy
towards compliance to Global Data Privacy Regulations (GDPR).
Information security practices is the base to implement privacy,
organization and technological measures in terms of physical
and logical access controls are built in to the system. Awareness
to employees on the work environment and best practices are
imparted through trainings periodically.
28. 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 https://www.subex.com/shareholder-services/. There were
no complaints during the year 2017-18.
29. 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 received
one complaint of sexual harassment from a women employee of
the Company. The matter was considered and resolved within the
timelines stipulated under the said Act.
30. 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.
31. 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 its Promoters,
Directors, Key Managerial Personnel or other designated persons
which may have a potential conflict with the interest of the
32 | SUBEX LIMITED
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 arrangements
with its subsidiaries, based on transfer pricing methodology, for
development and enhancement of its products as well as marketing
of its products by the subsidiaries across locations. The Company
has also entered into marketing arrangements with its subsidiaries
wherein there is a cross charge done by the subsidiaries towards
its efforts for the same.
The Policy on Related party transactions as approved by the Board
is uploaded on the Company’s website under the link https://
www.subex.com/shareholder-services/
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”.
32. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE
REGULATORS OR COURTS
There are no significant material orders passed the Regulators/
Courts which would impact the going concern status of the
Company and its future operations.
33. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith in “Annexure E”.
34. LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the year 2017-
18 to the National Stock Exchange of India Ltd (‘NSE’) and BSE Ltd
(‘BSE’) where the Company’s shares are listed.
35. DIRECTORS’ RESPONSIBILITY STATEMENT
In accordance with the provision of Section 134(3)(c) of the
Companies Act, 2013, the Board of Directors affirm:
a)
In the preparation of the annual accounts for the financial year
ended March 31, 2018, the applicable accounting standards
have been followed and there are no 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, 2018 and
of the profit 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 provisions 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, 2018 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.
36. 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 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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN 06563872
Anil Singhvi
Chairman & Independent Director
DIN 00239589
Place: Bengaluru, India
Date: May 04, 2018
Annual Report 2017-18 | 33
Annexure A
Additional Information as at March 31, 2018 as per the Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014
Sl.No Particulars
1.
Net options granted as on March 31, 2018
2.
3.
4.
5.
6.
7.
8.
9.
10.
Options granted during the year
Pricing formula
Options vested but not exercised as on March 31, 2018
Options exercised as on March 31, 2018
Options exercised during the year
Exercise Price
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, 2018
Options lapsed/cancelled/ surrendered as on March 31, 2018
Options lapsed/cancelled/ surrendered during the year
Variation of terms of options
No. of employees covered
Employee wise details of options granted during the year under review to:
(i) Key managerial personnel
(i) other employee receiving a grant in the year of option amounting to 5% or more of options
granted during that year
identified employees who were granted option, during the year, equal to or exceeding 1% of
(i)
the issued capital (excluding outstanding warrants and conversions) of the Company at the
time of grant;
ESOP 2005
36,494
-
ESOP 2008
-
-
As mentioned
As mentioned
earlier in the report
24,055
12,439
-
-
-
-
earlier in the report
-
-
-
-
-
-
58,02,424
68,313
None
87
-
-
-
23,33,537
28,301
None
-
-
-
-
0.01
-
11.
Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in
0.01
accordance with Indian Accounting Standard (Ind AS) 33 ‘Earnings per share’
Where the Company has calculated the employee compensation cost using the intrinsic value of
12.
-
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:
Weighted-average exercise prices and weighted-average fair values of options separately for
options whose exercise price either equals or exceeds or is less than the market price of the stock.
(As per note 36 of the Standalone financials)
Description of the method used during the year to estimate the fair values of options, including the
13.
14.
H18.24
H28.44
N. A.
N. A.
risk-free interest rate
following weighted-average information :
i.
ii. expected life
iii. expected volatility
iv. expected dividends
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN 06563872
Place: Bengaluru, India
Date: May 04, 2018
34 | SUBEX LIMITED
-
-
-
-
-
-
-
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN 00239589
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, 2017 to March 31, 2018. 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.
Place: Bengaluru
Date: May 04, 2018
For BMP & Co. LLP, Company Secretaries
Pramod S M
Partner
FCS 7834 / CP No. 13784
Annual Report 2017-18 | 35
Annexure C
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED: MARCH 31, 2018
[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
v) The following Regulations and Guidelines prescribed under
the Securities and Exchange Board of India Act, 1992 (‘SEBI
Act’):-
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,
2018 (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)
ii)
The Companies Act, 2013 (the Act) and the rules made
thereunder;
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;
a.
b.
c.
d.
e.
f.
g.
h.
i.
The Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011;
The Securities and Exchange Board of India (Prohibition
of Insider Trading) Regulations, 2015;
The Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2009;
The Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014.
The Securities and Exchange Board of India (Issue
and Listing of Debt Securities) Regulations, 2008;(Not
Applicable to the Company during the Audit Period);
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;
The Securities and Exchange Board of India (Delisting of
Equity Shares) Regulations, 2009; and (Not Applicable to
the Company during the Audit Period);
The Securities and Exchange Board of India (Buyback
of Securities) Regulations, 1998 (Not Applicable to the
Company during the Audit Period);
Securities and Exchange Board of
India (Listing
Obligations and Disclosure Requirements) Regulations,
2015
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
36 | SUBEX LIMITED
(c) Copy Right Act, 1957
(d) The Patents Act, 1970
(e) The Trade Marks Act, 1999
We have also examined the compliance with the applicable
clauses of the following:
a.
Secretarial Standards issued by the Institute of Company
Secretaries of India on Meetings of the Board of Directors
and General Meeting.
b.
Listing Agreements 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. except that provisions of section 203 of the Companies
Act, 2013 has not been complied (the Company has a Company
secretary who has been appointed as an acting CS but not as a Key
Managerial Personnel).
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 03, 2018
(Pradeep B. Kulkarni)
Partner
FCS 7260 / CP No. 7835
Annual Report 2017-18 | 37
Annexure D
PARTICULARS OF EMPLOYEES
Particulars
Mr. Vinod Kumar Padmanabhan
Mr. Ashwin Chalapathy
Mr. Ganesh K. V.
Designation of the employee
1. Whole-Time Director & Chief
1. Whole-Time Director, Chief
Operating Officer (May 25,
2017-October 31, 2017)
2. Non-Executive, Non-
Independent Director
(November 01, 2017-March
31, 2018)
3. Managing Director & CEO with
effect from April 01, 2018
Remuneration received
Nature of employment, whether
contractual or otherwise
1. H53,69,029
2. Nil
1. Permanent
2. Otherwise
3. Permanent
Technology Officer and Head
of Service Delivery (May 25,
2017-October 31, 2017)
2. Non-Executive, Non-
Independent Director
(November 01, 2017 onwards)
- Resigned from the Board
with effect from May 04,
2018.
1. H45,48,746
2. Nil
1. Permanent
2. Otherwise
Qualifications and experience of the
employee
B.Tech
28 Yrs
M.Sc (Computer Science)
23 Yrs
Date of commencement of
employment
Oct 15, 1997
Jan 15, 2007
The age of such employee
48 Yrs.
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
Crompton Greaves
0.01%
Whether any such employee is a
relative of any Director or manager
of the Company and if so, name of
such Director or manager
NA
46 Yrs.
Siemens
NA
NA
CFO, Global Head-
Legal & Company
Secretary (last
working day- July 31,
2017).
H37,38,983
Permanent
CA, CS, Senior Mgt
Program from IIM-C
33Yrs
Nov 27, 2012
56 Yrs.
Logix Microsystems
Ltd
NA
NA
38 | SUBEX LIMITED
Annexure E
Form No. MGT-9
EXTRACT OF ANNUAL RETURN
AS ON THE FINANCIAL YEAR ENDED MARCH 31, 2018
[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, Bengaluru-560103
vi) Whether listed Company (Yes / No)
Yes, on the National Stock Exchange of India Ltd and BSE Ltd
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, Bengaluru – 560 003
Contact No. 080-23469661/662/664/665
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:
(All the business activities contributing 10 % or more of the total turnover of the Company are stated)
Name and Description of main products /services
NIC Code of the Product/service % to total turnover of the Company
Sl.
No.
1.
Implementation and customization
2. Managed services
3.
Support services
-
-
-
32
34
34
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
Sl.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Name and Address of the Company
CIN/GLN
Holding/Subsidiary
% of shares/
Applicable
Subex Technologies Limited, India
Subex Assurance LLP, India
Subex Digital LLP, India
Subex Americas Inc., Canada
Subex (UK) Limited, England
Subex Inc., USA
Subex (Asia Pacific) Pte. Limited, Singapore
Subex Azure Holdings Inc., USA
Subex Middle East (FZE), UAE
U74140KA2005PLC035905
AAJ-0729
AAJ-0728
Foreign Company
Foreign Company
Foreign Company
Foreign Company
Foreign Company
Foreign Company
/Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
capital held*
100
100
100
100
100
100
100
100
100
Section
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
*Including % of holding, either directly or indirectly through subsidiaries.
Annual Report 2017-18 | 39
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
(i) Category–wise Share Holding*
Category of Shareholders
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
% of Total
Shares
Demat
Physical
Total
% of
Total
Shares
%
Change
during
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,52,844
0.09
4,52,844
-
-
-
-
-
-
5,21,200
0.10
5,21,200
-
-
-
-
-
-
9,74,044
0.19
9,74,044
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,74,044
0.19
9,74,044
-
21,64,479
-
0.43
-
28,48,537
-
-
-
78,764
28,06,956
-
-
-
-
-
0.02
0.55
-
-
-
-
-
78,764
-
-
5,50,94,999
50,50,199
1.00
5,80,22,300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,52,844
0.08
(0.01)
-
-
-
-
-
-
5,21,200
0.09
(0.01)
-
-
-
-
-
-
9,74,044
0.17
(0.02)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,74,044
0.17
(0.02)
-
-
28,48,537
0.51
-
-
-
-
-
-
78,764
0.01
-
-
-
-
-
0.08
-
-
-
(0.01)
(0.55)
-
5,50,94,999
9.80
5,80,22,300
10.32
(9.80)
(9.32)
10,62,60,582
400
10,62,60,982
20.96
11,83,97,679
400 11,83,98,079
21.07
-
-
-
-
-
-
-
-
0.11
-
11,36,82,693
49,811
11,37,32,504
22.43
12,81,49,774
44,251 12,81,94,025
22.81
0.38
18,38,05,398
0
18,38,05,398
36.26
21,11,59,948
- 21,11,59,948
37.57
1.31
A. Promoters
(1) Indian
a) Individual/ HUF
4,52,844
b) Central Govt.
c) State Govt(s)
d) Bodies Corp.
e) Banks / FI
f) Any Other
Sub-total (A)(1)
(2) Foreign
(a) NRIs – Individuals
(a) Other – Individuals
(a) Bodies Corp.
(a) Banks/FI
(a) Any other.
Sub-total(A)(2)
-
-
5,21,200
-
-
9,74,044
-
-
-
-
-
-
Total shareholding of
Promoter (A) = (A)(1)+(A)(2)
9,74,044
-
21,64,479
-
-
-
78,764
28,06,956
-
-
50,50,199
B. Public Shareholding
1.
Institutions
a) Mutual Funds
b) Banks / FI
c) Central Govt.
d) State Govt(s)
e) Venture Capital Funds
f) Insurance Companies
g) FIIs
h) Foreign Venture Capital
Funds
i) Others (specify)
Foreign Portfolio Investors
Sub-total (B)(1)
2. Non-Institutions
a) Bodies Corp.
i) Indian
ii) Overseas
b)
Individuals
i)
ii)
Individual
shareholders
holding nominal
share capital up
to H1 lakh
Individual
shareholders
holding nominal
share capital
in excess of H1
lakh
40 | SUBEX LIMITED
Category of Shareholders
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
% of Total
Shares
Demat
Physical
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,88,600
60,000
81,194
-
-
-
0.08
0.01
0.02
-
-
-
3,88,600
79,095
81,194
-
-
84,97,887
1.68
1,02,22,484
-
-
17,79,005
-
-
-
0.35
-
-
-
37,95,674
-
2,01,36,829
3.97
2,76,48,411
-
-
-
6,52,80,387
12.88
22,35,775
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
Change
during
the year
-
(0.01)
-
(0.01)
-
-
% of
Total
Shares
-
0.07
0.01
0.01
-
-
-
3,88,600
79,095
81,194
-
-
1,02,22,484
1.82
0.14
-
-
-
-
37,95,674
0.68
-
-
2,76,48,411
4.92
-
-
-
-
0.33
-
0.95
-
22,35,775
0.40
(12.48)
-
-
-
-
-
-
-
-
-
c) Others (specify)
Trusts
Director & their relatives
Foreign Nationals
Escrow Account
Market Maker
-
3,88,600
60,000
81,194
-
-
Non Resident Indians
84,97,887
O C Bs
Societies
Clearing Members
shares in transit
-
-
17,79,005
-
Hindu Undivided Families
2,01,36,829
NRIs/OCBs
-
Foreign Corporate Bodies
6,52,80,387
-
-
-
Partnership Firms
Custodian of Enemy Property
Foreign Collaborators
ESOPs/ESOS/ESPS Employee
shareholders
Total Public Shareholding
(B)=(B)(1)+ (B)(2)
C. Shares held by Custodian
for GDRs & ADRs
6,16,030
1,670
6,17,700
0.12
5,58,729
1,670
5,60,399
0.10
(0.02)
Sub-Total(B)(2)
50,05,88,605
51,881 50,06,40,486
98.76
50,27,39,063
46,321 50,27,63,384
50,56,38,804
51,881 50,56,90,685
99.95
56,17,13,407
46,321 56,17,59,728
89.64
99.96
(9.12)
0.01
2,43,207
-
2,43,207
0.05
2,43,207
-
2,43,207
0.04
(0.01)
Grand Total (A+B+C)
50,68,56,055
51,881 50,69,07,936
100
56,19,56,614
46,321 56,20,02,935
100
* As per the records of the RTA.
II. Shareholding of Promoters
Shareholder’s Name
Shareholding at the beginning of the year
Shareholding at the end of the year
Sl.
No.
No. of
Shares
% of total
Shares of the
% of Shares
Pledged /
No. of
Shares
% of total
Shares
% of Shares
Pledged/
Company
encumbered to
total shares
of the
encumbered to
Company
total shares
% change
in share
holding
during the
year*
1.
Kivar Holdings Private
5,21,200
Limited
Subash Menon
Sudeesh Yezhuvath
2.
3.
80,601
3,72,243
0.10
0.02
0.07
0.10
5,21,200
0.02
0.07
80,601
3,72,243
0.09
0.01
0.07
0.01
(0.01)
0.01
0
(0.01)
0
* There was no change in the number of shares held by Promoters during the year. The percentage change in shareholding is due to
increase in the paid-up share capital.
The reduction in the percentage of shares pledged/encumbered is due to the release of pledge on shares by Axis Trustee Services Ltd,
on the redemption of FCCB III.
Annual Report 2017-18 | 41
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
0.10
0.02
0.07
5,21,200
80,601
3,72,243
0.09
0.01
0.07
There is no change in shareholding as at the end of the year
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 Singapore Fund Pte. Ltd.
Uno Metals Ltd
AKG Finvest Ltd
Tonbridge (Mauritius) Limited
Leeds (Mauritius) Limited
Angel Fincap Private Limited
IL and FS Securities Services Limited
Dilipkumar Lakhi
Chirag Dilipkumar Lakhi
10.
Societe Generale
Shareholding at the beginning of
the year
Shareholding at the end of the year
No. of shares
% of total shares
of the Company
No. of shares
% of total shares
of the Company
NIL
1,72,52,000
2,00,70,000
NIL
NIL
72,27,806
3,18,431
28,36,857
20,96,431
NIL
-
3.40
3.96
-
-
1.43
0.06
0.56
0.41
-
2,75,31,428
2,56,02,000
1,97,10,000
1,79,16,321
96,47,250
75,20,818
42,17,932
40,96,322
20,96,431
20,87,122
4.90
4.56
3.51
3.19
1.72
1.34
0.75
0.73
0.37
0.37
v. Shareholding of Directors and Key Managerial Personnel
Sl No.
For Each of the Directors and KMP
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
1.
2.
3.
4.
5.
6.
7.
8.
At the beginning of the year
Surjeet Singh (term concluded on March 31,
2018)
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Vinod Kumar Padmanabhan (appointed as
Director on May 25, 2017)
Ashwin Chalapathy (appointed as Director on
May 25, 2017 & resigned w.e.f May 04, 2018)
Mehernaz Dalal (appointed as CFO w.e.f. June
15, 2017)
Ganesh KV (resigned as CFO and CS w.e.f. June
15, 2017
NIL
60,000
NIL
NIL
19,095
NIL
NIL
NIL
42 | SUBEX LIMITED
N.A.
0.01
N.A.
N.A.
0.01
N.A.
N.A.
N.A.
NIL
60,000
NIL
NIL
19,095
NIL
NIL
NIL
N.A.
0.01
N.A.
N.A.
0.01
N.A.
N.A.
N.A.
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/accrued but not due for payment
Particulars
Secured Loans
excluding deposits
Unsecured Loans
Deposits
(H In lakhs)
Total Indebtedness
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)
Change in Indebtedness during the financial year
i)
ii)
iii)
Principal Amount
Interest due but not paid
Interest accrued but not due
Net Change
Indebtedness at the end of the financial year
i)
ii)
iii)
Principal Amount
Interest due but not paid
Interest accrued but not due
Total (i+ii+iii)
10,059
-
501
10,560
(10,059)
-
(501)
(10,560)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,059
-
501
10,560
(10,059)
-
(501)
(10,560)
-
-
-
-
The Company repaid the outstanding US$ 3,600,000 under FCCB III on its maturity date, July 07, 2017.
The State Bank of India (SBI), Overseas Branch, Bengaluru, vide its letter dated October 25, 2017 has confirmed that the Company has
repaid its Working Capital Loan of H42.05 Crores and has no outstanding dues.
Pursuant to the restructuring, the Working Capital Limits of the Company to the tune of H54.83 Crores, held with Axis Bank Ltd, CBB Branch,
Bengaluru, has been transferred to its subsidiary, Subex Assurance LLP. Hence the Company has no outstanding Working Capital loan as on
March 31, 2018.
VI. OTHER REMUNERATION OF DIRECTORS AND MANAGERIAL PERSONNEL*
A. Remuneration to Managing Director, Whole–time Directors and/or Manager:
A1.
Sl.
No
Particulars of Remuneration
1.
Gross salary
Surjeet Singh
Managing Director & CEO**
(H In lakhs)
Total Amount
(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act,
38
38
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
Sweat Equity
Commission
- as % of profit
- Others, specify
5. Others, please specify
Total
Ceiling as per the Act
* All the values have been rounded off to the nearest Lakhs.
** Upto conclusion of term as on March 31,2018.
-
-
-
-
-
-
-
-
38
60 Lakhs p.a as per Section
II of Part II of Schedule V of
the Act
-
-
-
-
-
-
-
-
38
60 Lakhs.
Annual Report 2017-18 | 43
A2.
S l .
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
Sweat Equity
Commission
- as % of profit
- Others, specify
5.
Others, please specify (Flexible Benefit Plan)
Total
Ceiling as per the Act
A3.
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
Sweat Equity
Commission
- as % of profit
- Others, specify
5. Others, please specify (Flexible Benefit Plan)
Total
Ceiling as per the Act
(H in Lakhs)
Total Amount
Vinod Kumar Padmanabhan
Whole Time Director
(May 25, 2017-October 31,
2017)
54
54
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54
H120 Lakhs p.a as per Section
II of Part II of Schedule V of
the Act
54
H120 Lakhs.
(H in Lakhs)
Total Amount
Ashwin Chalapathy
Whole Time Director
(May 25, 2017-October 31,
2017)
45
45
-
-
-
-
-
-
-
-
45
120 Lakhs p.a as per Section
II of Part II of Schedule V of
the Act
-
-
-
-
-
-
-
-
45
120 Lakhs.
44 | SUBEX LIMITED
B. Remuneration to other Directors:
(H in Lakhs)
Particulars of Remuneration
Name of Directors
Total Amount
Sl.
No.
1.
Independent Directors
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Fee for attending Board/Committee meetings
Commission
Others, please specify
Total (1)
2.
Other Non-Executive Directors
Fee for attending Board/Committee meetings
Commission
Others, please specify
Total (2)
Total = (1+2)
Total Remuneration
Overall Ceiling as per the Act
28
-
-
28
22
-
-
22
Mr. Vinod Kumar
Padmanabhan
(Nov 01,
2017-March 31,
2018)
Ashwin
Chalapathy
(Nov 01, 2017
-March 31,
2018)
-
-
-
-
28
28
-
-
-
-
22
22
23
-
-
23
-
-
-
-
-
23
23
H1,00,000 per meeting for the Independent Directors
73
-
-
73
N.A
-
-
-
-
73
73
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
(H in Lakhs)
Particulars of Remuneration
Sl.
No
Key Managerial Personnel
Total Amount
Mehernaz Dalal
Chief Financial Officer
with effect from June
15, 2017
1.
Gross salary
(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act,
43
43
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
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
-
-
-
-
-
-
1
44
Not Applicable
-
-
-
-
-
-
1
44
Annual Report 2017-18 | 45
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: N.A
Type
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding
Section of the
Companies Act
Brief Description Details of Penalty
/ Punishment/
Compounding
fees imposed
Authority [RD /
NCLT/ COURT]
Appeal made,
if any (give
Details)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
46 | SUBEX LIMITED
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;
b. Balance between fixed and incentive pay reflecting short
and long term performance objectives, appropriate to the
working of the Company and its goals;
c. Responsibility required to be shouldered by the Executive
Director, the industry benchmarks and the current trends;
d.
The Company’s performance vis-à-vis the annual budget
achievement and individual performance vis-à-vis the
KRAs / KPIs.
Annual Report 2017-18 | 47
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;
D. REMUNERATION POLICY FOR OTHER EMPLOYEES
In determining the remuneration of the other employees of 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;
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;
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
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.
the
iv) The remuneration including annual increment and performance
bonus is decided based on the criticality of the roles and
responsibilities, the Company’s performance vis-à-vis the
annual budget achievement, individuals performance vis-à-
vis KRAs/ KPIs, industry benchmark and current compensation
trend in the market.
v) The Managing Director will carry out the individual performance
review based on the standard appraisal matrix and shall
take into account the appraisal score card and other factors
mentioned herein above, whilst recommending the annual
increment and performance incentive to N&R Committee for its
review and approval.
48 | SUBEX LIMITED
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)
(g) Subex Assurance LLP
(h) Subex Digital LLP
(b) Nature of contracts/ arrangements/ transactions
A. Sub-Contracting Transactions
(All the aforementioned entities are subsidiaries of Subex Limited)
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
Annual Report 2017-18 | 49
(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 Assurance LLP
Subex Digital LLP
Subex Americas Inc.
Subex Inc.
Subex Technologies Ltd.
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 25, 2017 (approval), January 29, 2018 and May 04, 2018
(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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN 06563872
Place: Bengaluru, India
Date: May 04, 2018
50 | SUBEX LIMITED
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN 00239589
Annexure H
DETAILS / DISCLOSURES OF RATIO OF REMUNERATION
Particulars
(i) the ratio of the remuneration
of each Director to the
median remuneration of the
employees of the Company
for the financial year;
(ii) the percentage increase
in remuneration of each
Director, Chief Financial
Officer, Chief Executive
Officer, Company Secretary
or Manager, if any, in the
financial year;
(iii) the percentage increase in
the median remuneration of
employees in the financial
year;
(iv) the number of permanent
employees on the rolls of
Company;
(v) 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.
For the period from April 01, 2017-October 31,
2017
For the period from November 01,
2017-March 31, 2018 (Post restructuring)
1. Surjeet Singh (MD & CEO) 3.29: 1.00
Surjeet Singh (MD & CEO) 6.29: 1.00
2. Vinod Kumar Padmanabhan (WTD) 20.34:1.00
3. Ashwin Chalapathy(WTD) 18.65: 1.00
MD & CEO: 28.47%
CFO: (41.82)%
WTD’s :N.A
MD & CEO:257.48%
CFO: (40.43)%
WTD’s :N.A
The median remuneration increased by 11.16%
during this period.
Incomparable due to Business
restructuring, where majority of the
employees were transferred to Subex
Assurance LLP.
905
47
There was an increase of 10.71% in the average
percentile of salaries of employees during this
period.
The details pertaining to average percentile
increase/decrease in the salaries of
employees is incomparable due to Business
restructuring, where majority of the
employees were transferred to Subex
Assurance LLP.
There was an increase of 28.47% in the
remuneration paid to the MD & CEO, which was
approved by the Board at their meeting held on
October 04, 2017.
There was an increase of 257.48% in the
remuneration paid to the MD & CEO in this
period, which was approved by the Board
at their meeting held on October 04, 2017.
There was a decrease of 41.82% in the
remuneration paid to the CFO during this period.
There was a decrease of 40.43% in the
remuneration paid to the CFO during this
period.
The remuneration of Directors, Senior Management and Employees is as per the Remuneration
Policy of the Company
Annual Report 2017-18 | 51
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 for the
financial year 2017-18 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 as on March 31,
2018.
Composition
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Nisha Dutt
Mr. Surjeet Singh
Independent Director
Managing Director & CEO
Mr. Surjeet Singh ceased to be the member with effect from March
31, 2018, due to the conclusion of his term as MD & CEO on the
same date. Mr. Vinod Kumar Padmanabhan was appointed as
member of the Committee with effect from April 01, 2018.
OBJECTIVE AND SCOPE
The objective of the Corporate Social Responsibility (“CSR”) policy
of 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.
Centre for providing Vocational Training to visually impaired and
disabled orphan teenage girls.
FOCUS AREA
• Eradicating extreme hunger and poverty;
• Promotion of education;
• Promoting gender equality and empowering women;
• Employment enhancing vocational skills;
ACTIVITIES COVERED DURING THE YEAR
• Education aid: Sponsored 40 economically-challenged students
from rural areas with scholarships through the Nurture Merit
program.
• Education aid: Sponsored tuition fees for the Vidyaranya Trust
Orphanage.
• Vocation Training for Women empowerment: SCT has tied up
with the Prerana Resource Centre for providing Vocational
Training to visually impaired and disabled orphan teenage girls
and has Sponsored their tuition fees. As part of this program,
25 blind and disabled girls are provided Trainings in 3 phases –
Basic Education, Vocational Training & Employment follow-up.
Out of the 25, 22 Blind/Disabled Girls have been successful in
attaining jobs in different factories – Textile Industry, Packaging
Industry, Printing and others.
• Received Nurture Merit contribution from 33 Subexians and
more than 20 Subexians are contributing a monthly amount
from their salary for SCT activities.
For more
responsibility/.
details
visit
https://www.subex.com/social-
• Other activities:
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 the 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 the education of economically challenged meritorious
students as part of the Nurture Merit Programme, conducted blood
and stem donation camps, donated clothes and other essentials
to Government schools. SCT has tied up with the Prerana Resource
52 | SUBEX LIMITED
•
•
•
•
Organized blood and stem cell donation camp with TTK
Bank.
Visited Bellandur Government School, and Government
school, Kadubisanahalli to understand their requirements.
Provided 10 Desktops to Government Higher Secondary
School for education purpose. Also provided Water
Coolers for providing clean drinking water to the students.
Donated Clothes, and Toys for economically challenged
children through Goonj, with the help of Subexian
volunteers.
•
•
•
Vidyaranya Trust Orphanage - SCT volunteers spent time
with children and donated back packs and water sippers
to the children.
