Redefining Our Identity
Through Digital Trust
Subex Annual Report 2019-20
001
ANNUAL
REPORT
2019-2020
FORWARD-LOOKING STATEMENT
In this Annual Report, we have disclosed
forward-looking information to enable investors to
comprehend our prospects and make informed
investment decisions. This report and other
statements - written and oral - that we periodically
make, contain forward-looking statements that set
out anticipated results based on the management’s
plans and assumptions. We have tried, wherever
possible, to identify such statements by using words
such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’,
‘intends’, ‘plans’, ‘believes’ and words of similar
substance in connection with any discussion of
future performance. We cannot guarantee that
these forward-looking statements will be realized,
although we believe we have been prudent in
assumptions. The achievement of results is subject
to risks, uncertainties and even inaccurate
assumptions. Should known or unknown risks or
uncertainties materialize, or should underlying
assumptions prove inaccurate, actual results could
vary materially from those anticipated, estimated or
projected. Readers should bear this in mind. We
undertake no obligation to publicly update any
forward-looking statements, whether as a result of
new information, future events or otherwise.
CON TE NT
03.
Overview
03 Strategic Framework
04 A Note to Shareholders
06 Investor Fact Sheet
07 Quick Facts & Investment Highlights
08.
Strategic Report
08 Where We Operate & Our Distinctive Resources
09 Our Business at Glance
10 Products & Services
12 Chief Executive’s Strategic View
14 Investing in Building Tomorrow's Growth
16 Future is Here
18 The Proven IoT and OT Security Partner
19 Subex Charitable Trust
20 Financial Highlights
21.
Governance
21 Board of Directors
22 Leadership Team
23.
52.
69.
76.
91.
Board's Report
Report on Corporate Governance
Business Responsibility Report
Management Discussion and Analysis
Standalone financial statements
144.
Consolidated financial statements
198.
Shareholders’ Information
002
Subex Annual Report 2019-20
REDEFINING
OUR IDENTITY
THROUGH
DIGITAL TRUST
Given the breakneck speed of technological
advancement, businesses face the risk of obsolescence
if they fail to innovate or adapt with agility. This has
nudged organizations to explore new business models,
technologies, and revenue streams, often putting them
in uncharted waters. Of course, as they say, with great
risks come great opportunities. In this backdrop, the
one aspect that lies at the intersection of opportunities,
risks and vulnerabilities is Trust. 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.
Historically, Subex’s evolution as a product company
has always reflected our ability to foresee an emerging
need or a trend, and then build capabilities to help our
customers address the inherent challenges that come
with that trend. This continues with our transition into
the space of Digital Trust as well. Identifying Digital
Trust as the underpinning critical element of every
digital transaction, Subex has crafted a unique roadmap
and strategy that helps us address this emerging need.
Our credibility of handling huge volumes of telecom
data for over two decades acts as the foundation for
this phase of growth in the space of Digital Trust.
Subex Annual Report 2019-20
003
STRATEGIC FRAMEWORK
TO UNLOCK POSSIBILITIES
3 HORIZON STRATEGY
Y
G
E
T
A
R
T
S
R
U
O
Expand the core
• Revenue Assurance
• Fraud Management
• Partner Management
• Network Asset Management
• Capacity Management
Growth in New Areas
• IoT Security
• Analytics Center of Trust
Invest in New Verticals
(Multi-vertical SaaS)
• CrunchMetrics
• IDcentral
E
S
O
P
R
U
P
R
U
O
N
O
I
S
I
V
R
U
O
S
L
A
O
G
S
E
U
L
A
V
R
U
O
Customers
Partners
Subexians
Shareholders
TO BE THE GLOBAL LEADER
IN DIGITAL TRUST
VIBRANT SUBEX
REVENUE GROWTH
Think Customer
Make It Happen
Create Value
Win Together
Be Open Be Fair
004
Subex Annual Report 2019-20
A N OT E TO S H A R E H O L D E R S
The highlight of course was the resilience in our
margins where our EBITDA margins (excluding
forex for the year) ended at ₹ 862 million as
against ₹ 514 million in FY 19.
Dear Shareholders,
It gives me great pleasure to address you once again to update you on
the progress made by your Company during the last financial year and
the outlook for the year going ahead.
At the outset, I hope that you and your family are safe and in sound
health. The recent crisis due to COVID-19 has led to an atmosphere of
uncertainty resulting in disruption that most organizations had not
foreseen. Even before various governments issued their respective
mandates, we took the call to return nearly all our on-site employees to
their bases and invoke the Business Continuity Plan. It helped us in
getting the requisite clearances, institute standard operating
procedures, set up remote working, and address bottlenecks before the
lockdown restrictions kicked in. As an organization enabling critical
operations for customers in over 90 countries, our objective was to
ensure minimal business disruption while safeguarding Subexians’
health at the same time. I am happy to inform you that all Subexians are
sound and safe at this point. While we are still not over the hump, we
will continue to monitor the global situation and take appropriate steps.
Against the backdrop of the pandemic, we had a steady year in terms of
our financial performance. The revenue for the year was ₹ 3,650 million
as against ₹ 3,481 million in FY 19, which translates to a 5% growth. The
highlight, of course, was the resilience in our margins where our
EBITDA margins (excluding forex for the year) ended at ₹ 862 million as
against ₹ 514 million in FY 19. Our Profit after tax (excluding exceptional
items), was at ₹ 485 million as against ₹ 252 million in FY 19. So, a good
year in terms of profitability while we continue to focus on increasing
momentum in revenue growth.
Subex Annual Report 2019-20
005
We have started deployment of IoT security
solution in a 5G edge cloud setup in APAC,
and we expect to make it into a major 5G
security reference site for us.
In line with our vision to be the leader in Digital
Trust, we continued on the execution of our 3
Horizon strategy, that we initiated in FY 19. On
our core, that is Horizon-1, we continue to see
interest from Tier-I customers who are
refreshing outdated technologies. The Telecom
Business Support System (BSS) that we address
in Horizon 1 is a mature but fragmented market
segment. The introduction of advanced
machine learning techniques in our products
have made our solutions extremely attractive
and is enabling us to compete very well and
displace competitors and gain market share.
Further, we will be adding Augmented Analytics
Platform, Partner Management and Capacity
Management Solutions to our portfolio this
year. The next generation augmented analytics
platform, based on open source components,
will help our customers to manage large
volumes of data and generate meaningful
insights. Partner management and capacity
management solutions will address the
emerging needs of telecom operators in a 5G
scenario and leverage technologies like
Blockchain and Machine Learning. We believe
these additions will make our solution portfolio
extremely interesting to our customers.
Horizon 2 continues to be our top growth area,
and we are making slow but steady progress.
5G will ignite an explosion in the number of
connected devices and along with it, the need
for IoT security. We are currently deploying our
security solution in a 5G edge cloud setup in
APAC and are confident that it will become
one of the reference sites for 5G security.
Another interesting one is the deployment at a
European fuel cell Manufacturer wherein we
are securing fuel cell that goes into electric
cars. Further, we intend to strengthen our
go-to-market channel with more strategic
partners and OEMs.
On Horizon 3, while still early days, we are
progressing well on CrunchMetrics and
IDcentral. CrunchMetrics, our automated
anomaly detection solutions are focused on
solving specific business problems like pricing
error, transaction glitches, supply chain issues,
IT infrastructure issues in the eCommerce and
FinTech segments. IDcentral’s digital analytics
platform soft-launched in Indonesia has
several data custodians coming on board to
achieve about 40% coverage of the population.
We are now in the process of engaging
enterprises to solve their digital identity
analytics needs.
Despite the pandemic, the long-term outlook
on Digital Trust remains strong. We will
continue to stay the course and focus on
execution of the three-horizon strategy to
become the leader in Digital trust. Our
investments into R&D continue unhindered as
these are imperative to build capabilities and
scale our business. We have also planned to
increase the investment in the training of
Subexians, as it will be necessary to navigate and
grow our company out of this pandemic.
The capital reduction exercise that we have
initiated post the approval of the board and
shareholders is progressing as per our plan. We
intend to complete it this year.
As we go through these challenging times, I would
like to place on record my heartfelt gratitude to all
the Subexians who despite the trying
circumstances, rallied with commitment and zeal
to deliver the same level of service and excellence
to our clients. I am also grateful to our board of
directors for their advice and direction during this
journey. And lastly but most importantly, the
shareholders, who have been with us through
thick and thin, means a lot to us and we thank you
for all the confidence that you have reposed on
us.
Warm regards,
Vinod Kumar Padmanabhan
Managing Director & Chief Executive Officer
006
Subex Annual Report 2019-20
INVESTOR FACTSHEET
Subex is a pioneer in enabling Digital Trust for businesses across the globe. Founded in 1994, Subex has spent over 25 years
in helping Global Communications Service Providers maximize their revenues and profitability. Having served the market
over the last 25 years by providing world-class solutions for business optimization 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, identity, predictability and confidence in data, Subex helps businesses embrace the disruptive changes in the
business landscape and succeed with Digital Trust.
STOCK PROFILE
VALUATION MAR ’20
Sector
BSE
NSE
IT Software Products
EV/Sales (x)
SUBEX | 532348
EV/ EBITDA (x)
0.23
0.97
SUBEX
Incorporated
December 06, 1994
Issued Shares (Cr)
Share Price* (₹)
Market Cap* ( ₹ Cr)
56.20
11.01
618.8
52-week H/L Range (₹)
11.01 – 2.80
Float as % of O/S Shares
90%
*Share price and market cap (BSE) as on 10th August’20
SHAREHOLDING
PATTERN (%)
MAR’20
Promoters - 0.00%
Public - 96.05%
Non Promoter-Non Public - 3.95%
Subex Annual Report 2019-20
007
QUICK FACTS
1994
Foundation of
Company
01
300+
Global
Installations
04
25 +
Years of
experience
90+
05
Countries
02
05
800+
Employees
03
200+
Customers
Globally
06
35+
Industry Awards
07
US$ 3.1 mn
R&D spend in
new areas
05
08
US$ 44mn
Order Book
in FY20
09
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
• Organization restructured keeping customers at the center to enhance value delivery
• Making strong inroads in the multi vertical IoT Security space; IoT Security Market is expected to touch US$
4.5 billion by 2022
• Incubating virtual startups within the organization to diversify into new areas and verticals
• Sticky Revenue Model – About 60% of revenue is annuity/recurring and >98% customer retention
• Investing heavily in newer areas like Digital Trust and AI/ML, Deep learning based anomaly detection
• Passionate and committed team led by CEO Vinod Kumar Padmanabhan with clear focus to put the company
on growth track
• Zero debt with operating cash flow of ₹ 67 Crore in FY 20
• Successful execution of 3 Horizon strategy will create substantial value for all stakeholders
008
Subex Annual Report 2019-20
WHERE WE OPERATE
OUR DISTINCTIVE RESOURCES
FINANCIAL
STRENGTH
Our strong balance sheet
and robust cash flows,
gives us the strength and
ability to invest in
Horizon 2 and 3 areas
and upgrade our
products in core business
with latest technolgies.
Last year we invested
$ 3.1 Mn in horizon 2 & 3
related initiatives
PEOPLE
The commitment &
make it happen
attitude of 800+
Subexians is a
foundation of our
business
CUSTOMERS
INNOVATION
Our wide and long
standing customer
base is the strength of
our business. We have
200+ customers in
90+ countries
The virtual start ups is a
testimony of continous
investment in R&D to
stay at the forefront of
the industry trends
PARTNERS &
SUPPLIERS
Our partners &
suppliers also form
a core of our
ecosystem
OUR BRANDS
We are also incubating
virtual start ups within
Subex and we own 3
brands: Subex Secure,
CrunchMetrics &
IDcentral
Subex Annual Report 2019-20
009
OUR BUSINESS AT GLANCE
Digitalization 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.
Against this backdrop, a key element is often ignored and one
that lies at the intersection of opportunities, risks and vulnera-
bilities 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 organization 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
organizations 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 summarize, 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.
010
Subex Annual Report 2019-20
PRODUCTS & SERVICES
ROC Revenue Assurance
• 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
ROC Fraud Management
• Built to increase fraud prevention by eliminating known frauds, uncovering new fraud patterns, minimizing fraud
run time, augmenting internal controls, and supporting continuous fraud management process improvements
• Combines a traditional rules engine, advanced AI/ML capabilities and a scalable architecture to ensure proactive
detection of fraudulent activities on the network
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 lifecycle management through its AI/ML-based
capabilities
ROC Capacity Management
• Provides proactive, actionable business intelligence with the power of AI/ML capabilities to make appropriate
investments in maximizing network capacity
• Gleans insights from network capacity trends
• Helps identify capacity ‘hot-spots’ and predict ‘time-to-exhaustion’
ROC Partner Management
• Identify the right partners for your business and onboard them quickly through a configurable workflow-based process
to add new revenue streams.
• Reduce time-to-market for new services and ensure early revenue realization, business growth, and faster customer
acquisition.
• Create transparent partnerships by allowing partners to access critical information and make informed business decisions.
Partner Settlement
• Leverage automation and data analytics to facilitate accurate billing and settlement to manage revenue and margins
across interconnect and digital ecosystem.
• Enables you to introduce innovative services, bundle offerings and products and handle billing for traditional and digital
services, thereby opening new business streams for complex variable pricing models.
Subex Annual Report 2019-20
011
ROC Route Optimisation
• Ensures accurate route optimization based on network traffic and capacity forecasting business rules while
maintaining the quality of service.
• Automate distribution of sales offers, contracts, and dial codes based on different costing methods of sales
and buying prices.
• Automate end-to-end rate management and switch provisioning, thereby improving operator efficiency and
reduces the workload
Subex Secure
• Offers comprehensive IoT security from real-time discovery and monitoring to response and recovery
• Leverages a one of its kind honeypot network that combines physical devices and device emulations to
generate IoT/ICS signatures
• Evaluates identity and device breaches and updates the Subex Secure signature repository to safeguard the
enterprise from new and emerging IoT threats
ACT (Analytics Center of Trust)
• 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 roadmap
• 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 provide actionable business intelligence around Product, Customer, Risk, and Revenue
CrunchMetrics
• CrunchMetrics is an advanced real-time analytics platform that automatically analyzes streaming data at a granular
level to identify critical incidents and new business opportunities in real-time
• The vertical agnostic platform is equipped with powerful analytical capabilities such as AI-powered anomaly detection,
multivariate analysis, and auto-clustering for extremely low latency and automated operational decision making
• Packed with features such as contribution analysis and smart insights, CrunchMetrics allows you to understand your
data better and identify the root cause of unexpected anomalies before they affect your revenue
IDcentral
• A comprehensive identity repository enabling enterprises to convert attributes to digital identities
• Identity verification and authentication solutions based on phone number and alternate ID
• Data driven intelligence for a comprehensive behavioral score of your consumers
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Subex Annual Report 2019-20
CHIEF EXECUTIVE’S
STRATEGIC VIEW
A conversation with
Vinod Kumar Padmanabhan,
Managing Director &
Chief Executive Officer
Q. Over the last year, Subex has been aggressively focusing on enabling
Digital Trust in business ecosystems. What makes Digital Trust essential to
successful organizations in the current situation, and how is Subex
progressing in this pursuit?
Make digital trust your USP
Modern technologies are emerging at a breakneck pace leaving regulators scrambling
to catch up, making data the hottest commodity within enterprises. This has led to an
increased adoption of digital services and modes of engagement as businesses
continue to shift online. Businesses across domains are riding on the tremendous data
being generated from online payments, entertainment, and communication platforms
to deliver extreme personalization. However, on the flip side, real-life instances across
multiple industries reveal that trust in digital services is at an all-time low. Additionally,
hyper-vigilance has become essential in the wake of a five-fold increase in
cyber-attacks. All of these factors place the onus on digital trust. Assuring immutable
digital trust can unlock a world of opportunities to exponentially grow one’s business,
especially in a secure, personalized, smart, and uber-connected ecosystem.
We recognized this growing need early on and tuned our offering to cater to this.
Today, Subex defines Digital Trust as the convergence of privacy, identity, security,
confidence in data, and risk mitigation, and our products align well with these
overarching tenets. Building trust is about competitive advantage, and this is exactly
what Subex offers – deep trust as a foundational lever for higher customer stickiness.
Our customers, particularly CxOs and senior management, resonate with the need for
Digital Trust and the uptake has been positive. We are consistently innovating within
this space so we can refine our positioning, inspire confidence, and inject richer
functionalities that better serve our customers.
Q. Considering the consolidation that is taking place, what are Subex’s
plans to stay relevant in the market?
Bullish about our offerings
In truth, the consolidation within telecommunications works very much to the
advantage of strong and deep-rooted players like Subex. To continue being an integral
part of the 5G and enterprise business growth journey for CSPs, we have an actively
evolving Digital Trust portfolio that spans across 3 horizons.
Our core Horizon 1 offerings now boast AI/ML capabilities, and continue to attract Tier
1 customers that want to modernize their legacy systems, strengthen digital dexterity,
adopt and scale 5G, etc. This year, we are also expanding our ROC suite with two new
products developed on open source and blockchain technologies.
Our powerful Horizon 2 offerings around IoT security and analytics are geared to
support the demand for cloud infrastructure, edge computing, industrial automation,
and IoT-enablement. Powered by Digital Trust, these products will help CSPs
maneuver into that focal position where they can comprehensively serve an
enterprise’s needs through pervasive connectivity, cloud-based infrastructure, and
360-degree security.
CrunchMetrics and IDCentral, which are part of our Horizon 3 offerings, enhances our
Digital Trust portfolio. Both these solutions have been created with a focus on market
dynamics and have given us the impetus to broaden our horizons into domains
beyond the telecom world
Q. What growth are you seeing in IoT security? What is the next phase
and how do you plan to get there?
Certainly, the IoT security market will be a crucial revenue lever for us. 5G has arrived
and CSPs are investing significant amount of money to upgrade their capabilities.
Given the lower commercial value of consumer-led use cases, the strategy for 5G
monetization is largely enterprise driven. So, enabling industrial automation becomes
key. 5G will ignite an explosion in the number of connected devices even as smart
cities and critical infrastructure become a reality. Within the next 5 years, APAC and
North Americas is expecting 11 billion and 6 Billion new IoT connections respectively.
This entire web of connected devices becomes gigantic and extremely complex. It is a
sweet spot for hackers, especially given their
strategy in enabling Digital Trust through our
‘Vibrant Subex’, our unifying work culture that
advanced techniques , making the whole
three-horizon offerings remains the same. We are
has created highly performant and engaged
ecosystem quite vulnerable. Stakeholders in such
resiliently meeting our ongoing project
Subexians, who have stayed the course despite
an ecosystem will fail to derive value from their IoT
commitments and penetrating mature markets of
strong headwinds. It has been a joint learning
deployments and, in some cases, even suffer
North America and Europe as well as the
experience, both for us and our customers, on
tremendous setbacks if security is not addressed as
emerging APAC market. Our diversification from
how to collaborate virtually. Interestingly, there
a key priority.
the slow OSS/BSS segment into other avenues
have been more avenues for creative
These factors – the rapid increase in the number of
like IoT security, analytics, etc., is reflected in the
brainstorming. But since virtual tools are limited
connected devices, the looming threat of
ascending growth curve of our Horizon 2
in their capacity to support whiteboarding
vulnerability, and our ability to secure infrastructure
offerings and positive market expectations from
sessions and face-to-face discussions, we have
and investments – make IoT security the next big
our Horizon 3 offerings.
enabled optional work from office with all
thing for us. . Recent enhancements to our IoT
What has changed is our emphasis on: 1)
requisite precautionary and safety measures.
security platform also promise better user
Upscaling our team to enhance our competitive
This is helping us resume some of the projects
experience, faster issue identification and
advantage, and 2) Amplifying value from our
that were on-hold because of the outbreak.
resolution, and analytics-as-a-service. Parallelly,
investments to decrease time to market. We are
Subex is extending its reach into commercial,
also executing a new framework to boost overall
industrial and automotive IoT through strategic
performance. Across the board, we are
Q. What are the key customer wins for
partnerships with OEMs and FinTechs. We are
pragmatically distilling our go-to-market strategy
FY 2019-2020?
already executing a project for a non-telco client in
towards verticals that are less affected by the
South Africa. At present, because of COVID-19,
pandemic. In summary, we are aligning our
Revamping our fraud management and revenue
there is some disruption, but engagements will
products, people, and processes to ensure we
assurance solutions using artificial intelligence
resume at speed once markets reopen.
lead the market with relevant and sustainable
and machine learning has won us several Tier 1
Q. What is the expectation from
CrunchMetrics and IDCentral?
Across both these solutions, we are using a
two-track approach. One path is to forge
solutions.
Q. Given the rising importance of
connectivity, would you say that the
COVID-19 crisis has unlocked new
opportunities for service offerings?
partnerships with data-centric organizations, and
In sync with the customer’s pulse
we are progressing well here. Technology-wise, we
customers in Europe as well as APAC. Jawwal,
the leading mobile network operator in
Palestine, enlisted us to upgrade to the newer
versions of our solutions. We won a multi-year
deal with Econet Wireless Zimbabwe for our
Analytics Center of Trust. VIVA Kuwait renewed
their contract for our Revenue Assurance and
Fraud Management solutions.
have made significant steps towards fine-tuning
For Subex, the opportunity lies in customer
In highly competitive RFPs, Subex is repeatedly
these offerings based on market and customer
engagement. Since COVID-19, CSPs have been
emerging as a winner, which I believe is a true
feedback. On CrunchMetrics, we have added
stretched thin due to surging demand and
endorsement of our capabilities. This has
multivariant capabilities to our anomaly detection
network capacity spikes. Internet traffic increased
significantly sharpened our competitive edge.
solution and are now focused on solving specific
by nearly 30% with users spending nearly 4 hours
We are deploying our renewed partner
business problems in the eCommerce and FinTech
a day browsing social media (compared to the
management solution for a Tier 1 customer in
segments. Our focus areas include business
usual 1.5 hours), consuming online videos and TV,
North America. This year, Subex has also
operations like pricing error, transaction glitches,
and leveraging video conferencing to work and
forayed into the automotive sector through
and supply chain issues as well as IT operations like
learn from home. It is an unpredictable
partnerships with OEMs, which is an exciting
platform and infrastructure challenges. IDCentral’s
environment and telcos are grappling to stay
opportunity for us.
digital analytics platform has had a pilot launch in
ahead of potential problems. Many are still
Indonesia, achieving coverage across nearly 40% of
figuring out how to reprioritize their investments
Q. What is the talent acquisition strategy
the population with five data custodians.
like balancing the need for advanced analytics
for the coming year?
Parallelly, we are also collaborating with enterprises
versus optimizing costs. But as projects shift into
Upskilling talent to grab greater market share
and using our data to solve their challenges around
remote mode, visibility is a challenge. Here, Subex
digital identity. Thus, even as our data sources get
helps through our dedicated global delivery and
For the most part we are leaders in the market
better, we are constantly refining how we can use
operations centers that enable distributed work
segments that we operate in and this has been
and monetize these through relevant use cases and
and uninterrupted service delivery. This reinforces
possible because of our emphasis on
solutions that articulate clear outcomes and
one part of our vision, i.e., improving time to
continuous product and solution
address pain points for clients. This will direct our
market. Further, in the near future, our
enhancements. We have substantially invested
GTM strategy for greater effectiveness post-launch.
consulting-led Analytics Center of Trust can
on developing our ML and AI capabilities and
Q. Keeping in mind the global slowdown
due to the pandemic, how is Subex
repositioning itself? What is your strategy
empower CSPs with predictive and prescriptive
now have over 40 AI/ML specialists. This along
analytics to identify unknown variables, uncover
with the development of new open source-
problems and formulate appropriate solutions.
open API next generation platform, digital
security and automated anomaly detection
for competitive advantage in the next year?
How do you see Subex continuing on its
products make our technical work content one
An eye on the market
path of continuous R&D when
of the best in the industry. Further we will be
collaboration is a challenge because of
investing on upgrading the skills of Subexians to
Subex is staying the course and following the
remote working?
roadmap set by our three-horizon strategy to
Ideation and discovery
become a global leader in Digital Trust. Globally,
excel and explore their full potential.
We are also bringing in new talents around
areas like security, SaaS business to augment
the economic recovery from COVID-19 is still fluid.
Our investments into R&D continue unhindered
our capability. Overall the intention is to create
The long-term investment strategies of CSPs
as these are imperative to build capabilities and
the right environment for the best talents to
haven’t changed and, pursuant to this, our overall
scale our business. We are reaping the benefits of
flourish and succeed.
Q. Over the last year, Subex has been aggressively focusing on enabling
Digital Trust in business ecosystems. What makes Digital Trust essential to
successful organizations in the current situation, and how is Subex
progressing in this pursuit?
Make digital trust your USP
Modern technologies are emerging at a breakneck pace leaving regulators scrambling
to catch up, making data the hottest commodity within enterprises. This has led to an
increased adoption of digital services and modes of engagement as businesses
continue to shift online. Businesses across domains are riding on the tremendous data
being generated from online payments, entertainment, and communication platforms
to deliver extreme personalization. However, on the flip side, real-life instances across
multiple industries reveal that trust in digital services is at an all-time low. Additionally,
hyper-vigilance has become essential in the wake of a five-fold increase in
cyber-attacks. All of these factors place the onus on digital trust. Assuring immutable
digital trust can unlock a world of opportunities to exponentially grow one’s business,
especially in a secure, personalized, smart, and uber-connected ecosystem.
We recognized this growing need early on and tuned our offering to cater to this.
Today, Subex defines Digital Trust as the convergence of privacy, identity, security,
confidence in data, and risk mitigation, and our products align well with these
overarching tenets. Building trust is about competitive advantage, and this is exactly
what Subex offers – deep trust as a foundational lever for higher customer stickiness.
Our customers, particularly CxOs and senior management, resonate with the need for
Digital Trust and the uptake has been positive. We are consistently innovating within
this space so we can refine our positioning, inspire confidence, and inject richer
functionalities that better serve our customers.
Q. Considering the consolidation that is taking place, what are Subex’s
plans to stay relevant in the market?
Bullish about our offerings
In truth, the consolidation within telecommunications works very much to the
advantage of strong and deep-rooted players like Subex. To continue being an integral
part of the 5G and enterprise business growth journey for CSPs, we have an actively
evolving Digital Trust portfolio that spans across 3 horizons.
Our core Horizon 1 offerings now boast AI/ML capabilities, and continue to attract Tier
1 customers that want to modernize their legacy systems, strengthen digital dexterity,
adopt and scale 5G, etc. This year, we are also expanding our ROC suite with two new
products developed on open source and blockchain technologies.
Our powerful Horizon 2 offerings around IoT security and analytics are geared to
support the demand for cloud infrastructure, edge computing, industrial automation,
and IoT-enablement. Powered by Digital Trust, these products will help CSPs
maneuver into that focal position where they can comprehensively serve an
enterprise’s needs through pervasive connectivity, cloud-based infrastructure, and
360-degree security.
CrunchMetrics and IDCentral, which are part of our Horizon 3 offerings, enhances our
Digital Trust portfolio. Both these solutions have been created with a focus on market
dynamics and have given us the impetus to broaden our horizons into domains
beyond the telecom world
Q. What growth are you seeing in IoT security? What is the next phase
and how do you plan to get there?
Certainly, the IoT security market will be a crucial revenue lever for us. 5G has arrived
and CSPs are investing significant amount of money to upgrade their capabilities.
Given the lower commercial value of consumer-led use cases, the strategy for 5G
monetization is largely enterprise driven. So, enabling industrial automation becomes
key. 5G will ignite an explosion in the number of connected devices even as smart
cities and critical infrastructure become a reality. Within the next 5 years, APAC and
North Americas is expecting 11 billion and 6 Billion new IoT connections respectively.
This entire web of connected devices becomes gigantic and extremely complex. It is a
Subex Annual Report 2019-20
013
sweet spot for hackers, especially given their
advanced techniques , making the whole
ecosystem quite vulnerable. Stakeholders in such
an ecosystem will fail to derive value from their IoT
deployments and, in some cases, even suffer
tremendous setbacks if security is not addressed as
a key priority.
These factors – the rapid increase in the number of
connected devices, the looming threat of
vulnerability, and our ability to secure infrastructure
and investments – make IoT security the next big
thing for us. . Recent enhancements to our IoT
security platform also promise better user
experience, faster issue identification and
resolution, and analytics-as-a-service. Parallelly,
Subex is extending its reach into commercial,
industrial and automotive IoT through strategic
partnerships with OEMs and FinTechs. We are
already executing a project for a non-telco client in
South Africa. At present, because of COVID-19,
there is some disruption, but engagements will
resume at speed once markets reopen.
Q. What is the expectation from
CrunchMetrics and IDCentral?
Across both these solutions, we are using a
two-track approach. One path is to forge
partnerships with data-centric organizations, and
we are progressing well here. Technology-wise, we
have made significant steps towards fine-tuning
these offerings based on market and customer
feedback. On CrunchMetrics, we have added
multivariant capabilities to our anomaly detection
solution and are now focused on solving specific
business problems in the eCommerce and FinTech
segments. Our focus areas include business
operations like pricing error, transaction glitches,
and supply chain issues as well as IT operations like
platform and infrastructure challenges. IDCentral’s
digital analytics platform has had a pilot launch in
Indonesia, achieving coverage across nearly 40% of
the population with five data custodians.
Parallelly, we are also collaborating with enterprises
and using our data to solve their challenges around
digital identity. Thus, even as our data sources get
better, we are constantly refining how we can use
and monetize these through relevant use cases and
solutions that articulate clear outcomes and
address pain points for clients. This will direct our
GTM strategy for greater effectiveness post-launch.
Q. Keeping in mind the global slowdown
due to the pandemic, how is Subex
repositioning itself? What is your strategy
for competitive advantage in the next year?
An eye on the market
Subex is staying the course and following the
roadmap set by our three-horizon strategy to
become a global leader in Digital Trust. Globally,
the economic recovery from COVID-19 is still fluid.
The long-term investment strategies of CSPs
haven’t changed and, pursuant to this, our overall
strategy in enabling Digital Trust through our
three-horizon offerings remains the same. We are
resiliently meeting our ongoing project
commitments and penetrating mature markets of
North America and Europe as well as the
emerging APAC market. Our diversification from
the slow OSS/BSS segment into other avenues
like IoT security, analytics, etc., is reflected in the
ascending growth curve of our Horizon 2
offerings and positive market expectations from
our Horizon 3 offerings.
What has changed is our emphasis on: 1)
Upscaling our team to enhance our competitive
advantage, and 2) Amplifying value from our
investments to decrease time to market. We are
also executing a new framework to boost overall
performance. Across the board, we are
pragmatically distilling our go-to-market strategy
towards verticals that are less affected by the
pandemic. In summary, we are aligning our
products, people, and processes to ensure we
lead the market with relevant and sustainable
solutions.
Q. Given the rising importance of
connectivity, would you say that the
COVID-19 crisis has unlocked new
opportunities for service offerings?
In sync with the customer’s pulse
For Subex, the opportunity lies in customer
engagement. Since COVID-19, CSPs have been
stretched thin due to surging demand and
network capacity spikes. Internet traffic increased
by nearly 30% with users spending nearly 4 hours
a day browsing social media (compared to the
usual 1.5 hours), consuming online videos and TV,
and leveraging video conferencing to work and
learn from home. It is an unpredictable
environment and telcos are grappling to stay
ahead of potential problems. Many are still
figuring out how to reprioritize their investments
like balancing the need for advanced analytics
versus optimizing costs. But as projects shift into
remote mode, visibility is a challenge. Here, Subex
helps through our dedicated global delivery and
operations centers that enable distributed work
and uninterrupted service delivery. This reinforces
one part of our vision, i.e., improving time to
market. Further, in the near future, our
consulting-led Analytics Center of Trust can
empower CSPs with predictive and prescriptive
analytics to identify unknown variables, uncover
problems and formulate appropriate solutions.
How do you see Subex continuing on its
path of continuous R&D when
collaboration is a challenge because of
remote working?
Ideation and discovery
Our investments into R&D continue unhindered
as these are imperative to build capabilities and
scale our business. We are reaping the benefits of
‘Vibrant Subex’, our unifying work culture that
has created highly performant and engaged
Subexians, who have stayed the course despite
strong headwinds. It has been a joint learning
experience, both for us and our customers, on
how to collaborate virtually. Interestingly, there
have been more avenues for creative
brainstorming. But since virtual tools are limited
in their capacity to support whiteboarding
sessions and face-to-face discussions, we have
enabled optional work from office with all
requisite precautionary and safety measures.
This is helping us resume some of the projects
that were on-hold because of the outbreak.
Q. What are the key customer wins for
FY 2019-2020?
Revamping our fraud management and revenue
assurance solutions using artificial intelligence
and machine learning has won us several Tier 1
customers in Europe as well as APAC. Jawwal,
the leading mobile network operator in
Palestine, enlisted us to upgrade to the newer
versions of our solutions. We won a multi-year
deal with Econet Wireless Zimbabwe for our
Analytics Center of Trust. VIVA Kuwait renewed
their contract for our Revenue Assurance and
Fraud Management solutions.
In highly competitive RFPs, Subex is repeatedly
emerging as a winner, which I believe is a true
endorsement of our capabilities. This has
significantly sharpened our competitive edge.
We are deploying our renewed partner
management solution for a Tier 1 customer in
North America. This year, Subex has also
forayed into the automotive sector through
partnerships with OEMs, which is an exciting
opportunity for us.
Q. What is the talent acquisition strategy
for the coming year?
Upskilling talent to grab greater market share
For the most part we are leaders in the market
segments that we operate in and this has been
possible because of our emphasis on
continuous product and solution
enhancements. We have substantially invested
on developing our ML and AI capabilities and
now have over 40 AI/ML specialists. This along
with the development of new open source-
open API next generation platform, digital
security and automated anomaly detection
products make our technical work content one
of the best in the industry. Further we will be
investing on upgrading the skills of Subexians to
excel and explore their full potential.
We are also bringing in new talents around
areas like security, SaaS business to augment
our capability. Overall the intention is to create
the right environment for the best talents to
flourish and succeed.
014
Subex Annual Report 2019-20
INVESTING IN BUILDING
TOMORROW'S GROWTH
A conversation with
Venkatraman G S, CFO
We continue our journey towards being a world leader in
enabling Digital Trust, and you can see detailed updates in this
annual report on the progress we are making on this front. Here
is an update I wanted to provide on your company's financial
performance for FY 19-20 and how we see FY 20-21 panning
out.
For FY 19-20, we had reasonably good overall revenue
growth at 5% compared to FY 18-19, and we ended the
year with ₹ 365 crores in revenues, making FY 19-20 one of
our strongest growth years in the past five years. We
continue to look to drive higher growth in the business so
that we have a larger share of revenues coming in from the
Horizon 2 areas like ROC Insights and IoT Security. We have
identified and invested in new areas like CrunchMetrics – A
state-of-the-art AI/ML enabled multi-vertical anomaly detection
solution, Digital Identity solutions through IDcentral as part of
our Horizon 3 strategy. The strategic investments made in
Horizon 3 areas will provide us with the right set of products to
drive revenue growth in the coming years and expand our
offerings across additional verticals beyond Telecom.
From a profitability perspective, FY 19-20 was a good year. We
managed our overall costs well, and your company's Profit
before exceptional items was at ₹ 79.96 crores, compared to
₹ 47.08 crore in FY 18-19, a growth of 69.8% over last year.
During the year, we focused on recognizing the challenges and
significant investment requirements of telecom operators, which
have resulted in a longer opportunity conversion cycle and lower
costs towards IT solutions. To navigate these roadblocks, the
management has undertaken our annual impairment exercise
concerning the carrying value of goodwill and basis valuation. An
external valuation expert conducted the exercise. Your company
made an impairment provision of ₹ 314.7 crore towards the
carrying value of goodwill. The management believes that the
carrying value of goodwill as of March 31, 2020, post such
impairment, is appropriate.
Our focus on managing liquidity and
former COO of the Company in respect of
In sum, across the board, I see our people
cashflows efficiently continues. We had
long drawn litigations. This amicable
engaged with our customers and working
strong cash generation from business
settlement allows your company to focus on
closely with them to solve their business
operations. Our operating cash flows were
growing the business and not being
problems efficiently. We continue to work
at 78%, and free cash flows were at 67% of
distracted by the long-drawn litigation.
closely with key stakeholders of our
our EBITDA for the year. We ended the year
customer organization so that we have a
with cash and cash equivalents of ₹ 90.4
In line with supporting the growing needs of
common understanding of how they see
crore compared to ₹ 39.5 crore end of last
the business, your company set up a new
Digital Trust enabling their business to have
year. Normalized EPS*(excluding
subsidiary in Bangladesh.
exceptional items) for the year was higher
by 82% compared to FY 2018-19.
As you are all aware, the COVID-19
a competitive advantage. We will continue
to engage with our customers towards
being their partner of choice in enabling
pandemic hit large parts of India beginning
Digital Trust for their business.
As indicated in my communication with you
the second week of March and disrupted
last year, we have made good progress in
your company's operations as well. Your
Outlook for FY 2020-21
some of the areas we wanted to focus on,
company was able to make some early
to address our large equity capital base and
moves in response to the pandemic by
We exited FY 19-20 with a robust fourth
the overall size of our balance sheet. I will
triggering our business continuity plans
quarter and healthy Cash balances.
cover them in some more detail in the
(BCP). Keeping the health and safety of its
following paragraphs.
employees on priority, we were able to keep
For FY 20-21, we will continue to focus on
our employees safe and manage to move
being a global leader in digital trust by
• Your Board of Directors, in its meeting
almost 100% of our work to be executed
following our three horizon strategy. We
held on February 07, 2020, has approved a
remotely from our employees' homes. Your
look to grow our core business in Horizon 1
scheme of Capital reduction, in accordance
company was able to meet its obligations
and continue to focus on Horizon 2 areas,
with Section 52 and Section 66 of the
towards the customers without any
Companies Act, 2013 of the Companies Act,
disruption to our services.
2013 read with National Company Law
i.e., IoT Security and ROC Insights, to gain
traction and momentum in the market. At
the same time, we continue to invest in new
Tribunal ('NCLT') (Procedure for reduction
The company has taken all the necessary
products like CrunchMetrics and IDcentral
of the share capital of Company) Rules,
steps to assess the possible effects of the
as part of our Horizon 3 areas.
2016 and other applicable provisions of the
COVID-19 pandemic on the business. Since
Companies Act, 2013. Subject to the
consent of the shareholders and the
the Group has a rich portfolio of services to
However, we are watching the situation very
partner with customers, which are primarily
closely on how different geographies,
approval from NCLT and other statutory
reputed telecom operators, we believe there
markets, and customers respond to the
authorities, as and where applicable, the
should be a limited impact of COVID-19 on
ongoing COVID-19 pandemic. Since these
accumulated losses shall be written off
the annuity portion of our overall operations.
are unprecedented times and the environ-
against the paid-up share capital of the
However, the company will continue to
ment is very dynamic, we will continue to
company. The aforesaid write-off against
monitor and assess the impact of COVID-19
keep you updated as to how we see our
the paid-up share capital would be achieved
on its business and provide periodic updates.
business evolving in FY 20-21.
by reducing the face value of the equity
shares from ₹ 10/- to ₹ 5/- each
Other sections of this annual report highlight
We also are utilizing the relatively lower
the initiatives and activities taken up by
business activity currently to upskill and train
• As we stand today, post-approval of the
Subex in our effort to be responsible
our Subexians so that we can take our
capital reduction scheme by your board of
corporate citizens. We remain dedicated to
products to market faster, as the business
directors, the company's shareholders have
enhancing transparency and maintaining
activity picks up in the post COVID-19
also approved the scheme by e-voting. The
disclosure to shareholders through various
world.
capital reduction scheme now awaits
additional disclosures such as the Board's
approvals from NCLT and other statutory
Report, Management Discussion and
Our success has been possible due to the
authorities as applicable.
Analysis, Consolidated and Standalone Ind AS
outstanding efforts of our Finance and
financials, and Shareholder's Information.
Procurement team at Subex that I am so
• Once approved by the NCLT, the
proud to lead. They continuously challenge
restructuring of our financials will enable us
At Subex, we drive the culture of change,
themselves to innovate and deliver the best
to have a rational structure commensurate
innovation, and knowledge management.
results for all our stakeholders. I thank our
with our current business, allowing us to
Our expertise in innovation and excellence
Subexians, Clients, Investors, Shareholders
better service the equity.
has enabled 'Subex Secure,' your company's
Bankers and Advisors for their trust and
IoT security solution, to be ranked among
support to us and gratefully acknowledge
We have entered into settlement
the Top 3 "Security Platforms of the Year" by
their contribution in working towards our
agreements with the former MD & CEO and
Compass Intelligence.
vision of being a global leader in Digital Trust.
Subex Annual Report 2019-20
015
Our focus on managing liquidity and
cashflows efficiently continues. We had
strong cash generation from business
operations. Our operating cash flows were
at 78%, and free cash flows were at 67% of
our EBITDA for the year. We ended the year
with cash and cash equivalents of ₹ 90.4
crore compared to ₹ 39.5 crore end of last
year. Normalized EPS*(excluding
exceptional items) for the year was higher
by 82% compared to FY 2018-19.
As indicated in my communication with you
last year, we have made good progress in
some of the areas we wanted to focus on,
to address our large equity capital base and
the overall size of our balance sheet. I will
cover them in some more detail in the
following paragraphs.
• Your Board of Directors, in its meeting
held on February 07, 2020, has approved a
scheme of Capital reduction, in accordance
with Section 52 and Section 66 of the
Companies Act, 2013 of the Companies Act,
2013 read with National Company Law
Tribunal ('NCLT') (Procedure for reduction
of the share capital of Company) Rules,
2016 and other applicable provisions of the
Companies Act, 2013. Subject to the
consent of the shareholders and the
approval from NCLT and other statutory
authorities, as and where applicable, the
accumulated losses shall be written off
against the paid-up share capital of the
company. The aforesaid write-off against
the paid-up share capital would be achieved
by reducing the face value of the equity
shares from ₹ 10/- to ₹ 5/- each
• As we stand today, post-approval of the
capital reduction scheme by your board of
directors, the company's shareholders have
also approved the scheme by e-voting. The
capital reduction scheme now awaits
approvals from NCLT and other statutory
authorities as applicable.
• Once approved by the NCLT, the
restructuring of our financials will enable us
to have a rational structure commensurate
with our current business, allowing us to
better service the equity.
We have entered into settlement
agreements with the former MD & CEO and
former COO of the Company in respect of
long drawn litigations. This amicable
settlement allows your company to focus on
growing the business and not being
distracted by the long-drawn litigation.
In line with supporting the growing needs of
the business, your company set up a new
subsidiary in Bangladesh.
As you are all aware, the COVID-19
pandemic hit large parts of India beginning
the second week of March and disrupted
your company's operations as well. Your
company was able to make some early
moves in response to the pandemic by
triggering our business continuity plans
(BCP). Keeping the health and safety of its
employees on priority, we were able to keep
our employees safe and manage to move
almost 100% of our work to be executed
remotely from our employees' homes. Your
company was able to meet its obligations
towards the customers without any
disruption to our services.
