001 Overview
002 Strategic Framework
002 Investor Fact sheet
004 A Note to Shareholders
006 Strategic Report
006 Our Business at glance
007 Financial Highlights
008 Products & Services
010 Chief Executive’s Strategic
View
012 Focusing on Consistent
Growth and Shareholder
Value
013 Winning in Newer Horizons
014 IoT Security: Poised for
Exponential Growth
015 Where We Operate
016 Subex – Making a Difference
Together
017 Governance
017 Board of Directors
018 Leadership Team
019 Board’s Report
043 Corporate Governance
Report
059 Management Discussion and
Analysis
076 Standalone Financial
Statements
129 Consolidated Financial
Statements
180 Shareholder Information
Contents
Forward-looking statement
In this Annual Report we have disclosed
forward-looking information to enable
investors to comprehend our prospects and
take informed investment decisions. This report
and other statements - written and oral - that
we periodically make, contain forward-looking
statements that set out anticipated results based
on the management’s plans and assumptions.
We have tried, wherever possible, to identify
such statements by using words such as
‘anticipates’, ‘estimates’, ‘expects’, ‘projects’,
‘intends’, ‘plans’, ‘believes’ and words of similar
substance in connection with any discussion
of future performance. We cannot guarantee
that these forward-looking statements will be
realised, although we believe we have been
prudent in assumptions. The achievement of
results is subject to risks, uncertainties and
even inaccurate assumptions. Should known or
unknown risks or uncertainties materialise, or
should underlying assumptions prove inaccurate,
actual results could vary materially from those
anticipated, estimated or projected. Readers
should bear this in mind. We undertake no
obligation to publicly update any forward-
looking statements, whether as a result of new
information, future events or otherwise.
Broadening
The Horizon
WITH AN EXPERIENCE
SPANNING OVER
A QUARTER-
CENTURY, SUBEX HAS
ESTABLISHED ITSELF AS
THE GLOBAL LEADER IN
TELECOM ANALYTICS.
During this period, we have worked with
the world’s largest telcos, helping them
save billions of Dollars. In the process,
we recognised how multiple other
verticals faced similar challenges we
could help alleviate, and this marked the
beginning of our foray into newer areas,
essentially broadening our horizon.
Through our extensive experience of
handling massive volumes of data,
we have been successful in building
a robust platform that can meet the
demanding nature of the digital era. This
has allowed us to develop capabilities
towards being the pioneers of Digital
Trust, to meet the emerging needs
of the digital business ecosystem. As
we move into our next phase, we will
leverage these capabilities to meet the
growing needs of businesses across
multiple verticals such as IoT, Fintech
and Retail to name a few. With the
need for Digital Trust increasing across
multiple industries, Subex is poised to
address their requirements, paving the
way for our next wave of sustainable
growth. This multi-vertical strategy will
enable us to build upon our decades of
experience to make Digital Trust as a key
enabler, helping businesses to succeed
and grow.
Strategic Framework
Our Purpose
Our Vision
Our Goals
Our Strategy
Experience the thrill of unlocking possibilities
Be the world leader in Digital Trust
Vibrant Subex
Revenue Growth
3 Horizon Strategy for Growth
Enhance the Core
Revenue Assurance
Fraud Management
Asset Assurance
Partner Management
Network Analytics
Growth in New Areas
IoT Security
Analytics
Invest in Emerging Areas
(Multi-Vertical SaaS)
CrunchMetrics
Digital Identity
Our Values
Think
Customer
Make It
Happen
Deliver
Value
Be Open.
Be Fair.
Win
Together
Investor Fact Sheet
Global Communications Service Providers maximise their revenues and profitability. Having served the market over the last 2 decades by
providing world-class solutions for business optimisation and analytics, Subex is now leading the way by enabling all-round Digital Trust
in the business ecosystems of its customers. Focusing on privacy, security, risk mitigation, predictability and confidence in data, Subex
helps businesses embrace the disruptive changes in the business landscape, and succeed with Digital Trust.
, Subex has spent 25 years in helping
Shareholding Pattern (%)
Mar’19
Top shareholders >1 (%)
Mar’19
IT Software Products
SUBEX | 532348
SUBEX
Stock Profile
Sector
BSE
NSE
Incorporated
Issued Shares (Cr)
Share Price* (H)
Market Cap* (H Cr)
52-week H/L Range (H)
Float as % of O/S Shares
*Share price and market cap (BSE) as on May 14, 2019
56.20
6.99
391.72
8.01 - 4.40
90%
Valuation Mar ’19
Price /Earnings (x)
EV/Sales (x)
EV/ EBITDA (x)
*Source: Thomson One
14.0
1.1
9.3
002 | SUBEX LIMITED
Promoters - 0.08%
Public - 97.02%
Non Promoter-Non Public - 1.99%
UNO Metals Ltd. - 3.46%
AKG Finvest Ltd. - 3.30%
Stock Holding Corporation of India Ltd. - 1.19%
1994
Formation of the
Company
25
Years of Experience
800+
Employees
300+
Global Installations
90+
Countries
200+
Customers Globally
35+
Industry Awards
US$ 2 mn
R&D spend
in new areas
US$ 55 mn
Order Intake in FY19
Investment Highlights
Pioneers in the space of Digital Trust
Leading player in the telecommunication
space focusing on products to
communications service providers (CSPs)
globally to drive digital transformation
and competitive differentiation
Making strong inroads in the multi
vertical IoT Security space; IoT Security
Market is expected to touch US$ 4.5
billion by 2022
Sticky Revenue Model with long client
relationship
Investing heavily in newer areas like
Digital Trust and AI/ML, Deep learning
based anomaly detection
Passionate and committed team led by
new CEO Vinod Kumar Padmanabhan with
clear focus to put the Company on growth
track
Zero debt with operating cash flow of H55
Incubating virtual startups within the
Crore
organisation to diversify into new areas
and verticals
New initiatives expected to impact
revenue growth starting FY20
Annual Report 2018-19 | 003
It gives me great pleasure to
address and update you on the
progress made by Subex in the last
financial year.
The two areas of focus that were of primary importance
to me since I took over the role of CEO in last year was
revenue growth and a vibrant Subex. And to do this,
we rediscovered our purpose, values and set our vision
to be the largest player globally in the space of Digital
Trust. This vision further dovetailed into our three-
horizon strategy wherein horizon 1 consisted of our
core areas; horizon 2 consisted of high-growth areas of
IoT security and analytics; and horizon 3 consisted of
aspirational areas of automated multi-vertical anomaly
detection and digital identity.
I am happy to announce that both from a strategy and
execution perspective, we did well during the course
of last year. We closed the year with revenue of H348
cr which was a growth of 7.3% over the corresponding
number of H324 cr in the last fiscal year. The Profit
After Tax also saw a jump of 21.7% to finish the year at
H25.2 cr. While we do understand that these are small
beginnings, what gives us confidence is the fact that
our outlined strategy is definitely taking shape and we
see a strong traction for growth going into the next
fiscal year.
Let me provide you a brief view of how we did in each
of these horizons. The market segment of telecom
BSS i.e. Business Support Systems software that
predominantly covers horizon 1 areas is expected to
remain flat. As a global leader in most of the areas
that we operate in this segment, our effort was to
perform better by increasing our market share with
differentiated offerings. We embedded purpose-built
AI/ML into our products, leveraged technology to
Dear
Shareholders,
004 | SUBEX LIMITED
A NOTE TO SHAREHOLDERS 7.3%
growth over the
corresponding
number of H324 cr in
the last fiscal.
However, the proof of the pudding is the fact
that we have met the internal target of US$5
million contracted business in the very first
year of operation on horizon 2 products.
effectively manage huge data volumes,
compute requirements, and thereby
created significant competitive advantage
during the course of last year. We are
competing very well with a strong
pipeline of new opportunities further
strengthened by a phenomenal last
quarter that resulted in a 30% increase
in new business bookings over the
previous year. The Q4 FY19 results reflect
the impact of these higher new business
bookings.
Horizon 2 is our key growth area at the
moment. With this target, our intent was
not only build on the initial advantage that
we have from a technology perspective
but also increase the coverage of as many
segments as possible. Towards this end,
we have secured customers in a diverse
range of verticals like smart cities, oil and
gas, connected cars, manufacturing and
IoT connectivity providers to name a few.
Our honeypot lab has been enhanced
and we have also carefully extended it to
top research facilities in Singapore, Dubai
and Europe. This proactive approach of
generating threat signature is becoming
a key differentiator of our digital security
solution. ACT our Analytics Center of Trust,
the other product offering in the horizon
2 portfolio has now been extended to two
customers and both are being driven very
strategically at this point.
However, the proof of the pudding is the
fact that we have met the internal target
of US$5 million contracted business in the
very first year of operation on horizon 2
products.
On horizon 3, which is the aspirational
areas, we are working on much larger use
cases and have launched CrunchMetrics,
an AI/ML based multi-vertical anomaly
detection in January this year. After
successful completion of PoCs, we have
now started engagement with two Tier 1
telcos in Europe and APAC. We have also
started POC with a large Fintech player
in India and are confident of showing
good results soon. The second product
in horizon 3 addresses digital identity
management, and this product will be
ready for launch in the first quarter of FY
20.
Subexians, our people continue to be
the greatest asset to Subex. I am pleased
to announce that we have added some
exceptional talent during the course
of this year. We brought a new COO,
CFO and a Company Secretary. We also
strengthened the domain and business
consulting side by bringing heavyweights
in the industry with over 20 years of
hands-on experience. We now have a
well-oiled team that is committed to
drive the growth strategy. We have also
executed the first phase of ESOP allocation
and have all key Subexians covered.
So, what does the future hold for us?
Based on the market reaction and general
feedback, our growth strategy seems to
be right and on mark. Our focus going
forward will be on execution of this
growth strategy. There are three key
global trends that we are tracking and
intent to leverage for our growth. The first
is increasing importance of Digital Trust,;
second, the onset of 5G and mobile-edge
computing and finally digital identity
becoming central to digital economy. With
access to state-of-the-art technology and
also the biggest bank of digital threat
signature and extensive coverage, we
believe we are well positioned in our
pursuit of being the leader in Digital Trust.
We intend to invest heavily to scale the
coverage, both on the technology and
market coverage factor to drive value
not only to our customers but also to our
associates and shareholders.
Finally, I want to place my deep
appreciation to the Board who stood
behind us and supported us in every
step of this long and exciting journey in
front of us. My thanks are also due to the
Subexians, without whose commitment
and zeal we will find it hard to accomplish
the growth targets in front of us.
“A journey well begun is half done”,
goes the saying. We believe we are in that
spot and I am confident that the remaining
part of the journey will be one that we will
cherish in the foreseeable future.
Warm regards,
Vinod Kumar Padmanabhan
Managing Director
& Chief Executive Officer
Annual Report 2018-19 | 005
S T R A T E G I C R E P O R T
Our Business
at a Glance
Digitalisation has changed our lives in
more ways than we can imagine. What
makes it even more interesting is the
pace of these changes and their impact
on businesses. Today, status quo is
transient and does not ensure security
or leadership in the market. Businesses
face the risk of obsolescence if they fail
to innovate or adapt and hence there is
a need to be ahead of the curve in every
aspect of business – be it technology,
business models, strategy or customer
engagement.
In this backdrop, the one aspect that lies
at the intersection of opportunities, risks
and vulnerabilities is Trust. Trust is the
centerpiece for every interaction on a
personal, societal and business level —
in both traditional and digital business
models.
With the lines blurring between the
digital and physical worlds, multiple
disparate elements like people, processes
and products come together to work in
tandem. Digital Business revolves around
agile and ephemeral digital interactions
and leverages digital supply chains that
are established dynamically to enable
each interaction. In such a scenario Digital
Trust becomes the key enabler for high-
quality digital interactions by measuring
and quantifying expectations of an entity
– specifically validating who or what it
claims to be, and if it will behave in an
expected manner within a digital business
transaction. Digital Trust is viewed as the
lifeblood or currency of digital business,
and it wraps around every aspect of
digital business.
As an organisation handling huge
volumes of data from different sources,
structures and at varying velocities for
more than two decades, Subex is well
poised to help businesses leverage
Digital Trust to succeed in the digital
era. Focusing on privacy, security, risk
mitigation, predictability and confidence
in data, Subex leverages its world-class
software suite to help organisations
infuse Digital Trust into their ecosystems.
Subex helps drive Digital Trust across
multiple dimensions addressing
Transactional Trust, Competence Trust
and Representational Trust across its
customers’ businesses, consumers and
partners. Addressing each of these
dimensions of trust is necessary to create
an all-encompassing, robust and fail-
proof framework for Digital Trust, and
our portfolio of products and solutions is
designed to do exactly that.
To summarise, multi-dimensional, multi-
directional Digital Trust is the key to
succeed in the digital era, and Subex is
leading the way by enabling businesses
create inspiring digital experiences.
006 | SUBEX LIMITED
Financial
Highlights
Revenues (H Cr)
0
6
3
7
5
3
2
2
3
4
2
3
Gross Margin (%)
EBITDA Margin (%)
8
4
3
0
6
8
5
7
5
8
7 5
5
6
2
3
2
2
2
6
1
5
1
FY15 FY16 FY17 FY18 FY19
FY15 FY16 FY17 FY18 FY19
FY15 FY16 FY17 FY18 FY19
Annual Report 2018-19 | 007
Products
& Services
ROC Revenue
Assurance
ROC Fraud
Management
Provides a comprehensive view
of an enterprise by providing
better visibility into risks
surrounding operations, revenue
and margins.
Built around big data and focused
analytics capabilities, the solution
addresses the new, complex
and critical challenges faced
by Revenue Assurance teams
globally.
Built to increase fraud prevention
by eliminating known frauds,
uncovering new fraud patterns,
minimising fraud run time,
augmenting internal controls,
and supporting continuous
fraud management process
improvements.
Combines traditional rules
engine, advanced AI/ML
capabilities and scalable
architecture to ensure proactive
detection of fraudulent activities
on the network
Ensures that the system can
be easily integrated with the
ecosystem by utilising readily
deployable interfaces
ACT (Analytics
Center of Trust)
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
Helps operators drive effective
operations, enables near real-
time detection and accelerates
leakage recovery cycles
Provides an end-to-end analytics
framework to ensure a successful
Analytics Journey
Ensures the right analytics
strategy by establishing CSPs
current maturity, defining the
business vision, and identifying
the required road map
Delivers real-time insights on
the shifts in trends across the
spectrum through a trusted
information infrastructure
powered by AI/ML Capabilities
Provides Analytics as a Service
to deliver actionable business
intelligence around Product,
Customer, Risk and Revenue
008 | SUBEX LIMITED
ROC Network
Asset
Management
Helps operators save millions
of dollars through its analytics-
driven asset harvesting insights
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
life cycle management through
its AI/ML-based capabilities
ROC Capacity
Management
ROC Partner
Management
Provides proactive, actionable
business intelligence with the
power of AI/ML capabilities to
make appropriate investments in
maximising network capacity
Gleans insights from network
capacity trends
Helps identify capacity ‘hot-
spots’ and predict ‘time-to-
exhaustion’
Correlates end-to-end capacity
issues
Forecasts lead time for capacity
exhaustion scenarios
Provides a 360-degree view
of the partner ecosystem by
providing detailed profiles of
partner agreements based on
data such as revenue sharing and
margins
Ensures swift partner on-
boarding, partner self-care,
end-to-end revenue visibility
and seamless communication
between business partners
Subex
Secure
Crunch
Metrics
Offers comprehensive IoT security
Advanced anomaly detection
from real-time discovery and
monitoring to response and
recovery
system that helps organisations
discover business opportunities
and mitigate risks in real-time.
Leverages a one of its kind
Leverages the combined power
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
new and emerging IoT threats
of statistics, Artificial Intelligence
(AI) and Machine Learning (ML)
to identify anomalies that are
a representation of business
impact.
ROC Partner
Settlement
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
Opens new business models
for complex variable pricing,
bandwidth trading and VoIP
services
Enables telcos to track roaming
records and conduct end to end
roaming settlements
Zero-touch supplier invoice
reconciliation and dispute
management capabilities for
complete automation of complex
manual processes
Annual Report 2018-19 | 009
Chief Executive’s
Strategic View
Q: What would you consider
as the most important
accomplishments of the past
year?
A. Our single most important goal in
the past year was to focus on growth.
Equipped with the freedom to explore,
we rediscovered our purpose, values
and vision to become the largest global
provider of digital trust across all domains.
The growth path we charted which would
be a move from a telecom business
analytics optimisation provider to a
globally recognised digital trust player is
indeed an ambitious journey. However,
our confidence lies in our strong
internal capabilities in terms
of engineering and product
A conversation
with Vinod Kumar
Padmanabhan,
MD & CEO
developments, backed by a
passionate set of Subexians
(our employees).
We translated our vision
into a three-horizon strategy
where Horizon 1 would be our
core products, Horizon 2 would
involve newly launched products
with huge potential and Horizon 3
would aim at aspirational growth areas
and big impact use cases. To execute
our strategy, we needed a great team
and to that extend we have done a great
job aligning out team, bringing in the
right new talents wherever required and
getting them motivated behind our vision.
Q: How are you executing this
three-horizon growth strategy
and what factors give you
confidence?
A. A clear strategy makes execution
easier. Going by the progress we have
made during the first leg of executions,
by performing extremely well via new
business acquisitions, it appears that our
growth strategy is working. Our game plan
is to pursue a more aggressive growth
strategy and we will do this by fast-
tracking selected components for rapid
growth.
Our strategy has been broken down
to specific Annual Operating Plans
(AOPs), which is further simplified into
what each team will have to work on.
The initiation of an OKR system which
explores objective and key result areas to
be achieved in 90 days helps in keeping
the focus on vital goals, amidst daily
operational compulsions.
For example, within our Horizon 1
strategy, since growth within the space
is slow, it is very clear that we have to go
after improving existing market share.
In the past year, we have done precisely
that. Our new business acquisition was
the strongest in Q4, which resulted in a
30% increase in yearly order booking.
In Horizon 2, we are building on the
competitive advantage that we have,
particularly in the IoT security space.
We have enhanced and extended our
honeypot to top research institutions
in Singapore, Spain and the UAE. Our
confidence is further strengthened by the
success with respect to both contracted
bookings and revenue in the very first
year of operations of these products. The
approach of incubating new ideas as a
virtual startup within the organisation
and then using our existing field and sales
set-up to quickly scale is working well for
us. This is our advantage when compared
to new startups out there.
Q: What are the three most
important industry drivers
that make Subex a partner of
choice?
A. Digital security is becoming a major
issue globally. The World Economic Forum
identifies cyber and digital security
threats as one of the key global risks
along with climate change, inequality, etc.
010 | SUBEX LIMITED
We are seeing an infusion of IoT even in
critical infrastructure and this raises the
digital threat to an even higher and critical
level. All these will result in the rapid
growth of the digital security market.
Secondly, digital trust. Digital is being
intensified across all spheres, and this will
propel digital trust to become a key pillar
within the digital economy. IDC defines
digital trust as the enabling of decisions
made between two or more entities based
on each entity’s digital reputation and
assurance levels. In the present scenario,
if digital trust is not taken care of, the
entire digital economy can crumble.
Moreover, smart companies will use
digital trust as a competitive advantage.
With Subex having built a comprehensive
portfolio around digital trust, we will be
able to ride that wave successfully.
Thirdly, 5G and its opening up of the
economy across several spheres. It
is essential to understand that 5G’s
impact will not be limited to the Telecom
segment alone but will open up several
sectors within the economy through
digitalisation and intelligent connectivity.
While the advent of 4G brought on
successful platforms such as Uber, Airbnb,
and Swiggy, 5G with its high bandwidth
availability, astonishing speeds and low
latency, will open up the economy to
several use cases that we at this point
can’t even imagine. Subex will be at the
forefront helping Telcos and other digital
service providers take their products to
the market.
Q: What will you outline as the
key growth areas for Subex?
A. Our performance in Horizon 1 last
year, with our core products, has been
exceptional and we will take on a more
aggressive outlook to expand our market
share. We will go after the smaller players
in this fragmented market with our
enhanced portfolio. This should result in
a growth rate higher that what we had
last year. The biggest growth drivers,
the status of being a world leader in
this space. As a part of our new growth
strategy, we are looking at a much
larger use case to be implemented in
multi-vertical domains. Our Horizon 2
and 3 products, such as IoT security and
Anomaly detection caters to an extremely
large and growing market segments,
which will result in our company growing
significantly larger. Successful execution
of this strategy will create substantial
value for all stakeholders – our customers,
our shareholders and Subexians. Vital
to success will be the execution of our
growth strategy and we look forward
to continued support from all our
stakeholders.
Q: How have you
strengthened corporate
governance and shareholder
communication?
At Subex, we strongly believe that the
spirit of corporate governance should
stretch beyond the statutory form.
Corporate governance serves as a key
driver of sustainable corporate growth
and long-term value creation for the
stakeholders along with the protection
of their interests. Subex has a strong and
independent board which follows the
highest level of governance. Last year, we
had stepped up our communication with
our investors with half yearly investor
calls. We intend to move this to quarterly
calls and propose to engage with our
investors on a more frequent basis where
we will provide regular updates on the
business and outlook of the Company.
however, will be the Horizon 2 products
consisting of IoT Security and Analytics.
These products have already been proved
in the market place and we are all set to
leverage the large market expansion.
This is where our near-term growth will
come from. Our long-term growth, for the
next 3-5 years, will be from the sustained
growth of existing Horizon 2 products
and newly launched Horizon 3 products.
The subscription-based revenue from
these products will start contributing
significantly in the next couple of years.
Q: How is Subex placed with
respect to attracting and
retaining talent?
A. Subex is currently poised to take its
products globally, and all IPs we create
for our products and solutions will follow
the guidelines of catering to a global
audience. Secondly, it is important to note
that Subex caters to some of the largest
global enterprises. We currently cater
to about 75% of the largest telecoms
in the world. This equips us with the
ability to quickly scale solutions in this
large open space, among some of our
largest clients. Thirdly, Subex brings to
the table the advantage of access to a
large amount of data, which significantly
helps to run successful AI and ML models.
Finally, Subex offers a unique, open and
passionate culture, which forms the core
of our success. All new Subexians are
amazed by the refreshing nature of our
open culture. As one of the early product
companies, with more than two decades
of innovation, Subex offers exciting
opportunities for aspirational candidates.
Q: Where do you see Subex
creating wealth in the long
term?
A. Subex in the past has worked in the
niche but vitally important segment
of business optimisation within Telco.
We have done a great job and got to
http://reports.weforum.org/global-risks-2018/
global-risks-2018-fractures-fears-and-failures/
https://www.idc.com/getdoc.
jsp?containerId=US43986218
Annual Report 2018-19 | 011
Focusing on Consistent Growth
and Shareholder Value
FY 18-19 coming down to 100 days versus
120 days in FY 17-18. Efficient collection
of receivables and optimal utilisation of
cash has helped us report good growth in
operating cash flow and improved Days
Sales Outstanding (DSO).
Having come out of the FCCB loans
and related overhang which was on
the balance sheet of the Company, we
have started work on strengthening
your company’s balance sheet and the
liquidity. This will help us make necessary
organic and inorganic investments to
sustain the growth. During FY 19, in line
with our values of “Make It Happen”, we
bolstered our digital business by investing
close to H14.7 Crores in IoT security and
Analytics offerings. These investments
will provide us the impetus and platform
for the growth we are expecting in
these new businesses. In January 2019,
company launched our new product
“CrunchMetrics” which is an AI/ML based
anomaly detection analytics solution for
business incident discovery.
Subex has a broad range of stakeholders
including clients, shareholders, creditors
and regulators. With our financial
performance becoming stable and with
the positive business momentum as
we exit FY 2018-19, we have started
engaging with our investors and will step
up our investor relations efforts in the
coming year. We will be having regular
quarterly investor calls as we announce
our quarterly results every quarter and
we will meet with potential Investors be
it family offices, institutional and high net
worth investors, to help step up sustained
long-term interest in the Subex stock.
I feel honored to bring it to your
knowledge that in January 2019, your
company has paid off Working capital
loans from its banking partners in entirety
and Subex is now a completely Debt-free
company.
In conversation with
Venkatraman G S,
Chief Financial Officer
Focusing on consistent growth
and shareholder value
As we continue to execute on the
strategies laid out of focusing on the
three-horizon strategy as explained by
Vinod Kumar Padmanabhan, our CEO,
I wanted to provide an update on the
financial performance of the Company.
Your company returned a decent
performance for the financial year 2018-
19. Consolidated revenue grew to H34,812
lakhs in FY 19, up from Rs.32,432 lakhs
in FY 18, which is 7.3% over the previous
year, and net profits after tax grew by
21.7% in FY 19 over the previous year.
Revenue increased due to growth in our
core business, also aided by favorable
currency movements. EBITDA has
remained strong at 15% and Return on
Capital Employed (ROCE) is at 5.8%.
In terms of cash flows of the Company,
EBITDA to Operating Cash flow grew to
85% in FY 19 from 40% in FY 18 and
EBITDA to Free Cash Flow grew to 79% in
FY 19 from 34% in FY 18, this has resulted
in our Days Sales Outstanding (DSO) for
Your company continues to give back
to the society through Subex Charitable
Trust. Other sections of this annual report
highlight the initiatives and activities
taken up by Subex in our effort to be
responsible corporate citizens.
012 | SUBEX LIMITED
We remain dedicated to enhancing
transparency and to maintain disclosure to
shareholders through various additional
disclosures such as Board’s Report,
Management Discussion and Analysis,
Consolidated and Standalone Ind-AS
financials and Shareholder’s Information.
Outlook for FY 2019–20
Your company’s rate of growth has been
consistent year on year basis and we
expect to continue this growth momentum
for FY 20. In addition to our continuous
efforts on delivery and operational
efficiencies to improve margins, the
Company will be increasingly focusing on
business which will help us solidify our
position of being a leader in digital trust
solutions.
Our diversified client base has contributed
to a more stable revenue stream. On
the cost front, company is constantly
monitoring and controlling IT costs
using Cloud technology. At the same
time, company will continue to focus
on significant costs including Payroll
and Travel costs and look at ways to
optimise this further. These initiatives
will help support the Company to sustain
profitability as the focus remains on
growth in our chosen areas.
In the coming year we will look to address
our large equity capital base and make
the balance sheet lighter, so that size of
the balance sheet is commensurate to the
size of our current business.
I would like to personally thank our
outstanding Finance, Procurement,
Secretarial, and Legal teams, which
I am proud to lead. Their dedication,
adaptability and commitment towards
continuous development helps in
achieving outstanding results for Subex
and our stakeholders.
I feel honored to have taken over the
role of Chief Financial Officer from
December 2018, and I pledge to be an
effective partner to our business leaders.
I’m grateful to all our investors for your
patience and trust. Your support helps
Subex become a stronger company every
day.
Winning in
Newer Horizons
In conversation with
Rohit Maheshwari,
Head of Strategy &
Product
Winning in newer horizons
We are living in the new age of
inventions.
Digital transformation, increasing
adoption of artificial intelligence and
machine learning (AI/ML) and dramatic
increase in availability of cheap and
powerful compute is enabling business
disruption at a speed we have never seen
before.
Innovation has become a must-have
strategy for enterprise success in an ever-
changing technological environment.
The need for democratising artificial
intelligence/machine learning (AI/
ML) services has risen, and the industry
has been going through large-scale
automation.
5G, with its promise of low latency, high
bandwidth connectivity with capacity to
handle a very large number of devices has
the promise to impact every industry.
A doorway to new use cases
The emergence of 5G as an enabler for
innovation has had a positive impact on
our own portfolio. By providing us with
more opportunities to work on solutions
like network asset management, capacity
management, IoT security and digital
partner management, investment in 5G
has become a strategy that we feel can
greatly expand our business horizons.
5G Technology allows us to cater to a
much larger audience of very interesting
use cases. As a result, with the
advantages of our past investments, our
play on digital identity, digital trust and
security, we are fully equipped to compete
in the market. Our significant investments
in R&D, will provide our customers with
solutions from the extreme disruption that
5G has created.
Dynamism at an all-time high
The world seems to have moved beyond
the hype of crypto currencies and we are
now seeing exploratory work to identify a
number of interesting business use cases
of Blockchain. We are actively involved
in exploring with digital service provider
consortiums to build Blockchain based
partner management solution.
We are also witnessing an increasing
adoption of Open Source software to
accelerate innovation. A challenge that
continues to remain, however, is the
stitching together of multiple open source
software into one cohesive platform or
solutions. We believe that by making the
best of open source and combining this
with our domain understanding of the
problem, we are well equipped to quickly
identify, build and deploy innovative
solutions.
Enterprises are now collecting and
organising increasing amounts of data to
perform business analytics. Paradoxically
this continued increase in data volumes
and data sets is becoming a barrier
for enterprises to take full advantage.
Traditional methods like dashboards
and reports are now getting replaced by
augmented analytics. Indeed, augmented
analytics is poised to become a long-
term market trend with a potential to
grow into a $50 billion market by 2026.
Subex has entered this space through its
SaaS-based augmented analytics solution,
CrunchMetrics. Marking our entry into
many new sectors, we believe that we
are now strongly positioned to gain great
market share in the near future.
Building and evolving Machine Learning
(ML) models is a challenging and time-
consuming process. There clearly is a need
to automate feature engineering, model
building and model implementation, thus
making ML accessible to increasing set
of customers. Subex is very focused on
automating the complete data analytics
pipeline in all our products. As our
business diversifies into new verticals,
we see this as a very powerful gateway
into sectors beyond telecom, like financial
technology, e-commerce, insurance
and other financial services. While we
are already the market leaders of fraud
management in telecom, we are keen
to explore other verticals and emerge
successful in them as well.
With respect to digital identity, this year
has been a watershed one for industries
in cyber security. The way individuals and
enterprises currently protect accounts
and information is becoming history
as synthetic IDs, stolen accounts, deep
fakes and password thefts increasingly
make the headlines. Organisations are
beginning to question the credibility
of the identity of the person/bot
they interact with, and here, we see
opportunities for technology in verifying
digital identities.
Towards continued leadership
The coming years have in store unlimited
opportunities that allow us a huge
potential to expand. We at Subex are
committed to continue to provide
value to our customers by persistently
pursuing the shortest and surest paths to
innovation. Our ability to effectively tap
newer developments makes us confident
that in the future, we will continue to lead
in more than just the telecom industry.
Annual Report 2018-19 | 013
IoT Security:
Poised for Exponential Growth
IoT Security: Poised for
exponential growth
IoT Security has been a strong growth
area for Subex. This year, we grew our
revenues considerably and are looking
at a strong order book in the year ahead.
Our strategy to be a multi-vertical player
has paid us rich dividends. We have
broken ground in verticals such as oil
and gas, smart cities, connected cars and
manufacturing while deepening market
traction in traditional verticals such as
telecom. The new verticals have given
us a substantial set of use cases and out
of the box solutions to address common
pain points connected with each of them.
We intend to replicate and use these
learnings to pursue and engage future
accounts.
One of Subex’s strengths has been our
presence in the telecom vertical. Our
engagements with Pod and Telefonica
bear testament to the depth and breadth
of our engagement with telcos . As telcos
provide connectivity to a significant
proportion of IoT devices, Subex aims to
leverage these relationships to become
the largest IoT security provider.
This year also saw the launch of a new
suite of products to augment our existing
fraud management solution. Designed
keeping the convergence of security and
fraud at most of our telco customers in
mind, our digital fraud prevention suite
can, not only detect but also prevent
instances of fraud by being directly
linked to the network. The suite can also
increase the coverage of an existing fraud
prevention team from voice, data and
fraud management services to digital
services such as IPTV, marketplace etc.,
being rolled out by telcos.
We have also moved into 5G security.
Through critical partnerships and other
efforts, we were able to log our first win
in this space. This has also placed us in a
very strong position to ride the impending
5G wave and we are positively excited
about it.
The competitive landscape has changed
considerably in the last year with the
emergence of well-funded start-ups and
due to large cyber security companies
moving into IoT security. To compound
this, we are competing with different
players in each vertical.
Our investments in the last 4 years
to derive organically generated
threat intelligence is among our key
differentiators allowing Subex to win in
the marketplace. Platform enhancements
are in the works in key areas to keep
the product ahead of market trends and
aligned to emergent customer needs.
Our focus on Artificial Intelligence and
Machine Learning is another sales driver
for us. Our research collaboration with
universities around the world is another
area of focus for Subex.
According to credible estimates, IoT
security is expected to grow by 680% to
become a $680 Billion industry. Subex
intends to be a dominant player in this
space. Our advantage drawn from being
an early mover alongside our focused
efforts, investments and collaboration
have held us in good stead thus far. We
will continue to work towards maintaining
and improving our position to deliver
exponential value to our customers and
growth to the Company and specifically
our shareholders.
In conversation with
Kiran Zachariah,
Head of IoT Security
According to credible
estimates, IoT security is
expected to grow by 680%
to become a $680 Billion
industry. Subex intends to
be a dominant player in
this space.
014 | SUBEX LIMITED
Where we
operate
90+
Countries
200+
Customers
300+
Installations
Annual Report 2018-19 | 015
SUBEX -
MAKING A DIFFERENCE
TOGETHER
Subex Charitable Trust (SCT) is a non-
profit trust that mobilises employee
participation in community projects. SCT
was set up to provide for welfare activities
for the under privileged and the needy
in the society. 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. SCT is managed by
trustees elected amongst the employees
of the Company.
During the year
Vocational training for 25 Blind/
Disabled Women: SCT tied up with
Prerana Resource Centre for providing
vocational training to visually impaired
and disabled orphan teenage girls. As
part of this program, 25 girls have been
provided vocational training to enable
them to attain work opportunities
across various industries.
SCT has contributed towards the
‘Nurture Merit Programme’. The
programme provides scholarships to
economically challenged students from
rural areas
During Kerala and Kodagu floods, SCT
also stepped in to help the flood victims
by collecting flood relief materials and
ensured that it was sent to victims
through army trucks.
016 | SUBEX LIMITED
Board of
directors
Anil Singhvi
Chairman & Independent Director
Nisha Dutt
Independent Director
Poornima Prabhu
Independent Director
George Zacharias
Independent Director
Vinod Kumar Padmanabhan
Managing Director
& Chief Executive Officer
Annual Report 2018-19 | 017
leadership
team
Vinod Kumar
Padmanabhan
Managing Director & Chief
Executive Officer
Shankar Roddam
Chief Operating Officer
Venkatraman G S
Chief Financial Officer
Mohan Sitharam
Chief Human Resources Officer
Rohit Maheshwari
Head of Strategy & Products
Kiran Zachariah
Head of IoT Security
Suraj Balachandran
Head of Sales – EMEA & APAC
Mark Bourgoin
Vice President – Americas
018 | SUBEX LIMITED
BOARD’S REPORT
Dear members
Your Directors have pleasure in presenting the 25th Annual Report of the Company on the business and operations together with the
audited results for the year ended March 31, 2019.
1. FINANCIAL RESULTS
The Company’s financial performance for the year ended March 31, 2019 is summarized as below:
(H in Lakhs)
Particulars
Total Revenue
Share of profit/(loss) net
Other Income
Finance Cost
Profit/(Loss) before Exceptional items & tax expense
Exceptional Items
Profit/(Loss) before tax
Tax expenses
Profit/ (Loss) after tax
Other comprehensive income
a) to be reclassified to profit or loss in subsequent periods
b) not to be reclassified to profit or loss in subsequent periods
Total comprehensive income for the year
2. RESULTS OF OPERATIONS
During the financial year ended March 31, 2019, the total revenue
on a standalone basis was H1,916 lakhs as against the revenue
for the previous year which was H17,993 Lakhs. The Company has
during the year under review incurred a loss of H2,453 lakhs as
against a profit of H32 lakhs in the previous year.
On a consolidated basis, the total revenue stood at H34,812 lakhs
as against H32,432 lakhs during the previous year. The profit for
the financial year 2018-19 was H2,522 lakhs as against a profit of
H2,068 lakhs in the previous year.
3. DIVIDEND
The Directors have not proposed any dividend to be paid for the
financial year 2018-19.
4. RESERVES
The Company does not propose to transfer amounts to the
general reserve out of the amount available for appropriation. The
total earnings of H2,094 lakhs available with the Company on a
consolidated basis is proposed to be retained in the statement of
profit and loss.
5. SHARE CAPITAL
As at March 31, 2019 and as at the date of this report, the authorized
share capital of the Company was H5,900,000,000 (Rupees Five
Consolidated
Standalone
2018-19
2017-18
2018-19
2017-18
34,812
-
101
216
4,708
-
4,708
2,186
2,522
(428)
(390)
(38)
2,094
32,432
-
140
775
2,275
1,166
3,441
1,373
2,068
(240)
(210)
(30)
1,828
1,916
(1,600)
10
4
(2,455)
-
(2,455)
(2)
(2,453)
(3)
-
(3)
(2,456)
17,993
37
66
547
(200)
389
189
157
32
(8)
-
(8)
24
hundred and ninety crores only) divided into 588,040,000 (Fifty-
eight crores, eighty lakhs and forty thousand only) equity shares
of H10 (Rupees Ten only) each and 2,00,000 (Two Lakhs only)
preference shares of H98 (Rupees Ninety-Eight only) each.
As at March 31, 2019 and as at the date of this report, the
issued, subscribed and paid-up share capital of the Company
was H5,620,029,350 (Rupees Five hundred and sixty two crores,
twenty nine thousand and three hundred and fifty only) divided
into 562,002,935 (Fifty six crores, twenty lakhs, two thousand
nine hundred and thirty five only) equity shares of H10 (Rupees
Ten only) each.
6. BUSINESS
Subex is a leading telecom analytics solutions provider, enabling a
digital future for global Telco’s. 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 optimize
enterprises. Subex leverages its award-winning analytics solutions
in areas such as Revenue Assurance, Fraud Management, Asset
Assurance and Partner Management “Revenue Management
Annual Report 2018-19 | 019
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.
Subex has received numerous awards jointly with its customers.
The recent awards include:
•
•
•
Pipeline Innovation Awards 2018 under “Managed Services”
category & “Innovations in Security & Assurance” and ‘Big
Data & Analytics’
Aegis Graham Bell Award 2017 for Innovation in ROC Insights
under “Data Science” Category
Global Telecoms Business Innovation Award 2017 with Saudi
Telecom Company.