Opportunity School for the mentally retarded - SCT
volunteers visited and spent time with mentally retarded
children and donated back packs and water sippers.
Donated cots and mattresses to Shishu Mandir, a home
for destitute children.
FINANCIAL DETAILS
In accordance with Section 135 of the Companies Act, 2013 and
Rules made under the Company has constituted a CSR Committee
as its Net worth has exceeded H500 Crores. As the Company has
incurred losses during the preceding 3 years, it is not mandatory to
incur expenditure on CSR activities. However, the CSR Committee,
in its meeting held on May 25, 2017, approved the contribution of
H10,00,000 to the SCT, for the period 2017-18 and the Company
has voluntarily undertaken certain activities as listed below. The
contribution towards the activities undertaken during the year was
made in April 2018.
The major projects and heads under which the outlay amount was spent as on the date of this report are as follows:
(H In Lakhs)
(1)
S. No
(2)
CSR project
or activity
identified
(5)
Amount
outlay
(budget)
project or
programs
wise
(3)
(4)
Sector in which
the Project is
covered
Projects or
programs
1) Local area or
other
2) Specify
the State and
district where
projects or
programs were
undertaken
(6)
(7)
(8)
Cumulative
expenditure
up to the
reporting
period
Amount
spent Direct
or through
implementing
agency
Amount
spent on the
projects or
programs Sub-
heads:
l) Direct
expenditure
on projects or
programs
2) Overheads
Bengaluru
4,08,000
4,08,000
4,08,000
4,08,000
Bengaluru
5,92,000
5,92,000
5,92,000
5,92,000
1
2
Providing
Vocational
Training to
visually impaired
and Disabled
Orphan Teenage
Girls
Nurture merit
programme
Promoting
employment
enhancing
vocation skills
especially among
children, women
and differently
abled
Providing
scholarships to
economically
challenged
students from
rural areas
Total
10,00,000
10,00,000
10,00,000
10,00,000
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.
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN 06563872
Place: Bengaluru, India
Date: May 04, 2018
Anil Singhvi
Chairman & Independent Director
DIN 00239589
Annual Report 2017-18 | 53
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
• Communicate externally, in a truthful manner, about how the
Company is run internally
• Comply with the laws in all the countries in which the Company
operates
Subex is committed to good Corporate Governance practices.
Consistent with this commitment, Subex seeks to achieve a high
level of responsibility and accountability in its internal systems and
policies. Subex respects the inalienable rights of the shareholders
to information on the performance of the Company. The Company
ensures, among others, the accountability of the Board of Directors
and the importance of its decisions to all its participants viz.,
customers, employees, investors, regulatory bodies etc.
II. BOARD OF DIRECTORS
As on March 31, 2018, the Board of Directors of Subex Limited
comprises 6 directors out of which 1 is an Executive Director, 2 are
Non-Executive Directors and 3 are Independent Directors.
During the year, Mr. Anil Singhvi was appointed as the Chairman
of the Company with effect from May 25, 2017. Further, Mr. Vinod
Kumar Padmanabhan, the Chief Operating Officer and Mr. Ashwin
Chalapathy, the Chief Technology Officer and Head of Service
Delivery were appointed as Whole-Time Directors of the Company
on May 25, 2017 as well.
Ms. Nisha Dutt, Independent Director was appointed as the
Chairperson of the Nomination & Remuneration Committee with
effect from May 25, 2017.
Mr. Ganesh K V ceased to be the Chief Financial Officer and
Company Secretary with effect from June 15, 2017 consequent
to his resignation from the Company. Ms. Mehernaz Dalal who
was heading the corporate function was appointed as the Chief
Financial Officer of the Company with effect from June 15, 2017.
Further, Mr. Arjun Makhecha was appointed as the Acting Company
Secretary with effect from June 15, 2017.
Pursuant to the restructuring of the business of the Company,
the Revenue Maximization Solutions business was contributed
to Subex Assurance LLP and the Subex Secure and Analytics
solutions and related businesses was contributed to Subex Digital
LLP. Consequent to such business restructuring Mr. Vinod Kumar
Padmanabhan and Mr. Ashwin Chalapathy were appointed in
Subex Assurance LLP and they continued as Non- Executive and
Non-Independent Directors on the Board of the Company with
effect from November 01, 2017 being the effective date of such
business restructuring.
The Board at its meeting held on October 04, 2017 based on the
recommendation of the Nomination & Remuneration Committee
re-appointed Mr. Surjeet Singh as the Managing Director and CEO
of the Company for the period from October 05, 2017 until March
31, 2018. On account of completion of tenure of Mr. Surjeet Singh
as Managing Director and CEO of the Company, he ceased to be a
member of the Board and all the Committees.
In view of the completion of tenure of Mr. Surjeet Singh as the
Managing Director and CEO of the Company on March 31, 2018 and
based on the recommendation of the Nomination & Remuneration
Committee, the Board at its meeting held on March 21, 2018
appointed Mr. Vinod Kumar Padmanabhan as the Managing
Director and CEO of the Company with effect from April 01, 2018.
54 | SUBEX LIMITED
The Board at its meeting held on May 04, 2018 took note of the
resignation tendered by Mr. Ashwin Chalapathy from the Board of
Subex and its subsidiaries with effect from May 04, 2018.
The Board appointed Mr. Vinod Kumar Padmanabhan as a member
on the Audit Committee, Stakeholders’ Relationship Committee and
Corporate Social Responsibility Committee with effect from April 01,
2018.
Details of the composition of the Board of Directors and their
attendance and other particulars are given below.
A.Composition and Category of Directors as on March 31, 2018
Category
No. of Directors %
Independent Directors
Executive Directors
Non- Executive Directors
Total
3
1
2
6
50
17
33
100
B. Attendance of Directors at the Board Meetings and the Last AGM and Details about Directorships and Memberships in Committees
as on March 31, 2018
Director
Position
Mr. Surjeet Singh^^ Managing Director and
Chief Executive Officer
Mr. Anil Singhvi
Independent Director
Ms. Nisha Dutt
Independent Director
Ms. Poornima
Prabhu
Mr. Vinod Kumar
Padmanabhan *
Mr. Ashwin
Chalapathy **
Notes:
Independent Director
Non-Executive, Non-
Independent Director
Non-Executive, Non-
Independent Director
Includes directorship in Subex Limited.
No. of
Board
Meetings
Held
No. of
Board
Meetings
Attended
Last AGM
Attended
No. of
Directorships
In Public
Companies
No. of Board/
Committees
In Which The
Director Is
Chairman
No. of Board
/Committees
In Which The
Director Is
Member
10
10
10
10
9
9
6
10
8
10
6
7
Yes
Yes
Yes
Yes
Yes
Yes
2
7
1
1
1
1
-
2
-
-
-
-
2
3
2
1
-
-
Committee means Audit Committee and Stakeholders’ Relationship Committee. Memberships in Committees of Subex Limited are
included.
^^ Pursuant to the terms of the employment agreement of Mr. Surjeet Singh with the Company, his tenure as Managing Director and
CEO of the Company concluded on March 31, 2018 and consequently he ceased to continue on the Board of the Company and the
Committees. All details of Mr. Surjeet Singh in this report, wherever it appears, are up to March 31, 2018.
*
The Board of Directors at its meeting held on May 25, 2017 appointed Mr. Vinod Kumar Padmanabhan as a Whole-Time Director of
the Company. Subsequently on account of the restructuring of the Company, Mr. Vinod Kumar Padmanabhan was designated as Non-
Executive and Non-Independent Director with effect from November 01, 2017. The Board appointed Mr. Vinod Kumar Padmanabhan as
the Managing Director and CEO of the Company with effect from April 01, 2018.
** The Board of Directors at its meeting held on May 25, 2017 appointed Mr. Ashwin Chalapathy as a Whole-Time Director of the Company.
Subsequently on account of the restructuring of the Company, Mr. Ashwin Chalapathy was designated as Non- Executive and Non-
Independent Director with effect from November 01, 2017.
Mr. Ashwin Chalapathy resigned from the directorship of the Company with effect from May 04, 2018.
Annual Report 2017-18 | 55
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;
• Reviewing, with the management, the annual and quarterly
financial statements before submission to the Board for approval,
with particular reference to:
a) Changes, if any, in accounting policies and practices and
reasons for the same;
b) Major accounting entries involving estimates based on the
exercise of judgment by management;
c) Significant adjustments made in the financial statements
arising out of audit findings;
d) Qualifications in the draft Audit Report;
• Reviewing and monitoring the auditor’s independence and
performance, and effectiveness of audit process;
• 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;
• 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;
• Evaluating the internal financial controls;
• 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;
C. Number and Dates of Board Meetings
Details of meetings of the Board held during the financial year
2017-18 are as follows:
Sl. No. Board Meeting Number Date of the Board Meeting
1.
2.
3.
4.
5.
6.
7.
8
9.
10.
May 25, 2017
May 25, 2017
June 05, 2017
July 28, 2017
August 21, 2017
October 04, 2017
November 10, 2017
December 21, 2017
January 29, 2018
March 21, 2018
No. 1/2017-18
No. 2/2017-18
No. 3/2017-18
No. 4/2017-18
No. 5/2017-18
No. 6/2017-18
No. 7/2017-18
No. 8/2017-18
No. 9/2017-18
No. 10/2017-18
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
Mr. Vinod Kumar Padmanabhan
No. of Shares Held
as at March 31, 2018
60,000
NIL
NIL
19,095
the
F. Familiarization Programme for Independent Directors
Pursuant to Regulation 25(7) of the SEBI (LODR) Regulations,
2015, the familiarization programme aims to provide independent
directors with
the socio-economic
industry scenario,
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 programme also
seeks to update the directors on the roles, responsibilities, rights
and duties under the Companies Act, 2013 and other statutes.
There was no independent director appointed during the year.
Details of the familiarization programme imparted to independent
directors is available on the following link https://www.subex.
com/shareholder-services/.
56 | SUBEX LIMITED
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.
All members of the Audit Committee are financially literate and
have related financial management expertise.
Member
Mr. Anil Singhvi
Mr. Surjeet Singh
Ms. Nisha Dutt
B. Composition of The Audit Committee as on March 31, 2018
Ms. Poornima Prabhu
No. of Audit
Committee
Meetings Held
No. of Audit
Committee Meetings
Attended
7
7
7
7
7
5
5
7
Sl. No Name of the Director
Category
1.
2.
3.
4.
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt
Independent Director
Mr. Surjeet Singh *
Managing Director and CEO
Ms. Poornima Prabhu
Independent Director
Mr. Ganesh K V, Chief Financial Officer, Global Head-Legal and
Company Secretary ceased to be the Secretary of the Audit
Committee with effect from June 15, 2017 consequent to his
resignation from the Company.
*Mr. Surjeet Singh ceased to be the member of the Audit Committee
on March 31, 2018.
Mr. Vinod Kumar Padmanabhan was inducted to the Audit
Committee with effect from April 01, 2018.
C. Meetings and Attendance of the Committee during the Year
During the financial year 2017-18, the following Audit Committee
meetings were held:
1. No. 1/ 2017-18
2. No. 2/ 2017-18
3. No. 3/ 2017-18
4. No. 4/ 2017-18
5. No. 5/ 2017-18
6. No. 6/ 2017-18
7. No. 7/ 2017-18
May 25, 2017
June 05, 2017
July 28, 2017
August 21, 2017
November 10, 2017
January 29, 2018
March 21, 2018
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 31, 2017
Quarter ended June 30, 2017
Quarter and Half year ended
September 30, 2017
Quarter and nine months
ended December 31, 2017
Dates on which the
results were considered
May 25, 2017
July 28, 2017
November 10, 2017
January 29, 2018
The Attendance of the directors at the Audit Committee Meetings
during the financial year 2017-18 were as follows:
M/s 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 attended the meeting of the Committee
held on May 25, 2017 and were re- appointed by the Committee
for the financial year 2017-18.
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 the 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, 2018 is as follows:
Sl. No. Name of the Director
Category
1.
2.
3.
Ms. Nisha Dutt (Chairperson)
Independent Director
Mr. Anil Singhvi
Independent Director
Ms. Poornima Prabhu
Independent Director
B. Meetings and Attendance of the Committee during the Year
During the financial year 2017-18, the following meetings of the
Nomination and Remuneration Committee were held:
1.
2.
3.
4.
5.
6.
No. 1/2017-18
No. 2/2017-18
No. 3/2017-18
No. 4/2017-18
No. 5/2017-18
No. 6/2017-18
May 25, 2017
June 05, 2017
July 28, 2017
October 04, 2017
December 21, 2017
March 21, 2018
At its meeting held on October 04, 2017, the Committee approved
the re-appointment and remuneration of Mr. Surjeet Singh as
the Managing Director & CEO of the Company for the period from
October 05, 2017 to March 31, 2018. Further at the meeting of the
Committee held on March 21, 2018, the Committee approved the
appointment and remuneration of Mr. Vinod Kumar Padmanabhan
Annual Report 2017-18 | 57
as the Managing Director & CEO of the Company for a period of 3
years with effect from April 01, 2018.
Companies Act, 2013. However, no commission was paid to the
independent directors during the year.
Attendance of the members at the Nomination and Remuneration
Committee meetings during the financial year 2017-18 were as
follows:
Member
No. of Nomination
and Remuneration
Committee Meetings
Held
No. of Nomination
and Remuneration
Committee Meetings
Attended
Ms. Nisha Dutt
Mr. Anil Singhvi
Ms. Poornima
Prabhu
6
6
6
4
6
6
C. Details of remuneration paid to all the Directors during the
Year 2017-18 are as follows:
The Independent Directors are paid sitting fees of H1,00,000 per
meeting for attendance in the Board Meetings and 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 in
the financial statements. The compensation, however, is within
the parameters set by the provisions of the Companies Act, 2013
and rules made thereunder.
Details of remuneration paid to the directors during the year 2017-
18 are as follows:
Remuneration Details of Executive Directors:
1. Mr. Surjeet Singh, Managing Director & CEO (October 05, 2017
to March 31, 2018)
(a) Tenure: October 05, 2017 to March 31, 2018
(b) Remuneration: H5,00,000 per month.
(c) Benefits:
a. Medical Reimbursement: Reimbursement of medical
expenses incurred, including premium paid on health
insurance policies, whether in India or aboard, for self
and family.
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.
(d) Taxes: All taxes, duties, levies, surcharge etc. shall be borne
solely by Mr. Surjeet Singh.
(e) Expenses: The Company shall reimburse, on a monthly basis,
all reasonable travelling, entertainment and other similar
out of pocket expenses necessarily and reasonably incurred
by him wholly in proper performance of his duties and
responsibilities. He shall be entitled to travel in Business class
where travel time is more than 5 hrs.
(f) Leave: Casual/sick leave and holidays as per the policy of the
Company.
(H in Lakhs)
Commission $
(g) Termination: The Company or Mr. Surjeet Singh may terminate
the agreement giving either party notice in writing of 90
(Ninety) days.
Name
Sitting
fees
Salary and
perquisites
Ms. Nisha Dutt
Mr. Anil Singhvi
Mr. Surjeet Singh
Ms. Poornima Prabhu
Mr. Vinod Kumar
Padmanabhan
22
28
N. A.
23
N. A.
Mr. Ashwin Chalapathy
N. A.
-
-
38
-
54
45
-
-
-
-
-
-
All the values have been rounded off to the nearest Lakhs.
$ Remuneration to independent directors by way of commission
was approved by the Board at their Meeting held on May 25,
2017 and subsequently approved by the shareholders at the 23rd
Annual General Meeting held on July 28, 2017 for an amount
not exceeding 1% per annum of the net profits of the Company
calculated in accordance with the provisions of Section 198 of the
58 | SUBEX LIMITED
2. Mr. Vinod Kumar Padmanabhan, Managing Director & CEO
(April 01, 2018 to March 31, 2021)
a) Tenure: 3 years (April 01, 2018 to March 31, 2021)
b) Remuneration: H60,00,000 per annum for a period of 3 years
from April 01, 2018.
c)
Taxes: Mr. Vinod Kumar Padmanabhan will be solely
responsible for all personal and other taxes relevant including
the preparation and filing of such tax returns with appropriate
authority.
d) Expenses: The Company shall reimburse all reasonable
travelling and other similar out of pocket expenses necessarily
and reasonably incurred by him wholly in proper performance
of his duties and responsibilities.
e) Other terms and conditions: As per the employment agreement
between Subex Limited and Mr. Vinod Kumar Padmanabhan
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
Chairman, Board of Directors, Members of the Committee and
Individual Directors was formulated for such evaluation. The
evaluation criteria included aspects related to competency of
directors, strategy and performance evaluation, 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 Stakeholders’ Relationship 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
other documents etc. Details of grievances of the investors are
provided in the “Shareholders’ Information” section of this Annual
Report.
A. Composition of The Stakeholders’ Relationship Committee as
on March 31, 2018
Sl. No Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi
(Chairman)
Ms. Nisha Dutt
Independent Director
Independent Director
Mr. Surjeet Singh*
Managing Director & CEO
Mr. Ganesh K V, Chief Financial Officer, Global Head-Legal and
Company Secretary ceased to be the Secretary of the Committee
with effect from June 15, 2017 pursuant to his resignation from the
Company.
*Mr. Surjeet Singh ceased to be the member of the Stakeholders’
Relationship Committee on March 31, 2018
Mr. Vinod Kumar Padmanabhan was inducted to the Stakeholders’
Relationship Committee by the Board with effect from April 01,
2018.
B. Meetings and Attendance of the Committee during the Year
During the financial year 2017-18, the following meetings of the
Stakeholders’ Relationship Committee were held:
1.
2.
3.
4.
No. 1/2017-18
No. 2/2017-18
No. 3/2017-18
No. 4/2017-18
May 25, 2017
July 28, 2017
November 10, 2017
January 29, 2018
Attendance of the Directors at the Stakeholders’ Relationship
Committee Meetings for the financial year 2017-18 were as follows:
Member
No. of takeholders‘
Relationship
Committee
Meetings Held
No. of Stakeholders’
Relationship
Committee
Meetings Attended
Mr. Anil Singhvi
Mr. Surjeet Singh
Ms. Nisha Dutt
4
4
4
4
4
4
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 administers
options under the stock options schemes. There were no grants
made during the financial year 2017-18.
A. Composition of The ESOP Committee as on March 31, 2018
Sl. No. Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt
Independent Director
Ms. Poornima Prabhu
Independent Director
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.
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:
Annual Report 2017-18 | 59
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
iii. monitor the Corporate Social Responsibility Policy of the
Company from time to time.
A. Composition of The CSR Committee as on March 31, 2018
Sl. No. Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt
Independent Director
Mr. Surjeet Singh*
Managing Director & CEO
*Mr. Surjeet Singh ceased to be the member of the Corporate Social
Responsibility Committee with effect from March 31,2018.
Mr. Vinod Kumar Padmanabhan was inducted to the Corporate
Social Responsibility Committee with effect from April 01, 2018.
B. Meetings and Attendance of the Committee during the Year
2017-18:
Member
No. of CSR
Committee
Meetings Held
No. of CSR
Committee
Meetings Attended
Mr. Anil Singhvi
Ms. Nisha Dutt
Mr. Surjeet Singh
1
1
1
1
1
1
During the financial year 2017-18, the Committee met on May 25,
2017 to discuss and approve the contribution to be made towards
the Corporate Social Responsibility programs.
The CSR Charter and the Policy of the Company are available on the
website of the Company at https://www.subex.com/shareholder-
services/.
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, i.e. 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.
60 | SUBEX LIMITED
A. Composition of the Risk Management Committee as on March
31, 2018
Sl. No. Name of the Director
Category
1.
2.
3.
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Surjeet Singh*
Managing Director & CEO
Mr. Vinod Kumar
Padmanabhan
Non- Executive, Non-
Independent Director
*Mr. Surjeet Singh ceased to be the member of the Risk
Management Committee on March 31, 2018.
B. Meetings and Attendance during the Year
There were no meetings of the Risk Management Committee held
during the financial year 2017-18.
IX. INDEPENDENT DIRECTOR
During the year under review, the Independent Directors met, 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 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 at whistleblower@subex.com
is also available in exceptional cases. This policy is applicable to all
the directors, employees, vendors and customers of the Company.
The policy is also posted on the website of the Company.
The Whistle Blower Policy of the Company is available on the website
of the Company at https://www.subex.com/shareholder-services/.
XI. GENERAL BODY MEETINGS
A. Location and Time of the Last Three AGMs
Year
2014-15
2015-16
2016-17
Date of AGM
June 19, 2015
September 12, 2016
July 28, 2017
Venue
Registered office
Registered Office
Le Meridien, “Coronet” hall, No.
28 Sankey Road, Bengaluru-560
052
Time
1.00 PM
2:00 PM
3:00 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
June 19, 2015
September 12, 2016
July 28, 2017
7
2
3
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 Authorized 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.
1. Alteration of Articles of Association of the Company.
2. Re-appointment 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.
1. Appointment of Mr. Vinod Kumar Padmanabhan as a Whole-Time Director of the
Company.
2. Appointment of Mr. Ashwin Chalapathy as a Whole-Time Director of the Company.
3. Approve payment of remuneration to Independent Directors by way of commission.
B. Location and Time of the Last Three EGMs
Year
2011-12
2012-13
2012-13
Date of EGM
December 28, 2011
June 28, 2012
August 17, 2012
Venue
Registered office
Registered office
Registered office
Time
11.30 AM
11.30 AM
11.30 AM
C. Postal Ballot during the year 2017-18
Pursuant to the provisions of Section 110 and other applicable provisions of the Companies Act, 2013, the following special resolutions
were passed by the Members of the Company through postal ballot:
A. Postal Ballot conducted during March 30, 2017 to April 29, 2017
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. Details of the special resolutions that were passed are as follows:
Resolution
No.
Particulars
Total Number of
shares voted
Voted in
Favour
Voted
against
Percentage
(in favour)
Result
1.
2.
Increase in Authorized Share Capital
51,364,551
51,003,488
361,063
99.30
Approved
Issue of Equity Shares on preferential basis
51,238,450
51,054,878
183,572
99.64
Approved
Annual Report 2017-18 | 61
B. Postal Ballot conducted during August 25, 2017 to September 23, 2017
Mr. Biswajit Ghosh, Practicing Company Secretary (Membership Number FCS:8750, CP No. 8239) was appointed as the scrutinizer for the
above mentioned remote e-voting process and Postal Ballot. Details of the special resolutions that were passed are as follows:
Resolution
No.
Particulars
Total Number of
shares voted
Voted in Favour
Voted
against
Percentage
(in favour)
Result
1.
2.
3.
Restructuring of the business of the Company
119,241,219
118,221,024
1,020,195
99.14% Approved
Amendment to Articles of Association
118,450,070
118,066,693
383,377
99.68% Approved
Amendment to the object Clause of the
Memorandum of Association
115,882,184
115,870,492
11,692
99.99% Approved
independence. The Company has
relevant
declarations in this regard from its Independent Directors Mr. Anil
Singhvi, Ms. Nisha Dutt and Ms. Poornima Prabhu.
received
the
B. INSIDER TRADING
The Company has adopted a Code of Conduct for prevention of
Insider Trading with a view to regulate trading in securities by the
Directors and designated employees of the Company. The code
requires pre-clearance for dealing in the Company’s shares and
prohibits the purchase or sale of Company’s shares by the Directors
and the designated employees while in possession of unpublished
price sensitive information in relation to the Company and during
the period when the Trading Window is closed. The Company
Secretary & Compliance Officer is responsible for implementation
of the Code.
C. FINES
During the year 2017-18, 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 of H18,240/- on the Company
under Clause 31 of the erstwhile Listing Agreement for delay in
submission to the exchange, the Annual Report for 2014-15 which
was duly paid. There was no other fine, penalty nor any stricture
passed by SEBI, Stock Exchanges or any other Statutory Authority
on matters relating to capital markets, in the last three years, other
than as stated above.
D. CEO/CFO CERTIFICATION
The Company has obtained a certificate from the CEO and CFO as
required by Regulation 17 (8) (Part B of Schedule II) of the SEBI
(LODR) Regulations, 2015.
The complete results of the voting along with the scrutinizers report
for the aforementioned postal ballot’s were made available on the
website of the Company www.subex.com and on the websites of
BSE and NSE.
XII. SUBSIDIARY COMPANIES
A policy on materiality of subsidiaries has been formulated and the
same has been posted on the website of the Company under the
link https://www.subex.com/shareholder-services/.
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 Accounting Standards (AS18) and 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 https://www.subex.com/shareholder-
services/.
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
62 | SUBEX LIMITED
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 said Financial year there were no changes made to the
Code. All the members of the Board and the Senior Management
Personnel have affirmed compliance to the Code, as at March 31,
2018. 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
https://www.subex.com/shareholder-services/.
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 https://www.subex.com/shareholder-services/. 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, Board’s
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 on
Corporate Governance as per Clause E of Schedule V of the SEBI
(LODR) Regulations, 2015 forms part of the Board’s Report.
XVIII. COMPLIANCE WITH DISCRETIONARY REQUIREMENTS
PROVIDED UNDER PART E OF SCHEDULE II OF THE SEBI
(LODR) REGULATIONS, 2015
Part E of Schedule II of the SEBI (LODR) Regulations, 2015 states
that the discretionary requirements provided therein may be
implemented as per the Company’s discretion. However, the
disclosures of compliance with mandatory requirements and
adoption (and compliance)/non-adoption of non-mandatory
in the section on Corporate
requirements shall be made
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
Annual Report 2017-18 | 63
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 the
Chairman of the Company and the Chief Executive Officer. The
Board at its meeting held on May 25, 2017 appointed Mr. Anil
Singhvi as the Chairman of the Company.
The Board at its meeting held on October 04, 2017 re-appointed
Mr. Surjeet Singh as Managing Director and CEO of the Company
from October 05, 2017 until March 31, 2018. Consequent to the
conclusion of tenure of Mr. Surjeet Singh, the Board at its meeting
held on March 21, 2018, based on the recommendation of the
Nomination & Remuneration Committee appointed Mr. Vinod Kumar
Padmanabhan as Managing Director and CEO of the Company for a
term of 3 years effective from April 01, 2018.
E. Reporting of Internal Auditor
The Internal Auditors report to the Audit Committee of the Board of
Directors and are requested to be present as invitees at the Audit
Committee meetings held every quarter.
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN 06563872
Place: Bengaluru, India
Date: May 04, 2018
For Subex Limited
Anil Singhvi
Chairman and Independent Director
DIN 00239589
Place: Bengaluru, India
Date: May 04, 2018
64 | SUBEX LIMITED
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, 2018.
Place: Bengaluru
Date: May 04, 2018
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN 06563872
Annual Report 2017-18 | 65
CEO AND 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 and the cash flow statement of the Company for the year ended March 31, 2018 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.
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN 06563872
Mehernaz Dalal
Chief Financial Officer
Place: Bengaluru
Date: May 04, 2018
Place: Bengaluru
Date: May 04, 2018
66 | SUBEX LIMITED
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 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
licensing, professional
revenue contributing pie consists of
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 optimise operations.
Subex helps CSPs to drive new business models, enhance customer
experience and optimise enterprises. Subex leverages its award-
winning analytics solutions in areas such as Revenue Assurance,
Fraud Management, Network Asset Management and Partner
Settlement, and complements them through its newer solutions
such as IoT Security. Subex also offers scalable Managed Services
and Business Consulting services.