The company has taken all the necessary
steps to assess the possible effects of the
COVID-19 pandemic on the business. Since
the Group has a rich portfolio of services to
partner with customers, which are primarily
reputed telecom operators, we believe there
should be a limited impact of COVID-19 on
the annuity portion of our overall operations.
However, the company will continue to
monitor and assess the impact of COVID-19
on its business and provide periodic updates.
Other sections of this annual report highlight
the initiatives and activities taken up by
Subex in our effort to be responsible
corporate citizens. We remain dedicated to
enhancing transparency and maintaining
disclosure to shareholders through various
additional disclosures such as the Board's
Report, Management Discussion and
Analysis, Consolidated and Standalone Ind AS
financials, and Shareholder's Information.
At Subex, we drive the culture of change,
innovation, and knowledge management.
Our expertise in innovation and excellence
has enabled 'Subex Secure,' your company's
IoT security solution, to be ranked among
the Top 3 "Security Platforms of the Year" by
Compass Intelligence.
In sum, across the board, I see our people
engaged with our customers and working
closely with them to solve their business
problems efficiently. We continue to work
closely with key stakeholders of our
customer organization so that we have a
common understanding of how they see
Digital Trust enabling their business to have
a competitive advantage. We will continue
to engage with our customers towards
being their partner of choice in enabling
Digital Trust for their business.
Outlook for FY 2020-21
We exited FY 19-20 with a robust fourth
quarter and healthy Cash balances.
For FY 20-21, we will continue to focus on
being a global leader in digital trust by
following our three horizon strategy. We
look to grow our core business in Horizon 1
and continue to focus on Horizon 2 areas,
i.e., IoT Security and ROC Insights, to gain
traction and momentum in the market. At
the same time, we continue to invest in new
products like CrunchMetrics and IDcentral
as part of our Horizon 3 areas.
However, we are watching the situation very
closely on how different geographies,
markets, and customers respond to the
ongoing COVID-19 pandemic. Since these
are unprecedented times and the environ-
ment is very dynamic, we will continue to
keep you updated as to how we see our
business evolving in FY 20-21.
We also are utilizing the relatively lower
business activity currently to upskill and train
our Subexians so that we can take our
products to market faster, as the business
activity picks up in the post COVID-19
world.
Our success has been possible due to the
outstanding efforts of our Finance and
Procurement team at Subex that I am so
proud to lead. They continuously challenge
themselves to innovate and deliver the best
results for all our stakeholders. I thank our
Subexians, Clients, Investors, Shareholders
Bankers and Advisors for their trust and
support to us and gratefully acknowledge
their contribution in working towards our
vision of being a global leader in Digital Trust.
We continue our journey towards being a world leader in
enabling Digital Trust, and you can see detailed updates in this
annual report on the progress we are making on this front. Here
is an update I wanted to provide on your company's financial
performance for FY 19-20 and how we see FY 20-21 panning
out.
For FY 19-20, we had reasonably good overall revenue
growth at 5% compared to FY 18-19, and we ended the
year with ₹ 365 crores in revenues, making FY 19-20 one of
our strongest growth years in the past five years. We
continue to look to drive higher growth in the business so
that we have a larger share of revenues coming in from the
Horizon 2 areas like ROC Insights and IoT Security. We have
identified and invested in new areas like CrunchMetrics – A
state-of-the-art AI/ML enabled multi-vertical anomaly detection
solution, Digital Identity solutions through IDcentral as part of
our Horizon 3 strategy. The strategic investments made in
Horizon 3 areas will provide us with the right set of products to
drive revenue growth in the coming years and expand our
offerings across additional verticals beyond Telecom.
From a profitability perspective, FY 19-20 was a good year. We
managed our overall costs well, and your company's Profit
before exceptional items was at ₹ 79.96 crores, compared to
₹ 47.08 crore in FY 18-19, a growth of 69.8% over last year.
During the year, we focused on recognizing the challenges and
significant investment requirements of telecom operators, which
have resulted in a longer opportunity conversion cycle and lower
costs towards IT solutions. To navigate these roadblocks, the
management has undertaken our annual impairment exercise
concerning the carrying value of goodwill and basis valuation. An
external valuation expert conducted the exercise. Your company
made an impairment provision of ₹ 314.7 crore towards the
carrying value of goodwill. The management believes that the
carrying value of goodwill as of March 31, 2020, post such
impairment, is appropriate.
016
Subex Annual Report 2019-20
THE FUTURE
IS HERE
A conversation with
Rohit Maheshwari,
Head of Strategy & Products
The development of digital infrastructure is accelerating, and
telecom operators are at the heart of this revolution. While 4G is
here to stay for some more years, we have already seen the launch
of 5G networks. 5G is also referred to as “Enterprise G” and most
telecom operators forecast an increasing shift of their revenue from
consumer to enterprise business in the coming years. As per
industry leaders, there is business opportunity worth $2 Trillion up
for grabs for operators who cater to the enterprise sector.
The initial 5G use cases were focused on exploiting enhanced
Mobile Broadband (eMMB), Fixed Wireless Access (FWA) capabilities
to provide enhanced indoor and outdoor broadband for industries,
and to support AR and VR use cases for factory automation. In the
case of the consumer segment, the use cases are focused on
real-time gaming, UHD video streaming, and smart homes.
To meet the initial industrial demand last year, we have seen private
4G and 5G networks grow at more than 30% year on year. The
private 5G network is expected to grow around 20% CAGR over the
next 5 years.
5G use cases will evolve over the next several years to exploit its
ultra-reliable low latency communications (URLLC) capabilities. We
see the rise of the smart grids, factory automation and autonomous
transportation each requiring critical communications capabilities.
There will also be shift of intelligence from cloud closer to action or
the edge.
Impact of COVID-19
In the aftermath of COVID-19, most industries have seen a
significant disruption. However, telecommunications industry has
largely managed to buck the trend. Here are four key trends which
impact Subex’s customers
1. Intensification of digital transformation. This
manage risk through our portfolio of solutions
services, data services, and new-age digital
has resulted in an increasing demand for
services from consumer fraud, partner fraud,
telecom services.
Each of our offerings today extensively
and internal fraud.
2. Big thrust on automation and transforma-
leverages Artificial Intelligence. Subex’s AI Labs
tion of labour-intensive industries. Industrial
has made a significant impact across our
• Our ROC Network Asset Management
Robotics/AR/VR to run factories are taking the
portfolio by leveraging cutting edge AI
solution helps operators optimize network
centre stage. This has increased the demand
research and making research output
asset investments and achieve vendor contract
for high bandwidth critical communication
accessible to our customers.
adherence through AI-driven contract
network capability.
digitalization.
3. COVID-19 has also proven to be a point of
I am pleased to present the key highlights of
inflection for telemedicine, remote education
our portfolio:
technology and remote collaboration
• CrunchMetrics is a streaming data analytics
solution which leverages a unique combination
capabilities. Every industry relies on a solid
• Subex’s Network Capacity Management
of proprietary anomaly detection, multivariate
communications backbone.
solution helps 4G and 5G operators deliver
analysis and auto-clustering analysis capabilities
4. Digital services are seeing increased levels
exceptional customer experience through
for extremely low latency and automated
of competition. Those offering superior
smart network investment planning.
real-time operational decision making
customer experience are set to win the race.
Leveraging “hot data” for agility in decision
• Subex’s ROC Partner Management solution
• Subex’s IDCentral, is a privacy-first, consent
making is the key to success.
enables telecom operators to collaborate with
driven complete cloud platform for ID
5. Unfortunately, increased digitalisation has
their partners in offering winning digital
verification, ID scoring, and ID repository.
also come with an increase in cybersecurity
services. The solution is blockchain enabled
risks, fraud risks, issues of credibility, and
and helps build digital trust through transpar-
As you can see Subex’s portfolio comprises a
transparency. To succeed in an all-digital
ency between partners.
world, leaders have already started to bring
broad range of products designed to help
businesses manage risk and build digital trust.
digital trust at the centre of their business
• Subex continues to be a world leader in
strategy.
Our product portfolio
We, at Subex, believe that risk management is
business assurance. Our Revenue Assurance
As we grow, we will continue to invest in new
solution helps CSPs enhance CX, minimize
technologies, capabilities, and partnerships to
risk, manage margins, and get business
deliver winning risk intelligence products. By
insights true business assurance.
leveraging emerging technologies, and driving
product innovation, we will continue to build
fundamental to building digital trust. For over
• Our 360-degree Fraud Management solution
impactful solutions to help our customers
2 decades we have helped telecom operators
uses AI to protect operator’s voice and SMS
succeed.
Subex Annual Report 2019-20
017
The development of digital infrastructure is accelerating, and
telecom operators are at the heart of this revolution. While 4G is
here to stay for some more years, we have already seen the launch
of 5G networks. 5G is also referred to as “Enterprise G” and most
telecom operators forecast an increasing shift of their revenue from
consumer to enterprise business in the coming years. As per
industry leaders, there is business opportunity worth $2 Trillion up
for grabs for operators who cater to the enterprise sector.
The initial 5G use cases were focused on exploiting enhanced
Mobile Broadband (eMMB), Fixed Wireless Access (FWA) capabilities
to provide enhanced indoor and outdoor broadband for industries,
and to support AR and VR use cases for factory automation. In the
case of the consumer segment, the use cases are focused on
real-time gaming, UHD video streaming, and smart homes.
To meet the initial industrial demand last year, we have seen private
4G and 5G networks grow at more than 30% year on year. The
private 5G network is expected to grow around 20% CAGR over the
next 5 years.
5G use cases will evolve over the next several years to exploit its
ultra-reliable low latency communications (URLLC) capabilities. We
see the rise of the smart grids, factory automation and autonomous
transportation each requiring critical communications capabilities.
There will also be shift of intelligence from cloud closer to action or
the edge.
Impact of COVID-19
In the aftermath of COVID-19, most industries have seen a
significant disruption. However, telecommunications industry has
largely managed to buck the trend. Here are four key trends which
impact Subex’s customers
1. Intensification of digital transformation. This
has resulted in an increasing demand for
telecom services.
2. Big thrust on automation and transforma-
tion of labour-intensive industries. Industrial
Robotics/AR/VR to run factories are taking the
centre stage. This has increased the demand
for high bandwidth critical communication
network capability.
3. COVID-19 has also proven to be a point of
inflection for telemedicine, remote education
technology and remote collaboration
capabilities. Every industry relies on a solid
communications backbone.
4. Digital services are seeing increased levels
of competition. Those offering superior
customer experience are set to win the race.
Leveraging “hot data” for agility in decision
making is the key to success.
5. Unfortunately, increased digitalisation has
also come with an increase in cybersecurity
risks, fraud risks, issues of credibility, and
transparency. To succeed in an all-digital
world, leaders have already started to bring
digital trust at the centre of their business
strategy.
Our product portfolio
manage risk through our portfolio of solutions
Each of our offerings today extensively
leverages Artificial Intelligence. Subex’s AI Labs
has made a significant impact across our
portfolio by leveraging cutting edge AI
research and making research output
accessible to our customers.
I am pleased to present the key highlights of
our portfolio:
• Subex’s Network Capacity Management
solution helps 4G and 5G operators deliver
exceptional customer experience through
smart network investment planning.
• Subex’s ROC Partner Management solution
enables telecom operators to collaborate with
their partners in offering winning digital
services. The solution is blockchain enabled
and helps build digital trust through transpar-
ency between partners.
• Subex continues to be a world leader in
business assurance. Our Revenue Assurance
solution helps CSPs enhance CX, minimize
risk, manage margins, and get business
insights true business assurance.
We, at Subex, believe that risk management is
fundamental to building digital trust. For over
2 decades we have helped telecom operators
• Our 360-degree Fraud Management solution
uses AI to protect operator’s voice and SMS
services, data services, and new-age digital
services from consumer fraud, partner fraud,
and internal fraud.
• Our ROC Network Asset Management
solution helps operators optimize network
asset investments and achieve vendor contract
adherence through AI-driven contract
digitalization.
• CrunchMetrics is a streaming data analytics
solution which leverages a unique combination
of proprietary anomaly detection, multivariate
analysis and auto-clustering analysis capabilities
for extremely low latency and automated
real-time operational decision making
• Subex’s IDCentral, is a privacy-first, consent
driven complete cloud platform for ID
verification, ID scoring, and ID repository.
As you can see Subex’s portfolio comprises a
broad range of products designed to help
businesses manage risk and build digital trust.
As we grow, we will continue to invest in new
technologies, capabilities, and partnerships to
deliver winning risk intelligence products. By
leveraging emerging technologies, and driving
product innovation, we will continue to build
impactful solutions to help our customers
succeed.
018
Subex Annual Report 2019-20
THE PROVEN IoT
AND OT SECURITY
PARTNER
A conversation with
Kiran Zachariah, Head of IoT Security
sector, considering the IoT market is continuously maturing and
expanding, bringing the need to grow and scale the product’s
capabilities. We have also redesigned the user interface to make it
much more intuitive, and the initial feedback from our customers
has been extremely positive.
The underpinning factor around our commercial successes has
been the research that we do around digital security. Our
honeypot labs continue to yield high-quality intelligence. We
have expanded the infrastructure to maintain our leadership.
We continue to have a more robust threat intel than the
competition, and we will continue to make strategic
investments in our research and development capabilities.
Some critical partnerships around 5G security are in the works
because of our referenceable installations. While the COVID-19
situation has slowed 5G adoption, we are well-positioned to ride the
growth when the technology does become mainstream. Our technical
ability to handle specific use cases and the experience we bring
towards monetization models around IoT, healthcare, connected cars,
and other sectors driving 5G adoption, are the key reasons for
integrators to choose us as the partner of choice.
There has been substantial consolidation of our competition. Many of
our competitors have been acquired by larger organizations. While this
validates our market positioning and our overall strategy, it also forces
us to reevaluate our go-to-market strategy. This year, our focus will be
on increasing our channels and other distribution avenues to maintain
our market leadership this year effectively.
All initial market reports point to a slow down in IoT adoption and
digitization. To counter this potential slowdown, we have pivoted to
secure underserved sectors such as manufacturing and critical
infrastructure. Initial forays into these sectors have been very
promising. We remain incredibly positive to continue growing the
business this year, with growth rates exceeding the previous ones.
Even in these extenuating circumstances, we continue to strive to
deliver exponential growth for our company and specifically to our
shareholders.
This year has been a seminal one for Subex, as we continue to expand
our footprint in the digital security space. The highlight for the year has
been substantial victories in the manufacturing and connected car
segments. We have also increased focus within our home base,
through our foray into the Indian market towards both the enterprise
and government sectors.
Many of our recent wins were against stiff, well-known competition; in
some cases, many times larger than us. The ability to provide unique
solutions while catering to specific customer needs and the
uniqueness of our threat intelligence platforms were the key
differentiators that helped us prevail over these behemoths.
Our telco security product, which augments the traditional fraud
solution, has had substantial uptake, and we see a strong pipeline for
the product, especially around Voice and SMS monitoring. Regulations
in key geographies have created opportunities that did not exist earlier
and drove the majority of the uptake around this product line.
We launched a new version of our flagship product Subex Secure, with
enhanced capabilities around managing large volumes of traffic in the
order of terabits per second. This capability is a crucial need in the
Subex Annual Report 2019-20
019
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 welfare
activities for the under privileged and the needy in the society. SCT is managed by trustees elected amongst the employees of the company.
The list of activities undertaken by the SCT have been stated below and under Annexure G to the Board's Report.
Activities covered during the year
Below are the activities, the SCT has undertaken during the year.
Go Green initiative
Health & Education
• Conducted tree plantation drive and
distributed saplings to Subexians.
• Initiative to set-up kitchen garden for a
school run for destitute boys enabling
them to have fresh produce in their own
backyard.
Kerala & Coorg Floods
• Contribution towards the reconstruction
of classrooms at the St. Mary’s Higher
Secondary School based in Champakalum,
Alappuzha, Kerala which was affected by
the Kerala floods.
• Donations and relief materials contribut-
ed by Subexians were supplied to the
people affected by the floods in Karnataka
& Kerala in August 2019.
• Sponsored a sanitary napkin incinerator
to Govt high school for girls. Subexians
also volunteered to create awareness on
health and sanitation.
• Has conducted a general health check-up
camp for the support staff of the Company,
with more than 75 support staff members
participating in the same.
• Rotary Blood donation event.
• Sponsored the roofing of old classrooms
at the Tarihal Govt. School located in a
remote village near Belgaum, Karnataka.
COVID-19 Pandemic
• Supporting the Samarthanam Trust for
the disabled, by donating 50 testing kits
to them.
• Supporting Rotary TTK by contributing
towards the procurement of 30 Personal
Protective Equipments (PPEs) Kits for
doctors and nurses involved in treating
patients who have tested by positive for
the virus.
020
Subex Annual Report 2019-20
FINANCIAL HIGHLIGHTS
5
6
3
8
4
3
4
2
3
8
5
8
5
7
5
4
2
6
1
5
1
FY 18 FY 19 FY 20
FY 18 FY 19 FY 20
FY 18 FY 19 FY 20
Revenues ( ₹ Cr)
Gross Margin (%)
EBITDA Margin (%)
Subex Annual Report 2019-20
021
BOARD OF DIRECTORS
ANIL SINGHVI
Chairman, Non-Executive &
Non-Independent Director
NISHA DUTT
Independent Director
POORNIMA PRABHU
Independent Director
GEORGE ZACHARIAS
Independent Director
VINOD KUMAR
PADMANABHAN
Managing Director &
Chief Executive Officer
SHIVA SHANKAR
NAGA RODDAM
Whole-Time Director &
Chief Operating Officer
022
Subex Annual Report 2019-20
LEADERSHIP TEAM
VINOD KUMAR PADMANABHAN
Managing Director & Chief Executive Officer
SHIVA SHANKAR NAGA RODDAM
Whole-Time Director &
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
VENKATESH KRISHNAN
RVP - North America
BHAVNA SINGH
General Counsel
23
BOARD'S REPORT
Dear Members,
Your Directors take pleasure in presenting the 26th Annual Report of the Company on the business and operations together with the
audited results for the year ended March 31, 2020.
1.
FINANCIAL RESULTS
The Company’s financial performance for the year ended March 31, 2020 is summarized as below:
(` in Lakhs)
Particulars
Total Revenue
Share of Profit/ (Loss) before exceptional items, net
Other Income
Finance Cost
Profit/ (Loss) before exceptional items and tax expense
Exceptional Items
Profit/ (Loss) before tax
Tax expenses
Profit/ (Loss) after tax
Other comprehensive income
a) to be reclassified to profit or loss in subsequent
periods
b) not to be reclassified to profit or loss in subsequent
periods
Consolidated
2019-20
36,498
-
563
564
7,996
(31,766)
(23,770)
3,145
(26,915)
(29)
5
(34)
2018-19
34,812
-
101
216
4,708
-
4,708
2,186
2,522
(428)
(390)
(38)
Standalone
2019-20
1,079
1,889
202
32
891
(21,361)
(20,470)
118
(20,588)
(21)
-
(21)
2018-19
1,916
(1,600)
10
4
(2,455)
-
(2,455)
(2)
(2,453)
(3)
-
(3)
Total comprehensive income for the year
(26,944)
2,094
(20,609)
(2,456)
2. OVERVIEW AND RESULTS OF OPERATIONS
The spread of COVID-19 has severely impacted businesses
around the globe. In many countries, including India, there
has been severe disruption to regular business operations
due to lock-downs, disruptions in transportation, travel bans,
quarantines, social distancing and other emergency measures.
The Company has considered internal and certain external
sources of information including economic forecasts, budgets
required to meet performance obligations and likely delays
on contractual commitments, up to the date of approval of
these financial statements, in determining the possible impact
from the COVID-19 pandemic. The Company has used the
principles of prudence in applying judgements, estimates and
assumptions and based on the current estimates, the Company
expects to fully recover the carrying amount of its assets.
The impact of the global health pandemic may be different
from that estimated as at the date of approval of it's financial
statements and the Company will continue to closely monitor
any material changes to its assessment of economic impact of
the COVID- 19 pandemic.
During the financial year ended March 31, 2020, the total revenue
on a standalone basis was ` 1,079 lakhs as against the revenue
for the previous year which was ` 1,916 lakhs. The Company has
during the year under review incurred a loss of ` 20,588 lakhs as
against a loss of ` 2,453 lakhs in the previous year.
On a consolidated basis, the total revenue stood at ` 36,498
lakhs as against ` 34,812 lakhs during the previous year. The
loss incurred for the financial year 2019-20 is ` 26,915 lakhs as
against a profit of ` 2,522 lakhs in the previous year.
3. DIVIDEND
The Directors have not proposed any dividend to be paid for the
financial year 2019-20.
4. RESERVES
The Company does not propose to transfer amounts to the
general reserve out of the amount available for appropriation.
The total loss of ` 26,944 lakhs available with the Company on
a consolidated basis is proposed to be retained in the profit and
loss account.
5. SHARE CAPITAL
As at March 31, 2020, the authorized share capital of the
Company was ` 5,900,000,000 (Rupees Five hundred and ninety
crores only) divided into 588,040,000 (Fifty-eight crores, eighty
lakhs and forty thousand only) equity shares of ` 10 (Rupees Ten
only) each and 200,000 (Two lakhs only) preference shares of
` 98 (Rupees Ninety-eight only) each.
As at March 31, 2020, the issued, subscribed and paid-up share
capital of the Company was ` 5,620,029,350 (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 ` 10 (Rupees Ten only) each.
Subex Annual Report 2019-20 24
6. SCHEME OF REDUCTION OF SHARE CAPITAL
The Board of Directors at their meeting held on February 07,
2020, approved the Scheme for Reduction of Capital under
Section 66 & Section 52 of the Companies Act, 2013. The
Scheme is subject to approval of the shareholders, Hon’ble
National Company Law Tribunal ("NCLT"), Bengaluru, and all
other regulatory approvals.
Considering the future prospects of growth and value addition
to the Company and its Shareholders, it was proposed to
re-align the relationship between its capital and assets in
accordance with Section 52 & Section 66 of the Companies
Act, 2013 read with the National Company Law Tribunal
(Procedure for reduction of share capital of Company) Rules,
2016 and other applicable provisions of the Companies Act,
2013 (to the extent applicable), and subject to the consent of
the Shareholders, NCLT and other statutory authorities as and
where applicable, by writing-off the accumulated losses of
` 3,840,109,702 reflecting in the unaudited financial statements
of the Company as on December 31, 2019, against the paid-up
share capital and Securities Premium Account balance of the
Company, to have a rational structure which is commensurate
with its remaining business and assets.
Hence the proposed Scheme which was approved by the Board
of Directors of the Company provided for Reduction of equity
share capital and securities premium account of the Company
in accordance with Section 52 & 66 of the Companies Act, 2013.
The capital structure of the Company pre and post-scheme is reflected in the table below:
Particulars
No. of shares
Amount (`) Particulars
No. of shares
Amount (`)
Pre-reduction
Post-reduction
Authorised Share Capital
Equity shares of face value ` 10
588,040,000
5,880,400,000 Equity shares of face
1,176,080,000
5,880,400,000
each
value ` 5 each
Preference shares of face value
200,000
19,600,000 Preference shares of
200,000
19,600,000
`98 each
face value ` 98 each
Issued, subscribed, and paid-up Share Capital
Equity shares of face value `10
562,002,935
5,620,029,350 Equity shares of face
562,002,935
2,810,014,675
each
value ` 5 each
The below table reflects the pre-capital reduction and post-capital reduction balances of Securities premium account and accumulated
loss of the Company as at December 31, 2019:
Particulars
Securities Premium Account
Pre-reduction (`) Proposed reduction(`)
Post-reduction (`)
2,670,428,364
1,030,095,027
1,640,333,337
Profit and Loss (Dr) i.e. Accumulated Losses
3,840,109,702
3,840,109,702
NIL
In terms of the MCA General Circular No 14/2020 dated April
08, 2020 and 17/2020 dated April 13, 2020, (“MCA Circulars”),
in view of the current extraordinary circumstances due to the
COVID-19 pandemic requiring social distancing, Companies
are advised to take all decisions requiring members’ approval,
other than items of ordinary business or business where
any person has a right to be heard, through the mechanism
of Postal Ballot/ e-voting in accordance with the provisions of
the Act and Rules made thereunder, without holding a general
meeting that requires physical presence of members at a
common venue.
Pursuant to Section 110 of the Companies Act, 2013 and the
Rules provided thereunder the Company proposed passing of
resolutions by Postal Ballot, for obtaining the consent of the
shareholders for the Scheme for reduction of Capital.
The MCA clarified that for Companies that are required to
provide e-voting facility under the Act, while they are transacting
any business(es) only by Postal Ballot upto June 30, 2020 or till
further orders, whichever is earlier, the requirements provided
in Rule 20 of the Rules as well as the framework provided in
the MCA Circulars will be applicable mutatis mutandis. In
connection with this, the Company had sent the Postal Ballot
Notice dated May 22, 2020 by email to all its members who
have registered their email addresses with the Company or
depository/ depository participants and the communication
of assent/ dissent of the members took place through remote
e-voting system.
The e-voting period for the Postal Ballot commenced on
Wednesday, May 27, 2020 from 9.00 a.m. (IST) and ended
on Thursday, June 25, 2020 at 5.00 p.m (IST). The Company
appointed Mr. Pramod S.M. (Membership No. 7834 and
Certificate of Practice No.13784), Partner, BMP & Co., LLP,
the Scrutinizer and
Practicing Company Secretaries as
Mr. Biswajit Ghosh, (FCS Membership No. 8750 and Certificate
of Practice No. 8239), Partner, BMP & Co., LLP, Practicing
Company Secretaries, as an alternate scrutinizer to Mr. Pramod
S.M., for conducting the meeting only through the electronic
voting process, in a fair and transparent manner. Please refer
https://www.subex.com/investors/capital-reduction/
the
Postal Ballot notice and the procedure for e-voting.
for
The Resolution for reduction of the share capital of the
Company was approved with requisite majority and the
results were displayed on the website of the Company
at https://www.subex.com/investors/capital-reduction/ and
Subex Annual Report 2019-20 necessary disclosures were made to the Stock Exchanges.
Subsequently, the Company has made an application before
the Hon’ble National Company Law Tribunal, Bengaluru Bench,
Bengaluru, seeking their approval to the Scheme.
7.
SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial
Standards as amended from time to time.
8. BUSINESS
Subex is a pioneer in the space of Digital Trust, providing
solutions for 75% of the world’s top 50 telcos. Founded around
the time when video telephony was launched, Subex has been
witnessing the evolution of mobile technology ever since. Today,
we are consultants to global telecom carriers for operational
excellence and business transformation by driving new revenue
models, enhancing the customer experience and optimizing the
enterprise. Subex leverages its award-winning analytics solutions
in areas such as Revenue Assurance, Fraud Management,
Network Asset Management Capacity Management, Partner
Management, and Analytics “Revenue Management Services/
RMS business” and complements them through its newer
solutions such as IoT Security, Digital Identity Management and
Anomaly Detection “Digital Business”. Subex also offers scalable
Managed Services and Business Consulting services. Being truly
a global company, it has more than 300 installations across 90+
countries.
During the year, ‘Subex Secure’ was ranked as the “Top Security
Platform of the Year” by Compass Intelligence.
Compass Intelligence, a market acceleration research and
consulting firm, awards honor to top companies, products, and
technology solutions in mobile, IoT, and emerging technology
industries. Subex Secure, the IoT security solution of choice
for a range of industries from smart cities, oil and gas plants
and critical infrastructure entities to telecom operators and
connected cars, and has been at the forefront of IoT security
innovation.
9. SUBSIDIARIES (WHOLLY OWNED AND OTHER SUBSIDIARIES)
As on March 31, 2020, the Company has 10 subsidiaries.
SUBEX ASSURANCE LLP AND ITS SUBSIDIARIES
For the year ended March 31, 2020, Subex Assurance LLP
earned a net income of ` 33,006 lakhs as against net income
of ` 30,144 lakhs in the previous year and a net loss of ` 12,930
lakhs (including exceptional loss of ` 16,808 lakhs) as against a
net profit of ` 165 lakhs in the previous year.
As at March 31, 2020, Subex Limited held 99.99 % of the capital
in Subex Assurance LLP and the balance is held by Subex Digital
LLP.
Subex (UK) Limited is a wholly owned subsidiary of Subex
Assurance LLP. For the year ended March 31, 2020, the
Standalone net income of Subex (UK) Limited was ` 21,309
lakhs as against ` 19,390 lakhs in the previous year, and
a net gain of ` 1,113 lakhs as against ` 1,370 lakhs in the
previous year.
25
Subex (Asia Pacific) Pte. Limited is a wholly owned
subsidiary of Subex (UK) Limited. For the year ended March
31, 2020, the Standalone net income of Subex (Asia Pacific)
Pte. Limited was ` 3,064 lakhs as against ` 3,952 lakhs in the
previous year, and a net gain of ` 19 lakhs as against a net
gain was ` 18 lakhs in the previous year.
Subex Inc. is a wholly owned subsidiary of Subex (UK)
Limited. For the year ended March 31, 2020, the Standalone
net income of Subex Inc. was ` 10,290 lakhs as against
` 9,854 lakhs in the previous year, and the net gain of ` 1,074
lakhs as against a net gain of ` 117 lakhs in the previous year.
As on March 31, 2020, 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, 2020,
the standalone net income of Subex Middle East (FZE) is
` 2,433 lakhs as against ` 1,391 lakhs in the previous year
and net gain of ` 15 lakhs as against a net gain of ` 60 lakhs
in the previous year.
Subex Bangladesh Private Limited, a wholly owned
subsidiary of Subex Assurance LLP was incorporated on
February 13, 2020. For the year ended March 31, 2020,
the standalone net income of Subex Bangladesh Private
Limited is ` 382 Lakhs and net gain of ` 11 lakhs.
SUBEX DIGITAL LLP
For the year ended March 31, 2020, Subex Digital LLP earned a
net income of ` 882 lakhs as against ` 438 lakhs in the previous
year, and a net loss of ` 1,989 lakhs as against ` 1,765 lakhs in
the previous year.
As at March 31, 2020, 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
Subex Technologies Limited is a wholly owned subsidiary
of Subex Limited. For the year ended March 31, 2020, Subex
Technologies Limited earned a net loss of ` 4 lakhs as against a
net loss of ` 4 lakhs in the previous year.
SUBEX AMERICAS INC.
For the year ended March 31, 2020, the standalone net income
of Subex Americas Inc. is ` 2,459 lakhs as against ` 970 lakhs in
the previous year, and a net profit was ` 664 lakhs as against a
net profit of ` 96 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, 2020, 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 subsidiaries.
Subex Annual Report 2019-20 26
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://www.subex.com/investors/
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://www.subex.com/investors/shareholder-
services/. Owing to the restrictions placed due to COVID-19,
members are encouraged to inspect the same, electronically.
10. DEPOSITS
As on March 31, 2020, there are no outstanding options under
the Scheme.
b.
EMPLOYEE STOCK OPTION PLAN-2018
The Company pursuant to resolutions passed by the Board
and the Shareholders dated June 26, 2018 and July 31, 2018,
respectively, had adopted the Subex Employees Stock Option
Scheme-2018 (“ESOP – 2018” or “Plan”). This scheme was
formulated in accordance with the Securities and Exchange
Board of India (Share Based Employee Benefits) Regulations,
2014.
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 has been implemented through the ESOP Trust, which
is authorized to acquire shares of the Company through
secondary market for providing such share based payments to
its employees. Total number of Options granted/to be granted
under the Scheme shall not exceed 5% (Five percent) of the
paid- up equity capital as on March 31, 2018.
Your Company has not accepted any deposits from the public
during the year and there are no deposits which are remaining
unclaimed or unpaid as at the end of the year and, as such, no
amount of principal or interest was outstanding as on the date
of the Balance sheet.
The Nomination & Remuneration Committee of the Company
in their meeting held on February 07, 2020 granted 12,800,000
options approved under ESOP – 2018 scheme to the eligible
employees. Total options granted till March 31, 2020 under the
said Plan are 23,450,000.
11. 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 34 to the standalone financial statements
which forms part of the Annual Report.
Details of the Company’s Employee Stock Option Plans and
a summary disclosure in compliance with 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)
Regulations, 2014 are available on the Company’s website at
https://www.subex.com/ (click on investors/announcement-
filing/other-intimations).
a.
EMPLOYEE STOCK OPTION PLAN-2005
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 ` 10/-. 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 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.
12. 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 33 (iv) to the Standalone Financial Statements.
13. MATERIAL CHANGES AND COMMITMENTS, EFFECTING THE
FINANCIAL POSITION OF THE COMPANY BETWEEN THE END
OF FINANCIAL YEAR AND DATE OF THE REPORT.
Pursuant to the Company’s application under Regulation 37
of the SEBI (Listing Obligations and Disclosure Requirements),
Regulations, 2015 (“SEBI (LODR) Regulations, 2015”), seeking
observation letters of the Stock Exchanges on the proposed
scheme of Reduction of Share Capital, BSE Ltd (Designated
Stock Exchange) and National Stock Exchange of India Ltd
issued observation letters dated May 20, 2020 and May 21,
2020, respectively, to the proposed scheme of Reduction, as
stated under point 6 of this Report. Pursuant to the provisions
of Section 110 of the Companies Act, 2013, read with the
Companies (Management and Administration) Rules, 2014 and in
terms of the Ministry of Corporate Affairs “MCA” General Circular
No’s 14/2020 dated April 08, 2020 and 17/2020 dated April 13,
2020, the Notice of Postal Ballot dated May 22, 2020, was made
available to all members, through emails only. The period for
voting on the Special Resolution pertaining to the Reduction of
Share Capital of the Company commenced on May 27, 2020
and ended on June 25, 2020. Apart from the aforestated, there
have been no material changes for the period between end of
the financial year 2019-20 and the date of this report affecting
the financial position of the Company.
Subex Annual Report 2019-20 14. 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 under the 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.
15. MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion & Analysis as stipulated under
Regulation 34 of the SEBI (LODR) Regulations, 2015 is presented
in a separate section forming part of this Annual Report.
16. DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per Section 152 of the Companies Act, 2013, at least two-
third of the Directors shall be subject to retirement by rotation.
One-third of such Directors must retire from office at each
Annual General Meeting “AGM” of the shareholders and a retiring
Director is eligible for re-election. Accordingly, Mr. Vinod Kumar
Padmanabhan, Managing Director & CEO, retires by rotation and
being eligible, has offered to be re-appointed at the 26th AGM.
APPOINTMENT/ RE-APPOINTMENT
Pursuant to the recommendations of the Nomination &
Remuneration Committee, the Board at its meeting held on
May 13, 2019, appointed Mr. George Zacharias as an Additional
Independent Director of the Company, to hold office until the
date of the 25th AGM. His appointment for a period of five years
was approved by the members at the 25th AGM of the Company
held on July 04, 2019. Mr. George Zacharias has over 30 years
of diverse and successful work experience. He has worked at
Grindwell Norton, Madura Coats Threads, Madura Garments,
Sify Ltd and Yahoo! India. He was also the co-founder and CEO
of 7Strata Inc. and Chief Strategy Officer, Mindtree. He has
been on the Board of Internet Companies including CricInfo
and Refco-Sify Securities. Having served on the Board of
several Companies, he was exempted from taking the online
proficiency self-assessment test conducted by the Indian
Institute of Corporate Affairs (IICA), as specified under Section
150 of the Companies Act, 2013.
Pursuant to the recommendations of the Nomination &
Remuneration Committee, the Board,
a) At its meeting held on February 07, 2020, appointed
Mr. Shiva Shankar Naga Roddam as the Whole-Time
27
Director & Chief Operating Officer for a term of three years,
subject to the approval of the members at the 26th AGM.
b) At its meeting held on February 07, 2020, approved the
re-appointment of Ms. Nisha Dutt as an Independent
Directors for a further period of 5 years with effect from
March 25, 2020. Her re-appointment is being placed before
the members for their approval, at the 26th AGM.
c) At its meeting held on May 11, 2020, approved the
re-appointment of Mr. Anil Singhvi, in the capacity of a
Non-Executive & Non-Independent Director with effect
from June 18, 2020. His re-appointment is being placed
before the members for their approval, at the 26th AGM.
Mr. Singhvi will continue as the Chairman of the Company,
in the capacity of a Non-Executive & Non-Independent
Director.
The details regarding the familiarization program for Independent
Directors is available on the website of your Company under the
link https://www.subex.com/investors/shareholder-services/.
17. BOARD MEETINGS
During the year, six 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
1/2019-20
2/2019-20
3/2019-20
4/2019-20
5/2019-20
6/2019-20
Date of Meeting
May 13, 2019
August 12, 2019
October 11, 2019
November 08, 2019
January 06, 2020
February 07, 2020
The details of the attendance of the Directors are provided in the
Report on Corporate Governance.
18. PERFORMANCE EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and
Regulation 17 (10) of the SEBI (LODR) Regulations, 2015, the
Board at its meeting held on February 07, 2020 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 Report on Corporate Governance.
19. POLICY ON DIRECTORS APPOINTMENT AND
REMUNERATION POLICY OF THE COMPANY
The Policy on Appointment of Directors and the Remuneration
Policy of the Company has been uploaded on the website of
the Company https://www.subex.com/investors/shareholder-
services/. The Details/Disclosures of Ratio of Remuneration
to each Director to the median employee’s remuneration is
enclosed herewith as “Annexure F”.
Subex Annual Report 2019-20 28
20. AUDIT COMMITTEE
As on March 31, 2020, the Audit Committee consisted of 5 (five)
Directors as its members.
Composition
Mr. Anil Singhvi (Chairman)
Category
Independent Director
Ms. Nisha Dutt
Independent Director
Ms. Poornima Prabhu
Independent Director
Mr. Vinod Kumar Padmanabhan Managing Director & CEO
Mr. George Zacharias *
Independent Director
* Mr. George Zacharias was inducted into the Committee w.e.f February
07, 2020.
The role, terms of reference, 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, including its reconstitution, post
the re-appointment of Mr. Anil Singhvi as a Non-Executive &
Non-Independent Director, have been provided in the report on
Corporate Governance.
21. 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
M/s. S. R. Batliboi & Associates LLP, Chartered Accountants,
Bengaluru (FRN 101049W/E300004), were appointed as the
Statutory Auditors of the Company for a term of 5 years at the
21st AGM of the Company held on June 19, 2015. Based on the
recommendations of the Audit Committee, the Board at its
meeting held on May 11, 2020, approved the re-appointment of
M/s. S. R. Batliboi & Associates LLP for a term of 5 years, from the
conclusion of the ensuing 26th AGM to be held on September
25, 2020, upto the conclusion of the 31st AGM.
There are no qualifications, reservations, 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
M/s. V Sreedharan & Associates, a firm of Company Secretaries in
practice to undertake the Secretarial Audit of the Company. The
Secretarial Audit Report and the Annual Secretarial Compliance
Report are annexed herewith as “Annexure C”.
The Secretarial Audit Report for the year ended March 31, 2020
does not contain any qualifications, reservations, or adverse
remarks.
22. PARTICULARS OF EMPLOYEES
The particulars of employees required under Section 197 of the
Companies Act, 2013 read with the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 have
not been provided as 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.
23. BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as stipulated under
Regulation 34 of the SEBI (LODR) Regulations, 2015 is presented
in a separate section forming part of this Annual Report.
24. 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, ensuring continued savings through this initiative.
Suppliers delivering the products to Subex regarding lighting,
diesel generators etc, abide by the guidelines laid out by the
government.
Subex aims to reduce its impact on the environment by:
i. Monitoring the level of water and energy used along with
the waste produced.
ii.
Targeting a reduction in the use of water and energy
reduction in waste along with an increase in amount of
waste that is recycled/ reused etc.
iii.
Increasing the awareness on environment safety and
engagement of employees.
iv. Adopting sustainable practices designed to ensure the
health and safety of Subex’s employees, stakeholders, and
the environment.
v. Operating its business in compliance of environmental laws
and regulations.
25. TECHNOLOGY ABSORPTION, ADOPTION, INNOVATION AND
PRODUCT DEVELOPMENT
Subex is one of the first Product companies from India and is
the first Product company from India in the Telecom domain.
Subex Annual Report 2019-20
29
The portfolio of products has contributed to the success in
this domain and has also built a strong foundation to add
value to our Customers, independent of the economic and
market conditions. The last few years have seen a rapid
change in technologies being leveraged and this has been
further influenced by the Digital Transformation of services
and portfolio within our Customer base. Subex has a dedicated
team to explore these new technologies which then contribute
to innovations on the existing Portfolio as well as creation of
new Product Intellectual Property. The Products developed and
released by this team influence our ability to compete and win,
while also delivering value to our Customers.
26. FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year 2019-20, total foreign exchange inflow and
outflow of the Company is as follows:
i)
ii)
Foreign Exchange earnings ` 1,082 lakhs (Previous Year
` 2,178 lakhs)
Foreign Exchange outgo ` 366 lakhs (Previous Year ` 678
lakhs)
27. CORPORATE SOCIAL RESPONSIBILITY
28. RISK MANAGEMENT POLICY & IMPLEMENTATION
The Risk Management Committee as required under Regulation
21 of the SEBI (LODR) Regulations, 2015 has been constituted
voluntarily by the Company. According to Regulation 21 (5) of the
said Regulations, 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.
29. HUMAN RESOURCE MANAGEMENT
Detailed report on Human Resource management is given in
the Management Discussion and Analysis, forming part of the
Annual Report.
30. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
To enable contribution to society and other stakeholders, the
Company has constituted the Corporate Social Responsibility
Committee (CSR Committee) comprising of the following
Directors as on March 31, 2020:
Composition
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Mr. Vinod Kumar Padmanabhan
Managing Director & CEO
Ms. Nisha Dutt
Independent Director
Mr. Shiva Shankar Naga Roddam^ Whole-Time Director &
COO
^Mr. Shiva Shankar Naga Roddam was inducted into the Committee w.e.f
February 07, 2020.
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 G” to the Board's report.
The CSR Committee charter and the CSR Policy of the Company
are available on the website at the below link https://www.
subex.com/investors/shareholder-services/.
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. The details of the
activities conducted during the year, have been provided in a
separate section in this Annual Report as “Annexure G ”
In accordance with the provision of Section 134(5)(e) 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
(“Ind AS”).
Pursuant to the provisions of the Section 134(5)(f) of the Act,
the Company during the year devised proper systems to ensure
compliance with the provisions of all applicable laws. 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 Annual Report 2019-20 30
Subex is certified for ISO 9001:2015 (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 Subex continued to focus on reviews and updates
on processes thereby aligning the projects to the current
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.
31. VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has implemented a vigil mechanism policy
to deal with instances 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/investors/
shareholder-services/. There was 1 (one) complaint received
during the year 2019-20 and the same was investigated and
resolved within the timelines stipulated under the policy.