7. SUBSIDIARIES (WHOLLY OWNED AND OTHER
SUBSIDIARIES)
As on March 31, 2019, the Company has 9 subsidiaries.
SUBEX ASSURANCE LLP AND ITS SUBSIDIARIES
For the year ended March 31, 2019, Subex Assurance LLP earned
a net income of H30,133 lakhs as against a net income of H12,813
Lakhs in the previous year and a net profit of H165 Lakhs, as against
a net profit of H635 lakhs in the previous year
As at March 31, 2019, Subex Limited held more than 99.99 % of the
capital in Subex Assurance LLP and the balance is held by Subex
Digital LLP.
•
•
•
•
•
For the year ended March 31, 2019, the Standalone income
of Subex (UK) Limited was H18,803 Lakhs as against H16,401
Lakhs in the previous year, and a net gain of H1,370 Lakhs as
against a net loss of H8,197 lakhs in the previous year.
Subex (Asia Pacific) Pte. Limited is a wholly owned subsidiary
of Subex (UK) Limited. For the year ended March 31, 2019, the
Standalone income of Subex (Asia Pacific) Pte. Limited was
H3,952 Lakhs as against H2,997 lakhs in the previous year, and
a net gain of H18 lakhs as against a net loss of H644 Lakhs in
the previous year.
Subex Inc.is a wholly owned subsidiary of Subex (UK) Limited.
For the year ended March 31, 2019, the Standalone income
of Subex Inc. was H9,839 lakhs as against H9,353 Lakhs in the
previous year, and the net gain was H117 lakhs as against a
net gain of H78 Lakhs in the previous year.
As on March 31, 2019, Subex (UK) Limited holds 8 common
shares (7.41%) in the capital of Subex Americas Inc.
Subex Middle East (FZE) is a wholly owned subsidiary of
Subex Assurance LLP. For the year ended March 31, 2019, the
standalone income of Subex Middle East (FZE) was H1,388
lakhs as against H1,132 Lakhs in the previous year and a net
gain of H60 lakhs as against a loss of H14 Lakhs in the previous
year.
020 | SUBEX LIMITED
SUBEX DIGITAL LLP
For the year ended March 31, 2019, Subex Digital LLP earned an
income of H438 Lakhs as against H33 Lakhs in the previous year,
and a net loss of H1,765 Lakhs as against a net loss of H598 Lakhs
in the previous year.
As at March 31, 2019, Subex Limited held more than 99.99% of
the capital in Subex Digital LLP and the balance is held by Subex
Assurance LLP.
SUBEX TECHNOLOGIES LIMITED
For the year ended March 31, 2019, Subex Technologies Limited
incurred a net loss of H4 Lakhs as against a net loss of H1 Lakh in
the previous year. Subex Technologies Limited is a wholly owned
subsidiary of Subex Limited.
SUBEX AMERICAS INC.
For the year ended March 31, 2019, the standalone income of
Subex Americas Inc. was H957 Lakhs as against H851 Lakhs in the
previous year, and the net profit was H96 Lakhs as against a net
profit of H6,271 Lakhs in the previous year.
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, 2019, Subex Limited holds 100 common shares
(92.59%) in the capital of Subex Americas Inc.
The above-mentioned numbers are as per the audited financial
statements of respective subsidaries.
In accordance with Section 129(3) of the Companies Act, 2013,
the Company has prepared consolidated financial statements of
the Company and all its subsidiary companies, which forms part of
the Annual Report. A statement containing salient features of the
financial statements of the subsidiaries of the Company in Form
AOC-1, forms part of the annexure to the Standalone Financial
Statements.
In accordance with third proviso of Section 136(1) of the Companies
Act, 2013, the Annual Report of the Company, containing therein
its standalone and the consolidated financial statements has been
placed on the website of the Company under the following link
https://subex.com/shareholder-services/.
Further, as per the fourth proviso to the said Section, audited
annual accounts of each of the subsidiary companies have also
been placed on the website of the Company under the following
link https://subex.com/shareholder-services/. These documents
will also be available for inspection during business hours at the
registered office of the Company at Bengaluru, India.
8. DEPOSITS
Your Company has not accepted any deposits from the public
during the year and there are no deposits which remain unclaimed
or unpaid as at the end of the year and, as such, no amount of
principal or interest was outstanding as of the date of the Balance
sheet.
9. EMPLOYEE STOCK OPTIONS SCHEMES
All the schemes endeavor to provide incentives and retain
employees who contribute to the growth of the Company. During
the year under review, there has been no variation in the terms of
ESOP schemes. Additional details have also been disclosed under
Note 36 to the standalone financial statements which form part of
the Annual Report.
Details of the Company’s Employee Stock Option Plans and a
summary disclosure in compliance with the Companies (Share
Capital and Debentures) Rules, 2014, forms part of this report
as “Annexure A”. The details as required under the Securities
and Exchange Board of India (Share Based Employee Benefits)
Regulation, 2014 are available on the Company’s website https://
subex.com/shareholder-services/.
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 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-2018 (ESOP-V)
The Company pursuant to resolutions passed by the Board
and the Shareholders dated June 26, 2018 and July 31, 2018,
respectively, has adopted the Subex Employees Stock Option
Scheme-2018 (“ESOP – V” or “Plan”)
The Board authorized the Nomination & Remuneration
Committee or such other person(s) as maybe authorised
by the Nomination & Remuneration Committee for the
superintendence and administration of the Plan. The ESOP
Plan would be implemented through the Subex Employee
Welfare and ESOP Benefit Trust, “ESOP Trust”, by acquiring
the equity shares of the Company from the secondary market.
Total number of Options to be granted under the Scheme shall
not exceed 5% (Five percent) of the paid- up equity capital as
on March 31, 2018.
10. PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS UNDER SECTION 186
Details of Loans, Guarantees or Investments covered under Section
186 of the Companies Act 2013, are given in note number 34 (b)
(iv) to the Standalone Financial Statements.
11. MATERIAL CHANGES AND COMMITMENTS,
EFFECTING THE FINANCIAL POSITION OF THE
COMPANY BETWEEN THE END OF FINANCIAL YEAR
AND DATE OF THE REPORT.
The Board at its meeting held on May 13, 2019, appointed
Mr. George Zacharias as an Additional Independent Director, to hold
office until the date of the 25th Annual General Meeting (AGM).
There have been no material changes for the period between end
of the financial year 2018-19 and the date of this report effecting
the financial position of the company.
12. 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, “SEBI (LODR),
Regulations, 2015”, as amended from time to time. The Auditor’s
certificate on compliance with respect to the same is annexed
herewith as “Annexure B”. In addition, it has documented its
internal policies in line with the Corporate Governance guidelines.
13. MANAGEMENT DISCUSSION & ANALYSIS
REPORT
The Management Discussion & Analysis report is presented in a
separate section forming part of this Annual Report.
14. DIRECTORS AND KEY MANAGERIAL
PERSONNEL
As per Section 152 of the Companies Act, 2013, at least two-
thirds of the Directors shall be subject to retirement by rotation.
One-third of such Directors must retire from office at each AGM 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
AGM.
to
the
Pursuant
the Nomination &
recommendations of
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 was
approved by the members at the 24th AGM of the Company held
on July 31, 2018.
Mr. Ashwin Chalapathy, Non-Independent, Non-Executive Director,
resigned from the Board with effect from May 04, 2018.
Annual Report 2018-19 | 021
APPOINTMENT
to
the
Pursuant
the Nomination &
recommendations of
Remuneration Committee, the Board at its meeting held on
May 13, 2019, appointed Mr. George Zacharias as an Additional
Independent Director of the Company and he shall hold office
until the date of the 25th AGM. His appointment for a period of five
years is being placed before the members for their approval at the
ensuing AGM.
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/
CHANGES IN THE KEY MANAGERIAL PERSONNEL
Ms. Mehernaz Dalal resigned from the position of Chief Financial
Officer w.e.f. November 30, 2018. Mr. Venkatraman G S was
appointed as the Chief Financial Officer of the Company w.e.f.
November 30, 2018.
Mr. G V Krishnakanth was appointed as the Company Secretary of
the Company w.e.f July 10, 2018 and Compliance Officer w.e.f. July
19, 2018.
15. BOARD MEETINGS
During the year, 7 Board Meetings were convened and held. The
intervening gap between the meetings was within the period
prescribed under the Companies Act, 2013 and the SEBI (LODR),
Regulations, 2015. The dates on which meetings were held are as
follows:
Board Meeting Number
1/2018-19
2/2018-19
3/2018-19
4/2018-19
5/2018-19
6/2018-19
7/2018-19
Date of Meeting
May 04, 2018
June 26, 2018
July 19, 2018
July 31, 2018
September 10, 2018
October 31, 2018
January 29, 2019
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, 2019 carried out an annual
performance evaluation of its own performance, Chairman and the
directors individually, as well as the evaluation of the working of
its committees. The manner of evaluation 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
E”. and the Details / Disclosures of Ratio of Remuneration to each
Director to the median employee’s remuneration as “Annexure G”.
022 | SUBEX LIMITED
18. AUDIT COMMITTEE
As on March 31, 2019, the Audit Committee had four Directors
as its members viz. Mr. Anil Singhvi, Chairman & Independent
Director, Ms. Nisha Dutt, Independent Director, Ms. Poornima
Prabhu, Independent Director and Mr. Vinod Kumar Padmanabhan,
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, including amendments thereon.
Further details of the Audit Committee have been provided in the
report on Corporate Governance forming part of this Annual Report.
19. AUDITORS
There are no instances of frauds reported by auditors pursuant to
sub-section (12) of Section 143 which are reportable to the Central
Government.
STATUTORY AUDITORS
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. The requirement for ratification
of appointment of auditors by the members at every AGM is done
away with, vide the Ministry of Corporate Affairs notification dated
May 07, 2018.
There are no qualifications, reservations or adverse remarks or
disclaimers made by Statutory Auditors of the Company in the
Audit Report.
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
V. Sreedharan & Associates, a firm of Company Secretaries in
practice to undertake the Secretarial Audit of the Company. The
Secretarial Audit Report is annexed herewith as “Annexure C”.
The Secretarial Audit Report for the year ended March 31, 2019
does not contain any qualification, reservation or adverse remark.
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 have not
been provided as they are not applicable to the Company. None of
the employees of the Company, draw remuneration in accordance
with the limits prescribed under the said Rules. Hence the details
of the top 10 (ten) employees under the said Rules have not been
stated.
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 the Company has
on the environment from its own operations is relatively low when
compared to companies in other industries. However, the Company
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
- 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
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 as on March 31,
2019.
Composition
Mr. Anil Singhvi (Chairman)
Mr. Vinod Kumar Padmanabhan
Ms. Nisha Dutt
Category
Independent Director
Managing Director & CEO
Independent Director
Pursuant to the CSR Policy adopted by the Board, the Company
proposes to undertake such activities as may be useful and
contributive in nature
Particulars required to be disclosed pursuant to the Companies
(Corporate Social Responsibility Policy) Rules, 2014 are given in
“Annexure H” to the Boards’ report.
The CSR Committee charter and the CSR Policy of the Company are
available in the website under the below link https://www.subex.
com/shareholder-services/.
waste produced.
SUBEX CHARITABLE TRUST
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 OUTGO
During the year 2018-19 total foreign exchange inflow and outflow
is as follows:
i)
Foreign Exchange earnings H2,178 Lakhs (Previous Year
H16,240 Lakhs)
ii) Foreign Exchange outgo H678.44 Lakhs (Previous Year H9,592
Lakhs)
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 to the Prerana Resource Centre for providing vocational
training to visually impaired and disabled orphan teenage girls.
As part of this program, 25 girls have been provided vocational
training to enable them to attain work opportunities across various
industries. The SCT has also provided its support for the education
of economically challenged meritorious students as part of the
Nurture Merit Programme. Further details have been provided in a
separate section in this Annual Report as “Annexure H ”.
25. RISK MANAGEMENT POLICY &
IMPLEMENTATION
The Risk Management Committee has been constituted as required
under Regulation 21 of the SEBI (LODR) Regulations, 2015,
voluntarily by the Company. According to Regulation 21 (5), the
provisions of Risk Management Committee shall be applicable
to top 500 listed entities, determined on the basis of market
capitalization.
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.
Annual Report 2018-19 | 023
26. HUMAN RESOURCE MANAGEMENT
Detailed report on Human Resource management is given in the
Management Discussion and Analysis section of the Annual report.
27. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY
In accordance with the provisions of Section 134(5) of the
Companies Act, 2013 and as per the provisions of the SEBI (LODR),
Regulations, 2015, the Company has an Internal Control System,
commensurate with the size, scale and 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 material weakness
in the Company. The Directors have in the Directors Responsibility
Statement (under paragraph (e) of the Section) confirmed the
same to this effect. The Company has policies and procedures in
place for ensuring proper and efficient conduct of its business, the
safeguarding of its assets, the prevention and detection of frauds
and errors, the accuracy and completeness of the accounting
records and timely preparations, reliable financial information. The
Company has adopted accounting policies which are in line with
Indian Accounting Standards(“IndAS”).
Pursuant to the provisions of the Section 134(5)(f) of the Act,
the Company during the year devised proper systems to ensure
compliance with the provisions of all applicable laws. 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) of the Section) 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
approaches towards achieving better compliance, standardizing
activities to consistently achieve better customer satisfaction.
This year, the emphasis was more towards reviews and updates
on processes for projects and organization, alignment to the new
organization structure. Identification and involvement of process
owners to review processes and make it relevant and align it to
024 | SUBEX LIMITED
the organization. Some of the requirements which were specific
to customer were customized, with audits conducted for some of
the accounts.
28. VIGIL MECHANISM/ WHISTLE BLOWER
POLICY
The Company has implemented a vigil mechanism policy to deal
with instance of fraud, leakage of Unpublished Price Sensitive
Information 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 2018-19.
29. POLICY ON SEXUAL HARRASSMENT OF
WOMEN AT WORKPLACE
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 the 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 (ICC) chaired by a senior female employee of the
Company, has been set up to redress complaints received under
this Act.
During the year under review, no complaints have been received
by the Company.
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
Company at large. Further, none of the Directors had any pecuniary
relationships of transactions vis-à-vis the Company.
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 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 F”.
32. SIGNIFICANT AND MATERIAL ORDERS PASSED
BY THE REGULATORS OR COURTS
There were no significant material orders passed by 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 as “Annexure D”.
The annual return for the financial year 2017-18 pursuant to section
(3) of section 92 has been placed on the website of the Company,
www.subex.com.
34. LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the year 2018-
19 to the National Stock Exchange of India Ltd (‘NSE’) and BSE Ltd
(‘BSE’) where the Company’s shares are listed.
35. MAINTENANCE OF COST RECORDS
Maintenance of cost records as specified by the Central Government
under sub-section (1) of Section 148 of the Companies Act, 2013,
is not applicable to the Company as the Company operates out of a
Special Economic Zone (SEZ) .
36. DIRECTORS’ RESPONSIBILITY STATEMENT
In accordance with the provision of Section 134(3)(c) of the
Companies Act, 2013, the Board of Directors, to the best of their
knowledge and belief, affirms:
a)
In the preparation of the annual accounts for the financial year
ended March 31, 2019, the applicable accounting standards
have been followed along with proper explanation relating to
material departures;
b) That the accounting policies have been selected and applied
consistently and it has made judgments and estimates that
are reasonable and prudent so as to give a true and fair view
of the state of affairs of the Company as at March 31, 2019 and
of the loss of the Company for the year ended on that date;
c)
That proper and sufficient care has been taken for the
maintenance of adequate accounting records in accordance
with the 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, 2019 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.
thank
the customers, vendors,
37. APPRECIATION/ACKNOWLEDGEMENTS
Your Directors
investors,
shareholders and bankers for their continued support during
the year. We place on record our appreciation for the support
/co-operation extended by the various departments of the
Government of India, Government of Karnataka, Central and State
Government authorities particularly, SEZ authorities, Ministry
of Corporate Affairs, Central Board of Direct Taxes, Central Board
of Indirect Taxes and Customs, the Ministry of Commerce and
Industry, Ministry of Labour and employment, Reserve Bank of
India, Securities and Exchange Board of India, BSE Limited, National
Stock Exchange of India Ltd, National Securities Depository Limited
and Central Depository Services (India) Limited and other State
Government authorities and look forward to their support in all
future endeavors.
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
For Subex Limited
Anil Singhvi
Chairman & Independent Director Managing Director & CEO
DIN:00239589
DIN:06563872
Vinod Kumar Padmanabhan
Bengaluru, India
May 13, 2019
Annual Report 2018-19 | 025
ANNEXURE A
2
3
4
5
6
7
8
9
10
11
12
13
14
Information as at March 31, 2019 pertaining to the Employee Stock Option Schemes of the Company
Sl.No Particulars
1
Net options granted as on March 31, 2019
Options granted during the year
Options vested but not exercised as on March 31, 2019
Options vested during the year
Options exercised as on March 31, 2019
Options exercised during the year
The total number of shares arising as a result of exercise of options
during the year ended March 31, 2019
Exercise Price
Variation of terms of options
Money realized by exercise of options during the year
Total number of options in force
Options lapsed/cancelled/ surrendered as on March 31, 2019
Options lapsed/cancelled/ surrendered during the year
Employee wise details of options granted during the year under review to:
(i) Key managerial personnel
(ii) other employee receiving a grant in the year of option amounting to 5% or more
of options granted during that year
(iii) identified employees who were granted option, during the year, equal to
or exceeding 1% of the issued capital (excluding outstanding warrants and
conversions) of the Company at the time of grant;
Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option
calculated in 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 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 35 of the Standalone Financial
Statements)
Description of the method used during the year to estimate the fair values of options,
including the following weighted-average information :
i. risk-free interest rate
ii. expected life
iii. expected volatility
iv. expected dividends
v. market price on grant date
ESOP 2005
18,564
-
6,125
-
12,439
-
ESOP 2018
1,06,50,000
1,06,50,000
-
-
-
-
-
H10.26 -
H24.99
None
-
6,125
58,20,354
17,930
-
-
-
-
-
H6
None
-
1,06,50,000
Nil
Nil
-
Vinod Kumar Padmanabhan- MD
& CEO - 17,00,000*
Venkatraman G S-CFO - 6,50,000
G V Krishnakanth-CS - 1,50,000
Shankar Roddam - 900,000
Kiran Zachariah - 900,000
Mark Bourgoin - 650,000
Jamie More - 650,000
Suraj Balachandran - 650,000
Rohit Maheshwari - 650,000
Mohan Sitharam - 650,000
-
(H 0.44)
(H 0.44)
N.A
N.A
H13.74
H18.24
Black-Scholes Model
N.A
6.90%
2 years
50%
0%
H5.70
* Stock options granted to Mr. Vinod Kumar Padmanabhan, as an employee of Subex Assurance LLP.
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN:00239589
Bengaluru, India
May 13, 2019
026 | SUBEX LIMITED
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN:06563872
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, 2018 to March 31, 2019. 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.
Date: May 13, 2019
Place: Bengaluru
For BMP & Co. LLP
Company Secretaries
Pramod S M
Partner
FCS 7834 / CP No. 13784
Annual Report 2018-19 | 027
ANNEXURE C
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED: MARCH 31, 2019
[Pursuant to Sub Section (1) of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To,
The Members,
SUBEX LIMITED
We have conducted the secretarial audit of the compliance
of applicable statutory provisions and the adherence to good
corporate practices by Subex Limited (hereinafter called the
company). Secretarial Audit was conducted in a manner that
provided us a reasonable basis for evaluating the corporate
conducts/statutory compliances and expressing my opinion
thereon.
Based on our verification of the Company’s Books, Papers, Minute
Books, Forms and Returns filed and other Records maintained by
the company and also the information provided by the Company,
its officers, agents and authorized representatives during the
conduct of secretarial audit, we hereby report that in our opinion,
the company has, during the financial year ended on March 31,
2019 (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;
v) The following Regulations and Guidelines prescribed under
the Securities and Exchange Board of India Act, 1992 (‘SEBI
Act’):-
a.
The Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011;
028 | SUBEX LIMITED
b.
c.
d.
e.
f.
g.
h.
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
(SEBI ICDR Regulations), up to September 10, 2018
and SEBI ICDR Regulations, 2018 w.e.f September 11,
2018;
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; (Not Applicable to the
Company during the Audit Period);
The Securities and Exchange Board of India (Buyback of
Securities) Regulations, 1998 (SEBI Buyback of Securities
Regulations) up to September 10, 2018 and SEBI Buyback
of Securities Regulations, 2018 w.e.f September 11,
2018; (Not Applicable to the Company during the Audit
Period); and
i.
India (Listing
Securities and Exchange Board of
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
(c) Copy Right Act, 1957
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.
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
Bengaluru
May 13, 2019
(Pradeep B. Kulkarni)
Partner
FCS: 7260; CP No. 7835
Secretarial compliance report of Subex Limited for the year ended March 31, 2019
We have examined:
(a) all the documents and records made available to us and
explanation provided by Subex Limited (“the listed entity”);
(b) the filings/ submissions made by the listed entity to the stock
exchanges;
(c) website of the listed entity;
(b) the Securities Contracts (Regulation) Act, 1956 (“SCRA”), rules
made thereunder and the Regulations, circulars, guidelines
issued thereunder by the Securities and Exchange Board of
India (“SEBI”);
The specific Regulations, whose provisions and the circulars/
guidelines issued thereunder, have been examined, include: -
(a) Securities and Exchange Board of India (Listing Obligations
(d) any other document/ filing, as may be relevant, which has
and Disclosure Requirements) Regulations, 2015;
been relied upon to make this certification;
for the year ended March 31, 2019 (“Review Period”) in respect of
compliance with the provisions of:
(a) the Securities and Exchange Board of India Act, 1992 (“SEBI
issued
Act”) and the Regulations, circulars, guidelines
thereunder; and
(b) The Securities and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulations, 2009 (SEBI
ICDR Regulations), up to September 10, 2018 and SEBI ICDR
Regulations, 2018 w.e.f September 11, 2018;
(c) Securities and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011;
Annual Report 2018-19 | 029
(d) The Securities and Exchange Board of India (Buyback of
Securities) Regulations, 1998 (SEBI Buyback of Securities
Regulations) up to September 10, 2018 and SEBI Buyback of
Securities Regulations, 2018 w.e.f September 11, 2018; (Not
Applicable to the Company during the Review Period);
(e) Securities and Exchange Board of India (Share Based Employee
Benefits) Regulations, 2014;
(f) Securities and Exchange Board of India (Issue and Listing of
Debt Securities) Regulations, 2008 (Not Applicable to the
Company during the Review Period);
(g) Securities and Exchange Board of India (Issue and Listing
of Non- Convertible and Redeemable Preference Shares)
Regulations, 2013 (Not Applicable to the Company during the
Review Period);
(h) Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015;
and based on the above examination, we hereby report that,
during the Review Period:
(a) The listed entity has complied with the provisions of the above
Regulations and circulars/ guidelines issued thereunder;
(b) The listed entity has maintained proper records under the
provisions of the above Regulations and circulars/ guidelines
issued thereunder in so far as it appears from our examination
of those records.
(c) There was no action taken against the listed entity/ its
promoters/ directors/ material subsidiaries either by SEBI or
by Stock Exchanges (including under the Standard Operating
Procedures issued by SEBI through various circulars) under the
aforesaid Acts/ Regulations and circulars/ guidelines issued
thereunder.
(d) The listed entity has taken the following action to comply with the observation made in previous reports:
Sl. No. Observations of the Practicing
Company Secretary in the previous
reports
Observations made in the
secretarial compliance report
for the year ended
Actions taken by the listed
entity, if any
1
The provisions of Section 203 of
the Companies Act, 2013 has not
been complied w.r.t appointment of
Whole Time Company Secretary (the
company has a company secretary
who has been appointed as an acting
Company Secretary but not as a Key
Managerial Personnel).
31.03.2018
(Secretarial Audit Report
pursuant to the provisions of
Companies Act, 2013)
The Company has appointed
Mr. G V Krishnakanth as
a Whole Time Company
Secretary under the
provisions of Section 203
of the Companies Act, 2013
w.e.f 10.07.2018
Comments of the
Practicing Company
Secretary on the actions
taken by the listed entity
For the period of non-
compliance, the Company
has to either compound
or get it adjudicated
with the Registrar of
Companies, Karnataka
For V. SREEDHARAN & ASSOCIATES
(Pradeep B. Kulkarni)
Partner
FCS: 7260; CP No. 7835
Bengaluru
May 13, 2019
030 | SUBEX LIMITED
ANNEXURE D
Form No. MGT-9
EXTRACT OF ANNUAL RETURN
As on the financial year ended on March 31, 2019
[Pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies
(Management and Administration) Rules, 2014]
I. REGISTRATION AND OTHER DETAILS:
i)
ii)
iii)
iv)
v)
vi) Whether listed Company (Yes / No)
vii) Name, Address and Contact details of Registrar and
CIN
Registration Date
Name of the Company
Category / Sub Category of the Company
Address of the Registered office and contact details
Transfer Agent, if any
L85110KA1994PLC016663
December 06, 1994
Subex Limited
Company having Share Capital
RMZ Ecoworld, Outer Ring Road, Devarabisanahalli, Bengaluru-560103
Yes, on the National Stock Exchange of India Ltd and BSE Ltd
Canbank Computer Services Limited
J P Royale,1st Floor, No.218
2nd Main, Sampige Road
(Near 14th Cross), Malleswaram
Bengaluru – 560 003
Contact No. 080-23469664/665
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
(All the business activities contributing 10 % or more of the total turnover of the Company are stated)
Sl.
No.
1.
2.
3.
Name and Description of
main products /services
Implementation and customization
Managed services
Support services
NIC Code of the Product/service
% to total turnover of the Company
-
-
-
46
28
20
The above- mentioned services are constituents of Sub-contracting charges as recorded in the Financial Statements of the Company.
Additionally, the Company has made Investments in LLPs and the share of profit received from these investments contributes to 8% of total
turnover of the Company.
CIN/GLN
Name and Address of the Company
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
Sl.
No.
1.
2.
3.
4.
5.
6.
7.
U74140KA2005PLC035905
AAJ-0729
AAJ-0728
Foreign Company
Foreign Company
Foreign Company
Foreign Company
Holding/Subsidiary/
Associate
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
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
8.
9.
% of shares/
capital held*
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Applicable
Section
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
Foreign Company
Foreign Company
Subsidiary
Subsidiary
100.00
100.00
2 (87)
2 (87)
*Includes % of holding, either directly or indirectly through subsidiaries
Annual Report 2018-19 | 031
IV. SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)
(i) Category-wise Share Holding
Category of Shareholders
A. Promoters
(1) Indian
a) Individual/ HUF
b) Central Govt.
c) State Govt(s)
d) Bodies Corp.
e) Banks / FI
f) Any Other
Sub-total (A)(1)
(2) Foreign
(a) NRIs – Individuals
(b) Other – Individuals
(c) Bodies Corp.
(d) Banks/FI
(e) Any other.
Sub-total(A)(2)
Total shareholding of
Promoter (A) = (A)(1)+(A)(2)
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) Individual shareholders
holding nominal share capital
up to H1 lakh
ii) Individual shareholders
holding nominal share capital in
excess of H1 lakh
c) Others (specify)
Trusts
Director & their relatives
Foreign Nationals
Escrow Account
Market Maker
Non-Resident Indians
O C Bs
Societies
Clearing Members
shares in transit
Hindu Undivided Families
NRIs/OCBs
Foreign Corporate Bodies
032 | SUBEX LIMITED
No. of Shares held at the beginning of the year
Demat
Physical
Total
% of
Total
Shares
No. of Shares held at the end of the year
Demat
Physical
Total
% of
Total
Shares
-
4,52,844
-
-
5,21,200
-
-
9,74,044
-
-
-
-
-
-
-
9,74,044
-
-
-
28,48,537
-
-
-
78,764
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,52,844
-
-
5,21,200
-
-
9,74,044
-
-
-
-
-
-
-
9,74,044
-
-
-
28,48,537
-
-
-
78,764
-
-
0.08
-
-
0.09
-
-
0.17
-
-
-
-
-
-
-
0.17
-
-
-
0.51
-
-
-
0.01
-
-
4,74,044
-
-
-
-
-
4,74,044
-
-
-
-
-
-
-
4,74,044
-
-
-
14,62,082
-
-
-
78,764
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,74,044
-
-
-
-
-
4,74,044
-
-
-
-
-
-
-
4,74,044
-
-
-
14,62,082
-
-
-
78,764
-
-
0.08
-
-
-
-
-
0.08
-
-
-
-
-
-
-
0.08
-
-
-
0.26
-
-
-
0.01
-
%
Change
during
the
year
-
-
-
-
(0.09)
-
-
(0.09)
-
-
-
-
-
-
-
(0.09)
-
-
-
(0.25)
-
-
-
-
-
-
-
5,50,94,999
5,80,22,300
-
-
11,83,97,679
-
-
-
-
-
-
-
-
400
-
-
-
-
5,50,94,999
5,80,22,300
-
-
11,83,98,079
-
-
-
-
9.80
10.32
-
-
21.07
-
-
-
-
15,40,846
-
-
11,51,35,575
-
-
-
-
-
-
-
-
400
-
-
-
-
15,40,846
-
-
11,51,35,975
-
-
-
-
-
-
-
(9.80)
0.27 (10.05)
-
-
(0.57)
-
-
-
-
20.50
-
-
12,81,49,774
44,251
12,81,94,025
22.81
12,17,77,651
41,227
12,18,18,878
21.68
(1.13)
21,11,59,948
-
3,88,300
79,095
81,194
-
-
1,02,22,484
-
-
37,95,674
-
2,76,48,411
-
22,35,775
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,11,59,948
-
3,88,300
79,095
81,194
-
-
1,02,22,484
-
-
37,95,674
-
2,76,48,411
-
22,35,775
37.57
-
0.07
0.01
0.01
-
-
1.82
-
-
0.68
-
4.93
-
0.40
26,49,70,321
-
3,91,300
79,095
81,194
-
-
1,21,01,827
-
-
12,06,890
-
2,79,56,782
-
39,48,118
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,49,70,321
-
3,91,300
79,095
81,194
-
-
1,21,01,827
-
-
12,06,890
-
2,79,56,782
-
39,48,118
47.15
-
0.07
0.01
0.01
-
-
2.15
-
-
0.21
-
4.98
-
0.70
9.58
-
-
-
-
-
-
0.33
-
-
(0.47)
-
0.05
-
0.30
Category of Shareholders
Partnership Firms
Custodian of Enemy Property
Foreign Collaborators
ESOPs/ESOS/ESPS Employee
shareholders
Sub-Total(B)(2)
Total Public Shareholding
(B)=(B)(1)+ (B)(2)
C. Shares held by Custodian
for GDRs & ADRs
Employee Benefit Trust
[under the SEBI (Share
Based Employee Benefit)
Regulations, 2014]#
Grand Total (A+B+C)
No. of Shares held at the beginning of the year
Demat
Physical
Total
% of
Total
Shares
No. of Shares held at the end of the year
Demat
Physical
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
% of
Total
Shares
-
-
-
-
-
-
%
Change
during
the
year
-
-
-
5,58,729
50,27,17,063
1,670
46,321
5,60,399
50,27,63,384
0.10
8,54,436
89.47 54,85,03,189
22
8,54,458
41,649 54,85,44,838
0.15
97.61
0.05
8.14
56,17,13,407
46,321
56,17,59,728
99.79 55,00,44,035
41,649 55,00,85,684
97.88
(1.91)
2,43,207
-
2,43,207
0.04
2,43,207
-
2,43,207
0.04
-
-
56,19,56,614
-
46,321
-
56,20,02,935
-
1,12,00,000
100 56,19,61,286
-
1,12,00,000
41,649 56,20,02,935
1.99
100
1.99
# Held in the Demat account of the Trustees of the Subex Employee Welfare and ESOP Benefit Trust
II. Shareholding of Promoters
Shareholder’s Name
Sl.
No.
Shareholding at the
beginning of the year
Shareholding at the
end of the year
No. of
Shares
% of total
Shares of the
Company
% of Shares
Pledged /
encumbered
to total shares
No. of
Shares
% of total
Shares of the
Company
% of Shares
Pledged/
encumbered
to total shares
% change in
share holding
during the
year
1.
2.
3.
Kivar Holdings Private
Limited
Subash Menon
Sudeesh Yezhuvath
5,21,200
80,601
3,72,243
0.09
0.01
0.07
0.01
0.01
0.00
Nil
1,01,801
3,72,243
0.00
0.02
0.07
NA
0.02
0.00
(0.09)
0.01
0.00
III. Change in Promoters’ Shareholding
Sl.
No.
1.
2.
At the beginning of the year
Kivar Holdings Private Limited
Date wise Increase / Decrease in Promoters Shareholding
during the year specifying the reasons for increase/
decrease (e.g. allotment/transfer/bonus/ sweat equity,
etc)
Inter - se transfer of 5,00,000 shares to Mr. Subash Menon
on August 09, 2018
Inter-se transfer of 21,200 shares to Mr. Subash Menon on
March 30, 2019
Subash Menon
Date wise Increase / Decrease in Promoters Share
holding during the year specifying the reasons for
increase/decrease (e.g. allotment/transfer/bonus/
sweat equity, etc)
Inter-se transfer of 5,00,000 shares from Kivar Holdings
Private Limited on August 09, 2018
Sale of 5,000 shares on September 25, 2018
Shareholding
Cumulative Shareholding
during the Year
No. of shares % of total shares
of the company
No. of shares % of total shares
of the company
5,21,200
0.09
80,601
0.01
21,200
Nil
0.00
0.00
5,80,601
5,75,601
0.10
0.10
Annual Report 2018-19 | 033
Sl.
No.
3.
1.
2.
3.
Sale of 2,95,000 shares on September 26, 2018
Sale of 25,000 shares on September 27, 2018
Sale of 1,25,000 shares on September 28, 2018
Sale of 50,000 shares on October 01, 2018
Inter-se transfer of 21,200 shares from Kivar Holdings
Private Limited on March 30, 2019
Sudeesh Yezhuvath
Date wise Increase / Decrease in Promoters Share holding
during the year specifying the reasons for increase/
decrease (e.g. allotment/transfer/bonus/ sweat equity,
etc): None
At the End of the year
Kivar Holdings Private Limited
Subash Menon
Sudeesh Yezhuvath
Shareholding
Cumulative Shareholding
during the Year
No. of shares % of total shares
of the company
No. of shares % of total shares
of the company
3,72,243
0.07
2,80,601
2,55,601
1,30,601
80,601
1,01,801
3,72,243
3,72,243
Nil
1,01,801
3,72,243
0.05
0.04
0.02
0.01
0.02
0.07
0.07
NA
0.02
0.07
iv. Shareholding Pattern of top ten Shareholders
(other than Directors, Promoters and holders of GDRs and ADRs):
For Each of the Top 10 Shareholders
Sl.
No.
1.
2.
3.
4.
5.
UNO Metals Ltd
AKG Finvest Ltd
Shivani Tarun Haribhakti
Niveditha Lalge R & Prashanth Nayak M &
Stock Holding Corporation of India Ltd - A/C NSE
Derivatives
Barclays Wealth Trustees India Private Limited
Hitesh Harakhchand Vora
Anagha Advisors LLP
Edelweiss Custodial Services Limited
6.
7.
8.
9.
10. Dilipkumar Lakhi
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
2,56,02,000
1,97,10,000
1,00,000
Nil
6,26,000
Nil
12,49,999
Nil
16,80,388
40,96,322
4.56
3.51
0.02
-
0.11
-
0.22
-
0.30
0.73
1,94,12,000
1,85,60,000
1,15,85,337
1,12,00,000
66,70,042
55,00,000
47,71,999
44,50,000
52,49,943
40,96,322
3.45
3.30
2.06
1.99
1.19
0.98
0.85
0.79
0.93
0.73
& Held by the Trustees of the Subex Employee Welfare and ESOP Benefit Trust
v. Shareholding of Directors and Key Managerial Personnel
Sl.
No.
For Each of the Directors and KMP
Shareholding
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
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Vinod Kumar Padmanabhan
Ashwin Chalapathy (resigned w.e.f. May 4, 2018)
1.
2.
3.
4.
5.
6. Mehernaz Dalal
(resigned as CFO w.e.f. November 30, 2018)
Venkatraman G S
(appointed as CFO w.e.f. November 30, 2018)
G V Krishnakanth (appointed as CS w.e.f. July 10, 2018)
7.
8.
60,000
NIL
NIL
19,095
NIL
NIL
N.A
N.A
0.01
N.A
N.A
0.01
N.A
N.A
N.A
N.A
60,000
-
-
19,095
-
-
NIL
NIL
0.01
-
-
0.01
-
-
N.A
N.A
034 | SUBEX LIMITED
For Each of the Directors and KMP
Shareholding
Sl.
No.
Cumulative Shareholding
during the year
At the end of the year
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Vinod Kumar Padmanabhan
Ashwin Chalapathy (resigned w.e.f May 04, 2018)
1.
2.
3.
4.
5.
6. Mehernaz Dalal (resigned w.e.f November 30, 2018)
7.
8.
Venkatraman G S
G V Krishnakanth
No. of shares % of total shares
of the Company
No. of shares % of total shares
of the Company
60,000
NIL
NIL
19,095
NIL
NIL
NIL
NIL
0.01
N.A
N.A
0.01
N.A
N.A
N.A
N.A
60,000
-
-
19,095
-
-
-
-
0.01
-
-
0.01
-
-
-
-
V. INDEBTEDNESS
The Company is debt-free as on March 31, 2019.
VI. OTHER REMUNERATION OF DIRECTORS AND MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
Sl. No Particulars of Remuneration
1.
2.
3.
4.
5.
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
Stock Options
Sweat Equity
Commission
- as % of profit
- Others, specify…
Others, please specify (Flexible Benefit Plan)
Total
Ceiling as per the Act
# Remuneration paid from Subex Limited.
B. Remuneration to other Directors:
Vinod Kumar Padmanabhan
Managing Director & CEO
(H in Lakhs)
Total Amount
56.97#
56.97
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56.97
60 Lakhs pa as per Section II of
Part II of Schedule V of the Act
56.97
60 Lakhs.
Sl. No Particulars of Remuneration
Name of Directors
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Total Amount
(H in Lakhs)
1.
2.