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:
•
•
•
•
•
Converge 2018 Big Data & Analytics Award under “Customer
Analytics” Category
Pipeline Innovation Award 2018 & 2017 for the ‘Innovations
in Managed Services’, Big Data & Analytics and Security &
Assurance” category
Aegis Graham Bell Award 2017 for Innovation in ROC Insights
under “Data Science” Category
Global Telecoms Business Innovation Award 2017 with Saudi
Telecom Company
Innovation Awards under “Managed Services”
Pipeline
category & “Innovations in Security & Assurance”
Subex has spent over 25 years in enabling 3/4th of the largest
50 CSPs globally achieve competitive advantage. Being truly a
global Company, we have more than 300 installations across 90+
countries.
We have a global presence, employing over 900+ people, with
headquarters in Bengaluru, India and offices in Singapore, UK, US
and UAE.
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
The last couple of years saw Telcos faced with a paradoxical
choice of fighting OTT digital providers vs partnering with the OTT
digital providers. It is clear that digital is now deeply embedded
in the telco ecosystem as an efficiency and scalability driver, as
a customer engagement and experience driver and indeed as
a driver of new digital products, services, and offerings. Telcos
continue to invest in augmenting networks, forging partnerships
and indeed in some cases building walled gardens of an entire
ecosystem of digital services. Further, larger-scale adoption of IoT
has started gathering momentum and 2018 is now forecast to be
the year when IOT becomes massive.
We see significant opportunities for Subex in the digital play
of telcos and homecoming of IoT. In the core areas of Revenue
Assurance and Fraud Management the new digital service expose
Annual Report 2017-18 | 67
telcos to new business risks, revenue risks, cost and margin
risks, fraud risks, compliance and regulatory risks. Subex is well
positioned to help telcos manage these risks, while at the same
time helping them remain agile to their customer needs and
agile to successfully take on the digital competition. Subex with
its Partner Management portfolio is also well positioned to help
telcos attract, retain and work efficiently with digital partners.
into fintech and digital banks, into home automation and indeed
industrial IoT service providers. This is resulting in new buying
centers within the telcos for fraud, risk and security solutions.
Failure to develop good relationships with the new buying centers
can result in Subex getting sidelined. Subex needs to leverage its
domain credentials and its relationship with existing buyers to
mitigate this risk.
Return on invested capital particularly in networks is coming
under significant pressure and scrutiny. Subex’s network analytics
portfolio with its network lifecycle management and capacity
management solutions is well positioned to capitalize on the
opportunity created to optimise network spend and use networks
as a driver of customer experience.
The timing of Subex’s IoT security solution has coincided well with
the massive IoT offtake we are experiencing. With security being
identified as one of the key barriers to IoT adoption, we believe
Subex is well positioned to grab a portion of the IoT security spend
market.
THREATS
Core areas of Subex such as fraud management, revenue assurance,
partner settlement are evolving. For instance, Revenue Assurance
and Fraud Management are evolving into Business Assurance and
increasingly getting closer to Enterprise Risk Management; and
partner settlement is evolving into larger partner management to
manage the digital ecosystem for telcos. Subex needs to ensure
that it can capitalize on these changes and create leadership
positions in the evolved areas.
With digital services, telcos are changing into content providers,
OUR REVENUE MODEL
Our revenue generally comes from four streams: (1) licensing; (2)
professional services related to installations and configuration
activity; (3) annual support contracts; and (4) managed 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
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.
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
Customization
Support
License & Addl. License
68 | SUBEX LIMITED
FY
‘05
5
0
13
18
64
FY
‘06
9
0
5
19
67
FY
‘07
2
9
6
26
57
FY
‘08
3
8
10
30
49
FY
‘09
1
11
7
25
56
FY
‘10
2
10
7
27
54
FY
‘11
1
14
3
28
54
FY
‘12
0
18
7
18
57
FY
‘13
0
24
8
31
37
FY
‘14
1
27
8
34
30
FY
‘15
4
34
7
30
25
FY
FY
FY
‘16
‘17 ‘18
1
36
8
35
20
1
33
7
32
27
-
33
8
33
26
OUR PRODUCTS
Subex offers the Revenue Operations Centre (ROC®) Solution
Suite for Business and CapEx Optimisation, which has solutions
for ‘Risk & Security’ which consists of Digital Revenue Assurance,
Fraud Management and IoT & M2M Security; and for enhancing
‘Experience’ through Customer
Journey Analytics, Customer
Analytics, and CMO Insights. The platform also provides solutions
for helping enterprises to ‘Optimise’ through Network Asset
Management, Data
Integrity Management and Capacity
Management; and also solutions to help CSPs ‘Monetize’ through
Interconnect Billing, and Digital 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 business insights through
advanced analytics.
All solutions come together to help CSPs prevent fraud losses,
collect all revenues, reduce defaulted payments, reduce wasteful
expenditure, manage inter-carrier and partner expenses and
optimise CapEx.
The ROC enables profitable service provider growth through
coordinated operational control.
For service providers that aim to optimise their operational
and process infrastructure, ROC delivers Business and CapEx
Optimisation in the most pragmatic manner.
Functions of ROC:
• Creates a direct linkage between operations and profitability
based on credible and timely cross-functional data correlation.
• Brings together, in a synergistic manner, formally disparate
assurance, audit and governance functions.
• Enables an operations infrastructure that monitors and controls
the entire revenue chain and identifies risks to margins and
customer satisfaction.
• Supports business and operational
innovation programs
because of its end-to-end view.
SUBEX PORTFOLIO
DRIVE NEW BUSINESS MODELS
ENHANCING
CUSTOMER EXPERIENCE
OPTIMISE ENTERPRISE
CONSULTING & ADVISORY SERVICES
Business
Operations
Infrastructure
Revenue
Intelligence
Customer
Intelligence
Product
Intelligence
Partner
Management
Fraud
Management
Revenue
Assurance
Risk
Intelligence
Interconnect
Settlement
Network Asset
Management
s
e
c
i
v
r
e
S
d
e
g
a
n
a
M
l
s
c
i
t
y
a
n
A
d
e
c
n
a
v
d
A
IoT Security
Capacity Management
ROC+ Platform
Annual Report 2017-18 | 69
RISK & SECURITY
Digital Revenue Assurance
Subex’s Digital 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. Digital 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 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.
Digital 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.
Fraud Management
The fraud management solution by Subex, 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.
Subex Fraud Management’s high flexibility allows operators of
different sizes to customize rules to suit unique network and
business requirements. A configurable workflow management tool
integrates the investigation process with detection.
70 | SUBEX LIMITED
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.
MONETISE
Partner Settlement
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.
Subex Partner Settlement’s flexibility, scalability and ease of use
empower all types of service providers, fixed or mobile, national
incumbent or new entrant. Partner Settlement 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.
Route Optimisation
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 optimised routing table, the system provides an integrated
management of the routing table changes across multiple business
functions. Subex Route Optimization 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.
Subex Secure
Subex IoT security 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 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.
OPTIMISE
Network Asset Management
Network Asset Management
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, Subex 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 utilization
and optimises P2R (Plan-to-retire) and cash-to-cash cycle for
assets and improves overall operational efficiency.
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. 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. Data Integrity Management combines
three powerful data integrity functions: multi-layer network and
service discovery; data reconciliation; and discrepancy analytics.
Integrity Management discovers network
Data
resources,
identifies them and reconciles them with your 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.
Capacity Management
Subex’s Capacity Management solution enables CSPs to prevent an
availability or performance impact on business-critical applications
due to capacity issues. 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.
Business Insights
Today, for Communications Service Providers (CSPs), the volume of
data required to be dealt with is enormous. Being able to store and
access such volumes of data is only part of the problem for them. In
order to effectively use the data to improve and 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 decisions can be taken. Due to this, CSPs are
not able to generate ROI from their Data Analytics solution.
Annual Report 2017-18 | 71
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”.
Subex Business
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, Business Insights transcends beyond
providing mere dashboards to providing insights which can be
consumed by executives across multiple levels. Moreover, ROC
Insights ensures costs are kept low by keeping a zero CapEx, only
OPEX-driven model.
Additionally, the Business Insights service can be used to generate
insights only which are relevant and required. Business Insights
does this by adopting a pay-as-you go model, tailor-made to
address the challenges of today’s telcos around Product, Risk,
Customer and Revenue.
Consulting & Assessment 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 assessment services in the following
domains:
• Maturity assessment: Benchmarking of their revenue assurance
and fraud management processes with respect to global
standards and provide metrics across people skills, processes,
technology usage and measurement strategies.
• 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.
72 | SUBEX LIMITED
• 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 optimisation: Optimizing 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 you are a business executive or a functional
leader, we understand your challenges related to running such
operations. There is a dearth of domain experts; Commercial-Of-
The-Shelf (COTS) software products while implemented are not
being utilized to their maximum capabilities; there is a continuous
pressure on managing with limited resources; even though output
expectations are sky high.
At Subex, our 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
efficiency 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
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.
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 installations spread across 90+
countries. This includes 3/4th of the largest 50 CSPs globally. A
partial list of customers is given below:
APAC – Aircel, Astro, Airtel, Bakrie Telecom, CAT, Celcom, DTAC, DST
Brunei, Idea Cellular, Indosat Ooredoo, Maxis, MTS, Ncell, Optus,
Packet One, PLDT, Reliance Communications, Reliance Jio, Robi
Axiata, Starhub, Singtel, Smartfren, Tata Communications, Tata
Teleservices, Telenor Myanmar, Teletalk, Telstra, Telkom Indonesia,
True Move, Telenor India, Vinaphone, Vodafone India.
Americas- Alaska Communications, America Movil AT&T, BTC
Bahamas, , Cincinnati Bell Wireless, Claro Argentina, Claro Brazil,
Claro Colombia, Claro Dominican Republic, Claro Peru, Claro
Puerto Rico, Comcast Cable, Cricket Communications, Century Link,
Hawaiian Telcom, Etecsa, Entel Bolivia, Liberty Global, Movistar
Chile, Movistar Colombia, Movistar Mexico, Movistar Peru, Nextel
Brazil, Nextel Chile, ICE, Telcel, Telmex, Telus, T Mobile, Verizon.
EMEA- Airtel, Almadar, AST Communications, Atalntique Telecom,
Azercell, ALB Telecom Batelco, Bezeq International, BTC Botswana,
BT, Cell C, Colt, Coolwave, Cyta, Du, Econet, Elisa, Ethio Telecom,
Etisalat UAE, Etisalat Nigeria, Geocell, Glo, Go Malta, Interoute,
INWI, Jawwal, K Cell, Level 3, Liberty Global, Life, Mascom, Melita
Cable, Mobily, Moldcell, Monaco Telecom, Omantel, Ooredoo
Algerie, Ooredoo Kuwait, Ooredoo Tunisia, Ooredoo Qatar, Orange
Mali, Orascom Algeria, Paltel, Polkomtel, Sabafon, Sonatel, STC,
Swisscom, Talk Talk, Telcom Egypt, Telecom Romania, Telefonica,
Telekom, Slovenjie, Telenor, Telia Company, Teo, Tunise Telecom,
Turk Telecom, Ucell, Viva, Vodafone Ireland, Vodafone Turkey, Zain.
The chart below illustrates the geographical mix of customer base:
Geographical Mix (PERCENTAGE)
EMEA
AMERICAS
APAC
100
90
80
70
60
50
40
30
20
10
o
33
16
14
21
8
37
40
35
55
50
26
53
44
51
17
17
20
23
20
22
24
19
21
19
20
63
57
57
57
61
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
Annual Report 2017-18 | 73
GLOBAL COMMUNICATION SERVICES INDUSTRY OVERVIEW
The global number of mobile subscribers at the end of 2017 stood
at 5 million, equivalent to 66% of the world’s population. In 2017,
mobile technologies and services generated 4.5% of the global
GDP, a contribution that amounted to US$3.6 trillion (economic
value-added). In 2017, the wider mobile ecosystem supported
29 million jobs directly and indirectly and made a substantial
contribution to the funding of the public sector, with ~US$500
billion raised through general taxation and US$25 billion through
mobile spectrum auctions. Migration to smartphones that operate
on high-speed mobile networks, coupled with increasing consumer
propensity to engage with the digital world, is driving mobile data
traffic up across all regions. The number of connections excluding
cellular IoT totaled 7.8 billion globally in 2017 and is pegged to
reach 9 billion by 2025, taking the SIM ownership ratio to 1.5. In
developing countries, the SIM ownership ratio is often higher,
especially in Sub-Saharan Africa (1.7), where many consumers
use multiple SIMs from different mobile operators, often through
dual-SIM handsets, to make use of the best network coverage and
call quality in certain locations. (Source: GSMA)
GLOBAL
UNIQUE
SUBSCRIBERS
2017
5.0
billion
2025
5.9
billion
PENETRATION RATE
GLOBAL CONNECTIONS
(Excluding M2M)
2017
66%
2025
71%
7.8bn
2017
103%
PENETRATION RATE
9.0bn
2025
110%
PENETRATION RATE
5
8
2
7
MOBILE INTERNET USERS
T
E
N
R
E
T
N
I
E
L
I
B
O
M
I
S
R
E
B
R
C
S
B
U
S
SUBSCRIBER AND
MOBILE INTERNET
PENETRATION BY
REGION 2017
4
8
3
7
0
8
2
5
2
6
6
3
7
6
0
5
4
4
1
2
7
6
1
4
FIGURES IN PER CENT
2017
3.3bn
5.0bn
2025
MOBILE OPERATOR CAPEX
INTERNET OF THINGS
$479bn
2018
Capex (cumulative)
2020
2017
Total connections
7.5bn
25.1bn
2025
% of connections*
4G
29%
2017
53%
2025
5G
1.2bn
2025
14%
of connections*
*Excluding cellular IoT
Outlook
The number of unique mobile subscribers will reach 5.9 billion
by 2025, equivalent to 71% of the world’s population. By 2022,
contribution of mobile technologies and services will reach US$4.6
trillion, or 5% of the global GDP, as countries increasingly benefit
from the improvements in productivity and efficiency brought about
by an increased take-up of mobile services and mobile-to-mobile
solutions. The more significant growth opportunity will lie in the
domain of mobile internet – a market that will add 1.75 billion new
users over the next eight years, reaching a milestone of 5 billion
mobile internet users by 2025. In 2019, 4G will become the leading
mobile network technology worldwide by number of connections
(>3 billion) – another major milestone for the mobile industry,
about a decade since the launch of early 4G commercial services.
Meanwhile, the mobile industry continues to make progress with
5G, including successful trials around the globe and the approval
of non-standalone 5G radio specifications in December 2017. A
number of mobile 5G commercial launches are expected over the
next three years in North America and major markets across Asia
and Europe. China, the US and Japan will be the leading countries
in terms of 5G connection deployment in 2025, while Europe as a
whole will continue to make progress as well. In total, these four
economies will account for >70% of the 1.2 billion 5G connections
expected to be installed globally by end-2025. By 2025, mobile
74 | SUBEX LIMITED
internet penetration will reach 61% of the global population and
account with 86% of them being unique subscribers. Most of these
new mobile internet users will hail from China (~350 million),
India (~330 million) and Sub-Saharan Africa (~280 million). By
2025, two-thirds of all mobile connections (excluding cellular IoT)
across the world will operate on high-speed networks, with 4G
accounting for 53% of total mobile SIMs and 5G, 14%. To support
migration and drive engagement, operators will have to invest a
sum of US$0.5 trillion in mobile capex between 2018 and 2020.
(Source: GSMA)
Internet of things (IoT)
IoT connections include cellular and non-cellular connections. At
the end of 2017, there were 30 commercial deployments of LTE-M
and NB-IoT in 20 countries, including the US, China and several
nations across Europe. While IoT is rapidly becoming a mainstream
technology in consumer markets such as consumer electronics and
smart homes, the industrial IoT segment is still in its infancy. The
number of smartphone users is forecast to grow from 2.1 billion in
2016 to ~2.5 billion in 2019, with smartphone penetration rates
increasing as well. ~36% of the world’s population is projected to
use a smartphone by end-2018, up from ~10% in 2011. With this
increase in the smartphone and internet users, the popularity of
4G has increased as well. The number of IoT connections (cellular
and non-cellular) will increase more than threefold worldwide
between 2017 and 2025, reaching 25 billion. By 2025, licensed
cellular IoT connections will reach 3.1 billion worldwide, or 12%
of the total IoT connections. As emerging technologies (AI, IoT and
advanced data analytics) converge, 5G could play an enabling role
in realising their full potential. For example, IoT will require both
more pervasive intelligence and a ubiquitous connectivity layer
to allow devices to communicate and support the on-demand
availability of data analytics. Globally, the industrial connections
base will overtake consumer IoT connections by 2023. IoT security
spending will increase by 73% to reach US$195 billion 2019 from
US$113 billion in 2015 and is predicted to grow at an even faster
rate after 2020. (Source: GSMA)
Growth drivers
•
Funding and innovations: Over the last five years, IoT startups
are increasingly being backed by private investors. Some of
these companies are also adopting a horizontal business model
by establishing their presence across multiple sectors and
segments of the IoT value chain. More and more companies
are commercialising mobile IoT modules for both LTE-M and
NB-IoT, typically supported by software development kits.
Some mobile operators and equipment vendors are also
establishing open labs to help solution developers test new
concepts and certify products.
•
•
•
•
Development in connectivity: While the majority of IoT devices
– typically in indoor environments – will likely be connected
by radio technologies designed for short-range connectivity
(such as Wi-Fi, Z-Wave and Zigbee), other IoT devices that
require wide-area network coverage, coverage on the move,
lower latency and ultra-reliability will likely be primarily
connected by cellular networks using licensed spectrum.
Proliferation across verticals: The number of IoT connections
(cellular and non-cellular) will increase more than threefold
worldwide between 2017 and 2025, driven by rising adoption
of smart solutions in buildings (heating, air conditioning,
security, lighting and automation), utilities (energy, water
and gas, smart metering and smart grid) and manufacturing
(inventory tracking, monitoring and diagnostics, warehouse
management).
Smart cities: Smart city initiatives are on the rise across major
metropolitan areas in the US, China, Singapore, India, Qatar
and the UAE.
Smart homes: Smart homes are increasingly becoming a
platform for a suite of digital services, applications and
devices, and will be the largest source of growth within the
consumer segment, driven by their increased demand in
areas such as home security, energy usage monitoring, and
infrastructure (routers and extenders).
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 major 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.
Annual Report 2017-18 | 75
Reduction in Consumer and Business Purchasing
We depend on our customers – primarily 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. First, it will simply reduce the overall
size of the market; each consolidation effectively reduces 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
major customers
We mentioned above our customers are primarily CSPs. We are
fully dependent on CSPs as our major customer base. As a result,
we are fully susceptible to any downturns or negative changes in
the CSP industry.
is, perhaps, especially true
Security
You must be well aware that security threats are prevalent
in the
everywhere today. This
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
76 | SUBEX LIMITED
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.
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.
In addition to risks related to improper disclosure of personal data,
new laws and regulations are being implemented. One significant
new regulation is the European General Data Protection Regulation
(“GDPR”) which goes into full effect in May 2018. Compliance
efforts related to these laws and regulations is significant and
could be a distraction from other activities. Further, even without
any actual improper disclosure of personal data, non-compliance
could result in large fines. Still further, customer focus on these laws
and regulations could delay or jeopardize sales and installations of
Subex products.
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.
We make strong efforts to put in place processes and methodologies
to address these issues and to turn it into a strategic advantage
by being in the forefront of technological evolution. For example,
regular skill upgradation programs and training sessions that
include attending global conferences and 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.
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
investment
spending by customers,
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
information technology
Annual Report 2017-18 | 77
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
Debt Obligations
The details of the FCCB’s of the Company are summarized below:
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
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.
Particulars
Issue of FCCB I on March 08, 2007
Restructuring of bonds during 2009-10
Discount @ 30%
Balance as on November 02, 2009
Conversion to equity in 2009-10 and 2010-11
Balance March 31, 2011
Restructuring of bonds during 2012-13
Premium
Balance on July 06, 2012
Mandatory conversion to equity shares on July 17, 2012
Balance after mandatory conversion
Conversion to equity up to March 31, 2016
Balance as on March 31, 2016
Conversion during 2016-17
Redemption on March 06, 2017
Balance as on March 31, 2017
Redemption on July 07, 2017
Balance as on March 31, 2018
US$ 180,000,000
2.00% coupon
convertible bonds
"FCCB I"
180.00
(141.00)
-
39.00
-
39.00
(38.00)
-
1.00
-
1.00
-
1.00
-
(1.00)
-
-
Nil
As on March 31, 2018, the Company did not have any outstanding FCCB’s.
78 | SUBEX LIMITED
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
-
1.40
-
1.40
-
(1.40)
-
-
Nil
(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
(3.60)
Nil
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
In accordance with the provision of Section 134(5) of the
The Internal Auditors monitor and evaluate the efficacy and
adequacy of internal control systems in the Company, its
Companies Act, 2013, and as per the provisions of the SEBI
compliance with operating systems, accounting procedures
(LODR), Regulations, 2015, the Company has an Internal
and policies at all locations of the Company and its
Control System, commensurate with the size, scale and
subsidiaries. Based on the report of Internal Auditors, process
complexity of its operations.
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
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.
material weakness in the Company. The Directors have in
Subex is certified for ISO 9001:2008 (Quality Management
the Directors Responsibility Statement under paragraph (e)
System) and
ISO 27001:2013
(Information Security
confirmed the same to this effect. The Company has policies
Management System).
Internal audits are conducted
and procedures in place for ensuring proper and efficient
periodically for projects and support functions to adhere to
conduct of its business, the safeguarding of its assets, the
these international standards. These audits are conducted
prevention and detection of frauds and errors, the accuracy
across Bengaluru, UK and US locations to ensure processes
and completeness of the accounting records and timely
are followed to provide a better customer experience.
preparations, reliable financial information. The Company
Summary of the audits are shared across organization to
has adopted accounting policies which are in line with Indian
help understand strengths and weaknesses in the system.
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
People involvement in organization process initiatives is
one that approaches towards achieving better compliance,
standardizing activities to consistently achieve better
customer satisfaction.
laws. Each department of the organization ensured that
This year, the emphasis was more towards information
it had complied with the applicable laws and furnished its
security including the privacy aspects of customer data
report to the Head of department who then along with the
where applicable. Focused effort on data privacy, align
Chief Financial Officer discussed on the compliance status
with customer’s strategy towards compliance to Global
of the department. Any matter that required attention
Data Privacy Regulations (GDPR).
Information security
was immediately dealt with. The Chief Financial Officer
practices is the base to implement privacy, organization
reported to the Audit Committee and the Board on the
and technological measures in terms of physical and logical
overall compliance status of the Company. In effect, such
access controls are built in to the system. Awareness to
compliance system was largely found to be adequate and
employees on the work environment and best practices are
operating effectively. The Directors have in the Directors
imparted through trainings periodically.
Responsibility Statement under paragraph (f) also confirmed
the same to this effect.
Annual Report 2017-18 | 79
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Key Financials and Ratio Analysis
Financial Highlights/Year Ending March 31st
Revenue from operations
Total Income
Earnings Before Interest, Exceptional Items & Taxes (EBIT)
Profit/(Loss) before Exceptional items & tax
Exceptional Items
Profit/(Loss) before tax
Tax expenses
Profit/ (Loss) after tax
Other comprehensive income
Equity dividend %
Share Capital
Reserves & Surplus
Net worth
Gross Property, Plant & equipment and intangible assets
Net Property, Plant & equipment and intangible assets
Total Assets
Key Indicators
Earnings per Share (Year end)
Debt (including Working capital) Equity-%
EBITDA / Sales - %
Net Profit Margin - %
Return on year end Net Worth %
Return on year end capital employed % (EBIT/ Capital Employed)
(H in Lakhs)
2018
2017
Consolidated
32,432
Standalone
17,993
Consolidated
35,733
Standalone
32,441
32,572
18,096
36,887
33,694
2,996
2,275
1,166
3,441
1,373
2,068
(240)
Nil
56,200
21,745
77,945
2,137
719
314
(200)
389
189
157
32
(8)
Nil
56,200
18,034
74,234
6,287
5,624
9,505
7,528
(10,890)
(3,362)
961
4,323
(1,376)
Nil
50,691
17,718
68,409
1,832
923
5,451
4,162
(4,591)
(429)
254
(683)
(33)
Nil
50,691
13,035
63,726
1,015
482
89,768
75,148
95,669
92,463
2018
2017
Consolidated
Standalone
Consolidated
Standalone
0.37
0.15
10.83
6.38
2.35
3.84
0.01
0.01
5.65
0.17
0.03
0.42
(0.85)
0.40
27.99
(12.10)
(8.33)
13.89
(0.13)
0.45
17.65
(2.11)
(1.12)
8.55
COMMENTARY ON FINANCIAL STATEMENTS
Share Capital
During 2016-17, the Company issued 4,096,290 equity shares
towards consideration other than cash upon conversion of FCCBs
of 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.
Other Equity
Foreign Currency Translation Reserve
During the year 2017-18, the Company has completed the
liquidiation of its subsidiary viz. Subex Technologies Inc., USA and
accordingly the balance of foreign currency translation reserve
amounting to H1,166 Lakhs has been credited to profit and loss
account.
During 2017-18, the Company allotted 55,094,999 equity shares
on a preferential basis at H14 per share to QVT Singapore Fund
Pte. Ltd, Tonbridge (Mauritius) Ltd and Leeds (Mauritius) Ltd (Non-
Promoters).
Balance of Foreign Currency Translation Reserve, arising on
consolidation of foreign subsidiaries, of H11,821 Lakhs has been
included in the Reserves and Surplus.
80 | SUBEX LIMITED
Securities Premium
Securities Premium Account includes the premium collected on:
•
•
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.
55,094,999 equity shares that were allotted during the year
2017-18 at a premium of H4/- per share. The shares were
allotted to Non-Promoters, on preferential basis.
Capital Reserve
Pursuant to restructuring, the difference of H2,776 between net
assets transferred from the Company to Subex Assurance LLP and
Subex Digital LLP and capital contribution made by the Company
has been recognized as Capital reserve in the books of the
Company. (Refer note 31 of standalone financial statements for
further details)
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, 2018 amounts to H1 Lakh
(Previous Year: H6 Lakhs).
Short Term Borrowings
As at March 31, 2018, the Company has an outstanding balance of
short term borrowings from Axis Bank amounting to H3,215 Lakhs
(Previous Year: H5,216 Lakhs from Axis Bank and H3,374 Lakhs
from SBI) on a consolidated basis and & H Nil (Previous Year: H8,590
Lakhs) on a standalone basis.
Balance of loan outstanding to SBI bank was repaid on October
25, 2017, and accordingly, the corporate guarantee by Subex
Technologies Limited and Subex (UK) Limited and 100% shares
pledged of Subex (UK) Limited have been released.
Pursuant to the restructuring of the Company, balance of loan
outstanding from Axis bank was transferred to Subex Assurance
LLP. This loan has been secured by primary charge on customers
receivables and the current assets of SA LLP and collateral charge
on the fixed assets of SA LLP. The Company has also given a
corporate guarantee to the lenders of SA LLP for the purpose of
availing such working capital loan facilities.
Long Term Borrowings (including current maturities)
Current maturities of long term debt as at March 31, 2018 consists of:
a. On June 30, 2017, the Company redeemed outstanding
FCCBs III amounting to US$ 3.60 Million (H2,336 Lakhs) and
paid accrued interest of US$ 0.1 Million ( H67 Lakhs) on the
aforesaid bonds. On July 06, 2017, the deferred interest in
respect of aforesaid bonds for the period July 06, 2012 to
January 06, 2016 amounting to US$ 0.72 Million ( H467 Lakhs)
has been paid. As at March 31, 2018, there are no outstanding
FCCBs and related interest [March 31, 2017 US $ 3.60 Million
(H2,336 Lakhs)].
b. During the quarter ended June 30, 2017, Subex Americas Inc.,
has repaid the term loan of US$ 12 Million (H7,782 Lakhs) to
the respective lenders on May 15, 2017.