32. 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 financial year under review, no complaints have been
received by the Company.
33. 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.
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, is 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/investors/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 as “Annexure E”.
35. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE
REGULATORS OR COURTS
into settlement
During the year, the Company entered
agreements with the former MD & CEO and former COO of
the Company in respect of long drawn litigations wherein
certain claims were made against the Company. The Company
had also made counter claims on the ex-Directors including
recovery of excess managerial remuneration and other
advances. The Company contested these litigations vigorously
during the arbitrations and filed challenge petitions against the
Arbitration Awards before the Hon’ble City Civil Courts. As the
litigations were ongoing for a period of more than six years and
keeping in view the mounting litigation costs, accumulating
interest charges (on the Arbitrations Awards) and management
bandwidth spent on this matter, the Company consented
to settle and conclude the ongoing litigations. In terms of
the settlement agreements, the Company paid an amount
of ` 820 lakhs (net of ` 234 lakhs recoverable from such
ex-employees). Accordingly, the aforesaid litigation was amicably
settled. Apart from the aforesaid, there were no significant and
material orders passed by the Regulators/ Courts which would
impact the going concern status of the Company and its future
operations.
34. RELATED PARTY TRANSACTIONS
36. EXTRACT OF ANNUAL RETURN
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
The extract of the Annual Return in form MGT-9 required under
Section 92 (3) of the Companies Act, 2013 and Rule 12 of the
Companies (Management and Administration) Rules, 2014 is
Subex Annual Report 2019-20 enclosed as “Annexure D” and shall be placed, along with the
Annual Return, on the Company’s website https://www.subex.
com/investors/shareholder-services/.
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;
31
37. LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the year
2019-20 to the Exchanges’ where the Company’s shares are
listed i.e. the National Stock Exchange of India Ltd (‘NSE’) and
BSE Ltd (‘BSE’).
38. 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) .
39. DIRECTORS’ RESPONSIBILITY STATEMENT
In accordance with the provision of Section 134(3)(c) of the
Companies Act, 2013, the Board of Directors affirms:
a)
In the preparation of the annual accounts for the financial
year ended March 31, 2020, 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, 2020 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
d) That the accounts for the year ended March 31, 2020 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;
40. APPRECIATION/ACKNOWLEDGEMENTS
thank
the customers, vendors,
Your Directors
investors,
shareholders’ and bankers for their continued support during
the year. We place on record our appreciation for the support /
the various departments of
co-operation extended by
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, the Securities and Exchange Board
of India, BSE Limited, National Stock Exchange of India Ltd,
National Securities Depository Limited, Central Depository
Services (India) Limited and other State Govertment 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
Anil Singhvi
Chairman, Non-Executive & Non-Independent Director
DIN:00239589
Place: Mumbai
August 10, 2020.
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN:06563872
Place: Bengaluru
August 10, 2020.
Subex Annual Report 2019-20 32
ANNEXURE A
Information as at March 31, 2020 pertaining to the Employee Stock Option Schemes of the Company
Particulars
Sl.
No
1
2
3
4
5
6
7
8
9
Options granted as on March 31, 2020
Options granted during the year
Options vested but not exercised as on March 31, 2020
Options vested during the year
Options exercised as on March 31, 2020
Options exercised during the year
No. of shares arising as a result of exercise of options during the year ended March 31, 2020
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, 2020
Options lapsed/cancelled/ surrendered during the year**
10
Employee wise details of options granted during the year under review to:
(i) Key managerial personnel
(ii) other employee receiving a grant in the year of option amounting to 5% or more of options granted
during that year
(iii) identified employees who were granted option, during the year, equal to or exceeding 1% of the
issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.
ESOP 2005
ESOP 2018
5,838,918
-
-
12,439
-
-
` 10.26- ` 24.99
None
-
-
5,826,479
6,125
23,450,000
12,800,000
4,900,000
5,325,000
425,000
425,000
NIL#
` 6
None
` 2,550,000
21,975,000
1,050,000
1,050,000
-
-
-
-
-
-
Vinod Kumar
Padmanabhan- MD
& CEO*-800,000
Venkatraman G S
-CFO-350,000
G V Krishnakanth-
CS-50,000
Shiva Shankar Naga
Roddam-WTD &
COO^- 600,000
Venkatesh Krishnan-
750,000
-
11
Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in
` (3.78)
` (3.78)
accordance with Indian Accounting Standard (Ind AS) 33 ‘Earnings per share’
12
Where the Company has calculated the employee compensation cost using the intrinsic value of
N.A
N.A
the stock options, the difference between the employee compensation cost so computed and the
employee compensation cost that shall have been recognized if it had used the fair value of the options.
The impact of this difference on profits and on EPS of the Company is:
13
Weighted-average exercise prices and weighted-average fair values of options separately for options
-
` 6
whose exercise price either equals or exceeds or is less than the market price of the stock. (As per note
34 of the Standalone financials)
Subex Annual Report 2019-20 Sl.
No
14
Particulars
ESOP 2005
ESOP 2018
Description of the method used during the year to estimate the fair values of options, including the
Black Scholes
33
following weighted-average information:
i. risk-free interest rate
ii. expected life
iii. expected volatility
iv. expected dividends
v. market price on grant date
N.A.
Model
6.70%
2 years
41%
0%
` 6
*Stock options granted to Mr. Vinod Kumar Padmanabhan, as an employee of Subex Assurance LLP.
^Stock options granted to Mr. Shiva Shankar Naga Roddam, as an employee of Subex Assurance LLP.
**In accordance with the provisions of the ESOP Schemes 2005 & 2018, lapsed options are reissued.
# There are no fresh equity shares arising as a result of exercise of options during the year ended March 31, 2020. Shares were transferred from the ESOP
Trust against the exercise of options.
For Subex Limited
Anil Singhvi
Chairman, Non-Executive & Non-Independent Director
DIN:00239589
Place: Mumbai
August 10, 2020.
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN:06563872
Place: Bengaluru
August 10, 2020.
Subex Annual Report 2019-20 34
ANNEXURE B
To,
Members of Subex Limited
CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE
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, clauses (b) to (i) of Regulation 46(2) and paragraphs C, D and E of
Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 from the period April 01, 2019 to March
31, 2020. 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, clauses (b) to (i) of sub-regulation (2) of
Regulation 46 and paragraphs C, D and E of Schedule V of the Listing Regulations, as applicable of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 subject to our observation that pursuant to Regulation 17(1)(c) of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, there was a delay in appointing the 6th Director on the Board of the Company. The
Company has appointed the 6th Director with effect from 7th February 2020.
We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness
with which the management has conducted the affairs of the Company.
Date: August 10, 2020
Place: Bangalore
For BMP & Co. LLP
Company Secretaries
Pramod S M
Partner
FCS 7834 / CP No. 13784
UDIN: F007834B000574279
Subex Annual Report 2019-20
ANNEXURE C
Form No. MR-3
SECRETARIAL AUDIT REPORT
[Pursuant to Sub Section (1) of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014]
FOR THE FINANCIAL YEAR ENDED MARCH 31, 2020
35
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, 2020 (the audit
period) complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-
mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company during the
audit period according to the provisions of:
i)
The Companies Act, 2013 (the Act) and the rules made thereunder;
ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment
and Overseas Direct Investment. The Company has not made any External Commercial Borrowings during the audit period;
v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’): -
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018;
d. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;
e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (Not Applicable to the
Company during the Audit Period);
f.
The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the
Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Not Applicable to the Company
during the Audit Period);
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018 (Not Applicable to the Company during
the Audit Period); and
i.
The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR)
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
Subex Annual Report 2019-20 36
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.,
mentioned above subject to the following observation:
a. Pursuant to the provisions of sub-rule (4A) of rule 5 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer
and Refund) Rules, 2016, Form No. IEPF-1A is yet to be filed by the Company.
b. Pursuant to Regulation 17(1)(c) of LODR, there was a delay in appointing the 6th Director on the Board of the Company. The Company
has appointed 6th Director w.e.f 07.02.2020.
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 period under review:
a. The Company had received emails from The Securities and Exchange Board of India (SEBI) on January 28, 2020 and February 18,
2020 relating to the compliance of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and the Company had replied vide
letters dated January 30, 2020 and February 26, 2020 and awaiting further communication from SEBI.
b. The Company had filed application before the Registrar of Companies, Karnataka for adjudication of delay in appointment of whole-
time company secretary pursuant to the provisions of Sub-section (1) of Section 203 of the Companies Act, 2013 on October 09,
2019. The Company is waiting for the hearing date from the Registrar of Companies, Karnataka.
c. The Company had received notice from the IEPF authority dated May 20, 2019, relating to transfer of shares pursuant to the provisions
of sub-section (6) of Section 124 of the Companies Act, 2013 and for non-filing of Form No. IEPF 4 for the dividends declared by the
Company till financial year 2006-07. The Company has sent reply letter dated June 28, 2019 to the IEPF Authority.
The Company has sought certain clarifications from IEPF authorities for complying with section (6) of Section 124 of the Companies Act,
2013 and awaiting for further communication from them.
The following event / action was having a major bearing on the Company’s affairs in pursuance of the above referred laws, rules,
regulations, guidelines etc., during the audit period:
The Board of Directors of the Company has approved the Scheme for Reduction of Share Capital during the audit period. The detailed
information is available on the Company’s website under the weblink at https://www.subex.com/investors/capital-reduction/
For V. SREEDHARAN & ASSOCIATES
(Pradeep B. Kulkarni)
Partner
FCS: 7260; CP No. 7835
UDIN Number F007260B000224213
Bengaluru
May 11, 2020
This report is to be read with our letter of even date which is annexed as ‘Annexure 1’ and forms an integral part of this report.
Subex Annual Report 2019-20
‘Annexure -1’
To,
The Members
Subex Limited,
RMZ Ecoworld Outer Ring Road,
Devarabisanahalli,
Bengaluru - 560103
37
Our report of even date is to be read along with this letter:
1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion
on these secretarial records based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of
the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial
records. We believe that the processes and practices we followed, provide a reasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.
4. Wherever required, we have obtained the Management representation about the compliance of laws, rules and regulations and
happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of
management. Our examination was limited to the verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with
which the management has conducted the affairs of the Company.
For V. SREEDHARAN & ASSOCIATES
(Pradeep B. Kulkarni)
Partner
FCS: 7260; CP No. 7835
UDIN Number F007260B000224213
Bengaluru
May 11, 2020
Subex Annual Report 2019-20
38
SECRETARIAL COMPLIANCE REPORT OF SUBEX LIMITED FOR THE YEAR ENDED MARCH 31, 2020
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;
(d) any other document/ filing, as may be relevant, which has been relied upon to make this certification;
For the year ended March 31, 2020 (“Review Period”) in respect of compliance with the provisions of:
(a) The Securities and Exchange Board of India Act, 1992 (“SEBI Act”) and the Regulations, circulars, guidelines issued thereunder; and
(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) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR);
(b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018;
(c) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(d) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018 (Not Applicable to the Company during the
Review Period);
(e) The 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) The 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) The 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 subject to the
reporting made under point no. (c) below;
(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) The following are the details of actions 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 there under:
Sl.
No.
1
Action taken by SEBI /
Details of violation
Details of action taken E.g. fines,
Observations/ remarks of the Practicing
Stock Exchanges
warning letter, debarment etc.,
Company Secretary if any
The NSE has been sending
The 6th Director was
The NSE vide its notice dated
The Company had
replied
to
all
the
communications
to
the
appointed by the Company
February 03, 2020 asked the
communications of NSE saying that they were
Company to appoint the
w.e.f 07.02.2020, whereas
Company to pay the fine of
scouting appropriate profiles of persons who
6th Director on a quarterly
Pursuant
to Regulation
` 5,42,800/- for the delay in
could be appointed as the 6th Director on the
basis from the 1st quarter
17(1)(c) of LODR,
the
appointing the 6th Director on the
Board of the Company.
of FY 2019-20 and the
board of directors of the
Board
NSE vide its notice dated
top 1000
listed entities
February 03, 2020 asked
comprise of not
less
the Company to pay the
than six directors w.e.f
fine of ` 5,42,800/- for the
01.04.2019
delay in appointing the 6th
Director on the Board
The Company has again sent its reply against NSE’s
notice dt. 03.02.2020 vide letter dated February
05, 2020 and requested the NSE to waive the fine
amount and waiting further communication from
NSE.
Subex Annual Report 2019-20 39
Sl.
No.
2
Action taken by SEBI /
Details of violation
Details of action taken E.g. fines,
Observations/ remarks of the Practicing
Stock Exchanges
warning letter, debarment etc.,
Company Secretary if any
The Company had
Mr. Subhash Menon, one
The Company is advised to
The Company had informed Mr. Subhash Menon
received emails from The
of the Promoters of Subex
disgorge the said profit of
regarding communication received from the SEBI
Securities and Exchange
Limited, had executed
` 24,81,074/- earned by
for his necessary action.
Board of India (SEBI) on
contra trades in the scrip
Mr. Subhash Menon, through
January 28, 2020 and
of Subex Limited, which
execution of contra trades,
February 18, 2020 relating
is in contravention of
and remit the same to SEBI, for
to the compliance of the
Clause 10 of the Code
credit to the Investor Protection
SEBI (Prohibition of Insider
of Conduct specified
and Education Fund (IPEF)
Trading) Regulations, 2015
under Schedule B of
administered by the Board, within
Regulation 9(1) of the SEBI
10 days of email dt. 28.01.2020
The Company had also replied to SEBI vide letters
dated January 30, 2020 and February 26, 2020
and awaiting further communication from SEBI
(Prohibition of Insider
Trading) Regulations, 2015.
Mr. Subhash Menon, by
executing such contra
trades earned a profit of
` 24,81,074/-
(d) The listed entity has taken the following action to comply with the observation made in previous reports:
Sl.
No.
Observations of the
Observations made in the
Actions taken by the listed entity
Comments of the Practicing Company Secretary
Practicing Company
secretarial compliance
if any
on the actions taken by the listed entity
Secretary in the previous
report for the year ended.
reports
1
The provisions of
Not Applicable
The Company has appointed
For the period of non-compliance, the Company
Mr. G. V. Krishnakanth as a Whole
has filed the application before the Registrar of
Time Company Secretary under
Companies, Karnataka and awaiting the hearing
the provisions of Section 203
date from the Registrar of Companies, Karnataka
of the Companies Act, 2013
w.e.f 10.07.2018 and filed the
application before the Registrar
of Companies, Karnataka for
adjudication during the
FY 2019-20
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).
For V. SREEDHARAN & ASSOCIATES
(Pradeep B. Kulkarni)
Partner
FCS: 7260; CP No. 7835
UDIN Number F007260B000224312
Bengaluru
May 11, 2020
Subex Annual Report 2019-20 40
ANNEXURE D
Form No. MGT-9
EXTRACT OF ANNUAL RETURN
As on the financial year ended 31st March 2020
[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)
CIN
Registration Date
Name of the Company
L85110KA1994PLC016663
December 06, 1994
Subex Limited
Category / Sub Category of the Company
Company having Share Capital
Address of the Registered office and contact details
RMZ Ecoworld, Outer Ring Road, Devarabisanahalli, Bengaluru-560103
Whether listed Company (Yes / No)
Yes, on the National Stock Exchange of India Ltd and BSE Ltd
vii)
Name, Address and Contact details of Registrar & Transfer Agent,
Canbank Computer Services Limited*
if any
J P Royale,1st Floor, No.218
2nd Main, Sampige Road
(Near 14th Cross), Malleswaram
Bengaluru – 560 003
Contact No. 080-23469661/662/664/665
* The change in Registrar & Transfer Agents from Canbank Computer Services Limited to Kfin Technologies Private Limited took effect from July 24, 2020.
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
(All the business activities contributing 10 % or more of the total turnover of the Company are stated)
Name and Description of main products /services
NIC Code of the
Product/service
% to total turnover
of the Company
Sl.
No.
1.
2.
3.
Sl.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
License, Implementation and customization
Managed services
Support services
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
Name and Address of the Company
CIN/GLN
Subex Assurance LLP, India
Subex Digital LLP, India
Subex Americas Inc., Canada
Subex (UK) Limited, England
Subex Inc., USA
AAJ-0729
AAJ-0728
Foreign Company
Foreign Company
Foreign Company
Subex (Asia Pacific) Pte Limited, Singapore
Foreign Company
Subex Azure Holdings Inc., USA
Subex Middle East (FZE), UAE
Foreign Company
Foreign Company
10.
Subex Bangladesh Private Limited, Bangladesh
Foreign Company
*Includes % of holding, either directly or indirectly through subsidiaries.
-
-
-
38
23
39
Holding/
Subsidiary/
Associate
% of shares/
capital held*
Applicable
Section
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
2 (87)
Subex Technologies Limited, India
U74140KA2005PLC035905
Subsidiary
Subex Annual Report 2019-20 IV. SHARE HOLDING PATTERN *(Equity Share Capital Breakup as a percentage of Total Equity)
(i) Category-wise Share Holding
Category of Shareholders
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
% of Total
Demat
Physical
Total
% of Total
Shares
Shares
A. Promoters
(1) Indian
a) Individual/ HUF
4,74,044
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)
-
-
-
-
-
4,74,044
-
-
-
-
-
-
Total shareholding of
4,74,044
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
-
14,62,082
-
-
-
f) Insurance Companies
78,764
g) FIIs
h) Foreign Venture Capital
Funds
i) Others (specify)
Foreign Portfolio Investors
-
-
-
-
Sub-total (B)(1)
15,40,846
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,74,044
0.08
-
-
-
-
-
-
-
-
-
-
4,74,044
0.08
-
-
-
-
-
-
-
-
-
-
-
-
4,74,044
0.08
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,62,082
0.26
32,76,389
-
-
-
-
-
-
-
-
-
78,764
0.01
78,764
-
-
-
-
-
-
-
-
-
-
-
-
15,40,846
0.27
33,55,153
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,76,389
0.59
-
-
-
-
-
-
78,764
0.01
-
-
-
-
-
-
-
-
41
% Change
during the
year
(0.08)
-
-
-
-
-
(0.08)
-
-
-
-
-
-
(0.08)
-
0.33
-
-
-
-
-
-
-
-
2. Non-Institutions
a) Bodies Corp.
i) Indian
ii) Overseas
b) Individuals
11,51,35,575
400 11,51,35,975
20.50 8,82,73,090
465
8,82,73,555
_
_
_
_
_
_
_
15.71
_
(4.79)
-
i) Individual shareholders
12,17,77,651
41,227
12,18,18,878
21.68 10,85,57,274
41,163 10,85,98,437
19.32
(2.36)
holding nominal share
capital up to ` 1 lakh
33,55,153
0.60
0.33
Subex Annual Report 2019-20 42
ii) Individual shareholders
26,49,70,321
- 26,49,70,321
47.15 28,89,05,286
- 28,89,05,286
51.41
4.26
holding nominal share
capital in excess of
` 1 lakh
c) Others (specify)
Trusts
Director & their relatives
Foreign Nationals
Escrow Account
Market Maker
3,91,300
79,095
81,194
-
-
Non-Resident Indians
1,21,01,827
OCBs
Societies
-
-
Clearing Members
12,06,890
shares in transit
-
Hindu Undivided Families
2,79,56,782
NRIs/OCBs
-
Foreign Corporate Bodies
39,48,118
Partnership Firms
Custodian of Enemy
Property
Foreign Collaborators
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,91,300
79,095
81,194
-
-
0.07
0.01
0.01
-
-
3,53,300
5,29,095
81,194
-
-
1,21,01,827
2.15
1,25,09,153
-
-
-
-
-
-
12,06,890
0.21
21,40,098
-
-
-
2,79,56,782
4.98
2,84,98,741
-
-
-
39,48,118
0.70
54,16,874
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,53,300
5,29,095
81,194
-
-
0.06
0.10
0.01
-
-
(0.01)
0.09
-
-
-
1,25,09,153
2.23
0.08
-
-
21,40,098
-
2,84,98,741
-
54,16,874
-
-
-
-
-
0.38
-
5.07
-
0.97
-
-
-
-
-
0.17
-
0.09
-
0.27
-
-
-
ESOPs/ESOS/ESPS
8,54,436
22
8,54,458
0.15
11,23,821
21
11,23,842
0.20
0.05
Employee shareholders
Sub-Total(B)(2)
54,85,03,189
41,649 54,85,44,838
97.61 53,63,87,926
41,649 53,64,29,575
Total Public Shareholding
55,00,44,035
41,649 55,00,85,684
97.88 53,97,43,079
41,649 53,97,84,728
95.46
96.05
(B)=(B)(1)+ (B)(2)
C. Shares held by
Custodian for GDRs & ADRs
2,43,207
Employee Benefit Trust
1,12,00,000
-
-
2,43,207
0.04
2,43,207
1,12,00,000
1.99
2,19,75,000
-
-
2,43,207
2,19,75,000
0.04
3.91
(2.15)
(1.83)
-
1.92
[under the SEBI (Share
Based Employee Benefits)
Regulations, 2014]#
Grand Total (A+B+C)
56,19,61,286
41,649 56,20,02,935
100 56,19,61,286
41,649 56,20,02,935
100
-
*As per the records of the RTA.
#Held in the Demat account of the Trustees of the Subex Employee Benefit and ESOP Benefit Trust.
(ii) Shareholding of Promoters
Sl. No.
Shareholder’s
Shareholding at the beginning of the year
Shareholding at the end of the year
Name
No. of Shares
% of total
% of Shares
No. of Shares
% of total
% of Shares
Shares of the
Pledged /
Company
encumbered
to total shares
Shares of the
Pledged/
Company
encumbered
to total shares
% change
in
share holding
during the year
1.
2.
3.
Kivar Holdings
Private Limited
Subash Menon
Sudeesh
Yezhuvath
Nil
1,01,801
3,72,243
0.00
0.02
0.06
NA
0
0
Nil
Nil
Nil
0.00
0.00
0.00
NA
NA
NA
-
(0.02)
(0.06)
Subex Annual Report 2019-20 43
(iii) Change in Promoters’ Shareholding
Sl.
No
Shareholding at the beginning of the year
Cumulative Shareholding during the Year
No. of shares
% of total shares of
No. of shares
% of total shares of
the Company
the Company
At the beginning of the year
1.
Kivar Holdings Private Limited
Nil
0.00
Date wise Increase / Decrease in Promoters
Shareholding during the year specifying
the reasons for increase/decrease (e.g.
allotment/transfer/bonus/ sweat equity,
etc): NA
2.
Subash Menon
1,01,801
0.02
-
NA
Date wise Increase / Decrease in Promoters
Shareholding during the year specifying
the reasons for increase/decrease (e.g.
allotment/transfer/bonus/ sweat equity, etc)
Sale of 1,01,801 shares on May 23, 2019
Sudeesh Yezhuvath
3,72,243
0.06
Date wise Increase / Decrease in Promoters
Shareholding during the year specifying
the reasons for increase/decrease (e.g.
allotment/transfer/bonus/ sweat equity, etc)
Sale of 2,000 shares on May 21, 2019
Sale of 2,00,000 shares on May 22, 2019
Sale of 1,70,243 shares on May 24, 2019
At the End of the year
Kivar Holdings Private Limited
Subash Menon
Sudeesh Yezhuvath
a.
3.
a.
b.
c.
1.
2.
3.
1,01,801
3,72,243
3,70,243
1,70,243
Nil
Nil
Nil
Nil
0.02
0.06
0.06
0.03
NA
NA
NA
NA
(iv) Shareholding Pattern of top ten Shareholders
(other than Directors, Promoters and holders of GDRs and ADRs)
Sl
No.
For Each of the Top 10 Shareholders
Shareholding at the beginning of the year
Shareholding at the end of the year
No. of shares
% of total shares of
No. of shares
% of total shares of
the Company
the Company
1.
Subex Employee Welfare and ESOP
1,12,00,000
2.00
2,19,75,000
Benefit Trust represented by Trustees-
Niveditha Lalge R & Prashanth Nayak M
2.
Stock Holding Corporation of India Ltd -
66,70,042
A/C NSE Derivatives
Edelweiss Custodial Services Limited
Joseph Jivanayakam Daniel
Rajesh Goenka
UNO Metals Ltd
Anagha Advisors LLP
AKG Finvest Ltd
Shailesh V Haribhakti
3.
4.
5.
6.
7.
8.
9.
10.
Ashok Kumar Goenka
52,49,443
NIL
30,00,000
1,94,12,000
44,50,000
1,85,60,000
NIL
20,00,000
1.19
0.93
NA
0.53
3.45
0.79
3.30
NA
0.36
1,75,69,946
99,84,412
92,00,000
85,00,000
85,00,000
77,69,543
67,22,000
57,89,000
56,00,000
3.91
3.13
1.78
1.64
1.51
1.51
1.38
1.20
1.03
1.00
Subex Annual Report 2019-20 Sl
No.
1.
2.
3.
4.
5.
6.
7.
8.
1.
2.
3.
4.
Sl.
No
1.
2.
3.
4.
44
(v) Shareholding of Directors and Key Managerial Personnel
For Each of the Directors and KMP
Shareholding
Cumulative Shareholding during the year
No. of shares
% of total shares of
No. of shares
% of total shares of
the Company
the Company
At the beginning of the year
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Vinod Kumar Padmanabhan
George Zacharias (appointed as Independent Director
w.e.f. May 13, 2019)
Shiva Shankar Naga Roddam (appointed as Whole-
Time Director & COO w.e.f. February 07, 2020)
Venkatraman G S
G V Krishnakanth
At the end of the year
Anil Singhvi
Nisha Dutt
Poornima Prabhu
Vinod Kumar Padmanabhan
5.
George Zacharias
6.
7.
8.
Shiva Shankar Naga Roddam
Venkatraman G S
G V Krishnakanth
V.
INDEBTEDNESS
The Company is debt free as on March 31, 2020.
60,000
NIL
NIL
19,095
N.A.
N.A.
NIL
NIL
60,000
NIL
NIL
4,44,095
N.A.
25,000
NIL
NIL
0.01
N.A.
N.A.
0.01
N.A
N.A
N.A
N.A
0.01
N.A.
N.A.
0.08
N.A
0.01
N.A
N.A
NIL
NIL
NIL
4,25,000
NIL
25,000
NIL
NIL
60,000
NIL
NIL
4,44,095
NIL
25,000
NIL
NIL
N.A
N.A
N.A
0.08
N.A
0.01
N.A
N.A
0.01
N.A
N.A
0.08
N.A
0.01
N.A
N.A
VI. OTHER REMUNERATION OF DIRECTORS AND MANAGERIAL PERSONNEL
A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
Particulars of Remuneration
Gross salary
Vinod Kumar Padmanabhan
Total Amount
Managing Director & CEO
(` in Lakhs)
(` in Lakhs)
(a) Salary as per provisions contained in Section 17(1) of the Income-tax Act, 1961
56.97
56.97
(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…
5.
Others, please specify (Flexible Benefit Plan)
Total
Ceiling as per the Act
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56.97
60 Lakhs p.a. as per
Section II of Part II of
Schedule V of the Act
56.97
60 Lakhs.
Note: As Mr. Shiva Shankar Naga Roddam draws his remuneration from Subex Assurance LLP, the details pertaining to the remuneration have not been stated.
Subex Annual Report 2019-20 B. Remuneration to other Directors:
SN.
Particulars of Remuneration
Directors
1
Independent Directors
Anil Singhvi
Nisha Dutt Poornima Prabhu George Zacharias
45
(` in Lakhs)
Total Amount
Fee for attending Board/ Committee
19.00
10.00
17.00
4.00
50.00
meetings
Commission
Others, please specify
Total (1)
2
Other Non-Executive Directors
Fee for attending Board/ Committee
meetings
Commission
Others, please specify
Total (2)
Total (B)=(1+2)
Total Managerial Remuneration
Overall Ceiling as per the Act
-
-
-
-
-
-
-
-
19.00
10.00
17.00
4.00
50.00
-
-
-
-
-
-
-
-
19.00
19.00
10.00
10.00
NA
-
-
-
-
17.00
17.00
` 1,00,000 per meeting
-
-
-
-
4.00
4.00
-
-
-
-
50.00
50.00
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
C1.
Sl.
No
Particulars of Remuneration
Key Managerial Personnel
1.
Gross salary
(` in Lakhs except stock options)
(` in Lakhs except stock options)
Venkatraman G S
G V Krishnakanth
Chief Financial Officer
Company Secretary & Compliance
Officer
(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 during the year)
Sweat Equity
Commission
- as % of profit
- others, specify…
2.
3.
4.
5.
Others, please specify (Flexible Benefit Plan)
Total (1+2+3+4+5)
Ceiling as per the Act
63.05
-
-
3,50,000
-
-
-
-
4.17
67.22
Not Applicable
49.75
-
-
50,000
-
-
-
-
-
49.75
Subex Annual Report 2019-20
46
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES*:
Type
Section of the
Brief Description
Details of Penalty
Authority [RD / NCLT/
Appeal made, if any
Companies Act
/ Punishment/
Compounding fees
imposed
COURT]
(give Details)
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*The Company had received a Notice from the Registrar of Companies (ROC), Karnataka, regarding Non-Appointment of Company Secretary for the period
from June 15, 2017- July 09, 2018 (resulting in a Delay in appointment by 216 days). The Company has filed an application for adjudication before the ROC,
appealing that the delay was purely by inadvertence and without any malafide intension.
Subex Annual Report 2019-20 ANNEXURE E
(Pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the
FORM AOC 2
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
47
1. Details of contracts or arrangements or transactions not at arm's length basis
1. Name(s) of the related party and nature of relationship
2. Nature of contracts/ arrangements/ transactions
3. Duration of the contracts/ arrangements/ transactions
4. Salient terms of the contracts or arrangements or transactions including the value, if any
5. Justification for entering into such contracts or arrangements or transactions
NOT APPLICABLE
6. Date(s) of approval by the Board
7. Amount paid as advances, if any:
8. 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 arrangement or transactions at arm's length basis
(a) Name(s) of the related party and nature of relationship
(a) Subex Technologies Limited
(b) Subex (UK) Limited
(c) Subex Americas Inc.
(d) Subex (Asia Pacific) Pte Limited
(e) Subex Inc.
(f) Subex Middle East (FZE)
(g) Subex Azure Holdings Inc
(h) Subex Assurance LLP
(i) Subex Digital LLP
(j) Subex Bangladesh Private Limited
(All the aforementioned entities are subsidiaries of Subex
Limited)
(b) Nature of contracts/ arrangements/ transactions
A. Sub-Contracting Transactions
Subex (Asia Pacific) Pte Ltd
Subex Inc.
B. Marketing & Allied Services Expense Transactions
Subex (Asia Pacific) Pte Ltd
Subex Inc.
C. Reimbursement of expenses
Subex (UK) Limited
Subex (Asia Pacific) Pte Ltd
Subex Assurance LLP
Subex Digital LLP
Subex Inc.
D. Allocation of Employee Stock option expenses
Subex Assurance LLP
Subex Digital LLP
E. Share of profit/ (loss)
Subex Assurance LLP
Subex Digital LLP
(c) Duration of the contracts/ arrangements/ transactions
The transactions mentioned in 2(b) above are continuing
contracts.
Subex Annual Report 2019-20 48
(d) Salient terms of the contracts or arrangements or transactions including the value, if any: A. Sub-Contracting Transactions
The subsidiary transfers a portion of the revenue generated
by them to the ultimate holding Company
B. Marketing & Allied Services Expense Transactions
The subsidiary transfers the cost incurred in earning the
revenue to the ultimate holding Company
C. 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.
D. Reimbursement of ESOP expenses
The holding company transfers the ESOP expense incurred
on pertaining to ESOPs held by the employees of respective
subsidiaries.
E. Share of Profit/ (Loss)
Subex Assurance LLP and Subex Digital LLP transfers share
of profit/ (loss) incurred during the year to the respective
partners as per the partnership deed.
The details pertaining to the value of transactions, form
part of the Related Party Schedule to the Standalone
Financial Statements. (Note 31)
(e) Date(s) of approval by the Board, if any:
(f) Amount paid as advances, if any:
May 13, 2019
NA
Additional Note for Point 2: The Company had granted an interest free loan to the Subex Employee Welfare and ESOP Benefit Trust during
the financial year. (Refer Note 31 forming part of the Standalone Financial Statements)
For Subex Limited
Anil Singhvi
Chairman, Non-Executive & Non-Independent Director
DIN:00239589
Place: Mumbai
August 10, 2020.
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN:06563872
Place: Bengaluru
August 10, 2020.
Subex Annual Report 2019-20 ANNEXURE F
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;
49
Vinod Kumar Padmanabhan (MD & CEO)
3.97 : 1.00
Shiva Shankar Naga Roddam (WTD & COO): Not applicable as Shiva
Shankar Naga Roddam draws his remuneration from Subex Assurance LLP.
(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;
MD & CEO: NIL
CFO: NIL
CS: 5%
WTD & COO: Not applicable as there was no WTD & COO on the Board
in 2018-19.
(iii) the percentage increase in the median remuneration of employees in
The median remuneration increased by 37.45%.
the financial year; *
(iv) the number of permanent employees on the rolls of Company;
27
(v) average percentile increase already made in the salaries of employees
There was an average increase of 7.8% in the salaries of employees other
other than the managerial personnel in the last financial year and its
than managerial personnel. There was no increase in the remuneration
comparison with the percentile increase in the managerial remuneration
paid to the MD & CEO and the CFO during the period under review. There
and justification thereof and point out if there are any exceptional
was an increase of 5% in the remuneration paid to the CS.
circumstances for increase in the managerial remuneration;
(vi) Affirmation that the remuneration is as per the remuneration policy of
The remuneration of Directors, Senior Management and Employees is as
the Company.
per the Remuneration Policy of the Company.
* The increase in median remuneration is on account of internal movement of employees between the Company and its subsidiaries, Subex Assurance LLP
& Subex Digital LLP.
Subex Annual Report 2019-20 50
ANNEXURE G
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. The Subex Charitable Trust is our primary social responsibility trust. The objectives are
enabling education of eligible students from financially weaker sections of society, vocational training for women, amongst others.
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 Policy is
available on https://www.subex.com/investors/shareholder-services/.
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/social-responsibility/
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, 2020.
Composition
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Mr. Vinod Kumar Padmanabhan
Mr. Shiva Shankar Naga Roddam
Category
Independent Director
Independent Director
Managing Director & CEO
Whole-Time Director & COO
3. Average Net Profit/ (Loss) of the Company for the last three financial years: ` (18,604.17) 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
Details
(2)Specify the state and district where projects or programs was 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 direct or through implementing agency
6. Reason for not spending the prescribed CSR expenditure: Not Applicable
7. CSR Responsibility Statement:
Not Applicable
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 Annual Report 2019-20
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. The list of activities undertaken by the SCT have been stated below.
51
FOCUS AREA
Eradicating extreme hunger and poverty.
Promotion of education.
Promoting gender equality and empowering women.
Employment enhancing vocational skills.
Promoting environmental consciousness.
ACTIVITIES COVERED DURING THE YEAR
The Company has incurred losses during the preceding 3 financial years. Though it is not mandatory to incur any expenditure on CSR
activities, the SCT has undertaken and contributed towards the following activities during the year.
a) As part of its ‘Go Green’ initiative, members of the SCT have conducted tree plantation drives and have also distributed saplings to
Subexians. A total amount of ` 19,000 has been contributed towards these initiatives.
b) Another project as part of ‘Go Green’ initiative was to set-up kitchen garden for a school run for destitute boys enabling them to have
fresh produce in their own backyard. A total amount of ` 98,500 has also been contributed by the employees of Subex, towards this
initiative.
c) As part of its ‘Health & Education’ initiative, the SCT:
i. Has sponsored a sanitary napkin incinerator in the restroom at a Kannada medium Govt high school for girls and lady Subexians
have also help create awareness on health and sanitation. The SCT looks to sponsor more of such units and has received
positive feedback from the Management of the school for this endeavour. An amount of ` 46,075 has been contributed towards
these initiatives.
ii. Has conducted a general health check-up camp for the support staff of the Company, with more than 75 support staff members
participating in the same.
iii. Has organized the Rotary Blood donation event at the Company.
iv. Has sponsored ` 2,00,000 towards the roofing of old classrooms at the Tarihal Govt. School located at a remote village in Tarihal
near Belgaum, Karnataka, to ensure that the school is protected during monsoon.
v. Has contributed ` 2,50,000 towards the reconstruction of classrooms at the St. Mary’s Higher Secondary School based in
Champakalum, Alappuzha, Kerala. The school was affected by the floods that struck Kerala in August 2019.
vi. Has sponsored the 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. ` 4,20,000 was contributed
towards this cause.
Apart from these activities, the SCT ensured that donations and relief materials contributed by Subexians were supplied to the
people affected by the floods in Karnataka in August 2019.
In its endeavour to do its part and extend a helping hand to the needy during the COVID-19 pandemic, the SCT has undertaken the
following projects:
1.
Supporting the Samarthanam Trust for the disabled, by donating 50 testing kits to them.
2. Supporting Rotary TTK by contributing towards the procurement of 30 Personal Protective Equipments (PPEs) Kits for doctors and
nurses involved in treating patients who have tested by positive for the virus.
For Subex Limited
Anil Singhvi
Chairman CSR Committee
DIN:00239589
Place: Mumbai
August 10, 2020.
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN:06563872
Place: Bengaluru
August 10, 2020.
Subex Annual Report 2019-20 52
REPORT ON CORPORATE GOVERNANCE
I. COMPANY’S PHILOSOPHY ON CODE OF
II. BOARD OF DIRECTORS
CORPORATE GOVERNANCE
The Ideology of Corporate Governance is based on fairness,
openness, professionalism, accountability and focus on the
sustainable success of the Company and building confidence
of its various stakeholders, thereby paving a way for long
term growth. The Company believes that good Corporate
Governance emerges from the application of the best and sound
management practices and compliance with the laws coupled
with adherence to the highest standards of transparency and
business ethics. Therefore, situation, performance, ownership
and governance of the Company are equally important with
respect to the structure, activities and policies of the organization.
Subex Limited’s (“Subex / the Company”) compliance with the
Corporate Governance guidelines as stipulated by the Stock
Exchanges and the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations,
2015 [“SEBI (LODR), Regulations, 2015”] is described in this
section.
For the success of the organisation, we believe it requires highest
standards of corporate behaviour towards everyone we work
with, the communities we touch and the environment on which
we have an impact. This is our road to consistent, competitive,
profitable and responsible growth and creating long-term value
for our stakeholders, our people and our business partners.
These principles have been the guiding force for our operations
which we will endeavour in years to come.
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, 2020,
unless otherwise stated. Material changes and events between
the end of the financial year and date of the report are provided
wherever required.
As on March 31, 2020, the Board of Directors of Subex Limited
comprises of six directors out of which two are Executive
Directors and four 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.
The Company is listed in 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 (DIN: 00162570) as Additional Independent Director
of the Company to hold office for a period of 5 years subject to
the approval of the members at the 25th Annual General Meeting.
The members at the said Annual General Meeting, appointed
Mr. George Zacharias as Independent Director of the Company
to hold office for a term of five years from May 13, 2019, not
liable to retire by rotation.
Details of appointments / re-appointments:
i. Mr. Shiva Shankar Naga Roddam (DIN:07212118) was
appointed by the Board of Directors at its meeting held
on February 07, 2020 as Whole-Time Director & Chief
Operating Officer of the Company for a period of three
years subject to the approval of the members at the 26th
AGM.
ii. Ms. Nisha Dutt (DIN: 06465957) was re-appointed by the
Board of Directors at its meeting held on February 07, 2020
as an Independent Director for a further period of 5 years
with effect from March 25, 2020. Her re-appointment is
being placed before the members for their approval, at the
26th AGM.
iii. Based on the recommendations of the Nomination &
Remuneration Committee, the Board at
its meeting
held on May 11, 2020 approved the re-appointment of
Mr. Anil Singhvi (DIN: 00239589) as Non- Executive and
Non-Independent Director of the Company with effect
from June 18, 2020 and the same is being placed before
the members for their approval of the members at the
26th AGM.
A. Board Process:
The Board meets at regular intervals or atleast once in each
quarter to discuss and decide on Company / Business policy
and strategy apart from other Board business specifically
reserved for its attention to ensure that it exercises full control
over significant strategic, financial, operational and compliance
Subex Annual Report 2019-20
53
matters. The Board / Committee Meetings are pre-scheduled
and informed to the Directors well in advance to facilitate them
to plan their schedule and to ensure meaningful participation in
the meetings. However, in case of a special and urgent business
need, the Board’s approval is taken by passing resolutions by
circulation, as permitted by law, which are noted and confirmed
in the subsequent Board Meeting.
The agenda items along with notes and information thereto
(except for the price sensitive information, which is either
placed at the meeting or sent just before meeting) as provided in
Secretarial Standard (SS-1) on “Meeting of the Board of Directors”
read with SEBI (LODR) Regulations, 2015 and Companies Act,
2013, are circulated to all Board Members well in advance before
the Board Meetings. Additional agenda in the form of ‘Other
Business” are included with the permission of the Chairman and
with the consent of the majority of the Independent Directors
present at the meeting.
B. Details of Board of Directors and their attendance is as follows:
Director
Position & Category
No. of
No. of Board
Last AGM
No. of
No. of
No. of Board/
No. of Board /
Board
Meetings
Attended
Directorships
Directorships
Committees
Committees
Meetings
Attended
in Private
in Public
in Which the
in Which the
Held
Companies
Companies
Director is
Director Is
$Mr. Anil Singhvi
Chairman & Independent
Director
Mr. Vinod Kumar
Managing Director &
Padmanabhan
Chief Executive Officer
[Executive/ WTD]
Ms. Nisha Dutt
Independent Director
Ms. Poornima
Independent Director
Prabhu
*Mr. George
Independent Director
Zacharias
6
6
6
6
5
6
6
4
6
4
** Mr. Shiva
Whole-Time Director &
NA
NA
Shankar Naga
COO
Roddam
Yes
Yes
Yes
Yes
Yes
NA
4
-
1
-
-
-
6
2
1
1
2
1
Chairman
Member
1
-
-
1
-
-
5
2
1
2
2
-
Details of Directorships along with category held by Directors in other Listed Entities:
Name of the Director
Name of the Listed Entity
Category of Directorship
Mr. Vinod Kumar Padmanabhan
Nil
Nil
Mr. Anil Singhvi
Hindustan Construction Company Limited
Independent Director
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. George Zacharias
Shree Digvijay Cement Co Limited
Executive, Non-Independent Director
Nil
Nil
Nil
Nil
Matrimony.com Limited
Non-Executive, Independent Director
** Mr. Shiva Shankar Naga Roddam
Nil
Nil
Notes:
Includes both Listed and Unlisted Public Companies and includes the Directorship details held in Subex Limited.
Memberships/Chairmanships of only Audit Committee and Stakeholders Relationship Committee in public companies (listed and unlisted) including
Subex Limited is considered as per the requirements of Regulation 26 (1) (b) of SEBI (LODR) Regulations. Membership details mentioned above includes
chairmanship positions held.