Independent Directors
Fee for attending board/committee meetings
Commission
Others, please specify
Total (1)
Other Non-Executive Directors
Fee for attending board/committee meetings
Commission
Others, please specify
Total (2)
Total (B)=(1+2)
Total Managerial Remuneration
Overall Ceiling as per the Act
24.00
-
-
24.00
14.00
-
-
14.00
Ashwin Chalapathy (resigned w.e.f 04.05.2018)
18.00
-
-
18.00
-
-
-
-
24.00
24.00
-
-
-
-
14.00
14.00
-
-
-
-
18.00
18.00
J1,00,000 per meeting for the Independent Directors
56.00
-
-
56.00
-
-
-
-
56.00
56.00
Annual Report 2018-19 | 035
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
Sl. No Particulars of Remuneration
Key Managerial Personnel
(H in Lakhs, except Options)
1.
2.
3.
4.
5.
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
Stock Options (granted)
Sweat Equity
Commission
- as % of profit
- others, specify…
Others, please specify (Flexible Benefit
Plan)
Total (1+2+3+4+5)
Ceiling as per the Act
Ms. Mehernaz Dalal
Chief Financial Officer upto
November 30, 2018
Mr. Venkatraman G S
Chief Financial Officer
w.e.f November 30, 2018
Mr. G V Krishnakanth
Company Secretary
w.e.f July 10, 2018
63.08
29.78
23.52
-
-
-
-
-
-
-
-
-
6,50,000
-
-
-
-
1.44
63.08
31.22
Not Applicable
-
-
1,50,000
-
-
-
-
-
23.52
Authority
[RD / NCLT/
COURT]
Appeal made,
if any (give
Details)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type
Section of the
Companies Act
Brief
Description
Details of Penalty /
Punishment/ Compounding
fees imposed
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
036 | SUBEX LIMITED
ANNEXURE E
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
A. Criteria for Appointment of Non-Executive
Directors & Independent Directors
a) The Non-Executive Directors shall be of high integrity with
relevant expertise and experience so as to have a diverse
Board with Directors having expertise in the fields of
marketing, finance, taxation, law, governance and general
management.
b)
c)
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.
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
and ;
d.
The Company’s performance vis-à-vis the annual budget
achievement and individual performance vis-à-vis the
KRAs / KPIs.
Annual Report 2018-19 | 037
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:
D. Remuneration Policy for Other Employees
In determining the remuneration of the other employees the
Company, the Reporting Manager shall ensure / consider the
following:
i)
ii)
The relationship of remuneration and performance benchmark
is clear;
The balance between fixed and incentive pay reflecting short
and long term performance objectives are appropriate to the
working of the Company and its goals;
i)
ii)
The relationship of remuneration and performance benchmark
is clear;
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; and
v) The Managing Director 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 to N&R
Committee for its review and approval.
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 Reporting Manager will carry out the
individual
performance review based on the standard appraisal matrix
and shall take into account the appraisal score card and other
factors mentioned herein above, whilst recommending the
annual increment and performance incentive.
038 | SUBEX LIMITED
ANNEXURE F
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
a. Name(s) of the related party and nature of
relationship
b. Nature of contracts/ arrangements/ transactions
c. Duration of the contracts/ arrangements/
transactions
d. Salient terms of the contracts or arrangements or
transactions including the value, if any
e. Justification for entering into such contracts or
arrangements or transactions
f. Date(s) of approval by the Board
g. Amount paid as advances, if any:
h. Date on which the special resolution was passed in
general meeting as required under first proviso to
Section 188
2. Details of material contracts or arrangements or transactions at arm’s length basis
NOT APPLICABLE
(a) Name(s) of the related party and nature of
relationship
(b) Nature of contracts/ arrangements/
transactions
(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 Azure Holdings Inc
(h) Subex Assurance LLP
(i) Subex Digital LLP
(All the aforementioned entities are subsidiaries of Subex Limited)
A. Sub-Contracting Transactions
Subex (Asia Pacific) Pte Ltd
Subex Inc.
B. Marketing & Allied Services Expense Transactions
Subex (UK) Limited
Subex Inc.
C. Reimbursement of expenses
Subex (UK) Limited
Subex (Asia Pacific) Pte Ltd
Subex Assurance LLP
Subex Digital LLP
(c) Duration of the contracts/ arrangements/
The transactions mentioned in 2(b) above are continuing contracts.
transactions
Additional Note for point no. 2 : The Company had granted an interest free loan to the Subex Employee Welfare and ESOP Benefit Trust
during the financial year. (Refer Note 32 forming part of the Standalone Financial Statements)
Annual Report 2018-19 | 039
(d) Salient terms of the contracts or arrangements or
A. Sub-Contracting Transactions
transactions including the value, if any:
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. 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.
The details pertaining to the value of transactions, form part of the
Related Party Schedule to the Standalone Financial Statements.
(Note 32)
(e) Date(s) of approval by the Board, if any:
(f) Amount paid as advances, if any:
May 04, 2018
N.A
For Subex Limited
Anil Singhvi
Chairman & Independent Director
DIN:00239589
Bengaluru, India
May 13, 2019
ANNEXURE G
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN:06563872
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;
Vinod Kumar Padmanabhan (MD & CEO)
3.65 : 1.00
MD & CEO: 51.62%
CFO & CS: Incomparable.
(iii) the percentage increase in the median remuneration of employees
The median remuneration increased by 27.70 %.
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.
33
There was an increase of 51.10% in the salaries of
employees other
than managerial personnel. This
increase is due to the reallocation of employees between
the Company and its subsidiaries (i.e between Subex
Limited, Subex Assurance LLP and Subex Digital LLP).
There was increase of 51. 62% in the remuneration paid to
the MD & CEO during the period under review.
The remuneration of Directors, Senior Management
and Employees is as per the Remuneration Policy of the
Company.
040 | SUBEX LIMITED
ANNEXURE H
ANNUAL REPORT ON CSR ACTIVITIES
Sustainable practices have always been an integral part of Subex
Limited. Corporate Social Responsibility is a large part of our overall
sustainability policy encompassing social action. Subex Charitable
Trust is our primary social responsibility trust. The objective was
enabling education of eligible students from financially weaker
sections of society and vocational training for women
1. OBJECTIVE AND SCOPE
The objective of the Corporate Social Responsibility (“CSR”) policy
of Subex Limited (“the Company”) is to lay down guidelines to
enable the Company to take the required measures to make a
meaningful contribution to the society and other stakeholders
The CSR Activities of the company will be focused on :
a) eradicating extreme hunger and poverty; b) promotion
of education; c) promoting gender equality and empowering
women; d) reducing child mortality and improving maternal
health; e) combating human immunodeficiency virus, acquired
immune deficiency syndrome, malaria and other diseases; f)
ensuring environmental sustainability; g) employment enhancing
vocational skills; h) social business projects; i) contribution to the
Prime Minister’s National Relief Fund or any other fund set up by the
Central Government or the State Governments for socio-economic
development and relief and funds for the welfare of the Scheduled
Castes, the Scheduled Tribes, other backward classes, minorities
and women; and j) such other matters as may be prescribed.
For more detail visit https://www.subex.com/shareholder-
services/.
2. 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,
2019.
Composition
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Mr. Vinod Kumar Padmanabhan Managing Director & CEO
Category
Independent Director
Independent Director
3. Average Net Profit of the Company for the last three financial
years: (H5,967.92 Lakhs)
4. Prescribed CSR Expenditure (two per cent. of the amount as in
item 3 above): NIL
5. Details of CSR spent during the financial year:
a.
Total amount spent for the financial year: Not applicable
b. Amount unspent, if any: Not applicable
c. Manner in which the amount spent during the financial year is detailed below:
Particulars
CSR project or activity identified
Sector in which the project is covered
Projects or programme
(1) Local area or other
(2) Specify the state and district where projects or programs were
undertaken
Amount outlay (budget project or programme wise)
Amount spent on the project or programme
Sub Heads;
(1) Direct expenditure on projects or programmes
(2) Overheads
Cumulative expenditure up to the reporting period
Amount Spent directly or through implementing agency
Details
Not Applicable
Annual Report 2018-19 | 041
6. Reason for not spending the prescribed CSR expenditure: Not
ACTIVITIES COVERED DURING THE YEAR
Pursuant to the provisions of Section 198 of the Companies Act,
2013, the company has incurred losses during the preceding 3
financial years. Though it is not mandatory to incur any expenditure
on CSR activities, the below activities have been voluntarily
undertaken during the year.
a) An amount of H5,92,000 was contributed towards the ‘Nurture
Merit Programme’. The programme provides scholarships to
economically challenged students from rural areas.
b) The SCT also sponsored vocational training programmes to
the Prerana Resource Centre. The Centre is an organization for
visually impaired and disabled orphan teenage girls, aiming
to make them self-reliant through these trainings. An amount
of H7,88,000 was contributed towards this cause.
For Subex Limited
For Subex Limited
Anil Singhvi
Chairman & Independent Director Managing Director & CEO
DIN:00239589
DIN:06563872
Vinod Kumar Padmanabhan
Bengaluru, India
May 13, 2019
Applicable
7. CSR Responsibility Statement:
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.
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 to the Prerana Resource Centre for providing vocational
training to visually impaired and disabled orphan teenage girls.
As part of this program, 25 girls have been provided vocational
training to enable them to attain work opportunities across various
industries. The SCT has also provided its support for the education
of economically challenged meritorious students as part of the
Nurture Merit Programme.
FOCUS AREA
•
•
•
•
Eradicating extreme hunger and poverty;
Promotion of education;
Promoting gender equality and empowering women;
Employment enhancing vocational skills.
042 | SUBEX LIMITED
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.
All details mentioned in this Report are as at March 31, 2019.
Material changes and events between the end of the financial year
and date of the report are provided where ever required.
II. BOARD OF DIRECTORS
As on March 31, 2019, the Board of Directors of Subex Limited
comprises of four directors out of which one is an Executive Director
and three are Independent Directors. The Independent Directors
satisfy the criteria of independence specified in the Act and as laid
down under Regulation 16 (1) (b) of the SEBI (LODR) Regulations,
2015. They also meet the criteria for their appointment formulated
by the Nomination & Remuneration Committee (“NRC”) as
approved by the Board.
Mr. Vinod Kumar Padmanabhan was appointed as the Chief
Executive Officer and Managing Director of the Company with
effect from April 01, 2018. The Board appointed Mr. Vinod Kumar
Padmanabhan as a member of the Audit Committee, Stakeholders’
Relationship Committee and Corporate Social Responsibility
Committee with effect from April 01, 2018.
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 Company is listed amongst top 1000 Companies based on
market capitalisation as on March 31, 2019, by the National Stock
Exchange of India Limited. In accordance with amendment to
Regulation 17(1)(c ) of the SEBI (LODR) Regulations, the Board of
Directors of the Company shall comprise of six directors with effect
from April 01, 2019. In line with the said amendment, the Board at
its meeting held on May 13, 2019, appointed Mr. George Zacharias
as an Additional Independent Director, to hold office until the date
of the 25th Annual General Meeting (AGM) and intends to appoint
one more person as Additional Director.
Annual Report 2018-19 | 043
A. Details of Board of Directors and their attendance is as follows:
Director
Position &
Category
No. of
Board
Meetings
Held
No. of
Board
Meetings
Attended
Last AGM
Attended
No. Of
Directorships
in Private
Companies
No. Of
Directorships
in Public
Companies▴
*Mr. Vinod
Kumar
Padmanabhan
Mr. Anil
Singhvi
Ms. Nisha Dutt
Ms. Poornima
Prabhu
**Mr. Ashwin
Chalapathy
Managing Director
and Chief Executive
Officer [Executive/
WTD ]
Chairman &
Independent
Director
Independent
Director
Independent
Director
Non-Executive,
Non-Independent
Director
7
7
7
7
1
6
7
4
7
0
Yes
Yes
Yes
Yes
NA
-
1
-
-
-
2
6
1
1
1
No. Of
Board/
Committees
in which the
Director is
Chairman ■
-
2
-
-
-
No. Of Board
/Committees
in which the
Director Is
Member ■
2
4
2
1
-
Details of Directorships along with category held by Directors in other Listed Entities:
Name of the Director
*Mr. Vinod Kumar Padmanabhan
Mr. Anil Singhvi
Name of the Listed Entity
Nil
Hindustan Construction Company Limited
# Deepak Fertilisers and Petrochemicals
Corporation Ltd
Nil
Nil
Nil
Nil
Nil
Nil
Category of Directorship
Nil
Independent Director
Independent Director
Ms. Nisha Dutt
Ms. Poornima Prabhu
**Mr. Ashwin Chalapathy
Notes:
▴ Includes both Listed and Unlisted Public Companies and includes the Directorship details held in Subex Limited.
■ Committee means Audit Committee and Stakeholders’ Relationship Committee. Membership details mentioned above includes
chairmanship positions held.
* The Board at its meeting held on March 21, 2018, appointed Mr. Vinod Kumar Padmanabhan as the Managing Director and Chief
Executive Officer of the Company with effect from April 01, 2018.
** The Board at its meeting held on May 04, 2018, considered the resignation tendered by Mr. Ashwin Chalapathy from the Directorship of
the company with effect from May 04, 2018. All details of Mr. Ashwin Chalapathy in this report, wherever it appears, are up to the date
of his resignation.
# Mr. Anil Singhvi resigned from the Board of Deepak Fertilisers and Petrochemicals Corporation Ltd w.e.f April 19, 2019.
Additional information:
1. Mr. Anil Singhvi was appointed on the Board of Shree Digvijay Cement Company Ltd effective from April 30, 2019.
2. Ms. Poornima Prabhu resigned from the Board of Finolex Cables Limited effective from March 31, 2019.
044 | SUBEX LIMITED
B. Number and Dates of Board Meetings
Details of meetings of the Board held during the financial year 2018-19 are as follows:
Sl.
1.
2.
3.
4.
5.
6.
7.
Board Meeting Number
No. 1/2018-19
No. 2/2018-19
No. 3/2018-19
No. 4/2018-19
No. 5/2018-19
No. 6/2018-19
No. 7/2018-19
Date of the Board Meeting
May 04, 2018
June 26, 2018
July 19, 2018
July 31, 2018
September 10, 2018
October 31, 2018
January 29, 2019
C. Disclosure of relationships between directors inter-se:
There are no inter se relationships between the Board members.
D. Details of Shareholding of Non- Executive Directors:
Name of the Director
Mr. Anil Singhvi
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. Vinod Kumar Padmanabhan
No. of Shares held as at March 31, 2019
60,000
NIL
NIL
19,095
There are no convertible instruments held by the non-executive directors of the Company.
% of equity
0.010%
NA
NA
0.003%
E. Familiarization
Directors
Programme
for
Independent
the
Pursuant to Regulation 25(7) of the SEBI (LODR) Regulations,
2015, the familiarization programme aims to provide independent
the socio-economic
industry scenario,
directors with
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/.
Core skills/expertise/competencies of the Board of
Directors.
The Board of Subex comprises of highly renowned professionals
drawn from diverse fields. They bring with them a wide range of
skills and experience to the Board, which enhances the quality of
the decision making process of the Board.
Mr. Anil Singhvi, Chairman & Independent Director is a Chartered
Accountant, and has over 30+ years of experience in the corporate
sector and provides his rich financial expertise, advice and
guidance to the Company in formulating the strategic plan for
business, financial and related aspects. Apart from Subex limited
he is also on the board of reputed companies.
Mr. Vinod Kumar Padmanabhan, Managing Director & CEO
who has over 20+ years of experience in the corporate world
has spearheaded several initiatives that helped the company
engage with its customer as a long-term strategic partner and he
also involves in the field of Sales and customer interaction and
negotiation where ever needed. Since April 01, 2018 he has been
instrumental in ramping up Subex’s operations in Africa, Eastern
Europe and the Middle East. He has been successful in meeting
the top industry heads and has been a part of several discussion
forums which has added value to the company in attracting the
business talents and major business dealings.
Ms. Poornima Prabhu, Independent Director holds a degree in
Bachelor of Arts and LLB, provides her valuable advice to the
Board and assists in the decision making related to the Legal and
Governance aspects. In her past career, she served Lodha Ventures
Holdings Pvt Ltd. as Head – Legal and as Of Counsel at J. Sagar
Associates. She has a rich experience in corporate law, including
mergers and acquisitions, divestment and litigation settlement.
Ms. Nisha Dutt, Independent Director holds a Master’s degree
and provides her expertise to the management in devising the
business management, strategic plans and adds value towards
solving the management related queries. She has played a vital
role as a CEO of Intellecap and was responsible for front ending the
conceptualisation programmes.
The Board is satisfied that the independent directors have met
their criteria of independence as required under the SEBI (LODR)
Regulations, 2015 and relevant declarations have been received
from the directors.
III. AUDIT COMMITTEE
The constitution of the Audit Committee complies with the
requirement under Section 177 of the Companies Act, 2013 and
Annual Report 2018-19 | 045
Regulation 18 of SEBI (LODR) Regulations. All the members of Audit
Committee have accounting and financial expertise. The Company
Secretary acts as the Secretary to the Committee.
8. Reviewing, with the management, performance of statutory
and internal auditor’s adequacy of the internal control
systems;
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:
1. 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;
2. Recommending
to
the Board,
re-
appointment, terms of appointment or reappointment and, if
required, the replacement or removal of the statutory auditor
and their remuneration;
the appointment,
3. Approving the payment to be made to the statutory auditors
for any other services rendered by the statutory auditors;
4. Reviewing, with the management, the annual financial
statements and auditors’ report thereon before submission to
the board for approval, with particular reference to:
a) Matters required to be
included
in the Director’s
Responsibility Statement to be included in the Board’s
Report in terms of clause (c) of sub-section 3 of section
134 of the Companies Act, 2013.
b) Changes, if any, in accounting policies and practices and
reasons for the same.
c) Major accounting entries involving estimates based on
the exercise of judgment by management.
d) Significant adjustments made in the financial statements
arising out of audit findings.
e) Compliance with listing and other legal requirements
relating to financial statements.
f) Disclosure of any related party transactions.
g) Modified opinions in the draft audit report.
5. Reviewing, with the management, the quarterly financial
statements before submission to the board for approval;
6. Reviewing, with the management, the statement of uses
/ application of funds raised through an issue (public issue,
rights issue, preferential issue, etc.), the statement of funds
utilized for purposes other than those stated in the offer
document / prospectus / notice and the report submitted
by the monitoring agency monitoring the utilization of
proceeds of a public or rights issue, and making appropriate
recommendations to the board to take up steps in this matter;
7. Reviewing and monitoring the auditor’s independence and
performance, and effectiveness of audit process;
046 | SUBEX LIMITED
9. Reviewing the adequacy of internal audit function, if any,
including the structure of the internal audit department,
staffing and seniority of the official heading the department,
reporting structure coverage and frequency of internal audit;
10. Discussing with internal auditors any significant findings and
follow up there on;
11. 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;
12. Discussing with statutory auditors before
the audit
commences, about the nature and scope of audit as well as
post-audit discussion to ascertain any area of concern;
13. Looking into the reasons for substantial defaults in the
payment to the depositors, debenture holders, shareholders
(in case of nonpayment of declared dividends) and creditors;
14. Overseeing the functioning of the whistle blower/ vigil
mechanism which shall provide for adequate safeguards
against victimization of employees and directors who avail
of the vigil mechanism and to take action against repeated
frivolous complaints filed by director or employee;
15. Powers to investigate any activity within its terms of reference
or referred to it by the Board, have full access to information
contained in the books of accounts, seek information from any
employee, obtain outside legal or other professional advice
and secure attendance of outsiders with relevant expertise, if
it considers necessary;
16. Carrying out any other function as mentioned in the terms of
reference of the Audit Committee and as prescribed under
the SEBI (LODR) Regulations, 2015, the Companies Act, 2013
and the Rules made thereunder and any other statutory/
regulatory body from time to time;
17. Examination of the financial statement and the auditors’
report thereon;
18. Scrutinizing the inter-corporate loans and investments;
19. Valuation of undertakings or assets of the company, wherever
it is necessary;
20. Evaluating the internal financial controls and risk management
systems;
21. Monitoring the end use of funds raised through public offers
and related matters;
22. 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;
23. Calling for comments of the auditors about internal control
systems, the scope of audit, including the observations of
the auditors and review of financial statement before their
submission to the Board and discussing any related issues
with the internal and statutory auditors and the management
of the company, if any;
24. Approval or any subsequent modification of transactions of
the company with related parties;
25. Approval / recommendation to the Board of the transactions
other than transactions referred to in Section 188;
26. Omnibus approval of the related party transactions proposed
to be entered into by the Company subject to the provisions of
the Companies Act, 2013;
27. Ratification of the transactions upto H1 crore entered into by
a director or officer of the Company without obtaining prior
approval of the Audit Committee;
28. reviewing the utilization of loans and/ or advances from/
investment by the holding company
in the subsidiary
exceeding rupees 100 crore or 10% of the asset size of the
subsidiary, whichever is lower including existing loans /
advances / investments;
The Audit Committee charter containing terms of reference is also
available on the Company’s website at http://www.subex.com/
shareholder-services/.
B. Composition of the Audit Committee as on March 31, 2019
Sl. No
1.
2.
3.
4.
Name of the Director
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. Vinod Kumar Padmanabhan
Category
Independent Director
Independent Director
Independent Director
Managing Director & CEO
C. Meetings and Attendance of the Committee during the Year
During the financial year 2018-19, the following meetings of the Audit Committee were held:
Sl. No
1.
2.
3.
4.
5.
6.
Meeting No.
No. 1/ 2018-19
No. 2/ 2018-19
No. 3/ 2018-19
No. 4/ 2018-19
No. 5/ 2018-19
No. 6/ 2018-19
Date of the meeting
May 04, 2018*
June 26, 2018
July 31, 2018*
September 10, 2018
October 31, 2018*
January 29, 2019*
*dates on which the Quarterly/Half Yearly/ Year ended results were considered.
The Attendance of the directors at the Audit Committee Meetings during the Financial Year 2018-19 were as follows:
Name of the Director
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. Vinod Kumar Padmanabhan
No. of Audit Committee Meetings Held
6
6
6
6
No. of Audit Committee Meetings Attended
6
3
6
5
IV. NOMINATION & REMUNERATION COMMITTEE
The Nomination & Remuneration Committee has been constituted
as required under Section 178 of the Act and Regulation 19 of SEBI
(LODR) Regulations, 2015. All the three members including the
chairperson are Independent directors.
The Nomination & Remuneration Committee has, inter alia, the
following mandate as prescribed under Part C of Schedule II of The
SEBI (LODR) Regulations, 2015 and Section 17 of the Companies
Act, 2013 some of which are:
A. Terms of Reference
1.
2.
Formulation of the criteria for determining qualifications,
positive attributes and independence of a director, KMP or
other employees and recommend to the Board of Directors
a policy relating to the appointment & remuneration of the
directors, key managerial personnel and other employees;
Formulation of criteria for evaluation of performance of
independent directors and the Board of Directors and
specifying the manner for effective evaluation of performance
of Board, its committees and individual directors to be carried
out either by the Board, the Committee or by an independent
Annual Report 2018-19 | 047
external agency and
compliance;
review
its
implementation and
3. Devising a policy on diversity of Board of Directors;
4.
Identifying persons who are qualified to become directors and
who may be appointed in senior management in accordance
with the criteria laid down and recommend to the Board of
Directors on their appointment, remuneration and removal;
5. Develop and recommend to the Board succession plan for
the key positions in the company (the “Succession Plan”), to
review the Succession Plan periodically, develop and evaluate
potential candidates for executive positions and recommend
to the Board any changes to, and any candidates for succession
under, the Succession Plan and to perform a consultative and
advisory role for any appointment requiring Board approval
for the top management positions of the Company;
6. Administer the Company’s equity incentive plans, including
the review and grant of options to eligible employees under
the plans and the terms and conditions applicable to such
options, subject to the provisions of each plan;
7. Deciding on whether to extend or continue the term of
appointment of the independent director, on the basis of the
report of performance evaluation of independent directors;
8. Recommend to the Board, all remuneration, in whatever form,
payable to senior management;
9. Carrying out any other function as prescribed under the SEBI
Listing Regulations, the Companies Act, 2013 and the Rules
made thereunder and any other statutory/regulatory body
from time to time;
The Nomination & Remuneration Committee charter containing
terms of reference is also available on the Company’s website at
https://www.subex.com/shareholder-services/ .
A. Composition of the Nomination & Remuneration Committee as on March 31, 2019 is as follows:
Sl. No
1.
2.
3.
Name of the Director
Ms. Nisha Dutt (Chairperson)
Mr. Anil Singhvi
Ms. Poornima Prabhu
Category
Independent Director
Independent Director
Independent Director
B. Meetings and Attendance of the Committee during the Year
During the financial year 2018-19, the following meetings of the Nomination & Remuneration Committee were held:
Sl. No
1.
2.
3.
4.
5.
Meeting No.
No. 1/2018-19
No. 2/2018-19
No. 3/2018-19
No. 4/2018-19
No. 5/2018-19
Date of the meeting
May 04, 2018
June 26, 2018
September 10, 2018
October 31, 2018
January 29, 2019
At the meeting of the Committee held on March 21, 2018, the Committee approved the appointment and remuneration of Mr. Vinod Kumar
Padmanabhan as the Managing Director & CEO of the Company for a period of 3 years with effect from April 01, 2018.
Attendance of the members of the Nomination & Remuneration Committee meetings during the financial year 2018-19 were as follows:
Name of the Director
Ms. Nisha Dutt
Mr. Anil Singhvi
Ms. Poornima Prabhu
No. of Nomination & Remuneration Committee
Meetings Held
5
5
5
No. of Nomination & Remuneration Committee
Meetings Attended
2
5
5
C. 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. The Committee formulated the
criteria for evaluation of the Chairman, Board of Directors, Members
of the Committee and Individual Directors and the evaluation is
conducted accordingly. The evaluation criteria included aspects
related to competency of directors, strategy and performance
evaluation, governance, independence, 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 Chairman and non-independent
directors was carried out by the independent directors. The
directors expressed their satisfaction with the evaluation process
and its results, which reflected in the overall management of the
Board and its committees with the Company.
048 | SUBEX LIMITED
D. Details of remuneration paid to all the Directors
during the year 2018-19 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 & 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 2018-19 are as follows:
Name
Mr. Anil Singhvi
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. Vinod Kumar Padmanabhan
Mr. Ashwin Chalapathy*
* Details of the remuneration paid until May 04, 2018.
Sitting fees
24.00
14.00
18.00
-
-
(H in Lakhs)
Salary and perquisites
-
-
-
56.97
Nil
Remuneration Details of Executive Director:
Mr. Vinod Kumar Padmanabhan, Managing Director & CEO
annexed to the Board’s Report in Form MGT-9 as required under
the provisions of Section 92 of the Companies Act, 2013.
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
Complete details of remuneration paid to Executive Directors
/ Non-Executive Directors during the financial year 2018-19
are provided in (Annexure D) the extract of the Annual Return,
The Company has laid down the criteria for making payments
to the Non-Executive Directors. The details of such criteria are
available in the Remuneration Policy disseminated on the website
of the Company at the below link https://www.subex.com/
shareholder-services/.
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. The committee has been constituted in accordance with
Section 178 of the Companies Act, 2013 and Regulation 20 of
the SEBI (LODR)Regulations, 2015. The Company Secretary is the
compliance officer of the Committee.
A. Composition of the Stakeholders’ Relationship Committee as on March 31, 2019
Sl. No
1.
2.
3.
Name of the Director
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Mr. Vinod Kumar Padmanabhan *
Category
Independent Director
Independent Director
Managing Director & CEO
* Mr. Vinod Kumar Padmanabhan was inducted to the Stakeholders’ Relationship Committee by the Board with effect from April 01, 2018.
The Board of Directors in their meeting held on May 13, 2019 reconstituted the composition of Stakeholders’ Relationship Committee as
follows:
Sl. No
1.
2.
3.
Name of the Director
Ms. Poornima Prabhu (Chairperson)
Mr. Anil Singhvi
Mr. Vinod Kumar Padmanabhan
Category
Independent Director
Independent Director
Managing Director & CEO
Annual Report 2018-19 | 049
B. Meetings and Attendance of the Committee during the year 2018-19:
During the financial year 2018-19, the following meetings of the Stakeholders’ Relationship Committee were held:
Sl. No
1.
2.
3.
4.
Meeting No.
No. 1/2018-19
No. 2/2018-19
No. 3/2018-19
No. 4/2018-19
Date of the meeting
May 04, 2018
July 31, 2018
October 31, 2018
January 29, 2019
C. Attendance of the Directors at the Stakeholders’ Relationship Committee Meetings for the financial year 2018-19
were as follows:
Name of the Director
Mr. Anil Singhvi
Ms. Nisha Dutt
Mr. Vinod Kumar Padmanabhan
No. of Stakeholders’ Relationship
Committee Meetings Held
4
4
4
No. of Stakeholders’ Relationship
Committee Meetings Attended
4
3
4
The committee expresses satisfaction with the Company’s performance in dealing with investor grievances and its share transfer system.
The details of the complaints received and resolved during the fiscal year ended March 31, 2019 are as follows:
Name of the Non-Executive Director heading the Committee
Name of the Compliance Officer
Number of shareholders’ complaints pending at the beginning of the year
Number of shareholders’ complaints received during the year
Number of shareholder’s complaints redressed during the year.
Number of shareholder’s complaints not solved to the satisfaction of the
shareholders
Number of shareholder’s complaints pending at end of the year
Mr. Anil Singhvi, Chairman & Independent Director
Mr. G V Krishnakanth, Company Secretary
0
4
4
0
0
VII. ESOP COMMITTEE (Compensation Committee)
The Company has instituted Employee Stock Option Schemes in line with the Securities and Exchange Board of India (Share Based Employee
Benefits) Regulations, 2014. The Committee grants and administers options under the stock options schemes to eligible employees. Details
of the Employee Stock Options are available under the Board’s Report section of the Annual Report.
A. Composition of The ESOP Committee as on March 31, 2019
Sl. No
1.
2.
3.
Name of the Director
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Ms. Poornima Prabhu
Category
Independent Director
Independent Director
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.
During the year ESOP Committee (Compensation Committee) of
the Board was dissolved and all powers of the Committee were
vested in the Nomination & Remuneration Committee of the Board
of Directors.
CORPORATE SOCIAL RESPONSIBILITY
VIII.
(“CSR”) COMMITTEE
To enable the Company to take required measures to make a
meaningful contribution to society and other stakeholders, it has
constituted the Corporate Social Responsibility Committee (“CSR
Committee”). The CSR Committee has, inter alia, the following
mandate:
i.
formulate and recommend to the Board of Directors of the
Company, a Corporate Social Responsibility Policy which shall
indicate the activities to be undertaken by the Company as
specified in Schedule VII of the Companies Act, 2013;
ii.
recommend the amount of expenditure to be incurred on the
activities referred to in clause (i); and
iii. monitor the Corporate Social Responsibility Policy of the
Company from time to time.
050 | SUBEX LIMITED
A. Composition of the CSR Committee as on March 31, 2019
Sl. No
1.
2.
3.
Name of the Director
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Mr. Vinod Kumar Padmanabhan*
Category
Independent Director
Independent Director
Managing Director & CEO
* 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 2018-19:
During the financial year 2018-19, the Committee met on July 19, 2018 to discuss and approve the contribution to be made towards the
Corporate Social Responsibility programs.
Name of the Director
Mr. Anil Singhvi
Ms. Nisha Dutt
Mr. Vinod Kumar Padmanabhan
No. of CSR Committee Meetings held
1
1
1
No. of CSR Committee Meetings attended
1
1
1
Pursuant to the provisions of Section 198 of the Companies Act,
2013, the company has incurred losses during the preceding 3
financial years. Though it is not mandatory to incur any expenditure
on CSR activities, the below activities have been voluntarily
undertaken during the year.
a) An amount of H5,92,000 was contributed towards the ‘Nurture
Merit Programme’. The programme provides scholarships to
economically challenged students from rural areas.
b) The SCT also sponsored vocational training programmes to
the Prerana Resource Centre. The Centre is an organization for
visually impaired and disabled orphan teenage girls, aiming
to make them self-reliant through these trainings. An amount
of H7,88,000 was contributed towards this cause.
The CSR Charter and the Policy of the company are available on the
website of the company at https://www.subex.com/shareholder-
services/.
IX. 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.
A. Composition of the Risk Management Committee as on March 31, 2019
Sl. No
1.
2.
3.
Name of the Director
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt*
Mr. Vinod Kumar Padmanabhan
Category
Independent Director
Independent Director
Managing Director & CEO
*Ms. Nisha Dutt was appointed as a member of the Risk Management Committee with effect from April 01,2018
B. Meetings and Attendance of the Committee during the year 2018-19:
The committee met once during the financial year 2018-19 at its meeting held on July 19, 2018 to identify the risks which could be foreseen
for the company and mitigate the same.
Name of the Director
Mr. Anil Singhvi
Ms. Nisha Dutt
Mr. Vinod Kumar Padmanabhan
No. of Risk Management
Committee Meetings Held
1
1
1
X. INDEPENDENT DIRECTORS
During the year under review, the Independent Directors met once, inter alia, to:
No. of Risk Management
Committee Meetings attended
1
1
1
•
•
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.
Annual Report 2018-19 | 051
XI. GENERAL BODY MEETINGS
A. Location and time of the last three AGMs:
Year
2015-16
2016-17
2017-18
Date of AGM
September 12, 2016
July 28, 2017
July 31, 2018
Venue
Registered Office of the Company
Le Meridien, “Coronet” hall, No. 28 Sankey Road, Bengaluru-560 052
“The Grand Ball Room”, Hotel Lalit Ashok, Kumara Krupa High Grounds,
Bengaluru-560001
Time
2:00 PM
3:00 PM
2:00 PM
Details of the Special Resolutions passed at the last three AGMs:
No. of special resolutions
Date of Annual
General Meeting
passed
September 12, 2016
2
Details of Resolution pertaining to-
1. Alteration of Articles of Association of the Company.
July 28, 2017
July 31, 2018
3
4
2. Re-appointment of Mr. Surjeet Singh as Managing Director & 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 Whole-Time Director of
the Company.
2. Appointment of Mr. Ashwin Chalapathy as Whole-Time Director of the
Company.
3. Approve payment of remuneration to Independent Directors by way of
commission.
1. Approval of the Employee Stock Option Scheme 2018 of the Company
and Grant of Employee Stock Options to the employees of the Company
thereunder.
2. Approval of the Employee Stock Option Scheme 2018 and grant of Employee
Stock Options to the employees of the Company’s subsidiaries under the
Scheme.
3. Authorization to the ‘Subex Employee Welfare and ESOP Benefit Trust’ for
Secondary Acquisition.
4. Provision of interest free loan by the Company for purchase of its own
shares by the Trust /Trustees for the benefit of Employees and Employees of
Subsidiaries under the Subex Stock Option Scheme 2018.
During the financial year ended March 31, 2019, there were no special resolutions passed through the postal ballot.
B.
Location and time of the last three EGMs.
During the last three years, there was no Extra – Ordinary General Meetings held. However, the details of the latest three Extra-Ordinary
General Meetings held are as follows:
Year
2011-12
2012-13
2012-13
Date of EGM
December 28, 2011
June 28, 2012
August 17, 2012
Venue
Registered office of the Company
Registered office of the Company
Registered office of the Company
Time
11:30 A M
11:30 A M
11:30 A M
C. Postal Ballot during the financial year 2018-19
There was no postal ballot conducted during the financial year
2018-19.
XII. 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/ Economic Times (English) and Vijay Karnataka/
Vishwavani (Kannada). The complete financial statements are
posted on the Company’s website https://subex.com/news-
events/#statutory-advertisement. 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, press
release and business opportunities and the same is displayed
on the website of the company under https://subex.com/
newsroom/.
Being a Company with strong focus on green initiatives, Subex
proposes to send all the shareholder communications such as
052 | SUBEX LIMITED
the notice of General Meetings, Audited Financial Statements,
Board’s Report, Auditors’ Report, etc., as done in the past, to its
shareholders in electronic form by sending the said reports 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 respective 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. The
Company during the said financial year 2018-19, had scheduled
the Investor calls to discuss on the Earnings of the Company for
relevant quarters which were scheduled on August 01, 2018 and
January 30, 2019 respectively. The Company did not have any
Institutional investors during the financial year and hence there
were no presentations made to the institutional investors. The
transcripts pertaining to the Earning’s call held during the year are
uploaded on the Company’s website under the link https://subex.
com/news-events/#investor-analyst-call.
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 31 to the Standalone and Note 32 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 at 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
independence. The Company has
relevant
declarations in this regard from its Independent Directors.
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 persons 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 persons 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 2018-19, there was no fine, penalty nor any
stricture passed by SEBI, Stock Exchanges or any other Statutory
Authority on matters relating to capital markets. Also, 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.
D. 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 and no personnel
has been denied access to the audit committee during the
said financial year. 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/.
E. POLICY ON ‘MATERIAL’ 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.
Annual Report 2018-19 | 053
F. DISCLOSURE OF COMMODITY PRICE RISKS AND
COMMODITY HEDGING ACTIVITIES
(LODR) Regulations, 2015 and the same forms a part of this report
as “Annexure A”.
Company is exposed to foreign exchange risk on account of import
and export transactions entered. The Company is not doing any
hedging activities, as there is a natural hedge between exports
and imports.
G. DETAILS OF UTILIZATION OF FUNDS RAISED THROUGH
PREFERENTIAL ALLOTMENT OR QUALIFIED INSTITUTIONS
PLACEMENT AS SPECIFIED UNDER REGULATION 32 (7A).
There were no funds raised by the Company through Preferential
allotment or qualified institutional placement as specified under
the above mentioned regulation during the financial year 2018-19.
H. CEO/CFO CERTIFICATION
The Company has obtained a certificate from the CEO/CFO as
required by Regulation 17 (8) (Part B of Schedule II) of the SEBI
I.
A CERTIFICATE FROM A COMPANY SECRETARY IN
PRACTICE THAT NONE OF THE DIRECTORS ON THE BOARD
OF THE COMPANY HAVE BEEN DEBARRED OR DISQUALIFIED
FROM BEING APPOINTED OR CONTINUING AS DIRECTORS
OF COMPANIES BY THE BOARD/MINISTRY OF CORPORATE
AFFAIRS OR ANY SUCH STATUTORY AUTHORITY.