Fixed Assets
On a consolidation basis, the Company added H287 Lakhs to its
gross block and also disposed off certain assets no longer required.
The Company’s net block of fixed assets as at March 31, 2018 is
H719 Lakhs (as at March 31, 2017 was H923 Lakhs).
On a standalone basis, the Company added H6,283 Lakhs to its gross
block which includes the purchase of Intellectual Property Right
viz. Data Integrity Management (DIM) amounting to H6,078 Lakhs
from Subex Americas Inc. The Company disposed off certain assets
no longer required and the net block of fixed assets as at March 31,
2018 is H5,624 lakhs (as at March 31, 2017 was H482 lakhs).
Investments
During the year 2016-17, the Company recognized an amount of
H6,070 lakhs as diminution in carrying value of investments in
Subex Americas Inc. Consequently, the investment carrying value
as of March 31, 2017 is H936 Lakhs. During the year 2017-18, there
is no diminution in the carrying value of investments. Accordingly,
the carrying value of those investments remains at H936 Lakhs.
During the year 2017-18, the Company invested in Limited Liability
Partnerships, namely, Subex Assurance LLP and Subex Digital LLP.
The consideration was paid in cash amounting to H9,990 each.
During the year 2017-18, the Company, in the form of partner’s
capital contribution, invested an amount of H61,564 Lakhs in
Subex Assurance LLP and H1,869 Lakhs in Subex Digital LLP. The
consideration was discharged by means of transfer of assets and
liabilities at fair value
Restructuring
Effective November 01, 2017, the Company’s RMS business and
the Digital business have been transferred to Subex Assurance
LLP (“SA LLP”) and Subex Digital LLP (“SD LLP”) at H61,564 Lakhs
and H1,869 Lakhs, respectively, in the form of Company’s capital
contribution. The Company continues to directly hold 99.99%
share in the capital of, and in the profits and losses of, each of
these LLPs and the entire economic interest as well as control and
Annual Report 2017-18 | 81
ownership of the RMS Business and Digital Business remains with
the Company post such Restructuring. (Refer note 31 of standalone
financial statement for further details).
Trade Receivables
The major customers of the Company are the telecom and cellular
operators overseas and in India. The receivables are spread over a
large customer base. There is no significant concentration of credit
risk on a single customer.
All the debtors are generally considered good and realizable and
necessary provision has been made for debts considered to be bad
and doubtful. The level of sundry debtors is normal and is in tune
with business trends requirements.
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
H1,346 Lakhs (Previous year H2,596 Lakhs) on a consolidated basis
and H2,228 Lakhs (Previous Year H10,408 Lakhs) on a standalone
basis. The Company has written off bad debts from the earlier
provision for doubtful debts against the aforesaid trade receivables
after obtaining necessary approvals.
Cash and Cash Equivalents
The bank balances includes both rupee accounts and foreign
currency accounts. The Margin Money deposit of H Nil (Previous
Year: H126 Lakhs) on Standalone basis and H370 Lakhs (Previous
Year: H258 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.
Income
The segment wise break up of income on consolidated basis is
given below:
Particulars
(H in Lakhs except percentages)
2017-18
2016-17
Value
%
Value
%
Software Products
3,193
9.85
4,771
Software Services
29,239
90.15
30,962
13.35
86.65
Total
32,432
100.00
35,733
100.00
Geographically, the Company earns income from export of software
products and related services to USA, EMEA & Asia Pacific region.
Other Income
Other income mainly consists of income derived by the Company
from write back of withholding taxes paid on interest on FCCB III,
interest on deposits from banks and interest on inter-Company
loans.
82 | SUBEX LIMITED
Expenditure
The employee benefits expenses increased to H17,471 Lakhs
(Previous year: H15,871 Lakhs) on consolidated basis and
decreased to H6,248 Lakhs (Previous year: H8,537 Lakhs) on
standalone basis.
The Company incurred other administration expenses excluding
employee benefit expenses, finance cost, taxes and exceptional
items at 37% of its total Income during the year as compared to
31% during the previous year on consolidated basis and 64% of
its total income during the year as compared to 58% during the
previous year on a standalone basis.
Operating Profits
During the year, on consolidated basis, the Company earned an
operating profit before interest, depreciation, tax, amortization
and exceptional items of H3,427 Lakhs being 11% of total revenue
(excluding other income) as against H8,909 Lakhs at 25% during
the previous year.
On a standalone basis, the Company earned operating profit
before Interest, depreciation, tax and exceptional items of H947
Lakhs being 5% of total income as against H4,687 Lakhs at 14%
during the previous year.
Interest & Bank Charges
The Company incurred an expenditure of H775 Lakhs (Previous
year: H2,040 Lakhs) on a consolidated basis and H547 Lakhs
(Previous year: H1,505 Lakhs) on a standalone basis. The interest
paid/accrued mainly relates to interest on working capital loan.
Depreciation
Depreciation and amortization for the year amounted to H517
Lakhs (Previous year: H495 Lakhs) on consolidated basis and H703
Lakhs (Previous year: H273 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 Profit/ Total Comprehensive Income
On consolidated basis, the net profit of the Company amounted to
H2,068 Lakhs, as against a loss of H4,323 Lakhs during the previous
year. Total comprehensive income for the year is H1,828 Lakhs as
compared to loss of H5,698 Lakhs during previous year.
On standalone basis, the profit of the Company amounted to H32
lakhs as against a loss of H683 Lakhs during the previous year. Total
comprehensive income for the year is H24 Lakhs as compared to
loss of H716 Lakhs during previous year.
Exceptional Item
On a consolidated basis, the Company has completed the
liquidation of one of its subsidiary and accordingly the foreign
currency translation gain amounting to H1,166 lakhs, has been
credited to the statement of profit and loss.
At a standalone level, the Company has shown an income of H389
Lakhs pertaining to a reversal of provisioning of inter-Company
loans.
Earnings per Share
Earnings/ (loss) per share calculated by dividing profit for the year
by the weighted average number of equity share outstanding
during the year is of H0.37 per share [Previous year: H(0.85) per
share] on a consolidated basis and H0.01 per share [Previous year:
H(0.13) per share] on a 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, 2018, we
had 905 full time Subexians on our rolls globally.
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 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 the 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%.
Pursuant to the conclusion of the term of Mr. Surjeet Singh as
the Managing Director and CEO of the Company on March 31,
2018 and based on the recommendations of the Nomination
& Remuneration Committee, the Board at its meeting held on
March 21, 2018 appointed Mr. Vinod Kumar Padmanabhan as the
Managing Director and CEO of the Company for a period of three
years with effect from April 01, 2018, subject to the approval of the
shareholders at the ensuing Annual General Meeting.
Mr. Ashwin Chalapathy, Non-Executive, Non-Independent Director,
resigned from the Board with effect from May 04, 2018.
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 optimising
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
Annual Report 2017-18 | 83
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. The new hire training is then followed up
with an on-the-job training to strengthen the knowledge and skills
learnt during the training period.
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 57 different training
programmes apart from product trainings in this financial year. As
these training programmmes were customized, the rating received
has been the highest compared to the last 3 years. 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 value based 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 | SUBEX LIMITED
INDEPENDENT AUDITOR’S REPORT
To the Members of
Subex Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying Standalone Ind AS Financial
Statements of Subex Limited (“the Company”), which comprise the
Standalone Balance Sheet as at March 31, 2018, 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 (hereinafter referred to as “the
Standalone Ind AS Financial Statements”).
Management’s Responsibility for the Standalone Ind AS
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 the Companies (Indian Accounting Standards)
includes
Rules, 2015, as amended. This responsibility also
maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding of the assets of
the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable
and prudent; and the design, implementation and maintenance
of adequate internal financial controls that were operating
effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation
of the 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. 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 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 controls
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 state of
affairs of the Company as at March 31, 2018, its standalone profit
including other comprehensive income, its standalone cash flows
and the standalone changes in equity for the year ended on that
date.
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 of the
aforesaid Standalone Ind AS Financial Statements;
(b) In our opinion, proper books of account as required by
law have been kept by the Company so far as it appears
from our examination of those books;
(c) The Standalone Balance Sheet, the Standalone Statement
including Other Comprehensive
of Profit and Loss
Annual Report 2017-18 | 85
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 maintained for the purpose of preparation of the
Standalone Ind AS Financial Statements;
(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
Companies (Indian Accounting Standards) Rules, 2015,
as amended;
(e) On the basis of written representations received from
the directors of the Company as on March 31, 2018, and
taken on record by the Board of Directors of the Company,
none of the directors of the Company is disqualified as
on March 31, 2018, from being appointed as a director in
terms of section 164 (2) of the Act;
(f) With respect to the adequacy and the operating
effectiveness of the internal financial controls over
financial reporting of the Company, refer to our separate
Report in “Annexure 2” to this report; and
(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 Company has disclosed the impact of pending
litigations on its financial position in its Standalone
Ind AS Financial Statements – Refer note 35 (b) to
the Standalone Ind AS Financial Statements;
The Company did not have any long-term contracts
including derivative contracts for which there were
any material foreseeable losses; and
iii. There were no amounts which were required to be
transferred to the Investor Education and Protection
Fund by the Company.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Rajeev Kumar
Partner
Membership Number: 213803
Place: Bengaluru
Date: May 04, 2018
Annexure 1 to the Independent Auditor’s Report of even date on the Standalone
Ind AS Financial Statements of Subex Limited
Statement on the matters specified in paragraph 3 and 4 of the Companies (Auditor’s Report) Order, 2016 (“the Order”)
(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 to directors including
entities in which they are interested and in respect of loans
and advances given, 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
86 | SUBEX LIMITED
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 within the
meaning of sections 73 to 76 of the Act and the Companies
(Acceptance of Deposits) Rules, 2014 (as amended).
Accordingly, the provisions of clause 3(v) of the Order are not
applicable.
(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 custom, duty
of excise, value added tax, goods and services tax, cess
and other material statutory dues applicable to it.
(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, goods and services tax, cess
and other material statutory dues were outstanding, at
the year end, for a period of more than six months from
the date they became payable.
(c) According to the records of the Company, there are
no dues of income-tax, sales-tax, service tax, duty of
customs, duty of excise, value added tax, goods and
services tax and cess, which have not been deposited on
account of any dispute, except the following:
Name of the Statute Nature of the dues
Income Tax Act,
1961
Adjustment for
transfer pricing,
disallowances
under section
10A and other
disallowances
Finance Act, 1994
Service tax
Disputed
amount*
(H in Lakhs)
Amount
paid/ refund
adjusted
under protest
(H in Lakhs)
Period to which
the amount relates
(Financial Year)
3,382
724
2012-13
2010-11
2009-10
2006-07
2005-06
2004-05
2003-04
30
-
-
4
141
212
924
379
10
346
4
80
211
1,004
3,608
Forum where dispute is pending
Income Tax Appellate Tribunal
(‘ITAT’), Bangalore #
Hon’ble High Court of Karnataka
Commissioner of Income Tax
(Appeals), Bangalore
Commissioner of Income Tax
(Appeals), Bangalore
Deputy Commissioner of Income
Tax (Appeals), Bangalore
Hon’ble High Court of Karnataka
Hon’ble Supreme Court of India
April 2006 to
October 2007
Central Excise and Service Tax
Appellate Tribunal, Bangalore
-
April 2006 to July
2009
Commissioner of Service Tax,
Bangalore
* Excluding penalty and interest from the date of Order to March 31, 2018.
# In respect of amount disputed for the year 2012-13, the Company has obtained a stay order from ITAT.
(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 (including 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
Annual Report 2017-18 | 87
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 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 complied with provisions of section 42
of the Act in respect of the preferential allotment/ private
placement of shares and amounts raised, have been used for
the purposes for which the funds were raised. Further, the
Company has not made any preferential allotment/ private
placement of fully or partly convertible debentures during the
year under review.
(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 04, 2018
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, 2018 in conjunction with our audit of the
Standalone Ind AS Financial Statements of the Company as of and
for the year then ended.
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.
Management’s Responsibility for Internal Financial Controls
The Company’s Board of Directors 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 (the “Guidance Note”). 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,
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 and the Standards on Auditing as specified under section
143(10) of the Act, 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
88 | SUBEX LIMITED
financial controls over financial reporting were established and
maintained and if such controls operated effectively in all material
respects.
timely detection of unauthorised acquisition, use or disposition
of the Company’s assets that could have a material effect on the
financial statements.
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 controls based on the assessed risk. The procedures
including the
selected depend on the auditor’s
assessment of the risks of material misstatement of the Standalone
Ind AS Financial Statements, whether due to fraud or error.
judgment,
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.
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
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, 2018, based
on the internal financial controls over financial reporting criteria
established by the Company considering the essential components
of internal controls stated in the Guidance Note.
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 04, 2018
Annual Report 2017-18 | 89
Standalone balance sheet as at March 31, 2018
Notes
As at
March 31, 2018
As at
March 31, 2017
(H in Lakhs)
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Financial assets
Investments
Loans
Other balances with banks
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
Provisions
Current liabilities
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Other current liabilities
Provisions
Income tax liabilities (net)
3
4
5
6
7
10
11
12
13
6
8
9
10
13
14
15
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
1 & 2
As per our report of even date
For and on behalf of the Board of Directors
29
5,595
64,406
35
-
234
2,494
425
288
73,506
6
1,364
211
-
61
1,642
75,148
56,200
18,034
74,234
1
1
-
415
49
51
112
286
913
914
75,148
362
120
65,701
349
126
234
1,873
478
564
69,807
180
18,966
151
2,536
823
22,656
92,463
50,691
13,035
63,726
250
250
8,590
14,383
3,472
1,216
266
560
28,487
28,737
92,463
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
90 | SUBEX LIMITED
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
Standalone statement of profit and loss for the year ended March 31, 2018
Notes
Year ended
March 31, 2018
Year ended
March 31, 2017
(H in Lakhs)
22
23
24
25
26
27
28
29
21
1
2
3
4
5
6
7
8
9
Income
Revenue from operations
Share of profit/ (loss), (net), from Limited Liability Partnerships
Other income
Total income
Expenses
Employee benefits expense
Finance costs
Depreciation and amortization expense
Other expenses
Total expenses
(Loss)/ profit before exceptional items and tax expense (1-2)
Exceptional items (net)
Profit/ (loss) before tax expense (3+4)
Tax expense (net):
Current tax (credit)/charge
Provision - foreign withholding taxes (net)
MAT charge/ (credit)
Net profit/ (loss) for the year (5-6)
Other comprehensive income ('OCI'), net of tax
Items that will not be reclassified subsequently to profit or loss
Re-measurement loss on defined benefit plans
Total comprehensive income for the year attributable to
equity holders of the Company (7+8)
10 Basic and diluted earnings/ (loss) per equity share
[nominal value of share H 10 (March 31, 2017: H 10)]
Corporate information and significant accounting policies
The accompanying notes are an integral part of the standalone financial statements
30
1 & 2
As per our report of even date
For and on behalf of the Board of Directors
17,993
37
66
18,096
6,248
547
703
10,798
18,296
32,441
-
1,253
33,694
8,537
1,505
273
19,217
29,532
(200)
4,162
389
189
(53)
157
53
157
32
(8)
(8)
24
(4,591)
(429)
94
254
(94)
254
(683)
(33)
(33)
(716)
0.01
(0.13)
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
Annual Report 2017-18 | 91
50,281
410
50,691
5,509
56,200
(H in Lakhs)
Total
Standalone statement of changes in equity for the year ended March 31, 2018
A. Equity share capital (refer note 14):
No.
H in Lakhs
Equity shares of H 10 each issued, subscribed and fully paid-up
As at April 1, 2016
Issued during the year - Conversion of FCCBs
As at March 31, 2017
Issued during the year - Preferential issue of equity shares**
As at March 31, 2018
502,811,646
4,096,290
506,907,936
55,094,999
562,002,935
B. Other equity (refer note 15):
Particulars
Attributable to equity holders of the Company
Reserves and surplus
General
Securities
reserve
premium
Capital
reserve
Employee
stock
options
reserve
Surplus /
(deficit) in the
statement of
profit and loss
Equity
component
of compound
financial
instruments
259
-
-
(54)
24,378
-
-
123
-
-
-
-
-
-
As at April 1, 2016
Less: 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
Add: Deferred stock compensation expenses
As at March 31, 2017
Add: Profit for the year
Less: Other comprehensive income
Add/ (less): On account of repayment of FCCBs*
Add: Additions during the year on account of
preferential issue of equity shares**
Less: Compensation on ESOP cancelled/lapsed
during the year
Add: Deferred stock compensation expenses
-
Add: On account of restructuring (refer note 31)
2,776
2,776
As at March 31, 2018
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the standalone financial statements
-
205
-
-
(205)
-
-
-
-
-
-
-
-
-
-
-
-
-
24,501
-
-
-
2,204
-
-
-
26,705
1,780
-
-
-
16
-
-
-
(12,996)
(683)
(33)
255
13,437
(683)
(33)
324
-
-
(10)
-
(10)
-
1,780
-
-
-
-
-
-
-
1,780
-
6
-
-
-
-
(5)
-
-
1
-
(13,457)
32
(8)
205
-
-
-
-
(13,228)
-
13,035
32
(8)
-
2,204
(5)
-
2,776
18,034
*Upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, has been transferred
to surplus/(deficit) in the statement of profit and loss.
**refer note 14(e) on preferential issue of equity shares.
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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
92 | SUBEX LIMITED
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
Standalone statement of cash flows for the year ended March 31, 2018
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
(A) Operating activities
Profit/(loss) before tax expense
Adjustments to reconcile profit/(loss) before tax expense to net cash flows:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss/ (gain) on disposal of property, plant and equipment (net)
Interest income (including fair value changes)
Finance costs (including fair value changes)
Provision for doubtful debts and advances (net of reversal)
Provisions for doubtful advances no longer required written back (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
Share of profit/ (loss) (net) from Limited Liability Partnership
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 of refund)
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 in subsidiaries
Cash transferred pursuant to restructuring (refer note 31)
Movement in deposits (net)
Interest received
Net cash flows used in investing activities
189
155
548
2
(34)
547
(182)
(389)
-
(30)
32
(62)
(37)
(55)
684
389
8,789
453
464
(3,381)
(144)
(53)
43
7,244
(999)
6,245
(203)
(6,080)
-
-
(1,300)
89
14
(7,480)
(429)
241
32
(1)
(215)
1,505
1,094
(1,579)
6,170
(1,037)
53
21
-
576
6,431
1,551
187
(1,004)
(302)
(1,610)
42
1,143
(57)
6,381
(495)
5,886
(275)
(78)
2
(100)
-
(67)
5
(513)
Annual Report 2017-18 | 93
Standalone statement of cash flows for the year ended March 31, 2018
(C) Financing activities
Movement in working capital loans (net)
Interest paid
Preferential issue of equity shares
Repayment of borrowings (FCCBs)
Net cash flows from/(used in) financing activities
(D) Net increase/(decrease) 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 (refer note 9)
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the standalone financial statements
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
(3,107)
(975)
7,713
(2,336)
1,295
60
-
151
211
(1,981)
(1,189)
-
(2,249)
(5,419)
(46)
1
196
151
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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
94 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
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.
Effective November 1, 2017, the Company has restructured its business by way of transfer of its Revenue Maximisation Solutions
and related businesses (“RMS business”) and the Subex Secure and Analytics solutions and related businesses (“Digital business”)
to its newly formed subsidiaries, Subex Assurance LLP (“SA LLP”) and Subex Digital LLP (“SD LLP”) (together referred to as “LLPs”),
respectively, hereinafter referred to as the “Restructuring” to achieve amongst other aspects, segregation of the Company’s business
into separate verticals to facilitate greater focus on each business vertical, higher operational efficiencies, and to enhance the
Company’s ability to enter into business specific partnerships and attract strategic investors at respective business levels, with an
overall objective of enhancing shareholder value. Post such Restructuring, the Company continues to directly hold 99.99% share in
the capital of, and in the profits and losses of, each of these LLPs and the entire economic interest as well as control and ownership of
the RMS Business and Digital Business remains with the Company post such Restructuring. Also, refer note 31 in this regard.
These standalone financial statements for the year ended March 31, 2018 are approved by the Board of Directors on May 04, 2018.
2. Significant accounting policies
a. Basis of preparation
The standalone financial statements of the Company have been prepared and presented in accordance with accounting principles
generally accepted in India including Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013
read with Companies (Indian Accounting Standards) Rules 2015 (as amended from time to time).
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 (“H”) 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 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.
Annual Report 2017-18 | 95
Notes to the standalone financial statements for the year ended March 31, 2018
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.
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
In accordance with Ind AS 109, the Company assesses impairment of financial assets (‘Financial instruments’) and recognises expected
credit losses, which are measured through a loss allowance.
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.
The Company provides for impairment of trade receivables and unbilled revenue based on assumptions about risk of default and
expected timing of collection. The Company uses judgement in making these assumptions and selecting inputs to the impairment
calculation, based on the Company’s past history, customer’s creditworthiness, existing market conditions as well as forward looking
estimates at the end of each reporting period. Also, refer note 2(h).
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 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.
96 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
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.
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 AS 18, 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
Annual Report 2017-18 | 97
Notes to the standalone financial statements for the year ended March 31, 2018
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 Goods and Service 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 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 standalone statement of profit and loss using effective interest rate method.
e. Property, plant and equipment
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 the standalone
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 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 amortization and accumulated impairment losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and the related expenditure is reflected in the standalone statement of profit and
loss in the period in which the expenditure is incurred.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortization period and the amortization 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 amortization 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 amortization
Depreciation of property, plant and equipment and amortization of intangible assets with finite useful lives is calculated on a straight-
line basis over the useful lives of the assets estimated by the management, basis technical assessment:
98 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
The Company has used the following useful lives to provide depreciation on plant and equipment and amortization of intangible
assets:
Assets
Computer hardware
Furniture and fixtures
Vehicles
Office equipment
Computer software
Intellectual property rights
Useful life
3 years
5 years
5 years
5 years
4 years
10 years
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.
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.
Equity investments in subsidiaries
Investments in subsidiaries are classified as non-current investments. 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.
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.
i.
j.
Annual Report 2017-18 | 99
Notes to the standalone financial statements for the year ended March 31, 2018
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.
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
A 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 amortized cost
Financial assets are subsequently measured at amortized 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 amortized 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.
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)
100 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
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 amortized 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.
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.
Annual Report 2017-18 | 101
Notes to the standalone financial statements for the year ended March 31, 2018
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 flows
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 or 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.
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 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
102 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
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 (H). The Company determines the functional currency as INR on
the basis of primary economic environment in which the entity operates.
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 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 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 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.
Annual Report 2017-18 | 103
Notes to the standalone financial statements for the year ended March 31, 2018
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.
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’.
104 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
3. Property, plant and equipment
Computer
equipment
Furniture and
fixtures
Vehicles
Office
equipment
Cost
As at April 1, 2016
Additions
Disposals
As at March 31, 2017
Additions
Disposals
Transfer on account of restructuring (refer note 31)
As at March 31, 2018
Depreciation
As at April 1, 2016
Charge for the year
Disposals
As at March 31, 2017
Charge for the year
Disposals
Transfer on account of restructuring (refer note 31)
As at March 31, 2018
Net block
As at March 31, 2017
As at March 31, 2018
4.
Intangible assets
Cost
As at April 1, 2016
Additions
Disposals
As at March 31, 2017
Additions
Disposals
Transfer on account of restructuring (refer note 31)
As at March 31, 2018
Amortization
As at April 1, 2016
Amortization for the year
Disposals
As at March 31, 2017
Amortization for the year
Disposals
Transfer on account of restructuring (refer note 31)
As at March 31, 2018
Net block
As at March 31, 2017
As at March 31, 2018
501
252
(1)
752
193
(1)
(884)
60
204
227
-
431
145
(1)
(531)
44
321
16
7
-
-
7
1
-
(7)
1
2
2
-
4
1
-
(5)
-
3
1
1
11
-
12
1
-
-
13
-
2
-
2
2
-
-
4
10
9
38
12
-
50
8
(2)
(52)
4
12
10
-
22
7
-
(28)
1
28
3
(H in Lakhs)
Total
547
275
(1)
821
203
(3)
(943)
78
218
241
-
459
155
(1)
(564)
49
362
29
Computer
software
Intellectual property
rights*
(H in Lakhs)
Total
117
78
-
195
2
-
(67)
130
43
32
-
75
65
-
(10)
130
120
-
-
-
-
-
6,078
-
-
6,078
-
-
-
-
483
-
-
483
-
5,595
117
78
-
195
6,080
-
(67)
6,208
43
32
-
75
548
-
(10)
613
120
5,595
*The Company, vide agreement dated June 7, 2017, purchased Intellectual Property Rights (“IPR”), pertaining to its Network Analytics
portfolio from its subsidiary Subex Americas Inc., for a purchase consideration of US$ 9.4 Million (H 6,078 Lakhs) based on valuation carried
out by an external valuer. The aforesaid acquisition would enable the Company to consolidate the Intellectual Property Rights embedded
in various software products, which would enhance the product offering portfolio of the Company.
Annual Report 2017-18 | 105
Notes to the standalone financial statements for the year ended March 31, 2018
5.
Investments
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
Non-current
Investments carried at cost*
A.
Investments in equity shares of wholly owned subsidiaries
(unquoted equity instruments)
100 (March 31, 2017: 100) equity shares fully paid-up, no-par value, in Subex Americas
Inc. [Impairment on investment H 76,560 Lakhs (March 31, 2017: H 76,560 Lakhs)]
4,999,994 (March 31, 2017: 4,999,994) equity shares of H 10 each fully paid-
up in Subex Technologies Limited [Impairment on investment H 500 Lakhs
(March 31, 2017: H 500 Lakhs)]
Nil (March 31, 2017: 5,039,565,245) equity shares of GBP 0.00001 each fully paid-up in
Subex (UK) Limited**
Nil (March 31, 2017: 1) equity shares of AED 150,000 each fully paid-up, in Subex Middle
East (FZE)**
B.
Investment in limited liability partnership firms (refer note 1, 23 & 31)
Investment in Subex Assurance LLP in form of capital contribution of H 61,564 Lakhs and
share of profit of H 635 Lakhs for the period ended March 31, 2018
Investment in Subex Digital LLP in form of capital contribution of H 1,869 Lakhs and share
of loss of H 598 Lakhs for the period ended March 31, 2018
Total Investments carried at cost (A+B)
Aggregate amount of unquoted investments in subsidiaries
Aggregate amount of impairment on investments
936
-
-
-
936
-
64,738
27
936
65,701
62,199
1,271
63,470
64,406
141,466
77,060
64,406
-
-
-
65,701
142,761
77,060
65,701
* As at March 31, 2018, the Company has assessed the carrying value of the investment in its subsidiaries, based on future operational
plan, projected cash flows and valuation carried out by an external valuer. Considering the aforesaid valuation, the management is of the
view that, the carrying value of the investment in subsidiaries as at March 31, 2018 is appropriate.
**Pursuant to the restructuring, Subex Limited has transferred its investment in equity shares of wholly owned subsidiaries Subex (UK)
Limited and Subex Middle East (FZE) to Subex Assurance LLP. Also, refer note 31.
6.