* The Board of Directors at its meeting held on May 13, 2019 appointed Mr. George Zacharias (DIN: 00162570) as an Independent Director of the Company.
** The Board of Directors at its meeting held on February 07, 2020 appointed Mr. Shiva Shankar Naga Roddam (DIN: 07212118) as Whole-Time Director &
COO of the Company.
$ Mr. Anil Singhvi (DIN: 00239589) has been re-appointed as Non-Executive & Non-Independent Director of the Company with effect from June 18, 2020.
Subex Annual Report 2019-20 54
C. Number and Dates of Board Meetings
Details of meetings of the Board held during the financial
year 2019-20 are as follows:
Sl. No Board Meeting Number
Date of the Board Meeting
1.
2.
3.
4.
5.
6.
No. 1/2019-20
May 13, 2019
No. 2/2019-20
August 12, 2019
No. 3/2019-20
October 11, 2019
No. 4/2019-20
November 08, 2019
No. 5/2019-20
January 06, 2020
No. 6/2019-20
February 07, 2020
member on the Board. When such a need becomes apparent,
the NRC reviews potential candidates in terms of their expertise,
attributes, personal and professional backgrounds, and their
ability to attend meetings in India. It then places the details of
shortlisted candidates to the Board for its consideration. If the
Board approves, the person is appointed as an Additional Director
of the Company and subject to the approval of Shareholders at
the next general meeting they are appointed as a Director of
the Company either as Independent Director / Non-Executive
& Non-Independent Director / Executive Director as the case
may be.
G. Familiarization Programme for Independent Directors
D. Disclosure of relationships between directors inter-se:
There are no inter- se relationships between the Board members.
E. Details of Shareholding of Executive and Non- Executive
Directors:
Name of the Director
No. of Shares Held
% of equity
as at March 31, 2020
Mr. Anil Singhvi
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. Vinod Kumar
Padmanabhan
Mr. George Zacharias
Mr. Shiva Shankar Naga
Roddam
60,000
NIL
NIL
4,44,095
NIL
25,000
0.011
NA
NA
0.079
NA
0.004
There are no convertible instruments held by the Executive and
Non-Executive directors of the Company.
F. Term of Board Membership and Selection process
The Board, on recommendations of the Nomination &
Remuneration Committee of the Board [“NRC”], considers the
appointment and reappointment of Directors. Section 149(10)
of the Companies Act, 2013, provides that an Independent
Director shall hold office up to five consecutive years on the
Board of a Company, not liable to retire by rotation, and shall be
eligible for re-appointment for a further term at a maximum of
five years on passing of a special resolution by the Shareholders.
Section 152 of the Companies Act, 2013, states that one-third of
the Board members other than Independent Directors who are
subject to retire by rotation, shall retire every year and are eligible
for re-appointment, if approved by the Shareholders. The Non-
Executive & Non-Independent Directors including Managing
Director & Chief Executive Officer of the Company are liable to
retire by rotation and eligible for re-appointment, if approved by
the Shareholders.
Recommending any new member on the Board is the
responsibility of the NRC which consists of a majority of
Independent Directors. Given the existing composition of
the Board, the tenure as well as the years left of the existing
members to serve on the Board, and the need for new domain
expertise is reviewed by the NRC for the appointment of new
the
Pursuant to Regulation 25(7) of the SEBI (LODR) Regulations,
2015,
to provide
familiarization programme aims
independent directors with the industry scenario, the socio-
economic environment in which the Company operates, the
business model, the operational and financial performance of
the Company, significant developments to enable them to take
well informed decisions in a timely manner. The familiarization
programme also seeks to update the directors on the roles,
responsibilities, rights and duties under the Companies Act,
2013 and other statutes. Mr. George Zacharias was appointed
as Independent Director by the Board at its meetings held on
May 13, 2019. 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 Directors 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 Board’s decision-making process.
The following are the core skills, expertise and competencies
for effective functioning of the Company which are currently
available with the Board:
Competencies
Description
/ Skills
Finance and
Financial management, Capital
allocation,
Governance
accounting, financial reporting, Compliance, best
practices in governance, ethics and values to
enhance the value of the stakeholders
Strategy
Management decisions, branding, operational
integration, understanding diverse business
environments, economic conditions and regulatory
framework
Sales and
marketing
Developing strategies for increasing market share,
Sales growth, expanding global markets and
enhance reputation of the organisation
Personnel and
People practices and policies, geographic, cultural
Leadership
and economic conditions and driving strengths
and talent, succession planning, risk management
and long term growth.
Subex Annual Report 2019-20 Mr. Anil Singhvi, Chairman & Independent Director (Non-
Executive & Non-Independent Director of the Company with
effect from June 18, 2020) is a Chartered Accountant, and has
over three decades of experience in the corporate sector and
has rich expertise in financial, strategic planning for business
and related aspects. Apart from Subex Limited he is also on the
board of reputed companies.
Mr. Vinod Kumar Padmanabhan, Managing Director & CEO has
over two decades of experience in the corporate world and
has spearheaded several initiatives that helped the Company
engage with its customer as a long-term strategic partner. He
is also involved in the field of Sales, customer interaction and
negotiation wherever 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 Bachelor
of Arts and a Law degree and provides her valuable advice to
the Board and assists in the decision making related to the Legal
and Governance aspects. She has served at Lodha Ventures
Holdings Pvt Ltd., as Head – Legal and as Of Counsel at J. Sagar
Associates. She has rich experience in corporate law, including
mergers and acquisitions, divestment and litigation settlement.
Ms. Nisha Dutt, Independent Director holds a Master’s in Business
Administration 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.
Mr. George Zacharias has over three decades of diverse and
successful work experience. He holds a graduate degree
in Chemical Engineering and a PG Diploma in Business
Management. He has worked with reputed companies across
and assists the management in decision making process
concerning with the business strategy and operational matters.
Mr. Shiva Shankar Naga Roddam is the Whole-Time Director
& Chief Operating Officer responsible for Sales, Marketing,
Engineering & Delivery of Subex Group who has over two
decades of experience in Telecommunications, Cloud and PaaS.
He comes with extensive international experience and ability
to scale businesses in competitive environments, particularly
around the SaaS space. He holds a degree in Business
Management with specialization in Sales & Marketing.
55
business and policy decisions are considered by the NRC of
the Company, for appointment as Independent Director on
the Board. The NRC, inter alia, considers skills, qualifications,
positive attributes, area of expertise, number of Directorship(s)
and Membership(s) held in other companies by such persons, in
accordance with Company’s policies on selection of Directors.
As required under the Companies Act, 2013, one meeting of the
Independent Directors of the Company was held on February
07, 2020.
All Independent Directors have given declarations that they
meet the criteria of Independence as laid down under section
149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the
Listing Regulations. In the opinion of the Board, the Independent
directors, fulfil the conditions of Independence specified in
section 149(6) of the Companies Act, 2013 and Regulation 16(1)
(b) of the Listing Regulations.
I. Directors Remuneration
The Company has a policy for the remuneration of Directors
including Independent Directors. The remuneration policy lays
down principles and parameters to ensure that remunerations
are competitive, reasonable, and in line with corporate and
individual performance. The Executive Director is appointed by
Shareholders’ resolution which includes their remuneration to be
paid to them which is in line with the statutory requirements and
Company’s policies. The annual remuneration is recommended
by the Nomination & Remuneration Committee to the Board
for its consideration. While recommending the remuneration,
the committee also takes into account corporate performance
in a given year and individual performance parameters. The
remuneration is within the limits approved by Shareholders.
Perquisites and retirement benefits are paid in accordance
with the Company’s compensation policies, as applicable to all
employees. Independent Directors are entitled to receive sitting
fees and reimbursement of any expenses for attending meetings
of the Board and its Committees. The Remuneration paid by the
Company is in conformity with the provisions of the Companies
Act, 2013, and has been considered and approved by the Board
and the Shareholders. The Company has not granted any stock
options to Independent Directors.
Details of the remuneration paid to the Directors (Executive/
Non-Executive/Independent Directors) as
required under
the SEBI (LODR) Regulation, 2015 as well as under the
Companies Act, 2013 are provided as part of this report and
in Form MGT-9, which forms part of the Board's Report
as 'Annexure D' and is placed on the Company’s website
https://www.subex.com/investors/shareholder-services/.
H.
Independent Directors
III. AUDIT COMMITTEE
As on date, the Company has three Independent Directors
including two Women Independent Directors on the Board. All
the Independent Directors satisfy the criteria of Independence
as laid down in the Companies Act, 2013 and the SEBI (LODR)
Regulation, 2015.
Considering the requirement of skill sets on the Board, eminent
people having an independent standing in their respective
profession, and who can effectively contribute to the Company’s
The constitution of the Audit Committee complies with the
requirement under Section 177 of the Companies Act, 2013
and Regulation 18 of SEBI (LODR) Regulations. Mr. Anil Singhvi,
Chairman of the Audit Committee (upto June 17, 2020) was
present at the 25th Annual General Meeting. The Company
Secretary acts as the Secretary to the Committee. The Chief
Financial Officer, the Senior Management, the Statutory Auditors
and the Internal Auditors are invited to attend all the meetings
of the Committee.
Subex Annual Report 2019-20 56
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, the appointment, re-
appointment, terms of appointment or reappointment and,
if required, the replacement or removal of the statutory
auditor and their remuneration.
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;
8. Reviewing, with the management, performance of statutory
and internal auditor’s adequacy of the internal control
systems
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
Subex Annual Report 2019-20 24. Approval or any subsequent modification of transactions of
*dates on which the Quarterly/Half Yearly/Year ended results for the
the Company with related parties.
financial year 2019-20 were considered.
25. Approval / recommendation to the Board of the transactions
other than transactions referred to in Section 188.
The Attendance of the directors at the Audit Committee
Meetings during the Financial Year 2019-20 were as follows:
57
Ms. Poornima Prabhu
Independent Director
A. Terms of Reference
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 ` 1 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 ` 100 crore or 10% of the asset size of the
subsidiary, whichever is lower including existing loans /
advances / investments.
terms of
The Audit Committee charter containing
reference is also available on the Company’s website at
https://www.subex.com/investors/shareholder-services/.
B. Composition of the Audit Committee as on March 31, 2020
Sl.
No
1.
2.
3.
4.
5.
Name of the Director
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt
Independent Director
Mr. Vinod Kumar
Padmanabhan
Managing Director & CEO
Mr. George Zacharias*
Independent Director
*Appointed as a member of the committee w.e.f February 07, 2020.
Further, the Board at its meeting held on May 11, 2020
re-constituted the committee as mentioned below w.e.f June
18, 2020:
Sl.
No
1.
2.
3.
4.
Name of the Director
Category
Ms. Nisha Dutt (Chairperson)
Independent Director
Mr. Anil Singhvi
Non-Executive & Non-
Independent Director
Ms. Poornima Prabhu
Independent Director
Mr. George Zacharias
Independent Director
C. Meetings and Attendance of the Committee during the Year
During the financial year 2019-20, the following meetings of the
Audit Committee were held:
Sl.
No
1.
2.
3.
4.
5.
Meeting No.
Date of the meeting
No. 1/ 2019-20
No. 2/ 2019-20
No. 3/ 2019-20
No. 4/ 2019-20
No. 5/ 2019-20
May 13, 2019*
August 12, 2019*
November 08, 2019*
January 06, 2020
February 07, 2020*
Name of the Director
No. of Audit
No. of Audit
Committee
Committee
Meetings Held
Meetings Attended
Mr. Anil Singhvi (Chairman)
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. Vinod Kumar
Padmanabhan
5
5
5
5
5
3
5
5
Mr. George Zacharias
NA
NA
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. 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:
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 external agency and
review its implementation and compliance.
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 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.
Subex Annual Report 2019-20 58
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.
Name of the Director
No. of
No. of Nomination
Nomination &
& Remuneration
Remuneration
Committee
Committee
Meetings Attended
Meetings Held
Ms. Nisha Dutt
Mr. Anil Singhvi
Ms. Poornima Prabhu
3
3
3
2
3
3
8. Recommend to the Board, all remuneration, in whatever
form, payable to senior management.
D. Performance Evaluation
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/investors/shareholder-services/.
B. Composition of the Nomination & Remuneration Committee
as on March 31, 2020 is as follows:
Sl.
No
1
2
3.
Name of the Director
Category
Ms. Nisha Dutt (Chairperson)
Independent Director
Mr. Anil Singhvi
Independent Director
Ms. Poornima Prabhu
Independent Director
The Board at its meeting held on May 11, 2020 re-constituted
the committee as mentioned below w.e.f June 18, 2020:
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.
Name of the Director
Category
V. Remuneration Policy
Sl.
No
1
2
Ms. Poornima Prabhu
Independent Director
(Chairperson)
Mr. Anil Singhvi
Non -Executive, Non
Independent Director
3.
Ms. Nisha Dutt
Independent Director
C. Meetings and Attendance of the Committee during the Year
During the financial year 2019-20, the following meetings of the
Nomination & Remuneration Committee were held:
Sl.
No
1.
2.
3.
Meeting No.
Date of the meeting
No. 1/2019-20
No. 2/2019-20
No. 3/2019-20
May 13, 2019
August 12,2019
February 07, 2020
Ms. Poornima Prabhu, Chairperson of the Nomination &
Remuneration Committee was present at the 25th Annual
General Meeting.
Attendance of the members of the Nomination & Remuneration
Committee meetings during the Financial Year 2019-20 were
as follows:
The Remuneration Policy provides the framework to attract,
motivate and retain qualified and expert individuals that
the Company needs in order to achieve its strategic and
operational objectives. The Remuneration policy is devised in
accordance with Section 178(3) and (4) of the Companies Act,
2013 and is available on the website of the Company under
https://www.subex.com/investors/shareholder-services/. The
Company follows a compensation mix of fixed pay, benefits
and performance-based variable pay and sharing of wealth
through the Company’s stock options. Individual performance
pay is determined by combination of individual and business
performance of the Company. The Company pays remuneration
by way of salary, benefits, perquisites and allowances (fixed
component) and performance incentives (variable component)
to its Executive Directors and Key Managerial Personnel .
A. Details of remuneration paid to all the Directors during
the year 2019-20 are as follows:
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.
Subex Annual Report 2019-20 Details of remuneration paid to the directors during the year
2019-20 are as follows:
necessarily and reasonably incurred by him wholly in
proper performance of his duties and responsibilities.
59
Name
Sitting fees
Mr. Anil Singhvi
Ms. Nisha Dutt
Ms. Poornima Prabhu
Mr. Vinod Kumar Padmanabhan
Mr. George Zacharias
Mr. Shiva Shankar Naga Roddam*
19.00
10.00
17.00
-
4.00
-
(` in Lakhs)
Salary and
perquisites
-
-
-
56.97
-
Nil#
* Mr. Shiva Shankar Naga Roddam was appointed as Whole-Time
Executive Director of the Company for the period commencing from
February 07, 2020 and to hold office until February 06, 2023 subject to
the approval of members at the 26th AGM.
# Mr. Shiva Shankar Naga Roddam draws remuneration from the
subsidiary company of Subex Limited i.e Subex Assurance LLP as per his
employment agreement with the LLP.
Remuneration of Executive Directors:
The compensation paid to the Executive Directors were
within the limits approved by the Shareholders. The elements
of the total compensation are approved by the Nomination &
Remuneration Committee within the overall limits specified
under the Companies Act, 2013. The elements of compensation
of the Executive Directors include the fixed compensation,
variable compensation in the form of annual incentive, benefits,
work related facilities and perquisites. The Nomination &
Remuneration Committee determines the annual variable
pay compensation in the form of annual incentive and annual
increment for the Executive Directors based on Company’s and
individual’s performance as against the pre agreed objectives for
the year.
Details of Remuneration of Executive Directors during the
year are given below:
Mr. Vinod Kumar Padmanabhan, Managing Director & CEO
(April 01, 2018 to March 31, 2021)
a) Tenure: 3 years (April 01, 2018 to March 31, 2021)
b) Remuneration: ` 60,00,000 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
e) Other terms and conditions including notice period and
severance fees: As per the employment agreement between
Subex Limited and Mr. Vinod Kumar Padmanabhan.
Mr. Shiva Shankar Naga Roddam, Whole-Time Executive
Director & Chief Operating Officer (February 07, 2020 to hold
office until February 06, 2023)
a. Tenure: 3 Years commencing from 07 February 2020 to
February 06, 2023 (subject to the approval of the members
at the ensuing Annual General Meeting.)
b. #Remuneration: NIL.
c. Taxes: Mr. Shiva Shankar Naga Roddam 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. All other terms and conditions including notice period and
severance fees will be as per the employment agreement
of Mr. Shiva Shankar Naga Roddam.
# Mr. Shiva Shankar Naga Roddam is paid remuneration from the
subsidiary company of Subex Limited i.e Subex Assurance LLP as per his
employment agreement with the LLP.
Details of the remuneration paid to the Directors (Executive/
Non-Executive/Independent Directors) as required under the
SEBI (LODR) Regulations, 2015 as well as under the Companies
Act, 2013 are provided in Form MGT-9, which forms part of the
Board's Report as 'Annexure D' and is placed on the website
https://www.subex.com/investors/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.
Subex Annual Report 2019-20 60
A. Composition of the Stakeholders Relationship Committee as
on March 31, 2020
Sl.
No
1
2
3.
Name of the Director
Category
Ms. Poornima Prabhu
Independent Director
(Chairperson)
Mr. Anil Singhvi
Mr. Vinod Kumar
Padmanabhan
Independent Director
Managing Director & CEO
The Board at its meeting held on May 11, 2020 re-constituted
the committee as mentioned below w.e.f June 18, 2020:
Sl.
No
1
2
3.
Name of the Director
Category
Mr. Anil Singhvi (Chairman)
Non-Executive &
Non- Independent Director
Ms. Poornima Prabhu
Independent Director
Mr. Vinod Kumar
Padmanabhan
Managing Director & CEO
B. Meetings and Attendance of the Committee during the Year
During the financial year 2019-20, the following meetings of the
Stakeholders Relationship Committee were held:
Sl.
No
1.
2.
3.
4.
Meeting No.
Date of the meeting
No. 1/2019-20
No. 2/2019-20
No. 3/2019-20
No. 4/2019-20
May 13, 2019
August 12, 2019
November 08, 2019
February 07, 2020
C. Attendance of the Directors at the Stakeholders Relationship
Committee Meetings for the Financial Year 2019-20 were as
follows:
Name of the Director
No. of
No. of
Stakeholders
Stakeholders
Relationship
Committee
Relationship
Committee
Meetings Held
Meetings Attended
4
3
4
1
4
3
4
1
Mr. Anil Singhvi
Ms. Poornima Prabhu*
Mr. Vinod Kumar
Padmanabhan
Ms. Nisha Dutt#
*Inducted as Member of Stakeholders Relationship Committee with
effect from May 13, 2019
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 ended March 31, 2020 are as follows:
Name of the Non-Executive Director
heading the Committee
Name and designation of the
Compliance Officer
Ms. Poornima
Prabhu (till June 17,
2020)
Mr. Anil Singhvi,
Chairman, Non–
Executive and
Non-Independent
Director (w.e.f June
18, 2020)
Mr. G V Krishnakanth,
Company Secretary
Number of shareholders complaints
pending at the beginning of the year
Number of shareholders complaints
received during the year
Number of shareholders complaints
redressed during the year.
Number of shareholders complaints
not solved to the satisfaction of the
shareholders
Number of shareholders complaints
pending at end of the year
0
0
0
0
0
VII. ESOP COMMITTEE (Compensation Committee)
During the financial year 2018-19, the 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.
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 as 'Annexure A' to the Board's Report.
VIII.CORPORATE SOCIAL RESPONSIBILITY
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:
#Stepped down as Member of Stakeholders Relationship Committee
with effect from May 13, 2019
i.
formulate and recommend to the Board of Directors of
the Company, a Corporate Social Responsibility Policy
Subex Annual Report 2019-20 Independent Director
Managing Director & CEO
B. Meetings and Attendance during the Year
which shall indicate the activities to be undertaken by the
Company as specified in Schedule VII of The Companies
Act, 2013;
ii.
recommend the amount of expenditure to be incurred on
the activities referred to in clause (i); and
iii. monitor the Corporate Social Responsibility Policy of the
Company from time to time.
A. Composition of the CSR Committee as on March 31, 2020
Name of the Director
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Sl.
No
1.
2.
3.
Ms. Nisha Dutt
Mr. Vinod Kumar
Padmanabhan
4.
Mr. Shiva Shankar Naga
Whole-Time Director & COO
Roddam*
* Mr. Shiva Shankar Naga Roddam was inducted into the Committee w.e.f
February 07, 2020.
B. Meetings and Attendance of the Committee during the Year
2019-20:
There were no meetings of the Committee held during the
financial year under consideration.
Pursuant to the provisions of Section 198 of the Companies Act,
2013, the Company has incurred losses during the preceding
three financial years and hence no amounts were required to be
allocated / contributed for undertaking CSR activities.
Though it is not mandatory to incur any expenditure on CSR
activities, the Subex Charitable Trust (SCT) was voluntarily set
up to undertake welfare activities for the under privileged and
the needy in the society. SCT is managed by trustees elected
amongst the employees of the Company. The details of the
activities conducted during the year, have been provided in a
separate section in this Annual Report as 'Annexure G' to the
Board's Report.
The CSR Charter and the Policy of the Company are available
on the website of the Company at https://www.subex.com/
investors/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
61
three key elements i.e. Risk Assessment, Risk Management and
Risk Monitoring.
A. Composition of the Risk Management Committee as on
March 31, 2020
Sl.
No
1.
2.
3.
Name of the Director
Category
Mr. Anil Singhvi (Chairman)
Independent Director
Ms. Nisha Dutt
Independent Director
Mr. Vinod Kumar
Padmanabhan
Managing Director & CEO
The committee met once during the financial year 2019-20 at
its meeting held on August 12, 2019 to identify the risks which
could be foreseen and mitigate the same.
Name of the Director
No. of Risk
No. of Risk
Management
Management
Committee
Committee
Meetings Held
Meetings attended
1
1
1
1
1
1
Mr. Anil Singhvi
Ms. Nisha Dutt
Mr. Vinod Kumar
Padmanabhan
X. INDEPENDENT DIRECTOR
During the year under review, the Independent Directors met
once, inter alia, to:
Review the performance of the Non-Independent Directors
and the Board of Directors as a whole;
Assess the quality, quantity and timeliness of flow of
information between the Management of the listed entity
and the Board of Directors that is necessary for the Board
to effectively and reasonably perform their duties.
XI. GENERAL BODY MEETINGS
A. Location and Time of the Last Three AGMs
Year
Date of AGM Venue
Time
2016-17
July 28, 2017
Le Meridien, “Coronet”
3:00 PM
hall, No. 28 Sankey Road,
Bengaluru-560 052
2017-18
July 31, 2018
“The Grand Ball Room”,
2:00 PM
Hotel Lalit Ashok, Kumara
Krupa High Grounds,
Bengaluru-560 001
2018-19
July 04, 2019
“The Grand Ball Room”,
2:00 PM
Hotel Lalit Ashok, Kumara
Krupa High Grounds,
Bengaluru-560 001
Subex Annual Report 2019-20 62
Details of the Special Resolutions passed at the Last Three AGMs:
Date of Annual
No. of special
Details of Resolutions pertaining to
General
Meeting
resolutions
passed
July 28, 2017
3
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.
July 31, 2018
4
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.
July 04, 2019
1
1. Provision of interest free loan
by the Company for purchase
of its own shares by the Trust
/Trustees for the benefit of
Employees under the Subex
Stock Option Scheme 2018
During the financial year ended March 31, 2020, there were no
special resolutions passed through postal ballot. The Company
proposed to have the special resolution passed through Postal
Ballot for the purpose of Reduction of Share Capital of the
Company through e-voting procedure, which commenced on
May 27, 2020 and concluded on June 25, 2020, in accordance
with the MCA General Circular No. 14/ 2020 dated April 08, 2020
and Circular No. 17/2020 dated April 13, 2020 (“MCA Circulars”),
in view of the current extraordinary circumstances due to the
COVID-19 pandemic requiring social distancing.
In compliance with the requirements of the MCA Circulars,
hard copies of the Postal Ballot Notice along with Postal Ballot
Forms and pre-paid business envelope were not sent to the
members for this Postal Ballot and members were required
to communicate their assent or dissent through the remote
e-voting system only. Please refer https://www.subex.com/
investors/capital-reduction/ for the Postal ballot notice and the
procedure for e-voting.
B. Location and Time of the Last Three EGMs
During the last three years, there were no Extra – Ordinary
General Meetings held. However, the details of the latest Extra-
Ordinary General Meetings (EGM's) held have been stated.
Year
Date of EGM
Venue
Time
2011-12
December 28, 2011
Registered office of the
11.30 A M
Company
2012-13
June 28, 2012
Registered office of the
11.30 A M
Company
2012-13
August 17, 2012
Registered office of the
11.30 A M
Company
C. Postal Ballot during year 2019-20
There were no other meetings held during the year under review
nor were any resolutions passed through postal ballot during the
financial year 2019-20.
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 (English) and Vishwavani (Kannada). The complete
financial statements are posted on the Company’s website
https://www.subex.com/ (click on investors/announcement-
filing/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
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 email addresses provided by them and made available to
us by the Depositories. The Company during the said financial
year 2019-20, had scheduled the Investor calls to discuss on
the Earnings of the Company for relevant quarters which
were scheduled on August 14, 2019, November 11, 2019 and
February 10, 2020 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://www.subex.com/ (click on investors/announcement-
filing/investor-analyst-call).
Subex Annual Report 2019-20 In view of the COVID-19 pandemic, the Ministry of Corporate
Affairs (“MCA”) vide circular no. 20/2020 dated May 05, 2020
read with General Circular No. 14/2020 dated April 08, 2020
and General Circular No. 17/2020 dated April 13, 2020 (the ‘MCA
Circulars’), provided certain relaxations for companies, including
conducting of the Annual General Meeting (AGM) through
Video Conferencing (VC) or through Other Audio-Visual Means
(OAVM) (‘VC/OAVM’), if AGMs of such companies are conducted
during the calendar year 2020. The said MCA Circulars have also
dispensed with the printing and dispatch of annual reports to
shareholders. In line with the above MCA Circulars, SEBI vide
its circular no. SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated May
12, 2020 dispensed with the requirement of Regulation 36 (1)(b)
and (c) of the SEBI (LODR) Regulations, 2015, for listed entities,
who conduct their AGMs during the calendar year 2020, which
otherwise prescribes that a listed entity shall send a hard copy of
the statement containing salient features of all the documents,
as prescribed in Section 136 of the Companies Act, 2013 to the
shareholders who have not registered their email addresses and
hard copies of full annual reports to those shareholders, who
request for the same, respectively.
Accordingly, this year, in view of spread of the COVID-19
pandemic and also to support the “Green Initiative in Corporate
Governance”, an initiative taken by the MCA, the Company has
decided to send soft copies of Annual Report 2019-20 (including
AGM Notice) to those shareholders whose email addresses are
registered with the Depository Participants and / or with the
Company’s Registrars & Transfer Agents.
In terms of above MCA Circulars and in view of the current
extraordinary circumstances due to the COVID-19 pandemic
requiring social distancing, the Company is taking measures to
allow Members to vote through the mechanism of e-voting or
other electronic modes in accordance with the provisions of
the Companies Act, 2013 and rules made thereunder, without
holding a AGM that requires physical presence of Members at a
common venue.
With respect to detailed procedure for Remote e-voting or
voting through electronic mode and attending the AGM through
VC/OAVM, please refer the Notes and instructions annexed to
Notice of 26th AGM.
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 Ind AS has been made in note 31 to the Standalone
and Note 31 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
63
https://www.subex.com/investors/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
their independence. The Company has received the relevant
declarations in this regard from its Independent Directors of the
Company.
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 2019-20, National Stock Exchange of India
Limited [“NSE”] had sent letters to the Company for non-
compliance with respect to Regulation 17 (1) (c) of the SEBI
(LODR) Regulations for the delay in appointment of the 6th
Director. The Company has submitted its responses against
the Letters received by NSE enumerating the reasons for delay
in compliance with respect to Regulation 17 (1) (c) of the SEBI
LODR Regulations and sought additional time for complying
with the requirement. Further, the NSE imposed a total amount
as fine of ` 6,45,000 (` 4,60,000 & ` 1,85,000 respectively)
for the delay in appointing the 6th Director on the Board. The
Company submitted its response to NSE stating the reasons for
non-compliance and urged NSE to waive the fine imposed and
sought further time till March 31, 2020, to enable it to comply
with the Regulation 17 (1) (c) of the SEBI (LODR) Regulations,
2015. The NSE vide its letter dated June 23, 2020 intimated the
Company that its request for waiver of fine was not considered
favorably and the Company remitted the fine to NSE on July
08, 2020.
D. VIGIL MECHANISM AND WHISTLE BLOWER MECHANISM
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.
Adequate safeguards have been provided in the policy to
prevent victimization of anyone who is using this platform and
Subex Annual Report 2019-20 64
direct access to the Chairperson 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 available on the website of the Company at
https://www.subex.com/investors/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/investors/shareholder-
services/.
The Annual Financial Statements of material subsidiaries are
tabled before the Audit committee and the Board.
F. DISCLOSURE OF COMMODITY PRICE RISKS AND
COMMODITY HEDGING ACTIVITIES/LIQUIDITY
The Company does not deal in commodities and hence
disclosure relating to commodity price risks and commodity
hedging activities is not applicable. The Company is exposed
to foreign exchange risk on account of import and export
transactions entered. The Company has not done any hedging
activity during the year ended March 31, 2020 as there is a natural
hedge between exports and imports. However, the Company
has initiated hedging from May 2020 for FY20-21.
The liquidity position of the Company was not impacted during
the said financial year.
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
2019-20.
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 (LODR) Regulations, 2015 and the same forms a part of this
report as Annexure 1.
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 2.
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 M/s. S.R. Batliboi &
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, 2020, is as follows:
(` in Lakhs)
Fees for audit and related services paid to S.R.
Batliboi & Associates LLP
Other fees paid to S.R. Batliboi & Associates LLP
and Affiliate firms and to entities of the network of
which the statutory auditor is a part.
Total fees
111
71
182
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 (“the
ICC”) 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 did
not receive any complaints.
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 workplace, in business practices and in dealing with
stakeholders. The Code gives guidance through examples on
the expected behavior from an employee in a given situation
and the reporting structure.
During the said Financial year there were no changes made
to the Code. All the members of the Board and the Senior
Management Personnel have affirmed compliance to the
Code, as at March 31, 2020. A declaration to this effect, signed
by the Managing Director & CEO forms part of this report as
Annexure 3. The Code has been posted on the Company’s
website under
link https://www.subex.com/investors/
the
shareholder-services/ .
M. RECOMMENDATION OF THE COMMITTEES
There were no instances in the financial year 2019-20, where
Subex Annual Report 2019-20
65
the Board had not accepted any recommendations of any
Committees of the Board which is mandatorily required.
XIV. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis is presented in a
separate section forming part of the Annual Report.
XV. GENERAL SHAREHOLDER INFORMATION
General shareholder information is provided in the “Shareholders'
Information” Section of the Annual Report.
XVI. COMPLIANCE WITH CORPORATE
GOVERNANCE REQUIREMENTS AND
PRACTISING COMPANY SECRETARIES
CERTIFICATE
The Company has complied with disclosure requirements,
wherever applicable, as specified in clauses (b) to (i) of sub
regulation (2) of Regulation 46 of SEBI (LODR) Regulations, 2015
and Regulation 17 to 27 of SEBI (LODR) Regulations, 2015, except
for the delay in appointing the 6th Director on the Board of the
Company pursuant to Regulation 17(1)(c) of the said Regulations.
The Company has appointed the 6th Director with effect from
February 07, 2020.
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.
Part E of Schedule II of the SEBI (LODR) Regulations, 2015 states
that the discretionary requirements provided therein may be
implemented as per the Company’s discretion. However, the
disclosures of compliance with mandatory requirements and
adoption (and compliance)/non-adoption of non-mandatory
requirements shall be made in the section on Corporate
Governance in the Annual Report. The Company has complied
with the following non-mandatory requirements:
A. The Board
The Company appointed Mr. Anil Singhvi, Independent Director
(Non-Executive & Non-Independent Director w.e.f. June 18,
2020) as the Non-Executive Chairman of the Company at its
meeting held on May 25, 2017. The Company reimburses the
expenses incurred by the Chairman for discharge of his duties
that are attributable to the Company on a regular basis pursuant
to the provisions of Regulation 27(1) of SEBI (LODR) Regulation,
2015.
B. Shareholders’ Rights
The Company communicates with investors regularly through
emails, telephone calls and face to face meetings. The Company
publishes the quarterly/half-yearly/annual 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.
XVII. COMPLIANCE WITH DISCRETIONARY
D. Reporting of Internal Auditor
REQUIREMENTS PROVIDED UNDER PART
E OF SCHEDULE II OF THE SEBI (LODR)
REGULATIONS, 2015
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
Anil Singhvi
Chairman, Non-Executive, &
Non-Independent Director
DIN: 00239589
Place: Mumbai
Date: August 10, 2020
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN: 06563872
Place: Bengaluru
Date: August 10, 2020
Subex Annual Report 2019-20
66
ANNEXURE 1
CEO and CFO certification in terms of Regulation 17 (8) of the SEBI (LODR) Regulations, 2015
To,
The Board of Directors
Subex Limited
Dear Sirs,
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, 2020 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)
ii)
iii)
Significant changes in internal control, if any, over financial reporting during the year;
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
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.
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN: 06563872
Date: May 11, 2020
Place: Bengaluru
For Subex Limited
Venkatraman G S
Chief Financial Officer
Date: May 11, 2020
Place: Bengaluru
Subex Annual Report 2019-20 ANNEXURE 2
(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)
CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS
67
To
The Members,
Subex Limited
CIN L85110KA1994PLC016663
RMZ Ecoworld, Outer Ring Road,
Devarabisanahalli, Bangalore-560 103
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, 2020, 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.
In our opinion and to the best of our information and according to the verifications [including Directors Identification Number (DIN) status
at the portal www.mca.gov.in] as considered necessary and explanations furnished to us by the Company & its officers, we hereby certify
that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31st March 2020 have been
debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India,
Ministry of Corporate Affairs, or any such other Statutory Authority
Sl No. Name of the Director
1.
2.
3.
4.
5.
6.
Anil Chandanmal Singhvi
Poornima Kamalaksh Prabhu
Nisha Dutt
Vinod Kumar Padmanabhan
George Zacharias
Shiva Shankar Naga Roddam
DIN
00239589
03114937
06465957
06563872
00162570
07212118
Designation
Chairman and Independent Director
Independent Director
Independent Director
Managing Director & CEO
Independent Director
Whole-Time Director & COO
Ensuring the eligibility of for the appointment / continuity of every Director on the Board is the responsibility of the management of the
Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to
the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the
Company.
For BMP & Co. LLP
Company Secretaries
Pramod S M
Partner
FCS 7834 / CP No. 13784
UDIN: F007834B000591516
Date: August 10, 2020
Place: Bangalore
Subex Annual Report 2019-20
68
Annexure
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
Reference
i.
ii.
iii.
iv.
v.
vi.
Minutes of Nomination & remuneration
Circular No. LIST/COMP/14/2018-19 dated June 20, 2018 issued by BSE & NSE/
Committee
CML/2018/02 dated June 20, 2018
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
Section 164(2) of the Companies Act, 2013 read with Rule 14(2) of the Companies
(Appointment and Qualifications of Directors) Rules, 2014
DIR-9 filed by the Company regarding default
Section 164(2) of the Companies Act, 2013 read with Rule 14(2) of the Companies
under section 164(2)
(Appointment and Qualifications of Directors) Rules, 2014
List of disqualified directors placed on website of
Section 164(2)
Ministry of Corporate Affairs at http://mca.gov.in/
MinistryV2/disqualifieddirectorslist.html
vii.
Directors debarred/disqualified through SEBI order
Section 11B of the SEBI Act, 1992
as per list placed at BSE Limited and NSE Limited at
https://www.bseindia.com/investors/debent.aspx
https://www1.nseindia.com/invest/content/
regulatory_actions.htm
ANNEXURE 3
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, 2020.
Place: Bengaluru
Date: August 10, 2020
For Subex Limited
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN: 06563872
Subex Annual Report 2019-20
BUSINESS RESPONSIBILITY REPORT
Introduction
This report is in accordance with Regulation 34 of the Securities
& Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (“SEBI LODR Regulations”),
which includes our responses to questions on practices covering
the initiatives taken by the Company from an Environmental,
Social and Governance perspective.
Subex is a pioneer in enabling Digital Trust for businesses across
the globe.
Founded in 1994, we have been part of the evolution of mobile
technology. Today, we are consultants to Global Telecom
Carriers for operational excellence and business transformation
Section A – General Information about the Company
69
by driving new revenue models, enhancing the customer
experience and optimizing the enterprise.
Subex leverages its award-winning analytics solutions in areas
such as Revenue Assurance, Fraud Management, Network Asset
Management, Capacity Management, Partner Settlement and
Analytics. It also complements them through its newer solutions
such as IoT Security, Digital Identity Management and Anomaly
Detection. Subex also offers scalable Managed Services and
Business Consulting services.
We have a global presence, employing over 800+ people, with
headquarters in Bengaluru, India and offices in Singapore, UK,
USA, Bangladesh and UAE.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Corporate Identity Number (CIN)
L85110KA1994PLC016663
Name of the Company
Registered address
Website
E-mail Id
SUBEX LIMITED
RMZ Ecoworld Outer Ring Road, Devarabisanahalli, Bengaluru- 560 103
https://www.subex.com/
investorrelations@subex.com
Financial Year reported
April 01, 2019 to March 31, 2020
Sector(s) that the Company is engaged in (industrial
IT Software, Services, and related activities. NIC Codes – 62011, 62013
activity code-wise)
List three key products / services that the Company
Please refer page 82 of the Annual Report (forming part of the Management Discussion
manufacture / provides (as in Balance Sheet)
and Analysis)
Total number of locations where business activity is undertaken by the Company
i) Number of International Locations (Provide details of major 5)
United Kingdom
United States of America
Singapore
United Arab Emirates
Canada
ii) Number of National Locations: 1 (One), the Registered Office of the Company located at Bengaluru, India.
10.
Markets served by the Company - Local / State /
India, Americas, EMEA, Asia Pacific
National / International
Section B – Financial Details of the Company (on a Consolidated basis) (as on 31.3.2020)
1.
2.
3.
4.
Paid up Capital (INR)
As on March 31, 2020, the paid-up capital of the Company stood at
` 5,620,029,350 consisting of 562,002,935 equity shares of ` 10 each.
Total turnover (INR in Lakhs)
Total Profit/ (loss) after Taxes (INR in Lakhs)
` 36,498
` (26,915)
Total spending on Corporate Social Responsibility (CSR) as
NIL (See point no. 5)
percentage of profit after tax (%)
Subex Annual Report 2019-20 70
5.
List of activities in which expenditure in point no. 4 has been incurred
Pursuant to the provisions of Section 198 of the Companies Act, 2013, the company has incurred losses during the preceding three financial years,
hence no amounts were required to be allocated / contributed for undertaking CSR activities.
Though it is not mandatory to incur any expenditure on CSR activities, the Subex Charitable Trust ("SCT") was voluntarily set up to undertake
welfare activities for the under privileged and the needy in the society. SCT is managed by trustees elected amongst the employees of the
Company. The details of the activities conducted during the year, have been provided in a separate section in this Annual Report as 'Annexure G'
to the Board’s Report (Annual Report on CSR Activities).
Further details on the activities undertaken by the SCT are contained under Principles 4 & 8.
Section C – Other Details
1.
Does the Company have any Subsidiary Company / Companies?
Yes, the Company has Ten subsidiaries, namely:
1. Subex Assurance LLP
2. Subex Digital LLP
3. Subex Technologies Limited
4. Subex Americas Inc.
5. Subex (UK) Limited
6. Subex Middle East (FZE)
7. Subex Bangladesh Private Limited
8. Subex Azure Holdings Inc.
9. Subex (Asia Pacific) Pte Limited
10. Subex Inc.
2.
Do the Subsidiary Company / Companies participate in the BR initiatives of the parent company? If yes, then indicate the number of such
subsidiary company(s).
Yes. As the business responsibility initiatives are run at a group level, all subsidiaries participate in the initiatives, to the extent relevant.
3.
Do any other entity / entities (e.g. suppliers, distributors etc) that the Company does business with participate in the BR initiatives of the
Company ? If yes, then indicate the percentage of such entity / entities? (Less than 30%, 30-60%, more than 60%)
We do not mandate that our suppliers and partners participate in the Company’s BR initiatives. However, they are encouraged to do so.
Section D – BR Information
1. Details of Director / Directors responsible for BR
a) Details of the Director / Director responsible for implementation of the BR policy / policies
Sl.
No
1.
Name
Designation
DIN
Mr. Vinod Kumar Padmanabhan
Managing Director & CEO
06563872
b) Details of the BR Head
S l .
Particulars
No.
1
2
3
4
5
DIN
Name
Designation
Telephone No.
E-mail ID
Details
06563872
Mr. Vinod Kumar Padmanabhan
Managing Director & CEO
080-66598700
investorrelations@subex.com
Subex Annual Report 2019-20
71
2. Principle-wise (as per NVGs) BR policy / policies
As per Regulation 34 of the Listing Regulations read with SEBI Circular No CIR/CFD/CMD/10/2015 dated November 04, 2015, the nine
areas of Business Responsibilities are as follows:
Principle 1 (P1)
Principle 2 (P2)
Principle 3 (P3)
Principle 4 (P4)
Principle 5 (P5)
Principle 6 (P6)
Principle 7 (P7)
Principle 8 (P8)
Principle 9 (P9)
Businesses should conduct and govern themselves with Ethics, Transparency and Accountability.
Businesses should provide goods and services that are safe and contribute to sustainability throughout their life
cycle.
Businesses should promote the well-being of all employees.
Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are
disadvantaged, vulnerable and marginalized.
Businesses should respect and promote human rights.
Businesses should respect, protect, and make efforts to restore the environment.
Businesses when engaged in influencing public and regulatory policy, should do so in a responsible manner.
Businesses should support inclusive growth and equitable development.
Businesses should engage with and provide value to their customers and consumers in a responsible manner.
Questions
P1
P2
P3
P4
P5
P6
P7
P8
P9
Sl.
No
1.
2.
3.
4.
6.
7.
8.
9.
Do you have a policy / policies for…
Has the policy being formulated in
consultation with the relevant stakeholders
Does the policy conform to any national /
international standards? If yes, specify?
Has the policy been approved by the Board?
If yes, has it been signed by MD / Owner /
CEO / appropriate Board Director
5.
Does the Company have a specified
committee of the Board / Director / Official
to oversee the implementation of the policy
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Indicate the link for the policy to be viewed
The policies are available on the Company’s website –
on line?
https://www.subex.com/investors/shareholder-services/
Has the policy been formally communicated
to all relevant internal and external
stakeholders?