A Certificate from the Practicing Company Secretary is received by
the company stating that none of the directors on the board of the
company have been debarred or disqualified from being appointed
or continuing as directors of companies by the board/ministry of
corporate affairs or any such statutory authority and the same is
annexed to this report as “Annexure B”.
J. DETAILS OF FEES PAID BY THE LISTED ENTITY AND ITS SUBSIDIARIES, ON A CONSOLIDATED BASIS, TO THE STATUTORY
AUDITOR AND ALL ENTITIES IN THE NETWORK FIRM/NETWORK ENTITY OF WHICH THE STATUTORY AUDITOR IS A PART.
Fee disclosures as required by Clause 10(k), Part C, Schedule V of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015.
The total fees for all services paid by Subex Limited and its subsidiaries, on a consolidated basis, to S.R. Batliboi and Associates LLP, Statutory
Auditors and other firms in the network entity of which the statutory auditor is a part, as included in the consolidated financial statements
of the Company for the year ended March 31, 2019, is as follows:
Fees for audit and related services paid to S.R. Batliboi & Associates LLP
Other fees paid to S.R. Batliboi & Associates LLP & Affiliate firms and to entities of the
network of which the statutory auditor is a part.
Total fees
(H in Lakhs)
119
5.5
124.5
K. DISCLOSURES IN RELATION TO THE SEXUAL HARASSMENT
OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013
The Company has an
Internal Complaints Committee (ICC
Committee) which meets regularly to discuss and monitor if there
is any sexual harassment in the work place and resolves the
issues if any. During the financial year under consideration, the
ICC committee did not receive any complaints related to the sexual
harassment of women.
L. 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 Board of 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 the code underwent an amendment
which was approved by the Board at its meetings held on May 13,
2019. All the members of the Board and the Senior Management
Personnel have affirmed compliance to the Code, as at March
31, 2019. A declaration to this effect, signed by the Managing
Director & CEO is provided in the certification section of the Annual
Report. The Code has been posted on the Company’s website
under the link https://www.subex.com/shareholder-services/ as
“Annexure C”.
M. RECOMMENDATION OF THE COMMITTEES
There were no instances in the financial year 2018-19, where the
Board had not accepted any recommendation of any committee of
the board which is mandatorily required.
054 | SUBEX LIMITED
XIV. Management Discussion and Analysis
The Management Discussion and Analysis forms part of the Annual
Report.
XV. General Shareholder information
General shareholder information is provided in the “Shareholder’s
Information” Section of the Annual Report. There liquidity position
of the Company was not impacted during the said financial year.
XVI. Corporate Governance 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.
XVII. Compliance with Discretionary
requirements provided under Part E of Schedule
II of the SEBI (LODR) Regulations, 2015
Part E of Schedule II of the SEBI (LODR) Regulations, 2015 states
that the discretionary requirements provided therein may be
implemented as per the Company’s discretion. However, the
disclosures of compliance with mandatory requirements and
adoption (and compliance)/non-adoption of non-mandatory
requirements shall be made
in the section on Corporate
Governance in the Annual Report. The Company has complied with
the following non-mandatory requirements:
A. The Board
Mr. Anil Singhvi, Independent Director is the Non-Executive
Chairman of the Company. The Company reimburses the expenses
incurred by the Chairman for discharge of his duties that are
attributable to the company on a regular basis pursuant to the
provisions of Regulation 27(1) of SEBI (LODR) Regulation, 2015.
B. Shareholders’ Rights
The Company communicates with investors regularly through
e-mails, telephone calls and face to face meetings. The Company
publishes the quarterly financial results in leading business
newspaper(s) as well as on the Company’s website.
C. Modified opinion(s) in Audit Report
The Company did not receive any Modified Opinion in the Audit
Report of the Financial Statements during the financial year.
D. 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.
For Subex Limited
For Subex Limited
Anil Singhvi
Chairman & Independent Director Managing Director & CEO
DIN:00239589
DIN:06563872
Vinod Kumar Padmanabhan
Bengaluru, India
May 13, 2019
Annual Report 2018-19 | 055
ANNEXURE A
CEO and CFO certification in terms of Regulation 17 (8)
of the SEBI (LODR) Regulations, 2015
To,
The Board of Directors
Subex Limited
Dear Sir/Madam,
CEO/CFO Certification in terms of Regulation 17 (8) of the SEBI (LODR) Regulations, 2015
In terms of Regulation 17 (8) of the SEBI (LODR) Regulations, 2015, we hereby certify to the Board of Directors that:
A) We have reviewed the financial statements and the cash flow statement of the Company for the year ended March 31, 2019 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.
Venkatraman G S
Chief Financial Officer
Date: May 13, 2019
Place: Bengaluru
Vinod Kumar Padmanabhan
Managing Director & CEO
Date: May 13, 2019
Place: Bengaluru
056 | SUBEX LIMITED
ANNEXURE B
CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS
(As per item 10(i) of clause C of Schedule V of the Securities Exchange Board of India
(Listing Obligations and Disclosure Requirement) Regulations, 2015 read with regulation 34(3)
of the said Listing Regulations).
To
The Members,
Subex Limited
1. We have examined the status of debarring or disqualification from being appointed or continuing as directors of companies by the
SEBI/Ministry of Corporate Affairs or any such statutory authority for the year ended on March 31, 2019, as stipulated in item 10(i)
of clause C of Schedule V of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations,
2015 read with regulation 34(3) of the said Listing Regulations.
2.
It is neither an audit nor an expression of opinion regarding the legality of debarring or disqualification by the SEBI/Ministry of
Corporate Affairs or any such statutory authority.
3. Our examination was limited to a review of the relevant records of the Company and website of Ministry of Corporate affairs, stock
exchange(s), SEBI and other relevant statutory authority(ies) (specify) as specified in Annexure to this certificate.
4.
In our opinion and to the best of our information and according to our examination of the relevant records and the explanations given
to us and the representations made by the Directors and the Management, we certify that none of the directors on the board of Subex
Limited have been debarred or disqualified from being appointed or continuing as directors of companies by the SEBI/Ministry of
Corporate Affairs or any such statutory authority during the year ended at March 31, 2019.
5. As on March 31, 2019, the Board of Directors of the Company was constituted by:
Sl No.
1.
2.
3.
4.
Name of the Director
Anil Chandanmal Singhvi
Poornima Kamalaksh Prabhu
Nisha Dutt
Vinod Kumar Padmanabhan
DIN
00239589
03114937
06465957
06563872
Designation
Chairman & Independent Director
Independent Director
Independent Director
Managing Director & CEO
Date: May 13, 2019
Place: Bengaluru
For BMP & Co. LLP
Company Secretaries
Pramod S M
Partner
FCS 7834 / CP No. 13784
Annual Report 2018-19 | 057
Annexure to Certificate of non disqualification of Directors
List of Documents/records/websites verified for issuance of Certificate as per item 10(i) of clause C of Schedule V of the Securities
Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015 read with regulation 34(3) of the said
Listing Regulations.
Sr. No Documents/records/website
i.
ii.
Minutes of Nomination & remuneration Committee
Corporate announcements made by Company for appointment of
Directors
Corporate announcements made by Company for cessation/resignation/
vacation of Directors
Declaration made by directors in form DIR-8
iii.
iv.
v.
DIR-9 filed by the Company regarding default under section 164(2)
vi.
vii.
List of disqualified directors placed on website of Ministry of Corporate
Affairs at http://mca.gov.in/MinistryV2/disqualifieddirectorslist.html
Directors debarred/disqualified through SEBI order as per list placed at
BSE Limited and NSE Limited at https://www.bseindia.com/investors/
debent.aspx
https://www.nseindia.com/invest/content/regulatory_actions.htm
ANNEXURE C
Reference
Circular No. LIST/COMP/14/2018-19 dated June 20,
2018 issued by BSE & NSE/CML/2018/02 dated June
20, 2018
Section 164(2) of the Companies Act, 2013 read
with Rule 14(2) of the Companies (Appointment and
Qualifications of Directors) Rules, 2014
Section 164(2) of the Companies Act, 2013 read
with Rule 14(2) of the Companies (Appointment and
Qualifications of Directors) Rules, 2014
Section 164(2)
Section 11B of the SEBI Act, 1992
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, 2019.
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN: 06563872
Date: May 13, 2019
Place: Bengaluru
058 | 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 enable Digital Trust for organizations. Subex is now charting
the transformation of communications service providers into
digital enterprises. We are developing next-generation solutions
in new and emerging business areas such as advanced data
analytics, business intelligence, business assurance and Internet
of Things (IoT). Our revenue contributing pie consists of licensing,
professional services related to installations and configuration
activity, annual support contracts and managed services.
Our pioneering platform, the Revenue Operations Centre (ROC®)
– a centralized approach that sustains profitable growth and
financial health of organizations through coordinated operational
control - brings together business intelligence, domain knowledge
and workflow support. ROC acts as the underpinning solution on
which organizations can build their processes to bring in privacy,
security, risk mitigation, confidence in data, and predictability.
Subex leverages its award-winning analytics solutions in areas
such as Revenue Assurance, Fraud Management, Network Asset
Management, Partner Settlement, and Analytics and complements
them through its newer solutions such as IoT Security and Anomaly
Detection. Subex also offers scalable Managed Services and
Business Consulting services.
We are proud to be recognized as a leader in our market, and
to be seen as the pioneers in the area of Digital Trust. We are
especially proud to have received numerous awards jointly with
our customers. Our recent awards include:
•
•
•
Pipeline Innovation Awards 2018 under “Managed Services”
category & “Innovations in Security & Assurance” and Big Data
& Analytics
Aegis Graham Bell Award 2017 for Innovation in ROC Insights
under “Data Science” Category
Global Telecoms Business Innovation Award 2017 with Saudi
Telecom Company
spent
25 years in enabling 3/4th of the largest
Subex has
50 Communications Service Providers (CSPs), globally achieve
competitive advantage. Being truly a global company, we have
300+ installations across 90+ countries.
We have a global presence, employing over 800+ 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
Businesses have changed drastically in the last few years,
with disruptions in technology, business models and customer
preferences. Rapid digitalization has empowered organizations to
make the most out of available data, but at the same time put a huge
responsibility on them in terms of trust. However, recent studies
have shown that trust is at an all-time low in today’s digital world.
In one of the studies, close to 1/3rd of the respondents mentioned
that they were less comfortable sharing their data, than they were
6 months ago. Organizations have now begun to take note of this
dip in trust levels, and many are acting in the right direction. In
another study, 61% of CEOs see ‘building trust’ as one of the top 3
priorities for their organizations. In this backdrop, Subex’s focus on
Digital Trust provides a huge opportunity in terms of the problem
to be addressed. Industries like Telecom, e-Commerce, and FinTech
deal with humungous amounts of data, and for them to succeed, it
is absolutely necessary to put trust at the center of their business.
Be it forging new partnerships, adopting emerging technologies,
driving new business models or improving their brand image
businesses now are seeing Digital Trust as a catalyst for success,
and that has opened up multi-vertical opportunities for Subex to
address.
Annual Report 2018-19 | 059
THREATS
Every great opportunity comes with a few inherent risks, when
addressed effectively delivers excellent results. In the case of
our core areas, threat arises from the fact that revenues from our
traditional areas have gone flat. While it can be attributed to the
lower impetus for telecom industry as a whole, it can be addressed
with multi-layered innovation on products and business models.
The challenges that telcos face will continue to change rapidly,
and this calls for agility and quick response from solution providers
like us. The infusion of AI-ML into our product lines, addressing
of digital frauds, repurposing Revenue Assurance for Regulatory
Assurance, etc. are all examples of how we are dealing with the
threat of stagnating relevance. With respect to the new verticals
we’re entering, while we are aggressive in our GTM strategy, we
are also cognizant about the risk of encountering competition from
unexpected quarters. Especially in the digital era, competition can
arise from extremely unconventional sources, and will need to be
dealt with utmost care. To ensure a safe pursuit, our approach is to
enter new verticals with those use cases which have very similar
applications as in the telecom vertical - where we have had success
for over two decades. For instance, telecom Fraud Management is
a domain that Subex is a leader in, and Fraud as a problem exists
in a similar way in the e-Commerce vertical as well allowing us to
fully utilize our expertise to demonstrate success in e-Commerce.
Another approach to mitigate the risk of competition in unfamiliar
territories is strategic partnerships with other vendors where there
are synergies.
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
e
g
a
t
n
e
c
r
e
P
100
90
80
70
60
50
40
30
20
10
0
36
34
23
31
10
22
34
10
FY 19 FY 18
Consolidated
e
g
a
t
n
e
c
r
e
P
100
90
80
70
60
50
40
30
20
10
0
28
35
20
32
13
46
20
6
FY 19 FY 18
Standalone
Managed Services,
Implementation & Customization,
Support,
License & Addl. License
060 | SUBEX LIMITED
OUR PRODUCTS
Subex offers the Revenue Operations Centre (ROC®) Solution
Suite for Business and CAPEX Optimisation, which has solutions
for driving Digital Trust and Optimisation. To this end, Subex’s
core products around Revenue Assurance and Fraud Management
have been enhanced with the power of Artificial Intelligence and
Machine Learning. Subex also provides network analytics through
its Network Asset Management, Data Integrity Management and
Capacity Management solutions. In a digital world, where multiple
partnerships will need to be managed, Subex provides CSPs with
a Partner Management and Partner Settlement solution. As a
means to help drive confidence in data, Subex recently launched
its revamped Analytics solutions which provides CSPs with an end-
to-end Analytics framework. Subex also provides organisations
with confidence in the growing connected world, through its IoT
Security solution, Subex secure, which is a multi-vertical solution
focused towards the telecom, government, automotive, and
defense segment, to name a few. Subex also recently launched
CrunchMetrics, an AI-based anomaly detection solution, which
helps organisations understand anomalous activities in their data
to identify avenues of growth and detect risks before they occur.
All solutions come together to help CSPs prevent fraud losses,
collect all revenues, reduce defaulted payments, reduce wasteful
expenditure, manage inter-carrier and partner expenses and
optimize CAPEX.
The ROC enables profitable service provider growth through
coordinated operational control.
For service providers that aim to optimize their operational
and process infrastructure, ROC delivers Business and CAPEX
Optimization in the most pragmatic manner.
Digital Revenue Assurance
ROC Revenue Assurance solution offers a comprehensive view of
an enterprise by providing better visibility into risks surrounding
operations, revenue and margins. Built around big data and
focused analytics capabilities, the solution addresses the new,
complex and critical challenges faced by Revenue Assurance
teams globally.
With a product history spanning over two decades, ROC Revenue
Assurance is the culmination of the operational experience of
being deployed in over 80+ sites globally.
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.
ROC Fraud Management solution provides comprehensive fraud
coverage for more than 350 types of fraud. The solution is integrated
with artificial intelligence and machine learning capabilities
to safeguard networks from frauds such as subscription fraud,
bypass/SIM box Fraud, PBX hacking and international revenue
share fraud (IRSF). It also provides coverage for next-generation
frauds such as Handset fraud, online sales, IPTV, advertisement
fraud and other digital frauds.
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.
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. 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.
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.
insights
Partner Management
Subex offers a comprehensive partner management solution
that provides visibility into the operator’s end-to-end wholesale
business with accurate
into revenue. The solution
offers a 360° view of a telco partner ecosystem by providing a
nuanced profile of partner agreements based on data such as
revenue sharing and margins. The solution helps in swift partner
onboarding, partner self-care, end-to-end revenue visibility and
communication between the operator and your partners. It helps
telecom operator manage diverse revenue streams while helping
to launch high-value, high margin services in collaboration with
partners.
ROC Partner Management is a domain-agnostic platform that
addresses the dynamics of telecom operator partner ecosystem
across wholesale voice, short message service (SMS), data,
content, Internet of Things (IoT), machine-to-machine (M2M),
utility, roaming, digital services, and billing and settlement.
Subex Secure
Subex Secure is an IoT security solution designed to secure
connected and constrained devices. It is an agentless product
Annual Report 2018-19 | 061
enabling networks to introduce multitudinous types of devices
securely. Subex Secure offers a way for business to scale IoT
deployments without compromising on security or taking on
additional risk. It is capable of monitoring billions of devices and
their data transmissions. Using a three-tier detection strategy,
it identifies threats as they occur on the network. These three
strategies are signature-based detection, heuristics and anomaly-
based detection. Risks are identified and flagged across these
three security layers thereby allowing seamless movement and
integrity of data.
Subex Secure’s threat database is updated in real-time with
signatures gathered from our 60 honeypots located in key cities
around the world. Threat intelligence is also gathered from other
credible sources.
Subex Secure is built for securing IoT. It comes with:
• Multi-tier detection mechanism to filter, flag and eliminate
various threats
•
•
•
•
Real-time threat database updates with threat intelligence
drawn globally
A unique detection engine that renders early detection of
threats
Zero latency and compute power
Virtually unlimited scalability for various IoT deployments and
connectivity flavors
SOC-based/SOC independent/hybrid ops
•
Network Asset Management
Network Asset Management
is a Telecom Asset Lifecycle
Management solution which provides framework and controls to
help CSPs make the best use of their assets to optimise their capital
and operations expenses in the digital era, which thereby helps
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 Network Asset
Management uses 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 in data integrity management, with over a
decade of experience in data integrity transformations with the
062 | SUBEX LIMITED
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 CSPs 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.
Capacity Management
Subex’s Capacity Management solution helps operators undertake
a predictive approach to understand their capacity
issues,
thereby helping them ensure the best customer experience while
optimising costs. 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.
Analytics Center of Trust (ACT)
Subex Analytics Center of Trust (ACT) is an end-to-end advanced
analytics framework which helps CSPs truly leverage their data to
drive business outcomes. Subex ACT enables CSPs to get the most
from their Analytics program from the very start, i.e., strategizing
the analytics roadmap, to setting up a trusted business intelligence
layer, till the end, i.e., generating analytics-driven business
outcomes. ACT comprises for three components:
•
•
•
Strategize: Leveraging over 25 years of expertise in telecom
analytics, Subex helps creating the right analytics strategy by
establishing CSPs current maturity, define the business vision,
and identifying the required roadmap.
Trusted BI: Subex’s ACT is powered by an intelligent
Information Infrastructure, which acts as the brain of the
system delivering real-time insights on the shifts in trends
across the spectrum. Subex’s BI is built around Hadoop and
big data capabilities, powered by machine learning (ML) and
artificial intelligence (AI).
ROC Insights: ROC Insights, advanced analytics service,
powers the ACT infrastructure, delivering next-generation
Analytics-as-a-Service to Telcos across the globe. The
solution leverages Subex’s expertise in BSS/OSS and Telecom
Analytics to deliver actionable business intelligence to
relevant business users at the right time. By combining the
best in both machine and human intelligence, the solution
transcends traditional approaches, accelerating the digital
journey of organizations. ROC insights provides actionable
insights around key focus areas: Product, Customer, Risk and
Revenue.
CrunchMetrics
Rapid digitalization across industries today has led to a massive
explosion of data volumes where years’ worth of data in the last
decade is now being generated in the matter of a few hours. While
organizations are doing reasonably well to capture and store this
data, the mechanisms to truly make use of such huge volumes of
data are unable to match the current volumes and velocity of data
being generated. Due to this challenge, organisations fall short
of responding to significant changes which can improve business
critical functions. To help organisations deal with this challenge,
Subex has launched a new brand, CrunchMetrics, an advanced
anomaly detection system designed to help organizations discover
business opportunities and mitigate risks in real-time. It leverages
the combined power of statistics, Artificial Intelligence (AI) and
Machine Learning (ML) to sift through data and identify anomalies
that are a representation of business impact. CrunchMetrics brings
to the table real-time anomaly detection helping organizations
find the ‘needle in the haystack’, thereby facilitating low latency
decision making. Through the launch of CrunchMetrics, Subex aims
to address a huge market that is expected to reach USD 4.5 Billion
by 2022 and will to cater to a variety of verticals.
CrunchMetrics is vertical agnostic and has a wide range of use
cases for Telecom, Retail and FinTech verticals at launch.
Consulting & Assessment Services
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
revenue
assurance and fraud management processes with respect
to global standards and provide metrics across people skills,
processes, technology usage and measurement strategies.
their
•
•
Business operations assessments: Gap analysis of existing
processes and provide the roadmap to close these gaps using
“analyse, evaluate, assess and recommend” framework.
Risk management: Identify the risks in the revenue chain
and plug leakages in a timely manner, through regular end
to end assessment of the existing business and revenue
streams. Subex’s custom framework is based on a thorough
•
•
•
•
understanding of risks, creating a Risk Control Matrix utilizing
TM Forum standards, and developing comprehensive standard
operating procedures.
Business process re-engineering: Review of the existing
business processes and then design and implement the new
business process after considering the best industry practices.
System integration and IT support operations: While migrating
from legacy OSS/BSS infrastructure, Subex provides extensive
checklists and exhaustive test cases making sure that
migration cost is reduced. Subex can also help in carrying out
customized health-check of RA and FM IT operations of telcos.
Product and service margin assurance: Assessment of the
target market and holistic margin and profitability check for
the entire service and product catalogue.
Portfolio optimization: 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
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.
Annual Report 2018-19 | 063
Subex Managed Services
SMART services leveraging proven technology
On-demand, Software-as-a-Service (SaaS) – ROC cloud
Small and medium telcos have business support system (B/OSS)
needs that are very different from those of larger telcos. In the
same vein, most B/OSS products are developed to address the
needs of large telcos. They are loaded with a host of standard
features, not all of which are relevant to smaller organizations, and
necessitate a substantial investment in licenses and resources.
Quite naturally, it is difficult to justify this investment in most small
and medium organizations. Subex is recognized as the leader in
the business optimization space and has pioneered the concept
of the ROC – the Revenue Operations Center – to enable profitable
growth through coordinated operational control. The same ROC is
delivered as a service to suit the needs of small and medium telcos
in the form of ROC cloud.
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 – Astro, Airtel, CAT, Celcom, DTAC, Digi Malaysia, DST Brunei,
Indosat Ooredoo, Maxis, Mobifone, Ncell, Optus, Unifi Mobile,
PLDT, Reliance Jio, Robi Axiata, Starhub, Singtel, Smart Axiata, Tata
Teleservices, Telenor Myanmar, Telstra, Telkom Indonesia, True
Move, Vinaphone, VodafoneIdea.
Americas- AT&T, Bell Canada, BTC Bahamas, Buckeye, C&W
Panama, Charter Communications, Cincinnati Bell Wireless, Claro
Brazil, Claro Colombia, Claro Dominican Republic, Cogeco, Comcast
Cable, Cox Communications, Entel Bolivia, Movistar Colombia,
Movistar Mexico, MTS, Rogers, Shaw Communications, Nextel
Brazil, ICE, Telcel, Telus, Telefonica, Tigo, T Mobile, Verizon.
EMEA- Airtel, Almadar, Atalntique Telecom, , Azercell, AlbTelecom
Batelco, , BTC Botswana, BT, Cell C, Colt, Coolwave, Cyta, Du, Econet,
Ethio Telecom, Etisalat UAE, Etisalat Nigeria, Geocell, Glo, Go,
Interoute, IPKO, INWI, Jawwal, KCell, Century Link, Liberty Global,
Lifecell, Mascom, Melita, Mobily, Moldcell, , Omantel, , Ooredoo
Algerie, Ooredoo Kuwait, Ooredoo Tunisia, Ooredoo Qatar, Orange
Mali, Orascom Algeria, Paltel, , 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, Vodafone
Romania, Vodafone Ziggo, Zain.
THE CSP INDUSTRY – the mobile market and its
outlook
A major share of the CSP industry is focused on the mobile market
and we will focus on the mobile market as well as the other
interconnected areas that make up the ecosystem.
Mobile penetration continues to grow but at a slower
pace
As per GSMA, by the end of 2018, 5.1 billion people around the
world subscribed to mobile services, accounting for 67% of the
global population. While a total of 1 billion new subscribers have
been added in the four years since 2013 (representing an average
annual growth rate of 5%), but the speed of growth is definitely
slowing. The market expects an average annual growth rate of
1.9% between 2018 and 2025 which will bring the total number of
mobile subscribers to 5.8 billion (71% of the population).
Unique
mobile
subscribers
2018
5.1bn
Mobile
Internet
users
2018
3.6bn
67% PENETRATION RATE
(% of population) 71%
47% PENETRATION RATE
(% of population) 61%
CAGR 2018-25
20255.8bn 1.9%
CAGR 2018-25
20255.0bn 4.8%
Source: GSMA Report 2019
064 | SUBEX LIMITED
It has been estimated that in 2018, mobile technologies and services generated 4.6% of GDP globally which is equivalent to $3.9 trillion
of economic value added. Not only this, the ecosystem also supported almost 32 million jobs (directly and indirectly). The GSMA report
mentions that by 2023, mobile’s contribution will reach $4.8 trillion (4.8% of GDP) as countries around the globe increasingly benefit from
the improvements in productivity and efficiency brought about by increased take-up of mobile services.
Mobile
industry
contribution
to GDP
Public funding
Mobile ecosystem contribution
to public funding (before regulatory
and spectrum fees)
2018510bn
$
Source: GSMA Report 2019
4.6%
of GDP 3.9tn
$
4.8tn
$
4.8%
2018
2023
Employment
2018
14m
Jobs
directly supported by
the mobile ecosystem
+17m indirect jobs
4G becomes the technology of choice while 5G is here
to stay
4G surpassed 2G in 2018 to become the world’s leading mobile
technology, with 3.4 billion connections representing 43% of the
total (excluding licensed cellular IoT). With growth coming rapidly,
especially across developing markets, 4 G will soon become the
dominant mobile technology, exceeding half of global mobile
connections in 2019 and reaching 60 percent in 2023.
Meanwhile, 5G is now a reality. Following market launches in the
United States and South Korea towards the end of 2018, by the end
of 2019, 16 more major countries will launch 5 G networks. While it
will take some time for 5G to hit critical mass, some markets will see
relatively rapid growth (for example, South Korea, US and Japan).
The speed at which 5 G is adopted and the value it will generate
will be affected by three factors: value generation opportunities,
cost considerations, and deployment dependencies.
Mobile operators are investing around $ 480 billion worldwide
between 2018 and 2020 in mobile capex to support this generative
shift and further increase consumer engagement in the digital era.
Half of this will be from countries expected to have launched 5G
by 2020. However, since most 5 G deployments will occur after
2020 (64 markets over the 2021–2025 period, bringing the total
to 116), we expect capex to grow above the approximately 160
billion dollars expected in 2020.
As the boundaries between mobile and the wider digital ecosystem
continue to blur and data monetisation poses an ongoing
challenge, many operators are moving beyond their traditional
(mobile and fixed) telecommunications businesses to explore new
revenue streams in a rapidly changing competitive environment.
While this strategic play has different approaches, timelines and
scales, the predominant drivers are the rise of IoT, the evolution of
the content ecosystem, the transformative power of AI for network
operations and services, and the onset of a new era of connected
devices.
While telecoms will continue to be the dominant source of revenue
for operators in the near to medium term, these new opportunities
have the potential to provide new revenue streams and add
business capabilities to allow operators to play a key role in the
future digital ecosystem.
Annual Report 2018-19 | 065
IoT will be omnipresent
The number of IoT connections (cellular and non- cellular) is
expected to triple worldwide between 2018 and 2025 to reach 25
billion. Growth will be driven by a proliferation in the segments
of smart building and smart home, together accounting for over
half of the 16 billion new IoT connections over this period. Rising
investor financing and a supportive ecosystem for innovation will
help support this growth, along with regulatory pressure for energy
efficiency. In addition, network connectivity developments, led by
operators, will play a key role in adapting to a variety of IoT use
cases. At the end of 2018, there were 83 commercial deployments
of LTE-M and NB-IoT worldwide.
Global IoT revenue meanwhile is expected to increase at an
average annual rate of 23% to 2025 to reach $1.1 trillion, a
fourfold increase on 2018. However, connectivity is expected to
become increasingly commoditised, declining from 9% of total
IoT revenue in 2018 to 5% in 2025. Therefore, mobile operators
deploy different strategies and business models to move beyond
offering connectivity only: their role in the value chain could vary
from providing essential tools and capabilities to IoT solutions
for ecosystem partners to becoming an end-to-end IoT solution
provider itself.
Internet of Things
9.1bn
25.2bn
2018
Total connections
2025
Smartphones
% of connections*
2025
60% 2018
79%
% of connections*
2018
4G
43%
5G 1.4bn
5.9%
15%
of connections*
2025
2025
*Excluding cellular IOT
Artificial Intelligence to drive Global Economy
Artificial intelligence has the potential to incrementally add 16
percent or around $13 trillion by 2030 to current global economic
output-an annual average contribution to productivity growth
of about 1.2 percent between now and 2030, according to a
September, 2018 report by the McKinsey Global Institute on the
impact of AI on the world economy.
AI could potentially lead to a gross GDP growth of around 26 percent
or $22 trillion by 2030. The major contributors to this figure are the
automation of labor, which could add up to 11 percent or around
$9 trillion to global GDP by 2030, and innovations in products and
services, which could increase GDP by about 7 percent or around
$6 trillion by 2030.
However, it is believed that in addition to its economic benefits,
AI will also lead to significant disruptions for workers, companies
and economies. There will likely be considerable costs associated
with managing labor-market transitions, especially for workers
being left behind by AI technologies, which could reduce the
gross impact of AI by around 10 percentage points, leading to the
aforementioned net GDP increase of 16 percent or $13 trillion by
2030.
Subex as a leading telecom solutions provider is uniquely
positioned to help telcos to embrace digitial transformation from a
business optimization provider. As 4G-5G connections would give
significant opportunities for telcos to offer digital services, there
is a very good opportunity for Subex to offer its risk and security
portfolio for these services. In addition to that, Subex can also offer
its asset assurance solution helping operators in optimizing their
costs of networks. Lastly, with its advanced analytics and insights
solutions, Subex can help global telcos in enhacing customer
experience for digital services rolled out on 4G-5G networks.
Key Projects Won/Executed in FY 19
Subex wins multi-million-dollar contract from Optus to deploy
its ROC Network Asset Management solution: The Company won
a multi-million-dollar contract with Optus, Australia to implement
its ROC Network Asset Management solution. Optus is one of the
066 | SUBEX LIMITED
largest telecom operators in Australia and a fully owned subsidiary
of Singtel. They offer mobile, enterprise and wholesale services
and home entertainment, exclusive content including EPL.
Subex was selected after successfully demonstrating its strong
domain expertise and unique value proposition while showcasing
the superiority of its solution. As part of the deal, Subex’s ROC
Network Asset Management will enable Optus to control all
of its existing and new network investments through a well-
defined network efficiency framework. This implementation will
further help Optus to protect their network investments, improve
utilization visibility and provide better financial controls.
Opening a new IoT security Lab in Bengaluru: An IoT Security
Lab was inaugurated in this fiscal which will be open to public-
private partnerships with universities. The lab provides research
opportunities on IoT Security threat intelligence using a one-of-its
kind honeypot network. This along with the continuous monitoring
of over 8.5 million customer devices has enabled the Company to
obtain 30% more IoT and ICS threat signatures and thereby offer a
comprehensive IoT threat intelligence and prevention solution to
our customers.
Florence, Arizona partners with Subex to cyber-secure critical
infrastructure: Subex partnered with the Town of Florence, Arizona
to provide security to its critical public infrastructure. As part of
this partnership, Subex will provide end-to-end cybersecurity to
detect, repel and remediate advanced threats to Florence’s most
basic and vital technological systems. When Florence launches its
smart cities project, Subex will continue to be the cybersecurity
partner for all projects coming under the plan.
Through this partnership, the Town of Florence is leading the way
by becoming one of the first cities to protect its public infrastructure
through solutions, strategies, and measures provided by Subex.
This partnership is a landmark one and will pave the way for other
cities to adopt similar measures thereby ensuring the highest
levels of protection for smart city projects across the United States.
Telefónica partnered with Subex On New Cybersecurity Venture:
Subex has joined hands with Telefonica to secure the world of IoT
across devices, networks and other infrastructure components.
Through this partnership, both companies will collaborate on
IoT security centered around Subex’s IoT offerings. Telefonica
will be using Subex’s offerings to secure IoT deployments on its
network while also offering them to other enterprises interested
in deploying an IoT security solution. One of the objectives of this
partnership is to remove the notion that security is a barrier for the
adoption of IoT and showing that instead, security can be a key to
unlocking demand and improve the adoption by providing holistic
and robust IoT security solutions. Security around IoT is gradually
turning into a competitive advantage and businesses can look at
leveraging IoT security as a differentiator factor while adhering to
regulatory compliance mandates.
Subex wins 5-Year multi-million-dollar contract with BTC:
Subex won a 5-year multi-million-dollar deal with Botswana
Telecommunications Corporation Limited
leading
telecommunications services provider in Botswana. As part of
the deal, Subex will be implementing its integrated ROC Revenue
Assurance and ROC Fraud Management Platform (iRAFM), along
with its ROC Partner Settlement and ROC Route Optimization. This
deal also marks the continuation of Subex and BTC’s long-standing
partnership which dates back to 2010.
(BTC), a
Through the multi-solution deployment of iRAFM, Subex will
enable BTC with an out-of-the-box solution to combat prevalent
frauds such as Subscription Fraud, Internal Fraud, Premium Rate
Service Fraud (PRS Fraud), and International Revenue Share Fraud
(IRSF), amongst others. The solution will also prevent losses
through revenue leakage by providing a solution with capabilities
to investigate, diagnose and recover any lost revenues.
The ROC Partner Settlement deployment will offer BTC a 360-degree
view of their interconnect agreements to help better manage
revenue and margins across their partner ecosystem. Moreover,
through ROC Route Optimisation, Subex will provide BTC with a
solution that analyzes existing data in terms of operator tariffs
and quality of service and generates forecasts to help make an
informed choice of interconnect operator partners. In addition to
this, Subex will also provide BTC with Managed Services expertise
to help them implement the best practices and get the most out of
the deployment.
Subex awarded 6-year contract from VodafoneZiggo: The
company has been awarded a six-year deal with VodafoneZiggo, a
Netherlands based operator offering fixed, mobile and integrated
communication and entertainment services to consumers and
businesses. Subex will deploy its ROC Partner Settlement and
Route Optimization Solutions. The solution will be deployed on a
SaaS-based model for VodafoneZiggo’s new Interconnect Billing
Platform, replacing three different existing legacy billing systems
with a single solution, to reduce complexities and optimize costs.
This deployment will also help VodafoneZiggo further reduce
its operational costs through the Subex Managed Service Center
of Excellence, to which certain business operations will be
outsourced.
Apart from reducing operational costs, the deployment will also
allow VodafoneZiggo to generate more revenues through the
new functionalities of the ROC platform, in addition to improving
interconnect billing and reconciliations.
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)
Annual Report 2018-19 | 067
security; (e) improper disclosure of personal data could result
in liability and harm to our reputation; (f) Technology changes
and obsolescence may impact our business; (g) recruiting and
retention of personnel is challenging; (h) adequately protecting
our intellectual property may not be possible; (i) allegations of
infringement of third party intellectual property poses risks; (j)
variability of our quarterly operating results makes comparisons
difficult; (k) non-compliance with statutory obligations may result
in fines and penalties; (l) non-compliance with environmental
regulations may lead to fines and penalties; (m) foreign exchange
fluctuations may lead to variability in our revenue; (n) SEZ related
taxation benefits may be uncertain; (o) failure to fulfill contractual
obligation may lead to claims; and (p) debt obligations. Below, we
will discuss each of these risk factors in some more detail. There
are, of course, additional risks faced by us.
Reduction in Consumer and Business Purchasing
We depend on our customers – 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
through considerable consolidation. The
CSPs have gone
consolidation, or merger, of one CSP with another can have at
several 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 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, when combined, choose to use
our products which may have a positive impact on our revenue.
Another possibility is that two existing customers merger. The
consolidation of two customers will have an adverse effect on
our revenue as the combined company attempts to reduce their
consolidated spending. Finally, 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.
068 | SUBEX LIMITED
Security
is, perhaps, especially true
You must be well aware that security threats are prevalent
everywhere today. This
in the
technology
industry where we participate. The security
vulnerabilities take many forms. Hackers may attempt to
compromise computer systems and networks. Fraudsters may
attempt to steal the identity of our personnel to gain access to our
computer systems, networks and even banking systems. Terror
activity could have an adverse impact on our business. We may fail
to adequately design our products leaving our customers exposed
to hacking and other network vulnerabilities. Perhaps this concern
– of failure to adequately design our products leading to exposure
of our customer’s information is one of the largest concerns. If one
of our customers faced a security breach allegedly as a result of
use of our products, it would cause significant reputational risk to
us and may lead to claims against us.
We devote significant resources to mitigate security threats
including threats to our internal IT systems, with respect to our
products and with respect to physical security of our buildings.
But, there cannot be any guarantee that these efforts will avoid
security breaches.
Improper disclosure of personal data could result in
liability and harm our reputation
You are probably aware of the global trend toward more sensitivity
regarding improper disclosure of personal data. This global trend
has a number of impacts on us. There are additional laws and
regulations in many jurisdictions. This not only leads to increased
administrative costs of compliance and increased difficulties in
doing business but violations of these laws and regulations involve
higher and higher fines and penalties. At the same time, we are
storing and processing increasingly large amounts of personal data
which leads to increased potential exposure.
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 went 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.
Historically, the Company has not received any allegation of
infringement of third party
intellectual property. However,
especially as the Company invests in and introduces new product
lines 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.
Annual Report 2018-19 | 069
Variability of Our Quarterly Operating Results Makes
Comparisons Difficult
information technology
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
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 and Goods and Service Tax 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. An ongoing
monitoring mechanism has been established with respect to
applicable laws.
Certifications and compliance
Subex is certified for both information security and quality
management system. Periodic reviews and internal audits of
projects and the organization are conducted to ensure internal
controls are adequate to provide confidence to management
and customers. A system is in place to identify and manage
process changes methodically. There is people involvement
across organization in the activities of process development,
implementation and reviews, there by achieving continual
improvement. A centralized process repository helps people easy
to access the required processes to perform their activities
Non-compliance with Environmental Regulations may
lead to fines and Penalties
Software development, being generally a pollution free industry,
means we are not subject to significant environmental regulations.