Loans
Unsecured
Carried at amortized cost
Non-current
Loans to related parties (refer note 33)
Considered good
Considered doubtful
Less: Allowances for doubtful loans and advances
Others (considered good)
Security deposits
Current (considered good)
Loans and advances to employees
106 | SUBEX LIMITED
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
-
1,706
(1,706)
-
35
35
6
6
-
2,095
(2,095)
-
349
349
180
180
Notes to the standalone financial statements for the year ended March 31, 2018
7. Other balances with banks
Non-current
Other bank balances (refer note 9)
Margin money deposits
8. Trade receivables*
Unsecured
Carried at amortized cost
Non-current
Considered good
Considered doubtful
Less: Allowance for doubtful debts**
Current
Considered good
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
-
-
126
126
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
-
2,228
(2,228)
-
1,364
1,364
-
10,408
(10,408)
-
18,966
18,966
*includes dues from related parties. Refer note 33.
**During the year ended March 31, 2018, the Company has written off bad debts amounting to H 1,621 Lakhs (March 31, 2017 : H 4,855
Lakhs) including related party receivables from its allowances for doubtful debts.
As at March 31, 2017, the Company had netted off H 28,735 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 which are 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.
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, 2018
(H in Lakhs)
As at
March 31, 2017
211
-
211
-
-
-
-
130
21
151
126
126
(126)
-
For the purpose of the standalone statement of cash flows, cash and cash equivalents comprise the total of current portion of cash and
cash equivalents as above.
Annual Report 2017-18 | 107
Notes to the standalone financial statements for the year ended March 31, 2018
10. Other financial assets
Unsecured, considered good
Carried at amortized cost
Non-current
Advance recoverable from former directors [refer note 35(b)(iii)]
Current
Unbilled revenue
Interest accrued but not due on bank deposits
11. Income tax assets (net)
Non-current
Advance income-tax [net of provision for taxation H 612 Lakhs (March 31, 2017: H 665 Lakhs)]
12. Deferred tax asset
Non-Current
Minimum alternative tax ('MAT') credit entitlement (refer note 21)
13. Other assets
Non-current
Balance with statutory/ government authorities*
Advance recoverable in cash or kind
Prepaid expenses
Current
Balance with statutory/ government authorities
Advance recoverable in cash or kind
Prepaid expenses
Advance to suppliers
Expenses incurred on behalf of customers
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
234
234
-
-
-
234
234
2,526
10
2,536
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
2,494
2,494
1,873
1,873
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
425
425
478
478
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
267
21
288
-
48
1
12
61
267
297
564
60
538
169
56
823
*Balance represents service tax erroneously paid by the Company during the financial years 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.
108 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
14. Share capital
Authorised share capital
Equity shares of H 10 each
As at April 1, 2016
Increase during the year
As at March 31, 2017
Increase during the year
As at March 31, 2018
Preference shares of H 98 each
As at April 1, 2016
Increase during the year
As at March 31, 2017
Increase during the year
As at March 31, 2018
Issued, subscribed and fully paid-up share capital
Equity shares of H 10 each issued, subscribed and fully paid-up*
As at April 1, 2016
Issued during the year - Conversion of FCCBs
As at March 31, 2017
Issued during the year - Preferential issue of equity shares [refer note 14(e)]
As at March 31, 2018*
No.
(H in Lakhs)
H in Lakhs
545,040,000
-
545,040,000
43,000,000
588,040,000
200,000
-
200,000
-
200,000
502,811,646
4,096,290
506,907,936
55,094,999
562,002,935
54,504
-
54,504
4,300
58,804
196
-
196
-
196
50,281
410
50,691
5,509
56,200
*includes 243,207 (March 31, 2017: 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 H 10 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 has not declared any dividend during the years ended March 31, 2018 and March 31, 2017.
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 H 10 each issued, subscribed and fully paid-up
Name of the shareholders
As at March 31, 2018
No.
% of total
shares
As at March 31, 2017
No.
% of total
shares
Tonbridge (Mauritius) Limited and Leeds (Mauritius) Limited
QVT Singapore Fund Pte. Ltd.
QVT Mauritius West Fund & Quintessence Mauritius West Fund
Deutsche Bank AG London -CB Account
Nomura Singapore Limited
27,563,571
27,531,428
-
-
-
-
4.90
4.90
-
-
-
-
47,843,816
17,436,426
2,806,956
-
-
9.44
3.44
0.55
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.
Annual Report 2017-18 | 109
Notes to the standalone financial statements for the year ended March 31, 2018
14. Share capital (contd.)
c) Shares reserved for issue under options (No.)
(i) Outstanding employee stock options under below schemes, granted/ available for
grant: (refer note 36)
ESOP III
ESOP IV
(ii)
FCCBs (refer note 16)
FCCBs III
As at
March 31, 2018
As at
March 31, 2017
24,055
-
-
24,055
92,368
28,301
15,522,785
15,643,454
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 preceding 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 (H 71,593 Lakhs), an amount of US$ 36.32 Million (H 20,359 Lakhs)
were mandatorily converted into equity shares on July 07, 2012].
As at
March 31, 2018
As at
March 31, 2017
89,335,462
89,335,462
e) During the year ended March 31, 2018, the Company made an allotment of 55,094,999 equity shares of the Company on a preferential
basis at an issue price of H 14 per equity share (Face value of H 10 per equity share) amounting to H 7,713 Lakhs under section 42 of the
Companies Act, 2013.
15. Other equity
Equity component of compound financial instruments
Balance as per last financial statements
Less: Conversion of FCCBs
Less: Transfer to surplus/(deficit) in the statement of profit and loss*
Closing balance
Capital reserve
Balance as per last financial statements
Add: Additions during the year on account of restructuring (refer note 31)
Closing balance
Securities premium
Balance as per last financial statements
Add: Additions during the year on conversion of FCCBs
Add: Additions during the year on account of preferential issue of equity shares [refer note 14 (e)]
Closing balance
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
205
-
(205)
-
-
2,776
2,776
24,501
-
2,204
26,705
259
(54)
-
205
-
-
-
24,378
123
-
24,501
110 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
15. Other equity
(contd.)
General reserve
Balance as per last financial statements
Add: Additions during the year
Closing balance
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
Add: Profit/(loss) for the year
Add: Residual portion on account of FCCBs conversion
Add: Transfer from equity component of compound financial instrument*
Less: OCI - Remeasurement loss on defined benefit obligations
Closing balance
Summary of other equity:
Equity component of compound financial instruments
Capital Reserve (refer note 31)
Securities premium account
General reserve
Employee stock options reserve
Surplus/(deficit) in the statement of profit and loss
Total other equity
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
1,780
-
1,780
6
(5)
-
1
(13,457)
32
-
205
(8)
(13,228)
-
2,776
26,705
1,780
1
(13,228)
18,034
1,780
-
1,780
16
(10)
-
6
(12,996)
(683)
255
-
(33)
(13,457)
205
-
24,501
1,780
6
(13,457)
13,035
*Upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, has been
transferred to surplus/(deficit) in the statement of profit and loss.
16. Borrowings
Carried at amortized cost
Non-current
Foreign currency convertible bonds*
Current maturities of long-term borrowings (secured)
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) and (iii)]
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
-
-
-
-
-
-
-
2,277
2,277
(2,277)
-
5,216
3,374
8,590
Annual Report 2017-18 | 111
Notes to the standalone financial statements for the year ended March 31, 2018
16. Borrowings (contd.)
*Secured FCCBs were carried at amortized cost at an effective interest rate of 9% p.a. (March 31, 2017: 9% p.a.) with maturity date of
July 07, 2017. On June 30, 2017, the Company redeemed outstanding FCCBs III amounting to US$ 3.6 Million (H 2,336 Lakhs) and paid
accrued interest of US$ 0.1 Million (H 67 Lakhs) on the aforesaid bonds. On July 6, 2017, the deferred interest in respect of aforesaid bonds
for the period July 6, 2012 to January 6, 2016 amounting to US$ 0.72 Million (H 467 Lakhs) was paid. As at March 31, 2018, there are no
outstanding FCCBs and related interest.
(i) The secured loan from banks were secured by primary charge on customer receivables and paripassu first charge on the current assets
of the Company, and collateral paripassu first charge on the fixed assets of the Company. Pursuant to the restructuring of the Company, Loan
type - I was transferred to Subex Assurance LLP and Loan type - II was repaid on October 31, 2017 and the aforesaid security was released.
(ii) Further, the Company had submitted a corporate guarantee by Subex Technologies Limited of H 4,205 Lakhs and Subex (UK) Limited of
H 4,205 Lakhs and pledged it’s 100% shares in Subex (UK) Limited. Pursuant to the restructuring, the loan was repaid on October 31, 2017
and the aforesaid securities have been released.
(iii) Loans repayable on demand from bank as at March 31, 2018 consisted of Cash Credit (CC) H Nil (March 31, 2017: H 2,934 Lakhs),
Pre-shipment Credit in Foreign Currency (PCFC) H Nil (March 31, 2017: H 1,420 Lakhs) and Export Bill Rediscounting (EBRD) H Nil (March 31,
2017: H 4,237 Lakhs), which carried an average interest rate of 10.14%, 3.10% and 4.16% (March 31, 2017: 11.67%, 3.89% and 5.51%)
respectively. During the current year, the facilities in relation to Loan type - I were transferred to Subex Assurance LLP and Loan type - II
were repaid, pursuant to the restructuring.
17. Trade payables*
Carried at amortized cost
Current
Trade payables
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
- total outstanding dues of micro enterprises and small enterprises**
- total outstanding dues of creditors other than micro enterprises and small enterprises
-
415
415
-
14,383
14,383
*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 days terms.
- for explanations on the Company’s credit risk management, refer note 40.
**There are no micro, small and medium enterprises to whom the Company owes any dues as at March 31, 2018 and March 31, 2017. This
information has been determined to the extent such parties have been identified on the basis of information available with the Company.
18. Other current financial liabilities
Carried at amortized cost
Employee related liabilities
Interest accrued but not due on borrowings
Current maturities of long term borrowings (refer note 16)
112 | SUBEX LIMITED
As at
March 31, 2018
49
-
-
49
(H in Lakhs)
As at
March 31, 2017
694
501
2,277
3,472
Notes to the standalone financial statements for the year ended March 31, 2018
19. Other current liabilities
Unearned revenue
Statutory dues
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*
(H in Lakhs)
As at
March 31, 2018
As at
March 31, 2017
-
51
51
1,001
215
1,216
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
1
1
3
9
100
112
250
250
31
135
100
266
*Provision for litigations consists of matters which are sub-judice. There is no movement in the provision during the current and previous
years, refer note 35(b) for further details.
21. Income tax liabilities (net)
Current
Provision for tax [net of advance tax H 234 Lakhs (March 31, 2017: H 202 Lakhs)]
Provision for foreign taxes
Provision for litigation [net of tax deducted at source H 62 Lakhs (March 31, 2017:
H 62 Lakhs)]*
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
150
34
102
286
182
276
102
560
*Provision for litigations consists of matters which are sub-judice. There is no movement in the provision during the current and previous
year, refer note 35(b) for further details.
Income tax expense in the standalone statement of profit and loss consist of the following:
Tax expense:
Current tax (credit)/ charge
Provision - foreign witholding taxes (net)*
MAT charge/ (credit)
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
(53)
157
53
157
94
254
(94)
254
Notes:
*Provision for foreign withholding taxes represents provision in respect of withholding taxes deducted/ deductible by customers.
Annual Report 2017-18 | 113
Notes to the standalone financial statements for the year ended March 31, 2018
21. Income tax liabilities (net) (contd.)
Reconciliation of tax to the amount computed by applying the statutory income tax rate to the income before tax is summarized below:
(H in Lakhs)
Profit/ (loss) before tax expense
Applicable tax rates in India
Computed tax charge (A)
Components of tax expense:
Provision for foreign withholding taxes (net)
MAT provision at 18.5% on the adjusted book profits of the Company in accordance
with the provisions of Income Tax Act, 1961
Reversal of tax charge in relation to earlier periods
Impact of allowances and disallowances as per Income Tax Act, 1961 (net)
MAT credit entitlement (available)/ reversed on the MAT provision as mentioned
above as per the provisions of Income Tax Act, 1961
Total adjustments (B)
Total tax expense (A+B)
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
23. Share of profit/ (loss), (net), from Limited Liability Partnerships*
Share of profit from Subex Assurance LLP
Share of loss from Subex Digital LLP
*refer note 31
114 | SUBEX LIMITED
Year ended
March 31, 2018
189
34.61%
65
Year ended
March 31, 2017
(429)
34.61%
-
157
-
(53)
(65)
53
92
157
254
94
-
-
(94)
254
254
Year ended
March 31, 2018
725
17,268
17,993
725
-
725
1,268
2,222
2,693
11,085
-
17,268
(H in Lakhs)
Year ended
March 31, 2017
1,332
31,109
32,441
1,168
164
1,332
3,853
4,035
4,498
18,715
8
31,109
Year ended
March 31, 2018
635
(598)
37
(H in Lakhs)
Year ended
March 31, 2017
-
-
-
Notes to the standalone financial statements for the year ended March 31, 2018
24. Other income
Write back of withholding taxes paid earlier (refer note 43)
Net gain on disposal of property, plant and equipment
Miscellaneous income
Interest income on:
Security deposits
Bank deposits
Inter-company loans and advances
25. Employee benefits expense
Salaries, wages and bonus
Contribution to provident and other funds
Staff welfare expenses
26. Finance cost
Interest
Foreign currency convertible bonds
Other borrowings
Other finance charges
Bank charges
27. Depreciation and amortization expense
Depreciation of property, plant and equipment (refer note 3)
Amortization of intangible assets (refer note 4)
Year ended
March 31, 2018
30
-
2
21
7
6
66
Year ended
March 31, 2018
5,684
214
350
6,248
(H in Lakhs)
Year ended
March 31, 2017
1,037
1
-
36
11
168
1,253
(H in Lakhs)
Year ended
March 31, 2017
7,865
331
341
8,537
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
95
294
11
147
547
494
657
21
333
1,505
Year ended
March 31, 2018
155
548
703
(H in Lakhs)
Year ended
March 31, 2017
241
32
273
Annual Report 2017-18 | 115
Notes to the standalone financial statements for the year ended March 31, 2018
28. Other expenses
Cost of hardware, software and support charges
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 28(i)]
Sales commission
Marketing and allied service charges
Provision for doubtful debts (net)
Exchange fluctuation loss (net)
Directors sitting fees
Loss on sale of fixed assets (net)
Miscellaneous expenses
28(i). Payments to the auditors*
As auditor
Audit fee
Tax audit fee
In other capacity
Other services (certification services)
Reimbursement of expenses
*Payment to auditors is exclusive of goods and services tax/ service tax.
29. Exceptional items (net)
Inter company balances [refer note 29(i)]
(i)
Provision for doubtful advances no longer required written back
(ii) Impairment of investments in subsidiaries [refer note 29(ii)]
116 | SUBEX LIMITED
Year ended
March 31, 2018
398
90
765
124
45
322
57
75
38
1,154
130
87
483
114
54
6,658
(182)
311
73
2
-
10,798
(H in Lakhs)
Year ended
March 31, 2017
574
148
1,264
185
108
368
90
98
27
1,909
66
128
553
122
37
11,676
1,094
713
49
-
8
19,217
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
87
4
15
8
114
100
4
5
13
122
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
389
389
-
-
389
1,579
1,579
(6,170)
(6,170)
(4,591)
Notes to the standalone financial statements for the year ended March 31, 2018
29(i) Represent, provision for doubtful advances no longer required written back upon collection of the loans and advances from its
overseas subsidiaries which were provided during the year ended March 31, 2016.
29(ii) As at March 31, 2017, basis the valuation carried out by an external valuer, the Company had made an impairment provision of H6,070
Lakhs and H100 Lakhs towards the carrying value of its investment in its subsidiaries viz., Subex Americas Inc. and Subex Technologies
Limited, respectively.
30. Earnings/ (loss) per share
Basic earnings/ (loss) per share (EPS) amounts are calculated by dividing the profit/ (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 profit/ (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 (H per share)
Profit/ (loss) attributable to equity shareholders (H in Lakhs)
Weighted average number of equity shares (No. in Lakhs)
Earnings/ (loss) per share basic and diluted (H per share)*
Year ended
March 31, 2018
10
32
5,554
0.01
Year ended
March 31, 2017
10
(683)
5,063
(0.13)
*Employee stock options outstanding as at March 31, 2018 and Employee stock options outstanding and foreign currency convertible
bonds outstanding as at March 31, 2017 are anti-dilutive and accordingly have not been considered for the purpose of computing dilutive
EPS of the respective years.
31. Restructuring
The Board of Directors of the Company in its meeting held on August 21, 2017 approved the restructuring of the Company’s business
by way of transfer of its Revenue Maximization Solutions and related businesses (“RMS business”) and the Subex Secure and Analytics
solutions and related businesses (“Digital business”) to its subsidiaries, Subex Assurance LLP (“SA LLP”) and Subex Digital LLP (“SD LLP”)
(together referred to as “LLPs”), respectively, hereinafter referred to as the “Restructuring”, subject to shareholders and other requisite
approvals, to achieve amongst other aspects, segregation of the Company’s business into separate verticals to facilitate greater focus on
each business vertical, higher operational efficiencies, and to enhance the Company’s ability to enter into business specific partnerships
and attract strategic investors at respective business levels, with an overall objective of enhancing shareholder value.
The shareholders of the Company approved the Restructuring by way of special resolution passed through postal ballot on September 23,
2017 and subsequently, the Board of Directors of the Company in its meeting held on October 4, 2017 approved November 1, 2017 to be
the effective date of Restructuring.
Accordingly, effective November 1, 2017, the Company’s RMS business and the Digital business have been transferred on a going concern
basis for a fair value consideration of H 61,564 Lakhs and H 1,869 Lakhs, respectively, in the form of Company’s capital contribution in the
aforesaid LLPs.
The Company has accounted for the restructuring in accordance with Appendix C (“Common control transactions”) to Ind AS 103
(“Business Combinations”), which requires common control transactions to be recorded at books values. Accordingly, the difference
between net assets transferred and the capital contribution of H 2,776 Lakhs has been recognised as Capital reserve.
Annual Report 2017-18 | 117
Notes to the standalone financial statements for the year ended March 31, 2018
31. Restructuring (contd.)
Balances transferred from Subex Limited to the LLPs pursuant to the restructuring are as follows:
(H in Lakhs)
SA LLP
SD LLP
Total
(A)
61,564
1,869
63,433
Particulars
Capital contribution
Net assets:
Assets:
Property, plant and equipment
Intangible assets
Investment in Subex (UK) Ltd., UK
Investment in Subex Middle East (FZE), UAE
Loans and advances
Trade receivables
Cash and cash equivalents
Other balances with banks
Other current financial assets
Other current assets
Total assets (B1)
Liabilities:
Borrowings
Trade payables
Other current financial liabilities
Other current liabilities
Provisions
Total liabilities (B2)
356
57
64,739
27
742
9,039
1,000
37
2,076
242
78,315
5,483
10,347
455
1,082
382
17,749
60,566
998
23
-
-
-
81
-
300
-
-
3
407
-
241
46
-
29
316
91
1,778
379
57
64,739
27
823
9,039
1,300
37
2,076
245
78,722
5,483
10,588
501
1,082
411
18,065
60,657
2,776
Net assets transferred
Capital reserve
(B=B1-B2)
(A-B)
32. Segment reporting
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.
Segment revenue by geographical location are as follows*:
Region
Americas
EMEA
India
APAC and rest of the world
*Revenues by geographic area are based on the geographical location of the customer.
118 | SUBEX LIMITED
Year ended
March 31, 2018
2,997
10,371
1,607
3,018
17,993
(H in Lakhs)
Year ended
March 31, 2017
5,199
21,047
2,642
3,553
32,441
Notes to the standalone financial statements for the year ended March 31, 2018
32. Segment reporting (contd.)
No external customer individually accounted for more than 10% of the total revenue of the Company during the years ended March 31,
2018 and March 31, 2017. 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
India
Outside India
Total non-current operating assets
As at
March 31, 2018
5,912
-
5,912
(H in Lakhs)
As at
March 31, 2017
1,046
-
1,046
**Non-current operating assets includes Property, plant and equipment, Intangible assets, Balance with statutory/ government authorities
and Prepaid expenses.
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.(liquidated during the year ended March 31, 2018)
Subex Middle East (FZE)
Subex Assurance LLP (w.e.f. April 5, 2018)
Subex Digital LLP (w.e.f. April 5, 2018)
ii. Related parties under Ind AS 24 and Companies Act, 2013
Key management personnel
Anil Singhvi
Surjeet Singh
Chairman (w.e.f. May 25, 2017) and Independent Director
Managing Director and Chief Executive Officer (Up to March 31, 2018)
Vinod Kumar Padmanabhan
Managing Director and Chief Executive Officer (w.e.f April 1, 2018)
Whole Time Director (w.e.f. May 25, 2017 to October 31, 2017)
Non Executive, Non Independent Director (w.e.f. November 1, 2017 to March 31, 2018)
Ashwin Chalapathy
Whole Time Director (w.e.f. May 25, 2017 to October 31, 2017)
Non Executive, Non Independent Director (w.e.f. November 1, 2017 to May 4, 2018)
Nisha Dutt
Independent Director
Poornima Kamalaksh Prabhu
Independent Director
Sanjeev Aga
Priyanka Roy
Mehernaz Dalal
Ganesh KV
Independent Director (Up to October 27, 2016)
Independent Director (Up to March 10, 2017)
Chief Financial Officer (w.e.f. June 15, 2017)
Chief Financial Officer, Global Head - Legal and Company Secretary (Up to June 15, 2017)
Annual Report 2017-18 | 119
Notes to the standalone financial statements for the year ended March 31, 2018
33. Related party transactions (contd.)
iii. Details of the transactions with the related parties during the year ended March 31, 2018:
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)
Interest received/ receivable on inter company loans:
Subex Americas Inc.
Employee Stock Option expenses allocated to:
Subex (UK) Limited
Subex Inc.
Reimbursement of expenses made to:
Subex Assurance LLP
Subex Digital LLP
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Americas Inc.
Subex Inc.
Subex Technologies Limited
Reimbursement of expenses received from:
Subex Assurance LLP
Subex Digital LLP
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Inc.
Subex Americas Inc.
Provision for doubtful advances/ debts and (provision no longer required written back)
Subex Americas Inc.
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Technologies Limited
120 | SUBEX LIMITED
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
5,394
2,479
2,213
288
711
11,085
2,710
3,315
244
356
33
6,658
6
6
-
-
-
408
11
10
7
-
1
1
438
756
69
21
29
8
1
884
1,173
(793)
(609)
(148)
(12)
(389)
10,587
3,322
1,886
1,479
1,441
18,715
5,153
5,149
631
521
222
11,676
168
168
1
1
2
-
-
35
29
5
1
1
71
-
-
9
19
11
-
39
(1,579)
3
-
-
-
(1,576)
Notes to the standalone financial statements for the year ended March 31, 2018
33. Related party transactions (contd.)
A. Transactions with wholly owned subsidiaries
Bad debts written off:*
Subex (Asia Pacific) Pte. 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.
Investments in equity shares in wholly owned subsidiaries:
Subex Technologies Limited
Investment made in form of capital contribution:
Subex Assurance LLP
Subex Digital LLP
Share of profit/(loss), (net), from Limited Liability Partnerships:
Subex Assurance LLP
Subex Digital LLP
Impairment on investment during the year:
Subex Americas Inc.
Subex Technologies Limited
Net assets, including investment, transferred pursuant to restructuring (refer note 31):
Subex Assurance LLP
Subex Digital LLP
B. Transactions with key managerial personnel
Salary and perquisites***
Vinod Kumar Padmanabhan
Ashwin Chalapathy
Mehernaz Dalal
Surjeet Singh
Ganesh KV
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
-
480
480
-
-
-
-
-
-
-
61,564
1,869
63,433
635
(598)
37
-
-
-
60,566
91
60,657
766
2,637
3,403
513
12,864
10,665
4,693
28,735
100
100
-
-
-
-
-
-
6,070
100
6,170
-
-
-
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
54
45
44
38
37
218
-
-
-
17
77
94
Annual Report 2017-18 | 121
Notes to the standalone financial statements for the year ended March 31, 2018
33. Related party transactions (contd.)
B. Transactions with key managerial personnel
Director sitting fees
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Sanjeev Aga
Priyanka Roy
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
28
22
23
-
-
73
22
14
-
10
3
49
*Bad debts written off during the year ended March 31, 2018 and March 31, 2017 are from allowances for doubtful debts.
**During the year ended March 31, 2017, the Company had netted off trade receivables from its subsidiaries against trade payables to the
respective subsidiaries pursuant to approval from its Authorised Dealer.
***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.
iv. Details of balances receivable from and payable to related parties are as follows:
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
Balances receivable from and payable to wholly owned subsidiaries
Trade receivables
Subex Americas Inc. [Net of provision of H 1,841 Lakhs (March 31, 2017: H 770 Lakhs)]
Subex UK Limited [Net of provision of H Nil Lakhs (March 31, 2017: H 148 Lakhs)]
Subex Inc. [Net of provision of H Nil Lakhs (March 31, 2017: H 2,965 Lakhs)]
Subex (Asia Pacific) Pte. Limited [Net of provision of H 34 Lakhs (March 31, 2017: H 4,016 Lakhs)]
Subex Middle East (FZE)
Subex Technologies Limited
Subex Digital LLP
Trade payables
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Americas Inc.
Subex Technologies Limited
Subex Middle East (FZE)
Subex Assurance LLP
Loans and Advances
Subex Americas Inc. [Net of provision of H Nil Lakhs (March 31, 2017: H 377 Lakhs)]
Subex Technologies Limited [Net of provision of H 1,706 Lakhs (March 31, 2017: H 1,718 Lakhs)]
Outstanding guarantees received from (refer note 16):
Subex Technologies Limited
Subex (UK) Limited
Outstanding guarantees given to:
Subex Assurance LLP
122 | SUBEX LIMITED
-
1
363
248
-
-
6
618
-
206
-
2
-
-
127
335
-
-
-
-
-
2,420
6,127
878
1,188
1,029
1
-
11,643
6,745
3,679
992
1,827
1
39
-
13,283
-
-
-
4,205
4,205
8,250
-
Notes to the standalone financial statements for the year ended March 31, 2018
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.
Loans and advances given to wholly owned subsidiaries:
Particulars
Subex Americas Inc.*
Subex Technologies Limited**
(H in Lakhs)
As at March 31, 2018
As at March 31, 2017
Outstanding
Amount
Maximum balance
outstanding during
the year
Outstanding
Amount
Maximum balance
outstanding during
the year
-
1,706
1,706
377
1,718
377
1,718
2,095
1,948
1,718
*Loans and advances to Subex Americas Inc., have been collected and related provision has been written back H 377 Lakhs
(March 31, 2017: H 1,579 Lakhs).
**Loans and advances to Subex Technologies Limited is provided as at March 31, 2018: H 1,706 Lakhs (March 31, 2017: H 1,718 Lakhs).
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 H Nil
Lakhs (March 31, 2017: H 698 Lakhs).
Future minimum lease payments under non-cancellable operating lease payable within one year and subsequently, from balance
sheet date is H Nil (March 31, 2017: H Nil).
The Company leases office facilities, residential facilities and servers under cancellable operating lease agreements. The Company
intends to renew such leases in the normal course of its business. Total rental expense for the year under cancellable operating leases
was H 765 Lakhs (March 31, 2017: H 567 Lakhs)
b) Contingent liabilities
Income tax demands [refer note (i)]
Service tax demands [refer note (ii)]
Others [refer note (iii)]
Corporate guarantee issued by the Company [refer note (iv) below and note 16]
Bank guarantees (furnished to customers)
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
12,692
3,687
1,293
8,250
6
6,982
3,687
1,293
-
119
Income tax
i.