Does the Company have in-house structure
to implement the policy / policies
Does the Company have a grievance
redressal mechanism related to the policy /
policies to address stakeholders’ grievances
related to the policy / policies.
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
10.
Has the Company carried out independent
audit / evaluation of the working of this
policy by an internal or external agency?
Y = Yes
3. Governance related to BR
Indicate the frequency with which the Board of Directors, Committee of the Board or CEO meet to assess the BR performance of the Company.
Within 3 months, 3-6 months, Annually, More than 1 year
3 to 6 months.
Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published
The Company is publishing its Business Responsibility Report from this financial year. Subject to the provisions of the SEBI (LODR) Regulations, 2015,
BR will be published annually, as part of the Annual Report and can be accessed at https://www.subex.com/investors/shareholder-services/.
Subex Annual Report 2019-20
72
SECTION E – Principle-wise performance
c. Blockchain for Digital Trust in Telecom Wholesale Business:
Principle 1 : Businesses should conduct and govern
themselves with Ethics, Transparency and Accountability
1. Does the policy relating to ethics, bribery and corruption
cover only the Company? Yes / No Does it extend to the
Group / Joint Ventures / Suppliers / Contractors / NGOs /
Others?
Subex has zero tolerance towards code of conduct of our
employees across all locations. Our Code of Conduct and
Whistle Blower policy covers our employees, contractors,
suppliers and other stakeholders.
2. How many stakeholder complaints have been received
in the past financial year and what percentage was
satisfactorily resolved by the management? If so, provide
details thereof, in about 50 words or so
In FY 2019-20, we received one complaint as part of
our Whistleblower policy. Soon after it was received, the
resolution mechanism as defined in the policy kicked in and
the compliant was resolved. Apart from the aforestated, no
complaints have been received.
Principle 2 : Businesses should provide goods and services
that are safe and contribute to sustainability throughout their
life cycle
1.
List upto 3 of your products or services whose design has
incorporated social or environmental concerns, risks and /
or opportunities
Subex is a provider of solutions that help build trust in the
digital ecosystem to telecom operators around the world.
Subex views digital trust as a multi-dimensional matrix that
covers privacy, security and risk mitigation.
Following are 3 solutions which Subex delivers to its clients that
have a significant impact on social risks:
a.
IoT Security:
Cyber security risks continue to pose a significant challenge
to the increasingly connected world we live in. Subex
Secure is a scalable and comprehensive threat detection,
mitigation, and management solution for assets, data and
networks connected to the IoT eco-system. Subex Secure
is aimed at securing smart cities, critical infrastructure,
manufacturing plants, oil and gas.
b. Fraud Management:
their wings
Digital transformation has resulted in telecom operators
spreading
far and wide beyond basic
connectivity services. Fraudsters exploit these digitally
enabled services for theft from citizens and for criminal
activity such as terrorism. Subex’s ROC Fraud Management
solution enables telecom operators to prevent, detect
and mitigate the impact of fraud on its customers and
thus makes a significant contribution towards making our
societies safer.
Telecom wholesale business is fraught with faceless,
boundary less fraudsters who commit large scale socially
impacting frauds such as Wangiri, IRSF and FAS frauds.
Subex leverages Blockchain to offer visibility on possible
fraud scenarios such as Wangiri, smart FAS, Short Stops,
and other wholesale fraud. It also assists in publishing
fraud mitigation evidence. It collates fraud information
from external systems to provide a consolidated view of
discrepancies due to fraud, rate and volume
Subex Blockchain is powered by the capabilities of an
enterprise-grade DLT
(Distributed Ledger Technology)
solution that is supported by a strong development
community and focused on solving business problems
while reducing compliance complexities for Telcos. The
open API framework can seamlessly integrate with existing
billing systems enabling faster time-to-market and quick
addressal of reconciliation and fraud mitigation. The
interface is designed especially for users to see near real-
time reconciliation reports with summarized data that can
be drilled down to event level discrepancies.
Subex is a member of the Communications Business
Automation Network (CBAN) & Risk and Assurance Group
(RAG) Blockchain consortiums. We also chair the Intercarrier
Settlement Telecom SIG – Linux Foundation Hyperledger.
2.
For each such product, provide the following details in
respect of resource use (energy, water, raw material etc)
per unit of product
Subex is committed to 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. However, given
the nature of our business, it is difficult to quantify.
3. Does the Company have procedure in place for sustainable
sourcing (including transportation)?
(a)
If yes, what percentage of your inputs was sourced
sustainably? Also provide details thereof, in about 50
words or so
We have a Responsible Purchase Procedure and a Supplier
Code of Conduct. Our suppliers are categorized into three
broad categories - People, Services and Products. Our
contracts have appropriate clauses and checks to prevent
the employment of child labor or forced labor in any form.
We engage with local suppliers for our People and Services
categories.
Our suppliers sign the code of conduct, agreeing towards
reduction of environmental footprint. Suppliers delivering
the products to Subex abide by the guidelines laid down by
the government.
Subex Annual Report 2019-20
4. Has the Company taken any steps to procure goods
and services from local & small producers, including
communities surrounding their place of work?
were given safety & skill up-gradation training, in the last
year?
Safety training is provided to 100% of the employees.
73
Yes. While the criteria for selection of goods and services
is quality, reliability, and price, we give preference to
small organizations / MSME vendors. Procurement of
materials from local sources is a strategy adopted by us
since it reduces time, cost, and efforts in procurement,
provides local employment opportunities and a reduced
environmental footprint in sourcing.
5. Does the Company have a mechanism to recycle products
and waste? If yes, what is the percentage of recycling of
products and waste (separately as <5%, 5-10%, >10%) Also
provide details thereof, in about 50 words or so
Yes, all types of waste which are generated in-house are
handed over to the authorized vendor for recycling. Subex
co-operates with its vendors towards ensuring the timely
recycling of waste.
Being environmentally cautious and waste sensitive, over
93% of the waste is managed, with less than 7% going into
landfills.
Principle 3: Businesses should promote the wellbeing of all
employees
Creating a positive, relevant, and meaningful experience for
its employees ("Subexians"), is one of the key focus areas for
Subex. With this in mind, their well-being becomes a very critical
component that Human Resources works on. We conduct
regular medical check-ups, mental and physical health-
workshops like yoga sessions, for all employees including our
support staff. Other benefits such as group medical insurance
for Subexians and their families and personnel accident policy
for Subexians are provided to all. We also have an active POSH
(Prevention of Sexual Harassment) committee that functions
with zero-tolerance towards any kind of harassment.
1. Please indicate the total number of employees - 961
2. Please indicate the total number of employees hired on
temporary / contractual / casual basis - 97
3. Please
indicate
employees - 253
the Number of permanent women
4. Please indicate the Number of permanent employees with
disabilities – Nil
5. Do you have an employee association that is recognised by
management – No
6. What percentage of your permanent employees are
members of this recognised employee association? – Not
applicable
7. Please indicate the Number of complaints relating to child
labour, forced labour, involuntary labour, sexual harassment
in the last financial year and pending as on the end of the
financial year – None.
8. What percentage of your under mentioned employees
Details of the skill up-gradation training*:
A. Permanent Employees – 57.75%
B. Permanent Women Employees – 14.78%
C. Casual / Temporary / Contractual Employees – 5.72%
D. Employees with disabilities – Not Applicable
* Includes employees who were not part of Subex at the end of
financial year.
Principle 4 - Businesses should respect the interests of, and
be responsive towards all stakeholders, especially those who
are disadvantaged, vulnerable and marginalised.
1. Has the Company mapped its internal and external
stakeholders?
Yes, the Company has mapped its internal and external
stakeholders. Internal Stakeholders of the Company include
employees, support staff, senior leaders, and Board of
Directors. The external stakeholders also include customers,
vendors, investors, regulatory bodies, and media. The
external stakeholders also include the communities the
Company engages with, during its social responsibilities.
2. Out of the above, has the Company identified the
disadvantaged, vulnerable and marginalized stakeholders?
Yes.
3. Are there any special initiatives taken by the Company
to engage with the disadvantaged, vulnerable and
marginalized stakeholders? If so, provide details thereof,
in about 50 words or so.
Yes. Please refer Principle 8 and Pages 50 to 51 of the
Annual Report for 2019-20 (Annual Report on CSR activities
- 'Annexure G' to the Board's Report.)
Principle 5 – Businesses should respect and promote
human rights
1. Does the policy of the Company on human rights cover
only the Company or extend to the Group / Joint Ventures
/ Suppliers / Contractors / NGOs / Others?
Subex has policies in place which covers its employees
against inhuman practices. Few policies which are in place
include Prevention of Sexual Harassment at Workplace,
Grievance policy, Equal Employment etc.
These policies are applicable to all our employees across all
locations and all our affiliates.
Subex has policies in place which covers its employees
against inhuman practices. The Company encourages its
suppliers, contractors and others to follow the principles
laid down in the Supplier Code of Conduct. All employees,
suppliers and contractors are required to respect the
human rights of fellow workers and communities where
Subex Annual Report 2019-20
74
we operate. The Company encourages its vendors to
comply with the relevant laws safeguarding labour rights
and human rights.
2. How many stakeholder complaints have been received in
the past financial year and what percent were satisfactorily
resolved by the Management?
None. Please refer point no. 2 under Principle 1 and page
202 of the Annual Report (forming part of the Shareholders'
Information section).
Principle 6 – Business should respect, protect and make
efforts to restore the environment
1. Does the policy related to Principle 6 cover only the
Company or extends to the Group / Joint Ventures /
Suppliers / Contractors / NGOs / Others?
The Company has a dedicated Policy/Standard Operating
Procedure (SOP) for its environmental requirements. The
Company encourages all its external stakeholders to strictly
adhere to safety and restoration of the environment.
2. Does the company have strategies / initiatives to address
global environmental issues such as climate change,
global warming etc.
taken
initiatives
the Company has
Yes,
to control
environmental impact or influence considering a life cycle
perspective. The Company also adapts itself to the changes
in environmental laws and has adapted measures such as
limiting the usage of single use plastics within the office
premises.
3. Does
the Company
identify and assess potential
environmental risks?
Yes.
4. Does the Company have any project related to Clean
Development Mechanism? If so, provide details thereof,
in about 50 words or so. Also, if yes, whether any
environmental compliance report is filed?
No.
5. Has the Company undertaken any other initiatives on –
clean technology, energy efficiency, renewable energy
etc.
Principle 7 – Business, when engaged in influencing public
and regulatory policy, should do so in a responsible manner
1.
Is your Company a member of any trade and chamber or
association? If yes, Name only those major ones that your
business deals with.
Yes. The Company is a member of FKCCI (Federation of
Karnataka Chambers of Commerce and Industry) and DSCI
(Data Security Council of India).
2. Have you advocated / lobbied through above associations
for the advancement or improvement of public good?
Yes / No. If yes, specify the broad areas (drop box:
Governance and Administration, Economic Reforms,
inclusive Development Policies, Energy security, Water,
Food Security, sustainable Business Principles, others)
Yes, Others. We co-operate with governments and industry
bodies by providing them threat reports every quarter and
information on demand regarding the prevailing threat
environment.
Principle 8 – Business should support inclusive growth and
equitable development
1. Does the Company have specified programmes / initiatives/
projects in pursuit of the policy related to Principle 8? If
yes, details thereof
Yes. Please refer Pages 50 to 51 of the Annual Report for
2019-20 (Annual Report on CSR activities-'Annexure G' to
the Board's Report.)
2. Are the programmes / projects undertaken through
in-house team / own foundation / external NGO /
Government structures / any other organization?
In-house team. The 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.
3. Have you done any impact assessment of your initiative?
The project activities are periodically reviewed by the
CSR Committee. Reports and feedback are sought to
understand the impact of the initiatives.
Yes, the Company intends to increase its energy efficiency
using solar or green power and is working towards the
implementation of the same.
4. What is your company’s direct contribution to community
development projects. Amount in INR and the details the
projects undertaken
6. Are the Emission / Waste generated by the Company
within the permissible limits given by CPCB / SPCB for the
financial year being reported?
Yes.
7. Number of show cause / legal notices received from CPCB
/ SPCB which are pending (i.e. not resolved to satisfaction)
as on end of financial year
No.
The Company has incurred losses during the preceding
3 financial years. Hence it is not mandatory to incur any
expenditure on CSR activities. For details of the voluntary
activities undertaken by the SCT, please refer Pages 50 to
51 of the Annual Report for 2019-20 (Annual Report on CSR
activities -'Annexure G' to the Board's Report.)
Subex Annual Report 2019-20
5. Have you taken steps to ensure that this Community
development initiative is successfully adopted by the
Community? Please explain in 50 words or so
The objective of the social initiatives undertaken by the
Company is to create a positive and sustainable impact
in the lives of the communities in the long run. The SCT
has received positive feedback from the organizations that
it has supported and looks to continue to provide greater
support towards community development.
Principle 9 – Business should engage with and provide value
to their customers and consumers in a responsible manner
1. What percentage of customer complaints / consumer
cases are pending as on the end of financial year?
None.
2. Does the Company display product information on the
product label, over and above what is mandated as per
local laws?
75
Not applicable to the Company, since it is a Technology
based Company.
3.
Is there any case filed by any stakeholder against the
Company regarding unfair trade practices, irresponsible
advertising and / or anti-competitive behavior during the
last five years and pending as on end of financial year? If
so, provide details thereof, in about 50 words or so
None, there have been no cases filed against Subex with
regards to unfair trade practices, irresponsible advertising,
and / or anti-competitive behavior during the last five years.
4. Did your Company carry out any consumer survey /
consumer satisfaction trends?
Yes. Subex followed the standard CSAT Survey until 2018.
Post 2018, Subex changed its survey modus operandi to
NPS (Net Promoter Score).
Subex Annual Report 2019-20
76
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 ("BSE").
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 build industry leading software products and solutions to help
businesses infuse trust in their digital ecosystems. With Digital Trust at
the core, Subex is now helping Communications Services Providers
("CSP") in their transformation journey to become truly digital
enterprises. Our strength lies in understanding the dynamic needs
of the telco market and leveraging emerging technologies like AI,
ML, Blockchain, and Augmented Analytics to build scalable solutions
to help telcos thrive in a competitive environment. Towards this, we
have created state-of-the-art solutions covering the areas of privacy,
security, identity, predictability, data integrity and risk mitigation,
all helping CSPs build a robust ecosystem of trust. 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, Capacity Management, Partner Settlement, and
Analytics. It also complements them through its newer solutions
such as IoT Security, Digital Identity Management and Anomaly
Detection. Subex also offers scalable Managed Services and Business
Consulting services.
Subex has spent over 25 years in enabling 3/4th of the largest 50
Communications Service Providers globally achieve competitive
advantage. Being truly a global company, we have more than 300
installations across 90+ countries.
We have a global presence, employing over 800+ people, with
headquarters in Bengaluru, India and offices in Singapore, UK, US,
UAE and Bangladesh.
More information on (a) an overview of the telecom industry (b) our
products (c) Opportunities and challenges and (d) our revenue model
is discussed below.
THE CSP INDUSTRY – the mobile market and its outlook Growth
may be becoming harder to see, but it's still there.
As per the latest GSMA Mobile Economy Report, by the end of 2019,
there were 5.2 billion unique mobile subscribers around the world,
accounting for 67% of the global population. Adding new subscribers
has increasingly become difficult as markets become further
saturated. Despite this:
There will be around 600 million new subscribers by 2025,
nearly two-thirds of which will be from the Asia-Pacific and Sub-
Saharan African regions.
The market expects an average annual growth rate of 1.9%
between 2019 and 2025, which will increase the number of
mobile subscribers to 5.8 billion (70% of the population).
The market will see a surge in Mobile Internet users from 3.8bn
in 2019 to 5.0bn by 2025, with an average annual growth of
4.6%. This also means that there will be a significantly increased
and continuous investment by operators to ensure optimal
network performance to keep up with the demand.
The operators' Capex spend is estimated at $1.1 trillion for the
period 2020 – 2025, and almost 80% of this will be towards 5G.
Source: GSMA Report 2020
Subex Annual Report 2019-20 77
4G dominates as 5G begins to make its mark
In 2019, 4G became the dominant mobile technology globally, with
over 4 billion connections, and 5G is gaining momentum.
of telecom: B2B2X. Telecoms will partner with other businesses
and governments to implement IoT in other industries, and the
'smart life' will be a new reality.
4G connections will continue to grow for the next few years,
peaking at just 60% of the global connections.
5G will start moving the needle in 2020. Mobile 5G is now
commercially available for 46 operators in 24 markets worldwide;
79 operators across a further 39 markets have announced plans
to launch mobile services.
Use of AI to drive churn down while maintaining market
differentiation. Telcos will use AI analytics to pinpoint the next
best offer and launch a micro-segmented and personalized
campaign to a customer at the right time, based on their
preferences and history.
5G – the next generation of networks will leverage AI, thus
making them smarter, while optimizing Capex.
There will be approximately 1.8 billion 5G connections by 2025.
Developed Asian countries and the US will lead the way
Blockchain will become a game-changer
IoT will form an integral part of the 5G era. By 2025, the number
of global IoT connections will be more than double to almost 25
billion, and the IoT revenue will more than triple to $1.1 trillion.
5G will give rise to new business models and revenue streams.
The predominant drivers are 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.
Blockchain will play a pivotal role in securely conducting business
with third parties while reducing costs and increasing revenue. CSPs
can leverage blockchain to offer new services using tamperproof
transaction management and automated contracting. Applications
include 5G enablement, mobile financial services, data management,
fraud management, identity management, instantaneous connectivity
and transaction, IoT connectivity, number portability, roaming and
more.
IoT: The battle is on to connect the home and workplace
The telco of the future
IoT connections will reach almost 25 billion globally by 2025, up
from 12 billion in 2019. The business case for IoT is shifting from
just connected devices to addressing specific problems or needs
with solutions to collect, process, and integrate data from multiple
sources, which can be analyzed to create value and provide
actionable insights.
As we enter the 5G era, network innovation has taken prime
importance. Over the last decade, the mobile network model
has trended away from asset ownership to infrastructure sharing.
Operators need to evolve their networks to meet the 5G era's
demands and to diversify their revenue streams to seek growth
beyond core telecom services.
There will be around 13.3 billion IoT connections by 2025; smart
buildings and smart homes will be key growth verticals
IoT revenue will touch the $1.1 trillion mark by 2025, with value
continuing to move up the stack to platforms
Security concerns and integration with existing technologies will
persist as the main challenges in deploying IoT based solutions.
Becoming an IoT connectivity service provider and offering
Machine-to-Machine (M2M) devices can open new streams of
revenue for the telcos.
Telcos are applying IoT to home automation and wearable
devices to enhance their overall customer experiences. In the
coming years, IoT smart sensors will be implemented in gaming
environments, healthcare, personal fitness goals, sports, and
more.
AI is an imminent reality
Telecommunications is one of the fastest-growing industries as well
as one that uses Artificial Intelligence and Machine Learning in many
aspects of their business, from enhancing the customer experience
to predictive maintenance to improving network reliability.
Telcos will use AI technologies to get insights from the data
goldmine they own and monetize it. As the owners of the
network, 5G technology, communication, and subscriber data,
CSPs will enable IoT revolution. This will lead to the next evolution
Revenue generation and customer experience will be the
primary goals of a network transformation strategy
Spectrum is the top concern for operators in the 5G era
The revenue from core services stagnates, leading major
operator groups to seek revenue opportunities from adjacent
services like Pay TV, media, IoT, enterprise solutions, etc. The
contribution from non-telecom services to total revenue is
growing slowly.
Conclusion:
Subex, as a leader in the space of Digital Trust, is uniquely positioned
to help telcos to embrace digital transformation. To take advantage
of the infinite possibilities that 5G unlocks will require a robust
ecosystem of partners, making collaboration the baseline for
success. While 5G rollout will create an unfathomable number of use
cases allowing services providers to significantly expand the number
of services they offer to both businesses and consumers, it also
presents new challenges. From sales and marketing to operations,
IT, network management, pricing, and billing, there will be enormous
changes that service providers must plan for. Subex is well placed to
support this transformation and can help service providers plan for
the strategic evolution of their value chain. Subex can help catalyze
the transformation process of traditional network developers into
service enablers for 5G and IoT, and ultimately to service creators,
with the ability to collaborate beyond telecoms.
Subex Annual Report 2019-20 78
OUR PRODUCTS
Subex offers the Revenue Operations Centre (ROC®) Solution Suite
that enable Digital Trust for our customers. To this end, Subex’s core
products around Revenue Assurance and Fraud Management have
been enhanced with the power of ArtificialIntelligence 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. To help drive confidence in data,
Analytics Center of Trust (ACT) - a solution framework built to
help organisations transform from a traditional business to a digital
one through the power of data analytics. Subex also provides
organisations with confidence in the growing connected world,
through its IoT Security solution, Subex secure, which is a multivertical
solution focused towards the telecom, government, automotive,
and defense segment, to name a few. Subex delivers AI-based
anomaly detection for digital businesses with a brand new product
called CrunchMetrics, which helps organisations automatically look
through billions of records, identify unusual patterns, intelligently
correlate these patterns with their context of occurrence, and flag
outliers that can cause business impact – all in real-time. Subex also
helps in transforming the way the business verifies users, through its
recently launched product called IDcentral. IDcentral provides a one-
stop solution for digital identity, verification and validation services.
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 pragmatically.
PRODUCT PORTFOLIO
Subex Secure (Digital Security)
Subex Secure is an IoT and OT security solution designed to secure
connected and constrained devices and networks. It is an agentless
product, 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 allowing the 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.
IDcentral (Digital Identity)
Today, each individual has multiple digital interactions which give rise
to something known as a digital footprint. This digital footprint is a
combination of various attributes like phone number, email ID, device
info, social network data etc. that when put together form the digital
identity of that individual. IDcentral specialises in bringing together
these different attributes to create verifiable digital identities leveraging
alternate sources of data. IDcentral acts as a one-stop solution for
digital identity verification and validation services by harvesting data
from multiple sources and adding layers of intelligence to enable the
creation of a real-time frictionless digital identity. Said identity can be
electronically accessed to solve numerous challenges reduction in
identity frauds, slack in the verification process and enhancing the
operational efficiency of businesses.
Crunch Metrics (Anomaly Detection)
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, organizations fall short of
responding to significant changes which can improve business critical
functions. To help organizations deal with this challenge, Subex
launched Crunch Metrics, 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. Crunch Metrics 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 Crunch Metrics, 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.
Crunch Metrics is vertical agnostic and has a wide range of use
cases for Telecom, Retail, FinTech and other digitally transformed
businesses.
Subex Annual Report 2019-20 Network Analytics
1. Network Asset Management
Network Asset Management is a Telecom Asset Lifecycle Management
solution that provides framework and controls to help CSPs make
the best use of their assets, thereby helping manage network
Capex efficiently. The solution ties the assets’ financial parameters
to its current utilization and location, creates a 360-degree view of
the asset, generates accurate reports for audits, and calculates the
return on assets. Also, it simplifies field audits, provides near real-time
capacity views, recommendations to optimize network utilization
and optimizes P2R (Plan-to-retire) and cash-to-cash cycle for assets
and improves overall operational efficiency.
2. Data Integrity Management
Subex is the pioneer of data integrity management, with over a
decade of experience in data integrity transformations with the
world’s leading service providers. Data Integrity Management is the
industry’s first solution for improving the quality of data that drives
critical service provider processes, resulting in lower costs and higher
service profitability.
3. Capacity Management
ROC Capacity Management solution helps operators undertake
a predictive approach to understand their capacity issues, thereby
helping them ensure the best customer experience while optimizing
costs and maximizing ROI. ROC Capacity Management ensures
the removal of capacity issues and ensures smooth operation of
business-critical applications, thereby resulting in positive customer
experience.
Business Assurance
ROC Revenue Assurance solution offers a comprehensive view
of an enterprise by providing better visibility into risks surrounding
operations, revenue and margins. With Active Risk Intelligence, our re-
imagined assurance product stack, operators can assess and address
impacts in near real-time or, in some cases, proactively. In today’s
reality of multi-service, multi-disciplinary offerings (e.g. Banking,
Retail, Digital Content etc.), the comprehensive AI/ML capabilities
in the solution will help our telecom partners identify unknown
unknowns, for meaningful course corrections. Furthermore, as
operators keep expanding their portfolio to cater to the demands of
today’s customers, in the ARI suite we’ve gone beyond traditional,
pointfocused dashboards to comprehensive storylines, which tell the
whole story.
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
ROC™ Fraud Management provides 360-degree fraud protection
across digital services by leveraging advanced machine learning
and signalling intelligence. The solution combines a traditional
rules engine with advanced artificial intelligence/ machine learning
capabilities to provide increased coverage across all telco services
and minimize fraud run-time in the network with real-time blocking
capabilities. With Subex’s comprehensive fraud management system,
operators can detect more than 350 types of fraud in all telecom
79
environments: Wireline (PSTN, ISP, VoIP) and Wireless (2G, 2.5G, 3G
& 4G); and across all services: postpaid, Payment, VAS, MMS and
M-commerce.
Partner Management
ROC Partner Management is a convergent solution that offers a
360-degree view of the evolving telecom ecosystem across Mobility,
Content, and Entertainment, 5G for Business Enterprise and Internet
of Things, by providing a nuanced profile of partner agreements
based on data such as revenue and margins. It helps in swift partner
onboarding, partner self-care, partner assurance, and end-to-end
revenue visibility and accessible communication between Telco
and its partners. It manages diverse revenue streams while helping
you launch high-value, high margin services in collaboration with
partners.
Partner Settlement
Subex ROC Partner Settlement leverages automation, flexibility,
and Assurance to facilitate faster, more accurate, seamless billing
and settlement as well as prudent AR/AP and Margin provisioning.
The billing platform enables you to introduce innovative product
bundling and billing mechanisms, thereby opening new business
models and staying agonistic to the services right from connectivity
to 5G NW Slicing at the same time. It has inbuilt capabilities of Tariff
Management, including OBR, bilateral agreements, accruals, GL-
codes, reconciliation, and dispute management, to name a few.
Integrated ETL, Dashboards & Reports, PDF to excel conversion utility
reduces CAPEX by providing bundled nifty tools that make ROC
Partner Settlement the most efficient solution.
Route Optimisation
Route Optimisation helps you by creating multiple routing plans
through template-based automatic rate sheet ingestion and sales
price generation for complete buying and selling requirements.
Configurable QoS parameters ensure quality route plans and
capacity consideration enable successful routing without call drop.
Commercial plans are converted to technical implementations and
directly uploaded to the switch using multiple interfaces of SOAP,
REST, and MML. The solution ensures that the entire end-to-end
processes from dial code/destination operator rate imports to switch
updates are controllable and auditable.
Analytics Center of Trust (Advanced Analytics)
Subex Analytics Center of Trust (ACT) is an end-to-end advanced
analytics framework that 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 analyticsdriven business outcomes. ACT
comprises of three components.
Strategies: Leveraging over 25 years of expertise in telecom
analytics, Subex helps to create 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,
Subex Annual Report 2019-20 80
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 provide
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 organisations. ROC Insights
provide actionable insights around key focus areas: Product,
Customer, Risk and Revenue.
Consulting & Assessment Services
Subex with its more than 25 years of experience in telecom domain,
end-to-end encounter in defining strategy to execution and use of
relevant tools that are compliant with global forums such as TM
Forum and CFCA; is the right partner of choice in consulting and
assessment services for global telcos.
Subex offers consulting and assessment services in the following
domains:
Maturity assessment: Benchmarking of their revenue assurance
and fraud management processes concerning global standards
and provide metrics across people skills, processes, technology
usage and measurement strategies.
Business operations assessments: Gap analysis of existing
processes and provide the roadmap to close these gaps using
“analyse, evaluate, assess and recommend” framework.
Risk management: Identify the risks in the revenue chain and
plug leakages promptly, 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 utilising 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 customised
health-check of RA and FM IT operations of telcos.
Product and service margin assurance: Assessment of the target
market and holistic margin and profitability check for the entire
service and product catalogue.
Portfolio optimisation: Optimising offering portfolio by holistic
assessment of products and offerings considering subscriber
base, price points, usage patterns, revenue share and benefit
comparison with other offerings.
Managed Services
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.
OPPORTUNITIES
With digital transformation all around us, Digital Trust has become
a key priority for Telecom Operators. Our portfolio with its focus
on Privacy, Security, Identity, Predictability, Data Integrity and Risk
Mitigation is well suited to help telecom operators build and deliver
Digital Trust.
5G is moving from labs to deployment phase and a relentless
wave of inventions are headed our way. This transition to 5G
will occur over the next 4 to 5 years and will result in several
opportunities for us at Subex.
Telcos are targeting enterprise services with 4G and 5G
applications in manufacturing, health care, distance learning
and transportation. Increasingly these services will rely on IoT
and MEC networks. Subex is well positioned to help carriers
in the areas of Capacity Management, Partner Management,
Asset Assurance, Business Assurance, Partner Management, IoT
Security and AI driven Augmented Analytics.
We continue to see demand for data bandwidth increase
relentlessly. At the same time revenues for telecom operators
are likely to stay flat over the next 5 years period. Operators
who do efficient network spends which combines capacity
with customer experience and ROI will succeed. We see
an opportunity to use our deep understanding of network
performance KPIs and our capabilities in artificial intelligence
in delivering cutting edge Network Capacity Management
solutions to telecom operators.
As most businesses are driven towards rapid digital transformation,
Cyber Crime and Fraud risks have seen a dramatic increase in
the first 5 months of 2020. We see strong demand for Security
and Fraud detection solutions of Subex.
Telcom Operators are transforming to platform players with
new lines of businesses focused on entertainment, ecommerce,
Subex Annual Report 2019-20 81
transportation, smart
Industrial Automation, autonomous
utility and cities. To succeed telecom operators are turning to
increasing use of data for operational and strategic decision
making. However, there are challenges. The journey from data to
insights has several manual steps which are prone to errors and
biases, it has a high dependency on skilled data scientists, data
itself continues to reside in silos in the telco world. To address
this latent need Subex is building an augmented analytics
platform which uses AI to the journey from data preparation
to insight generation and insight explanation. Subex’s new
platform also citizen data scientists by automating many aspects
of data science, machine learning, and AI model development,
management and deployment. We see a strong demand for this
platform among the Telecom Operators.
expertise and technological prowess, coupled with global exposure.
The upgraded system will help Jawwal achieve tangible success by
enhancing customer experience and protecting their revenues.
VIVA Kuwait renews a multi-year contract for Revenue Assurance
and Fraud Management with Subex.
Subex was awarded a 3-year contract
from Viva, Kuwait’s
fastestgrowing and most developed telecom operator, to provide its
ROC Revenue Assurance and ROC Fraud Management solutions on a
Managed Services model. Subex & Viva have been working for nearly
a decade and have seen sustained value in the relationship. Subex’s
vast experience in the Business Assurance and Fraud Management
space coupled with a great track record with Viva led to an extension
of a contract.
THREATS
Barring a handful of industries, this statement is probably
applicable to all other businesses for the next few months. While
the telecom industry is resilient to the COVID-19 crisis, it is not
spared of uncertainty. And this uncertainty does impact opex
and capex spend priorities.
We are clearly foreseeing some slow-down
in network
investments and introduction of 5G. Owing to COVID-19 the
focus seems to have shifted from low latency use cases to high
bandwidth type use cases.
Telcom operators today offer a variety of products and services
to its customers. Order management, provisioning, fulfillment,
billing and customer care are becoming increasingly complex.
Thus, demand on decision support solutions
like Fraud
Management and Revenue Assurance, to handle very complex
use cases continue to grow. We at Subex have invested in
technology upgrades and have invested in advanced AI labs to
address these growing expectations of our customers.
As Telcos turn into platform players and grow multiple lines
of new businesses, there is increased decentralization of
purchasing power and decision making among these lines of
businesses. We at Subex recognize this challenge and have
doubled down on ensuring greater relevance of our portfolio
and visibility to our portfolio among these decentralized centers
within telcos.
As cloud computing makes further inroads into telecom service
providers, so do a number of new cloud-based SaaS software
vendors each offering niche capabilities in the area of decision
analytics. We at Subex recognize these as new competitions and
have been building capabilities in response and in many cases
ahead of these players.
Key Announcements in FY20
Subex secures 5-year deal from Jawwal for ROC Fraud Management
and ROC Revenue Assurance.
Subex secured a five-year expansion of coverage of its partnership
with Jawwal – the foremost mobile network operator in Palestine to
provide an upgrade with ROC Revenue Assurance and ROC Fraud
Management. Subex was selected based on the proven experience
of enabling success in fastpaced environments, rich domain
Subex wins multi-year deal from Econet Wireless Zimbabwe to
deploy Analytics Centre of Trust.
Subex won a contract with Econet Wireless Zimbabwe, a leading
telecom operator in Zimbabwe for deployment of its Analytics
Center of Trust (ACT) offering. through the deployment, Econet will
be able to transform into an independent data driven organization,
thereby improving operational efficiency. Econet Wireless Zimbabwe
was looking to improve their operational efficiency by effectively
leveraging their data to make business decisions. To this end, Subex
was selected based on its proven expertise in implementing an
analytics solution which is flexible across business cases around
Customer, Technology, Product, Sales & Distribution, Risk and
Revenue. The analytical support from Subex will give impetus to
Econet’s strategic expansion.
Subex
joins GLF’s
Blockchain Network
(Global Leaders’ Forum) Communications
Subex is now part of the ITW Global Leaders’ Forum’s Communications
Blockchain Network (CBN), a blockchainbased consortium which
aims to revolutionize the ICT Service Provider industry’s commercial
settlement infrastructure. The ITW Global Leaders’ Forum is a global
network of leaders from the world’s largest International Carriers,
who convene to discuss strategic issues and to agree collaborative
activities, with the aim of upholding the principle of interoperability
and ubiquitous international and technological coverage. Subex will
work with GLF and other leading carriers and technology partners
towards democratizing trust and simplifying the settlement process
by using blockchain.
Subex and RAG announce first of its kind alliance to leverage
Blockchain for combatting fraud
Subex joined hands with the Risk & Assurance Group (RAG) to provide
a blockchain-based fraud management solution to its customers.
As part of this alliance, Subex becomes part of the RAG Wangiri
Blockchain Consortium which seeks to use Blockchain technology
to gather real-time industry threat intelligence about fraudsters. The
consortium includes some of the world’s leading Communications
Service Providers (CSP) from North America, Europe, Africa, and
Asia. By partnering with the RAG Wangiri Blockchain Consortium,
Subex aims to provide its customers with a decentralized and
cryptographically secure blockchain
fraud-related
information.
ledger of
Subex Annual Report 2019-20 82
Subex Secure ranked as the “Top Security Platform of the Year” by
Compass Intelligence.
Subex Secure ranked as the “Top Security Platform of the Year” by
Compass Intelligence. Compass Intelligence, a market acceleration
research and consulting firm, awards honor the top companies,
products, and technology solutions in mobile, IoT, and emerging
technology industries. Subex Secure, the IoT security solution of
choice for a range of industries from smart cities, oil and gas plants
and critical infrastructure entities to telecom operators and connected
cars, and has been at the forefront of IoT security innovation.
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
31
36
37
33
32
31
FY 20 FY 19
Consolidated
e
g
a
t
n
e
c
r
e
P
100
90
80
70
60
50
40
30
20
10
0
23
28
38
39
52
20
FY 20 FY 19
Standalone
Managed Services,
License, Implementation and Customization
Support and others
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. There
is the global COVID-19 pandemic, leading to uncertainty and
ambiguity in all businesses. There could be dramatic changes in the
business however due to the lack of any precedents, and the fact
the pandemic is still undergoing we are not able to provide specific
details on how this would impact Subex’s business. We wanted to
provide some information on certain risks stated herein including: (a)
reduction in consumer and business purchasing; (b) consolidation
(c) dependence on communications
in our customer base;
service providers asour major customers; (d) security; (e) improper
disclosure of personal data could result in liability and harm to our
reputation; (f) Technology changes and obsolescence may impact
ourbusiness; (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) noncompliance
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.
Subex Annual Report 2019-20 Security
You must be well aware that security threats are prevalent
everywhere today. This is, perhaps, especially true in the technology
industry where we participate. The security vulnerabilities take many
forms. Hackers may attempt to compromise computer systems
and networks. Fraudsters may attempt to steal the identity of our
personnel to gain access to our computer systems, networks and
even banking systems. Terror activity could have an adverse impact
on our business. We may fail to adequately design our products
leaving our customers exposed to hacking and other network
vulnerabilities. Perhaps this concern – of failure to adequately design
our products leading to exposure of our customer’s information is
one of the largest concerns. If one of our customers faced a security
breach allegedly as a result of use of our products, it would cause
significant reputational risk to us and may lead to claims against us.
We devote significant resources to mitigate security threats including
threats to our internal IT systems, with respect to our products and
with respect to physical security of our buildings. But, there cannot
be any guarantee that these efforts will avoid security breaches.
Improper disclosure of personal data could result in liability and
harm our reputation
You are probably aware of the global trend towards 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
83
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
Subex talent acquisition strategy is to hire candidates with the right
competencies required by the business at the right time, a judicious
mix of lateral hires and fresh graduate. We are an equal opportunity
employer and focus on meritocracy at all stages of the hiring and
strictly based on role-mapping career architecture.We have a robust
process to source and select the best talent, both for entry-level roles
as well as lateral hires through our website, channel partners, job
fairs, campus placements, and internal job postings.
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
Subex Annual Report 2019-20 84
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.
Variability of Our Quarterly Operating Results Makes Comparisons
Difficult
Our quarterly operating results have varied in the past due to reasons
like seasonal pattern of hardware and software capital spending by
customers, information technology investment trends, achievement
of milestones in the execution of projects, hiring of additional staff
and timing and integration of acquired businesses. Hence, the past
operating results and period to period comparisons may not indicate
future performance. Our management is attempting to mitigate this
risk through expansion of our client base geographically, increasing
annuity revenue such as through managed services and also looking
to grow revenues from Horizon 2 areas of IOT Security, ROC Insights
etc.
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
is certified for both
Subex
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 pollutionfree industry,
means we are not subject to significant environmental regulations.
Nonetheless, non-compliance with applicable environment
regulations may lead to significant fines and penalties. We do adhere
to the guidelines for disposing of E-wastes as stipulated by the
E-Waste (Management and Handling) Rules.
Foreign Exchange Fluctuations May Lead to Variability in Our
Revenue
We have substantial exposure to foreign exchange related risks
on account of revenue from export of software and outstanding
liabilities. There is a natural hedge to the extent of expense incurred
in same currency. Despite this, particularly given the volatility in the
foreign exchange market, there could be significant variations. Our
management is attempting to mitigate this risk through hedging by
obtaining by obtaining forward contracts against its revenue and
receivables
Failure to Fulfill Contractual Obligation May Lead to Claims
We enter into contracts with our customers in the ordinary course of
business under which we are obligated to perform and act according
to the contractual terms. Any failure to fulfill these contractual
obligations may expose us to financial, reputational and other risks.
Our management believes it has taken sufficient measures to assure
it meets its customer contractual obligations. Nonetheless, there
cannot be any assurance that a customer will not allege a breach by
us of our obligations.
Debt Obligation
The Company did not have any debt obligation as on March 31, 2020.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
In accordance with the provision of Section 134(5)(e) 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.
Subex Annual Report 2019-20 85
Such Internal Financial Controls were found to be adequate for a
Company of this size. The controls are largely operating effectively
since there has not been identification of any material weakness
in the Company. The Directors have in the Directors Responsibility
Statement under paragraph (e) confirmed the same to this effect. The
Company has policies and procedures in place for ensuring proper
and efficient conduct of its business, the safeguarding of its assets,
the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records and timely preparations,
reliable financial information. The Company has adopted accounting
policies which are in line with Indian Accounting Standards (“Ind AS”).
Pursuant to the provisions of the Section 134(5)(f) of the Act, the
Company during the year devised proper systems and continued
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) 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 9001:2015 (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 Subex continued to focus on reviews and updates on
processes thereby aligning the projects to the current 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
Financial Highlights/Year Ending 31st March
2019-20
2018-19
Consolidated
Standalone
Consolidated
Standalone
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, right-of-use asset and other
intangible assets
36,498
37,061
7,997
7,996
(31,766)
(23,770)
3,145
(26,915)
(29)
Nil
56,200
(4,661)
51,539
8,215
1,079
3,170
(1,168)
891
(21,361)
(20,470)
118
(20,588)
(21)
Nil
56,200
(6,176)
50,024
6,599
34,812
34,913
4,823
4,708
-
4,708
2,186
2,522
(428)
Nil
56,200
23,210
79,410
2,424
1,916
1,926
(861)
(2,455)
-
(2,455)
(2)
(2,453)
(3)
Nil
56,200
14,949
71,149
6,286
Net Property, Plant & equipment, right-of-use asset and other
4,861
1,157
547
5,005
intangible assets
Total Assets
68,098
55,128
89,649
74,479
Subex Annual Report 2019-20 86
Ratios where there has been a significant change from fiscal 2019 to fiscal 2020
Key Indicators
2019-20
2018-19
Debtor Turnover Ratio
Current Ratio
Debt (including Working capital) Equity %
Net Profit Margin %
Return on year end Net Worth %
Return on year end capital employed % (EBIT/ Capital Employed)
Consolidated
Standalone
Consolidated
Standalone
4.11
2.71
0.32
(73.74)
(52.28)
13.38
1.23
0.65
0.10
(1,908.06)
(41.20)
(2.33)
3.91
2.24
0.13
7.24
2.64
5.86
1.74
0.29
0.05
(128.03)
(3.45)
(1.21)
Debtors turnover ratio is computed as turnover by average debtors. On consolidated basis, increase in debtor’s turnover ratio is on
account of increase in revenue from ` 34,812 lakhs in 2018-19 to ` 36,498 lakhs, average debtors being constant. On standalone basis,
increase is on account of decrease in average debtors in 2019-20 compared to previous year.
Current ratio is computed as current assets by current liabilities. Increase in ratio is due to increase in current assets on both standalone
and consolidated basis as compared to previous year.
Debt equity ratio is computed as total liabilities by net worth. Increase in debt equity ratio is on account of decrease in net worth of the
company as explained in the below commentary.
Return on net worth is computed as comprehensive income attributable to shareholders by shareholders equity. Net profit margin is
computed as net profit/loss by turnover of the company. Variation in ratios has been explained in the below commentary.
Return on year end capital employed is computed as earnings before interest and tax by capital employed. There has been increase in
EBIT from ` 4,823 lakhs in 2018-19 to ` 7,997 lakhs in 2019-20 on consolidated basis and EBIT loss of ` 861 lakhs in 2018-19 to ` 1,168
lakhs in 2019-20 on standalone basis.