Nonetheless, non-compliance with applicable environment
regulations may lead to significant fines and penalties. We do
adhere to the guidelines for disposing of E-wastes as stipulated by
the E-Waste (Management and Handling) Rules.
Foreign Exchange Fluctuations May Lead to Variability in
Our Revenue
We have substantial exposure to foreign exchange related risks
on account of revenue from export of software and outstanding
liabilities. There is a natural hedge to the extent of expense incurred
in same currency. Despite this, particularly given the volatility in
070 | SUBEX LIMITED
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 benefits continue
under the GST regime, there might be some uncertainty on the
benefits due to frequent changes in the GST Laws in India. 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.
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.
Such internal financial controls were found to be adequate for a
Company of this size. The controls are largely operating effectively
since there has not been identification of any material weakness
in the Company. The Directors have in the Directors Responsibility
Statement under paragraph (e) confirmed the same to this effect.
The Company has policies and procedures in place for ensuring
proper and efficient conduct of its business, the safeguarding
of its assets, the prevention and detection of frauds and errors,
the accuracy and completeness of the accounting records and
timely preparations, reliable financial information. The Company
has adopted accounting policies which are in line with Indian
Accounting Standards(“IndAS”).
Pursuant to the provisions of the Section 134(5)(f) of the Act,
the Company during the year devised proper systems to ensure
compliance with the provisions of all applicable laws. Any matter
that required attention was immediately dealt with. The 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
approaches towards achieving better compliance, standardizing
activities to consistently achieve better customer satisfaction.
This year, the emphasis was more towards reviews and updates
on processes for projects and organization, alignment to the new
organization structure. Identification and Involvement of process
owners to review processes and make it relevant and align it to
the organization. Some of the requirements which were specific
to customer were customised, with audits conducted for some of
the accounts.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Key Financials and Ratio Analysis
(H in Lakhs)
Financial Highlights/Year Ending 31st March
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
Debtor Turnover Ratio
Interest Coverage Ratio
Current Ratio
Earnings per Share (Yearend)
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)
2018-19
2017-18
Consolidated
Standalone
Consolidated
Standalone
34,812
34,913
4,823
4,708
-
4,708
2,186
2,522
(428)
Nil
56,200
23,210
79,410
2,424
547
89,649
1,916
2,091
(861)
(2,455)
-
(2,455)
(2)
(2,453)
(3)
Nil
56,200
14,949
71,149
6,286
5,005
74,479
32,432
32,572
2,910
2,275
1,166
3,441
1,373
2,068
(240)
Nil
56,200
21,745
77,945
2,137
719
89,768
17,993
18,694
244
(200)
389
189
157
32
(8)
Nil
56,200
18,034
74,234
6,287
5,624
75,148
2018-19
2017-18
Consolidated
Standalone
Consolidated
Standalone
3.91
58.82
2.24
0.45
0.13
15.24
7.24
2.64
5.86
1.74
-
0.29
(0.44)
0.05
(12.32)
(128.03)
(3.45)
(1.21)
3.07
6.91
1.73
0.37
0.15
10.57
6.38
2.35
3.65
1.77
0.63
1.80
0.01
0.01
5.26
0.17
0.03
0.33
Annual Report 2018-19 | 071
COMMENTARY ON FINANCIAL STATEMENTS
Share Capital
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).
The Company has not allotted equity shares in 2018-19.
Reserves and Surplus
During the year 2017-18, the balance of Foreign Currency
Translation Reserve of H11,821 Lakhs has been included in the
Reserves and Surplus to bring it in line with Schedule III of the Act.
During the year 2018-19, the balance of Foreign Currency
Translation Reserve of H12,211 Lakhs has been included in the
Reserves and Surplus to bring it in line with Schedule III of the Act.
Securities Premium Account includes the premium collected on
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.
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, 2019 amounts to H18 Lakhs
(Previous Year: H2 Lakhs).
Short Term Borrowings
During the previous year 2017-18, 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 customer receivables of Subex Assurance LLP
(“SA LLP”) and paripassu first charge on the current assets of SA
LLP, and collateral paripassu first charge on the fixed assets of SA
LLP.
As at March 31, 2018, the Company had an outstanding balance of
H3,215 Lakhs from Axis Bank on a consolidated basis and H Nil on
a standalone basis.
As at March 31, 2019, the outstanding balance of short-term
borrowings is H Nil in the books of Consolidated & Standalone
financial statement.
Fixed Assets
During the year, the Company added H317 Lakhs on consolidated
basis and H12 Lakhs on standalone basis, to its gross block of
fixed assets. The Company disposed-off certain assets no longer
required. The Company’s net block of fixed assets was H547 Lakhs
(Previous year H719 Lakhs) on consolidated basis and H5,005 lakhs
(Previous year H5,624 lakhs) on standalone basis.
Investments
During the year 2018-19 and previous year 2017-18, there is no
diminution in the carrying value of investment in Subex Americas
Inc. Consequently, the carrying value of those investments remains
at H936 Lakhs.
During the previous 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 previous 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.
As at March 31, 2019, the carrying value of investment in Subex
Assurance LLP and investment in Subex Digital LLP remains at
H61,564 and H1,869 Lakhs respectively.
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
H1,789 Lakhs (Previous year H1,346 Lakhs) on a consolidated basis
and H2,255 Lakhs (Previous Year H2,228 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 include both rupee accounts and foreign
currency accounts. The Margin Money deposit of H418 Lakhs
(Previous Year: H Nil) on Standalone basis and H672 Lakhs (Previous
Year: H370 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.
072 | SUBEX LIMITED
Income
The segment wise break up of income on consolidated basis is given below:
(H in Lakhs)
Particulars
Software Products
Software Services
Total
2018-19
2017-18
Value
%
Value
%
3,352
31,460
34,812
9.6%
90.4%
100%
3,193
29,239
32,432
9.8%
90.2%
100%
Geographically, the Company earns income from export of software products and related services to USA, EMEA & Asia Pacific region.
Other Income
Other income consists of income derived by the Company from
Interest on income tax refund, interest on deposits from banks,
interest on Inter Company Loans.
Expenditure
The employee benefits expenses increased to H19,105 Lakhs
(Previous year: H17,471 Lakhs) on consolidated basis and
decreased to H739 Lakhs (Previous year: H6,248 Lakhs) on
standalone basis.
incurred administration and other expenses
The Company
excluding employee benefit expenses, depreciation, finance cost,
taxes and exceptional items at 30% of its total Income during the
year as compared to 35% during the previous year on consolidated
basis and 73% of its total income during the year as compared to
60% 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 H5,306 Lakhs being 15% of total revenue
(Excluding other income) as against H3,427 Lakhs at 11% total
revenue (Excluding other income) during the previous year. On
a standalone basis, the Company earned Operating Loss before
Interest, depreciation, tax and exceptional items of H236 Lakhs,
being 12% of total income (excluding other income and share of
profit/loss from LLP’s) as against an operating profit of H947 Lakhs
at 5% during the previous year.
Interest & Bank Charges
The Company incurred an expenditure of H216 Lakhs (Previous
year: H775 Lakhs) on a consolidated basis and H4 Lakhs (Previous
year: H547 Lakhs) on a standalone basis.
Depreciation
Depreciation and amortization for the year amounted to H483
Lakhs (Previous year: H517 Lakhs) on consolidated basis and H625
Lakhs (Previous year: H703 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
On consolidated basis, the net profit of the Company amounted to
H2,522 Lakhs, as against a net profit of H2,068 Lakhs during the
previous year. Total Comprehensive Income for the year is H2,094
Lakhs as compared to the income of H1,828 Lakhs during previous
year. On standalone basis, the net loss of the Company amounted
to H2,453 lakhs as against a net profit of H32 Lakhs during the
previous year. Total Comprehensive loss for the year is H2,456
Lakhs as compared to income of H24 Lakhs during previous year.
Earnings per Share
Basic Earnings/(Loss) per share computed based on number of
common stock outstanding, as on the Balance Sheet date is of
H0.45 per share (Previous year: H0.37 per share) on a consolidated
basis and a loss of H0.44 per share [Previous year: Earning of H0.01
per share] on a standalone basis.
Annual Report 2018-19 | 073
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL
RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED
Subexians
Our focus for the year was to bring in revenue growth and create
a vibrant Subex. Culturally as an organization we take pride in
ensuring the experience of the Subexian throughout the employee
lifecycle of recruitment, onboarding, performance, learning &
growth and offboarding is given utmost importance. And with
the host of initiatives we drive, we are on a journey of creating a
vibrant Subex.
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, 2019, we had 800+ 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 function is a
key enabler in the company’s growth path by driving focused
initiatives towards our talent focus and development.
We take employee engagement very seriously and to that effect
have HR policies that are drivers to creating a vibrant Subex. Work
from home, Sabbatical, Certification, Team Outing are examples of
a few policies which are employee focused.
Happy Feet, a day care facility within the premises for employees
is a child care facility we offer to young parents which is being
managed by a professional team.
Key hires for the year
Over the period of the last twelve months we have increased talent
bandwidth with the hire of key people including Venkatraman G S,
Shankar Roddam, Nishith Dave and Santhosh Gopalan in the roles
of CFO, COO, Head of Presales and Head of Consulting & Advisory
team respectively. This has helped create the pertinent thought
leadership paving way for our growth.
Recruitment
Programme etc., which are already entrenched in the Subex way
of adding talent to our team, the focus this year was on optimizing
the overall recruitment cost by adopting innovative recruitment
approaches.
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.
Subexian Onboarding
Statistically it is proven that onboarding ranks #2 (after recruiting)
with the second highest business impact of all the HR practices.
The ROI that an effective and efficient onboarding practice brings
to the table cannot be ignored.
Subex has defined a robust and a comprehensive onboarding
process with a clear goal of creating a great day one experience
including pick up from home, seating desk allocation and laptop
/ desktop being made available immediately after the induction.
The time spent on paper work has been reduced significantly by
completing all such mundane activity online before the joining
date. This has led to significantly improving the day one experience.
The process does not limit to only day one. Quantifiable processes
to cover the new joinee’s 30-60-90 training plan, regular polls and
interventions take place to assess employee engagement.
The new joinee training is then followed up with an on-the-job
training to strengthen the knowledge and skills learnt during the
training period.
Performance Management
This year the focus has hinged dramatically on high performance
with the aim of driving meritocracy. The HR team in consultation
with business drove multiple high- performance programs in
the form of rewarding high performers with enhanced roles and
incentive benefits.
During the year, the recruitment team has executed a well
thought out manpower strategy 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
The ask of the current work generation is to receive constant
coaching and feedback. This is being catered to by the introduction
of Continuous Performance Management (CPM) which enables
both the Subexian and the manager to seek and give feedback
instantly.
074 | SUBEX LIMITED
Learning & Growth
Learning & development analysis is a continuous process to
align people skills with business goals. A competency matrix of
employees has been implemented with the aim of improving the
efficiency through personalized skill and knowledge development.
The highlight of this year has been the introduction of asynchronous
learning. This approach combines self-study with asynchronous
interactions to promote learning, and it can be used to facilitate
learning in traditional on-campus learning, distance learning and
continuing learning.
Rewards & Recognition
We understand the importance of what appreciating and rewarding
good performance and talent is. And although a recognition
program involves costs, the outcome is significant. Some of the
advantages are –
•
•
•
•
•
Increases the repetition of desired behaviors, thereby aligning
people with the desired organizational goals
Better employee job satisfaction
Enhances team spirit
Lowers employee turnover by acting as a retention tool.
Lowers incidences of negative behavior, reduces absenteeism,
increases productivity, and decreases stress on the job.
• Maintains a strong employer brand
•
Acts as an allied HR process for meeting learning goals
We launched our revised rewards and recognition program called
‘World of Winners (WoW)’with a sole aim of mimicking the above.
Some of the key highlights of this program are an award wall
(which displays photos of winners along with a short description of
why they won the award), surprise rewards and hardship rewards.
We also institutionalized a one of its kind rewards and recognition
event. Key behaviors and traits were identified and Subexians who
displayed that were nominated for the awards. A neutral panel
was set up to pick winners from the nominations.
Compensation
Compensation at Subex is multi-dimensional and consists of fixed
salary, variable salary, benefits, health and disability insurance,
etc.
We benchmark our compensation package against industry data
and strive to achieve a balanced position. We also arrive at the
salary bands of Subexians by conducting comprehensive job
matching, data validation and quality audits.
We as an organization are committed to the growth and
development of our employees and will continue to invest in mind,
money and effort towards this.
Annual Report 2018-19 | 075
INDEPENDENT AUDITOR’S REPORT
To the Members of Subex Limited
Report on the Audit of the Standalone Ind AS Financial Statements
Opinion
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, 2019, the standalone
Statement of Profit and Loss, including the statement of Other
Comprehensive Income, the standalone Cash Flow Statement and
the standalone Statement of Changes in Equity for the year then
ended, and notes to the standalone financial statements, including
a summary of significant accounting policies and other explanatory
information (hereinafter referred to as “the standalone Ind AS
Financial Statements”).
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid standalone Ind
AS financial statements give the information required by the
Companies Act, 2013, as amended (“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, 2019, its loss including
other comprehensive income, its cash flows and the changes in
equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial
statements in accordance with the Standards on Auditing (SAs),
as specified under section 143(10) of the Act. Our responsibilities
under those Standards are further described in the ‘Auditor’s
Responsibilities for the Audit of the standalone Ind AS Financial
Statements’ section of our report. We are independent of the
Company in accordance with the ‘Code of Ethics’ issued by
the Institute of Chartered Accountants of India together with
the ethical requirements that are relevant to our audit of the
financial statements under the provisions of the Act and the Rules
thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the Code of Ethics.
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.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the standalone
Ind AS financial statements for the financial year ended March 31,
2019. These matters were addressed in the context of our audit
of the standalone Ind AS financial statements, and in forming our
opinion thereon, and we do not provide a separate opinion on
these matters. For each matter below, our description of how our
audit addressed the matter is provided in that context.
We have determined the matters described below to be the key
audit matters to be communicated in our report. We have fulfilled
the responsibilities described in the Auditor’s responsibilities for
the audit of the standalone Ind AS financial statements section
of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement
of the standalone Ind AS financial statements. The results of our
audit procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on the
accompanying standalone Ind AS financial statements.
Key audit matters
How our audit addressed the key audit matter
Impairment assessment of Investments in Subsidiaries (as described in note 5 of the standalone Ind AS financial statements)
As at March 31, 2019, the carrying value of investment in wholly
owned subsidiaries in the standalone Ind AS balance sheet
amounts to H 64,369 lakhs, which is assessed for impairment.
To assess if there is an impairment of the carrying value of the
investment, management conducted impairment tests, annually
or whenever changes in circumstances or events indicate that,
the carrying amount of such investment may not be recoverable.
An impairment loss is recognized if the recoverable amount is
lower than the carrying value.
Our audit procedures included the following:
(i) We understood the Company’s process for identification
of indicators for impairment and evaluated the Company’s
impairment assessment of
internal controls over
investment
the key
in subsidiaries. We understood
assumptions applied by the management such as revenue
growth, operating margins, discount rates and terminal
growth rates in determining impairment;
its
076 | SUBEX LIMITED
Key audit matters
How our audit addressed the key audit matter
Impairment assessment of Investments in Subsidiaries (as described in note 5 of the standalone Ind AS financial statements)
The recoverable amount is estimated by calculating the value in
use, basis valuation conducted by an external valuation specialist
(‘management’s expert’) factoring future business plans and
such valuation report/future business plans are reviewed and
approved by the Audit Committee/ Board of Directors of the
Company. This is a key audit matter as the testing of investment
impairment is complex and involves significant judgement. The
key assumptions involved in impairment tests are projected
revenue growth, operating margins, discount rates and terminal
growth etc.
(ii) In respect of the external valuation specialist engaged by
the management, we obtained the valuation report from the
management and assessed the independence, objectivity
and competence of the management expert;
(iii) We tested the key assumptions and considered the sensitivity
scenarios performed by management’s expert;
(iv) We involved valuation specialists for evaluating and testing
the key assumptions and methodologies used by the
management’s expert in their valuation reports; and
Contingent liabilities in relation to tax litigations (as described in note 34(b) of the standalone Ind AS financial statements)
(v) We assessed the disclosures made in the financial statements.
The Company has received certain demand orders and notices
relating to Income Tax and Service Tax matters. The Company is
contesting these demands.
Significant judgements and estimates are required to assess
impact of these litigations on the financial position, results of
operations and cash flows.
The evaluation of management’s judgements supported by the
assessments received from external tax and legal specialists
(‘management’s expert’), including those that involve estimations
in assessing the likelihood that a pending claim will succeed,
or a liability will arise, complexity of the cases, time period for
resolution have been a matter of significance during the audit and
hence considered as a key audit matter.
Our audit procedures included the following:
(i) We obtained an understanding and tested the internal
identification, recognition and
controls relating to the
measurement of provisions for disputes and disclosures of
contingent liabilities in relation to tax;
(ii) We obtained details of completed tax assessments, demands
issued by tax authorities, orders/notices received with
respect to other litigations from the management;
(iii) We obtained confirmation from management’s expert on
ongoing litigations along with risk assessment;
(iv) We held discussions with management to understand their
assessment of the quantification and likelihood of significant
exposures and the provision required for specific cases;
(v) We involved tax specialists to review the status of tax
assessments and management’s position in relation to on-
going disputes regarding likelihood assessment of exposure
carried out by the management;
(vi) We assessed the independence, objectivity and competence
of the management expert; and
(vii) We assessed the disclosures in the financial statements.
Annual Report 2018-19 | 077
Other Information
The Company’s Board of Directors is responsible for the other
information. The other information comprises the information
included in the Management Discussion and Analysis, Board’s
report including annexures and report on Corporate Governance,
but does not include the standalone Ind AS financial statements
and our auditor’s report thereon.
Our opinion on the standalone Ind AS financial statements does
not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial
statements, our responsibility is to read the other information and,
in doing so, consider whether such other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this
regard.
Responsibilities of Management 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 Act with respect to the preparation
of these standalone Ind AS financial statements that give a true
and fair view of the financial position, financial performance
including other comprehensive income, cash flows and changes
in equity of the Company in accordance with the 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) Rules,
2015, as amended. This responsibility also includes maintenance
of adequate accounting records in accordance with the provisions
of the Act for safeguarding of the assets of the Company and for
preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; and
the design, implementation and maintenance of adequate internal
financial 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.
In preparing the standalone
Ind AS financial statements,
management is responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but
to do so.
Those Board of Directors are also responsible for overseeing the
Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Standalone
Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether
the standalone Ind AS financial statements as a whole are free
from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with SAs will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these standalone
Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional
judgment and maintain professional skepticism throughout the
audit. We also:
•
•
•
•
Identify and assess the risks of material misstatement of the
standalone Ind AS financial statements, whether due to fraud
or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances. Under section 143(3)(i) of the Act, we
are also responsible for expressing our opinion on whether
the Company has adequate internal financial controls system
in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management’s use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt
on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
078 | SUBEX LIMITED
•
Evaluate the overall presentation, structure and content of
the standalone Ind AS financial statements, including the
disclosures, and whether the standalone Ind AS financial
statements represent the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the standalone Ind AS financial
statements for the financial year ended March 31, 2019 and are
therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.
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 purposes of our audit;
(b) In our opinion, proper books of account as required by
law have been kept by the Company so far as it appears
from our examination of those books;
(c) The
the
standalone Balance Sheet,
standalone
Statement of Profit and Loss including the Statement
of Other Comprehensive Income, the standalone Cash
Flow Statement and standalone Statement of Changes
in Equity dealt with by this Report are in agreement with
the books of account;
specified under Section 133 of the Act, read with
Companies (Indian Accounting Standards) Rules, 2015,
as amended;
(e) On the basis of the written representations received from
the directors as on March 31, 2019 taken on record by the
Board of Directors, none of the directors is disqualified as
on March 31, 2019 from being appointed as a director in
terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial
controls over financial reporting of the Company with
reference to these standalone Ind AS financial statements
and the operating effectiveness of such controls, refer to
our separate Report in “Annexure 2” to this report;
(g) In our opinion, the managerial remuneration for the year
ended March 31, 2019 has been paid / provided by the
Company to its directors in accordance with the provisions
of section 197 read with Schedule V to the Act; and
(h) With respect to the other matters to be included in the
Auditor’s Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, as amended
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 standalone Ind
AS financial statements – Refer Note 34(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
(d) In our opinion, the aforesaid standalone Ind AS financial
statements comply with the Accounting Standards
Place of Signature: Bengaluru
Date: May 13, 2019
Annual Report 2018-19 | 079
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.
(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 34(b)(iii) to the Standalone Ind
AS Financial Statements relating to amounts recoverable from
erstwhile directors of the Company towards excess managerial
remuneration pertaining to the financial year 2012-13, which
is under litigation.
(v) The Company has not accepted any deposits 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:
080 | SUBEX LIMITED
Name of
the Statute
Nature of the dues
Disputed
amount *
(H in Lakhs)
Income Tax
Act, 1961
Adjustment for
transfer pricing,
disallowances under
section 10A and
other disallowances
Finance
Act, 1994
Service tax
1,397
3,382
379
10
346
4
80
211
1,004
3,608
Amount paid/
refund adjusted
under protest
(H in Lakhs)
1,397
924
30
-
-
4
141
212
924
-
Period to which
the amount
relates
(Financial Year)
2013-14
2012-13
2010-11
2009-10
2006-07
2005-06
2004-05
2001-02,
2002-03 and
2003-04
April 2006 to
October 2007
April 2006 to
July 2009
Forum where dispute is pending
Income Tax Appellate Tribunal (‘ITAT’), Bangalore
Transfer Pricing Officer, Bangalore
Hon’ble High Court of Karnataka
Commissioner of Income Tax (Appeals), Bangalore
Commissioner of Income Tax (Appeals), Bangalore
Hon’ble High Court of Karnataka
Hon’ble High Court of Karnataka
Hon’ble Supreme Court of India
Central Excise and Service Tax Appellate Tribunal,
Bangalore
Commissioner of Service Tax, Bangalore
*Excluding penalty and interest from the date of Order to March 31, 2019.
(viii) The Company did not have any outstanding
loans or
borrowing dues in respect of a financial institution or bank or
to government or dues to debenture holders during the year.
(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.
(x) Based upon the audit procedures performed for the purpose
of reporting the true and fair view of the Standalone Ind AS
Financial Statements and according to the information and
explanations given by the management, we report that no
fraud by the Company or no fraud on the Company by its
officers or employees has been noticed or reported during the
year.
(xi) According to the information and explanations given by the
management, the managerial remuneration for the year
ended March 31, 2019 has been paid / provided by the
Company to its directors in accordance with the provisions of
section 197 read with Schedule V to the Act. In this regard,
we also draw attention to note 34(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.
(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 to us and
on an overall examination of the balance sheet, the Company
has not made any preferential allotment or private placement
of shares or fully or partly convertible debentures during the
year under review and hence, reporting requirements under
clause 3(xiv) are not applicable to the Company.
(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 of Signature: Bengaluru
Date: May 13, 2019
Annual Report 2018-19 | 081
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 March 31, 2019
in conjunction with our audit of the standalone Ind AS financial
statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial
Controls
The Company’s Management is responsible for establishing and
maintaining internal financial controls based on the internal
control over financial reporting criteria established by the
Company considering the essential components of internal control
stated in the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting issued by the Institute of Chartered
Accountants of India. These responsibilities include the design,
implementation and maintenance of adequate internal financial
controls that were operating effectively for ensuring the orderly
and efficient conduct of its business, including adherence to the
Company’s policies, the safeguarding of its assets, the prevention
and detection of frauds and errors, the accuracy and completeness
of the accounting records, and the timely preparation of reliable
financial information, as required under the Companies Act, 2013.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s
internal financial controls over financial reporting with reference to
these standalone Ind AS financial statements based on our audit.
We conducted our audit in accordance with the Guidance Note
on Audit of Internal Financial Controls Over Financial Reporting
(the “Guidance Note”) and the Standards on Auditing as specified
under section 143(10) of the Companies Act, 2013, to the extent
applicable to an audit of internal financial controls and, both issued
by the Institute of Chartered Accountants of India. Those Standards
and the Guidance Note require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether adequate internal financial controls
over financial reporting with reference to these standalone Ind AS
financial statements was established and maintained and if such
controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence
about the adequacy of the internal financial controls over financial
reporting with reference to these standalone Ind AS financial
statements and their operating effectiveness. Our audit of internal
financial controls over financial reporting included obtaining an
understanding of internal financial controls over financial reporting
with reference to these standalone Ind AS financial statements,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal
control based on the assessed risk. The procedures selected
depend on the auditor’s judgement, including the assessment
of the risks of material misstatement of the financial statements,
whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
internal financial controls over financial reporting with reference
to these standalone Ind AS financial statements.
Meaning of Internal Financial Controls Over Financial
Reporting With Reference to these Financial Statements
A Company’s internal financial control over financial reporting
with reference to these standalone Ind AS financial statements
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
control over financial reporting with reference to these standalone
Ind AS financial statements includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions
of the assets of the Company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
Company are being made only in accordance with authorisations
of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection
082 | SUBEX LIMITED
of unauthorised acquisition, use, or disposition of the Company’s
assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting With Reference to these Standalone
Ind AS Financial Statements
Because of the inherent limitations of internal financial controls
over financial reporting with reference to these standalone Ind
AS financial statements, including the possibility of collusion
or
improper management override of controls, material
misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls
over financial reporting with reference to these standalone Ind AS
financial statements to future periods are subject to the risk that
the internal financial control over financial reporting with reference
to these standalone Ind AS financial statements may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, adequate
internal financial controls over financial reporting with reference
to these standalone Ind AS financial statements and such internal
financial controls over financial reporting with reference to these
standalone Ind AS financial statements were operating effectively
as at March 31, 2019, based on the internal control 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.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Rajeev Kumar
Partner
Membership Number: 213803
Place of Signature: Bengaluru
Date: May 13, 2019
Annual Report 2018-19 | 083
Standalone balance SHEET
as at March 31, 2019
Notes
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
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
Trade payables
- total outstanding dues of micro enterprises and small enterprises
- total outstanding dues of creditors other than micro enterprises and small
enterprises
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
19
16
16
17
18
19
20
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
18
4,987
64,369
35
418
234
2,730
425
281
73,497
4
842
97
6
33
982
74,479
56,200
14,949
71,149
1
1
1
267
2,658
17
112
274
3,329
3,330
74,479
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
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 & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
084 | SUBEX LIMITED
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Standalone statement of profit and losS
for the year ended March 31, 2019
Notes
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
1
2
3
4
5
6
7
8
9
Income
Revenue from operations
Share of profit from Limited Liability Partnerships
Other income
Total income
Expenses
Employee benefits expense
Finance costs
Depreciation and amortization expense
Share of loss from Limited Liability Partnerships
Other expenses
Total expenses
Loss before exceptional items and tax expense (1-2)
Exceptional items
Profit/ (loss) before tax expense (3+4)
Tax expense (net):
Current tax (credit)
Provision/ (reversal) - foreign withholding taxes (net)
MAT charge
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)
21
22
23
24
25
26
22
27
28
20
36
10 Basic and diluted earnings/ (loss) per equity share [nominal value of
29
share H 10 (March 31, 2018: H 10)]
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
1,916
165
10
2,091
739
4
625
1,765
1,413
4,546
(2,455)
-
(2,455)
-
(2)
-
(2)
(2,453)
(3)
(3)
(2,456)
(0.44)
17,993
635
66
18,694
6,248
547
703
598
10,798
18,894
(200)
389
189
(53)
157
53
157
32
(8)
(8)
24
0.01
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 & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Annual Report 2018-19 | 085
Standalone statement of changes in equity
for the year ended March 31, 2019
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, 2017
Issued during the year - Preferential issue of equity shares **
As at March 31, 2018
Issued during the year
As at March 31, 2019
B. Other equity (refer note 15):
Particulars
506,907,936
55,094,999
562,002,935
-
562,002,935
Attributable to equity holders of the Company
50,691
5,509
56,200
-
56,200
(H in Lakhs)
Total
Reserves and surplus
General
reserve
Securities
premium
Employee
stock
options
reserve
Treasury
shares
Surplus /
(deficit) in the
statement of
profit and loss
As at April 1, 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: On account of restructuring
(refer note 30)
As at March 31, 2018
Less: Loss for the year
Less: Other comprehensive income
Less: Equity shares purchased by Subex
Employee Welfare and Employee Stock Option
Plan (“ESOP”) Benefit Trust
Add: Share-based payments (refer note 35)
As at March 31, 2019
Equity
component
of compound
financial
instruments
205
-
-
(205)
-
-
-
-
-
-
-
-
-
Capital
reserve
-
-
-
-
-
-
2,776
2,776
-
-
24,501
-
-
-
2,204
-
-
1,780
-
-
-
-
-
-
26,705
-
-
1,780
-
-
-
-
-
-
2,776
-
26,705
-
1,780
6
-
-
-
-
(5)
-
1
-
-
-
16
17
(13,457)
32
(8)
205
-
-
-
(13,228)
(2,453)
(3)
-
-
-
-
-
-
-
-
-
-
13,035
32
(8)
-
2,204
(5)
2,776
18,034
(2,453)
(3)
-
(645)
(645)
-
(15,684)
-
(645)
16
14,949
*In the previous year, upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, was
transferred to surplus/(deficit) in the statement of profit and loss.
**refer note 14(e) on preferential issue of equity shares
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the standalone financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
086 | SUBEX LIMITED
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Standalone statement of Cash flows
for the year ended March 31, 2019
(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
Expense on employee share based payments
Loss 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)
Write back of withholding taxes paid earlier
Amortized cost of deposits
Fair value change in financial instruments
Share of profit/ (loss) (net) from Limited Liability Partnerships
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 (used in)/ from operating activities
(B) Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Drawings from Limited Liability Partnerships
Cash transferred pursuant to restructuring (refer note 30)
(Investment in)/ Proceeds from margin money deposit
Interest received
Purchase of treasury shares by ESOP trust
Net cash flows used in investing activities
Year ended
March 31, 2019
(2,455)
17
608
16
-
(10)
4
35
-
-
4
-
1,600
7
(174)
5
488
-
31
(155)
10
(34)
(3)
168
(246)
(78)
(11)
-
6
1,035
-
(418)
1
(645)
(32)
(H in Lakhs)
Year ended
March 31, 2018
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)
Annual Report 2018-19 | 087
Standalone statement of Cash flows
for the year ended March 31, 2019
(C) Financing activities
Movement in working capital loans (net)
Interest paid
Preferential issue of equity shares
Repayment of borrowings (FCCBs)
Net cash flows (used in)/ from financing activities
(D) Net increase/ (decrease) in cash and cash equivalents (A+B+C)
Cash and cash equivalents at the beginning of the year
(E) Cash and cash equivalents at year end (refer note 9)
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
-
(4)
-
-
(4)
(114)
211
97
(3,107)
(975)
7,713
(2,336)
1,295
60
151
211
Explanatory notes to statement of cash flow
Reconciliation of liabilities arising from financing activities for the year ended March 31, 2018*
Particulars
As at
March 31, 2017
Foreign currency convertible bonds
Loan repayable on demand
Total liabilities from financing activities
2,277
8,590
10,867
Repayments
/proceeds
(Net)
(2,336)
(3,107)
(5,443)
Liability transferred
pursuant to
restructuring**
-
(5,483)
(5,483)
Foreign
exchange
fluctuation
59
-
59
(H in Lakhs)
As at
March 31, 2018
-
-
-
*For the current year 2018-19, there is no opening and closing balance of foreign currency convertible bonds or loan repayable on demand.
Therefore, there is no reconciliation of liabilities arising from financing activities for the year ended March 31, 2019.
**refer note 30
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the consolidated financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
088 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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 30 in this regard.
These standalone financial statements for the year ended March 31, 2019 are approved by the Board of Directors on May 13, 2019.
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 comprise the financial statements of the Company and its controlled employee benefit trust.
Subex Limited is the sponsoring entity of Employee Stock Option Plan (‘ESOP’) trust. Management of the Company can appoint and
remove the trustees and provide funding to the trust for buying the shares. Basis assessment by the management, it believes that the
ESOP trust are controlled by the Company and accordingly Subex Employee Welfare and ESOP Benefit Trust is consolidated [refer note
2(o) and note 35].
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:
Annual Report 2018-19 | 089
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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.
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.
Also, refer note 2(h).
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 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 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 35.
090 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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(r) and note 20.
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 holds the liability primarily for the purpose of trading
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.
Effective April 1, 2018, the Company adopted Ind AS 115 “Revenue from Contracts with Customers” using the cumulative catch-up
transition method, applied to contracts that were not completed as at April 1, 2018. In accordance with the cumulative catch-up
transition method, the comparatives have not been retrospectively adjusted. The following is a summary of new and /or revised
accounting policies related to revenue recognition.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the
consideration the Company expect to receive in exchange for those products or services.
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 based on 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.
Annual Report 2018-19 | 091
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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.
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 115, by applying the revenue recognition criteria for each distinct performance
obligation. The arrangements generally meet the criteria for considering the sale of software license, related implementation and
maintain services as distinct performance obligation. For allocating the consideration, the Company has measured the revenue in
respect of each distinct performance obligation of a transaction at its standalone selling price, in accordance with principles given
in Ind AS 115. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling
price. In cases where the Company is unable to determine the standalone selling price, the Company has used a residual method to
allocate the arrangement consideration. In these cases, the balance of the consideration, after allocating the standalone selling price
of undelivered components of a transaction has been allocated to the delivered components for which specific standalone selling
price 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 recognized 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 as at the balance sheet date.
The application of Ind AS 115 did not have significant impact on the financial statements.
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
Property, 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.
092 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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:
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, an assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset’s or CGU’s recoverable
amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine
the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount
of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the standalone
statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation
increase.
i.
Equity investments in subsidiaries
Investments in subsidiaries are classified as non-current investments. 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.
Investment in Limited Liability Partnership (LLP) firms is carried at cost in the separate financial statements. The share in profit/loss
in LLP is recognised as income/expense in the standalone statement of profit and loss and is recorded under other current financial
asset/liabilities as the right to share the profit/loss is established as per the LLP’s agreement.
Annual Report 2018-19 | 093
Notes to the Standalone Financial statements
for the year ended March 31, 2019
j.
Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception
of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
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.
094 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration
recognized in a business combination which is subsequently measured at fair value through profit or loss. For trade and other payables
maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these
instruments.
Derecognition of financial assets and liabilities
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers
the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability)
is derecognized when the obligation specified in the contract is discharged or cancelled or expires. When an existing financial
asset/ liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit and loss.
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
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
•
•
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming that market participants act in their economic best interest.
In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on
market conditions and risks existing at each reporting date.
Fair value hierarchy
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable.
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
Annual Report 2018-19 | 095
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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.
Treasury shares
The Company has formed Subex Employee Welfare and ESOP Benefit Trust (ESOP Trust) for providing share-based payment to its
employees. The Company treats ESOP Trust as its extension and shares held by ESOP Trust are treated as treasury shares.
Own equity instruments that are purchased (treasury shares) are recognised at cost and deducted from equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Any difference
between the carrying amount and the consideration, if reissued, is recognised in reserve. Share options exercised during the reporting
period are adjusted with treasury shares.
p. 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 projected
unit credit method as at the balance sheet date. The Company recognizes the net obligation of a defined benefit plan in its balance
sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in
other comprehensive income. In accordance with Ind AS, re-measurement gains and losses on defined benefit plans recognised in OCI
are not to be subsequently reclassified to the standalone statement of profit and loss. As required under Ind AS compliant Schedule III,
the Company transfers it immediately to ‘Surplus/ (deficit) in the statement of profit and loss’.
096 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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 where remaining maturity of such bond correspond to expected
term of defined benefit obligation.
Short-term employee benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the
year when the employees render the service. Compensated absences, which are expected to be utilised within the next 12 months,
are treated as short-term employee benefits. The Company measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employees
render the related services are treated as long-term employee benefits for measurement purpose. Such long-term compensated
absences are provided for based on the actuarial valuation using the projected unit credit method at the year end, less the fair
value of the plan assets out of which the obligations are expected to be settled. Actuarial gains/losses are immediately taken to the
standalone statement of profit and loss and are not deferred.
The Company presents the entire compensated absences balance as a current liability in the balance sheet, since it does not have an
unconditional right to defer its settlement for twelve months after the reporting date.
q. 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.
Effective April 1, 2018, the Company has adopted Appendix B to Ind AS 21- Foreign Currency Transactions and Advance Consideration
which clarifies the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related
asset, expense or income when an entity has received or paid advance consideration in a foreign currency. The effect on account of
adoption of this amendment was insignificant.
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 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.
Annual Report 2018-19 | 097
Notes to the Standalone Financial statements
for the year ended March 31, 2019
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.
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 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.
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 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.
098 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
u. 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’.
Annual Report 2018-19 | 099
Notes to the Standalone Financial statements
for the year ended March 31, 2019
3. Property, plant and equipment
Computer
equipment
Furniture and
fixtures
Vehicles
Office
equipment
Cost
As at April 1, 2017
Additions
Disposals
Transfer on account of restructuring (refer note 30)
As at March 31, 2018
Additions
Disposals
As at March 31, 2019
Depreciation
As at April 1, 2017
Charge for the year
Disposals
Transfer on account of restructuring (refer note 30)
As at March 31, 2018
Charge for the year
Disposals
As at March 31, 2019
Net block
As at March 31, 2018
As at March 31, 2019
4.
Intangible assets
Cost
As at April 1, 2017
Additions
Disposals
Transfer on account of restructuring (refer note 30)
As at March 31, 2018
Additions
Disposals
As at March 31, 2019
Amortization
As at April 1, 2017
Amortization for the year
Disposals
Transfer on account of restructuring (refer note 30)
As at March 31, 2018
Amortization for the year
Disposals
As at March 31, 2019
Net block
As at March 31, 2018
As at March 31, 2019
752
193
(1)
(884)
60
12
(1)
71
431
145
(1)
(531)
44
14
(1)
57
16
14
7
1
-
(7)
1
-
-
1
4
1
-
(5)
-
-
-
-
1
1
12
1
-
-
13
-
(11)
2
2
2
-
-
4
2
(5)
1
9
1
50
8
(2)
(52)
4
-
-
4
22
7
-
(28)
1
1
-
2
3
2
(H in Lakhs)
Total
821
203
(3)
(943)
78
12
(12)
78
459
155
(1)
(564)
49
17
(6)
60
29
18
Computer
software
Intellectual
property rights*
(H in Lakhs)
Total
195
2
-
(67)
130
-
-
130
75
65
-
(10)
130
-
-
130
-
-
-
6,078
-
-
6,078
-
-
6,078
-
483
-
-
483
608
-
1,091
5,595
4,987
195
6,080
-
(67)
6,208
-
-
6,208
75
548
-
(10)
613
608
-
1,221
5,595
4,987
*During the previous year, 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.