The Company has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2014, wherein
certain adjustments were made to the taxable income in relation to various matters including adjustments in respect of transfer pricing
under section 92CA of the Income Tax Act, 1961 and disallowances of certain expenditures. These demands are disputed by the
management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view
that the prices determined by it are at arm’s length, expenditures are deductible based on outcome of previous litigations, and is confident
that the demands raised by the Assessing Officers are not tenable under the Income Tax Act, 1961. Pending outcome of the aforesaid
matters under litigation, no provision has been made in the books of account towards these tax demands.
Annual Report 2017-18 | 123
Notes to the standalone financial statements for the year ended March 31, 2018
35. Commitments and contingent liabilities (contd.)
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 for these tax demands.
iii. Others
The Company had received certain claims from ex-directors for an amount of H 1,293 Lakhs. The aforesaid claims are disputed by the
Company and the matter is presently under arbitration with the arbitration tribunal. The management is of the view that these claims are
not tenable. Subsequent to the year ended March 31, 2018, in respect of arbitration concerning one of the ex-directors the Honorable
Tribunal has passed an award directing the Company to pay a sum of H 700 Lakhs. The Company has filed an application to set aside the
order and has also sought an interim stay in this regard. Basis opinion obtained from its legal counsel, the management is of the view that
the outcome of the matter is not predictable at this point. Accordingly, no provision is made in this regard and the same has been disclosed
as contingent liability.
The Company has also claimed the excess managerial remuneration of H 124 Lakhs (March 31, 2017: H 124 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 H 110 Lakhs (March 31, 2017: H 110 Lakhs). The aggregate amount of H 234 Lakhs (March 31, 2017:
H 234 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. Corporate Guarantee
With effect from November 1, 2017, the Company has given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of
H 8,250 Lakhs for the purpose of availing of working capital loan facilities by the said subsidiary.
v.
The Company has issued comfort letter to provide continued financial support to its subsidiary viz., Subex Americas Inc., to ensure that
the entity is able to meet its commitments and liabilities as they fall due and it continues as a going concern.
36. Employee stock options plans (‘ESOPs’)
The Company during the years 2005-2006 and 2008-09 has established equity settled ESOP schemes of 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.
124 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
36. Employee stock options plans (‘ESOPs’) (contd.)
Employees stock options details as on the balance sheet date are:
Options outstanding at the beginning of the year
ESOP – III
ESOP – IV
Cancelled, surrendered or lapsed during the year
ESOP – III
ESOP – IV
Options outstanding at the end of the year
ESOP – III
ESOP – IV
Options exercisable at the end of the year
ESOP – III
ESOP – IV
2017-18
Options (no.) Weighted average
exercise price per
stock option (H)
2016-17
Options (no.) Weighted average
exercise price per
stock option (H)
92,368
28,301
68,313
28,301
24,055
-
24,055
-
22.97
28.44
24.67
28.44
18.24
-
18.24
-
1,44,979
1,30,500
52,611
1,02,199
92,368
28,301
92,368
28,301
24.28
28.51
26.54
28.53
22.97
28.44
22.99
28.44
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)*
2017-18
2016-17
1.26
-
1.99
0.67
Range of exercise prices (H)
2017-18
10.26 - 54.83
2016-17
10.26 - 54.83
-
28.44
ESOP – III
ESOP – IV
*considering vesting and exercise period
37. Employee benefit plans
a) Provident fund
The Company makes contributions for qualifying employees to Provident Fund which is defined contribution plan. Under the scheme, the
Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized H 198 Lakhs
(March 31, 2017: H 281 Lakhs) for Provident Fund contributions.
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.
Annual Report 2017-18 | 125
Notes to the standalone financial statements for the year ended March 31, 2018
37. Employee benefit plans (contd.)
The following tables set out the status of the gratuity plan:
Disclosure as per Ind AS 19
A. Change in defined benefit obligation
B.
Obligations at beginning of the year
Service cost
Interest cost
Benefits settled
Actuarial loss (through OCI)
Liability transferred pursuant to restructuring (refer note 31)
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 gain (through OCI)
Contributions
Benefits settled
Asset transferred pursuant to restructuring (refer note 31)
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
C. Net liability recognised in the standalone balance sheet
D.
E.
F.
Expenses recognised in the standalone statement of profit and loss:
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
Actuarial 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
126 | SUBEX LIMITED
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
425
42
17
(51)
9
(420)
22
144
6
1
60
(51)
(142)
18
(22)
18
(4)
406
56
30
(101)
34
-
425
115
9
1
120
(101)
-
144
(425)
144
(281)
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
42
11
53
-
9
(1)
8
56
21
77
11
23
(1)
33
7.60%
7.00%
8.00%
18.00%
60 years
7.00%
7.60%
8.00%
18.00%
60 years
Notes to the standalone financial statements for the year ended March 31, 2018
37. Employee benefit plans (contd.)
G.
Five years pay-outs
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
H.
Contribution likely to be made for the next one year
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
3
3
3
3
3
20
3
31
60
57
55
51
340
120
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, 2018
100%
As at
March 31, 2017
100%
Year ended March 31, 2018
Year ended March 31, 2017
(H in Lakhs)
Effect of change in discount rate
0.5% increase
0.5% decrease
0.5% increase
0.5% decrease
Impact on defined benefit obligation increase/ (decrease)
(1)
1
(9)
10
Effect of change in salary
1% increase
1% decrease
1% increase
1% decrease
Impact on defined benefit obligation increase/ (decrease)
1
(1)
16
(15)
Effect of change in withdrawal
5% increase
5% decrease
5% increase
5% decrease
Impact on defined benefit obligation increase/ (decrease)
(1)
1
(9)
8
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
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
A. Total equity attributable to the share holders of the Company*
74,234
63,726
Borrowings - Current**
Current maturities of long term borrowings***
B. Total loans and borrowings
C.
D.
E.
Total capital (A+B)
Total loans and borrowings as a percentage of total capital (B/C)
Total equity as a percentage of total capital (A/C)
-
-
-
74,234
-
100%
8,590
2,277
10,867
74,593
15%
85%
*The Company has made preferential allotment of equity shares during the current year. Refer note 14(e).
Annual Report 2017-18 | 127
Notes to the standalone financial statements for the year ended March 31, 2018
38. Capital management (contd.)
**As at March 31, 2017 the current borrowings were in the nature of working capital loans from State Bank of India and Axis Bank. During
the year, entire loan from State Bank of India has been paid off and loan from Axis bank has been transferred to Subex Assurance LLP
pursuant to restructuring (refer note 31).
***Current maturities of long term borrowings as at March 31, 2017 represented FCCBs III of H 2,277 Lakhs and have been repaid on
May 15, 2017.
Accordingly, the Company is entirely supported by equity funds as at March 31, 2018.
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*
Cash and cash equivalents and other balances with banks
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, 2018
(H in Lakhs)
As at
March 31, 2017
-
1,364
-
35
6
1,405
211
-
211
49
415
-
-
464
10
18,966
2,526
349
180
22,031
151
126
277
694
14,383
501
10,867
26,445
*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. 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.
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
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 Company is exposed to credit risk from its operating activities (primarily trade receivables and unbilled revenue) from its financing
activities including deposits with banks, investments, foreign exchange transactions and other financial instruments.
128 | SUBEX LIMITED
Notes to the standalone financial statements for the year ended March 31, 2018
40. Financial risk management (contd.)
a. Trade receivables
Credit risk is managed by each business unit as per 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.
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, 2018
(H in Lakhs)
As at
March 31, 2017
1,364
-
1,364
18,966
2,526
21,492
The Company 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 the 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 risk of changes in interest rates relates primarily to the Company’s debt obligations with floating interest rates for
the period the Company was holding the debts.
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
(H in Lakhs)
Year ended March 31, 2018*
Change in
interest rate
Effect on loss
before exceptional
items and tax
expense
Year ended March 31, 2017
Change in
interest rate
Effect on profit
before exceptional
items and tax
expense
+1%
-1%
54
(54)
+1%
-1%
(94)
94
* The Company does not have any outstanding working capital loans as at March 31, 2018.
iii. Liquidity risk
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 and deposits is as below:
Particulars
Cash and cash equivalents
Other balances with banks
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
211
-
211
151
126
277
Annual Report 2017-18 | 129
Notes to the standalone financial statements for the year ended March 31, 2018
40. Financial risk management: (contd.)
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.
(H in Lakhs)
Total
Particulars
On demand
0-180 Days
180-365 Days
365 Days and
above
As at March 31, 2018
Trade payables
Borrowings
Other financial liabilities
As at March 31, 2017
Trade payables
Borrowings
Other financial liabilities
80
-
-
80
238
-
-
238
-
-
49
49
9,399
10,924
1,199
21,522
335
-
-
335
253
-
-
253
-
-
-
-
4,493
-
-
4,493
415
-
49
464
14,383
10,924
1,199
26,506
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 Company’s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company
has exposures to United States Dollars (‘US$’), Great Britain Pound (‘GBP’), Euro (‘EUR’), United Arab Emirates Dirham (‘AED’) and other
currencies. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities
and financing activities.
March 31, 2018
Particulars
Financial assets
Trade receivables
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
March 31, 2017
Particulars
Financial assets
Trade receivables
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Trade payables
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
130 | SUBEX LIMITED
US$
Denominated Currency
AED
GBP
Others
607
-
607
-
208
-
208
399
1
-
1
-
-
-
-
1
-
-
-
-
-
-
-
-
251
-
251
-
-
-
-
251
US$
Denominated Currency
AED
GBP
Others
8,267
2,057
10,324
2,786
6,124
2,794
11,704
(1,380)
6,125
-
6,125
1,979
6,697
-
8,676
(2,551)
1,668
42
1,710
73
100
3
176
1,534
2,090
112
2,202
818
683
3
1,504
698
(H in Lakhs)
Total
859
-
859
-
208
-
208
651
(H in Lakhs)
Total
18,150
2,211
20,361
5,656
13,604
2,800
22,060
(1,699)
Notes to the standalone financial statements for the year ended March 31, 2018
40. Financial risk management: (contd.)
Sensitivity analysis
Every 1% appreciation or depreciation in the respective foreign currencies against functional currency of the Company would cause the
loss before exceptional items in proportion to revenue of the Company to decrease or increase respectively by 0.04%. (Previous year
ended March 31, 2017: profit before exceptional items to decrease or increase respectively by 0.02%).
41. Standards issued but not yet effective:
Ind AS 115- Revenue from contract with customers:
On March 28, 2018, the Ministry of Corporate Affairs notified Ind AS 115 Revenue from contracts with customers. The standard replaces Ind
AS 11 Construction Contracts and Ind AS 18 Revenue.
The core principle of Ind AS 115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Ind AS 115 introduces a 5-step approach to revenue recognition:
•
•
Identify the contract(s) with a customer
Identify the performance obligation in contract
• Determine the transaction price
•
•
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the entity satisfies a performance obligation
Ind AS 115 establishes control-based revenue recognition model. An entity recognizes revenue when (or as) a performance obligation is
satisfied, i.e. when ‘control’ of the goods or services underlying the performance obligation is transferred to the customer. Also, Ind AS 115
provides more guidance for deciding whether revenue is recognized at a point in time or over time.
Transitional options under Ind AS 115:
•
Retrospectively to each prior period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and
Errors, subject to some practical expedients mentioned in Ind AS 115
•
Retrospectively with the cumulative effect of initial application recognized at the date of initial application
The standard is effective for annual periods beginning on or after April 1, 2018. The Company is currently evaluating the requirements and
impact of Ind AS 115 on its financial statements.
Ind AS 21 - Appendix B:
The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income
(or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the
transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance
consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment
or receipt of advance consideration.
Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements
prospectively to all assets, expenses and income in its scope that are initially recognised on or after:
(i) The beginning of the reporting period in which the entity first applies the Appendix, or
(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in
which the entity first applies the Appendix.
The standard is effective for annual periods beginning on or after April 1, 2018. The Company is currently evaluating the requirements and
impact of the aforesaid on its financial statements.
Annual Report 2017-18 | 131
Notes to the standalone financial statements for the year ended March 31, 2018
42. 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 the 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 years and accordingly, is not
required to spend any amount during the current year for this purpose. Accordingly, the Company has not made any expenditure
during the year ended March, 2018. Subsequent to the year end, on April 20, 2018, the Company has voluntarily incurred an expense
of H 10 lakhs towards CSR activities.
43. The Company had remitted withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961
amounting to H 1,067 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, upon revision of withholding taxes returns, the
Group has adjusted withholding taxes of H 30 Lakhs (March 31, 2017: H 1,037 Lakhs) 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.
44. 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, 2018 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.
45. Consequent to the restructuring more fully described in note 1 and 31, the current year figures are not comparable to previous year
figures. Previous year figures have been regrouped/ reclassified, wherever necessary to conform to current year’s classification.
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
132 | SUBEX LIMITED
FORM AOC 1
(Information in respect of each subsidiary to be presented)
Particulars
Subex
(Asia
Pacific)
Pte Ltd
Subex
(UK)
Limited
Subex
Americas
Inc
Subex
Inc.
Name of the subsidiary
Subex
Technologies
Ltd.***
Subex
Middle
East
Reporting period of the
subsidiary concerned
March 31,
2018
March 31,
2018
March 31,
2018
March 31,
2018
March 31,
2018
March 31,
2018
(H in Lakhs)
Subex
Tech-
nologies
Inc^
Subex
Assurance
LLP
Subex
Digital
LLP
-
-
April 5,
2017 to
March 31,
2018
INR
April 5,
2017 to
March 31,
2018
INR
Reporting Currency
Exchange rate as on the
last date of relevant
financial year in the case
of foreign subsidiaries
Share Capital/Partners
Capital and current
account
Reserve & surplus
Total Assets
Total Liabilities
Investments
Turnover*
Profit/(loss) before tax
Profit/(loss) after tax
Proposed Dividend
% of Shareholding**
Date of acquisition
SGD
GBP
US$
US$
INR
AED
49.82
92.28
65.17
65.17
1.00
17.75
1.00
1.00
3,986
41
49,806
-
500
27
(3,205)
1,661
880
-
2,992
(550)
(654)
-
100%
June 23,
2006
5,576
13,903
8,286
4,482
16,398
(5,391)
(5,308)
-
100%
June 23,
2006
(44,691)
5,544
429
1
851
6,266
6,264
-
100%
April 1,
2007
(2,985)
2,631
5,616
-
9,353
128
86
-
100%
June 23,
2006
(475)
87
62
-
-
4
4
-
100%
March 28,
2005
32
809
750
-
1,132
83
(14)
-
100%
March 25,
2015
-
-
-
-
-
-
-
-
-
-
-
62,200
1,271
-
77,493
15,293
21,476
12,813
1,125
635
-
100%
April 5,
2017
-
1,780
509
-
33
(598)
(598)
-
100%
April 5,
2017
^ Liquidated during the year.
* Turnover Includes Intercompany Transactions
** inlcuding % of holding either directly or indirectly through subsidiaries.
*** Represents non-operating company.
For and on behalf of the Board of Directors
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Anil Singhvi
Chairman & Director
DIN : 00239589
Mehernaz Dalal
Chief Financial Officer
Nisha Dutt
Director
DIN : 06465957
Annual Report 2017-18 | 133
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, 2018, 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 Ind AS 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
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 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.
134 | SUBEX LIMITED
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 controls
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, 2018,
their consolidated profit including other comprehensive income,
their consolidated cash flows and consolidated changes in equity
for the year ended on that date.
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 consolidation of the
financial statements have been kept so far as it appears from
our examination of those books;
(c) The Consolidated Balance Sheet, Consolidated Statement of
Profit and Loss including the Other Comprehensive Income, the
Consolidated Statement of Cash Flows and the 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 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,
which are incorporated in India as on March 31, 2018 taken
on record by the Board of Directors of the Holding Company
and its Subsidiary Company, none of the directors of the the
Holding Company and its Subsidiary Company is disqualified
as on March 31, 2018 from being appointed as a director in
terms of Section 164 (2) of the Act.
are incorporated in India, refer to our separate report in
“Annexure I” to this report; and
(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 Consolidated Ind AS Financial Statements disclose
the impact of pending litigations on its consolidated
financial position of the Group – Refer Note 34 (b) to the
Consolidated Ind AS Financial Statements;
The Company did not have any long-term contracts
including derivative contracts for which there were any
material foreseeable losses; and
iii. There were no amounts which were required to be
transferred to the Investor Education and Protection Fund
by the Holding Company and its Subsidiary Company,
which are incorporated in India during the year ended
March 31, 2018.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Rajeev Kumar
Partner
Membership Number: 213803
(f) With respect to the adequacy and the operating effectiveness
of the internal financial controls over financial reporting of
the Holding Company and its Subsidiary Company, which
Place: Bengaluru
Date: May 04, 2018
Annual Report 2017-18 | 135
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
Our audit involves performing procedures to obtain audit evidence
reporting of Subex Limited (“the Holding Company”) and its
about the adequacy of the internal financial controls over financial
Subsidiary Company, which are incorporated in India, as of and for
reporting and their operating effectiveness. Our audit of internal
the year ended March 31, 2018 in conjunction with our audit of the
financial controls over financial reporting included obtaining an
Consolidated Ind AS Financial Statements of Subex Limited and its
understanding of internal financial controls over financial reporting,
Subsidiary Company as of and for the year then ended.
assessing the risk that a material weakness exists, and testing and
Management’s Responsibility for Internal Financial Controls
The respective Board of Directors of the Holding Company and
its Subsidiary Company, which are incorporated in India, are
responsible for establishing and maintaining internal financial
controls based on the internal financial controls over financial
evaluating the design and operating effectiveness of internal
controls 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.
reporting criteria established by the Holding Company and its
We believe that the audit evidence, we have obtained is sufficient
Subsidiary Company considering the essential components
and appropriate to provide a basis for our audit opinion on the
of internal control stated in the Guidance Note on Audit of
Holding Company and its Subsidiary Company’s internal financial
Internal Financial Controls Over Financial Reporting issued by
controls over financial reporting.
the Institute of Chartered Accountants of India (“the Guidance
Note”). These responsibilities include the design, implementation
and maintenance of adequate internal financial controls that
were operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to the respective
company’s policies, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness
of the accounting records, and the timely preparation of reliable
financial information, as required under the Act.
Auditor’s Responsibility
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
Our responsibility is to express an opinion on the Holding Company
assurance that transactions are recorded as necessary to permit
and its Subsidiary Company’s internal financial controls over
preparation of the financial statements in accordance with
financial reporting based on our audit. We conducted our audit
generally accepted accounting principles, and that receipts and
in accordance with the Guidance Note and the Standards on
expenditures of the Company are being made only in accordance
Auditing as specified under section 143(10) of the Act, to the
with authorisations of management and directors of the Company;
extent applicable to an audit of internal financial controls, both
and (3) provide reasonable assurance regarding prevention or
applicable to an audit of Internal Financial Controls and both issued
timely detection of unauthorised acquisition, use or disposition
by the Institute of Chartered Accountants of India. Those Standards
of the Company’s assets that could have a material effect on the
and the Guidance Note require that we comply with ethical
financial statements.
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.
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
136 | SUBEX LIMITED
or
improper management override of controls, material
by the Holding Company and its Subsidiary Company considering
misstatements due to error or fraud may occur and not be detected.
the essential components of internal controls stated in the
Also, projections of any evaluation of the internal financial controls
Guidance Note.
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
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
In our opinion, the Holding Company and its Subsidiary Company,
which are incorporated in India, have, maintained in all material
respects, adequate
internal financial controls over financial
reporting and such internal financial controls over financial
per Rajeev Kumar
Partner
Membership Number: 213803
reporting were operating effectively as at March 31, 2018 based
Place: Bengaluru
on the internal controls over financial reporting criteria established
Date: May 04, 2018
Annual Report 2017-18 | 137
Consolidated balance sheet as at March 31, 2018
Notes
As at
March 31, 2018
As at
March 31, 2017
(H in Lakhs)
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 balances with banks
Other financial assets
Other current assets
Total assets
EQUITY AND LIABILITIES
Equity
Equity share capital
Other equity
Total equity
Liabilities
Non-current liabilities
Provisions
Deferred tax liabilities(net)
Current liabilities
Financial liabilities
Borrowings
Trade payables
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
7
10
13
14
15
20
21
16
17
18
19
20
22
656
65,882
63
439
75
234
2,810
552
537
71,248
134
9,290
3,007
295
5,250
544
18,520
89,768
56,200
21,745
77,945
280
826
1,106
3,215
1,331
1,511
3,230
712
718
10,717
11,823
89,768
785
65,882
138
399
258
234
1,977
478
564
70,715
196
11,851
7,386
-
4,508
1,013
24,954
95,669
50,691
17,718
68,409
297
-
297
8,590
1,805
11,922
3,085
677
884
26,963
27,260
95,669
Corporate information and significant accounting policies
The accompanying notes are an integral part of the consolidated 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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
138 | SUBEX LIMITED
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Anil Singhvi
Chairman & Director
DIN : 00239589
Mehernaz Dalal
Chief Financial Officer
Nisha Dutt
Director
DIN : 06465957
Consolidated statement of profit and loss for the year ended March 31, 2018
(H in Lakhs)
Notes
Year ended
March 31, 2018
Year ended
March 31, 2017
23
24
25
26
27
28
29
1
2
3
4
5
6
7
8
Income
Revenue from operations
Other income
Total income
Expenses
Employee benefits expense
Finance costs
Depreciation and amortization expense
Other expenses
Total expenses
Profit before exceptional items and tax expense (1-2)
Exceptional items (net)
Profit/ (loss) before tax expense (3+4)
Tax expense (net)(refer note 22):
Current tax (credit)/ charge
Provision - foreign withholding taxes (net)
MAT charge/ (credit)
Deferred tax charge (net)
Profit/ (loss) for the year (5-6)
Other comprehensive income ('OCI'), net of tax expense
Items that will be reclassified subsequently to profit or loss:
Net exchange differences on translation of foreign operations
Items that will not be reclassified subsequently to profit or loss:
Re-measurement loss on defined benefit plans
9
Total comprehensive income for the year attributable to equity holders of
the Company (7+8)
10 Basic and diluted earnings/ (loss) per equity share [nominal value of
30
share H 10 (March 31, 2017 : H 10)]
Corporate information and significant accounting policies
The accompanying notes are an integral part of the consolidated financial statements
1 & 2
As per our report of even date
For and on behalf of the Board of Directors
32,432
140
32,572
17,471
775
517
11,534
30,297
2,275
1,166
3,441
(171)
789
53
702
1,373
2,068
(210)
(30)
(240)
1,828
35,733
1,154
36,887
15,871
2,040
495
10,953
29,359
7,528
(10,890)
(3,362)
243
812
(94)
-
961
(4,323)
(1,344)
(32)
(1,376)
(5,699)
0.37
(0.85)
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
Annual Report 2017-18 | 139
Consolidated statement of changes in equity for the year ended March 31, 2018
A. Equity share capital (refer note 14):
Equity shares of H 10 each issued, subscribed and fully paid-up
As at April 1, 2016
Issued during the year - Conversion of FCCBs
As at March 31, 2017
Issued during the year - Preferential issue of equity shares**
As at March 31, 2018
B. Other equity (refer note 15):
No.
H in Lakhs
502,811,646
4,096,290
506,907,936
55,094,999
562,002,935
50,281
410
50,691
5,509
56,200
(H in Lakhs)
Attributable to equity holders of the Company
Reserves and surplus
General
reserve
Securities
premium
Employee
stock
options
reserve
Equity
component
of compound
financial
instruments
259
-
-
(54)
Particulars
1,780
-
-
-
-
-
1,780
-
-
-
-
-
205
-
-
24,378
-
-
123
As at April 1, 2016
Less: 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
Add: Deferred stock compensation expenses
As at March 31, 2017
Add: Profit for the year
Less: Other comprehensive income
Add: Other comprehensive income - Foreign
currency translation reserve gain on
liquidation of subsidiary [refer note 29(b)(ii)]
Add/ (less): On account of repayment of FCCBs*
Add: Additions during the year on account of
preferential issue of equity shares**
Less: Compensation on ESOP cancelled/lapsed
during the year
-
Add: Deferred stock compensation expenses
As at March 31, 2018
26,705
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the standalone financial statements
-
24,501
-
-
2,204
(205)
-
-
-
-
-
-
-
-
-
1,780
-
-
-
-
OCI
Exchange
reserve on
consolidation
Total
Surplus /
(deficit) in
the state-
ment of profit
and loss
6,935
(4,323)
(32)
256
-
-
2,836
2,068
(30)
(10,267)
-
(1,344)
-
23,101
(4,323)
(1,376)
325
-
(9)
-
(11,611)
-
(1,376)
-
17,718
2,068
(1,406)
-
1,166
1,166
205
-
-
-
-
-
-
2,204
(5)
-
5,079
-
(11,821)
-
21,745
16
-
-
-
(9)
-
7
-
-
-
-
-
(5)
-
2
*Upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, has been transferred
to surplus/ (deficit) in the statement of profit and loss.
**refer note 14(e) on preferential issue of equity shares.
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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
140 | SUBEX LIMITED
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Anil Singhvi
Chairman & Director
DIN : 00239589
Mehernaz Dalal
Chief Financial Officer
Nisha Dutt
Director
DIN : 06465957
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
3,441
(3,362)
Consolidated statement of cash flows for the year ended March 31, 2018
(A) Operating activities
Profit/ (loss) before tax expense
Adjustments to reconcile profit/ (loss) before tax expense to net cash flows:
Depreciation of property, plant and equipment
Amortization of intangible assets
Gain on disposal of property, plant and equipment (net)
Interest income (including fair value changes)
Finance costs (including fair value changes)
Provision for doubtful debts and advances (net of reversal)
Impairment of goodwill (exceptional item)
439
78
-
(54)
775
(32)
-
Foreign currency translation reserve gain on liquidation of subsidiary (exceptional item)
(1,166)
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 of refund)
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 investing activities
(30)
50
(62)
250
3,689
43
2,943
(395)
488
(421)
211
381
52
6,991
(1,626)
5,365
(285)
(2)
2
(95)
31
(349)
459
36
(1)
(63)
2,040
1,203
10,890
-
(1,037)
53
21
(320)
9,919
(32)
(2,745)
(2,174)
(308)
193
(159)
1,928
8
6,630
(1,238)
5,392
(604)
(92)
2
(29)
20
(703)
Annual Report 2017-18 | 141
Consolidated statement of cash flows for the year ended March 31, 2018
(C) Financing activities
Movement in working capital loans (net)
Interest paid
Preferential issue of equity shares
Repayment of term loans
Repayment of borrowings (FCCBs)
Net cash flows used in financing activities
(D) Net decrease 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 (refer note 9)
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the consolidated financial statements
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
(5,424)
(1,255)
7,713
(7,782)
(2,336)
(9,084)
(4,068)
(311)
7,386
3,007
(1,981)
(1,258)
-
-
(2,249)
(5,488)
(799)
(415)
8,600
7,386
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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
142 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
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 subsidiaries in India, USA, UK, Singapore, Canada and UAE and branches
in USA, UK, Canada, Australia, Italy, UAE and Saudi Arabia.
Effective November 1, 2017, the Company has restructured its business by way of transfer of its Revenue Maximisation Solutions
and related businesses (“RMS business”) and the Subex Secure and Analytics solutions and related businesses (“Digital business”)
to its newly formed subsidiaries, Subex Assurance LLP (“SA LLP”) and Subex Digital LLP (“SD LLP”) (together referred to as “LLPs”),
respectively, hereinafter referred to as the “Restructuring” to achieve amongst other aspects, segregation of the Company’s business
into separate verticals to facilitate greater focus on each business vertical, higher operational efficiencies, and to enhance the
Company’s ability to enter into business specific partnerships and attract strategic investors at respective business levels, with an
overall objective of enhancing shareholder value. Also, refer note 31 in this regard.