COMMENTARY ON FINANCIAL STATEMENTS
Share Capital
As at March 31, 2020, the issued, subscribed and paid-up share capital
of the Company was ` 5,620,029,350 (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 ` 10 (Rupees Ten
only) each. The Company has not allotted equity shares in 2019-20.
Reserves and Surplus
Securities premium
On standalone and consolidated basis, the balance of security
premium as at March 31, 2019 amounted to ` 26,705 lakhs.
During the year 2019-20, ` 7 lakhs has been transferred to
security premium on exercise of share options by employees.
As at March 31, 2020, the balance of security premium was
` 26,712 lakhs.
Retained earnings
On a standalone basis, as at March 31, 2019, there was deficit balance
in retained earnings amounting ` 15,684 lakhs. The deficit balance
has increased to ` 36,325 lakhs as at March 31, 2020 on account of
losses due to impairment of intangibles, impairment of investments
and other exceptional items during the year 2019-20.
On a consolidated basis, as at March 31, 2019, there was surplus
balance in retained earnings amounting ` 7,563 lakhs. As at March
31, 2020, there was deficit balance in retained earnings amounting `
19,828 lakhs on account of losses due to impairment of goodwill and
other exceptional items during the year 2019-20.
Exchange differences on translating the financial statements of a
foreign operation.
During the year 2018-19, the balance of Foreign Currency Translation
Reserve of ` 12,211 Lakhs has been included in the Reserves and
Surplus to bring it in line with Schedule III of the Act.
During the year 2019-20, the balance of Foreign Currency Translation
Reserve of ` 12,206 Lakhs has been included in the Reserves and
Surplus to bring it in line with Schedule III of the Act.
Total equity attributable to equity holders of the company
On a standalone basis, the total equity attributable to equity holders
of the Company has reduced to ` 50,024 lakhs as at March 31,
2020, compared to ` 71,149 lakhs as at March 31, 2019, primarily on
account of loss during the year and increase in treasury stock offset
by ESOP reserve.
On a consolidated basis, the total equity attributable to equity holders
of the Company has reduced to ` 51,539 lakhs as at March 31,
2020 from ` 79,410 lakhs as at March 31, 2019. The movement was
primarily on account of loss during the year and increase in treasury
Subex Annual Report 2019-20 87
stock offset by ESOP reserve and exchange gain on foreign currency
translation.
and doubtful. The level of sundry debtors is normal and is in tune with
business trends requirements.
Employee Stock Options Plan
Under the Subex Employees Stock Option Scheme-2018 Company
has granted 12,800,000 options during the year ended March 31,
2020 as compared to 10,650,000 options during March 31, 2019.
The net amount carried in respect of stock options outstanding at
March 31, 2020 amounts to ` 114 Lakhs (Previous year : ` 18 Lakhs).
Property, plant, equipment, right-of-use asset and other
intangible assets
During the year, the Company added ` 273 Lakhs on consolidated
basis and ` 2 Lakhs on standalone basis, to its gross block. The
Company disposed-off certain assets no longer required. Also, the
Company has classified land use-rights related net block to right-
of-use assets on account of adoption of Ind AS 116 – Leases. Refer
note 28 of consolidated financial statement and standalone financial
statement for the impact of Ind AS 116 – Leases. As at March 31,
2020, the balance in right-of-use asset stands at ` 4,424 Lakhs on
consolidated basis and ` 245 lakhs on standalone basis.
The Company’s net block of property, plant and equipment, right-of-
use asset and other intangible assets was ` 4,861 Lakhs (Previous year
` 547 Lakhs) on consolidated basis and ` 1,157 lakhs (Previous year
` 5,005 lakhs) on standalone basis.
Goodwill
On a consolidated basis, carrying value of goodwill as at
March 31, 2020 and March 31, 2019 stood at ` 34,409 lakhs and
` 65,882 lakhs, respectively.
During the year, considering the challenges and significant investment
requirements of telecom operators which had resulted in longer
opportunity conversion cycle and lower spends towards IT solutions,
the management had carried out the annual impairment exercise in
respect of carrying value of goodwill and had made an impairment
provision of ` 31,473 Lakhs towards carrying value of goodwill.
Investments
During the year, considering the challenges and significant investment
requirements of telecom operators which has resulted in longer
opportunity conversion cycle and lower spends towards IT solutions,
the management had carried out the annual impairment exercise in
respect of its investment in Subex Assurance LLP and had made an
impairment provision of ` 16,808 Lakhs towards its carrying value.
During the year 2019-20 and previous year 2018-19, there is no
diminution in the carrying value of investment in Subex Digital LLP
and Subex Americas Inc. The carrying value of these investments
remains at ` 1,869 Lakhs and ` 936 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
The management believes that the overall composition and
condition of trade receivables is satisfactory post assessment of
doubtful receivables. As at March 31, 2020, on a standalone basis
trade receivable amounted to ` 915 lakhs (previous year; `842 lakhs)
net of provision for doubtful debts of ` 2,262 lakhs (previous year;
` 2,255 lakhs).
On a consolidated basis trade receivable amounted to ` 9,206 lakhs
(previous year ` 8,539 lakhs) net of provision for doubtful debts of
` 2,178 lakhs (previous year ` 1,789 lakhs).
Cash and Cash Equivalents
On a standalone basis, balance in current and deposit accounts
stood at ` 392 lakhs as at March 31, 2020, as compared to ` 97 lakhs
as at March 31, 2019.
On a consolidated basis, balance in current, EEFC and deposit
accounts stood at ` 9,043 lakhs as at March 31,2020 as compared to
` 3,947 lakhs as at March 31, 2019.
The Margin Money deposit was Nil as at March 31, 2020 (Previous
Year: ` 418 Lakhs) on Standalone basis and ` 256 lakh (Previous Year:
` 672 Lakhs) on consolidated basis with the bankers for establishing
bank guarantee.
Long-terms Loans and Advances
It represents rent deposit, electricity deposit, telephone deposits and
employee advances of like nature.
Adoption of Ind AS 116 – Leases
Effective April 01, 2019, the Company adopted Ind AS 116 – Leases
and applied the standard to all lease contracts existing on April
01, 2019 using the modified retrospective method and has taken
the cumulative adjustment to retained earnings, on the date of
initial application. Consequently, the Company recorded the lease
liability at the present value of the lease payments discounted at the
incremental borrowing rate and the ROU asset at its carrying amount
as if the standard had been applied since the commencement date
of the lease, but discounted at the lessee’s incremental borrowing
rate at the date of initial application.
On transition, the adoption of the new standard resulted in the
recognition of ROU asset of ` 4,816 lakhs and ` 311 lakhs on
a consolidated and standalone basis, respectively, and a lease
liability of ` 5,052 lakhs and ` 326 lakhs on a consolidated and
standalone basis, respectively. The cumulative effect of applying
the standard, amounting ` 442 lakhs and ` 32 lakhs was debited to
retained earnings, net of taxes on a consolidated and standalone
basis, respectively. The effect of this adoption is insignificant on
the profit before tax, profit for the period and earnings per share.
Ind AS 116 – Leases resulted in an increase in cash inflows from
operating activities and an increase in cash outflows from financing
activities on account of lease payments.
Income
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 are considered to
constitute one segment and hence the Company has not made any
Subex Annual Report 2019-20 88
additional segment disclosures.
Tax Expense
Geographically, the Company earns income from export of software
products and related services to USA, EMEA & Asia Pacific region.
For the year ended March 31, 2020, tax expense was ` 118 lakhs
(previous year: ` 2 lakhs) on a standalone basis.
Other Income
Other income consists of income derived by the Company from
insurance refund, refund of research and development expense,
interest on deposits from banks.
Expenditure
The employee benefits expenses decreased to ` 17,454 Lakhs
compared to Previous year at ` 19,105 Lakhs on consolidated basis
and decreased to ` 616 Lakhs compared to Previous year: ` 739
Lakhs on standalone basis. Decrease on consolidated basis is majorly
on account of reduction in sales commission expense by ` 1,585
Lakhs.
Operating Profits
During the year, on consolidated basis, the Company earned an
Operating Profit before interest, depreciation, tax, amortization
and exceptional items of ` 9,505 Lakhs being 26% of total revenue
(Excluding other income) as against ` 5,306 Lakhs at 15% total
revenue (Excluding other income) during the previous year. Increase
is majorly on account of growth in revenue by 5%, i.e. ` 1,686
Lakhs, increase in forex gain by ` 716 Lakhs and decrease in sales
commission expense by ` 1,585 Lakhs.
On a standalone basis, the Company incurred Operating Loss before
Interest, depreciation, tax and exceptional items of ` 606 Lakhs
(excluding other income and share of profit/loss from LLP’s ) being
56% of total income (excluding other income and share of profit/loss
from LLP’s ) as against operating loss of ` 236 Lakhs at 12% during
the previous year. Increase in losses is majorly on account of dip in
revenue by ` 837 lakhs, compensated by reduction in employee cost
by ` 123 lakhs, consultancy charges by ` 136 lakhs, rent by ` 117 lakhs
and forex gain of ` 73 lakhs.
Interest & Bank Charges
During the year ended March 31,2020, company recognized interest
and bank charges totaling to ` 564 Lakhs (Previous year: ` 216 Lakhs)
on a consolidated basis and ` 32 lakhs (Previous year: ` 4 Lakhs) on
a standalone basis.
For the year ended March 31, 2020, expenditure includes interest
on Lease liability recognized as per Ind AS 116, Leases amounting
` 452 lakhs and ` 28 lakhs on a consolidated and standalone basis
respectively.
Depreciation
During the year ended March 31, 2020, depreciation expense
amounted to ` 1,508 Lakhs (Previous year: ` 483 Lakhs) on
consolidated basis and ` 562 Lakhs (Previous year: ` 625 Lakhs) on
standalone basis.
For the year ended March 31, 2020, depreciation and amortization
include depreciation on right of use asset recognized as per Ind AS
116, Leases amounting ` 1,116 lakhs and ` 66 lakhs on a consolidated
and standalone basis respectively.
Tax expense includes the provision of MAT credit entitlement of
` 425 Lakhs for considering the uncertainty as regards to its utilization,
offset by reversal of provision on foreign withholding tax amounting
` 308 lakhs on account of favorable assessment order received
during the year ended March 31, 2020 allowing foreign tax credit in
respect of AY 2016-17.
On a consolidated basis, tax expense was ` 3,145 lakhs (previous
year; ` 2,186 lakhs). Tax expense for the year March 31, 2020 includes
tax charge of ` 117 lakhs, provision of MAT credit entitlement of
` 425 lakhs, deferred tax of ` 1,849 lakhs and provision on Foreign tax
credit of ` 754 net of reversal of ` 308 lakhs on account of favorable
assessment order received during the year ended March 31, 2020
allowing foreign tax credit in respect of AY 2016-17.
Net Profit
On consolidated basis, the net loss of the Company amounted to
` 26,915 Lakhs (including exceptional loss of ` 31,766 lakhs majorly
on account of impairment of goodwill) as against a net profit of
` 2,522 Lakhs during the previous year. Total Comprehensive loss
for the year is ` 26,944 Lakhs as compared to the income of ` 2,094
Lakhs during previous year.
On standalone basis, the net loss of the Company amounted to
` 20,588 lakhs (including exceptional loss of ` 21,361 lakhs majorly on
account of impairment of Intangibles and investments in subsidiaries)
as against a net loss of ` 2,453 Lakhs during the previous year. Total
Comprehensive loss for the year is ` 20,609 Lakhs as compared to
loss of ` 2,456 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 loss of
` 4.94 per share (Previous year: Earning of ` 0.45 per share) on a
consolidated basis and a loss of ` 3.78 per share [Previous year: Loss
of ` 0.44 per share] on a standalone basis.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL
RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED
Subexians
In the year gone by we focused on key areas or themes around
which the Subexian’s lifecycle is built. By focusing on these themes,
which emerged from the E-SAT survey conducted at the beginning
of the year, our endeavor was to enhance the Subexian experience
throughout his/her lifecycle spanning recruitment, onboarding,
performance, learning & growth and offboarding. These four key
areas or themes were Leadership, Empowerment, Appreciation
& Recognition and Career Development & Learning. Culturally as
an organization we take pride in ensuring the experience of each
Subexian is positive and meaningful.
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, 2020, we had 800+full time Subexians
on our rolls globally.
Subex Annual Report 2019-20 is centralized at our corporate
Human Resources at Subex
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
for talent development.
Our existing HR policies continue. 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 childcare facility we offer to young
parents, which is being managed by a professional team. Given the
pandemic situation we are faced with, we relooked at some of these
policies, for the near to medium future, like widening the scope of
Work from Home, to make it more positive, relevant and meaningful
for Subexians.
As a significant step towards Subexian engagement, we established
a robust Internal Communications channel for communication and
engagement, through which all important company, business and
employee messages have been delivered to all Subexians across the
globe. The channel brings with it a mix of different platforms that
provide timely communication and sustained engagement across
all levels, and has created a significant impact in bringing Subexians
closer and instilling a feeling of belonging. This impact was greatly
felt towards that end of the year with COVID-19 hitting all of us. We
constantly communicated with Subexians to allay any apprehensions
due to fear and uncertainty they may have had, an in Subex facing
this situation and their well-being. We received unanimous positive
feedback on communications.
Key hires for the year
Over the period of the last twelve months we have hired senior
executives from the industry to fuel our growth strategy and
help take Subex to the next frontier of growth. Bertrand Le Roux
(Regional Vice President – Sales, for Europe), Jim Bolzenius (Head
Business Consulting – Americas), Sandeep Sudarshan (AVP Business
Consulting for EMEA and APAC), Vijen Sewpersadh (Sales Director -
Africa) are some of the key executives we have hired.
Recruitment
In the last year, we have streamlined the recruitment process to
support Subex’s growth plans. To add to the rigour and efficacy of
the recruitment process we initiated steps that would enable us to
show measurable impact on the growth and quality of the workforce.
The well-established processes like Coffee with the Hiring Manager,
Post- offer feedback, Subexian referral program, partner feedback,
interviewer feedback, Buddy Programme etc., continue. The focus
last year was also on hiring key global talent to fuel our growth
objectives. Our campus hire and internship programmes were
successfully conducted as we are cognizant of the need to bring on
board fresh, young minds to infuse innovation within Subex.
Subexian Onboarding
Our onboarding process has always been well recognized and
appreciated. Our robust and comprehensive onboarding process with
a clear goal of creating a great day-one experience continued with
great appreciation from the new joiners. Through our noteworthy
policies like pick up from home, seating desk allocation and laptop
89
/ desktop being made available immediately after the induction, the
day one experience has always been one of our key differentiators.
All paperwork is typically done online before the joining date and
this has helped save tremendous amount of time for new joiners
when they join Subex. The process does not limit to only day one.
Quantifiable processes to cover the new joiner’s 30-60-90 training
plan, regular polls and interventions take place to assess employee
engagement. The new joiner training is then followed up with an on-
the-job training to strengthen the knowledge and skills learnt during
the training period.
Towards the end of this year, despite the COVID-19 pandemic, we
did not deter from our endeavor to provide a very good onboarding
experience, and onboarded over 50 new Subexians completely
online. This was done successfully and has helped in creating a
positive Subexian experience right from the beginning.
Performance Management
This year the focus continued on encouraging and developing high
performance with the aim of driving meritocracy. The HR team
in consultation with business drove multiple highperformance
programs in the form of rewarding high performers with enhanced
roles and incentive benefits. We launched a high-performance club
with the objective of recognizing and encouraging high performers
to further improve their capabilities and deepen their commitment
to Subex. Members of this club are entitled to certain privileges like
attendance to bespoke conferences and external learning sessions.
The ask from millennials and GenZs is to receive constant coaching
and feedback. The Continuous Performance Management (CPM)
programme we introduced last year continues and we enhanced
some of the modules of this programme to increase the scope for
all Subexians.
Learning & Growth
Learning & development analysis is a continuous process to align
people skills with business goals.
In continuation with the programmes and initiatives of last year, like
the skill / competency matrix, we have also brought in a streamlined
focus on curated learning, with a mix of external and internal training
focused at specific groups and sections of Subexians.
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
Subex Annual Report 2019-20 90
Acts as an allied HR process for meeting learning goals
In addition to the specific initiatives we launched last year, like WoW,
which continue, we also introduced Subexian profiling platforms
through the Internal Communications channel that appreciate and
communicate the work done by Subexians to the entire organization.
Compensation
One of the main cornerstones of an employee’s willingness to stay
with an organization is compensation, and we recognize that. Subex
is committed to the growth and development of its employees and
will continue to invest in mind, money and effort towards this. We
look at compensation holistically at Subex, and provide a suitable
combination of fixed salary, variable salary, benefits, health and
disability insurance, etc.
We constantly keep abreast of industry trends and benchmarks, and
try to maintain a balanced approach to compensation. We also arrive
at the salary bands of Subexians by conducting comprehensive job
matching, data validation and quality audits.
Subex Annual Report 2019-20 91
STANDALONE
F I N A N C I A L
STATEMENTS
Subex Annual Report 2019-20 92
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, 2020, the standalone
Statement of Profit and Loss, including the statement of Other
Comprehensive Income/(Loss), the standalone Cash Flow Statement
and the standalone Statement of Changes in Equity for the year then
ended, and notes to the standalone Ind AS 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, 2020, its loss including other comprehensive income/
(loss), 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,
2020. These matters were addressed in the context of our audit of
the standalone 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 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, 2020, the net carrying value of investment in wholly owned
Our audit procedures included the following:
subsidiaries in the standalone Ind AS balance sheet amounts to ` 47,561 lakhs.
(i) We understood the Company’s process for identification of indicators for
As described in Note 5, an impairment provision of ` 16,808 lakhs has been
impairment and evaluated the Company’s internal controls over its impairment
made during the year towards the carrying value of investment in subsidiaries.
assessment of investment in subsidiaries. We understood the key assumptions
To assess if there is an impairment of the carrying value of investment,
management conducted impairment tests, annually or whenever changes in
applied by the management such as revenue growth, operating margins,
discount rates and terminal growth rates in determining impairment;
circumstances or events indicate that, the carrying amount of such investment
(ii) In respect of the external valuation specialist engaged by the management,
may not be recoverable. An impairment loss is recognized if the recoverable
we obtained the valuation report from the management and assessed the
amount is lower than the carrying value.
independence, objectivity and competence of the management expert;
The recoverable amount is estimated by calculating the value in use, basis
(iii) We tested the key assumptions and considered the sensitivity scenarios
valuation conducted by an external valuation specialist (‘management’s expert’)
performed by 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. In view of the COVID -19 pandemic, the management has
reassessed its future business plans and key assumptions as at March 31, 2020
while assessing the adequacy of impairment provision.
(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
Subex Annual Report 2019-20 93
This is a key audit matter as the testing of investment impairment is complex
(v) We assessed the disclosures made in the standalone Ind AS financial
and involves significant judgement. The key assumptions involved in
statements.
impairment tests are projected revenue growth, operating margins, discount
rates, terminal growth etc.
Potential liability in relation to tax litigations (as described in note 33 of the standalone Ind AS financial statements)
The Company has received certain demand orders and notices relating
Our audit procedures included the following:
to Income Tax and Service Tax matters. The Company is contesting these
demands.
(i) We obtained an understanding and tested the internal controls relating to
the identification, recognition and measurement of provisions for disputes and
Significant judgements and estimates are required to assess impact of these
disclosures of contingent liabilities in relation to tax;
litigations on the financial position, results of operations and cash flows.
(ii) We obtained confirmation from management’s expert on ongoing litigations
The evaluation of management’s judgements in accordance with the
along with risk assessment and assessed the independence, objectivity and
requirements of Appendix C to Ind AS 12 on ‘Uncertainty over Income tax
competence of the management expert;
treatments’, 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, time period for resolution have been a matter
(iii) We obtained details of completed tax assessments, demands issued by tax
authorities, orders/notices received with respect to other litigations from the
management;
of significance during the audit and hence considered as a key audit matter.
(iv) We held discussions with management to understand their assessment
of the quantification and likelihood of significant exposures and the provision
required in accordance with the requirements of Appendix C to Ind AS 12
which is supported by assessment reports from management’s expert;
(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; and
(vi) We assessed the disclosures made in the standalone Ind AS financial
statements.
fair view of the financial position, financial performance including
other comprehensive income/(loss), 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 Charged with Governance are also responsible for overseeing
the Company’s financial reporting process.
Other Information
The Standalone 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, Business Responsibility Report and Report on
Corporate Governance (hereinafter together referred to as “reports”)
, but does not include the standalone Ind AS financial statements and
our auditor’s report thereon. The reports are expected to be made
available to us after the date of this auditor’s report.
Our opinion on the standalone Ind AS financial statements does not
cover the other information and we will 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
identified above when it becomes available and, in doing so, consider
whether such other information is materially inconsistent with the
standalone Ind AS financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated.
Responsibilities of Management and Those Charged
with Governance 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
Subex Annual Report 2019-20 94
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 with reference
to financial statements 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.
•
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.
the matters communicated with
From
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, 2020 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 standalone Balance Sheet, the standalone Statement
of Profit and Loss including the Statement of Other
Comprehensive Income/(Loss), 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;
(d)
In our opinion, the aforesaid standalone Ind AS financial
statements comply with the Accounting Standards specified
under Section 133 of the Act, read with Companies (Indian
Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from
the directors as on March 31, 2020 taken on record by the
Board of Directors, none of the directors is disqualified as
on March 31, 2020 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;
Subex Annual Report 2019-20 (g)
In our opinion, the managerial remuneration for the year
ended March 31, 2020 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;
(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:
95
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
i.
ii.
The Company has disclosed the impact of pending
litigations on its financial position in its standalone
Ind AS financial statements – Refer Note 33(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
per Rajeev Kumar
Partner
Membership Number: 213803
UDIN: 20213803AAAABE2926
Place of Signature: Bengaluru
Date: May 11, 2020
Subex Annual Report 2019-20 96
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. In respect of
immovable properties of building that have been taken on
lease and disclosed as Right of Use assets in the Standalone
Ind AS Financial Statements, the lease agreements are in
the name of 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
Name of the Statute
Nature of the dues
Disputed amount *
(` in Lakhs)
Income Tax Act, 1961
Adjustment for
transfer pricing,
disallowances
under section
10A and other
disallowances
Finance Act, 1994
Service tax
151
1,397
379
10
1,004
3,608
and providing guarantees and securities, as applicable. In this
regard, we also draw attention to note 33(b)(iii) to the Standalone
Ind AS Financial Statements relating to amounts which were
recoverable from erstwhile directors of the Company towards
excess managerial remuneration pertaining to the financial year
2012-13, which has been settled during the year on execution of
settlement agreement.
(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,
duty of custom, 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,
duty of customs, 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:
Amount paid/
refund adjusted
under protest
(` in Lakhs)
Period to which
the amount
relates
(Financial Year)
Forum where dispute is pending
-
2014-15
Income Tax Appellate Tribunal (‘ITAT’),
Bangalore
1,397
2013-14 Income Tax Appellate Tribunal (‘ITAT’),
Bangalore
379
-
2010-11 Hon’ble High Court of Karnataka
2009-10 Commissioner of Income Tax (Appeals),
Bangalore
924
April 2006 to
October 2007
Central Excise and Service Tax Appellate
Tribunal, Bangalore
- April 2006 to July
Commissioner of Service Tax, Bangalore
2009
* Excluding penalty and interest from the date of Order to March 31, 2020.
Subex Annual Report 2019-20
97
(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.
(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.
(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.
(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.
(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.
(xiv) According to the information and explanations given to us and
on an overall examination of the standalone 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.
(xi) According to the information and explanations given by the
management, the managerial remuneration for the year ended
March 31, 2020 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 33(b)(iii) to the Standalone Ind AS Financial
Statements relating to amounts which were recoverable from
erstwhile directors of the Company towards excess managerial
remuneration pertaining to the financial year 2012-13, which
has been settled during the year on execution of settlement
agreement.
(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
UDIN: 20213803AAAABE2926
Place of Signature: Bengaluru
Date: May 11, 2020
Subex Annual Report 2019-20 98
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, 2020
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 of unauthorised acquisition, use, or
disposition of the Company’s assets that could have a material effect
on the financial statements.
Subex Annual Report 2019-20 99
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, 2020, 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.
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.
For S. R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm registration number: 101049W/E300004
per Rajeev Kumar
Partner
Membership number: 213803
UDIN: 20213803AAAABE2926
Place of Signature: Bengaluru
Date: May 11, 2020
Subex Annual Report 2019-20 100
STANDALONE BALANCE SHEET
as at March 31, 2020
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Financial assets
Investments
Loans
Other balances with banks
Other financial assets
Income tax assets (net)
Deferred tax asset (MAT credit entitlement)
Other non-current assets
Current assets
Financial assets
Loans
Trade receivables
Cash and cash equivalents
Other financial assets
Other current assets
Total assets
EQUITY AND LIABILITIES
Equity
Equity share capital
Other equity
Total equity
Liabilities
Non-current liabilities
Financial liabilities
Lease liabilities
Provisions
Notes
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
3
28
4
5
6
7
10
11
12
13
6
8
9
10
13
14
15
28
19
12
245
900
18
-
4,987
47,561
64,369
38
-
-
2,900
-
267
51,923
7
915
392
1,871
20
3,205
55,128
56,200
(6,176)
50,024
190
3
193
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
Subex Annual Report 2019-20
STANDALONE BALANCE SHEET (contd.)
as at March 31, 2020
Current liabilities
Financial liabilities
Lease 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)
Total liabilities
Total equity and liabilities
101
Notes
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
28
16
16
17
18
19
20
82
5
281
4,401
22
12
108
4,911
5,104
-
1
267
2,658
17
112
274
3,329
3,330
55,128
74,479
Corporate information and significant accounting policies
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
102
STANDALONE STATEMENT OF PROFIT AND LOSS
for the year ended March 31, 2020
Notes
Year ended
March 31, 2020
Year ended
March 31, 2019
(` in Lakhs)
21
22
23
24
25
26
22
27
20
35
29
1 & 2
1
Income
Revenue from operations
Share of profit from Limited Liability Partnerships before exceptional items (net)
Other income
Total income
2
Expenses
Employee benefits expense
Finance costs
Depreciation and amortization expense
Marketing and allied service charges [Refer note 31(iii)]
Exchange fluctuation (gain)/ loss (net)
Share of loss from Limited Liability Partnerships before exceptional items (net)
Other expenses
Total expenses
Profit/ (loss) before exceptional items and tax expense (1-2)
Exceptional items
Provision no longer required written back
Impairment of intangible asset (Refer note 4)
Provision for claim settlement [Refer note 33 (iii)]
Share of loss from Subex Assurance LLP (Refer note 5)
- Impairment of intangible assets and investment in subsidiary
Total exceptional items
Loss before tax expense (3+4)
Tax expense (net):
Provision for MAT credit (Refer note 12)
Reversal - foreign withholding taxes (Refer note 20)
Net loss for the year (5-6)
Other comprehensive income/ (loss) (‘OCI’), net of tax expense
Items that will not be reclassified subsequently to profit or loss
Re-measurement loss on defined benefit plans
Total comprehensive income/ (loss)
Total comprehensive income/ (loss) for the year attributable to equity holders of the
Company (7+8)
3
4
5
6
7
8
9
10
Basic and diluted loss per equity share [nominal value of share ` 10 (March 31, 2019 : ` 10)]
Corporate information and significant accounting policies
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
1,079
1,889
202
3,170
616
32
562
530
(34)
-
573
2,279
891
100
(3,599)
(1,054)
(16,808)
(21,361)
(20,470)
425
(307)
118
1,916
-
10
1,926
739
4
625
513
39
1,600
861
4,381
(2,455)
-
-
-
-
-
(2,455)
-
(2)
(2)
(20,588)
(2,453)
(21)
(21)
(20,609)
(3.78)
(3)
(3)
(2,456)
(0.44)
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
STANDALONE STATEMENT OF CHANGES IN EQUITY
for the year ended March 31, 2020
103
A. Equity share capital (refer note 14):
Equity shares of ` 10 each issued, subscribed and fully paid-up
As at April 1, 2018
Issued during the year
As at March 31, 2019
Issued during the year
As at March 31, 2020
B. Other equity (refer note 15):
Particulars
No.
` in Lakhs
562,002,935
-
562,002,935
-
562,002,935
56,200
-
56,200
-
56,200
(` in Lakhs)
Attributable to equity holders of company
Reserves and surplus
Total
Capital
reserve
Securities
premium
General
reserve
Employee
stock
options
reserve
As at April 1, 2018
Less: Loss for the year
Less: Other comprehensive income/ (loss)
Less: Equity shares purchased by Subex Employee
Welfare and Employee Stock Option Plan (“ESOP”) Benefit
Trust
Add: Share-based payments (refer note 34)
As at March 31, 2019
Less: Loss for the year
Less: Effect of adoption of Ind AS-116 Leases
Less: Other comprehensive income/ (loss)
Less: Equity shares purchased by Subex Employee
Welfare and Employee Stock Option Plan (“ESOP”) Benefit
Trust
Add: Share-based payments (refer note 34)
Add/(less): On account of exercise of stock options
2,776
26,705
1,780
-
-
-
-
-
-
-
-
-
-
-
-
2,776
26,705
1,780
-
-
-
-
-
-
-
-
-
-
7
-
-
-
-
-
-
1
-
-
-
16
17
-
-
-
-
102
(5)
Surplus/
(deficit)
in the
statement
of profit
and loss
(13,228)
(2,453)
(3)
-
Treasury
shares
-
-
-
(645)
18,034
(2,453)
(3)
(645)
-
-
16
(15,684)
(20,588)
(32)
(21)
-
-
-
(645)
14,949
-
-
-
(611)
-
23
(20,588)
(32)
(21)
(611)
102
25
As at March 31, 2020
2,776
26,712
1,780
114
(36,325)
(1,233)
(6,176)
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
104
STANDALONE STATEMENT OF CASH FLOWS
for the year ended March 31, 2020
(A)
Operating activities
Loss before tax expense
Adjustments to reconcile loss before tax expense to net cash flows:
Depreciation of property, plant and equipment and right-of-use assets
Amortization of intangible assets
Expense on employee share based payments
Interest income (including fair value changes)
Finance costs (including fair value changes)
Allowance for expected credit losses
Amortized cost of deposits
Share of profit/ (loss) (net) from Limited Liability Partnerships
Impairment of intangibles and investment in subsidiary
Provision no longer required written-back
Advance recoverable written-off
Net foreign exchange differences
Operating loss 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 operating activities
(B)
Investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Drawings from Limited Liability Partnerships
Movement in margin money deposit (net)
Purchase of treasury shares by ESOP trust
Interest received
Net cash flows from/ (used in) investing activities
(` in Lakhs)
Year ended
March 31, 2020
Year ended
March 31,2019
(20,470)
(2,455)
74
488
7
(29)
32
12
-
(1,889)
20,407
(100)
234
(34)
(1,268)
(3)
57
1
9
4
(9)
5
(19)
(1,223)
(29)
(1,252)
(3)
-
1,772
418
(611)
32
1,608
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)
(645)
1
(32)
Subex Annual Report 2019-20
STANDALONE STATEMENT OF CASH FLOWS (contd.)
for the year ended March 31, 2020
(C)
Financing activities
Proceeds from exercise of ESOP
Interest paid
Repayment of Lease liability
Net cash flows used in 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)
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
105
(` in Lakhs)
Year ended
March 31, 2020
Year ended
March 31,2019
25
(32)
(54)
(61)
295
97
392
-
(4)
-
(4)
(114)
211
97
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
106
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.
transformation,
subscriber-centric
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
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, Bangladesh
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.
These standalone financial statements for the year ended
March 31, 2020 are approved by the Board of Directors on
May 11, 2020.
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
Indian
Accounting Standards(Ind AS) specified under Section 133 of the
including
India
in
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 is controlled by the Company and
accordingly Subex Employee Welfare and ESOP Benefit Trust is
consolidated [refer note 2(o) and note 34].
The standalone financial statements are presented in INR (“`”)
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.
The Company has considered internal and certain external
sources of information including economic forecasts, budgets
required to meet performance obligations and likely delays on
contractual commitments, upto the date of approval of these
standalone Ind AS financial statements, in determining the
possible impact from the COVID-19 pandemic. The Company
has used the principles of prudence in applying judgements,
estimates and assumptions and based on the current estimates,
the Company expects to fully recover the carrying amount
of its assets. The impact of the global health pandemic may
be different from that estimated as at the date of approval of
these standalone Ind AS financial statements and the Company
will continue to closely monitor any material changes to its
assessment of economic impact of COVID- 19 pandemic.
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:
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 107
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).
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.
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 34.
Impairment of financial assets
Taxes
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 35).
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
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
for uncertain tax positions. Also refer note 2(r) and note 20.
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.
Leases
Ind AS 116 requires lessees to determine the lease term as the
non-cancellable period of a lease adjusted with any option
to extend or terminate the lease, if the use of such option is
reasonably certain. The Company makes an assessment on
the expected lease term on a lease-by-lease basis and there
by assesses whether it is reasonably certain that any options
to extend or terminate the contract will be exercised. In
evaluating the lease term, the Company considers factors such
as anysignificant leasehold improvements undertaken over the
lease term, costs relating to the termination of the lease and
the importance of the underlying asset to Company’s operation
staking into account the location of the underlying asset and
the availability of suitable alternatives. The lease term in future
periods is reassessed to ensure that the lease term reflects the
current economic circumstances. After considering current and
future economic conditions, the Company has concluded that
no changes are required to lease period relating to the existing
lease contracts [Refer to note 2(j)].
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 108
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.
The Company adopted Ind AS 115 “Revenue from Contracts with
Customers” using the cumulative catch-up transition method.
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 recognized:
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.
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 Services 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.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 109
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 Company expects to recognize these amounts in
revenue.
Applying the practical expedient as given in Ind AS 115, the
Company 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.
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
losses.
impairment
Internally generated
and accumulated
intangibles, excluding capitalised development costs, are
not capitalised and the related expenditure is reflected in the
standalone statement of profit and loss in the period in which
the expenditure is incurred.
Intangible assets with finite lives are amortized over the useful
economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired.
The amortization period and the amortization method for an
intangible asset with a finite useful life are reviewed at least at the
end of each reporting period. Changes in the expected useful
life or the expected pattern of consumption of future economic
benefits embodied in the asset are considered to modify the
amortization period or method, as appropriate, and are treated
as changes in accounting estimates.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are
recognised in the standalone statement of profit and loss when
the asset is derecognised.
g. Depreciation and amortization
Depreciation of property, plant and equipment and amortization
of intangible assets with finite useful lives is calculated on a
straight-line basis over the useful lives of the assets estimated by
the management, basis technical assessment:
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
Impairment of 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
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 110
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,
intangible assets and right-of-use asset 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.
impairment
For assets an assessment is made at each reporting date
to determine whether there is an indication that previously
recognised
longer exist or have
losses no
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 LLPs 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. The Company has
presented share of profit and share of loss from Limited Liability
Partnerships (‘LLP’) on net basis as the management considers
the net income/expense to be its return on investment in LLP.
j.
Leases
The Company assesses at contract inception whether a contract
is/ contains a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration.
Company as a lessee:
The Company applies a single recognition and measurement
approach for all leases, except for short-term leases and leases
of low-value assets. The Company recognises lease liabilities to
make lease payments and right-of-use assets representing the
right to use the underlying assets.
i)
Right-of-use assets
recognises
right-of-use assets at
The Company
the
commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at
cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a
straight-line basis over the lease term.
If ownership of the leased asset transfers to the Company at
the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated
useful life of the asset.
The right-of-use assets are also subject to impairment. Refer
note 2(h) Impairment of non-financial assets.
ii)
Lease Liabilities
At the commencement date of the lease, the Company
recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. In calculating
the present value of lease payments, the Company uses its
incremental borrowing rate at the lease commencement date
because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made.
iii) Short-term leases and leases of low-value assets
the short-term
The Company applies
lease recognition
exemption to its short-term leased assets (i.e., those leases that
have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leased assets
that are considered to be low value. Lease payments on short-
term leases and leases of low-value assets are recognised as
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 111
expense on a straight-line basis over the lease term.
The Company has adopted Ind AS 116, effective annual reporting
period beginning April 1, 2019 and applied the standard to
its leases using the modified retrospective method with the
cumulative effect of initially applying the Standard, recognised
on the date of initial application (April 1, 2019). Accordingly, the
Company has not restated comparative information, instead,
the cumulative effect of initially applying this standard has been
recognised as an adjustment to the opening balance of retained
earnings as on April 1, 2019.
The effect of adoption of Ind AS 116 is as follows:
Impact on balance sheet [increase/ (decrease)]:
(` in Lakhs)
Assets
Right-of-use assets
Prepayments
Equity
Retained earnings
Liabilities
Lease liabilities
March 31, 2020
April 1, 2019
245
(18)
227
(32)
272
311
(18)
293
(32)
326
Impact on statement of profit and loss [increase/ (decrease) in
profit]:
Depreciation and amortisation
Finance costs
Rent expenses
March 31, 2020
(66)
(28)
11
(86)
Impact on statement of cash flows [increase/ (decrease)]:
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.
March 31, 2020
Financial assets at fair value through profit or loss
Operating lease payments
Net cash flows from operating activities
Payment of principal portion of lease liabilities
Payment of interest portion of lease liabilities
Net cash flows from financing activities
82
82
(28)
(54)
(82)
There is no material impact on the basic earnings per share.
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
Financial assets are measured at fair value through profit or
loss unless it is measured at amortized cost or at fair value
through other comprehensive income on initial recognition.
The transaction costs directly attributable to the acquisition of
financial assets at fair value through profit or loss are immediately
recognised in standalone statement of profit and loss.
Financial liabilities
Financial liabilities are subsequently carried at amortized cost
using the effective interest method, except for contingent
consideration recognized in a business combination which is
subsequently measured at fair value through profit or loss. For
trade and other payables maturing within one year from the
balance sheet date, the carrying amounts approximate fair value
due to the short maturity of these instruments.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
112
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.
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
to
Borrowing costs directly attributable
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.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 113
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
compensated absences.
include provident
fund, gratuity and
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’.
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 (`). The Company determines the functional currency as
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 114
INR on the basis of primary economic environment in which the
entity operates.
earnings of branches where it is expected that the earnings of
the branch will not be distributed in the foreseeable future.
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.
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. Management periodically evaluates
positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
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.The
company reviews the “MAT credit entitlement” asset at each
reporting date and writes down the asset to the extent that
it is no longer probable that it will pay normal tax during the
specified period.
it has any uncertain
Upon adoption of the Appendix C to Ind AS 12, the Company
considered whether
tax positions,
particularly those relating to transfer pricing. The Company’s
tax filings in different jurisdictions include deductions related to
transfer pricing and the taxation authorities may challenge those
tax treatments. The Company determined, based on its tax
compliance and transfer pricing study, that it is probable that its
tax treatmentswill be accepted by the taxation authorities. The
Appendix did not have an impact on the financial statements of
the Company.
Deferred income tax
s. Provision and contingencies
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
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
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 115
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.
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’.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 116
3. Property, plant and equipment
Computer
equipment
Furniture and
fixtures
Vehicles
Office equipment
(` in Lakhs)
Total
Cost
As at April 1, 2018
Additions
Disposals
As at March 31, 2019
Additions
Disposals
As at March 31, 2020
Depreciation
As at April 1, 2018
Charge for the year
Disposals
As at March 31, 2019
Charge for the year
Disposals
As at March 31, 2020
Net block
As at March 31, 2019
As at March 31, 2020
4. Intangible assets
Cost
As at April 1, 2018
Additions
Disposals
As at March 31, 2019
Additions
Disposals
As at March 31, 2020
Amortization
As at April 1, 2018
Amortization for the year
Disposals
As at March 31, 2019
60
12
(1)
71
2
-
73
44
14
(1)
57
6
-
63
14
10
1
-
-
1
-
-
1
-
-
-
-
-
-
-
1
1
13
-
(11)
2
-
-
2
4
2
(5)
1
1
-
2
1
-
4
-
-
4
-
-
4
1
1
-
2
1
-
3
2
1
78
12
(12)
78
2
-
80
49
17
(6)
60
8
-
68
18
12
Computer
software
Intellectual
property rights
(` in Lakhs)
Total
130
-
-
130
-
-
130
130
-
-
130
6,078
6,208
-
-
-
-
6,078
6,208
-
-
-
-
6,078
6,208
483
608
-
1,091
613
608
-
1,221
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
4. Intangible assets (contd.)
Amortization for the year
Disposals
Impairment during the year*
As at March 31, 2020
Net block
As at March 31, 2019
As at March 31, 2020
117
(` in Lakhs)
Total
488
-
3,599
5,308
4,987
900
Computer
software
Intellectual
property rights
-
-
-
130
-
-
488
-
3,599
5,178
4,987
900
*As at December 31, 2019, considering the challenges and significant investment requirements of telecom operators which had resulted in longer opportunity
conversion cycle and lower spends towards IT solutions, the management carried out the annual impairment exercise in respect of its intangible assets and basis
valuation carried out by an external expert had made an impairment provision of ` 3,599 Lakhs towards carrying value of intangible asset. In view of the COVID
-19 pandemic, the management has reassessed its projections and assumptions and has concluded that, the carrying value of intangible asset of ` 900 Lakhs as
at March 31, 2020 is appropriate.
5. Investments
Non-current
Investments carried at cost
A. Investments in equity shares of wholly owned subsidiaries (unquoted equity instruments)
100 (March 31, 2019: 100) equity shares fully paid-up, no-par value, in Subex Americas Inc. [Impairment on
investment ` 76,560 Lakhs (March 31, 2019: ` 76,560 Lakhs)]*
4,999,994 (March 31, 2019: 4,999,994) equity shares of ` 10 each fully paid-up in Subex Technologies Limited
[Impairment on investment ` 500 Lakhs (March 31, 2019: ` 500 Lakhs)]
B. Investments in limited liability partnership firms (refer note 22 )
Investment in Subex Assurance LLP [Impairment on investment ` 16,808 Lakhs (March 31, 2019: Nil)]**
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
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
936
-
936
44,756
1,869
46,625
47,561
141,429
93,868
47,561
936
-
936
61,564
1,869
63,433
64,369
141,429
77,060
64,369
* As at March 31, 2020, the Company has assessed the carrying value of the investment in its subsidiary, 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 its subsidiaries as at March 31, 2020 is appropriate.
**As at December 31, 2019, considering the challenges and significant investment requirements of telecom operators which had resulted in longer opportunity
conversion cycle and lower spends towards IT solutions, the management has carried out the annual impairment exercise in respect of its investment in subsidiary
and basis valuation carried out by an external expert had made an impairment provision of ` 16,808 Lakhs towards the carrying value of investment in subsidiary.