100 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
5.
Investments
Non-current
Investments carried at cost
A.
Investments in equity shares of wholly owned subsidiaries (unquoted equity instruments)
100 (March 31, 2018: 100) equity shares fully paid-up, no-par value, in Subex Americas
Inc. [Impairment on investment H 76,560 Lakhs (March 31, 2018: H 76,560 Lakhs)]*
4,999,994 (March 31, 2018: 4,999,994) equity shares of H 10 each fully paid-up in
Subex Technologies Limited [Impairment on investment H 500 Lakhs (March 31, 2018:
H 500 Lakhs)]
B.
Investments in limited liability partnership firms (refer note 1, note 5(a), note 22 &
note30)*
Investment in Subex Assurance LLP
Investment in Subex Digital LLP
Total Investments carried at cost (A+B)
Aggregate amount of unquoted investments in subsidiaries
Aggregate amount of impairment on investments
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
936
-
936
61,564
1,869
63,433
64,369
141,429
77,060
64,369
936
-
936
62,199
1,271
63,470
64,406
141,466
77,060
64,406
During the previous year, pursuant to the restructuring, Subex Limited has transferred its investments in equity shares of wholly owned
subsidiaries Subex (UK) Limited and Subex Middle East (FZE) to Subex Assurance LLP. Also, refer note 30.
*As at March 31, 2019, 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, which has been approved by the Board of Directors. Considering
the aforesaid valuation, the management is of the view that, the carrying value of the investment in subsidiaries as at March 31, 2019 is
appropriate.
a) As at March 31, 2018, the share of profit of H 635 lakhs with respect to Subex Assurance LLP and share of loss of H 598 lakhs with
respect to Subex Digital LLP were adjusted with carrying value of investment considering management plan.
During the year, considering the financial position of the limited liability partnerships, management intends to fund the losses and
withdraw the share of profit. Accordingly, cumulative share of loss of H 2,363 lakhs pertaining to Subex Digital LLP and drawings
in excess of cumulative share of profit of H 235 lakhs pertaining to Subex Assurance LLP is disclosed under ‘Other current financial
liabilities’ (refer note 17).
6. Loans
Non-current
Loan receivable
Unsecured, considered good
Security deposit
Loan receivables - credit impaired
Loans to related parties (refer note 32 and note 33)
Impairment allowance for loan receivable
Loan receivables - credit impaired
Loans to related parties (refer note 32 and note 33)
Total
Current
Unsecured, considered good
Loans and advances to employees
Total
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
35
1,706
1,741
(1,706)
35
4
4
35
1,706
1,741
(1,706)
35
6
6
Annual Report 2018-19 | 101
Notes to the Standalone Financial statements
for the year ended March 31, 2019
7. Other balances with banks
Non-Current
Other bank balances (refer note 9)
Margin money deposits [refer note 34(b)(iii)]
8. Trade receivables*
Unsecured, considered good
Total (a)
Impairment allowance (allowance for bad and doubtful debts)**
Unsecured, considered good
Total (b)
Net Trade Receivables (a-b)
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
418
418
-
-
As at
March 31, 2019
3,097
3,097
(H in Lakhs)
As at
March 31, 2018
3,592
3,592
(2,255)
(2,255)
842
(2,228)
(2,228)
1,364
*includes dues from related parties. Refer note 31.
**During the year ended March 31, 2019, the Company has written off bad debts amounting to H 9 Lakhs (March 31, 2018 : H 1,621 Lakhs)
including related party receivables from its allowances 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, refer note 32 for the balance receivable from Subex Assurance LLP and Subex Digital LLP where certain directors of the Company
are appointed as designated partners / employee.
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
Non-current
Other balances with banks
Margin money deposits
Less: Disclosed under other balances with banks (Non-current) (refer note 7)
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
97
97
418
418
(418)
-
211
211
-
-
-
-
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.
102 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
10. Other financial assets
Unsecured, considered good
Carried at amortized cost
Non-current
Advance recoverable from former directors [refer note 34(b)(iii)]
Current
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, 2018: H 612
Lakhs)]
12. Deferred tax asset
Non-Current
Minimum alternative tax ('MAT') credit entitlement (refer note 20)
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, 2019
(H in Lakhs)
As at
March 31, 2018
234
234
6
6
234
234
-
-
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
2,730
2,730
2,494
2,494
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
425
425
425
425
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
267
14
281
8
9
-
16
33
267
21
288
-
48
1
12
61
*Balance represents service tax inadvertently 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.
Annual Report 2018-19 | 103
Notes to the Standalone Financial statements
for the year ended March 31, 2019
14. Share capital
Authorised share capital
Equity shares of H 10 each
As at April 1, 2017
Increase during the year
As at March 31, 2018
Increase during the year
As at March 31, 2019
Preference shares of H 98 each
As at April 1, 2017
Increase during the year
As at March 31, 2018
Increase during the year
As at March 31, 2019
Issued, subscribed and fully paid-up share capital
Equity shares of H 10 each issued, subscribed and fully paid-up *
As at April 1, 2017
Issued during the year - Preferential issue of equity shares [refer note 14(e)]
As at March 31, 2018
Issued during the year
As at March 31, 2019*
No.
(H in Lakhs)
545,040,000
43,000,000
588,040,000
-
588,040,000
200,000
-
200,000
-
200,000
506,907,936
55,094,999
562,002,935
-
562,002,935
54,504
4,300
58,804
-
58,804
196
-
196
-
196
50,691
5,509
56,200
-
56,200
*includes 243,207 (March 31, 2018: 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, 2019 and March 31, 2018.
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
As at March 31, 2019
No.
% of total shares
As at March 31, 2018
No.
% of total shares
-
-
-
-
27,563,571
27,531,428
4.90
4.90
As at March, 31, 2019, there is no individual shareholder or shareholder (together with PAC) holding more than 5% shares of the
Company.
104 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
14. Share capital (contd.)
c) Shares reserved for issue under options (No.)
Outstanding employee stock options under below schemes, granted/ available for
grant: (refer note 35)
ESOP - III
ESOP - V
As at
March 31, 2019
As at
March 31, 2018
6,125
11,200,000
11,206,125
24,055
-
24,055
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, 2019
As at
March 31, 2018
-
89,335,462
e) During the year ended March 31, 2018, the Company made an allottment 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.
f) Number of treasury shares outstanding
Equity shares held by Subex Employee Welfare and ESOP Benefit Trust (refer note 35)
15. Other equity
Equity component of compound financial instruments
Balance as per last financial statements
Less: Transfer to surplus/ (deficit) in the statement of profit and loss*
Closing balance
Capital reserve
Balance as per last financial statements
Add: Additions on account of restructuring (refer note 30)
Closing balance
Securities premium
Balance as per last financial statements
Add: Additions 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
As at
March 31, 2019
11,200,000
As at
March 31, 2018
-
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
-
-
-
2,776
-
2,776
26,705
-
26,705
1,780
-
1,780
205
(205)
-
-
2,776
2,776
24,501
2,204
26,705
1,780
-
1,780
Annual Report 2018-19 | 105
Notes to the Standalone Financial statements
for the year ended March 31, 2019
15. Other equity (contd.)
Employee stock options reserve
Balance as per last financial statements
Less: Compensation on ESOP cancelled/ lapsed during the year
Add : Share-based payments
Closing balance
Surplus/ (deficit) in the statement of profit and loss
Balance as per last financial statements
(Less)/ Add: (Loss)/ Profit for the year
Add: Transfer from equity component of compound financial instrument*
Less: OCI - Remeasurement loss on defined benefit obligations
Closing balance
Treasury Shares
Equity shares purchased by Subex Employee Welfare and ESOP Benefit Trust**
Closing balance
Summary of other equity:
Capital Reserve (refer note 30)
The Company recognises profit and loss on transfer of business on account of
restructuring to capital reserve.
Securities premium account
Securities premium is used to record the premium on issue of shares. The reserve
shall be utilised in accordance with the provisions of section 52 of the Companies
Act, 2013.
General reserve
This represents appropriation of profit by the Company.
Employee stock options reserve
The employee stock option reserve is used to record the value of equity-settled
share based payment transactions with employees. The amounts recorded in this
account are transferred to reserves upon exercise of stock options by employees.
Surplus/ (deficit) in the statement of profit and loss
Surplus/ (deficit) in the statement of profit and loss comprises of the amounts that
can be distributed by the company as dividends to its equity share holders.
Treasury Shares
Treasury shares represent own equity shares that are reacquired and recognised at
cost for the purpose of re-issuing to employees under ESOP scheme.
Total other equity
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
1
-
16
17
(13,228)
(2,453)
-
(3)
(15,684)
(645)
(645)
2,776
6
(5)
-
1
(13,457)
32
205
(8)
(13,228)
-
-
2,776
26,705
26,705
1,780
17
1,780
1
(15,684)
(13,228)
(645)
-
14,949
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.
**On July 31, 2018, the Board of Directors and the shareholders of the Company approved “Subex Employees Stock Option Scheme
– 2018” (hereinafter referred to as the “ESOP Scheme 2018” or “ESOP - V” ) to be administered through Subex Employee Welfare
and ESOP Benefit Trust (hereinafter referred to as the “ESOP Trust”). The ESOP Trust is authorised to purchase shares of the Company
through secondary market for issuance to the employees of the Group under ESOP Scheme 2018. Such shares held by ESOP Trust
are treated as treasury shares and recognised at cost and deducted from other equity. Also refer Note 35 for further details on ESOP
scheme.
106 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
16. 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
*includes dues to related parties. Refer note 32.
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 39.
**Payable to micro, small and medium enterprises
Description
d)
a) the principal amount remaining unpaid to any supplier as at the end of accounting year;
interest due thereon remaining unpaid to any supplier as at the end of accounting year;
b)
the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and
c)
Medium Enterprises Development Act, 2006, along with the amount of the payment made
to the supplier beyond the appointed day during each accounting year;
the amount of interest due and payable for the period of delay in making payment (which
have been paid but beyond the appointed day during the year) but without adding the
interest specified under the Micro, Small and Medium Enterprises Development Act, 2006;
the amount of interest accrued and remaining unpaid at the end of each accounting year; and
the amount of further interest remaining due and payable even in the succeeding years,
until such date when the interest dues above are actually paid to the small enterprise, for
the purpose of disallowance of a deductible expenditure under section 23 of the Micro,
Small and Medium Enterprises Development Act, 2006.
e)
f)
17. Other current financial liabilities
Carried at amortized cost
Current
Share of Loss from Subex Digital LLP* [refer note 5(a)]
Drawings in excess of share of profit from Subex Assurance LLP* [refer note 5(a)]
Employee related liabilities
Capital creditors
Advance from related parties*
*refer note 32
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
1
267
268
-
415
415
As at
March 31, 2019
1
-
-
(H in Lakhs)
As at
March 31, 2018
-
-
-
-
-
-
-
-
-
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
2,363
235
57
1
2
2,658
-
-
49
-
-
49
Annual Report 2018-19 | 107
Notes to the Standalone Financial statements
for the year ended March 31, 2019
18. Other current liabilities
Statutory dues
19. 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, 2019
17
17
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
51
51
(H in Lakhs)
As at
March 31, 2018
1
1
-
12
100
112
1
1
3
9
100
112
*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 34(b)(iii) for further details.
20. Income tax liabilities (net)
Current
Provision for tax [net of advance tax H 234 Lakhs (March 31, 2018: H 234 Lakhs)]
Provision for foreign taxes
Provision for litigation [net of tax deducted at source H 62 Lakhs
(March 31, 2018: H 62 Lakhs)] *
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
150
22
102
274
150
34
102
286
*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)(i) for further details.
Income tax expense in the standalone statement of profit and loss consist of the following:
Tax expense:
Current tax (credit)
Provision/ (reversal) - foreign witholding taxes (net) *
MAT charge
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
-
(2)
-
(2)
(53)
157
53
157
Notes:
*Represents provision in respect of withholding taxes deducted/deductible by the overseas customers of the Company.
108 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
20. 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:
Profit/ (loss) before tax expense
Applicable tax rates in India
Computed tax charge (A)
Components of tax expense:
Provision for foreign withholding taxes (net)
Deferred tax asset not recognised on carry forward losses
Other adjustments
Total adjustments (B)
Total tax expense (A+B)
21. Revenue from operations
Sale of products
Sale of services
Disaggregation of revenue:
Revenue by offering
Managed services
Sub-contracting services (refer note 32)
Sale of license
Implementation and customisation
Support services
22. Share of profit/ (loss) from Limited Liability Partnerships (net)*
Share of profit from Subex Assurance LLP
Share of loss from Subex Digital LLP
*refer note 5(a), note 30 and note 32.
23. Other income
Write back of withholding taxes paid earlier (refer note 42)
Miscellaneous income
Interest income on:
Security deposits
Bank deposits
Inter-company loans and advances (refer note 32)
As at
March 31, 2019
(2,455)
34.94%
(858)
(2)
858
-
856
(2)
(H in Lakhs)
As at
March 31, 2018
189
34.61%
65
157
-
(65)
92
157
Year ended
March 31, 2019
-
1,916
1,916
(H in Lakhs)
Year ended
March 31, 2018
725
17,268
17,993
44
1,872
-
-
-
1,916
Year ended
March 31, 2019
165
(1,765)
(1,600)
Year ended
March 31, 2019
-
-
2,222
11,085
725
1,268
2,693
17,993
(H in Lakhs)
Year ended
March 31, 2018
635
(598)
37
(H in Lakhs)
Year ended
March 31, 2018
30
2
3
7
-
10
21
7
6
66
Annual Report 2018-19 | 109
Notes to the Standalone Financial statements
for the year ended March 31, 2019
24. Employee benefits expense
Salaries, wages and bonus
Contribution to provident and other funds
Employee share based payments
Gratuity expense (refer note 36)
Staff welfare expenses
25. Finance cost
Interest
Foreign currency convertible bonds
Other borrowings
Other finance charges
Bank charges
26. Depreciation and amortization expense
Depreciation of property, plant and equipment (refer note 3)
Amortization of intangible assets (refer note 4)
27. 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
110 | SUBEX LIMITED
Year ended
March 31, 2019
684
24
16
4
11
739
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
5,684
172
-
42
350
6,248
(H in Lakhs)
Year ended
March 31, 2018
-
-
-
4
4
95
294
11
147
547
Year ended
March 31, 2019
17
608
625
Year ended
March 31, 2019
4
-
128
16
(H in Lakhs)
Year ended
March 31, 2018
155
548
703
(H in Lakhs)
Year ended
March 31, 2018
398
90
765
124
7
33
8
13
13
102
68
13
300
45
322
57
75
38
1,154
130
87
483
Notes to the Standalone Financial statements
for the year ended March 31, 2019
27. Other expenses (contd.)
Payments to auditors [refer note 27(i)]
Sales commission
Marketing and allied service charges (refer note 32)
Provision for doubtful debts (net)
Exchange fluctuation loss (net)
Directors sitting fees (refer note 32)
Loss on sale of fixed assets (net)
Contribution towards corporate social responsibility
27(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
28. Exceptional items
Inter company balances
Provision for doubtful advances no longer required written back*
Year ended
March 31, 2019
55
-
513
35
39
56
-
10
1,413
Year ended
March 31, 2019
48
1
3
3
55
(H in Lakhs)
Year ended
March 31, 2018
114
54
6,658
(182)
311
73
2
-
10,798
(H in Lakhs)
Year ended
March 31, 2018
87
4
15
8
114
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
-
-
389
389
*Represents provision for doubtful advances no longer required written back upon collection of the loans and advances from its subsidiaries
which were provided during the year ended March 31, 2016.
Annual Report 2018-19 | 111
Notes to the Standalone Financial statements
for the year ended March 31, 2019
29. 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, 2019
10
(2,453)
5,577
(0.44)
Year ended
March 31, 2018
10
32
5,554
0.01
*The weighted average number of shares takes into account the weighted average effect of changes in treasury shares transactions during
the year.
**Employee stock options outstanding as at March 31, 2019 and as at March 31, 2018 are anti-dilutive and accordingly have not been
considered for the purpose of computing dilutive EPS of the respective years.
30. Restructuring
During the previous year, 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 were 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.
Pursuant to restructuring, the Company accounted for the transaction 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 was recognised as Capital reserve.
112 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
30. Restructuring (contd.)
During the previous year, balances transferred from Subex Limited to the LLPs pursuant to the restructuring were as follows:
Particulars
(A) 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
(B1) Total assets
Liabilities:
Borrowings
Trade payables
Other current financial liabilities
Other current liabilities
Provisions
(B2) Total liabilities
(B) Net assets transferred (B1-B2)
Capital reserve (A-B)
SA LLP
61,564
SD LLP
1,869
(H in Lakhs)
Total
63,433
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
31. 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 is engaged in the business of software products and related services, which are monitored as a single segment by the Chief
Operating Decision Maker, accordingly, these, in the context of Ind AS 108 on Operating Segments Reporting are considered to constitute
one segment and hence the Company has not made any additional segment disclosures.
The Company’s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d) APAC.
‘Americas’ comprises the Company’s operations in North America, South America and Canada. ‘EMEA’ comprises the Company’s operations
in Europe, Middle East and APAC comprises of the Company’s operations majorly in Singapore and Australia. Customer relationships are
driven based on customer domicile.
Segment revenue by geographical location are as follows*:
Region
Americas
EMEA
India
APAC
*Revenues by geographic area are based on the geographical location of the customer.
Year ended
March 31, 2019
489
-
44
1,383
1,916
(H in Lakhs)
Year ended
March 31, 2018
2,997
10,371
1,607
3,018
17,993
Annual Report 2018-19 | 113
Notes to the Standalone Financial statements
for the year ended March 31, 2019
31. 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, 2019 and March 31, 2018. Revenue from certain subsidiaries accounts for more than 10% of the total revenues of the Company
(refer note 32).
Non-current operating assets by geographical location are as follows**:
Region
India
Outside India
Total non-current operating assets
As at
March 31, 2019
5,286
-
5,286
(H in Lakhs)
As at
March 31, 2018
5,912
-
5,912
**Non-current operating assets includes Property, plant and equipment, Intangible assets, Balance with statutory/ government authorities
and Prepaid expenses.
32. 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 Middle East (FZE)
Subex Assurance LLP (w.e.f April 5, 2017)
Subex Digital LLP (w.e.f April 5, 2017)
Trust which is consolidated
Subex Employee Welfare and ESOP Benefit Trust (w.e.f September 6, 2018)
ii. Related parties under Ind AS 24 and Companies Act, 2013
Key management personnel
Anil Singhvi
Vinod Kumar Padmanabhan
Venkatraman G S
G V Krishnakanth
Nisha Dutt
Poornima Kamalaksh Prabhu
Surjeet Singh
Ashwin Chalapathy
Mehernaz Dalal
Ganesh KV
Chairman (w.e.f. May 25, 2017) & Independent Director
Managing Director & Chief Executive Officer (w.e.f April 01, 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)
Chief Financial Officer (w.e.f. November 30, 2018)
Company Secretary (w.e.f July 10, 2018)
Independent Director
Independent Director
Managing Director & Chief Executive Officer (Up to March 31, 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 May 4, 2018)
Chief Financial Officer (w.e.f June 15, 2017 to November 30, 2018)
Chief Financial Officer, Global Head - Legal and Company Secretary (Up to June 15, 2017)
114 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
32. Related party transactions (contd.)
iii. Details of the transactions with the related parties during the year ended March 31, 2019:
Particulars
A. Transactions with wholly owned subsidiaries
Income from software development and sub-contracting services:
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex (UK) 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.
Reimbursement of expenses made to:
Subex Assurance LLP
Subex Digital LLP
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Inc.
Subex Technologies Limited
Reimbursement of expenses received from:
Subex Assurance LLP
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Digital LLP
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
Year ended
March 31, 2019
489
1,383
-
-
-
1,872
1
512
-
-
-
513
-
-
118
10
12
-
-
-
140
202
78
1
-
-
-
281
-
-
-
-
-
-
(H in Lakhs)
Year ended
March 31, 2018
2,479
2,213
5,394
288
711
11,085
2,710
3,315
244
356
33
6,658
6
6
408
11
10
7
1
1
438
756
21
29
69
8
1
884
1,173
(793)
(609)
(148)
(12)
(389)
Annual Report 2018-19 | 115
Notes to the Standalone Financial statements
for the year ended March 31, 2019
32. Related party transactions (contd.)
Particulars
Bad debts written off:*
Subex Americas Inc.
Investment made in form of capital contribution [refer note 5(a)]:
Subex Assurance LLP
Subex Digital LLP
Drawings during the period
Subex Assurance LLP
Loan given to Subex Employee Welfare and ESOP Benefit Trust****
Advance received
Subex Assurance LLP
Share of profit/(loss), from Limited Liability Partnerships:
Subex Assurance LLP
Subex Digital LLP
Net assets, including investment, transferred pursuant to restructuring
(refer note 30):
Subex Assurance LLP
Subex Digital LLP
B. Transactions with key managerial personnel
Salary and perquisites**
Vinod Kumar Padmanabhan***
Venkatraman G S***
G V Krishnakanth***
Mehernaz Dalal
Ashwin Chalapathy
Surjeet Singh
Ganesh KV
Director sitting fees
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
-
-
-
-
-
1,035
1,035
645
645
2
2
165
(1,765)
(1,600)
-
-
-
57
31
24
63
-
-
-
175
24
14
18
56
480
480
61,564
1,869
63,433
-
-
-
-
-
-
635
(598)
37
60,566
91
60,657
54
-
-
44
45
38
37
218
28
22
23
73
*Bad debts written off during the previous year ended March 31, 2018 were from allowances for doubtful debts.
**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.
***During the year, the Company has granted 25 lakhs ESOPs to key management personnel under ESOP 2018 scheme, which
includes options granted to designated partner/ employee of Subex Assurance LLP.
****Loan given to Subex Employee Welfare and ESOP Benefit Trust has been reduced from other equity. Also refer note 15.
116 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
32. Related party transactions (contd.)
iii. Details of balances receivable from and payable to related parties are as follows:
Particulars
Balances receivable from and payable to wholly owned subsidiaries
Trade receivables
Subex Americas Inc. [Net of provision of H 1,841 Lakhs (March 31, 2018:
H 1,841 Lakhs)]
Subex Inc.
Subex (Asia Pacific) Pte. Limited [Net of provision of H 34 Lakhs (March 31,
2018:H 34 Lakhs)]
Subex Assurance LLP
Subex UK Limited
Subex Digital LLP
Trade payables
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Assurance LLP
Subex Americas Inc.
Loans and Advances receivable
Subex Americas Inc. [Net of provision of H Nil (March 31, 2018: H Nil)]
Subex Technologies Limited [Net of provision of H 1,706 Lakhs (March 31,
2018: H 1,706 Lakhs)]
Loans and Advances payables
Subex Assurance LLP
Current financial liabilities
Share of Loss from investment in Subex Digital LLP
Overdraft from Subex Assurance LLP
Outstanding guarantees given to
Subex Assurance LLP [refer note 34(b)(iv)]
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
-
87
337
6
-
-
430
1
127
76
1
-
205
-
-
-
2
2
2,363
235
2,598
4,500
-
363
248
-
1
6
618
-
206
-
127
2
335
-
-
-
-
-
-
-
-
8,250
33. 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:
(H in Lakhs)
Particulars
Subex Technologies Limited*
Subex Americas Inc.**
As at March 31, 2019
As at March 31, 2018
Outstanding
Amount
Maximum balance
outstanding during
the year
Outstanding
Amount
Maximum balance
outstanding during
the year
1,706
-
1,706
1,706
-
1,706
-
1,706
1,718
377
*Loans and advances to Subex Technologies Limited is provided as at March 31, 2019: H 1,706 Lakhs (March 31, 2018: H 1,706 Lakhs).
**During the previous year, loans and advances to Subex Americas Inc., have been collected and related provision has been written back
H 377 Lakhs.
Annual Report 2018-19 | 117
Notes to the Standalone Financial statements
for the year ended March 31, 2019
34. Commitments and contingent liabilities
a) Commitments
Operating leases
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 128 Lakhs (March 31, 2018: H 765 Lakhs)
b) Contingent liabilities
Particulars
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)]
Bank guarantees (furnished to customers)
As at
March 31, 2019
10,952
3,687
1,293
4,500
-
(H in Lakhs)
As at
March 31, 2018
12,692
3,687
1,293
8,250
6
i.
ii.
Income tax
The Company has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2015,
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.
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 two of its ex-directors for an amount of H 1,293 Lakhs. The Company disputed the
same as these claims are not tenable. During the current year, in respect of arbitration concerning to one of the ex-directors, the
Honorable Tribunal has passed an Award directing the Company to pay a sum of H 696 lakhs (including interest). The Company has
filed an application before the Honorable City Civil Court, Bengaluru to set aside the Award and has also sought an interim stay in
this regard. The Honorable City Civil Court, Bengaluru passed an interim order staying the Award passed by the Honorable Tribunal
until disposal of the arbitral suit, subject to Company depositing a 60% bank guarantee of the award amount. The Company has
deposited a bank guarantee for an amount of H 418 Lakhs i.e., 60% of the award amount. During the current year, in respect of
the arbitration proceedings concerning to the other ex-director, the Honorable Tribunal passed an Award directing the company
to pay a sum of H 770 lakhs. The Company filed a challenge application before the Honorable City Civil Court, Bengaluru to set
aside the Arbitral Award which is pending. Since it is uncertain in both the matters if and what relief the Honorable City Civil
Court, Bengaluru will grant, the management, basis opinion obtained from its legal counsel, 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, 2018: 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
118 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
34. Commitments and contingent liabilities (contd.)
other advances paid to directors during the year 2012-13 amounting to H 110 Lakhs (March 31, 2018: H 110 Lakhs). The aggregate
amount of H 234 Lakhs (March 31, 2018: 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
The Company has given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of H 4,500 lakhs (March 31,
2018: 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.
35. 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.
The Board of Directors and the shareholders of the Company in their respective meetings held on July 31, 2018 approved “Subex
Employees Stock Option Scheme – 2018” (hereinafter referred to as the “ESOP Scheme 2018” or “ESOP - V”) in accordance with all the
applicable provisions of the Companies Act, 2013 and the provisions of the Securities and Exchange Board of India (Share Based Employee
Benefits) Regulations, 2014 (“SEBI ESOP Regulations”) to be administered through Subex Employee Welfare and ESOP Benefit Trust
(hereinafter referred to as the “ESOP Trust”). The ESOP Trust was registered as per provisions of Indian Trust Act, 1882 on September 6,
2018 and is authorised to acquire upto 5% of the outstanding share capital of the Company as on March 31, 2018 through secondary
market for providing such share-based payments to its employees. The ESOP Trust is consolidated in the standalone financial results of the
Company and the shares reacquired and held by ESOP Trust are treated as treasury shares and recognised at cost and deducted from other
equity. Subsequently, the Nomination and Remuneration Committee of the Company in their meeting held on January 29, 2019 granted
1,06,50,000 options effective from February 05, 2019 to the eligible employees at H 6/- each per share. The shares granted vest over a
period of 1 to 2 years and can be exercised over a maximum period of 2 years from the date of vesting.
Employees stock options details as on the balance sheet date are:
Particulars
As at March 31, 2019
As at March 31, 2018
Options outstanding at the beginning of the year
ESOP – III
ESOP – IV
Granted during the year
ESOP - V
Cancelled, surrendered or lapsed during the year
ESOP – III
ESOP – IV
ESOP - V
Options outstanding at the end of the year
ESOP – III
ESOP- V
Options exercisable at the end of the year
ESOP – III
ESOP - V
Options (no.)
Options (no.)
Weighted
average exercise
price per stock
option (H)
Weighted
average exercise
price per stock
option (H)
24,055
-
10,650,000
17,930
-
-
6,125
10,650,000
6,125
-
18.24
-
6.00
19.78
-
-
13.74
6.00
13.74
-
92,368
28,301
-
68,313
28,301
-
24,055
-
24,055
-
22.97
28.44
-
24.67
28.44
-
18.24
-
18.24
-
Annual Report 2018-19 | 119
Notes to the Standalone Financial statements
for the year ended March 31, 2019
35. Employee stock options plans (‘ESOPs’) (contd.)
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 – V
Weighted average remaining
contractual life(years)*
2018-19
2017-18
0.46
3.35
1.26
-
Range of exercise prices (H)
2018-19
10.26 - 24.99
6.00
2017-18
10.26 - 54.83
-
*considering vesting and exercise period
Fair value methodology
The key assumptions used in Black-Scholes model for calculating fair value is as below:
Particulars
Risk-free interest rate
Expected volatility of share
Expected life(years)
Weighted average fair value as on grant date (H)
March 31, 2019
6.90%
50.00%
2
1.46
The expected life of stock options is based on historical data and current expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects assumption that the historical volatility over a period similar to the life of the options is
indicative of future trends, which may also not necessarily be the actual outcome.
36. 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 23
Lakhs (March 31, 2018: H 198 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.
The following tables set out the status of the gratuity plan:
Disclosure as per Ind AS 19
A.
B.
Change in defined benefit obligation
Obligations at beginning of the year
Service cost
Interest cost
Benefits settled
Actuarial loss (through OCI)
Liability transferred pursuant to restructuring (refer note 30)
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
120 | SUBEX LIMITED
(H in Lakhs)
As at
March 31, 2019
As at
March 31, 2018
22
4
1
(10)
3
-
20
18
1
-
10
425
42
17
(51)
9
(420)
22
144
6
1
60
Notes to the Standalone Financial statements
for the year ended March 31, 2019
36. Employee benefit plans (contd.)
Benefits settled
Asset transferred pursuant to restructuring (refer note 30)
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
As at
March 31, 2019
(10)
-
19
(20)
19
(H in Lakhs)
As at
March 31, 2018
(51)
(142)
18
(22)
18
C. Net liability recognised in the standalone balance sheet
(1)
(4)
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
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
4
-
4
-
3
-
3
7.30%
7.60%
8.00%
18.00%
60 years
42
11
53
-
9
(1)
8
7.60%
7.00%
8.00%
18.00%
60 years
Assumptions regarding future mortality experience are set in accordance with the published statistics by Indian Assured Lives
Mortality (2006-08)
D.
E.
F.
G.
Five years pay-outs
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
-
3
3
3
3
18
-
3
3
3
3
3
20
3
H.
Contribution likely to be made for the next one year
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:
As at
March 31, 2019
100%
Investment with insurer
As at
March 31, 2018
100%
Annual Report 2018-19 | 121
Notes to the Standalone Financial statements
for the year ended March 31, 2019
36. Employee benefit plans (contd.)
Sensitivity analysis
J.
Particulars
Effect of change in discount rate
Impact on defined benefit obligation increase/ (decrease)
Year ended March 31, 2019
0.5% increase 0.5% decrease 0.5% increase 0.5% decrease
0.54
Year ended March 31, 2018
(0.48)
(0.51)
0.50
(H in Lakhs)
Effect of change in salary
Impact on defined benefit obligation increase/ (decrease)
1% increase
0.99
1% decrease
(0.93)
1% increase
1.05
1% decrease
(0.91)
Effect of change in withdrawal assumption
Impact on defined benefit obligation increase/ (decrease)
5% increase
(0.94)
5% decrease
1.09
5% increase
(0.90)
5% decrease
1.03
k.
The average duration of the defined benefit plan obligation at the end of the reporting period of gratuity is 6 years (March 31,
2018: 6 years).
37. 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.
Total equity attributable to the share holders of the Company*
Total equity as a percentage of total capital
As at
March 31, 2019
71,149
100%
(H in Lakhs)
As at
March 31, 2018
74,234
100%
*During the previous year, the Company has made preferential allotment of equity shares. Refer note 14(e).
38. 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*
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*
Capital creditors*
Advance from related party*
Share of Loss from investment in Subex Digital LLP*
Drawings in excess of share of profit from Subex Assurance LLP*
(H in Lakhs)
As at
March 31, 2019
As at
March 31, 2018
6
842
35
4
887
97
418
515
57
268
1
2
2,363
235
2,926
-
1,364
35
6
1,405
211
-
211
49
415
-
-
-
-
464
*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.
^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.
122 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
39. Financial risk management
The Company’s activities expose it to the following risks:
i.
ii.
iii. Liquidity risk
iv. Market risk
Credit risk
Interest rate 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 from its financing
activities including deposits with banks, investments, foreign exchange transactions and other financial instruments.
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
Total
As at
March 31, 2019
842
842
(H in Lakhs)
As at
March 31, 2018
1,364
1,364
The Company evaluates the concentration of risk with respect to trade receivables as low, since majority of its customers are
group entities.
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
(H in Lakhs)
below:
Particulars
Working capital loans
Year ended March 31, 2019*
Year ended March 31, 2018
Change in
interest rate
Effect on loss before
exceptional items
and tax expense
Change in
interest rate
Effect on loss before
exceptional items
and tax expense
-
-
-
-
+1%
-1%
54
(54)
*The Company does not have any outstanding working capital loans throughout the year ended on March 31, 2019.
Annual Report 2018-19 | 123
Notes to the Standalone Financial statements
for the year ended March 31, 2019
39. Financial risk management (contd.)
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:
Cash and cash equivalents
As at
March 31, 2019
97
97
(H in Lakhs)
As at
March 31, 2018
211
211
The table below summarises the maturity profile of the Company’s financial liabilities at the reporting date. The amounts are based on
contractual undiscounted payments.
Particulars
As at March 31, 2019
Trade payables
Other financial liabilities
As at March 31, 2018
Trade payables
Other financial liabilities
iv. Market risk
On demand
0-180 Days 181-365 Days More than
365 Days
50
-
50
80
-
80
218
60
278
-
49
49
-
2,598
2,598
335
-
335
-
-
-
-
-
-
(H in Lakhs)
Total
268
2,658
2,926
415
49
464
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 (‘USD’), Singapore Dollars (‘SGD’), 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, 2019
Particulars
Financial assets
Trade receivables
Total financial assets
Financial liabilities
Trade payables
Total financial liabilities
Net financial assets/ (liabilities)
Denominated currency
SGD
USD
Others
241
241
128
128
113
333
333
77
77
256
(H in Lakhs)
Total
1
1
1
1
-
575
575
206
206
369
124 | SUBEX LIMITED
Notes to the Standalone Financial statements
for the year ended March 31, 2019
39. Financial risk management (contd.)
March 31, 2018
Particulars
Financial assets
Trade receivables
Total financial assets
Financial liabilities
Trade payables
Total financial liabilities
Net financial assets
Denominated currency
SGD
USD
Others
607
607
208
208
399
244
244
-
-
244
(H in Lakhs)
Total
8
8
-
-
8
859
859
208
208
651
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 0.19%. (Previous
year ended March 31, 2018: profit before exceptional items to decrease or increase respectively by 0.04%).
40. Standards issued but not yet effective
Ind AS 116 - Leases:
On March 30, 2019, the Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Amendment Rules,
2019 containing Ind AS 116 – Leases and related amendments to other Ind ASs. Ind AS 116 replaces Ind AS 17 – Leases and related
interpretation and guidance. The standard sets out principles for recognition, measurement, presentation and disclosure of leases
for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a
lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.
Currently, operating lease expenses are charged to the statement of profit and loss. The Standard also contains enhanced disclosure
requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements as per Ind AS 17. Ind AS 116 is
effective for annual periods beginning on or after April 1, 2019.
Ind AS 12 - Appendix C - Uncertainty over Income Tax treatments:
On March 30, 2019, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules,
2019 containing Appendix C to Ind AS 12, Uncertainty over Income Tax treatments which clarifies the application and measurement
requirements in Ind AS 12 when there is uncertainty over income tax treatments. The current and deferred tax asset or liability shall
be recognized and measured by applying the requirements in Ind AS 12 based on the taxable profit (tax loss), tax bases, unused
tax losses, unused tax credits and tax rates determined by applying this appendix. The amendment is effective for annual periods
beginning on or after April 1, 2019.
Amendment to Ind AS 19 - Employee benefits:
On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 19 – Employee Benefits in connection
with accounting for plan amendments, curtailments and settlements. The amendments require an entity to use updated assumptions
to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement
and to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that
surplus was not previously recognised because of the impact of the asset ceiling. The amendment will come into force for accounting
periods beginning on or after April 1, 2019, though early application is permitted.
Annual Report 2018-19 | 125
Notes to the Standalone Financial statements
for the year ended March 31, 2019
40. Standards issued but not yet effective (contd.)
Amendment to Ind AS 12 – ‘Income Taxes’:
On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 12 – Income Taxes. The amendments
require an entity to recognise the income tax consequences of dividends as defined in Ind AS 109 when it recognises a liability to
pay a dividend. The income tax consequences of dividends are linked more directly to past transactions or events that generated
distributable profits than to distributions to owners. Therefore, an entity shall recognize the income tax consequences of dividends
in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or
events. The amendment will come into force for accounting periods beginning on or after April 1, 2019.
The Company is evaluating the effect of the aforementioned on its standalone financial statements.
41. 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. During the year ended March 31, 2019, the Company has voluntarily incurred an expense of H 10 lakhs
(March 31, 2018 : H Nil) towards CSR activities.
Amount spent during the year ended March 31, 2019:
(i) Construction/acquisition of any asset
(ii) On purposes other than (i) above
In Cash
Yet to be paid in cash
-
10
-
-
(H in Lakhs)
Total
-
10
42. During the previous year, 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 was considered no longer payable and the management basis
expert advice, was of the view that the withholding taxes paid by the Company in respect of the aforesaid interest, were recoverable
from income tax department and/ or are adjustable against its other withholding taxes obligations. Accordingly, upon revision of
withholding taxes returns, the Company adjusted withholding taxes of H Nil (March 31, 2018: H 30 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.
43. The Company has entered into ‘International transactions’ with ‘Associated Enterprises’ which are subject to Transfer Pricing
regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March 31, 2019 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.