These consolidated financial statements for the year ended March 31, 2018 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, 2018 are approved by the Board of Directors on May 04, 2018.
Following subsidiaries have been considered in the preparation of the consolidated financial statements:
Name of the subsidiary
Country of incorporation
Subex Americas Inc.
Subex (UK) Limited*
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Middle East, FZE*
Subex Technologies Limited**
Subex Technologies Inc. ^
Subex Azure Holdings Inc.**
Subex Assurance LLP***
Subex Digital LLP***
Canada
United Kingdom
United States of America
Singapore
United Arab Emirates
India
United States of America
United States of America
India
India
% of holding and voting power either directly or
indirectly through subsidiaries as at
March 31, 2018
March 31, 2017
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
-
-
*Pursuant to restructuring, the Company has transferred its investment in Subex (UK) Limited and Subex Middle East, FZE to Subex
Assurance LLP w.e.f November 1, 2017. Refer above and note 31.
**Represents non-operating companies.
***Incorporated/ registered on April 5, 2017.
^ Liquidated during the current year.
All the above subsidiaries are under the same management and are engaged in the same principle activities as the holding company.
Annual Report 2017-18 | 143
Notes to the consolidated financial statements for the year ended March 31, 2018
2. Significant accounting policies
a. Basis of preparation
The consolidated financial statements of the Group have been prepared and presented in accordance with accounting principles
generally accepted in India including Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013
read with Companies (Indian Accounting Standards) Rules 2015 (as amended from time to time).
The consolidated 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 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, 2018 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 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.
144 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
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 (“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 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
In accordance with Ind AS 109, the Group assesses impairment of financial assets (‘Financial instruments’) and recognises expected
credit losses, which are measured through a loss allowance.
The Group provides for impairment of trade receivables and unbilled revenue based on assumptions about risk of default and expected
timing of collection. The Group uses judgement in making these assumptions and selecting inputs to the impairment calculation,
based on the Group’s past history, customer’s creditworthiness, existing market conditions as well as forward looking estimates at the
end of each reporting period. 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
Annual Report 2017-18 | 145
Notes to the consolidated financial statements for the year ended March 31, 2018
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 and 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
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
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 for goodwill is not reversed in subsequent
periods.
146 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
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 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.
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 AS 18, 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 Goods and Service 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 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
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 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
Annual Report 2017-18 | 147
Notes to the consolidated financial statements for the year ended March 31, 2018
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 amortization and accumulated impairment losses. Internally generated intangibles, excluding
capitalised development costs, are not capitalised and the related expenditure is reflected in the consolidated statement of profit and
loss in the period in which the expenditure is incurred.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortization period and the amortization 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 amortization 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 amortization
Depreciation of property, plant and equipment and amortization of intangible assets with finite useful lives is calculated on a straight-
line basis over the useful lives of the assets estimated by the management, basis technical assessment:
The Group has used the following useful lives to provide depreciation on plant and equipment and amortization of intangible assets:
Assets
Computer hardware
Furniture and fixtures
Vehicles
Office equipment
Computer software
Useful life
3 years
5 years
5 years
5 years
4 years
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.
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.
148 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
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.
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 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 consolidated statement of profit and loss, unless they are directly attributable 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
A 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 amortized cost
Financial assets are subsequently measured at amortized 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
Annual Report 2017-18 | 149
Notes to the consolidated financial statements for the year ended March 31, 2018
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 amortized 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 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 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 the 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 amortized 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 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
150 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
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 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 flows
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 or 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 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 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.
Annual Report 2017-18 | 151
Notes to the consolidated financial statements for the year ended March 31, 2018
p. Employee benefits
Employee benefits include provident fund, pension fund, employee state insurance, gratuity and compensated absences.
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.
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 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 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.
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
consolidated 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.
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.
152 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
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.
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
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.
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.
Annual Report 2017-18 | 153
Notes to the consolidated financial statements for the year ended March 31, 2018
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 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’.
154 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
3. Property, plant and equipment
Computer
equipment
Furniture and
fixtures
Vehicles
Office
equipment
915
569
(1)
(11)
1,472
267
(14)
27
1,752
350
430
-
(10)
770
410
(12)
3
1,171
702
581
23
11
-
(1)
33
1
-
2
36
5
7
-
-
12
6
-
-
18
21
18
1
11
-
-
12
1
-
-
13
-
2
-
-
2
2
-
-
4
10
9
85
12
-
(4)
93
16
(2)
3
110
21
20
-
-
41
21
-
-
62
52
48
(H in Lakhs)
Total
1,024
603
(1)
(16)
1,610
285
(16)
32
1,911
376
459
-
(10)
825
439
(12)
3
1,255
785
656
Cost
As at April 1, 2016
Additions
Disposals
Exchange differences
As at March 31, 2017
Additions
Disposals
Exchange differences
As at March 31, 2018
Depreciation
As at April 1, 2016
Charge for the year
Disposals
Exchange differences
As at March 31, 2017
Charge for the year
Disposals
Exchange differences
As at March 31, 2018
Net block
As at March 31, 2017
As at March 31, 2018
4.
Intangible assets
Cost
As at April 1, 2016
Additions
Disposals
Exchange differences
As at March 31, 2017
Additions
Disposals
Exchange differences
As at March 31, 2018
Amortization
As at April 1, 2016
Amortization for the year
Disposals
Exchange differences
As at March 31, 2017
Amortization for the year
Disposals
Exchange differences
As at March 31, 2018
Net block
As at March 31, 2017
As at March 31, 2018
Note: Refer note 16 for the assets given on security.
Computer
software
(H in Lakhs)
Total
131
92
-
-
223
2
-
1
226
49
36
-
-
85
78
-
-
163
138
63
131
92
-
-
223
2
-
1
226
49
36
-
-
85
78
-
-
163
138
63
Annual Report 2017-18 | 155
Notes to the consolidated financial statements for the year ended March 31, 2018
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 (i)]
Closing balance
Below is the Cash Generating Unit (‘CGU’) wise break-up of goodwill:
Revenue Management Solutions ('RMS')
Data Integrity Management ('DIM')
As at
March 31, 2018
65,882
-
65,882
As at
March 31, 2018
62,156
3,726
65,882
(H in Lakhs)
As at
March 31, 2017
76,772
(10,890)
65,882
(H in Lakhs)
As at
March 31, 2017
62,156
3,726
65,882
Goodwill impairment testing
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, 2018
7% to 31%
24% to 36%
12% to 14%
As at
March 31, 2017
8% to 28%
23% to 29%
13% to 14%
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.
As at March 31, 2018, the Group assessed the carrying value of its goodwill along with the carrying value of related CGUs, based on
future operational plan, projected cash flows and valuation carried out by an external valuer. Considering the aforesaid valuation, the
management is of the view that, the carrying value of its goodwill as at March 31, 2018 is appropriate.
As at March 31, 2017, the Company had recognized a loss on impairment of goodwill related to its RMS CGU of H 4,880 Lakhs and DIM CGU
of H 6,010 Lakhs. Also, refer note 29(i).
Loans
6.
(Unsecured, considered good)
Carried at amortized cost
Non-Current
Security deposits
Current
Loans and advances to employees
156 | SUBEX LIMITED
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
439
439
134
134
399
399
196
196
Notes to the consolidated financial statements for the year ended March 31, 2018
7. Other balances with banks
Non-current
Other bank balances (refer note 9)
Margin money deposits
Current
Other bank balances (refer note 9)
Margin money deposits
8. Trade receivables
Unsecured
Carried at amortized cost
Non-current
Considered doubtful
Less: Allowances for doubtful debts*
Current
Considered good
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
75
75
295
295
258
258
-
-
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
1,346
(1,346)
-
9,290
9,290
2,596
(2,596)
-
11,851
11,851
*During the year ended March 31, 2018, the Group has written off bad debts amounting to H 1,242 Lakhs (March 31, 2017 : H 1,572 Lakhs),
from its allowance for doubtful debts.
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 which are 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.
9. Cash and cash equivalents
Current
Balance with banks
In current accounts
In EEFC accounts
Cash on hand
Other balances with banks
A
Deposits with remaining maturity for more than 3 months and less than 12 months
Less: Disclosed under Other balances with banks (Current) (refer note 7)
B
(A+B)
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
3,006
-
1
3,007
295
295
(295)
-
3,007
7,364
21
1
7,386
-
-
-
-
7,386
Annual Report 2017-18 | 157
Notes to the consolidated financial statements for the year ended March 31, 2018
9. Cash and cash equivalents
(contd.)
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, 2018
(H in Lakhs)
As at
March 31, 2017
75
75
(75)
-
258
258
(258)
-
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.
10. Other financial assets
Unsecured, considered good
Carried at amortized cost
Non-current
Advance recoverable from former directors [refer note 34(b)(iii)]
Current
Unbilled revenue
Interest accrued but not due on bank deposits
11. Income tax assets (net)
Non-current
Advance income-tax [net of provision for taxation H 688 Lakhs (March 31, 2017: H 706 Lakhs)]
12. Deferred tax assets (net)*
Non-current
Minimum alternative tax ('MAT') credit entitlement (refer note 22)
Deferred tax assets (net)
Depreciation and amortization expense: Difference between tax depreciation and
depreciation and amortization expense as per statement of profit and loss
A
Losses available for offsetting against future taxable profits
Provision for employee benefits and others
B
(A+B)
*Also, refer note 22
158 | SUBEX LIMITED
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
234
234
5,247
3
5,250
234
234
4,497
11
4,508
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
2,810
2,810
1,977
1,977
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
425
425
10
40
77
127
552
478
478
-
-
-
-
478
Notes to the consolidated financial statements for the year ended March 31, 2018
13. Other assets
Non-current
Balance with statutory/ government authorities*
Advance recoverable in cash or kind
Prepaid expenses
Current
Balance with statutory/ government authorities
Advance recoverable in cash or kind
Prepaid expenses
Advance to suppliers
Expenses incurred on behalf of customers
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
267
270
537
-
418
30
96
544
267
297
564
80
671
193
69
1,013
*Balances represents service tax erroneously paid by the Group during the financial years 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.
14. Share capital
Authorized share capital
Equity shares of H 10 each
As at April 1, 2016
Increase during the year
As at March 31, 2017
Increase during the year
As at March 31, 2018
Preference shares of H 98 each
As at April 1, 2016
Increase during the year
As at March 31, 2017
Increase during the year
As at March 31, 2018
Issued, subscribed and fully paid-up share capital
Equity shares of H 10 each issued, subscribed and fully paid-up*
As at April 1, 2016
Issued during the year - Conversion of FCCBs
As at March 31, 2017
Issued during the year - Preferential issue of equity shares [refer note 14 (e)]
As at March 31, 2018
No.
H in Lakhs
545,040,000
-
545,040,000
43,000,000
588,040,000
200,000
-
200,000
-
200,000
502,811,646
4,096,290
506,907,936
55,094,999
562,002,935
54,504
-
54,504
4,300
58,804
196
-
196
-
196
50,281
410
50,691
5,509
56,200
*includes 243,207 (March 31, 2017: 243,207) shares in respect of which Global Depository Receipts of the Company are listed on London
Stock Exchange.
Annual Report 2017-18 | 159
Notes to the consolidated financial statements for the year ended March 31, 2018
14. Share capital(contd.)
(a) Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of H 10 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, 2018 and March 31, 2017.
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 H 10 each issued, subscribed and fully paid-up
Name of the shareholders
Tonbridge (Mauritius) Limited and Leeds (Mauritius) Limited
QVT Singapore Fund Pte. Ltd
QVT Mauritius West Fund & Quintessence Mauritius West Fund
Deutsche Bank AG London -CB Account
Nomura Singapore Limited
As at March 31, 2018
No.
% of total
shares
As at March 31, 2017
No.
% of total
shares
27,563,571
27,531,428
-
-
-
4.90
4.90
-
-
-
-
-
47,843,816
17,436,426
2,806,956
-
-
9.44
3.44
0.55
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.
(c)
Shares reserved for issue under options (No.)
(i) Outstanding employee stock options under below schemes, granted/ available for
grant: (refer note 35)
ESOP III
ESOP IV
(ii) FCCBs (refer note 16)
FCCBs III
As at
March 31, 2018
As at
March 31, 2017
24,055
-
92,368
28,301
-
24,055
15,522,785
15,643,454
(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 preceding 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$ 128 Million
(H 71,593 Lakhs), an amount of US$ 36 Million (H 20,359 Lakhs) were mandatorily converted
into equity shares on July 07, 2012]
As at
March 31, 2018
As at
March 31, 2017
89,335,462
89,335,462
(e) During the year ended March 31, 2018, the Company made an allotment of 55,094,999 equity shares of the Company on a preferential
basis at an issue price of H 14 per equity share (Face value of H 10 per equity share) amounting to H 7,713 Lakhs under section 42 of the
Companies Act, 2013.
160 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
15. Other equity
Equity component of compound financial instruments
Balance as per last financial statements
Less: Conversion of FCCBs
Less: Transfer to surplus/ (deficit) in the statement of profit and loss*
Closing balance
Securities premium
Balance as per last financial statements
Add: Additions during the year on conversion of FCCBs
Add: Additions during the year on account of preferential issue of equity shares [refer note 14 (e)]
Closing balance
General reserve
Balance as per last financial statements
Add: Additions during the year
Closing balance
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
Add: Profit/ (loss) for the year
Add: Residual portion of FCCBs conversion
Add: Transfer from equity component of compound financial instrument*
Less: OCI - Re-measurement losses on defined benefit obligations
Closing balance
Exchange reserve on consolidation
Balance as per last financial statements
Add: Effect of foreign exchange rate variations during the year
Less: On account of liquidation of foreign subsidiary [refer note 29(ii)]
Closing balance
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
205
-
(205)
-
24,501
-
2,204
26,705
1,780
-
1,780
7
(5)
-
2
2,836
2,068
-
205
(30)
5,079
(11,611)
(1,376)
1,166
(11,821)
259
(54)
-
205
24,378
123
-
24,501
1,780
-
1,780
16
(9)
-
7
6,935
(4,323)
256
-
(32)
2,836
(10,267)
(1,344)
-
(11,611)
* Upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, has been
transferred to surplus/ (deficit) in the statement of profit and loss.
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
Exchange reserve on consolidation
Total other equity
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
-
26,705
1,780
2
5,079
(11,821)
21,745
205
24,501
1,780
7
2,836
(11,611)
17,718
Annual Report 2017-18 | 161
Notes to the consolidated financial statements for the year ended March 31, 2018
16. Borrowings
Carried at amortized cost
Non - current
Foreign currency convertible bonds*
Current maturities of long-term borrowings (secured):
Term loans**
Current maturities of long-term borrowings (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) and note (iii)]
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
-
-
-
-
-
3,215
-
3,215
2,277
7,782
10,059
(10,059)
-
5,216
3,374
8,590
* Secured FCCBs were carried at amortized cost at an effective interest rate of 9% p.a. (March 31, 2017: 9% p.a.) with maturity date of
July 07, 2017. On June 30, 2017, the Company redeemed outstanding FCCBs III amounting to US$ 3.6 Million (H 2,336 Lakhs) and paid
accrued interest of US$ 0.1 Million (H 67 Lakhs) on the aforesaid bonds. On July 6, 2017, the deferred interest in respect of aforesaid bonds
for the period July 6, 2012 to January 6, 2016 amounting to US$ 0.72 Million (H 467 Lakhs) was paid. As at March 31, 2018, there are no
outstanding FCCBs and related interest.
** Represents loan taken by Subex Americas Inc., which had been guaranteed by Subex (UK) Limited. This loan was carried at amortized
cost at an effective interest rate of 9.5% p.a. (March 31, 2017: 9.5% p.a.). The loan of US$ 12 Million (H 7,782 Lakhs) has been repaid on
May 15, 2017 and the guarantee by Subex (UK) Limited was released.
(i) The secured loan from banks were secured by primary charge on customer receivables and paripassu first charge on the current assets
of the Company, and collateral paripassu first charge on the fixed assets of the Company. Pursuant to the restructuring of the Company
Loan type - I was transferred to Subex Assurance LLP and Loan type - II was repaid on October 31, 2017 and the aforesaid security was
released.
Subsequently Loan type - I is secured by primary charge on customer receivables and current assets of Subex Assurance LLP
(“SA LLP”), and collateral charge on the fixed assets of SA LLP.
Further, Loan type - I is also guaranteed by the Company. Also, refer note 34(b)(iv).
(ii) The Company had submitted a corporate guarantee by Subex Technologies Limited of H 4,205 Lakhs and Subex (UK) Limited of H 4,205
Lakhs and pledged it’s 100% shares in Subex (UK) Limited. Pursuant to the restructuring, the Loan type - II was repaid on October 31,
2017 and the aforesaid securities have been released.
(iii) Loans repayable on demand from bank as at March 31, 2018 consisted of Cash Credit (CC) of H Nil (March 31, 2017: H 2,934 Lakhs), Pre-
shipment Credit in Foreign Currency (PCFC) of H 3,215 Lakhs (March 31, 2017: H 1,420 Lakhs), and Export Bill Rediscounting (EBRD) of
H Nil (March 31, 2017: H 4,237 Lakhs), which carried an average interest rate of 9.71%, 3.27%, and 4.54% (March 31, 2017: 11.67%,
3.89% and 5.51%) respectively. During the current year, the facilities in relation to Loan type - I were transferred to Subex Assurance
LLP and Loan type - II were repaid, pursuant to the restructuring.
162 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
17. Trade payables
Carried at amortized cost
Current
Trade payables
- total outstanding dues of micro enterprises and small enterprises*
- total outstanding dues of creditors other than micro enterprises and small enterprises
Terms and conditions of the above financial liabilities:
- Trade payables are non-interest bearing and are normally settled on 30 - 45 days terms.
- For explanations on the Group’s liquidity risk management, refer note 40.
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
-
1,331
1,331
-
1,805
1,805
**There are no micro, small and medium enterprises to whom the Company owes any dues as at March 31, 2018 and March 31, 2017. This
information has been determined to the extent such parties have been identified on the basis of information available with the Company.
18. Other current financial liabilities
Carried at amortized cost
Employee related liabilities
Interest accrued but not due on borrowings
Current maturities of long term borrowings (refer note 16)
19. Other current liabilities
Unearned revenue
Statutory dues
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, 2018
1,511
-
-
1,511
As at
March 31, 2018
2,086
1,144
3,230
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
1,362
501
10,059
11,922
(H in Lakhs)
As at
March 31, 2017
2,120
965
3,085
(H in Lakhs)
As at
March 31, 2017
280
280
89
523
100
712
297
297
43
534
100
677
*Provision for litigations consists of matters which are sub-judice. There is no movement in the provision during the current and previous
year, refer note 34(b) for further details.
Annual Report 2017-18 | 163
Notes to the consolidated financial statements for the year ended March 31, 2018
21. Deferred tax liabilities (net)
Non-current
Deferred tax liabilities
Depreciation and amortization expense: Difference between tax depreciation and
depreciation and amortization expense as per statement of profit and loss
Deferred tax assets
Provision for employee benefits and others
Losses available for offsetting against future taxable profits
22. Income tax liabilities (net)
A
B
(A-B)
Provision for tax [net of advance tax H 250 Lakhs (March 31, 2017: H 367 Lakhs)]
Provision for foreign taxes
Provision for litigation [net of tax deducted at source H 62 Lakhs (March 31, 2017: H 62 Lakhs)]*
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
1,693
1,693
65
802
867
826
-
-
-
-
-
-
As at
March 31, 2018
162
394
162
718
(H in Lakhs)
As at
March 31, 2017
235
487
162
884
*Provision for litigation consists of matters which are sub-judice. There is no movement in the provision during the current and previous
year, refer note 34(b) for further details.
Income tax expense in the consolidated statement of profit and loss consist of the following:
Tax expense:
Current tax (credit)/ charge
Provision - foreign withholding taxes(net) [refer note 22(i)]
MAT charge / (credit)
Deferred tax charge (net) [refer note 22(ii)]
Total tax expense
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
(171)
789
53
702
1,373
243
812
(94)
-
961
Notes:
22(i) Provision for foreign withholding taxes represents provision in respect of withholding taxes deducted/ deductible by customers.
22(ii) Deferred tax charge, comprises of deferred tax liability arising on account of tax benefits from amortization of intangible assets of
Subex Assurance LLP, net of deferred tax assets arising on account of carry forward losses and other taxable temporary differences, which
arose mainly on account of restructuring.
164 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
22. Income tax liabilities (net)(contd.)
Reconciliation of tax to the amount computed by applying the statutory income tax rate to the income before tax is summarized below:
(H in Lakhs)
Profit/ (loss) before tax
Applicable tax rates in India
Computed tax charge (A)
Components of tax expense:
Year ended
March 31, 2018
3,441
34.61%
1,191
Year ended
March 31, 2017
(3,362)
34.61%
-
Provision for foreign withholding taxes (net)
MAT provision at 18.5% on the adjusted book profits of the Company in accordance with
the provisions of Income Tax Act, 1961
Reversal of tax charge in relation to earlier period
Tax expense/ (reversal) on taxable income of foreign subsidiaries with differential tax rates
Impact of non-taxable income*
Impact of other allowances and disallowances as per Income Tax Act, 1961 (net)
MAT credit entitlement (available)/ reversed on the MAT provision as mentioned above
as per the provisions of Income Tax Act, 1961
Total adjustments (B)
789
-
(53)
(242)
(404)
39
53
182
812
94
-
149
-
-
(94)
961
Total tax expense (A+B)
*Represents tax impact on foreign currency translation reserve amounting to H 1,166 Lakhs, which is credited to the consolidated statement
of profit and loss upon completion of liquidiation of its subsidiary. Refer note 29(ii).
1,373
961
23. 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 customization
Managed services
Support services
Others
24. Other income
Write back of withholding taxes paid earlier (refer note 43)
Net gain on disposal of property, plant and equipment
Miscellaneous income
Interest income on:
Security deposits
Bank deposits
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
3,193
29,239
32,432
3,193
-
3,193
7,504
10,870
10,865
-
29,239
4,771
30,962
35,733
4,488
283
4,771
8,656
10,913
11,138
255
30,962
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
30
-
56
31
23
140
1,037
1
53
36
27
1,154
Annual Report 2017-18 | 165
Notes to the consolidated financial statements for the year ended March 31, 2018
25. Employee benefits expense
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
Salaries and wages*
Contribution to provident and other funds
Staff welfare expenses
14,210
1,127
534
15,871
*Net of reversal of provision no longer required, in respect of employee incentives amounting to H 725 Lakhs (March 31, 2017: H 700 Lakhs).
15,674
1,112
685
17,471
26. Finance cost
Interest
Foreign currency convertible bonds
Term loan
Other borrowings
Other finance charges
Bank charges
27. Depreciation and amortization expense
Depreciation of property, plant and equipment (refer note 3)
Amortization of other intangible assets (refer note 4)
28. Other expenses
Cost of hardware, software and support charges
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 28(i)]
Sales commission
Provision for doubtful debts (net of reversal)
Exchange fluctuation loss/ (gain)(net)
Directors' sitting fees
Loss on sale of fixed assets (net)
Miscellaneous expenses
166 | SUBEX LIMITED
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
95
-
326
21
333
775
494
464
657
23
402
2,040
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
439
78
517
459
36
495
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
577
1,549
1,767
210
128
646
111
308
54
2,549
212
418
950
201
153
(32)
1,650
77
2
4
11,534
943
1,603
1,803
201
159
500
112
331
34
3,082
109
400
785
191
123
1,203
(698)
53
-
19
10,953
Notes to the consolidated financial statements for the year ended March 31, 2018
28(i). Payments to the auditors*
(a) Statutory auditors
As auditor
Audit fee
Tax audit fee
In other capacity
Other services (certification services)
Reimbursement of expenses
(b) Other auditors for the subsidiaries
As auditor
Audit fee
In other capacity
Reimbursement of expenses
*Payment to auditors is exclusive of goods and services tax/ service tax.
29. Exceptional items (net)
Loss on impairment of goodwill [refer note 29(i)]
Foreign currency translation reserve gain on liquidation of foreign subsidiary [refer note 29(ii)]
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
98
4
25
10
137
62
2
64
201
102
4
5
14
125
64
2
66
191
Year ended
March 31, 2018
-
1,166
1,166
(H in Lakhs)
Year ended
March 31, 2017
(10,890)
-
(10,890)
29(i) As at March 31, 2017, the Company had recognized a loss on impairment of goodwill related to its RMS CGU of H 4,880 Lakhs and
DIM CGU of H 6,010 Lakhs based on its assessment of the carrying value of its goodwill along with the carrying value of related CGUs as at
such date.
29(ii) During the year ended March 31, 2018, the Company has completed the liquidiation of its subsidiary viz. Subex Technologies Inc.,
USA and accordingly the balance of foreign currency translation reserve amounting to H 1,166 Lakhs has been credited to the statement
of profit and loss.
30. Earnings/ (loss) per share
Basic earnings/ (loss) per share (EPS) amounts are calculated by dividing the profit/(loss) for the year attributable to equity holders of the
parent by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit/(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.
Annual Report 2017-18 | 167
Notes to the consolidated financial statements for the year ended March 31, 2018
30. Earnings/ (loss) per share (contd.)
Computation of basic and diluted EPS:
Nominal value per equity share (H per share)
Profit/ (loss) attributable to equity shareholders (H in Lakhs)
Weighted average number of equity shares (No. in Lakhs)
Profit/ (loss) per share basic and diluted (H per share)*
Year ended
March 31, 2018
Year ended
March 31, 2017
10
2,068
5,554
0.37
10
(4,323)
5,063
(0.85)
*Employee stock options outstanding as at March 31, 2018 and Employee stock options outstanding and foreign currency convertible
bonds outstanding as at March 31, 2017 are anti-dilutive and accordingly have not been considered for the purpose of computing dilutive
EPS of the respective years.
31. Restructuring
The Board of Directors of the Company in its meeting held on August 21, 2017 approved the restructuring of the Company’s business by
way of transfer of its RMS business and Digital business to its subsidiaries, SA LLP and SD LLP, respectively, subject to shareholders and
other requisite approvals. The shareholders of the Company approved the Restructuring by way of special resolution passed through postal
ballot on September 23, 2017 and subsequently, the Board of Directors of the Company in its meeting held on October 4, 2017 approved
November 1, 2017 to be the effective date of Restructuring.
Accordingly, effective November 1, 2017, the Company’s RMS business and the Digital business have been transferred on a going concern
basis for a fair value consideration of H 61,564 Lakhs and H 1,869 Lakhs, respectively, in the form of Company’s capital contribution in the
aforesaid LLPs. Post such Restructuring, the Company continues to directly hold 99.99% share in the capital of, and in the profits and losses
of, each of these LLPs and the entire economic interest as well as control and ownership of the RMS Business and Digital Business remains
with the Company post such Restructuring.
The Group has accounted for the restructuring in accordance with Appendix C (”Common control transactions”) to Ind AS 103 (”Business
Combinations”), which requires common control transactions to be recorded at books values. This being an intra group transaction, has
been eliminated in full for the purpose of consolidation, except the impact of taxes as described in note 22(ii).
32. Segment reporting
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.
Segment revenue by geographical location are as follows*:
Region
Americas
EMEA
India
APAC and rest of the world
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
5,322
19,076
2,656
5,378
32,432
6,555
20,392
2,835
5,951
35,733
*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 during the years ended March 31, 2018 and
March 31, 2017.