In view of the COVID -19 pandemic, the management has reassessed its projections and assumptions and has concluded that, the carrying value of its investment
in subsidiary as at March 31, 2020 is appropriate.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
118
6. Loans
Carried at amortized cost
Non-current
Loan receivable
Unsecured, considered good
Security deposit
Loan receivable - credit impaired
Loans to related parties (refer note 31 and note 32)
Impairment Allowance for loan receivable
Loan Receivables - credit impaired
Loans to related parties (refer note 31 and note 32)
Total
Current
Unsecured, considered good
Loans and advances to employees
Total
7. Other balances with banks
Non-Current
Other bank balances (refer note 9)
Margin money deposits [refer note 33(iii)]
8. Trade receivables*
Carried at amortized cost
Unsecured, considered good
Trade receivables from related parties
Trade receivables from other than related parties
Unsecured, credit impaired
Trade receivables from related parties
Trade receivables from other than related parties
Total (a)
Impairment allowance (allowance for expected credit loss)
Receivable from related parties, credit impaired
Receivables from other than related parties, credit impaired
Total (b)
Net Trade Receivables (a-b)
*includes dues from related parties. Refer note 31.
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
38
1,706
1,744
(1,706)
38
7
7
35
1,706
1,741
(1,706)
35
4
4
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
-
-
418
418
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
500
415
1,874
388
3,177
(1,874)
(388)
(2,262)
915
430
412
1,874
381
3,097
(1,874)
(381)
(2,255)
842
No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person.
Trade receivables are non-interest bearing and are generally on terms of 30 to 180 days.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
9. Cash and cash equivalents
Current
Balance with banks
In current accounts
Deposits with original maturity of less than 3 months
Non-current
Other balances with banks
Margin money deposits
Less: Disclosed under other balances with banks (Non-current) (Refer note 7)
119
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
72
320
392
-
-
-
-
97
-
97
418
418
(418)
-
For the purpose of the standalone statement of cash flows, cash and cash equivalents comprises of current portion of cash and cash equivalents as above.
10. Other financial assets
Unsecured, considered good
Carried at amortized cost
Non-current
Advance recoverable from former directors [refer note 33(iii)]
Current
Share of profit in excess of drawings from Subex Assurance LLP (also, refer note 31)
Interest accrued but not due on bank deposits
11. Income tax assets (net)
Non-current
Advance income-tax [net of provision for taxation ` 995 Lakhs (March 31, 2019: ` 612 Lakhs)]
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
-
-
1,871
-
1,871
234
234
-
6
6
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
2,900
2,900
2,730
2,730
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
120
12. Deferred tax asset
Non-Current
Minimum alternative tax (‘MAT’) credit entitlement (refer note 20)
Less: Provision for MAT credit*
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
425
(425)
-
425
-
425
*During the year ended March 31, 2020, the MAT credit entitlement of ` 425 Lakhs has been provided for considering the uncertainty as regards to its utilisation.
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
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
267
-
267
8
4
8
-
20
267
14
281
8
9
-
16
33
* Balances 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.
** Prepaid rent of ` 18 Lakhs has been reclassified to right-of-use asset pursuant to transition to Ind AS 116. Also, refer note 28.
14. Share capital
Authorised share capital
Equity shares of ` 10 each
As at April 1, 2018
Increase during the year
As at March 31, 2019
Increase during the year
As at March 31, 2020
No.
` in Lakhs
588,040,000
-
588,040,000
-
588,040,000
58,804
-
58,804
-
58,804
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
14. Share capital (contd.)
Preference shares of ` 98 each
As at April 1, 2018
Increase during the year
As at March 31, 2019
Increase during the year
As at March 31, 2020
Issued, subscribed and fully paid-up share capital
Equity shares of ` 10 each issued, subscribed and fully paid-up *
As at April 1, 2018
Issued during the year
As at March 31, 2019
Issued during the year
As at March 31, 2020
121
No.
` in Lakhs
200,000
-
200,000
-
200,000
562,002,935
-
562,002,935
-
562,002,935
196
-
196
-
196
56,200
-
56,200
-
56,200
* includes 243,207 (March 31, 2019: 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 ` 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, 2020 and March 31, 2019.
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) As at March 31, 2020 and as at March 31, 2019, there is no individual shareholder or shareholder (together with ‘Persons acting in
concert’) 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 34):
ESOP - III
ESOP - V
d) Number of treasury shares outstanding
Balance as per last financial statements
Add: Additions during the year
Closing balance
As at
As at
March 31, 2020
March 31, 2019
-
21,975,000
21,975,000
6,125
11,200,000
11,206,125
As at
As at
March 31, 2020
March 31, 2019
11,200,000
10,775,000
21,975,000
-
11,200,000
11,200,000
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
122
15. Other equity
Capital reserve
Balance as per last financial statements
Add: Additions during the year
Closing balance
Securities premium
Balance as per last financial statements
Add: On account of exercise of stock options
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
Add: Share-based payments
Less: On account of exercise of stock options
Closing balance
Surplus/ (deficit) in the statement of profit and loss
Balance as per last financial statements
Less: Loss for the year
Less: Effect of adoption of Ind AS-116 Leases
Less: OCI - Remeasurement loss on defined benefit obligations
Closing balance
Treasury Shares
Balance as per last financial statements
Less: Equity shares purchased by Subex Employee Welfare and ESOP Benefit Trust
Add: On account of exercise of stock options
Closing balance
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
2,776
-
2,776
26,705
7
26,712
1,780
-
1,780
17
102
(5)
114
(15,684)
(20,588)
(32)
(21)
2,776
-
2,776
26,705
-
26,705
1,780
-
1,780
1
16
-
17
(13,228)
(2,453)
-
(3)
(36,325)
(15,684)
(645)
(611)
23
(1,233)
-
(645)
-
(645)
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
15. Other equity (contd.)
Summary of other equity:
Capital Reserve
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 and profit and loss on exercise of stock
options held as treasury shares (refer note 34). 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
This represents surplus/ (deficit) arising from operations of the Company
Treasury Shares
This represents own equity shares that are acquired from open market for issuance to employees under ESOP
scheme.
Total other equity
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**
123
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
2,776
2,776
26,712
26,705
1,780
114
1,780
17
(36,325)
(15,684)
(1,233)
(645)
(6,176)
14,949
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
5
281
286
1
267
268
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 124
16. Trade payables (contd.)
*Payable to micro and small enterprises
Description
a)
b)
c)
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;
the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises
Development Act, 2006, along with the amount of the payment made to the supplier beyond the appointed
day during each accounting year
d)
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;
e)
f)
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
** includes dues to related parties. Refer note 31.
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 38
17. Other current financial liabilities
Carried at amortized cost
Current
Share of loss from Subex Digital LLP*
Drawings in excess of share of profit from Subex Assurance LLP*
Employee related liabilities
Capital creditors
Advance from related parties*
* refer note 31
18. Other current liabilities
Unearned revenue
Statutory dues
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
5
-
-
-
-
-
1
-
-
-
-
-
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
4,351
-
48
-
2
4,401
2,363
235
57
1
2
2,658
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
1
21
22
-
17
17
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
19. Provisions
Non-current
Provisions for employee benefits
Gratuity [refer note 35(b)]
Current
Provisions for employee benefits
Gratuity [refer note 35(b)]
Leave benefits
Provision for litigations [refer note 33(iii)]
20. Income tax liabilities (net)
Current
Provision for tax [net of advance tax Nil (March 31, 2019: ` 234 Lakhs)]
Provision for foreign taxes
Provision for litigation [net of tax deducted at source ` 62 Lakhs (March 31, 2019: ` 62 Lakhs)]*
125
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
3
3
3
9
-
12
1
1
-
12
100
112
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
-
6
102
108
150
22
102
274
* 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 33(i)
for further details.
Income tax expense in the standalone statement of profit and loss consist of the following:
Tax expense:
Provision for MAT credit (refer note 12)
Reversal - foreign withholding taxes*
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
425
(307)
118
-
(2)
(2)
*Represents provision in respect of withholding taxes deducted/ deductible by the overseas customers of the Company, which is net of reversal of ` 308
Lakhs considered no longer necessary on account of favourable assessment order received during the year allowing foreign tax credit in respect of AY 2016-17.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
126
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:
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
Provision for MAT credit
Total adjustments (B)
Total tax expense (A+B)
21. Revenue from operations
Sale of services
Disaggregation of revenue
Revenue by offering
Managed services
Sub-contracting services (refer note 31)
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
(20,470)
34.94%
(7,153)
(307)
7,153
425
7,271
118
(2,455)
34.94%
(858)
(2)
858
-
856
(2)
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
1,079
1,079
-
1,079
1,079
1,916
1,916
44
1,872
1,916
22. Share of profit/ (loss) from Limited Liability Partnerships before exceptional items (net)*
Share of profit from Subex Assurance LLP
Share of loss from Subex Digital LLP
* Refer note 5 and note 31.
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
3,878
(1,989)
1,889
165
(1,765)
(1,600)
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
23. Other income
Insurance claim
Interest income on:
Security deposits
Bank deposits
Miscellaneous income
24. Employee benefits expense
Salaries, wages and bonus
Contribution to provident and other funds
Employee share based payments
Gratuity expense [refer note 35(b)]
Staff welfare expenses
25. Finance cost
Interest expense on Lease liability
Bank charges
26. Depreciation and amortization expense
Depreciation of property, plant and equipment
Depreciation on right-of-use assets
Amortization of intangible assets
127
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
155
3
26
18
202
-
3
7
-
10
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
574
21
7
4
10
616
684
24
16
4
11
739
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
28
4
32
-
4
4
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
8
66
488
562
17
-
608
625
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
128
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
Payments to auditors [refer note 27(i)]
Allowance for expected credit loss (net)
Directors sitting fees (refer note 31)
Contribution towards corporate social responsibility
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
8
8
11
15
6
24
8
16
10
79
91
26
164
45
12
50
-
573
4
-
128
16
7
33
8
13
13
102
68
13
300
55
35
56
10
861
27(i). Payments to auditors (excluding goods and services tax):
(` in Lakhs)
As auditor
Audit fee
Tax audit fee
In other capacity
Other services (certification services)
Reimbursement of expenses
28. Leases
Year ended
Year ended
March 31, 2020
March 31, 2019
35
1
7
2
45
48
1
3
3
55
Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian
Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases
and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both
lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.
The Company has adopted Ind AS 116, effective annual reporting period beginning April 1, 2019 and applied the standard to its leases using the
modified retrospective method with the cumulative effect of initially applying the Standard, recognised on the date of initial application (April
1, 2019). Accordingly, the Company has not restated comparative information, instead, the cumulative effect of initially applying this standard
has been recognised as an adjustment to the opening balance of retained earnings as on April 1, 2019.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
129
28. Leases (contd.)
On transition, the Company recognised a lease liability measured at the present value of the remaining lease payments. The right-of-use
asset is recognised at its carrying amount as if the standard had been applied since the commencement of the lease, but discounted
using the lessee’s incremental borrowing rate as at April 1, 2019. Accordingly, a right-of-use asset of ` 311 Lakhs and lease liability of
` 326 Lakhs has been recognised. The cumulative effect of applying the standard resulted in ` 32 Lakhs being debited to retained earnings,
net of taxes. The lease payments for operating leases as per Ind AS 17 - Leases, were earlier reported under cash flow from operating activities.
The average incremental borrowing rate of 9.40% has been applied to lease liabilities recognised in the balance sheet at the date of initial
application.
On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-to-use
asset, and finance cost for interest accrued on lease liability.
The difference between the future minimum lease rental commitments towards non-cancellable operating leases reported as at March 31,
2019 compared to the lease liability as accounted as at April 1, 2019 is primarily due to inclusion of present value of the lease payments for the
cancellable term of the leases, reduction due to discounting of the lease liabilities as per the requirement of Ind AS 116 and exclusion of the
commitments for the leases to which the Company has chosen to apply the practical expedient as per the standard.
The details of the right-of-use asset held by the Company is as follows:
Gross Carrying Value
As at April 1, 2019
Additions during the year
Disposals during the year
As at March 31, 2020
Depreciation
Charge for the year
Disposals
As at March 31, 2020
Net block
As at March 31, 2020
(` in Lakhs)
Buildings
Total
311
-
-
311
66
-
66
311
-
-
311
66
-
66
245
245
The Company incurred ` 11 Lakhs for the year ended March 31, 2020 towards expenses relating to short-term leases and leases of low-value
assets.
Set out below are the carrying amounts of lease liabilities and the movements during the period:
As at April 1, 2019
Additions
Interest on lease liabilities
Payments
As at March 31, 2020
Current
Non-current
(` in Lakhs)
Lease
Liabilities
326
-
28
(82)
272
190
82
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
130
28. Leases (contd.)
The following are the amounts recognised in profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases (included in other expenses)
Total amount recognised in statement profit or loss
(` in Lakhs)
Year ended
March 31, 2020
66
28
11
105
The Company had total cash outflows for leases of ` 82 Lakhs for the year ended March 31, 2020. There are no future cash outflows relating to leases that
have not yet commenced.
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 (` per share)
Loss attributable to equity shareholders (` in Lakhs)
Weighted average number of equity shares (No. in Lakhs)*
Basic and diluted loss per share (` per share)**
Year ended
March 31, 2020
Year ended
March 31, 2019
10
(20,588)
5,452
(3.78)
10
(2,453)
5,577
(0.44)
*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, 2020 and as at March 31, 2019 are anti-dilutive and accordingly have not been considered for the purpose
of computing dilutive EPS of the respective years.
30. 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. Australia and Bangladesh. Customer relationships
are driven based on customer domicile.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
30. Segment reporting (contd.)
Segment revenue by geographical location are as follows*:
Region
Americas
India
APAC
131
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
424
-
655
1,079
489
44
1,383
1,916
* Revenues by geographic area are based on the geographical location of the customer.
No external customer individually accounted for more than 10% of the total revenue of the Company during the years ended March 31, 2020 and March 31, 2019.
Revenue from one of the subsidiary accounts for more than 10% of the total revenues of the Company (refer note 31).
Non-current operating assets by geographical location are as follows**:
Region
India
Outside India
Total non-current operating assets
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
1,424
-
1,424
5,286
-
5,286
** Non-current operating assets includes Property, plant and equipment, Right-of-use assets, Other intangible assets and Balance with statutory/ government
authorities and Prepaid expenses.
31. 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
Subex Digital LLP
Subex Bangladesh Private Limited (incorporated w.e.f. February 13, 2020)
Trust which is consolidated
Subex Employee Welfare and ESOP Benefit Trust (w.e.f September 6, 2018)
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
132
31. Related party transactions (contd.)
ii. Related parties under Ind AS 24 and Companies Act, 2013
Key management personnel
Anil Singhvi
Nisha Dutt
Poornima Kamalaksh Prabhu
George Zacharias
Vinod Kumar Padmanabhan
Shiva Shankar Naga Roddam
Venkatraman G S
G V Krishnakanth
Ashwin Chalapathy
Mehernaz Dalal
Chairman and Independent Director
Independent Director
Independent Director
Independent Director (w.e.f. May 13, 2019)
Managing Director and Chief Executive Officer (w.e.f April 1, 2018)
Whole-time Director & Chief Operating Officer (w.e.f February 07, 2020)
Chief Financial Officer (w.e.f. November 30, 2018)
Company Secretary (w.e.f July 10, 2018)
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)
iii. Details of the transactions with the related parties during the year ended March 31, 2020:
A. Transactions with wholly owned subsidiaries
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
Income from software development and subcontracting services:
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Marketing and allied service charges:
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Employee Stock Option expenses allocated to:
Subex Assurance LLP
Subex Digital LLP
Reimbursement of expenses incurred by Subex Limited on behalf of its subsidiaries:
Subex Assurance LLP
Subex Digital LLP
Subex (Asia Pacific) Pte. Limited
Reimbursement of expenses incurred by the subsidiaries on behalf of Subex Limited:
Subex Assurance LLP
Subex (Asia Pacific) Pte. Limited
Subex (UK) Limited
Subex Inc.
Drawings during the year from Limited Liability Partnership:
Subex Assurance LLP
Loan given to Subex Employee Welfare and ESOP Benefit Trust
424
655
1,079
-
528
2
530
84
10
94
106
10
16
132
17
15
1
1
34
1,772
1,772
611
611
489
1,383
1,872
1
512
-
513
-
-
-
118
10
12
140
202
78
1
-
281
1,035
1,035
645
645
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 31. Related party transactions (contd.)
Loan repaid by Subex Employee Welfare and ESOP Benefit Trust
Advance received
Subex Assurance LLP
Share of profit/(loss) from Limited Liability Partnerships before exceptional items :
Subex Assurance LLP
Subex Digital LLP
Share of profit/(loss) from Subex Assurance LLP on account of :
-Impairment of intangible assets and Investment in subsidiary
B. Transactions with key managerial personnel
Salary and perquisites*
Vinod Kumar Padmanabhan **
Venkatraman G S **
G V Krishnakanth **
Mehernaz Dalal
Director sitting fees
Anil Singhvi
Nisha Dutt
Poornima Prabhu
George Zacharias
133
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
25
25
-
-
3,878
(1,989)
1,889
(16,808)
(16,808)
-
-
2
2
165
(1,765)
(1,600)
-
-
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
57
67
50
-
174
19
10
17
4
50
57
31
24
63
175
24
14
18
-
56
* 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 ended March 31, 2020, the Company has granted 18 lakhs ESOPs (March 31, 2019 : 25 Lakhs ESOPs) to certain key management personnel
under ESOP 2018 scheme, which includes options granted to key management personnel of subsidiaries. Of the aforesaid ESOPs, 425,000 options has been
exercised during the year. Refer note 34.
iv. Details of balances receivable from and payable to related parties are as follows:
(` in Lakhs)
Balances receivable from and payable to wholly owned subsidiaries
Trade receivables
Subex Americas Inc. [Net of provision of ` 1,841 Lakhs (March 31, 2019: ` 1,841 Lakhs)]
Subex Inc.
Subex (Asia Pacific) Pte. Limited [Net of provision of ` 34 Lakhs (March 31, 2019:` 34 Lakhs)]
Subex Assurance LLP
Subex Digital LLP
As at
As at
March 31, 2020
March 31, 2019
-
182
259
46
13
500
-
87
337
6
-
430
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 134
31. Related party transactions (contd.)
Trade payables
Subex (UK) Limited
Subex Inc.
Subex (Asia Pacific) Pte. Limited
Subex Assurance LLP
Loans receivable
Subex Technologies Limited [Net of provision of ` 1,706 Lakhs (March 31, 2019: ` 1,706 Lakhs)]
Advance from related parties
Subex Assurance LLP
Current financial assets
Share of profit from investment in Subex Assurance LLP
Current financial liabilities
Share of loss from investment in Subex Digital LLP
Drawings in excess of share of profit from Subex Assurance LLP
Outstanding guarantees given to
Subex Assurance LLP [refer note 33(iv)]
Also, refer note 33(v) for comfort letter given to subsidiaries.
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
1
181
15
1
198
-
-
2
2
1,871
1,871
4,351
-
4,351
-
-
1
127
76
1
205
-
-
2
2
-
-
2,363
235
2,598
4,500
4,500
32. 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:
(` in Lakhs)
Particulars
As at March 31, 2020
As at March 31, 2019
Subex Technologies Limited*
Outstanding
Maximum balance
Outstanding
Maximum balance
Amount
outstanding during
Amount
outstanding during
the year
1,706
1,706
1,706
the year
1,706
1,706
1,706
* Loans and advances to Subex Technologies Limited is provided for as at March 31, 2020: ` 1,706 Lakhs (March 31, 2019: ` 1,706 Lakhs).
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 33. Contingent liabilities
Income tax demands [refer note (i)]
Service tax demands [refer note (ii)]
Others [refer note (iii)]
Corporate guarantee issued by the Company [refer note (iv)]
i.
Income tax
135
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
2,317
3,687
-
-
10,952
3,687
1,293
4,500
The Company has received assessment orders in respect of each of the financial years 2009-10, 2010-11, 2013-14 and 2014-15, 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, including its
tax experts/ advisors, are 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 its position will likely be upheld on ultimate resolution and will not have material adverse effect
on the Company’s financial position and results of operations. With respect to the demands of Subex Limited, the Company has paid
` 995 lakhs.
ii. Service tax
The Company has received demand order towards the service tax on import of certain services and equivalent amount of penalties
under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006 to July 2009. These
demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The
management is of the view that the service tax is not applicable on those import of services, and is confident that the demands raised by
the Assessing Officers are not tenable under law.
iii. Others
The Company had received certain claims from its former MD & CEO and former COO for an amount of ` 1,293 Lakhs (March 31, 2019:
` 1,293 Lakhs). The Company disputed the said claims and had also claimed the excess managerial remuneration of ` 124 Lakhs (March
31, 2019: ` 124 Lakhs) paid to the aforementioned ex-employees during the year ended March 31, 2013, in excess of the limits prescribed
under Schedule XIII of the Companies Act, 1956 and other advances paid during the year 2012-13 amounting to ` 110 Lakhs (March 31,
2019: ` 110 Lakhs).
On January 23, 2020, the Company had entered into a settlement agreement with the ex-employees in respect of these long drawn
litigations and has paid an amount of ` 820 Lakhs (net of ` 234 Lakhs recoverable from such ex-employees). Accordingly, the aforesaid
litigation is amicably settled and the related bank guarantee of ` 418 Lakhs is released.
iv. Corporate Guarantee
The Company had given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of Nil (March 31, 2019: ` 4,500 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 subsidiaries viz., Subex Americas Inc. and Subex
Digital LLP.
34. Employee stock options plans (‘ESOPs’)
The Company during the year 2005-2006 had established equity settled ESOP schemes of ESOP III. As per the 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.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
136
34. Employee stock options plans (‘ESOPs’) (contd.)
During the previous year, the Board of Directors and the shareholders of the Company approved “Subex Employees Stock Option
Scheme – 2018” (referred to as the “ESOP Scheme 2018” or “ESOP - V” ) to be administered through Subex Employee Welfare and ESOP Benefit
Trust (referred to as the “ESOP Trust”). The ESOP Trust is authorised to acquire shares of the Company 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 recognised at cost and deducted from other equity.
The Nomination and Remuneration Committee of the Company in their meeting held on February 7, 2020 granted 12,800,000 options under
approved ESOP V scheme to the eligible employees. Total options granted till March 31, 2020 under the said scheme are 22,400,000. 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:
Options outstanding at the beginning of the year
ESOP – III
ESOP – V
Exercised during the year
ESOP – V
Granted during the year
ESOP – V
Cancelled, surrendered or lapsed during the year
ESOP – III
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
2019-20
2018-19
Options (no.)
Weighted average
exercise price per
stock option (`)
Options (no.)
Weighted average
exercise price per
stock option (`)
6,125
10,650,000
425,000
12,800,000
6,125
1,050,000
-
21,975,000
-
4,375,000
13.74
6.00
6.00
6.00
13.74
6.00
-
6.00
-
6.00
24,055
18.24
-
-
10,650,000
17,930
-
6,125
10,650,000
6,125
-
-
-
6.00
19.78
-
13.74
6.00
13.74
-
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
Range of exercise prices (`)
life(years)*
2019-20
2018-19
2019-20
-
2.94
0.46
3.35
-
6.00
2018-19
10.26 - 24.99
6.00
* 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 (`)
March 31, 2020
March 31, 2019
6.70%
41.00%
2
1.23
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.
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
137
35. 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 ` 20
Lakhs (March 31, 2019: ` 23 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.
Change in defined benefit obligation
Obligations at beginning of the year
Service cost
Interest cost
Benefits settled
Actuarial loss (through OCI)
Obligations at end of the year
B.
Change in plan assets
Plan assets at beginning of the year, at fair value
Expected return on plan assets
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 standalone balance sheet
D.
Expenses recognised in the standalone statement of profit and loss:
Service cost
Interest cost (net)
Net gratuity cost
E.
Re-measurement gains/ (losses) in OCI
Actuarial (loss)/ gain due to financial assumption changes
Actuarial (loss)/ gain due to experience adjustments
Actuarial (loss)/ gain - return on plan assets greater than discount rate
Total expenses recognised through OCI
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
20
4
1
(21)
21
25
19
1
20
(21)
19
(25)
19
(6)
22
4
1
(10)
3
20
18
1
10
(10)
19
(20)
19
(1)
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
4
-
4
-
(21)
-
(21)
4
-
4
-
(3)
-
(3)
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
138
35. Employee benefit plans (contd.)
F.
Assumptions
Discount rate
Expected return on plan assets
Salary escalation
Attrition rate
Retirement age
Year ended
Year ended
March 31, 2020
March 31, 2019
6.41%
7.30%
7.00%
18.00%
60 years
7.30%
7.60%
8.00%
18.00%
60 years
Assumptions regarding future mortality experience are set in accordance with the published statistics by Indian Assured Lives Mortality (2012-14) [March 31, 2019:
Indian Assured Lives Mortality (2006-08)].
G
Five years pay-outs
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
H.
Contribution likely to be made for the next one year
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
3
3
3
3
3
20
3
-
3
3
3
3
18
-
The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors, benefit
obligation such as supply and demand in the employment market.
I.
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Investment with insurer
J.
Sensitivity analysis
Particulars
As at
As at
March 31, 2020
March 31, 2019
100%
100%
(` in Lakhs)
Year ended March 31, 2020
Year ended March 31, 2019
Effect of change in discount rate
0.5% increase
0.5% decrease
0.5% increase
0.5% decrease
Impact on defined benefit obligation increase/ (decrease)
(0.57)
0.60
(0.48)
0.50
Effect of change in salary
1% increase
1% decrease
1% increase
1% decrease
Impact on defined benefit obligation increase/ (decrease)
1.19
(1.11)
0.99
(0.93)
Effect of change in withdrawal assumption
5% increase
5% decrease
5% increase
5% decrease
Impact on defined benefit obligation increase/ (decrease)
(0.84)
(1.01)
(0.94)
1.09
K.
The average duration of the defined benefit plan obligation at the end of the reporting period of gratuity is 6 years (March 31, 2019: 6 years).
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
139
36. Capital management
The Company’s objective for capital management is to maximize shareholder value, safeguard business continuity and support the growth
of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic
investment plans. The funding requirements are met through equity and operating cash flows generated. The Company does not have any
long term debts hence there is no capital gearing ratio. Surplus fund has been invested into risk free highly liquid financial instruments.
37. Fair value hierarchy
The carrying value of financial instruments by categories is as follows:
Particulars
Financial assets measured at amortized cost
Share of profit in excess of drawings from Subex Assurance LLP*
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*
Lease Liabilities^
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
1,871
-
915
38
7
2,831
392
-
392
48
286
-
2
4,351
-
272
4,959
-
6
842
35
4
887
97
418
515
57
268
1
2
2,363
235
-
2,926
* 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.
38. Financial risk management
The Company’s activities expose it to the following risks:
i. Credit risk
ii. Interest rate risk
iii. Liquidity risk
iv. Market risk
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
140
38. Financial risk management (contd.)
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
The movement in credit loss allowance on customer balance is as follows :
Opening balance
Add: Provided during the year
Less: Bad-debts written-off
Add: Translation difference
Closing balance
c. Other financial assets and deposits with banks
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
915
915
842
842
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
2,255
12
(18)
13
2,262
2,228
35
(9)
1
2,255
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 does not have any debt outstanding as at March 31, 2020 and as at March 31, 2019. Also, the Company’s investments
are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.
iii. Liquidity risk
The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The
Company believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is
perceived.
The break-up of cash and cash equivalents and deposits is as below:
Particulars
Cash and cash equivalents
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
392
392
97
97
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
141
38. Financial risk management (contd.)
The table below summarises the maturity profile of the Company’s financial liabilities at the reporting date. The amounts are based on
contractual undiscounted payments.
Particulars
As at March 31, 2020
Trade payables
Lease Liability*
Other financial liabilities
As at March 31, 2019
Trade payables
Other financial liabilities
On demand
0-180 Days
181-365 Days More than 365 Days
50
-
-
50
50
-
50
232
41
4,401
4,674
218
60
278
4
41
-
45
-
2,598
2,598
-
243
-
243
-
-
-
(` in Lakhs)
Total
286
325
4,401
5,012
268
2,658
2,926
*Includes future cash outflow toward estimated interest on lease liabilities
iv. Market risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Company’s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company
has exposures to United States Dollars (‘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, 2020
Particulars
Financial assets
Trade receivables
Total financial assets
Financial liabilities
Trade payables
Total financial liabilities
Net financial assets/ (liabilities)
March 31, 2019
Particulars
Financial assets
Trade receivables
Total financial assets
Financial liabilities
Trade payables
Total financial liabilities
Net financial assets/ (liabilities)
Sensitivity analysis
Denominated currency
SGD
Others
259
259
15
15
244
Denominated currency
SGD
333
333
77
77
256
1
1
1
1
-
Others
1
1
1
1
-
USD
392
392
182
182
210
USD
241
241
128
128
113
(` in Lakhs)
Total
652
652
198
198
454
(` in Lakhs)
Total
575
575
206
206
369
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 0.42%
(March 31, 2019: 0.19%).
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
142
39. 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,
2020, considering losses incurred in past years, the Company does not have the obligation to incur expenses in relation to CSR.
Amount spent during the previous year ended March 31, 2019
(i) Construction/ acquisition of any asset
(ii) On purposes other than (i) above
In Cash
Yet to be paid
-
10
in cash
-
-
(` in Lakhs)
Total
-
10
40. 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, 2020 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.
41. The Board of Directors in its meeting held on February 07, 2020, has approved a scheme of Capital Reduction in accordance with
Section 52 of the Companies Act, 2013 and Section 66 of the Companies Act, 2013 read with National Company Law Tribunal (‘NCLT’)
(Procedure for reduction of share capital of Company) Rules, 2016 and other applicable provisions of the Companies Act, 2013. Subject
to the consent of the Shareholders and the approval from NCLT and other statutory authorities as and where applicable, the Accumulated
Losses of ` 38,401 Lakhs as at December 31, 2019 shall be written off against the paid-up share capital of the Company for an amount of
` 28,100 Lakhs by reducing the face value of the equity shares from ` 10/- to ` 5/- each and Securities Premium Account balance for an
amount of ` 10,301 lakhs.
42. The Company has considered internal and certain external sources of information including economic forecasts, budgets required
to meet performance obligations and likely delays on contractual commitments, upto the date of approval of these standalone Ind
AS financial statements, in determining the possible impact from the COVID-19 pandemic. The Company has used the principles of
prudence in applying judgements, estimates and assumptions and based on the current estimates, the Company expects to fully recover
the carrying amount of its assets. The impact of the global health pandemic may be different from that estimated as at the date of
approval of these standalone Ind AS financial statements and the Company will continue to closely monitor any material changes to its
assessment of economic impact of COVID- 19 pandemic.
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
NOTES TO THE STANDALONE FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
143
FORM AOC 1
(Information in respect of each Subsidiary to be presented with amounts in ` Lakhs)
Sl.No
1
2
3
4
5
6
7
8
9
Name of the Subsidiary
Subex (Asia
Subex (UK)
Subex
Subex Inc.
Subex
Subex
Subex
Subex
Subex
Pacific) Pte.
Ltd.
Americas
Technologies
Middle East
Bangladesh
Assurance
Digital LLP
Ltd.
Inc.
Ltd.***
(FZE)
Pvt Ltd.
LLP
Reporting Period of the
March 31,
March 31,
March 31,
March 31,
March 31,
March 31,
March 31,
March 31,
March 31,
Subsidiary Concerned
Reporting Curency
2020
SGD
2020
GBP
2020
USD
2020
USD
2020
INR
2020
AED
2020
BDT
Exchange Rate as on the last
53.03
93.50
75.67
75.67
1
20.60
0.86038
2020
INR
1
2020
INR
1
date of the 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/ (loss) after Taxation
Proposed Dividend
%of Shareholding**
3,986
(3,171)
41
49,806
-
4,853
(50,140)
(2,244)
2,249
10,693
1,434
-
5,799
4,482
675
1009
-
3,064
21,759
2,459
100
19
-
1,604
1,113
-
664
664
-
2,938
5,182
-
9,580
1,088
1,074
-
500
(481)
83
64
-
-
(4)
(4)
-
27
117
2,136
1,992
-
-
11
401
390
35
15
-
11
11
-
46,627
(2,483)
-
54,674
8,047
20,691
(11,516)
(12,930)
-
1,572
4,055
-
882
(1,989)
(1,989)
-
-
2,433
382
32,965
100%
100%
100%
100%
100%
100%
100%
100%
100%
Date of Acquisition/
June 23,
June 23,
April 1,
June 23,
March 28,
March 25,
February 13,
April 05,
April 05,
Incorporation
2006
2006
2007
2006
2005
2015
2020
2017
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
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20 144
CONSOLIDATED
F I N A N C I A L
S T A T E M E N T S
Subex Annual Report 2019-20 145
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
Statement of Profit and Loss, including other comprehensive income/
(loss), 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, 2020, their consolidated loss including other
comprehensive income/(loss), 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, 2020.
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
Revenue recognition and recoverability of trade receivables and unbilled revenue (as described in note 22, 8 and 10 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.
Our audit approach consisted of testing of the design and operating
effectiveness of the internal controls and substantive testing as follows:
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”), which 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.
(i) We evaluated the design of internal controls and tested the operating
effectiveness of the internal control over revenue recognition and monitoring
of trade receivables and unbilled revenue;
(ii) We performed following procedures on a sample of revenue contracts,
selected on a test check basis:
Read and identified 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;
Subex Annual Report 2019-20 146
The recoverability of trade receivables and unbilled revenue balances is a
key element of the Group’s working capital management. The Group has
determined the allowance for credit losses based on historical loss experience
adjusted to reflect current and estimated future economic conditions, while
taking into account possible impact from the COVID -19 pandemic.
We focused on this risk as the balances are material and there are significant
judgments involved in assessing recoverability of trade receivables and
unbilled revenue balances.
(iii) Tested evidence of license delivery and customer acceptance and
performed cut-off procedures;
(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;
(v) We performed procedures on sample basis of obtaining trade receivable
confirmations independently, checked subsequent to year end collections and
inquired with management about the recoverability status of receivables and
unbilled revenue;
(vi) We evaluated management’s assumptions used to determine the trade
receivables and unbilled revenue impairment amount, through detailed analysis
of ageing and assessment of material overdue individual balances;
(vii) We tested the mathematical accuracy and computation of the allowances
on expected credit losses by using the same input data used by the Group; and
(viii) We assessed the disclosures in the consolidated Ind AS financial statements.
Impairment assessment of Goodwill (as described in note 5 of the consolidated Ind AS financial statements)
As at March 31, 2020, the Group’s net goodwill balance amounts to
` 34,409 lakhs pertaining to two cash generating units (‘CGUs’) ie: Revenue
Management Solutions (‘RMS’) and Data Integrity Management (‘DIM’).
As described in Note 5, an impairment provision of ` 31,473 Lakhs has been
made during the year towards the carrying value of goodwill.
To assess if there is an impairment of the carrying value of 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 Holding
Company. In view of the COVID -19 pandemic, the management has
reassessed its future business plans and key assumptions as at March 31, 2020
while assessing the adequacy of impairment provision.
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 consolidated Ind AS financial
statements.
Potential liability in relation to tax litigations (as described in note 32 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 in accordance with the
requirements of Appendix C to Ind AS 12 on ‘Uncertainty over Income tax
treatments’, 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 and hence considered as a key audit matter.
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 confirmation from management’s expert on ongoing litigations
along with risk assessment and assessed the independence, objectivity and
competence of the management expert;
(iii) We obtained details of completed tax assessments, demands issued by tax
authorities, orders/notices received with respect to other litigations from the
management;
(iv) We held discussions with management to understand their assessment
of the quantification and likelihood of significant exposures and the provision
required in accordance with the requirements of Appendix C to Ind AS 12
which is supported by assessment reports from management’s expert;
(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; and
(vi)We assessed the disclosures in the consolidated Ind AS financial statements.
Subex Annual Report 2019-20 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, Business Responsibility Report and Report on
Corporate Governance (hereinafter together referred to as “reports”),
but does not include the consolidated Ind AS financial statements
and our auditor’s report thereon. The reports are expected to be
made available to us after the date of this auditor’s report.
Our opinion on the consolidated Ind AS financial statements does
not cover the other information and we will 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
identified above when it becomes available and, in doing so, consider
whether such other information is materially inconsistent with the
consolidated Ind AS financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
Responsibilities of Management and Those Charged with
Governance 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/(loss),
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.
In preparing the consolidated Ind AS 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 Charged with Governance are also responsible for overseeing
the financial reporting process of the Group.
147
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 with reference
to financial statements 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.
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
Subex Annual Report 2019-20 148
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 Ind AS 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, 2020 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;
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 as on March 31, 2020, 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 Subsidiaries, incorporated in India, is
disqualified as on March 31, 2020 from being appointed as a
director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy and the operating effectiveness
of the internal financial controls over financial reporting 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;
(g)
In our opinion, the managerial remuneration for the year ended
March 31, 2020, 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.
ii.
The consolidated Ind AS financial statements disclose the
impact of pending litigations on its consolidated financial
position of the Group in its consolidated Ind AS financial
statements – Refer Note 32 to the consolidated Ind AS
financial statements;
The Group did not have any material foreseeable losses in
long-term contracts including derivative contracts during
the year ended March 31, 2020; 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,
2020.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
(c) The Consolidated Balance Sheet, the Consolidated Statement of
Profit and Loss including the Statement of Other Comprehensive
Income/(Loss), 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;
per Rajeev Kumar
Partner
Membership Number: 213803
UDIN: 20213803AAAABF4017
Place of Signature: Bengaluru
Date: May 11, 2020
(d)
In our opinion, the aforesaid consolidated Ind AS financial
statements comply with the Accounting Standards specified
Subex Annual Report 2019-20 149
Annexure 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,
2020, 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; 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.
Subex Annual Report 2019-20 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 31,2020, 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.
150
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.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Rajeev Kumar
Partner
Membership Number: 213803
UDIN: 20213803AAAABF4017
Place of Signature: Bengaluru
Date: May 11, 2020
Subex Annual Report 2019-20 CONSOLIDATED BALANCE SHEET
as at March 31, 2020
151
(` in Lakhs)
Notes
As at
As at
March 31, 2020
March 31, 2019
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill on consolidation
Other intangible assets
Financial assets
Loans
Other balances with banks
Other financial assets
Income tax assets (net)
Deferred tax assets (including MAT credit entitlement)
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
Financial liabilities
Lease Liabilities
Provisions
Deferred tax liabilities (net)
3
28
5
4
6
7
10
11
12
13
6
8
9
7
10
13
14
15
28
19
20
434
4,424
34,409
3
533
189
-
3,305
262
267
43,826
104
9,206
9,043
67
5,264
588
24,272
68,098
56,200
(4,661)
51,539
3,458
355
3,774
7,587
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
Subex Annual Report 2019-20
152
CONSOLIDATED BALANCE SHEET (contd.)
as at March 31, 2020
Current liabilities
Financial liabilities
Lease 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)
Total liabilities
Total equity and liabilities
(` in Lakhs)
Notes
As at
As at
March 31, 2020
March 31, 2019
28
16
17
18
19
21
1,409
41
1,605
2,212
2,342
649
714
8,972
16,559
-
7
827
2,961
2,452
729
1,030
8,006
10,239
68,098
89,649
Corporate information and significant accounting policies
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
for the year ended March 31, 2020
153
(` in Lakhs)
Notes
Year ended
Year ended
March 31, 2020
March 31, 2019
1
Income
Revenue from operations
Other income
Total income
2
Expenses
Employee benefits expense
Finance costs
Depreciation and amortization expense
Exchange fluctuation gain (net)
Other expenses
Total expenses
Profit before exceptional items and tax expense (1-2)
Exceptional items
Impairment of goodwill (Refer note 5)
Provision no longer required written back
Provision for claim settlement [Refer note 32(iii)]
Total exceptional items
(Loss)/ profit before tax expense (3+4)
Tax expense (net):
Current tax charge
Provision for MAT credit (Refer note 12)
Provision - foreign withholding taxes (net)
Deferred tax charge (net)
(Loss)/ profit for the year (5-6)
Other comprehensive income/ (loss) (‘OCI’), net of tax expense
Items that will be reclassified subsequently to profit or loss:
Net exchange gain/ (loss) on translation of foreign operations
Items that will not be reclassified subsequently to profit or loss:
Re-measurement loss on defined benefit plans
Total comprehensive income/ (loss)
3
4
5
6
7
8
9
Total comprehensive income/ (loss) for the year attributable to equity holders of the
Company (7+8)
10
Basic and diluted (loss)/ earnings per equity share [nominal value of share ` 10
(March 31, 2019 : ` 10)]
22
23
24
25
26
27
21
34
29
36,498
563
37,061
17,454
564
1,508
(887)
10,426
29,065
7,996
(31,473)
761
(1,054)
(31,766)
(23,770)
117
425
754
1,849
3,145
(26,915)
5
(34)
(29)
(26,944)
(4.94)
34,812
101
34,913
19,105
216
483
(171)
10,572
30,205
4,708
-
-
-
-
4,708
274
-
885
1,027
2,186
2,522
(390)
(38)
(428)
2,094
0.45
Corporate information and significant accounting policies
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
154
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended March 31, 2020
A. Equity share capital (refer note 14):
Equity shares of ` 10 each issued, subscribed and fully paid-up
As at April 1, 2018
Issued during the year
As at March 31, 2019
Issued during the year
As at March 31, 2020
B. Other equity (refer note 15):
No.
` in Lakhs
562,002,935
-
562,002,935
-
562,002,935
56,200
-
56,200
-
56,200
(` in Lakhs)
Particulars
Attributable to equity holders of the Company
Reserves and Surplus
OCI
Total
Securities
General
Employee
(Deficit)/
Treasury
Exchange
premium
reserve
stock
surplus
Shares
reserve on
options
in the
reserve
statement
consolidation
As at April 1, 2018
Add: Profit for the year
Less: Other comprehensive income/ (loss)
Less: Equity shares purchased by Subex Employee
Welfare and Employee Stock Option Plan (“ESOP”)
Benefit Trust
Add: Share-based payments (refer note 33)
As at March 31, 2019
Less: Loss for the year
Less: Transition impact of Ind AS 116 - Leases, net of tax
Less/ Add: Other comprehensive income/ (loss)
Less: Equity shares purchased by Subex Employee
Welfare and Employee Stock Option Plan (“ESOP”)
Benefit Trust
Add: Share-based payments (refer note 33)
Add/(less): On account of exercise of stock options
26,705
1,780
-
-
-
-
-
-
-
-
26,705
1,780
-
-
-
-
-
7
-
-
-
-
-
-
As at March 31, 2020
26,712
1,780
Corporate information and significant accounting policies (refer notes 1 & 2)
The accompanying notes are an integral part of the consolidated financial statements
2
-
-
-
16
18
-
-
-
-
101
(5)
114
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
of profit
and loss
5,079
2,522
(38)
-
-
-
-
-
(645)
-
(11,821)
21,745
-
(390)
-
-
2,522
(428)
(645)
16
23,210
(26,915)
(442)
(29)
(611)
101
25
7,563
(645)
(12,211)
(26,915)
(442)
(34)
-
-
-
-
-
-
(611)
-
23
-
-
5
-
-
-
(19,828)
(1,233)
(12,206)
(4,661)
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended March 31, 2020
(A)
Operating activities
(Loss)/ profit before tax expense
Adjustments to reconcile (loss)/ profit before tax expense to net cash flows:
Depreciation of property, plant and equipment and right-of-use assets
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)
Allowance for expected credit losses
Expense on share based payment
Amortized cost of deposits
Write-off of deposits
Gain on modification of leases
Provision no longer required written back
Advance recoverable written-off
Impairment of goodwill
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
Proceeds from sale of property, plant and equipment
Movement in margin money deposit (net)
Purchase of treasury shares by ESOP trust
Interest received
Net cash flows used in investing activities
155
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
(23,770)
4,708
1,503
5
-
(156)
564
289
101
-
-
(6)
(761)
234
31,473
(744)
8,732
52
(181)
(718)
(2)
643
(669)
328
(17)
8,168
(1,457)
6,711
(353)
-
426
(611)
108
(430)
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)
Subex Annual Report 2019-20
156
CONSOLIDATED STATEMENT OF CASH FLOWS (Contd.)
for the year ended March 31, 2020
(C)
Financing activities
Proceeds from exercise of ESOP
Repayment in working capital loans (net)
Interest paid
Repayment of Lease liability
Net cash flows used in financing activities
(D)
Net increase 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)
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
25
-
(539)
(907)
(1,421)
4,860
236
3,947
9,043
-
(3,215)
(191)
-
(3,406)
912
28
3,007
3,947
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
Subex Annual Report 2019-20
157
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.