44. Consequent to the restructuring more fully described in note 1 and note 30, the current year figures are not comparable to previous
year figures.
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 & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
126 | SUBEX LIMITED
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
FORM AOC 1
(Information in respect of each Subsidiary to be presented with amounts in H Lakhs)
Sr. No
Name of the Subsidiary
Reporting Period of the
Subsidiary Concerned
Reporting Currency
Exchange Rate as on the Last
date of relevant financial
year in the case of foreign
subsidiaries
Share Capital/ Partners
Capital
Reserve & Surplus
Total Assets
Total Liabilities
Investments
Turnover*
Profit/(loss) Before Taxation
Profit After Taxation
Proposed Dividend
%of Shareholding**
Date of Acquisition
1
Subex
(Aisa Pacific)
PTE Ltd
March 31,
2019
SGD
2
Subex
(UK)
Limited
March 31,
2019
GBP
3
Subex
Americas
Inc
March 31,
2019
USD
4
Subex
Incorporated
March 31,
2019
USD
5
Subex
Technologies
Ltd.***
March 31,
2019
INR
6
Subex
Middle
East
March 31,
2019
AED
7
Subex
Assurance
LLP
March 31,
2019
INR
8
Subex
Digital LLP
March 31,
2019
INR
51.0375
90.525
69.155
69.155
1
18.8275
1
1
3,986
41
49,806
-
500
27
61,329
(494)
(3,171)
2,110
1,295
-
3,952
119
19
-
100%
June 23,
2006
3,751
8,596
4,804
4,482
18,806
(1,182)
(1,660)
-
100%
June 23,
2006
(44,659)
7,956
2,809
1
957
155
96
-
100%
April 1,
2007
(3,050)
3,261
6,311
-
9,839
126
118
-
100%
June 23,
2006
(479)
83
63
-
-
(4)
(4)
-
100%
March 28,
2005
91
683
564
-
1,388
48
61
-
100%
March 25,
2015
-
70,619
9,290
21,476
30,133
355
165
-
100%
April 5,
2017
-
1,674
2,168
-
438
(1,765)
(1,765)
-
100%
April 5,
2017
* Turnover Includes Intercompany Transactions
** Including % 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
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Annual Report 2018-19 | 127
Consolidated
FINANCIAL
STATEMENTs
128 | SUBEX LIMITED
INDEPENDENT AUDITOR’S REPORT
To the Members of Subex Limited
Report on the Audit of the Consolidated Ind AS Financial Statements
Opinion
We have audited the accompanying consolidated Ind AS financial
statements of Subex Limited (hereinafter referred to as “the
Holding Company”), its subsidiaries (the Holding Company and
its subsidiaries together referred to as “the Group”) comprising
of the consolidated Balance sheet as at March 31, 2019, the
including other
consolidated Statement of Profit and Loss,
comprehensive income, the consolidated Cash Flow Statement
and the consolidated Statement of Changes in Equity for the
year then ended, and notes to the consolidated Ind AS financial
statements, including a summary of significant accounting policies
and other explanatory information (hereinafter referred to as “the
consolidated Ind AS financial statements”).
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
Companies Act, 2013, as amended (“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, 2019,
their consolidated profit including other comprehensive income,
their consolidated cash flows and the consolidated statement of
changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the consolidated Ind AS financial
statements in accordance with the Standards on Auditing (SAs),
as specified under section 143(10) of the Act. Our responsibilities
under those Standards are further described in the ‘Auditor’s
Responsibilities for the Audit of the Consolidated
Ind AS
Financial Statements’ section of our report. We are independent
of the Group in accordance with the ‘Code of Ethics’ issued by
the Institute of Chartered Accountants of India together with
the ethical requirements that are relevant to our audit of the
financial statements under the provisions of the Act and the Rules
thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the Code of Ethics.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
consolidated Ind AS financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consolidated
Ind AS financial statements for the financial year ended March 31,
2019. These matters were addressed in the context of our audit
of the consolidated Ind AS financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description
of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key
audit matters to be communicated in our report. We have fulfilled
the responsibilities described in the Auditor’s responsibilities for
the audit of the consolidated Ind AS financial statements section
of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement
of the consolidated Ind AS financial statements. The results of
audit procedures performed by us, including those procedures
performed to address the matters below, provide the basis for our
audit opinion on the accompanying consolidated Ind AS financial
statements.
Key audit matters
How our audit addressed the key audit matter
Impact of New Standard on Revenue recognition-Ind AS 115 (as described in note 23 of the consolidated Ind AS financial statements)
The Group derives its revenue primarily from sale, implementation
and customization of its proprietary license and related managed/
support services.
Revenue from contracts with customers is recognized by the Group
in accordance with the requirements of Ind AS 115, Revenue from
Contracts with Customers (“Ind AS 115”).
We assessed the Group’s process to identify the impact of adoption
of the new revenue accounting standard. Our audit approach
consisted testing of the design and operating effectiveness of the
internal controls and substantive testing as follows:
(i) We evaluated the design of internal controls and tested the
operating effectiveness of the internal control;
Annual Report 2018-19 | 129
Key audit matters
How our audit addressed the key audit matter
Impact of New Standard on Revenue recognition-Ind AS 115 (as described in note 23 of the consolidated Ind AS financial statements)
The application of Ind AS 115 involves certain key judgements
relating to
identification of distinct performance obligations,
determination of the transaction price, allocation of transaction
price to the identified performance obligations especially to license
fees, the appropriateness of the basis used to measure revenue
recognized over time or at a point in time. Accordingly, revenue
recognition has been identified as a key audit matter.
(ii) We performed following procedures on a sample of
revenue contracts, selected on a test check basis:
•
•
•
identified
Read and
the distinct performance
obligations in these contracts and compared these
performance obligations with those identified and
recorded;
Read the terms of the contracts and tested the
determination of the transaction price including any
variable consideration. Also, tested management’s
evaluation of the stand-alone selling price for each
performance obligation;
Tested the basis used by the management to measure
revenue recognized over time or at a point in time as
per the requirements of Ind AS 115;
(iii) Tested evidence of
license delivery and customer
acceptance and performed cut-off procedures; and
(iv) In respect of fixed price contracts, we assessed the efforts
incurred with estimated efforts to identify significant
variations and reasons and to test whether those variations
have been considered in estimating the remaining efforts
to complete the contract.
Impairment assessment of Goodwill (as described in note 5 of the consolidated Ind AS financial statements)
As at March 31, 2019, the total goodwill recognized in the
consolidated balance sheet amounts to H 65,882 lakhs pertaining
to two cash generating units (‘CGUs’) ie: Revenue Management
Solutions (‘RMS’) and Data Integrity Management (‘DIM’).
To assess if there is an impairment of the carrying value of the
goodwill, management conducts impairment tests at CGU level to
which the goodwill is allocated, annually or whenever changes in
circumstances or events indicate that, the carrying amount of such
goodwill may not be recoverable. An impairment loss is recognized if
the recoverable amount is lower than the carrying value.
The recoverable amount of the CGU is estimated by calculating the
value in use of the CGU to which goodwill is allocated, basis valuation
conducted by an external valuation specialist (‘management’s
expert’) factoring future business plans and such valuation reports/
future business plans are reviewed and approved by the Audit
Committee/Board of Directors of the Company. This is a key audit
matter as the testing of goodwill impairment is complex and involves
significant judgement. The key assumptions involved in impairment
tests are projected revenue growth, operating margins, discount
rates and terminal growth.
Our audit procedures include the following:
(i) We evaluated the Group’s internal controls over its annual
impairment assessment and key assumptions applied such
as revenue growth, operating margins, discount rates and
terminal growth rates;
(ii) In respect of the external valuation specialist engaged
by the Group, we obtained the valuation report from the
management and assessed the independence, objectivity
and competence of the management expert;
(iii) We tested the key assumptions and considered the
sensitivity scenarios performed by management’s expert;
(iv) We involved valuation specialists for evaluating and
testing the key assumptions and methodologies used by
the management’s expert in their valuation reports; and
(v) We assessed the disclosures made
in the financial
statements.
130 | SUBEX LIMITED
Key audit matters
How our audit addressed the key audit matter
Contingent liabilities in relation to tax litigations (as described in note 34(b) of the consolidated Ind AS financial statements)
The Group has received certain demand orders and notices
relating to Income Tax and Service Tax matters. The Group is
contesting these demands.
Significant judgements and estimates are required to assess
impact of these litigations on the financial position, results of
operations and cash flows.
The evaluation of management’s
judgements supported
by the assessments received from external tax specialists
(‘management’s expert’), including those that involve estimations
in assessing the likelihood that a pending claim will succeed, or a
liability will arise, complexity of the cases and time for resolution
have been a matter of significance during the audit.
Our audit procedures include the following:
(i) We obtained an understanding and assessed the internal
control environment relating to the identification, recognition
and measurement of provisions for disputes and disclosures
of contingent liabilities in relation to tax;
(ii) We obtained details of completed tax assessments, demands
issued by tax authorities, orders/notices received with
respect to other litigations from the management;
(iii) We obtained confirmation from management’s expert on
ongoing litigations along with risk assessment;
(iv) We held discussions with management to understand their
assessment of the quantification and likelihood of significant
exposures and the provision required for specific cases;
(v) We involved tax specialists to review the status of tax
assessments and management’s position in relation to on-
going disputes regarding likelihood assessment of exposure
carried out by the management;
(vi) We assessed the independence, objectivity and competence
of the management expert; and
(vii) We assessed the disclosures in the financial statements.
Other Information
The Holding Company’s Board of Directors is responsible for the
other information. The other information comprises the information
included in the Management Discussion and Analysis, Board’s
report including annexures and report on Corporate Governance,
but does not include the consolidated financial statements and our
auditor’s report thereon.
Our opinion on the consolidated Ind AS financial statements does
not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated Ind AS financial
statements, our responsibility is to read the other information
and, in doing so, consider whether such other information is
materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Responsibilities of Management for the Consolidated Ind
AS Financial Statements
The Holding Company’s Board of Directors is responsible for the
preparation and presentation of these consolidated Ind AS financial
statements in terms of the requirements of 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 statement of changes in
equity of the Group in accordance with the 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) 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; selection and
application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and the design,
implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy
and completeness of the accounting records, relevant to the
preparation and presentation of the consolidated Ind AS financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error, which have been
used for the purpose of preparation of the consolidated Ind AS
financial statements by the Directors of the Holding Company, as
aforesaid.
Annual Report 2018-19 | 131
In preparing the consolidated financial statements, the respective
Board of Directors of the companies included in the Group are
responsible for assessing the ability of the Group to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Those respective Board of Directors of the companies included
in the Group are also responsible for overseeing the financial
reporting process of the Group.
Auditor’s Responsibilities for the Audit of the
Consolidated Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether
the consolidated Ind AS financial statements as a whole are free
from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with SAs will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
consolidated Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional
judgment and maintain professional skepticism throughout the
audit. We also:
•
•
•
•
Identify and assess the risks of material misstatement of the
consolidated Ind AS financial statements, whether due to
fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances. Under section 143(3)(i) of the Act, we
are also responsible for expressing our opinion on whether
the Holding Company has adequate internal financial controls
system in place and the operating effectiveness of such
controls.
Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management’s use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt
on the ability of the Group to continue as a going concern.
132 | SUBEX LIMITED
•
•
If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related
disclosures in the consolidated Ind AS financial statements or,
if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of
the consolidated Ind AS financial statements, including the
disclosures, and whether the consolidated Ind AS financial
statements represent the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group of which we are the independent auditors,
to express an opinion on the consolidated Ind AS financial
statements. We are responsible for the direction, supervision
and performance of the audit of the financial statements of
such entities included in the consolidated financial statements
of which we are the independent auditors. For the other
entities included in the consolidated financial statements,
which have been audited by other auditors, such other
auditors remain responsible for the direction, supervision and
performance of the audits carried out by them. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance of
the Holding Company and such other entities included in the
consolidated Ind AS financial statements of which we are the
independent auditors regarding, among other matters, the
planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated Ind AS financial
statements for the financial year ended March 31, 2019 and are
therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.
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 purposes 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 and reports of the other
auditors;
(c) The Consolidated Balance Sheet,
the Consolidated
Statement of Profit and Loss including the Statement of
Other Comprehensive Income, the Consolidated Cash Flow
Statement and Consolidated Statement of Changes in Equity
dealt with by this Report are in agreement with the books
of account maintained for the purpose of preparation of the
consolidated Ind AS financial statements;
(d) In our opinion, the aforesaid consolidated Ind AS financial
statements comply with the Accounting Standards specified
under Section 133 of the Act, read with Companies (Indian
Accounting Standards) 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, 2019, taken
on record by the Board of Directors of the Holding Company
and its Subsidiary Company, none of the directors of the
Holding Company and its Subsidiary Company is disqualified
as on March 31, 2019 from being appointed as a director in
terms of Section 164 (2) of the Act;
(g) In our opinion, the managerial remuneration for the year
ended March 31, 2019 has been paid / provided by the
Holding Company and its Subsidiary Company incorporated
in India to their directors in accordance with the provisions of
section 197 read with Schedule V to the Act; and
(h) With respect to the other matters to be included in the
Auditor’s Report in accordance with Rule 11 of the Companies
(Audit and Auditors) Rules, 2014, as amended, in our opinion
and to the best of our information and according to the
explanations given to us:
i.
The consolidated Ind AS financial statements disclose the
impact of pending litigations on consolidated financial
position of the Group in consolidated Ind AS financial
statements – Refer Note 34(b) to the consolidated Ind AS
financial statements;
ii.
The Group did not have any material foreseeable losses
in long-term contracts including derivative contracts
during the year ended March 31, 2019; and
iii. There were no amounts which were required to be
transferred to the Investor Education and Protection Fund
by the Holding Company and its Subsidiary Company
incorporated in India during the year ended March 31,
2019.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
(f) With respect to the adequacy and the operating effectiveness
of the internal financial controls over financial reporting with
reference to these consolidated Ind AS financial statements of
the Holding Company and its Subsidiary Company incorporated
in India, refer to our separate Report in “Annexure 1” to this
report;
per Rajeev Kumar
Partner
Membership Number: 213803
Place of Signature: Bengaluru
Date: May 13, 2019
Annual Report 2018-19 | 133
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”)
In conjunction with our audit of the consolidated Ind AS financial
statements of Subex Limited as of and for the year ended March
31, 2019, we have audited the internal financial controls over
financial reporting of Subex Limited (hereinafter referred to as
the “Holding Company”) and its Subsidiary Company, which are
companies incorporated in India, as of that date.
Management’s Responsibility for Internal Financial
Controls
The respective Board of Directors of the Holding Company and its
Subsidiary Company, which are companies incorporated in India,
are responsible for establishing and maintaining internal financial
controls based on the internal control over financial reporting
criteria established by the Holding Company and its Subsidiary
Company considering the essential components of internal control
stated in the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting issued by the Institute of Chartered
Accountants of India. These responsibilities include the design,
implementation and maintenance of adequate internal financial
controls that were operating effectively for ensuring the orderly
and efficient conduct of its business, including adherence to the
respective company’s policies, the safeguarding of its assets, the
prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation
of reliable financial information, as required under the Act.
Auditor’s Responsibility
Our responsibility is to express an opinion on the company’s
internal financial controls over financial reporting with reference
to these consolidated Ind AS financial statements based on our
audit. We conducted our audit in accordance with the Guidance
Note on Audit of Internal Financial Controls Over Financial
Reporting (the “Guidance Note”) and the Standards on Auditing,
both, issued by Institute of Chartered Accountants of India, and
deemed to be prescribed under section 143(10) of the Act, to
the extent applicable to an audit of internal financial controls.
Those Standards and the Guidance Note require that we comply
with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether adequate internal
financial controls over financial reporting with reference to these
consolidated Ind AS financial statements was established and
maintained and if such controls operated effectively in all material
respects.
Our audit involves performing procedures to obtain audit evidence
about the adequacy of the internal financial controls over financial
reporting with reference to these consolidated Ind AS financial
statements and their operating effectiveness. Our audit of internal
financial controls over financial reporting included obtaining an
understanding of internal financial controls over financial reporting
with reference to these consolidated Ind AS financial statements,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal
control based on the assessed risk. The procedures selected
depend on the auditor’s judgement, including the assessment
of the risks of material misstatement of the financial statements,
whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on
the Holding Company and its Subsidiary Company’s internal
financial controls over financial reporting with reference to these
consolidated Ind AS financial statements.
Meaning of Internal Financial Controls Over Financial
Reporting With Reference to these Consolidated Ind AS
Financial Statements
A company’s internal financial control over financial reporting
with reference to these consolidated Ind AS financial statements
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 control over financial reporting with reference to these
consolidated Ind AS financial statements includes those policies
and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance
with authorisations of management and directors of the company;
134 | SUBEX LIMITED
and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorised acquisition, use, or disposition
of the company’s assets that could have a material effect on the
financial statements.
Inherent Limitations of Internal Financial Controls
Over Financial Reporting With Reference to these
Consolidated Ind AS Financial Statements
Because of the inherent limitations of internal financial controls
over financial reporting with reference to these consolidated
Ind AS financial statements, including the possibility of collusion
or
improper management override of controls, material
misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls
over financial reporting with reference to these consolidated Ind
AS financial statements to future periods are subject to the risk that
the internal financial control over financial reporting with reference
to these consolidated Ind AS financial statements may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Holding Company and its Subsidiary Company,
which are companies incorporated in India, have, maintained in
all material respects, adequate internal financial controls over
financial reporting with reference to these consolidated Ind AS
financial statements and such internal financial controls over
financial reporting with reference to these consolidated Ind AS
financial statements were operating effectively as at March
31,2019, based on the internal control over financial reporting
criteria established by the Holding Company and its Subsidiary
Company considering the essential components of internal control
stated in the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting issued by the Institute of Chartered
Accountants of India.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Rajeev Kumar
Partner
Membership Number: 213803
Place of Signature: Bengaluru
Date: May 13, 2019
Annual Report 2018-19 | 135
Consolidated balance SHEET
as at March 31, 2019
Notes
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
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
- total outstanding dues of micro enterprises and small enterprises
- total outstanding dues of creditors other than micro enterprises and small
enterprises
Other financial liabilities
Other current liabilities
Provisions
Income tax liabilities (net)
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
Total liabilities
Total equity and liabilities
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
540
65,882
7
503
420
234
3,039
624
478
71,727
121
8,539
3,947
252
4,537
526
17,922
89,649
56,200
23,210
79,410
305
1,928
2,233
-
7
827
2,961
2,452
729
1,030
8,006
10,239
89,649
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
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 & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
136 | SUBEX LIMITED
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Consolidated statement of profit and losS
for the year ended March 31, 2019
Notes
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
1
2
3
4
5
6
7
8
9
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
Profit before tax expense (3+4)
Tax expense (net):
Current tax charge/ (credit)
Provision - foreign withholding taxes (net)
MAT charge
Deferred tax charge (net)
23
24
25
26
27
28
29
22
Profit 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 loss on translation of foreign operations
Items that will not be reclassified subsequently to profit or loss:
Re-measurement loss on defined benefit plans
36
Total comprehensive income for the year attributable to equity holders of
the Company (7+8)
10 Basic and diluted earnings per equity share [nominal value of share H 10
30
(March 31, 2018 : 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
34,812
101
34,913
19,105
216
483
10,401
30,205
4,708
-
4,708
274
885
-
1,027
2,186
2,522
(390)
(38)
(428)
2,094
0.45
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
0.37
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 & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Annual Report 2018-19 | 137
Consolidated statement of changes in equity
for the year ended March 31, 2019
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, 2017
Issued during the year - Preferential issue of equity shares **
As at March 31, 2018
Issued during the year
As at March 31, 2019
B. Other equity (refer note 15):
Particulars
As at April 1, 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)
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
As at March 31, 2018
Add: Profit for the year
Less: Other comprehensive income
Less: Equity shares purchased by Subex
Employee Welfare and Employee Stock Option
Plan (“ESOP”) Benefit Trust
Add: Share-based payments (refer note 35)
As at March 31, 2019
Equity
component
of compound
financial
instruments
205
-
-
-
(205)
-
-
-
-
-
-
-
-
506,907,936
55,094,999
562,002,935
-
562,002,935
Attributable to equity holders of the Company
Reserves and surplus
Employee
General
stock
reserve
options
reserve
Surplus /
(deficit) in the
statement of
profit and loss
Treasury
Shares
OCI
Exchange
reserve on
consolidation
50,691
5,509
56,200
-
56,200
(H in Lakhs)
Total
Securities
premium
24,501
-
-
1,780
-
-
-
-
2,204
-
26,705
-
-
-
-
-
-
1,780
-
-
-
-
-
26,705
-
1,780
7
-
-
-
-
-
(5)
2
-
-
-
16
18
2,836
2,068
(30)
-
205
-
-
5,079
2,522
(38)
-
-
-
-
-
-
-
-
-
-
(11,611)
-
(1,376)
17,718
2,068
(1,406)
1,166
1,166
-
-
-
(11,821)
-
(390)
-
2,204
(5)
21,745
2,522
(428)
-
(645)
-
(645)
-
7,563
-
(645)
-
(12,211)
16
23,210
*In the previous year, upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, was
transferred to surplus/(deficit) in the consolidated statement of profit and loss.
**refer note 14(e) on preferential issue of equity shares.
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the Consolidated financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
138 | SUBEX LIMITED
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Consolidated statement of Cash flows
for the year ended March 31, 2019
(A) Operating activities
Profit 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)
Expense on share based payment
Amortized cost of deposits
Write-off of deposits
Foreign currency translation reserve gain on liquidation of subsidiary (exceptional item)
Write back of withholding taxes paid earlier
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
Investment in margin money deposit (net)
Purchase of treasury shares by ESOP trust
Interest received
Net cash flows used in investing activities
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
4,708
427
56
(3)
(75)
216
459
16
59
7
-
-
-
(328)
5,542
(10)
554
391
27
(489)
1,358
(844)
(27)
6,502
(1,044)
5,458
(235)
-
11
(296)
(645)
25
(1,140)
3,441
439
78
-
(54)
775
(32)
-
50
-
(1,166)
(30)
(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)
Annual Report 2018-19 | 139
Consolidated statement of Cash flows
for the year ended March 31, 2019
(C) Financing activities
Repayment of 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 on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
(E) Cash and cash equivalents at year end (refer note 9)
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
(3,215)
(191)
-
-
-
(3,406)
912
28
3,007
3,947
(5,424)
(1,255)
7,713
(7,782)
(2,336)
(9,084)
(4,068)
(311)
7,386
3,007
Explanatory notes to statement of cash flow
Reconciliation of liabilities from financing activities for the year ended March 31, 2019
Particulars
Loan repayable on demand
Total liabilities from financing activities
As at
March 31, 2018
3,215
3,215
Repayments
/ proceeds
(Net)
(3,215)
(3,215)
Reconciliation of liabilities from financing activities for the year ended March 31, 2018
Particulars
Foreign currency convertible bonds
Term Loans
Loan repayable on demand
Total liabilities from financing activities
As at
March 31, 2017
2,277
7,782
8,590
18,649
Repayments
/ proceeds
(Net)
(2,336)
(7,782)
(5,424)
(15,542)
(H in Lakhs)
Foreign exchange
fluctuation
As at
March 31, 2019
-
-
-
-
(H in Lakhs)
Foreign exchange
fluctuation
As at
March 31, 2018
59
-
49
108
-
-
3,215
3,215
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the consolidated financial statements
As per our report of even date
For and on behalf of the Board of Directors
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
140 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
1. Corporate information
Subex Limited (“the Company” or “Subex” or “holding company” or “ parent 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, 2019 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, 2019 are approved by the Board of Directors on May 13, 2019.
Following subsidiaries have been considered in the preparation of the consolidated financial statements:
Name of the subsidiary
Country of incorporation
Subex Americas Inc.
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited *
Subex Middle East, FZE *
Subex Technologies Limited **
Subex Azure Holdings Inc. **
Subex Assurance LLP ***
Subex Digital LLP ***
Subex Technologies Inc. ^
Canada
United States of America
Singapore
United Kingdom
United Arab Emirates
India
United States of America
India
India
United States of America
% of holding and voting power either directly
or indirectly through subsidiaries as at
March 31, 2019
100
100
100
100
100
100
100
100
100
-
March 31, 2018
100
100
100
100
100
100
100
100
100
-
*In the previous year 2017-18, pursuant to restructuring, the Company has transferred its investment in Subex (UK) Limited and Subex
Middle East, FZE to Subex Assurance LLP. Also refer note 31.
**Represents non-operating companies.
***Incorporated/ registered in the previous year.
^ Liquidated in the previous year.
All the above subsidiaries are under the same management and are engaged in the same principle activities as the holding company.
Subex Limited is the sponsoring entity of Employee Stock Option Plan (‘ESOP’) trust. Management of the Company can appoint and
remove the trustees and provide funding to the trust for buying the shares. Basis assessment by the management, it believes that the
ESOP trust is controlled by the Company and accordingly Subex Employee Welfare and ESOP Benefit Trust is consolidated. [Refer note
2(p) and note 35]
Annual Report 2018-19 | 141
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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, 2019 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).
iv. The ESOP Trust is consolidated in the standalone financial statements of the Company and the shares purchased and held by ESOP
Trust are treated as treasury shares and recognised at cost and deducted from other equity. Refer note 2p.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent Company.
142 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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
taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair
Annual Report 2018-19 | 143
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against
which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Also refer note 2(s) and note 12, note 21 & note 22.
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 holds the liability primarily for the purpose of trading.
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
144 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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.
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.
Effective April 1,2018, the Group adopted Ind AS 115 “Revenue from Contracts with Customers” using the cumulative catch-up
transition method, applied to contracts that were not completed as at April 1, 2018. In accordance with the cumulative catch-up
transition method, the comparatives have not been retrospectively adjusted. The following is a summary of new and /or revised
accounting policies related to revenue recognition.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the
consideration the Group expect to receive in exchange for those products or services.
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 based on 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 115, by applying the revenue recognition criteria for each distinct performance obligation. The
arrangements generally meet the criteria for considering the sale of software license, related implementation and maintain services
as distinct performance obligation. For allocating the consideration, the Group has measured the revenue in respect of each distinct
performance obligation of a transaction at its standalone selling price, in accordance with principles given in Ind AS 115. The price that
is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In cases where the Group is
unable to determine the standalone selling price, the Group has used a residual method to allocate the arrangement consideration. In
these cases the balance of the consideration, after allocating the standalone selling price of undelivered components of a transaction
has been allocated to the delivered components for which specific standalone selling price 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 recognized 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 as at the balance sheet date.
Performance obligations and remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at
the end of the reporting period and an explanation as to when the Group expects to recognize these amounts in revenue.
Annual Report 2018-19 | 145
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
Applying the practical expedient as given in Ind AS 115, the Group has not disclosed the remaining performance obligation related
disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the entity’s performance
completed to date, typically those contracts where invoicing is on time and material basis.
Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations,
changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for
currency. Also, refer note 23.
The application of Ind AS 115 did not have significant impact on the financial statements
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
Property, 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 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.
146 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
j.
Impairment
Financial Assets
The Group assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109
(‘Financial instruments’) requires expected credit losses to be measured through a loss allowance. The Group recognises lifetime
expected losses for all contract assets and/ or all trade receivables that do not constitute a financing transaction. For all other financial
assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the
life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
Impairment of non-financial assets
Non-financial assets including Property, plant and equipment and intangible assets with finite life are evaluated for recoverability
whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable
amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset
does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is
determined for the CGU to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or
CGU) is reduced to its recoverable amount. An impairment loss is recognised in the consolidated statement of profit and loss.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s
or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in
the consolidated statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as
a revaluation increase.
k.
Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception
of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
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.
Annual Report 2018-19 | 147
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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
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.
Reclassification of financial assets
The group determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification
is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a
reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model
are expected to be infrequent. The group’s senior management determines change in the business model as a result of external
or internal changes which are significant to the group’s operations. Such changes are evident to external parties. A change in the
business model occurs when the group either begins or ceases to perform an activity that is significant to its operations. If the group
reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the
immediately next reporting period following the change in business 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.
148 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
Fair value of financial instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
•
•
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming that market participants act in their economic best interest.
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 2018-19 | 149
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
p.
Treasury shares
The parent Company has formed Subex Employee Welfare and ESOP Benefit Trust (ESOP Trust) for providing share-based payment to
its employees. The parent Company treats ESOP Trust as its extension and shares held by ESOP Trust are treated as treasury shares.
Own equity instruments that are purchased (treasury shares) are recognised at cost and deducted from equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of the parent Company’s own equity instruments. Any
difference between the carrying amount and the consideration, if reissued, is recognised in reserve. Share options exercised during
the reporting period are adjusted with treasury shares.
q. Employee benefits
Employee benefits include provident fund, pension fund, gratuity and compensated absences.
Defined contribution plans
Contributions payable to recognized provident funds 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 projected
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’.
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 where remaining maturity of such bond correspond to expected
term of defined benefit obligation.
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.
r.
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.
150 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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.
Effective April 1, 2018, the Group has adopted Appendix B to Ind AS 21- Foreign Currency Transactions and Advance Consideration
which clarifies the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related
asset, expense or income when an entity has received or paid advance consideration in a foreign currency. The effect on account of
adoption of this amendment was insignificant.
s.
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.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current
tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Annual Report 2018-19 | 151
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
t. 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.
u. 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.
v.
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’.
152 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
3. Property, plant and equipment
Computer
equipment
Furniture and
fixtures
Vehicles
Office
equipment
Cost
As at April 1, 2017
Additions
Disposals
Exchange differences
As at March 31, 2018
Additions
Disposals
Exchange differences
As at March 31, 2019
Depreciation
As at April 1, 2017
Charge for the year
Disposals
Exchange differences
As at March 31, 2018
Charge for the year
Disposals
Exchange differences
As at March 31, 2019
Net block
As at March 31, 2018
As at March 31, 2019
4.
Intangible assets
Cost
As at April 1, 2017
Additions
Disposals
Exchange differences
As at March 31, 2018
Additions
Disposals
Exchange differences
As at March 31, 2019
Amortization
As at April 1, 2017
Amortization for the year
Disposals
Exchange differences
As at March 31, 2018
Amortization for the year
Disposals
Exchange differences
As at March 31, 2019
Net block
As at March 31, 2018
As at March 31, 2019
1,472
267
(14)
27
1,752
288
(41)
16
2,015
770
410
(12)
3
1,171
380
(39)
14
1,526
581
489
33
1
-
2
36
9
(2)
-
43
12
6
-
-
18
11
(2)
-
27
18
16
12
1
-
-
13
-
(11)
-
2
2
2
-
-
4
2
(5)
-
1
9
1
93
16
(2)
3
110
20
(2)
-
128
41
21
-
-
62
34
(2)
-
94
48
34
Computer software
223
2
-
1
226
-
-
10
236
85
78
-
-
163
56
-
10
229
63
7
(H in Lakhs)
Total
1,610
285
(16)
32
1,911
317
(56)
16
2,188
825
439
(12)
3
1,255
427
(48)
14
1,648
656
540
(H in Lakhs)
Total
223
2
-
1
226
-
-
10
236
85
78
-
-
163
56
-
10
229
63
7
Note: Refer note 16 for the assets given on security.
Annual Report 2018-19 | 153
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
5. Goodwill on consolidation
Carrying value of goodwill
As at
March 31, 2019
65,882
(H in Lakhs)
As at
March 31, 2018
65,882
As at March 31, 2019, 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, which has been approved by the Board of Directors.
Considering the aforesaid valuation, the management is of the view that, the carrying value of the investment in subsidiaries as at March
31, 2019 is appropriate.
Below is the Cash Generating Unit (‘CGU’) wise break-up of goodwill:
Revenue Management Solutions ('RMS')
Data Integrity Management ('DIM')
As at
March 31, 2019
62,156
3,726
65,882
(H in Lakhs)
As at
March 31, 2018
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 Board of Directors. An average of the range of each assumption used is mentioned below:
Growth rate
Operating margins
Discount rate
As at
March 31, 2019
5% to 20%
20% to 36%
12% to 13%
As at
March 31, 2018
7% to 31%
24% to 36%
12% 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.
Management believes that any reasonable possible changes in the key assumptions would not cause the carrying amount to exceed the
recoverable amount of the cash generating unit.
6. Loans
Non-current
Unsecured, considered good
Security deposit
Total
Current
Unsecured, considered good
Loans to employees
Total
7. Other balances with banks
Non-current
Other bank balances (refer note 9)
Margin money deposits [refer note 34(b)(iii)]
Current
Other bank balances (refer note 9)
Margin money deposits
154 | SUBEX LIMITED
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
503
503
121
121
439
439
134
134
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
420
420
252
252
75
75
295
295
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
8. Trade receivables
Unsecured, considered good
Total (a)
Impairment allowance (allowance for bad and doubtful debts)
Unsecured, considered good
Total (b)
Net Trade Receivables (a-b)
As at
March 31, 2019
10,328
10,328
(H in Lakhs)
As at
March 31, 2018
10,636
10,636
(1,789)
(1,789)
8,539
(1,346)
(1,346)
9,290
i) During the year ended March 31, 2019, H 5,170 Lakhs of unbilled revenue as of April 1, 2018 has been converted to trade receivables
on billing. Also, refer note 10.
ii) During the year ended March 31, 2019, the Group has written off bad debts amounting to H 19 Lakhs (March 31, 2018 : H 1,242
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
Deposits with original maturity of less than 3 months
Cash on hand
Other balances with banks
A
Margin money 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)
Non-current
Other balances with banks
Margin money deposits
Less: Disclosed under Other balances with banks (Non-current) (refer note 7)
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
3,376
158
412
1
3,947
252
252
(252)
-
3,947
420
420
(420)
-
3,006
-
-
1
3,007
295
295
(295)
-
3,007
75
75
(75)
-
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.
Annual Report 2018-19 | 155
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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*
Advance to employees
Interest accrued but not due on bank deposits
*Also, refer note 8
11. Income tax assets (net)
Non-current
Advance income-tax [net of provision for taxation H 687 Lakhs
(March 31, 2018: H 688 Lakhs)]
12. Deferred tax asset*
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
Losses available for offsetting against future taxable profits
Provision for employee benefits and others
A
B
(A+B)
*Also refer note 22
13. Other assets
Non-current
Balance with statutory/ government authorities*
Advance recoverable in cash or kind
Prepaid expenses
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
234
234
4,517
12
8
4,537
234
234
5,247
-
3
5,250
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
3,039
3,039
2,810
2,810
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
425
425
(2,693)
1,992
900
199
624
425
425
10
40
77
127
552
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
267
211
478
267
270
537
156 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
13. Other assets (contd.)
Current
Balance with statutory/ government authorities
Advance recoverable in cash or kind
Prepaid expenses
Advance to suppliers
Expenses incurred on behalf of customers
(H in Lakhs)
As at
March 31, 2019
As at
March 31, 2018
8
402
23
93
526
-
418
30
96
544
*Balances represents service tax in inadvertently 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
Authorised share capital
Equity shares of H 10 each
As at April 1, 2017
Increase during the year
As at March 31, 2018
Increase during the year
As at March 31, 2019
Preference shares of H 98 each
As at April 1, 2017
Increase during the year
As at March 31, 2018
Increase during the year
As at March 31, 2019
Issued, subscribed and fully paid-up share capital
Equity shares of H 10 each issued, subscribed and fully paid-up *
As at April 1, 2017
Issued during the year - Preferential issue of equity shares [refer note 14(e)]
As at March 31, 2018
Issued during the year
As at March 31, 2019
No.
Hin Lakhs
545,040,000
43,000,000
588,040,000
-
588,040,000
200,000
-
200,000
-
200,000
506,907,936
55,094,999
562,002,935
-
562,002,935
54,504
4,300
58,804
-
58,804
196
-
196
-
196
50,691
5,509
56,200
-
56,200
*includes 243,207 (March 31, 2018: 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 Group had not declared any dividend during the year ended March 31, 2019 and March 31, 2018.
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.
Annual Report 2018-19 | 157
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
14. Share capital (contd.)
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, 2019
No.
% of total shares
As at March 31, 2018
No.
% of total shares
Tonbridge (Mauritius) Limited and Leeds (Mauritius)
Limited
QVT Singapore Fund Pte. Ltd
-
-
-
-
27,563,571
27,531,428
4.90
4.90
As at March, 31, 2019, there is no individual shareholder or shareholder (together with PAC) holding more than 5% shares of the
Company.
c)
Shares reserved for issue under options (No.)
Outstanding employee stock options under below schemes, granted/ available for
grant: (refer note 35)
ESOP III
ESOP - V
As at
March 31, 2019
As at
March 31, 2018
6,125
11,200,000
11,206,125
24,055
-
24,055
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, 2019
As at
March 31, 2018
-
89,335,462
e) During the previous year ended March 31, 2018, the Company made an allottment 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.
f) Number of treasury shares outstanding
Equity shares held by Subex Employee Welfare and ESOP Benefit Trust (refer note 35)
As at
March 31, 2019
11,200,000
As at
March 31, 2018
-
158 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
15. Other equity
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
Equity component of compound financial instruments
Balance as per last financial statements
Less: Transfer to surplus/ (deficit) in the statement of profit and loss*
Closing balance
Securities premium
Balance as per last financial statements
Add: Additions 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 : Share-based payments
Closing balance
Surplus / (deficit) in the consolidated statement of profit and loss
Balance as per last financial statements
Add: Profit for the year
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
Less: Effect of foreign exchange rate variations during the year
Add: On account of liquidation of foreign subsidiary (refer note 29)
Closing balance
Treasury Shares
Equity shares purchased by Subex Employee Welfare and ESOP Benefit Trust**
Closing Balance
-
-
-
26,705
-
26,705
1,780
-
1,780
2
-
16
18
5,079
2,522
-
(38)
7,563
(11,821)
(390)
-
(12,211)
(645)
(645)
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)
-
-
*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.
**On July 31, 2018, the Board of Directors and the shareholders of the Company approved “Subex Employees Stock Option Scheme
– 2018” (hereinafter referred to as the “ESOP Scheme 2018” or “ESOP - V”) to be administered through Subex Employee Welfare
and ESOP Benefit Trust (hereinafter referred to as the “ESOP Trust”). The ESOP Trust is authorised to purchase shares of the Company
through secondary market for issuance to the employees of the Group under ESOP Scheme 2018. Such reacquired shares held by ESOP
Trust are treated as treasury shares and recognised at cost and deducted from other equity. Also refer Note 35 for further details on
ESOP scheme.