168 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
32. Segment reporting (contd.)
Non-current operating assets by geographical location are as follows**:
Region
India
Outside India
Unallocated***
Total non-current operating assets
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
989
267
65,882
67,138
1,046
441
65,882
67,369
**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 that it is not practically feasible to allocate such
goodwill to various regions.
33. Related party transactions
i. Related parties under Ind AS 24 and Companies Act, 2013
Key management personnel of the Company:
Anil Singhvi
Surjeet Singh
Chairman (w.e.f. May 25, 2017) and Independent Director
Managing Director and Chief Executive Officer (Up to March 31, 2018)
Vinod Kumar Padmanabhan
Managing Director and Chief Executive Officer (w.e.f April 1, 2018)
Whole Time Director (w.e.f. May 25, 2017 to October 31, 2017)
Non Executive, Non Independent Director (w.e.f. November 1, 2017 to March 31, 2018)
Ashwin Chalapathy
Whole Time Director (w.e.f. May 25, 2017 to October 31, 2017)
Non Executive, Non Independent Director (w.e.f. November 1, 2017 to May 4, 2018)
Nisha Dutt
Independent Director
Poornima Kamalaksh Prabhu
Independent Director
Sanjeev Aga
Priyanka Roy
Independent Director (Up to October 27, 2016)
Independent Director (Up to March 10, 2017)
Mehernaz Dalal
Chief Financial Officer (w.e.f. June 15, 2017)
Ganesh KV
Chief Financial Officer, Global Head - Legal and Company Secretary (Up to June 15, 2017)
ii. Details of transactions with key management personnel
Salary and perquisites:*
Vinod Kumar Padmanabhan
Ashwin Chalapathy
Mehernaz Dalal
Surjeet Singh
Ganesh KV
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
54
45
44
586
37
766
-
-
-
572
77
649
Annual Report 2017-18 | 169
Notes to the consolidated financial statements for the year ended March 31, 2018
33. Related party transactions (contd.)
Director sitting fees
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Sanjeev Aga
Priyanka Roy
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
28
22
23
-
-
73
22
14
-
10
3
49
*The remuneration to the key managerial personnel does not include the provision/ accruals made on best estimate basis as they are
determined for the Group as a whole.
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 H 64 Lakhs (March
31, 2017: H 762 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, 2018
(H in Lakhs)
As at
March 31, 2017
5
-
-
64
5
-
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 amounted to
H 1,703 Lakhs (March 31, 2017: H 1,042 Lakhs).
b) Contingent liabilities
Income tax demands [refer note (i)]
Service tax demands [refer note (ii)]
Others [refer note (iii)]
Bank guarantees (furnished to customers)
Corporate guarantee issued by Subex Limited [refer note (iii) below and note 16]
Corporate guarantee issued by Subex Technologies Limited and Subex (UK) Limited
(refer note 16)
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
16,995
3,687
1,293
321
8,250
-
8,196
3,687
1,293
249
-
4,205
170 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
34. Commitments and contingent liabilities (contd.)
i.
Income tax
The Group has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2014, 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 had received certain claims from ex-directors for an amount of H 1,293 Lakhs. The aforesaid claims are disputed by the Group
and the matter is presently under arbitration with the arbitration tribunal. The management is of the view that these claims are not tenable.
Subsequent to the year ended March 31, 2018, in respect of arbitration concerning one of the ex-directors the Honorable Tribunal has
passed an award directing the Group to pay a sum of H 700 lakhs. The Group has filed an application to set aside the order and has also
sought an interim stay in this regard. Basis opinion obtained from its legal counsel, the management is of the view that the outcome of
the matter is not predictable at this point. Accordingly, no provision is made in this regard and the same has been disclosed as contingent
liability.
The Group has also claimed the excess managerial remuneration of H 124 Lakhs (March 31, 2017: H 124 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 H 110 Lakhs (March 31, 2017: H 110 Lakhs). The aggregate amount of H 234 Lakhs (March 31, 2017: H 234
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. Corporate Guarantee
With effect from November 1, 2017, the Company has given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of
H 8,250 Lakhs for the purpose of availing of working capital loan facilities by the said subsidiary.
v. The Group does not have any commitments as at balance sheet date except towards the operating lease as disclosed in note 34(a).
Annual Report 2017-18 | 171
Notes to the consolidated financial statements for the year ended March 31, 2018
35. Employee stock options plans (‘ESOPs’)
The Group during the years 2005-2006 and 2008-09 has established equity settled ESOP schemes of 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:
Particulars
Options outstanding at the beginning of the year
ESOP – III
ESOP – IV
Cancelled, surrendered or lapsed during the year
ESOP – III
ESOP – IV
Options outstanding at the end of the year
ESOP – III
ESOP – IV
Options exercisable at the end of the year
ESOP – III
ESOP – IV
2017-18
Options (no.) Weighted average
exercise price per
stock option (H)
2016-17
Options (no.) Weighted average
exercise price per
stock option (H)
92,368
28,301
68,313
28,301
24,055
-
24,055
-
22.97
28.44
24.67
28.44
18.24
-
18.24
-
1,44,979
1,30,500
52,611
1,02,199
92,368
28,301
92,368
28,301
24.28
28.51
26.54
28.53
22.97
28.44
22.99
28.44
Details of weighted average remaining contractual life and range of exercise prices for the options outstanding at the balance sheet
date:
Particulars
ESOP – III
ESOP – IV
*considering vesting and exercise period.
36. Employee benefit plans
Weighted average remaining
contractual life(years)*
2017-18
2016-17
1.26
-
1.99
0.67
Range of exercise prices (H)
2017-18
10.26 - 54.83
-
2016-17
10.26 - 54.83
28.44
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 H 980 Lakhs (March 31, 2017: H 990 Lakhs) towards Provident Fund and Pension Fund
contributions and H 44 Lakhs (March 31, 2017: H 47 Lakhs) towards 401K contribution.
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.
172 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
36. Employee benefit plans (contd.)
The following tables set out the status of the gratuity plan:
Disclosure as per Ind AS 19
A. Change in defined benefit obligation
Obligations at beginning of the year
Service cost
Interest cost
Benefits settled
Actuarial loss (through OCI)
Currency translation adjustment
Obligations at end of the year
B.
Change in plan assets
Plan assets at beginning of the year, at fair value
Expected return on plan assets
Actuarial gain (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
C. Net liability recognized in the consolidated balance sheet
D.
E.
F.
Expenses recognized in the consolidated statement of profit and loss:
Service cost
Interest cost (net)
Net gratuity cost
Re-measurement gains/ (losses) in OCI
Actuarial loss due to financial assumption changes
Actuarial gain due to experience adjustments
Actuarial loss - return on plan assets greater than discount rate
Total expenses recognized through OCI
Assumptions
Discount rate
Expected return on plan assets
Salary escalation*
Attrition rate
Retirement age
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
484
89
31
(64)
32
1
573
144
10
2
110
(62)
204
(573)
204
(369)
453
76
32
(108)
33
(2)
484
116
9
-
120
(101)
144
(484)
144
(340)
(H in Lakhs)
Year ended
March 31, 2018
Year ended
March 31, 2017
89
21
110
(16)
48
(2)
30
7.60%
7.00%
8.00%
18.00%
60 years
76
23
99
13
20
-
33
7.00%
7.60%
8.00%
18.00%
60 years
Annual Report 2017-18 | 173
Notes to the consolidated financial statements for the year ended March 31, 2018
36. Employee benefit plans (contd.)
G.
Five years pay-outs
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
89
82
78
73
68
458
43
70
65
62
57
366
*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.
H.
Contribution likely to be made for the next one year
I.
The major categories of plan assets as a percentage of the fair value of total plan
assets are as follows:
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
89
120
100%
100%
(H in Lakhs)
Year ended March 31, 2018
0.5% increase
0.5% decrease
Year ended March 31, 2017
0.5% increase
0.5% decrease
(12)
13
(10)
11
1% increase
1% decrease
1% increase
1% decrease
23
(22)
18
(17)
5% increase
5% decrease
5% increase
5% decrease
(12)
13
(12)
9
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
Impact on defined benefit obligation increase/
(decrease)
174 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
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:
As at and for the year ended March 31, 2018
Net Assets i.e., total assets
minus total liabilities
Amount
As % of
Consolidated
net assets
Share in profit or loss
Amount
As % of
Consolidated
profit or loss
(H in Lakhs)
Share in other
comprehensive income
Amount
As % of
consolidated
other com-
prehensive
income
Share in total
comprehensive income
Amount
As % of
consolidated
total com-
prehensive
income
Name of the entity
Parent
Subex Limited
Indian subsidiaries
Subex Technologies Limited
Subex Assurance LLP
Subex Digital LLP
Foreign subsidiaries
Subex (Asia Pacific) Pte Ltd.
Subex (UK) Ltd.
Subex Americas Inc.
Subex Inc.,
Subex Technologies Inc.
Subex Middle East
Total
Adjustments arising out of
consolidation
Total
Name of the entity
Parent
Subex Limited
Indian subsidiaries
Subex Technologies Limited
Subex Assurance LLP
Subex Digital LLP
Foreign subsidiaries
Subex (Asia Pacific) Pte Ltd.
Subex (UK) Ltd.
Subex Americas Inc.
Subex Inc.,
Subex Technologies Inc.
Subex Middle East
Total
Adjustments arising out of
consolidation
Total
49%
74,234
1%
32
(1%)
(8)
-
24
-
41%
1%
1%
7%
3%
(2%)
-
-
25
62,262
1,279
780
10,098
5,115
(2,983)
-
59
-
14%
(12%)
(13%)
(16%)
124%
2%
-
-
(4)
710
(586)
(655)
(826)
6,264
87
-
(14)
-
(1%)
-
(19%)
127%
(4%)
(2%)
-
-
-
(12)
(4)
(179)
1,185
(37)
(20)
-
1
-
12%
(10%)
(14%)
6%
105%
1%
-
-
(4)
698
(590)
(834)
359
6,227
67
-
(13)
100%
150,869
100%
5,008
100%
926
100%
5,934
-
-
(72,924)
77,945
-
-
(2,940)
2,068
-
-
(1,166)
(240)
-
-
(4,106)
1,828
Net Assets i.e., total assets
minus total liabilities
Amount
As % of
Consolidated
net assets
Share in profit or loss
Amount
As % of
Consolidated
profit or loss
(H in Lakhs)
Share in other
comprehensive income
Amount
As % of
consolidated
other com-
prehensive
income
Share in total
comprehensive income
Amount
As % of
consolidated
total com-
prehensive
income
95%
63,726
(13%)
(683)
2%
(33)
(18%)
(716)
-
-
-
(4%)
(16%)
(2%)
(5%)
-
-
29
-
-
(2,378)
9,733
(1,181)
(3,049)
-
71
1%
-
-
17%
35%
57%
2%
-
1%
54
-
-
892
1,859
3,012
116
(1)
35
-
-
-
(13%)
124%
(7%)
(6%)
0%
0%
-
-
-
182
(1,705)
102
81
-
(3)
1%
-
-
27%
4%
80%
5%
-
1%
54
-
-
1,074
154
3,114
197
(1)
32
100%
66,951
100%
5,284
100%
(1,376)
100%
3,908
-
-
1,458
68,409
-
-
(9,607)
(4,323)
-
-
-
(1,376)
-
-
(9,607)
(5,699)
Annual Report 2017-18 | 175
As at and for the year ended March 31, 2017
Notes to the consolidated financial statements for the year ended March 31, 2018
38. Capital management
The Group’s objective is to maintain a strong capital base to ensure sustained growth in business and to maximize the shareholders value.
The capital management focuses 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 - Current*
Current maturities of long term borrowings**
B.
Total loans and borrowings
C.
D.
E.
Total capital (A+B)
Total loans and borrowings as a percentage of total capital (B/C)
Total equity as a percentage of total capital (A/C)
As at
March 31, 2018
77,945
3,215
-
(H in Lakhs)
As at
March 31, 2017
68,409
8,590
10,059
3,215
18,649
81,160
4%
96%
87,058
21%
79%
*The Company has made preferential allotment of equity shares during the current year. Refer note 14(e).
*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 current borrowings.
**Current maturities of long term borrowings represented term loans of US$ 12 Million (H 7,782 Lakhs) and FCCBs III of H 2,277 Lakhs and
has been duly repaid as on May 15, 2017 and July 07, 2017, respectively.
In order to achieve the aforesaid objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial
covenants attached to the borrowings that define capital structure requirements. There have been no breaches in the financial covenants
of any borrowing in the current year.
39. Fair value hierarchy
The carrying value of financial instruments by categories is as follows:
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*
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^
176 | SUBEX LIMITED
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
3
9,290
5,247
439
134
15,113
1
3,006
370
3,377
1,511
1,331
-
3,215
6,057
11
11,851
4,497
399
196
16,954
1
7,385
258
7,644
1,362
1,805
501
18,649
22,317
Notes to the consolidated financial statements for the year ended March 31, 2018
39. Fair value hierarchy (contd.)
*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. 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.
40. Financial risk management:
The Group’s activities expose it to the following risks:
i. Credit risk
ii.
iii. Liquidity risk
iv. Market risk
Interest rate risk
Credit risk
i.
Credit Risk is the risk that a counter party will not meet its obligations under a financial instrument 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.
Trade receivables
a.
Credit risk is managed by each business unit as per the Group’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 Group does not hold collateral as security.
b. Credit risk exposure
The Group’s credit period generally ranges from 30 - 180 days. The credit risk exposure of the Group is as below:
Trade receivables
Unbilled revenue
Total
As at
March 31, 2018
9,290
5,247
14,537
(H in Lakhs)
As at
March 31, 2017
11,851
4,497
16,348
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 the Group generally invests 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 minimize the concentration
of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
Interest rate risk
ii.
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 risk of changes in interest rates relates primarily to the Company’s debt obligations with floating interest rates for
the period the Company was holding the debts.
Annual Report 2017-18 | 177
Notes to the consolidated financial statements for the year ended March 31, 2018
40. Financial risk management (contd.)
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
(H in Lakhs)
Year ended March 31, 2018
Effect of
Change
Year ended March 31, 2017
Effect of
Change
in interest rate
profit before
in interest rate
profit before
exceptional items
exceptional items
and tax expense
(60)
60
+1%
-1%
and tax expense
(94)
94
+1%
-1%
iii. Liquidity risk
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.
The break-up of cash and cash equivalents and deposits is as below:
Particulars
Cash and cash equivalents
Other balances with banks
As at
March 31, 2018
(H in Lakhs)
As at
March 31, 2017
3,007
370
3,377
7,386
258
7,644
The table below summarizes the maturity profile of the Group’s financial liabilities at the reporting date. The amounts are based on
contractual undiscounted payments.
Particulars
On demand
0-180 Days
180-365 Days
365 Days and
above
(H in Lakhs)
Total
As at March 31, 2018
Trade payables
Borrowings
Other financial liabilities
As at March 31, 2017
Trade payables
Borrowings
Other financial liabilities
251
-
-
251
542
-
-
542
983
3,215
1,511
5,709
1,000
18,701
1,867
21,568
95
-
-
95
263
-
-
263
3
-
-
3
-
-
-
-
1,331
3,215
1,511
6,057
1,805
18,701
1,867
22,373
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 (‘US$’), Great Britain Pound (‘GBP’), Euro (‘EUR’), United Arab Emirates Dirham (‘AED’) and other currencies. The
Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities and financing
activities.
178 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
40. Financial risk management (contd.)
Below is the summary of foreign currency exposure of Group’s financial assets and liabilities.
As at March 31, 2018
Particulars
Financial assets
Trade receivables
Cash and cash equivalents and other
bank balances
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
As at March 31, 2017
Particulars
Financial assets
Trade receivables
Cash and cash equivalents and other
bank balances
Other financial assets
Total financial assets
Financial liabilities
Borrowings
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
US$
Denominated Currency
AED
GBP
Others
5,482
334
1,109
6,925
837
1,306
2,143
4,782
-
-
-
-
793
1
794
(794)
1,507
54
150
1,711
840
(92)
748
963
842
121
181
1,144
745
(160)
585
559
US$
Denominated Currency
AED
GBP
Others
6,631
4,694
3,070
14,395
2,786
3,278
6,064
8,331
-
-
-
-
1,979
-
1,979
(1,979)
1,587
582
186
2,355
73
191
264
2,091
1,670
339
85
2,094
818
265
1,083
1,011
(H in Lakhs)
Total
7,831
509
1,440
9,780
3,215
1,055
4,270
5,510
(H in Lakhs)
Total
9,888
5,616
3,341
18,845
5,656
3,734
9,390
9,455
Sensitivity analysis
Every 1% appreciation or depreciation in the respective foreign currencies against functional currency of the each of the group entities
would cause the profit before exceptional items in proportion to revenue to increase or decrease respectively by 0.17% (March 31, 2017:
0.29%).
Annual Report 2017-18 | 179
Notes to the consolidated financial statements for the year ended March 31, 2018
41. Standards issued but not yet effective
Ind AS 115- Revenue from contract with customers:
On March 28, 2018, the Ministry of Corporate Affairs notified Ind AS 115 Revenue from contracts with customers. The standard replaces
Ind AS 11 Construction Contracts and Ind AS 18 Revenue.
The core principle of Ind AS 115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers
in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Ind AS 115 introduces a 5-step approach to revenue recognition:
•
•
Identify the contract(s) with a customer
Identify the performance obligation in contract
• Determine the transaction price
•
•
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the entity satisfies a performance obligation
Ind AS 115 establishes control-based revenue recognition model. An entity recognizes revenue when (or as) a performance obligation is
satisfied, i.e. when ‘control’ of the goods or services underlying the performance obligation is transferred to the customer. Also, Ind AS 115
provides more guidance for deciding whether revenue is recognized at a point in time or over time.
Transitional options under Ind AS 115:
•
Retrospectively to each prior period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and
Errors, subject to some practical expedients mentioned in Ind AS 115
•
Retrospectively with the cumulative effect of initial application recognized at the date of initial application
The standard is effective for annual periods beginning on or after April 1, 2018. The Group is currently evaluating the requirements and
impact of Ind AS 115 on its financial statements.
Ind AS 21 - Appendix B:
The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income
(or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the
transaction is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance
consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment
or receipt of advance consideration.
Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements
prospectively to all assets, expenses and income in its scope that are initially recognized on or after:
(i) The beginning of the reporting period in which the entity first applies the Appendix, or
(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in
which the entity first applies the Appendix.
The standard is effective for annual periods beginning on or after April 1, 2018. The Group is currently evaluating the requirements and
impact of the aforesaid on its financial statements.
180 | SUBEX LIMITED
Notes to the consolidated financial statements for the year ended March 31, 2018
42. 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 the 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 years and accordingly, is not
required to spend any amount during the current year for this purpose. Accordingly, the Company has not made any expenditure
during the year ended March, 2018. Subsequent to the year end, on April 20, 2018, the Company has voluntarily incurred an expense
of H 10 lakhs towards CSR activities.
43. The Group had remitted withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961
amounting to H 1,067 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, upon revision of withholding taxes returns, the Group has
adjusted withholding taxes of H 30 Lakhs (March 31, 2017: H 1,037 Lakhs) 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.
44. 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, 2018 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.
45. Previous year figures have been regrouped/ reclassified, wherever necessary to conform to current years’s classification.
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
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Director
DIN : 00239589
Nisha Dutt
Director
DIN : 06465957
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru
Date: May 04, 2018
Poornima Kamalaksh Prabhu
Director
DIN: 03114937
Place: Bengaluru
Date: May 04, 2018
Mehernaz Dalal
Chief Financial Officer
Annual Report 2017-18 | 181
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 24th ANNUAL GENERAL MEETING (AGM)
Date
July 31, 2018
Venue The “Grand Ball Room”, Hotel Lalit Ashok,
Kumara Krupa High Grounds, Bengaluru – 560 001
Time
2 PM
DATES OF BOOK CLOSURE
From July 25, 2018 to July 31, 2018 (both days inclusive).
BOARD MEETINGS & FINANCIAL CALENDAR
Financial year : April 01, 2018 to March 31, 2019
Calendar of Board Meetings to adopt the accounts
For quarter ending June 30,
2018
For quarter ending September
30, 2018
For quarter ending December
31, 2018
For the year ending March 31,
2019
– 4th week of July 2018
– 2nd week of November 2018
– 2nd week of February 2019
– 4th week of May 2019
DIVIDEND
The Directors have not proposed any dividend for the financial year
2017-18.
LISTING ON STOCK EXCHANGES
Equity Shares of the Company are quoted on the National Stock
Exchange of India Limited (NSE) since September 05, 2003 and on
the BSE Limited (BSE) since July 31, 2000. The Company has paid
listing fees for the year 2017-18 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 09, 2007.
During the year the outstanding amount of US$ 3.60 Million of the
Company’s US$ 127.721 million 5.70% Convertible Secured Bonds,
listed on the Singapore Exchange Securities Trading Limited since
July 10, 2012 was redeemed on July 07, 2017.
The stock codes of the Company at the Stock Exchanges are as
follows:
Name and address of the Stock
Exchange
Stock code
National Stock Exchange of India
Limited, 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
SUBEX
532348
SUBX
The International Securities Identification Number (ISIN) for the
Company’s Equity Shares in dematerialized form is INE754A01014.
CUSTODIAL FEE
Pursuant to the Securities and Exchange Board of India (SEBI)
Circular No. MRD/DoP/SE/Dep/Cir-4/2005 dated January 28,
2005 issuer companies are required to pay custodial fees to the
depositories with effect from April 01, 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 2017-18 to NSDL and CDSL on the basis of the number of
beneficial accounts maintained by them as on March 31, 2017.
STOCK MARKET DATA RELATING TO EQUITY SHARES LISTED IN INDIA
Average Monthly high and low quotes during each month in the
financial year 2017-18 as well as the volume of shares traded on
182 | SUBEX LIMITED
NSE and BSE are as under:
Month
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
NSE
BSE
Index Close Price
High* H
Low* H
High H
Low H
Sensex
(Closing price)
Nifty
(closing price)
11.58
11.32
9.97
10.57
9.02
8.86
8.58
8.77
8.73
11.39
9.43
8.44
11.12
10.87
9.70
10.04
8.62
8.54
8.30
8.40
8.37
10.51
8.93
8.14
11.59
11.31
9.95
10.58
9.02
8.85
8.59
8.73
8.76
11.37
9.43
8.43
11.12
10.88
9.72
10.04
8.63
8.57
8.30
8.41
8.38
10.52
8.94
8.13
29,695.83
30,420.07
31,144.68
31,879.61
31,772.23
31,887.12
32,397.64
33,395.14
33,424.40
34,989.42
34,287.04
33,323.32
9,214.57
9,436.99
9,606.95
9,850.12
9,901.18
9,977.92
10,138.68
10,324.75
10,322.26
10,771.15
10,533.11
10,232.63
*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
25
20
15
10
5
0
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Sensex-Avg close
Subex BSE
Annual Report 2017-18 | 183
15000
10000
5000
0
25
20
15
10
5
0
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Nifty - Avg Close
Subex NSE
CREDIT RATING
The India Ratings and Research organisation (Ind-Ra) in their letter dated July 20, 2017 made to the Company upgraded the Credit Rating
of Subex Limited from IND BBB+ to IND A-.
Instrument wise rating actions are mentioned below:
Instrument Type
Fund-based limits
Size of Issue (million)
Rating/Outlook
Rating Action
INR 956 (reduced from INR 1,148)
IND A-/Stable/IND A2+
Upgraded
Upgraded
Non-fund based limits*
INR180
IND A2+
*INR 145 million of the non-fund-based limits is interchangeable with the fund-based limits.
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, 2018
As on March 31, 2017
No. of share holders
% to total share holders
No. of share holders
% to total share holders
57,792
19,670
12,783
5,572
2,681
4,091
5,481
5,841
50.73
17.27
11.22
4.89
2.35
3.59
4.81
5.14
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
1,13,911
100.00
1,06,434
100.00
184 | SUBEX LIMITED
Categories of Shareholders:
Category
Public & Other (includes GDR’s and Foreign
Corporate Bodies)
As on March 31, 2018
As on March 31, 2017
No. of share
holders
Voting
strength %
No. of shares
held
No. of share
holders
Voting
strength %
No. of shares
held
112,577
78.66
442,070,413
105,041
78.17
396,248,254
Companies/ Indian Bodies Corporate
1,292
21.07
118,398,079
1,348
20.96
106,260,982
Core Promoters
Mutual Funds
ESOPs/ Employee shareholders
FII
TOTAL
3
Nil
39
Nil
0.17
Nil
0.10
Nil
974,044
Nil
560,399
Nil
3
Nil
41
1
0.19
Nil
0.12
0.56
974,044
Nil
617,700
2,806,956
1,13,911
100
562,002,935
1,06,434
100
506,907,936
R & T AGENTS AND SHARE TRANSFER SYSTEM
Canbank Computers Services Limited, J P Royale, 1st Floor, No.218,
2nd Main, Sampige Road (Near 14th Cross), Malleswaram, Bengaluru
- 560 003, were appointed as ‘Registrar and Transfer Agent’ both
in respect of shares held in physical form and dematerialized form
vide a tripartite agreement dated December 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,
Bengaluru - 560 003
Tel Nos. +91 80-23469661/62, 23469664/65
Fax Nos. +91 80-23469667/68
E-mail: canbankrta@ccsl.co.in
Website: www.canbankrta.com
SHARES HELD IN PHYSICAL AND DEMATERIALISED FORM
As on March 31, 2018, 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, 2018, the outstanding GDRs were 243,207.
During the year the outstanding amount of US$ 3.60 Million of the
Company’s US$ 127.721 million 5.70% Convertible Secured Bonds,
listed on the Singapore Exchange Securities Trading Limited since
July 10, 2012 was redeemed on July 07, 2017.
LOCATIONS
• Broomfield, CO 80021, USA
• Harrow, Middlesex, HA1 1JU, UK
• Burlington Square, Singapore
• Sharjah Airport International Free Zone, Sharjah, UAE
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
Annual Report 2017-18 | 185
hedging activities, as there is a natural hedge between exports
and imports.
ADDRESS FOR CORRESPONDENCE
For any queries, please write to:
INVESTOR GRIEVANCES
Details of the investor grievances received from the Registrar and
Transfer agent (RTA) for the period from April 01, 2017 to March 31,
2018 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.
Arjun Makhecha
Acting 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
Nature of complaints (excluding the
grievances received through E-mails 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
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 etc.
0
0
0
0
4
4
0
0
0
0
4
4
Notes
Notes
INDIA
Subex Limited
(CIN: L85110KA1994PLCO16663)
Regd. office: RMZ Ecoworld,
Devarabisanahalli, Outer Ring Road
Bengaluru - 560103, India
Tel: +91 80 6659 8700
Fax: +91 80 6696 3333
USA
Subex Inc.
12303 Airport Way, Bldg. 1,
Suite. 390, Broomfield, CO 80021
Tel: +1 303 301 6200
Fax: +1 303 301 6201
UK
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
Subex (Asia Pacific) Pte Limited
175A Bencoolen Street
#08-03 Burlington Square
Singapore - 189650
Tel: +65 6338 1218
Fax: +65 6338 1216
Middle East
Subex Middle East (FZE)
Executive Desk Q1-04-098/B,
P.O. Box: 513156,
Sharjah Airport International
Free Zone, Sharjah, UAE
Canada
Subex Americas Inc.
C/O BDO Canada LLP,
5494, Manotick Main Street
Box. 918, Manotick, Ontario
Canada, K4M1A8
Regional offices: Dubai | Ipswich