Annual Report 2018-19 | 159
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
15. Other equity (contd.)
Summary of other equity:
Securities premium
Securities premium is used to record the premium on issue of shares. The reserve
shall be utilised in accordance with the provisions of section 52 of the Companies
Act, 2013.
General reserve
This represents appropriation of profit by the Group.
Employee stock options reserve
The employee stock option reserve is used to record the value of equity-settled
share based payment transactions with employees. The amounts recorded in this
account are transferred to reserves upon exercise of stock options by employees.
Surplus/ (deficit) in the consolidated statement of profit and loss
Surplus/ (deficit) in the statement of profit and loss comprises of the amounts that
can be distributed by the Group as dividends to its equity share holders.
Exchange reserve on consolidation
The exchange differences arising on the translation of financial statements of
foreign operations with functional currency other than Indian rupees is recognised
in other comprehensive income and is presented within equity in the foreign
currency translation reserve.
Treasury Shares
Treasury shares represent own equity shares that are purchased and recognised at
cost for the purpose of re-issuing to employees under ESOP scheme.
Total other equity
16. Borrowings
Carried at amortized cost
Current
Loans repayable on demand from banks (Secured)
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
26,705
26,705
1,780
18
1,780
2
7,563
5,079
(12,211)
(11,821)
(645)
-
23,210
21,745
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
-
-
3,215
3,215
Secured loans repayable on demand is secured by primary charge on customer receivables and paripassu first charge on current assets of
Subex Assurance LLP (“SA LLP”), and collateral paripassu first charge on the fixed assets of Subex Assurance LLP. Further, the loan is also
guaranteed by the Company. Refer note 34(b)(iv).
Loans repayable on demand as at March 31, 2019 consisted of Pre-shipment Credit in Foreign Currency (PCFC) of H Nil (March 31, 2018
H 3,215 Lakhs), which carried an average interest rate of 3.49% (March 31, 2018; 3.27%).
160 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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.
*Payable to micro, small and medium enterprises
Description
d)
a) the principal amount remaining unpaid to any supplier as at the end of accounting year;
interest due thereon remaining unpaid to any supplier as at the end of accounting year;
b)
the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and
c)
Medium Enterprises Development Act, 2006, along with the amount of the payment made
to the supplier beyond the appointed day during each accounting year;
the amount of interest due and payable for the period of delay in making payment (which
have been paid but beyond the appointed day during the year) but without adding the
interest specified under the Micro, Small and Medium Enterprises Development Act, 2006;
the amount of interest accrued and remaining unpaid at the end of each accounting year; and
the amount of further interest remaining due and payable even in the succeeding years,
until such date when the interest dues above are actually paid to the small enterprise, for
the purpose of disallowance of a deductible expenditure under section 23 of the Micro,
Small and Medium Enterprises Development Act, 2006.
e)
f)
18. Other current financial liabilities
Carried at amortized cost
Current
Employee related liabilities
Capital creditors
19. Other current liabilities
Unearned revenue
Statutory dues
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
7
827
834
-
1,331
1,331
As at
March 31, 2019
7
-
(H in Lakhs)
As at
March 31, 2018
-
-
-
-
-
-
-
-
-
-
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
2,879
82
2,961
1,511
-
1,511
As at
March 31, 2019
1,429
1,023
2,452
(H in Lakhs)
As at
March 31, 2018
2,086
1,144
3,230
Annual Report 2018-19 | 161
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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, 2019
(H in Lakhs)
As at
March 31, 2018
305
305
95
534
100
729
280
280
89
523
100
712
*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)(iii) for further details.
21. Deferred tax liabilities (net)
Non-current
Deferred tax liabilities
Depreciation and amortization expense: Difference between tax depreciation and
depreciation and amortization expense
Deferred tax assets
Provision for employee benefits and others
Losses available for offsetting against future taxable profits
A
B
(A-B)
22. Income tax liabilities (net)
Provision for tax [net of advance tax H 246 Lakhs (March 31, 2018: H 250 Lakhs)]
Provision for foreign taxes
Provision for litigation [net of tax deducted at source H 62 Lakhs (March 31, 2018:
H 62 Lakhs)] *
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
1,928
1,928
-
-
-
1,928
1,693
1,693
65
802
867
826
As at
March 31, 2019
442
(H in Lakhs)
As at
March 31, 2018
162
426
162
1,030
394
162
718
*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)(i) for further details.
162 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
22. Income tax liabilities (net) (contd.)
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
Deferred tax charge (net) [refer note 22(ii)]
Total tax expense
Notes:
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
274
885
-
1,027
2,186
(171)
789
53
702
1,373
22(i)
Represents provision in respect of withholding taxes deducted/deductible by the overseas 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.
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)
Year ended
March 31, 2018
3,441
34.61%
1,191
Year ended
March 31, 2019
4,708
34.94%
1,645
Profit before tax
Applicable tax rates in India
Computed tax charge (A)
Components of tax expense:
Provision for foreign withholding taxes (net)
Tax effect on differential overseas tax rate
Impact of non-taxable income
Non-recognition of deferred tax asset on losses in certain subsidiaries
Deferred tax assets recognised on certain disallowances pertaining to previous periods
Other adjustments
Total adjustments (B)
Total tax expense (A+B)
*In the previous year, impact of non-taxable income pertains to 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 liquidation of its subsidiary. Refer note 29.
885
(209)
-
291
(426)
-
541
2,186
789
(242)
(404)
-
-
39
182
1,373
23. Revenue from operations*
Sale of products
Sale of services
Disaggregation of revenue:
Revenue by offering
Sale of license
Implementation and customisation
Managed services
Support services
Year ended
March 31, 2019
3,352
31,460
34,812
(H in Lakhs)
Year ended
March 31, 2018
3,193
29,239
32,432
3,352
8,309
12,427
10,724
34,812
3,193
7,504
10,870
10,865
32,432
Annual Report 2018-19 | 163
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
23. Revenue from operations* (contd.)
(H in Lakhs)
Year ended
March 31, 2019
Year ended
March 31, 2018
Revenue by contract type
Fixed price contract
Time and Material Contract
10,991
21,441
32,432
*During the year ended March 31, 2019, the Group recognized revenue of H 4,182 Lakhs arising from opening unearned revenue (gross
of trade receivables of H 3,034 Lakhs) as of April 1, 2018.
12,301
22,511
34,812
Refer note 32 for disaggregation of revenue by geographical segment.
Remaining performance obligations
The aggregate value of performance obligations that are completely or partially unsatisfied as at March 31, 2019, other than those
contracts wherein invoicing is on time and material basis is H 7,821 Lakhs. Out of the total remaining performance obligation other than
contracts where invoicing is on time and material basis, the Group expects to recognize revenue of around 50% within the next one year
and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based
on current assessment, the occurrence of the same is expected to be remote.
24. Other income
Interest income on:
Security deposits
Bank deposits
Miscellaneous income
Net gain on disposal of property, plant and equipment
Write back of withholding taxes paid earlier (refer note 43)
25. Employee benefits expense
Salaries and wages *
Contribution to provident and other funds
Employee share based payments
Gratuity expense (refer note 36)
Staff welfare expenses
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
45
30
23
3
-
101
31
23
56
-
30
140
Year ended
March 31, 2019
17,445
1,129
16
98
417
19,105
(H in Lakhs)
Year ended
March 31, 2018
15,674
1,023
-
89
685
17,471
*Net of reversal of provision no longer required, in respect of employee incentives amounting to H 40 Lakhs (March 31, 2018: H 725 Lakhs).
26. Finance cost
Interest
Foreign currency convertible bonds
Other borrowings
Other finance charges
Bank charges
164 | SUBEX LIMITED
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
-
82
25
109
216
95
326
21
333
775
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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 (refer note 33)
Contribution towards corporate social responsibility
Loss on sale of fixed assets (net)
Miscellaneous expenses
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
Year ended
March 31, 2019
427
56
483
Year ended
March 31, 2019
389
1,829
1,922
212
(H in Lakhs)
Year ended
March 31, 2018
439
78
517
(H in Lakhs)
Year ended
March 31, 2018
577
1,549
1,767
210
164
671
98
274
28
2,530
134
536
900
177
159
459
(171)
60
14
-
16
10,401
128
646
111
308
54
2,549
212
418
950
201
153
(32)
1,650
77
-
2
4
11,534
(H in Lakhs)
Year ended
March 31, 2019
Year ended
March 31, 2018
104
2
7
6
119
57
1
58
177
98
4
25
10
137
62
2
64
201
Annual Report 2018-19 | 165
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
29. Exceptional items
Foreign currency translation reserve gain on liquidation of foreign subsidiary*
Year ended
March 31, 2019
-
-
(H in Lakhs)
Year ended
March 31, 2018
1,166
1,166
*During the previous year ended March 31, 2018, the Company had 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 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 Parent 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 attributable to equity shareholders (H in Lakhs)
Weighted average number of basic equity shares (No. in Lakhs)*
Profit per share basic and diluted (H per share)**
Year ended
March 31, 2019
10
2,522
5,577
0.45
Year ended
March 31, 2018
10
2,068
5,554
0.37
*The weighted average number of shares takes into account the weighted average effect of changes in treasury shares transactions during
the year.
**Employee stock options outstanding as at March 31, 2019 and as at March 31, 2018 are anti-dilutive and accordingly have not been
considered for the purpose of computing dilutive EPS of the respective years.
31. Restructuring
During the previous year, 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).
166 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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 Company is engaged in the business of software products and related services, which are monitored as a single segment by the Chief
Operating Decision Maker, accordingly, these, in the context of Ind AS 108 on Operating Segments Reporting are considered to constitute
one segment and hence the Company has not made any additional segment disclosures.
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
Year ended
March 31, 2019
5,603
21,378
1,808
6,023
34,812
(H in Lakhs)
Year ended
March 31, 2018
5,322
19,076
2,656
5,378
32,432
*Revenues by geographic area are based on the geographical location of the customer.
Revenue from one customer amounting to H 3,687 Lakhs accounted for more than 10% of the total revenue of the group during the year
ended 31st March 2019. During the previous year ended 31st March 2018, no customer individually accounted for more than 10% of the
total revenue of the group.
Non-current operating assets by geographical location are as follows**:
Region
India
Outside India
Unallocated ***
Total non-current operating assets
Year ended
March 31, 2019
861
164
65,882
66,907
(H in Lakhs)
Year ended
March 31, 2018
989
267
65,882
67,138
**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
Trust that is consolidated
Subex Employee Welfare and ESOP Benefit Trust (w.e.f September 6, 2018)
Key management personnel of the Company
Anil Singhvi
Vinod Kumar Padmanabhan
Chairman (w.e.f. May 25, 2017) and Independent Director
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)
Designated partner of Subex Assurance LLP (w.e.f. April 5, 2017)
Designated partner of Subex Digital LLP (w.e.f. April 5, 2017)
Employee of Subex Assurance LLP (w.e.f. November 1, 2017)
Annual Report 2018-19 | 167
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
33. Related party transactions (contd.)
Venkatraman G S
G V Krishnakanth
Nisha Dutt
Poornima Kamalaksh Prabhu
Surjeet Singh
Ashwin Chalapathy
Mehernaz Dalal
Ganesh KV
ii. Transactions with the trust
Chief Financial Officer (w.e.f. November 30, 2018)
Designated partner of Subex Assurance LLP (w.e.f. November 15, 2018)
Designated partner of Subex Digital LLP (w.e.f. November 15, 2018)
Company Secretary (w.e.f July 10, 2018)
Independent Director
Independent Director
Managing Director and Chief Executive Officer (Up to March 31, 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 May 4, 2018)
Chief Financial Officer (w.e.f June 15, 2017 to November 30, 2018)
Chief Financial Officer, Global Head - Legal and Company Secretary (Up to June 15, 2017)
Loan given to Subex Employee Welfare and ESOP Benefit Trust*
iii. Details of transactions with key management personnel
Salary and perquisites:**
Vinod Kumar Padmanabhan (includes remuneration from Subex Assurance LLP)***
Venkatraman G S***
G V Krishnakanth***
Mehernaz Dalal
Ashwin Chalapathy
Surjeet Singh
Ganesh KV
Director sitting fees
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Year ended
March 31, 2019
645
645
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
-
-
(H in Lakhs)
Year ended
March 31, 2018
176
31
24
63
-
-
-
294
24
14
18
56
54
-
-
44
45
586
37
766
28
22
23
73
*Loan given to Subex Employee Welfare and ESOP Benefit Trust has been reduced from other equity. Also refer note 15.
** 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.
*** During the year, the Company has granted 25 lakhs ESOPs to key management personnel under ESOP 2018 scheme, which
includes options granted to designated partner/ employee of Subex Assurance LLP.
168 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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 7 Lakhs (March 31, 2018: H 64 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, 2019
-
-
-
(H in Lakhs)
As at
March 31, 2018
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 1,915 Lakhs (March 31, 2018: H 1,703 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 (iv)]
As at
March 31, 2019
15,254
3,687
1,293
373
4,500
(H in Lakhs)
As at
March 31, 2018
16,995
3,687
1,293
321
8,250
i.
Income tax
a) The Group has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2015,
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.
b)
One of the subsidiary, Subex Technologies Limited, had received demand orders in relation to disallowance of subcontracting
charges on non-deduction of withholding taxes pertaining to financial year ended March 31, 2008, amounting to H
308,806.34 thousands under section 143(3) of Income Tax Act, 1961 and H 121,408.42 thousands under section 201(1)
of Income Tax Act, 1961. In the matter relating to demand u/s 143(3) of Income Tax Act, 1961, the Company had received
a favourable decision from the Honorable Income Tax Appellate Tribunal in the financial year 2016-17. Subsequently, the
Department of Income Tax has filed an appeal in this regard with the Honorable High Court. The matter relating to section
201(1) of Income Tax Act, 1961 is stayed in the interim by the Honorable High Court pending the hearing in respect of the
matter. Based on the opinion received from the external consultants, the management is of the view that, these expenses
are deductible from taxable income, and is confident that the demands raised by the Assessing Officers are not tenable
under law. Pending outcome of the aforesaid matters under litigation, no provision has been made in the books of account
in respect of these tax demands.
Annual Report 2018-19 | 169
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
34. Commitments and contingent liabilities (contd.)
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 Company had received certain claims from two of its ex-directors for an amount of H 1,293 Lakhs. The Company disputed the
same as these claims are not tenable. During the current year, in respect of arbitration concerning to one of the ex-directors, the
Honorable Tribunal has passed an Award directing the Company to pay a sum of H 696 lakhs (including interest). The Company has
filed an application before the Honorable City Civil Court, Bengaluru to set aside the Award and has also sought an interim stay in
this regard. The Honorable City Civil Court, Bengaluru passed an interim order staying the Award passed by the Honorable Tribunal
until disposal of the arbitral suit, subject to Company depositing a 60% bank guarantee of the award amount. The Company has
deposited a bank guarantee for an amount of H 418 Lakhs i.e., 60% of the award amount. During the current year, in respect of
the arbitration proceedings concerning to the other ex-director, the Honorable Tribunal passed an Award directing the company
to pay a sum of H 770 lakhs. The Company filed a challenge application before the Honorable City Civil Court, Bengaluru to set
aside the Arbitral Award which is pending. Since it is uncertain in both the matters if and what relief the Honorable City Civil
Court, Bengaluru will grant, the management, basis opinion obtained from its legal counsel, 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, 2018: 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, 2018: H 110 Lakhs). The aggregate
amount of H 234 Lakhs (March 31, 2018: 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
The Company has given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of H 4,500 lakhs (March 31,
2018: 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).
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.
The Board of Directors and the shareholders of the Company in their respective meetings held on July 31, 2018 approved “Subex
Employees Stock Option Scheme – 2018” (hereinafter referred to as the “ESOP Scheme 2018” or “ESOP - V”) in accordance with all the
applicable provisions of the Companies Act, 2013 and the provisions of the Securities and Exchange Board of India (Share Based Employee
Benefits) Regulations, 2014 (“SEBI ESOP Regulations”) to be administered through Subex Employee Welfare and ESOP Benefit Trust
(hereinafter referred to as the “ESOP Trust”). The ESOP Trust was registered as per provisions of Indian Trust Act, 1882 on September 6,
170 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
35. Employee stock options plans (‘ESOPs’) (contd.)
2018 and is authorised to acquire upto 5% of the outstanding share capital of the Company as on March 31, 2018 through secondary
market for providing such share-based payments to its employees. The ESOP Trust is consolidated in the standalone financial results of the
Company and the shares reacquired and held by ESOP Trust are treated as treasury shares and recognised at cost and deducted from other
equity. Subsequently, the Nomination and Remuneration Committee of the Company in their meeting held on January 29, 2019 granted
1,06,50,000 options effective from February 05, 2019 to the eligible employees at H 6/- each per share. The shares granted vest over a
period of 1 to 2 years and can be exercised over a maximum period of 2 years from the date of vesting.
Employees stock options details as on the balance sheet date are:
Particulars
2018-19
2017-18
Options outstanding at the beginning of the year
ESOP – III
ESOP – IV
Granted during the year
ESOP – V
Cancelled, surrendered or lapsed during the year
ESOP – III
ESOP – IV
ESOP – V
Options outstanding at the end of the year
ESOP – III
ESOP – V
Options exercisable at the end of the year
ESOP – III
ESOP – V
Options (no.)
Options (no.)
Weighted
average exercise
price per stock
option (H)
Weighted
average exercise
price per stock
option (H)
24,055
-
10,650,000
17,930
-
-
6,125
10,650,000
6,125
-
18.24
-
6.00
19.78
-
-
13.74
6.00
13.74
-
92,368
28,301
-
68,313
28,301
-
24,055
-
24,055
-
22.97
28.44
-
24.67
28.44
-
18.24
-
18.24
-
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 – V
Weighted average remaining
contractual life(years)*
2018-19
2017-18
0.46
3.35
1.26
-
Range of exercise prices (H)
2018-19
10.26 - 24.99
6.00
2017-18
10.26 - 54.83
-
*considering vesting and exercise period
Fair value methodology
The key assumptions used in Black-Scholes model for calculating fair value is as below:
Particulars
Risk-free interest rate
Expected volatility of share
Expected life(years)
Weighted average fair value as on grant date (H)
March 31, 2019
6.90%
50.00%
2
1.46
The expected life of stock options is based on historical data and current expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects assumption that the historical volatility over a period similar to the life of the options is
indicative of future trends, which may also not necessarily be the actual outcome.
Annual Report 2018-19 | 171
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
36. Employee benefit plans
a) Provident fund
The Group makes contributions to Provident Fund, Pension Fund, Employee State Insurance scheme and other funds which are defined
contribution plan for qualifying employees. Under the scheme, the Group is required to contribute a specified percentage of the
payroll costs to fund the benefits. The Group recognized H 1,098 Lakhs (March 31, 2018: H 1,024 Lakhs) towards Provident Fund and
Pension Fund contributions (including 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.
The following tables set out the status of the gratuity plan:
Disclosure as per Ind AS 19
a.
b.
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
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 recognised in the consolidated balance sheet
d.
e.
Expenses recognised 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 recognised through OCI
172 | SUBEX LIMITED
(H in Lakhs)
As at
March 31, 2019
As at
March 31, 2018
573
98
40
(102)
40
2
651
204
15
2
132
(102)
251
(651)
251
(400)
484
89
31
(64)
32
1
573
144
10
2
110
(62)
204
(573)
204
(369)
Year ended
March 31, 2019
(H in Lakhs)
Year ended
March 31, 2018
98
25
123
7
33
(2)
38
89
21
110
(16)
48
(2)
30
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
36. Employee benefit plans (contd.)
f.
Assumptions
Discount rate
Expected return on plan assets
Salary escalation*
Attrition rate
Retirement age
Year ended
March 31, 2019
Year ended
March 31, 2018
6.70%
7.60%
7.30%
18.00%
60 years
7.60%
7.00%
8.00%
18.00%
60 years
Assumptions regarding future mortality experience are set in accordance with the published statistics by Indian Assured Lives
Mortality (2006-08)
g.
Five years pay-outs
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
As at
March 31, 2019
95
96
88
85
76
500
(H in Lakhs)
As at
March 31, 2018
89
82
78
73
68
458
*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
(H in Lakhs)
As at
March 31, 2019
95
As at
March 31, 2018
89
i.
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Investment with insurer
100%
j.
Sensitivity analysis
100%
(H in Lakhs)
Particulars
Effect of change in discount rate
Impact on defined benefit obligation increase/ (decrease)
Year ended March 31, 2019
0.5% increase 0.5% decrease
15
(13)
Year ended March 31, 2018
0.5% increase 0.5% decrease
13
(12)
Effect of change in salary
Impact on defined benefit obligation increase/ (decrease)
1% increase
26
1% decrease
(23)
1% increase
23
1% decrease
(22)
Effect of change in withdrawal assumption
Impact on defined benefit obligation increase/ (decrease)
5% increase
(12)
5% decrease
15
5% increase
(12)
5% decrease
13
k.
The average duration of the defined benefit plan obligation at the end of the reporting period of gratuity is 6 years (March 31, 2018:
6 years).
Annual Report 2018-19 | 173
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 Middle East
Total
Adjustments arising out of
consolidation
Total
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
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, 2019
(H in Lakhs)
Net Assets i.e., total assets
minus total liabilities
As % of
Consolidated
net assets
Amount
Share in profit or loss
Amount
As % of
Consolidated
profit or loss
Share in other
comprehensive income
Share in total comprehensive
income
Amount
As % of
consolidated other
comprehensive
income
As % of
consolidated total
comprehensive
income
Amount
51%
71,149
46%
(2,453)
-
44%
(1%)
22
61,488
(474)
1%
3%
4%
(2%)
-
815
3,793
5,147
(3,049)
119
100% 1,39,010
(59,600)
79,410
-
(5%)
33%
(3)
281
(1,744)
19
-
(1,660)
31%
96
(2%)
118
(2%)
(1%)
61
100% (5,285)
7,807
2,522
1%
-
5%
2%
(4%)
38%
15%
43%
-
100%
(3)
-
(20)
(10)
16
(164)
(64)
(182)
(1)
(428)
-
(428)
43%
(2,456)
-
(4%)
31%
(3)
261
(1,754)
35
(1%)
(1,824)
32%
32
(1%)
(64)
1%
60
(1%)
100% (5,713)
7,807
2,094
(H in Lakhs)
As at and for the year ended March 31, 2018
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 Middle East
Total
Adjustments arising out of
consolidation
Total
Net Assets i.e., total assets
minus total liabilities
As % of
Consolidated
net assets
Amount
Share in profit or loss
Share in other comprehensive
income
Share in total comprehensive
income
Amount
As % of
Consolidated
profit or loss
Amount
As % of
consolidated other
comprehensive
income
As % of
consolidated total
comprehensive
income
Amount
49%
74,234
1%
32
(1%)
(8)
-
24
-
41%
1%
25
62,262
1,279
1%
7%
3%
(2%)
-
780
10,098
5,115
(2,983)
59
100% 1,50,869
(72,924)
77,945
-
14%
(12%)
(13%)
(16%)
124%
2%
-
100%
(4)
710
(586)
(655)
(826)
6,264
87
(14)
5,008
(2,940)
2,068
-
(1%)
-
(19%)
127%
(4%)
(2%)
-
100%
-
(12)
(4)
(179)
1,185
(37)
(20)
1
926
(1,166)
(240)
-
12%
(10%)
(14%)
6%
105%
1%
-
100%
(4)
698
(590)
(834)
359
6,227
67
(13)
5,934
(4,106)
1,828
174 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
38. Capital management
The Group’s objective is to maintain a strong capital base to ensure sustained growth in business and to maximise the shareholders value.
The capital management focusses to maintain an optimal structure that balances growth and maximizes shareholder value.
Particulars
A. Total equity attributable to the share holders of the Company
B.
C.
D.
E.
Total borrowings
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, 2019
79,410
-
79,410
-
100%
(H in Lakhs)
As at
March 31, 2018
77,945
3,215
81,160
4%
96%
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:
Particulars
As at
March 31, 2019
(H in Lakhs)
As at
March 31, 2018
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*
Capital creditors*
Borrowings^
8
8,539
4,517
503
133
13,700
1
3,946
672
4,619
2,879
834
82
-
3,795
3
9,290
5,247
439
134
15,113
1
3,006
370
3,377
1,511
1,331
-
3,215
6,057
*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.
^During the previous year, the fair value of these accounts were calculated based on cash flow discounted using a lending/ borrowing
rate, they were classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.
Annual Report 2018-19 | 175
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
40. Financial risk management
The Group’s activities expose it to the following risks:
i.
ii.
iii. Liquidity risk
iv. Market risk
Credit risk
Interest rate risk
i. Credit risk:
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) and
from its financing activities including deposits with banks, foreign exchange transactions and other financial instruments.
a. Trade receivables
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:
Particulars
Trade receivables
Unbilled revenue
Total
As at
March 31, 2019
8,539
4,517
13,056
(H in Lakhs)
As at
March 31, 2018
9,290
5,247
14,537
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 minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make
payments.
ii.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market
interest rates. The Group’s risk of changes in interest rates relates primarily to the Group’s debt obligations with floating interest rates
for the period the Group 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 profit before tax due to change in the interest rate/ fair value of financial liabilities are as disclosed below:
(H in Lakhs)
Particulars
Year ended March 31, 2019
Year ended March 31, 2018
Change in interest
rate
Effect of profit before
exceptional items and
tax expense
Change in interest
rate
Effect of profit before
exceptional items and
tax expense
+1%
-1%
(23)
23
+1%
-1%
(60)
60
Working capital loans
176 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
40. Financial risk management (contd.)
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’s 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, 2019
3,947
254
4,201
(H in Lakhs)
As at
March 31, 2018
3,007
370
3,377
The table below summarises the maturity profile of the Group’s financial liabilities at the reporting date. The amounts are based on
contractual undiscounted payments.
Particulars
As at March 31, 2019
Trade payables
Other financial liabilities
As at March 31, 2018
Trade payables
Borrowings
Other financial liabilities
iv. Market risk
On demand
0-180 Days 181-365 Days More than
365 Days
128
-
128
251
-
-
251
706
2,961
3,667
983
3,215
1,511
5,709
-
-
-
95
-
-
95
-
-
-
3
-
-
3
(H in Lakhs)
Total
834
2,961
3,795
1,331
3,215
1,511
6,057
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Group’s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Group
has exposures to United States Dollars (‘USD’), Great Britain Pound (‘GBP’), Euro (‘EUR’), United Arab Emirates Dirham (‘AED’) and
other currencies. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating
activities and financing activities.
Below is the summary of foreign currency exposure of Group’s financial assets and liabilities.
As at March 31, 2019
Particulars
Financial assets
Trade receivables
Cash and cash equivalents and other bank
balances
Other financial assets
Total financial assets
Financial liabilities
Other financial liabilities
Total financial liabilities
Net financial assets/ (liabilities)
Denominated currency
USD
GBP
EUR
Others
5,128
1,145
2,250
8,523
290
290
8,233
-
-
-
-
3
3
(3)
1,407
354
271
2,032
277
277
1,755
1,118
229
691
2,038
551
551
1,487
(H in Lakhs)
Total
7,653
1,729
3,212
12,594
1,121
1,121
11,473
Annual Report 2018-19 | 177
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
40. Financial risk management (contd.)
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)
Denominated currency
USD
GBP
EUR
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
(H in Lakhs)
Total
7,831
509
1,440
9,780
3,215
1,055
4,270
5,510
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 respectivey by 0.33% (March 31,
2018, 0.17%).
41. Standards issued but not yet effective
Ind AS 116 - Leases:
On March 30, 2019, the Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Amendment Rules,
2019 containing Ind AS 116 – Leases and related amendments to other Ind ASs. Ind AS 116 replaces Ind AS 17 – Leases and related
interpretation and guidance. The standard sets out principles for recognition, measurement, presentation and disclosure of leases
for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a
lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.
Currently, operating lease expenses are charged to the statement of profit and loss. The Standard also contains enhanced disclosure
requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements as per Ind AS 17. Ind AS 116 is
effective for annual periods beginning on or after April 1, 2019.
Ind AS 12 - Appendix C - Uncertainty over Income Tax treatments:
On March 30, 2019, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules,
2019 containing Appendix C to Ind AS 12, Uncertainty over Income Tax treatments which clarifies the application and measurement
requirements in Ind AS 12 when there is uncertainty over income tax treatments. The current and deferred tax asset or liability shall
be recognized and measured by applying the requirements in Ind AS 12 based on the taxable profit (tax loss), tax bases, unused
tax losses, unused tax credits and tax rates determined by applying this appendix. The amendment is effective for annual periods
beginning on or after April 1, 2019.
Amendment to Ind AS 19 : Employee benefits:
On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 19 – Employee Benefits in connection
with accounting for plan amendments, curtailments and settlements. The amendments require an entity to use updated assumptions
to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement
and to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that
surplus was not previously recognised because of the impact of the asset ceiling. The amendment will come into force for accounting
periods beginning on or after April 1, 2019, though early application is permitted.
178 | SUBEX LIMITED
Notes to the Consolidated Financial statements
for the year ended March 31, 2019
41. Standards issued but not yet effective (contd.)
Amendment to Ind AS 12 – Income Taxes:
On March 30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 12 – Income Taxes. The amendments
require an entity to recognise the income tax consequences of dividends as defined in Ind AS 109 when it recognises a liability to
pay a dividend. The income tax consequences of dividends are linked more directly to past transactions or events that generated
distributable profits than to distributions to owners. Therefore, an entity shall recognize the income tax consequences of dividends
in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or
events. The amendment will come into force for accounting periods beginning on or after April 1, 2019.
The Group is evaluating the effect of the aforementioned on its consolidated financial statements.
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. During the year ended March 31, 2019, the Company has voluntarily incurred an expense of H 14 lakhs
(March 31, 2018: H Nil) towards CSR activities.
Amount spent during the year ended March 31, 2019:
(i) Construction/acquisition of any asset
(ii) On purposes other than (i) above
In Cash
Yet to be paid in cash
-
14
-
-
(H in Lakhs)
Total
-
14
43. During the previous year, 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 was considered no longer payable and the management basis
expert advice, was of the view that the withholding taxes paid by the Company in respect of the aforesaid interest, were recoverable
from income tax department and/ or are adjustable against its other withholding taxes obligations. Accordingly, upon revision of
withholding taxes returns, the Group adjusted withholding taxes of H Nil (March 31, 2018: H 30 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, 2019 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.
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 & Independent Director
DIN : 00239589
Poornima Prabhu
Independent Director
DIN: 03114937
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 13, 2019
Venkatraman G S
Chief Financial Officer
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Date: May 13, 2019
Annual Report 2018-19 | 179
“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 25TH ANNUAL GENERAL MEETING (AGM)
Date
Venue
Time
: July 04, 2019
: The “Grand Ball Room”, Hotel Lalit Ashok, Kumara Krupa High Grounds, Bengaluru – 560 001
: 02:00 P.M
DATES OF BOOK CLOSURE
From June 28, 2019 to July 04, 2019 (both days inclusive)
BOARD MEETINGS & FINANCIAL CALENDAR
Financial year 2019-20 : April 01, 2019 to March 31, 2020
Calendar of Board Meetings to adopt the accounts
For quarter ending June 30, 2019
For quarter ending September 30, 2019
For quarter ending December 31, 2019
For the year ending March 31, 2020
– 4th week of July 2019
– 2nd week of November 2019
– 2nd week of February 2020
– 4th week of May 2020
DIVIDEND
The Directors have not proposed any dividend to be paid for the financial year 2018-19.
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 2018-19 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.
The stock codes of the Company at the Stock Exchanges are as follows:
Name and address of the Stock Exchange
National Stock Exchange of India Limited,
Exchange Plaza, 5th Floor, Plot No. C/1, G Block
Bandra Kurla Complex, Bandra (East), Mumbai- 400051
BSE Limited,
Phiroze Jeejeebhoy Towers
Dalal Street, Mumbai 400001
London Stock Exchange
10 Paternoster Square
London, EC4M 7LS
Stock code
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 2018-19 to NSDL and CDSL on the basis of the number of beneficial accounts maintained by them
as on March 31, 2018.
180 | SUBEX LIMITED
STOCK MARKET DATA RELATING TO EQUITY SHARES LISTED IN INDIA
Monthly high and low quotes during each month in the financial year 2018-19 as well as the volume of shares traded on NSE and BSE are
as under:
Month
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan-19
Feb-19
Mar-19
High Price
NSE
Low Price
8.55
8.05
7.15
6.90
6.35
6.05
6.40
6.30
6.30
8.00
6.45
6.70
7.15
6.05
5.20
4.95
5.15
4.35
4.80
5.45
5.65
5.60
5.20
5.40
Number of
shares traded
4,04,02,184
4,21,45,469
4,38,87,174
7,79,43,178
6,33,08,629
3,44,14,487
3,55,04,280
1,99,49,744
1,29,25,362
4,06,60,806
1,75,97,320
2,97,23,517
SUBEX LIMITED SHARE PRICE VERSUS NSE S&P CNX NIFTY AND SENSEX
Month
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
BSE Sensex
35,160.36
35,322.38
35,423.48
37,606.58
38,645.07
36,227.14
34,442.05
36,194.30
36,068.33
36,256.69
35,867.44
38,672.91
40000
35000
35000
35000
35000
35000
10000
Number of
share straded
1,60,40,207
99,37,951
94,47,126
1,29,94,679
81,03,850
49,93,364
63,20,946
44,51,994
36,47,845
1,90,97,579
62,41,848
1,12,03,928
High Price
BSE
Low Price
8.55
8.04
7.10
6.87
6.40
6.07
6.40
6.31
6.35
8.01
6.49
6.69
7.18
6.06
5.15
4.96
5.16
4.40
4.77
5.41
5.69
5.60
5.07
5.45
Nifty 50
10,739.35
10,736.15
10,714.30
11,356.50
11,680.50
10,930.45
10,386.60
10,876.75
10,862.55
10,830.95
10,792.50
11,623.90
25
20
15
10
5
0
Apr May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Sensex Close
Subex BSE Close
Annual Report 2018-19 | 181
15000
10000
5000
0
25
20
15
10
5
0
Apr May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Nifty Close
Subex NSE Close
CREDIT RATING
The India Ratings and Research organisation (Ind-Ra) in their letter dated July 26, 2018 confirmed that the company’s credit rating remained
unchanged at IND A-.
Instrument wise rating actions are mentioned below:
Instrument Type
Fund-based limits
Non-fund based limits
Size of Issue (million)
INR 956 (reduced from INR 1,148)
INR180
Rating/Outlook
WD
WD
Rating Action
Affirmed and withdrawn (paid in full)
Affirmed and withdrawn (paid in full)
SHAREHOLDING PATTERN
(As per records of the RTA) *
Distribution of Shareholding:
No. of Equity shares held
As on March 31, 2019
As on March 31, 2018
1 – 5000
5001 – 10000
10001 – 20000
20001 –30000
30001 – 40000
40001 – 50000
50001 – 100000
100001 and above
TOTAL
No. of share holders
54,503
18,334
12,193
5,358
2,644
3,898
5,221
5,759
1,07,910
% to total share holders
50.51
16.99
11.30
4.97
2.45
3.61
4.84
5.33
100
No. of share holders
57,792
19,670
12,783
5,572
2,681
4,091
5,481
5,841
1,13,911
% to total share holders
50.73
17.27
11.22
4.89
2.35
3.59
4.81
5.14
100
182 | SUBEX LIMITED
Categories of Shareholders:
Category
Public & Other (includes
GDR’s and Foreign
Corporate Bodies)
Companies/ Indian Bodies
Corporate
Promoter & Promoter Group
Mutual Funds
ESOPs/ Employee
shareholders
FII
TOTAL
No. of share
holders
As on March 31, 2019
Voting strength
%
No. of shares
held
No. of share
holders
As on March 31, 2018
Voting strength
%
No. of shares
held
106,761
79.28
445,538,458
112,577
78.66
442,070,413
1,067
20.48
115,135,975
1,292
21.07
118,398,079
2
Nil
80
Nil
107,910
0.09
Nil
0.15
Nil
100
474,044
Nil
854,458
3
Nil
39
Nil
562,002,935
Nil
113,911
0.17
Nil
0.10
Nil
100
974,044
Nil
560,399
Nil
562,002,935
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 80-23469664/65
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, 2019, 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, 2019, the outstanding GDRs were 2,43,207. There
are no outstanding convertible instruments in the company.
LOCATIONS
•
•
•
•
Broomfield, CO 80021, USA
Harrow, Middlesex, HA1 1JU, UK
Burlington Square, Singapore
Sharjah Airport International Free Zone, Sharjah, UAE
LEGAL PROCEEDINGS
There are no legal proceedings against the Company which are
material in nature.
NOMINATION
Pursuant to the provisions of Section 72 of the Companies Act, 2013,
members may file nomination in respect of their shareholdings.
Any member willing to avail this facility may submit to the Company
the prescribed Form SH 13 (in duplicate), if not already filed. Form
SH 13 can be obtained with the help of M/s Canbank Computer
Services Limited, the R&T Agents. Members holding shares in
electronic form are requested to give the nomination request to
their respective Depository Participants directly.
INVESTOR GRIEVANCES
Details of the investor grievances received from the Registrar and
Transfer agent (RTA) for the period from April 01, 2018 to March 31,
2019 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.
Annual Report 2018-19 | 183
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
3
Cleared
3
0
0
0
1
4
0
0
0
1
4
ADDRESS FOR CORRESPONDENCE
For any queries, please write to:
Mr. G V Krishnakanth
Company Secretary & Compliance Officer
Subex Limited, RMZ Ecoworld, Outer Ring Road, Devarabisanahalli,
Bengaluru – 560 103, India.
Telephone: +91 80 6659 8700 Fax: +91 80 6696 3333
Email: investorrelations@subex.com
WEBSITE
Company’s website www.subex.com contains comprehensive information about the Company, products, press releases, financials and
investor relations. It serves as a source of information to the shareholders by providing key information like Board of Directors and the
committees, financial results, shareholding pattern, distribution of shareholding, dividend etc.
184 | SUBEX LIMITED
www.subex.com
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