These consolidated financial statements for the year ended
March 31, 2020 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, 2020 are approved by the Board of Directors on May
11, 2020.
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
to communication service
(“OSS/BSS”)
Support Systems
providers (“CSPs”) worldwide in the Telecom industry.
transformation,
subscriber-centric
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
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, Bangladesh and UAE and branches
in USA, UK, Canada, Australia, Italy, UAE and Saudi Arabia.
Following subsidiaries have been considered in the preparation of the consolidated financial statements:
Name of the subsidiary
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 Bangladesh Private Limited**
* Represents non-operating companies.
Country of
incorporation
% of holding and voting power
either directly or indirectly through
subsidiaries as at
March 31, 2020
March 31, 2019
Canada
United States of
America
Singapore
United Kingdom
United Arab
Emirates
India
United States of
America
India
India
Bangladesh
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
** Incorporated/ registered in the current 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 33].
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 158
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
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).
including
India
in
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 (“`”)
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,
2020 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.
than
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
the consolidated
those adopted
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.
in
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 2(p).
Profit or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders of the parent
company.
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 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.
The Group has considered internal and certain external sources
of information including economic forecasts, budgets required
to meet performance obligations and likely delays on contractual
commitments, upto the date of approval of these consolidated
financial Ind AS statements, in determining the possible impact
from the COVID-19 pandemic. The group has used the principles
of prudence in applying judgements, estimates and assumptions
and based on the current estimates, the group expects to fully
recover the carrying amount of its assets. The impact of the
global health pandemic may be different from that estimated
as at the date of approval of these consolidated Ind AS financial
statements and the Group will continue to closely monitor any
material changes to its assessment of economic impact of
COVID-19 pandemic.
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
159
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 34).
The parameter most subject to change is the discount rate. In
determining the appropriate discount rate for plans operated
in India, the management considers the interest rates of
government bonds in currencies consistent with the currencies
of the post-employment benefit obligation.
The mortality rate is based on publicly available mortality
tables. These mortality tables tend to change only at interval in
response to demographic changes. Future salary increases and
gratuity increases are based on expected future inflation rates.
Fair Value measurement of financial instruments
When the fair values of financial assets and financial liabilities
recorded in the consolidated balance sheet cannot be measured
based on quoted prices in active markets, their fair value is
measured using internal valuation techniques. The inputs to
these models are taken from observable markets where possible,
but where this is not feasible, a degree of judgement is required
in establishing fair values. Judgements include considerations of
inputs such as liquidity risk, credit risk and volatility. Changes in
assumptions about these factors could affect the reported fair
value of financial instruments. Also refer note 2(l).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 160
Share-based payments
in normal operating cycle
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 33.
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 for uncertain tax
positions.
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 20 &
note 21.
Leases
Ind AS 116 requires lessees to determine the lease term as the
non-cancellable period of a lease adjusted with any option
to extend or terminate the lease, if the use of such option is
reasonably certain. The Group makes an assessment on the
expected lease term on a lease-by-lease basis and there by
assesses whether it is reasonably certain that any options
to extend or terminate the contract will be exercised. In
evaluating the lease term, the Group considers factors such as
any significant leasehold improvements undertaken over the
lease term, costs relating to the termination of the lease and
the importance of the underlying asset to Group’s operations
taking into account the location of the underlying asset and
the availability of suitable alternatives. The lease term in future
periods is reassessed to ensure that the lease term reflects the
current economic circumstances. After considering current and
future economic conditions, the Group has concluded that no
changes are required to lease period relating to the existing
lease contracts [Refer to note 2(k)].
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
• 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 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 161
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.
The Group adopted Ind AS 115 “Revenue from Contracts with
Customers” using the cumulative catch-up transition method.
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.
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 Services 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.
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 22.
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 162
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
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.
impairment
losses.
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
Useful life
3 years
5 years
5 years
Office equipment
Computer software
5 years
4 years
The residual values, useful lives and methods of depreciation
of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.
j.
Impairment
Impairment of 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,
intangible assets and right-of-use asset 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 k.
Leases
The Group assesses at contract inception whether a contract
is/ contains a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration.
Group as a lessee:
The Group applies a single recognition and measurement
approach for all leases, except for short-term leases and leases
of low-value assets. The Group recognises lease liabilities to
make lease payments and right-of-use assets representing the
right to use the underlying assets.
i)
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost of right-of-
use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives
received. Right-of-use assets are depreciated on a straight-line
basis over the lease term.
If ownership of the leased asset transfers to the Group at the end
of the lease term or the cost reflects the exercise of a purchase
option, depreciation is calculated using the estimated useful life
of the asset.
The right-of-use assets are also subject to impairment. Refer
note 2(j) on impairment of non-financial assets.
ii)
Lease Liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. In calculating the present value
of lease payments, the Group uses its incremental borrowing
rate at the lease commencement date because the interest
rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased
to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in
the lease term, a change in the lease payments (e.g., changes
to future payments resulting from a change in an index or rate
used to determine such lease payments) or a change in the
assessment of an option to purchase the underlying asset.
iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption
to its short-term leased assets (i.e., those leases that have a lease
term of 12 months or less from the commencement date and
163
do not contain a purchase option). It also applies the lease of
low-value assets recognition exemption to leased assets that
are considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.
The Group has adopted Ind AS 116, effective annual reporting
period beginning April 1, 2019 and applied the standard to
its leases using the modified retrospective method with the
cumulative effect of initially applying the Standard, recognised
on the date of initial application (April 1, 2019). Accordingly, the
Group has not restated comparative information, instead, the
cumulative effect of initially applying this standard has been
recognised as an adjustment to the opening balance of retained
earnings as on April 1, 2019.
The effect of adoption of Ind AS 116 is as follows:
(` in Lakhs)
Impact on balance sheet [increase/ (decrease)]:
Assets
March 31, 2020
April 1, 2019
Right-of-use assets
Prepayments
Deferred tax asset
Equity
Retained earnings
Liabilities
Lease liabilities
4,424
(270)
125
4,279
4,816
(270)
64
4,610
(442)
(442)
4,867
5,052
Impact on statement of profit and loss [increase/ (decrease) in
profit]:
Depreciation and amortisation
Finance costs
Rent expenses
Other income
Deferred tax expenses
March 31, 2020
(1,116)
(452)
1,359
6
(61)
(264)
Impact on statement of cash flows [increase/ (decrease)]:
Operating lease payments
Net cash flows from operating activities
Payment of principal portion of lease liabilities
Payment of interest portion of lease liabilities
Net cash flows from financing activities
March 31, 2020
1,359
1,359
(452)
(907)
(1,359)
There is no material impact on the basic earnings per share.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 164
l.
Financial instruments
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument
of another entity.
Financial assets and liabilities are recognised when the Group
becomes a party to the contract that gives rise to financial assets
and liabilities. Financial assets and liabilities are initially measured
at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the
fair value measured on initial recognition of financial asset or
financial liability.
Cash and cash equivalents
The Group considers all highly liquid financial instruments,
which are readily convertible into known amounts of cash
that are subject to an insignificant risk of change in value and
having original maturities of three months or less from the date
of purchase, to be cash equivalents. Cash and cash equivalents
consist of balances with banks which are unrestricted for
withdrawal and usage.
Financial assets at amortized cost
Financial assets are subsequently measured at amortized
cost if these financial assets are held within a business whose
objective is to hold these assets in order to collect contractual
cash flows and the contractual terms of the financial asset give
rise on specified dates 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.
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 165
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
to
Borrowing costs directly attributable
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
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.
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 and
which are defined contribution schemes, are charged to the
consolidated statement of profit and loss.
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
Defined benefit plans
Gratuity, which is a defined benefit plan, is accrued based on
an independent actuarial valuation, which is done based on
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 166
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.
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.
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.Management periodically evaluates
positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred income tax
Deferred income tax is recognised using the balance sheet
approach, deferred tax is recognized on temporary differences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 167
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. The Group reviews the “MAT credit entitlement”
asset at each reporting date and writes down the asset to the
extent that it is no longer probable that it will pay normal tax
during the specified period.
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.
it has any uncertain
Upon adoption of the Appendix C to Ind AS 12, the Group
considered whether
tax positions,
particularly those relating to transfer pricing. The Company’s
and the subsidiaries’ tax filings in different jurisdictions include
deductions related to transfer pricing and the taxation authorities
may challenge those tax treatments. The Group determined,
based on its tax compliance and transfer pricing study, that
it is probable that its tax treatments (including those for the
subsidiaries) will be accepted by the taxation authorities. The
Appendix did not have an impact on the consolidated financial
statements of the Group.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 168
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’.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 3. Property, plant and equipment
169
(` in Lakhs)
Cost
As at April 1, 2018
Additions
Disposals
Exchange differences
As at March 31, 2019
Additions
Disposals
Exchange differences
As at March 31, 2020
Depreciation
As at April 1, 2018
Charge for the year
Disposals
Exchange differences
As at March 31, 2019
Charge for the year
Disposals
Exchange differences
As at March 31, 2020
Net block
As at March 31, 2019
As at March 31, 2020
Computer
equipment
Furniture and
Vehicles
Office equipment
Total
fixtures
1,752
288
(41)
16
2,015
246
(36)
13
2,238
1,171
380
(39)
14
1,526
359
(36)
7
1,856
489
382
36
9
(2)
-
43
-
-
2
45
18
11
(2)
-
27
7
-
3
37
16
8
13
-
(11)
-
2
-
-
-
2
4
2
(5)
-
1
1
-
-
2
1
-
110
20
(2)
-
128
27
(4)
4
155
62
34
(2)
-
94
20
(4)
1
111
34
44
1,911
317
(56)
16
2,188
273
(40)
19
2,440
1,255
427
(48)
14
1,648
387
(40)
11
2,006
540
434
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
170
4.
Intangible assets
Cost
As at April 1, 2018
Additions
Disposals
Exchange differences
As at March 31, 2019
Additions
Disposals
Exchange differences
As at March 31, 2020
Amortization
As at April 1, 2018
Amortization for the year
Disposals
Exchange differences
As at March 31, 2019
Amortization for the year
Disposals
Exchange differences
As at March 31, 2020
Net block
As at March 31, 2019
As at March 31, 2020
5. Goodwill on consolidation
Carrying value as per last financial statement
Less: Impairment of goodwill
Carrying value of goodwill
Below is the Cash Generating Unit (‘CGU’) wise break-up of goodwill:
Revenue Management Solutions (‘RMS’)
Data Integrity Management (‘DIM’)
(` in Lakhs)
Computer software
Total
226
-
-
10
236
-
(6)
2
232
163
56
-
10
229
5
(6)
1
229
7
3
226
-
-
10
236
-
(6)
2
232
163
56
-
10
229
5
(6)
1
229
7
3
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
65,882
(31,473)
34,409
65,882
-
65,882
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
33,444
965
34,409
62,156
3,726
65,882
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
171
5. Goodwill on consolidation (contd.)
Goodwill impairment testing
Considering the challenges and significant investment requirements of telecom operators which has resulted in longer opportunity conversion
cycle and lower spends towards IT solutions, the management has the advanced annual impairment exercise in respect of carrying value
of goodwill. The recoverable amount of a CGU is determined based on value-in-use calculations which require the use of assumptions.
The calculations use cash flow projections based on financial budgets approved by the Board of Directors. An average of the range of each
assumption used is mentioned below:
Growth rate
Operating margins
Discount rate
As at
As at
March 31, 2020
March 31, 2019
3% to 8%
9% to 18%
13% to 16%
5% to 20%
20% to 36%
12% to 13%
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.
Based on the above assessment and valuation carried out by an external valuation expert, there has been impairment of goodwill
amounting to ` 28,712 Lakhs (March 31, 2019: Nil) in relation to RMS CGU and ` 2,761 Lakhs (March 31, 2019: Nil) in relation to DIM
CGU towards carrying value of goodwill as on December 31, 2019. The aforesaid impairment has been reflected as ‘exceptional item’.
In view of the COVID -19 pandemic, the management has reassessed its projections and assumptions and has concluded that, the carrying
value of goodwill of ` 34,409 Lakhs as at March 31, 2020 is appropriate.
6. Loans
Carried at amortized cost
Non-Current
Unsecured, considered good
Security deposits
Total
Current
Unsecured, considered good
Loans to employees
Total
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
533
533
104
104
503
503
121
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 172
7. Other balances with banks
Non-current
Other bank balances (refer note 9)
Margin money deposits [refer note 32(iii)]
Current
Other bank balances (refer note 9)
Margin money deposits
8. Trade receivables
Unsecured, carried at amortized cost
Unsecured, considered good
Unsecured, credit impaired
Total (a)
Impairment allowance (allowance for expected credit loss)
Trade receivable, credit impaired
Total (b)
Net Trade Receivables (a-b)
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
189
189
67
67
420
420
252
252
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
9,206
2,178
11,384
(2,178)
(2,178)
9,206
8,539
1,789
10,328
(1,789)
(1,789)
8,539
During the year ended March 31, 2020, ` 3,198 Lakhs of unbilled revenue as of April 1, 2019 has been converted to trade receivables on billing.
(During the previous year ended March 31, 2019, ` 5,170 Lakhs of unbilled revenue as of April 1, 2018 converted to trade receivables). Also,
refer note 10.
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
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
3,773
18
5,252
-
9,043
3,376
158
412
1
3,947
A
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
9. Cash and cash equivalents (contd.)
173
(` in Lakhs)
Other balances with banks
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)
Non-current
Other balances with banks
Margin money deposits
Less: Disclosed under Other balances with banks (Non-current) (refer note 7)
B
(A+B)
As at
As at
March 31, 2020
March 31, 2019
67
67
(67)
-
9,043
189
189
(189)
-
252
252
(252)
-
3,947
420
420
(420)
-
For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the total of current portion of cash and cash equivalents as
above.
10. Other financial assets
Unsecured, considered good
Carried at amortized cost
Non-current
Advance recoverable from former directors [refer 32(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 ` 1,471 Lakhs (March 31, 2019: ` 687 Lakhs)]
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
-
-
5,258
-
6
5,264
234
234
4,517
12
8
4,537
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
3,305
3,305
3,039
3,039
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
174
12. Deferred tax assets (net) *
Non-current
Minimum alternative tax (‘MAT’) credit entitlement
Less: Provision for MAT credit**
Deferred tax assets (net)
Depreciation and amortization expense: Difference between tax depreciation and depreciation
and amortization expense
Depreciation arising from intangible assets pursuant to restructuring
Losses available for offsetting against future taxable profits
Provision for employee benefits and others
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
425
(425)
-
5
-
184
73
262
262
425
-
425
34
(2,727)
1,992
900
199
624
A
B
(A+B)
* Also refer note 20 & note 21.
**During the year ended March 31, 2020, the MAT credit entitlement of ` 425 Lakhs has been provided for considering the uncertainty as regards to its utilisation.
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
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
267
-
267
19
344
163
62
588
267
211
478
8
402
23
93
526
* Balances represents service tax 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.
** Prepaid rent of ` 270 Lakhs has been reclassified to right-of-use asset pursuant to transition to Ind AS 116. Also, refer note 28.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
14. Share capital
Authorised share capital
Equity shares of ` 10 each
As at April 1, 2018
Increase during the year
As at March 31, 2019
Increase during the year
As at March 31, 2020
Preference shares of ` 98 each
As at April 1, 2018
Increase during the year
As at March 31, 2019
Increase during the year
As at March 31, 2020
Issued, subscribed and fully paid-up share capital
Equity shares of ` 10 each issued, subscribed and fully paid-up *
As at April 1, 2018
Issued during the year
As at March 31, 2019
Issued during the year
As at March 31, 2020
175
No
` in Lakhs
588,040,000
-
588,040,000
-
588,040,000
200,000
-
200,000
-
200,000
562,002,935
-
562,002,935
-
562,002,935
58,804
-
58,804
-
58,804
196
-
196
-
196
56,200
-
56,200
-
56,200
* includes 243,207 (March 31, 2019: 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 ` 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, 2020 and March 31, 2019.
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) As at March, 31, 2020 and as at March 31, 2019, there is no individual shareholder or shareholder (together with ‘Person acting in concert’)
holding more than 5% shares of the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 176
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 33)
ESOP - III
ESOP - V
d) Number of treasury shares outstanding
Balance as per last financial statements
Add: Additions during the year
Closing balance
15. Other equity
Securities premium
Balance as per last financial statements
Add: On account of exercise of share options
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
Add: Share-based payments
Less: On account of exercise of share options
Closing balance
(Deficit)/ surplus in the statement of profit and loss
Balance as per last financial statements
Less/Add: (Loss)/ profit for the year
Less: Transition impact of Ind AS 116 - Leases, net of tax
Less: OCI - Re-measurement losses on defined benefit obligations
Closing balance
Exchange reserve on consolidation
Balance as per last financial statements
Add/Less: Effect of foreign exchange rate variations during the year
Closing balance
As at
March 31, 2020
As at
March 31, 2019
-
21,975,000
21,975,000
6,125
11,200,000
11,206,125
As at
As at
March 31, 2020
March 31, 2019
11,200,000
10,775,000
21,975,000
-
11,200,000
11,200,000
As at
(` in Lakhs)
As at
March 31, 2020
March 31, 2019
26,705
7
26,712
1,780
-
1,780
18
101
(5)
114
7,563
(26,915)
(442)
(34)
(19,828)
(12,211)
5
(12,206)
26,705
-
26,705
1,780
-
1,780
2
16
-
18
5,079
2,522
-
(38)
7,563
(11,821)
(390)
(12,211)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
15. Other equity (contd.)
Treasury Shares
Balance as per last financial statements
Less: Equity shares purchased by Subex Employee Welfare and ESOP Benefit Trust
Add: On account of exercise of share options
Closing Balance
Summary of other equity:
Securities premium
Securities premium is used to record the premium on issue of shares and profit and loss on exercise of stock
options held as treasury shares (refer note 33). 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.
(Deficit)/ surplus in the consolidated statement of profit and loss
This represents (deficit)/ surplus arising from operations of the Group.
Exchange reserve on consolidation
The exchange differences arising on 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
This represents own equity shares that are acquired from open market for issuance to employees under ESOP
scheme.
Total other equity
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
177
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
(645)
(611)
23
(1,233)
-
(645)
-
(645)
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
26,712
26,705
1,780
114
1,780
18
(19,828)
7,563
(12,206)
(12,211)
(1,233)
(645)
(4,661)
23,210
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
41
1,605
1,646
7
827
834
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
178
16. Trade payables (contd.)
*Payable to micro and small enterprises
Description
a)
b)
c)
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;
the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium
Enterprises Development Act, 2006, along with the amount of the payment made to the supplier beyond
the appointed day during each accounting year;
d)
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;
e)
f)
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.
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 38.
17. Other current financial liabilities
Carried at amortized cost
Current
Employee related liabilities
Capital creditors
18. Other current liabilities
Unearned revenue
Statutory dues
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
41
-
-
-
-
-
7
-
-
-
-
-
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
2,210
2
2,212
2,879
82
2,961
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
1,858
484
2,342
1,429
1,023
2,452
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
19. Provisions
Non-current
Provisions for employee benefits
Gratuity [refer note 34(b)]
Current
Provisions for employee benefits
Gratuity [refer note 34(b)]
Leave benefits
Provision for litigations [refer note 32(iii)]
20. Deferred tax liabilities (net)*
Non-current
Deferred tax liabilities
Depreciation arising from intangible assets pursuant to restructuring
Deferred tax assets
Depreciation and amortization expense: Difference between tax depreciation and depreciation
and amortization expense
Provision for employee benefits and others
Losses available for offsetting against future taxable profits
*Also, refer note 21.
21. Income tax liabilities (net)
Provision for tax [net of advance tax ` 19 Lakhs (March 31, 2019: ` 246 Lakhs)]
Provision for foreign taxes
Provision for litigation [net of tax deducted at source ` 62 Lakhs (March 31, 2019: ` 62 Lakhs)]*
179
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
355
355
111
538
-
649
305
305
95
534
100
729
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
A
B
(A-B)
5,861
5,861
32
899
1,156
2,087
3,774
1,928
1,928
-
-
-
-
1,928
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
36
516
162
714
442
426
162
1,030
*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 32(i) for
further details.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
180
21. Income tax liabilities (net) (cond.)
Income tax expense in the consolidated statement of profit and loss consist of the following:
(` in Lakhs)
Tax expense:
Current tax charge
Provision for MAT credit
Provision - foreign withholding taxes(net)*
Deferred tax charge (net)**
Total tax expense
Notes:
As at
As at
March 31, 2020
March 31, 2019
117
425
754
1,849
3,145
274
-
885
1,027
2,186
*Represents provision in respect of withholding taxes deducted/ deductible by the overseas customers of the Group, which is net of reversal of ` 308 Lakhs
considered no longer necessary on account of favourable assessment order received during the year allowing foreign tax credit in respect of AY 2016-17.
** 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. The liability
for the year ended March 31, 2020 in respect of tax benefits from amortisation of intangibles is net of provision no longer considered necessary amounting to
` 1,014 Lakhs considering the favourable assessment order in respect of Assessment Year 2016-17 with respect to foreign tax credit allowance.
Reconciliation of tax to the amount computed by applying the statutory income tax rate to the income before tax is summarized below:
(` in Lakhs)
(Loss)/ profit before tax expense
Applicable tax rates in India
Computed tax charge (A)
Components of tax expense:
Provision for foreign withholding taxes (net)
Deferred tax on FTC
Tax effect of differential overseas tax rates
Impact of disallowable income/expense
Non-recognition of deferred tax asset on losses in certain subsidiaries
Deferrred tax assets recognised on certain disallowances pertaining to previous periods
Provision for MAT credit
Total adjustments (B)
Total tax expense (A+B)
Deferred tax relates to the following:
Year ended
Year ended
March 31, 2020
March 31, 2019
(23,770)
34.94%
(8,306)
754
(1,014)
(11)
10,998
299
-
425
11,451
3,145
4,708
34.94%
1,645
885
-
(209)
-
291
(426)
-
541
2,186
(` in Lakhs)
Particulars
Consolidated Balance Sheet
Consolidated Statement of profit and loss
Depreciation and amortization expense : Difference between
tax depreciation and depreciation and amortization expense
Depreciation arising from intangible assets pursuant to
restructuring
Losses available for offsetting against future taxable profits
Provision for employee benefits and others*
Minimum alternative tax (‘MAT’) credit entitlement
Total
As at
As at
Year ended
Year ended
March 31, 2020
March 31, 2019
March 31, 2020
March 31, 2019
(37)
5,861
(1,340)
(972)
-
3,512
(34)
4,655
(1,992)
(900)
(425)
1,304
(3)
1,206
652
(6)
425
2,274
(24)
2,962
(1,150)
(760)
-
1,028
*Includes ` 64 Lakhs in respect of adoption of Ind AS 116 “Leases” being cumulative adjustment to retained earnings.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
22. 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
Others
Revenue by contract type
Fixed price contract
Time and Material Contract
181
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
3,274
33,224
36,498
3,274
10,066
11,412
10,753
993
36,498
14,655
21,843
36,498
3,352
31,460
34,812
3,352
8,309
12,427
10,724
-
34,812
12,301
22,511
34,812
*During the year ended March 31, 2020, the Group recognized revenue of ` 2,642 Lakhs arising from opening unearned revenue, gross of trade receivables of
` 2,852 Lakhs, as of April 01, 2019 (March 31, 2019: ` 4,182 lakhs arising out of opening unearned revenue, gross of receivables of ` 3,034 Lakhs as of April 01,
2018).
Refer note 30 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, 2020, other than those contracts
wherein invoicing is on time and material basis is ` 6,939 Lakhs (March 31, 2019 : ` 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.
23. Other income
Insurance claim
Refund of research and development expenses
Interest income on:
Security deposits
Bank deposits
Miscellaneous income
Net gain on disposal of property, plant and equipment
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
155
213
50
106
39
-
563
-
-
45
30
23
3
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
182
24. Employee benefits expense
Salaries and wages*
Contribution to provident and other funds
Employee share based payments
Gratuity expense (refer note 34)
Staff welfare expenses
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
15,606
1,099
101
134
514
17,445
1,129
16
98
417
17,454
19,105
* Net of reversal of provision no longer required, in respect of employee incentives amounting to ` 692 Lakhs (March 31, 2019: ` 77 Lakhs).
25. Finance cost
Interest
Interest expense on Lease liability
Other borrowings
Other finance charges
Bank charges
26. Depreciation and amortization expense
Depreciation of property, plant and equipment
Depreciation on right-of-use assets
Amortization of intangible assets
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
452
-
25
87
564
-
82
25
109
216
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
387
1,116
5
1,508
427
-
56
483
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
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
Payments to auditors [refer note 27(i)]
Sales commission
Allowance for expected credit loss (net of reversal)
Directors’ sitting fees (refer note 31)
Contribution towards corporate social responsibility
Miscellaneous expenses
27(i). Payments to auditors (excluding goods and services tax):
(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
183
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
1,019
2,262
371
214
131
747
95
240
28
2,701
145
595
917
168
437
289
54
-
13
389
1,829
1,922
212
164
671
98
274
28
2,530
134
536
900
177
159
459
60
14
16
10,426
10,572
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
91
3
11
6
111
56
1
57
168
104
2
7
6
119
57
1
58
177
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
184
28 Leases
Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian
Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 leases
and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both
lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.
The Group has adopted Ind AS 116, effective annual reporting period beginning April 1, 2019 and applied the standard to its leases using the
modified retrospective method with the cumulative effect of initially applying the Standard, recognised on the date of initial application (April
1, 2019). Accordingly, the Group has not restated comparative information, instead, the cumulative effect of initially applying this standard has
been recognised as an adjustment to the opening balance of retained earnings as on April 1, 2019.
On transition, the Group recognised a lease liability measured at the present value of the remaining lease payments. The right-of-use asset is
recognised at its carrying amount as if the standard had been applied since the commencement of the lease, but discounted using the lessee’s
incremental borrowing rate as at April 1, 2019. Accordingly, a right-of-use asset of ` 4,816 Lakhs and lease liability of ` 5,052 Lakhs has been
recognised. The cumulative effect of applying the standard resulted in ` 442 Lakhs being debited to retained earnings, net of taxes. The lease
payments for operating leases as per Ind AS 17 - Leases, were earlier reported under cash flow from operating activities. The weighted average
incremental borrowing rate of 8.95% has been applied to lease liabilities recognised in the balance sheet at the date of initial application.
On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-to-use
asset, and finance cost for interest accrued on lease liability.
The difference between the future minimum lease rental commitments towards non-cancellable operating leases reported as at March 31,
2019 compared to the lease liability as accounted as at April 1, 2019 is primarily due to inclusion of present value of the lease payments for the
cancellable term of the leases, reduction due to discounting of the lease liabilities as per the requirement of Ind AS 116 and exclusion of the
commitments for the leases to which the Group has chosen to apply the practical expedient as per the standard.
The details of the right-of-use asset held by the Group is as follows:
Gross Carrying Value
As at April 1, 2019
Additions during the year on account of lease modifications
Disposals during the year
Exchange differences
As at March 31, 2020
Depreciation
Charge for the year
Disposals
Exchange differences
As at March 31, 2020
Net block
As at March 31, 2020
Buildings
4,816
707
-
20
5,543
1,116
-
3
1,119
(` in Lakhs)
Total
4,816
707
-
20
5,543
1,116
-
3
1,119
4,424
4,424
The Group incurred ` 371 Lakhs for the year ended March 31, 2020 towards expenses relating to short-term leases and leases of low-value
assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
28 Leases (contd.)
Set out below are the carrying amounts of lease liabilities and the movements during the period:
As at April 1, 2019
Additions
Interest on lease liabilities
Payments
Exchange difference
As at March 31, 2020
Current
Non-current
The following are the amounts recognised in profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases (included in other expenses)
Total amount recognised in statement profit or loss
185
(` in Lakhs)
Lease Liabilities
5,052
701
452
(1,359)
21
4,867
1,409
3,458
(` in Lakhs)
Year ended
March 31, 2020
1,116
452
371
1,939
The Group had total cash outflows for leases of ` 1,359 Lakhs for the year ended March 31, 2020. The Group also had non-cash additions to
right-of-use assets and lease liabilities of ` 707 Lakhs and ` 701 Lakhs for the year ended March 31, 2020. There are no future cash outflows
relating to leases that have not yet commenced.
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 parent
by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit/ (loss) attributable to equity holders of the 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 (` per share)
(Loss)/ profit attributable to equity shareholders (` in Lakhs)
Weighted average number of basic equity shares (No. in Lakhs)*
Basic and diluted (loss)/ profit per share (` per share)**
Year ended
Year ended
March 31, 2020
March 31, 2019
10
(26,915)
5,452
(4.94)
10
2,522
5,577
0.45
*The weighted average number of shares takes into account the weighted average effect of changes in treasury shares.
**Employee stock options outstanding as at March 31, 2020 and as at March 31, 2019 are anti-dilutive and accordingly have not been
considered for the purpose of computing dilutive EPS of the respective years.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
186
30. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board
of directors of the Group assesses the financial performance and position of the Group. The Chief Executive Officer has been identified as the
chief operating decision maker.
The Group 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 Group 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
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
7,226
20,224
1,260
7,788
36,498
5,603
21,378
1,808
6,023
34,812
* Revenues by geographic area are based on the geographical location of the customer.
No single customer represents 10% or more of the Group’s total revenue for the year ended March 31, 2020. During the previous year ended
March 31, 2019, revenue from one customer amounting to ` 3,687 Lakhs accounted for more than 10% of the total revenue of the Group.
Non-current operating assets by geographical location are as follows**:
(` in Lakhs)
Region
India
Outside India
Unallocated ***
Total non-current operating assets
As at
As at
March 31, 2020
March 31, 2019
4,271
857
34,409
39,537
861
164
65,882
66,907
** Non-current operating assets includes Property, plant and equipment, Right-of-use assets, 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 187
31. 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
Nisha Dutt
Poornima Kamalaksh Prabhu
George Zacharias
Vinod Kumar Padmanabhan
Shiva Shankar Naga Roddam
Venkatraman G S
G V Krishnakanth
Ashwin Chalapathy
Mehernaz Dalal
ii. Transactions with the trust
Chairman and Independent Director
Independent Director
Independent Director
Independent Director (w.e.f. May 13, 2019)
Managing Director and Chief Executive Officer (w.e.f April 1, 2018)
Designated partner of Subex Assurance LLP
Designated partner of Subex Digital LLP
Whole-time Director & Chief Operating Officer (w.e.f February 07, 2020)
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)
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)
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
611
(25)
586
645
-
645
Loan given to Subex Employee Welfare and ESOP Benefit Trust
Loan repaid by Subex Employee Welfare and ESOP Benefit Trust
iii. Details of transactions with key management personnel during the year ended March 31, 2020:
(` in Lakhs)
Salary and perquisites:*
Vinod Kumar Padmanabhan (includes remuneration from Subex Assurance LLP)**
Venkatraman G S **
G V Krishnakanth **
Shiva Shankar Naga Roddam **
Mehernaz Dalal
Director sitting fees
Anil Singhvi
Nisha Dutt
Poornima Prabhu
George Zacharias
Year ended
Year ended
March 31, 2020
March 31, 2019
332
67
50
16
-
465
19
10
17
4
50
176
31
24
-
63
294
24
14
18
-
56
* 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 ended March 31, 2020, the Company has granted 18 lakhs ESOPs (March 31, 2019 : 25 Lakhs ESOPs) to certain key management personnel
under ESOP 2018 scheme, which includes options granted to key management personnel of subsidiaries. Of the aforesaid ESOPs, 425,000 options has been
exercised during the year. Refer note 33.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 188
32. 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)]
i.
Income tax
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
6,619
3,687
-
256
-
15,254
3,687
1,293
373
4,500
a) The Company has received assessment orders in respect of each of the financial years 2009-10, 2010-11, 2013-14 and 2014-15,
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, including its tax experts/ advisors, are 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 its position will likely be upheld on ultimate resolution and
will not have material adverse effect on the Company’s financial position and results of operations. With respect to the demands of
Subex Limited, the Company has paid ` 995 lakhs.
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 ` 3,088 Lakhs
under section 143(3) of Income Tax Act, 1961 and ` 1,214 Lakhs 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 November 2016 wherein refund has been determined. 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.
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.
iii. Others
The Company had received certain claims from its former MD & CEO and former COO for an amount of ` 1,293 Lakhs (March 31, 2019:
` 1,293 Lakhs). The Company disputed the said claims and had also claimed the excess managerial remuneration of ` 124 Lakhs (March
31, 2019: ` 124 Lakhs) paid to the aforementioned ex-employees during the year ended March 31, 2013, in excess of the limits prescribed
under Schedule XIII of the Companies Act, 1956 and other advances paid during the year 2012-13 amounting to ` 110 Lakhs (March 31,
2019: ` 110 Lakhs).
On January 23, 2020, the Company had entered into a settlement agreement with the ex-employees in respect of these long drawn
litigations and has paid an amount of ` 820 lakhs (net of ` 234 lakhs recoverable from such ex-employees). Accordingly, the aforesaid
litigation is amicably settled and the related bank guarantee of ` 418 Lakhs is released.
iv. Corporate Guarantee
The Company had given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of Nil (March 31, 2019: ` 4,500 Lakhs)
for the purpose of availing of working capital loan facilities by the said subsidiary.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
189
33. Employee stock options plans (‘ESOPs’)
The Group during the year 2005-2006 had established equity settled ESOP schemes of ESOP III. As per the 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.
During the previous year, the Board of Directors and the shareholders of the Company approved “Subex Employees Stock Option Scheme
– 2018” (referred to as the “ESOP Scheme 2018” or “ESOP - V” ) to be administered through Subex Employee Welfare and ESOP Benefit Trust
(referred to as the “ESOP Trust”). The ESOP Trust is authorised to acquire shares of the Company 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 recognised at cost and deducted from other equity.
The Nomination and Remuneration Committee of the Group in their meeting held on February 7, 2020 granted 12,800,000 options under
approved “Subex Employees Stock Option Scheme – 2018” to the eligible employees. Total options granted till March 31, 2020 under the said
scheme are 22,400,000. 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:
Options outstanding at the beginning of the year
ESOP – III
ESOP – V
Exercised during the year
ESOP – V
Granted during the year
ESOP – V
Cancelled, surrendered or lapsed during the year
ESOP – III
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
2019-20
2018-19
Options (no.)
Weighted average
Options (no.)
Weighted average
exercise price per
stock option (`)
exercise price per
stock option (`)
6,125
10,650,000
425,000
12,800,000
6,125
1,050,000
-
21,975,000
-
4,375,000
13.74
6.00
6.00
6.00
13.74
6.00
-
6.00
-
6.00
24,055
18.24
-
-
10,650,000
17,930
-
6,125
10,650,000
6,125
-
-
-
6.00
19.78
-
13.74
6.00
13.74
-
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
* considering vesting and exercise period
Weighted average remaining contractual
Range of exercise prices (`)
life(years)*
2019-20
2018-19
2019-20
2018-19
-
2.94
0.46
3.35
-
6.00
10.26 - 24.99
6.00
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 190
33. Employee stock options plans (‘ESOPs’) (contd.)
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 (`)
March 31, 2020
March 31, 2019
6.70%
41.00%
2
1.23
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.
34. 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 ` 1,055 Lakhs (March 31, 2019: ` 1,098 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.
Change in defined benefit obligation
Obligations at beginning of the year
Service cost
Interest cost
Benefits settled
Actuarial loss (through OCI)
Currency translation adjustment
Obligations at end of the year
B.
Change in plan assets
Plan assets at beginning of the year, at fair value
Expected return on plan assets
Actuarial gain (through OCI)
Contributions
Benefits settled
Plan assets at the end of the year
Present value of defined benefit obligation at the end of the year
Fair value of plan assets at the end of the year
C.
Net liability recognised in the consolidated balance sheet
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
651
134
43
(138)
36
14
740
251
18
2
141
(138)
274
(740)
274
(466)
573
98
40
(102)
40
2
651
204
15
2
132
(102)
251
(651)
251
(400)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20 34. Employee benefit plans (contd.)
D.
Expenses recognised in the consolidated statement of profit and loss:
Service cost
Interest cost (net)
Net gratuity cost
E.
Re-measurement gains/ (losses) in OCI
Actuarial (loss)/ gain due to financial assumption changes
Actuarial (loss)/ gain due to experience adjustments
Actuarial (loss)/ gain - return on plan assets greater than discount rate
Total expenses recognised through OCI
F.
Assumptions
Discount rate
Expected return on plan assets
Salary escalation*
Attrition rate
Retirement age
191
(` in Lakhs)
Year ended
Year ended
March 31, 2020
March 31, 2019
134
25
159
(16)
(20)
2
(34)
5.20%
7.30%
6.20%
18.00%
60 years
98
25
123
(7)
(33)
2
(38)
6.70%
7.60%
7.30%
18.00%
60 years
Assumptions regarding future mortality experience are set in accordance with the published statistics by Indian Assured Lives Mortality
(2012-14) [March 31, 2019: Indian Assured Lives Mortality (2006-08)].
G.
Five years pay-outs
Year 1
Year 2
Year 3
Year 4
Year 5
After 5th Year
(` in Lakhs)
As at
March 31, 2020
As at
March 31, 2019
111
106
99
89
80
499
95
96
88
85
76
500
*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
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
111
95
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%
100%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
192
34. Employee benefit plans (contd.)
J.
Sensitivity analysis
Particulars
Year ended March 31, 2020
Year ended March 31, 2019
(` in Lakhs)
Effect of change in discount rate
0.5% increase
0.5% decrease
0.5% increase
0.5% decrease
Impact on defined benefit obligation increase/ (decrease)
(17)
17
(13)
15
Effect of change in salary
1% increase
1% decrease
1% increase
1% decrease
Impact on defined benefit obligation increase/ (decrease)
32
(30)
26
(23)
Effect of change in withdrawal assumption
5% increase
5% decrease
5% increase
5% decrease
Impact on defined benefit obligation increase/ (decrease)
(19)
24
(12)
15
The average duration of the defined benefit plan obligation at the end of the reporting period of gratuity is 6 years (March 31, 2019:
K.
6 years).
35. Additional information pursuant to para 2 of general instructions for the preparation of consolidated
financial statements:
Contribution of net assets/ (liability) in the consolidated financial statements:
As at and for the year ended March 31, 2020
(` in Lakhs)
Name of the entity
Net Assets i.e., total assets
Share in profit or loss
Share in other
Share in total
minus total liabilities
comprehensive income
comprehensive income
As % of
Amount
As % of
Amount
As % of
Amount
As % of
Amount
Consolidated
net assets
Consolidated
profit or loss
consolidated
consolidated
other
total
comprehensive
comprehensive
income
income
48%
50,024
63% (20,588)
72%
(21)
63% (20,609)
-
16
45%
46,413
(2%)
(2,527)
-
(4)
40% (12,974)
6%
(1,999)
1%
5%
6%
815
5,313
5,758
(2%)
(2,227)
-
-
144
12
-
(4%)
(2%)
(3%)
-
-
(29)
1,301
664
1,060
15
11
-
(24%)
14%
(103%)
(786%)
203%
762%
(34%)
(3%)
-
7
(4)
30
228
(59)
(221)
10
1
-
(4)
40% (12,967)
6%
(2,003)
-
(5%)
(2%)
(3%)
-
-
1
1,529
605
839
25
12
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
Subex Bangladesh Pvt.Ltd
Total
100% 103,741
100% (32,543)
100%
(29)
100% (32,572)
Adjustments arising out of consolidation
Total
(52,202)
51,539
5,628
(26,915)
-
(29)
5,628
(26,944)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
193
35. Additional information pursuant to para 2 of general instructions for the preparation of consolidated
financial statements: (contd.)
As at and for the year ended March 31, 2019
Name of the entity
Net Assets i.e., total assets
minus total liabilities
Share in profit or loss
Share in other
comprehensive income
Share in total
comprehensive income
(` in Lakhs)
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
Amount
As % of
Consolidated
net assets
Amount
As % of
Consolidated
profit or loss
Amount
As % of
consolidated
other
comprehensive
income
Amount
As % of
consolidated
total
comprehensive
income
51%
71,149
46%
(2,453)
1%
(3)
43%
(2,456)
-
22
44%
61,488
(1%)
(474)
1%
3%
4%
815
3,793
5,147
(2%)
(3,049)
-
119
-
(5%)
33%
(3)
281
(1,744)
-
19
31%
(1,660)
(2%)
(2%)
(1%)
96
118
61
-
5%
2%
(4%)
38%
15%
43%
-
-
(20)
(10)
16
(164)
(64)
(182)
(1)
-
(4%)
(3)
261
31%
(1,754)
(1%)
35
32%
(1,824)
(1%)
1%
(1%)
32
(64)
60
Total
100% 139,010
100% (5,285)
100%
(428)
100%
(5,713)
Adjustments arising out of consolidation
Total
(59,600)
79,410
7,807
2,522
-
(428)
7,807
2,094
36. Capital management
The Group’s objective for capital management is to maximize shareholder value, safeguard business continuity and support the growth of the
Group. The Group determines the capital requirement based on annual operating plans and long-term and other strategic investment plans.
The funding requirements are met through equity and operating cash flows generated. The Group does not have any long term debts hence
there is no capital gearing ratio. Surplus fund has been invested into risk free highly liquid financial instruments.
37. Fair value hierarchy
The carrying value of financial instruments by categories is as follows:
Particulars
Financial assets measured at amortized cost
Interest accrued but not due on bank deposits*
Trade receivables*
Unbilled revenue*
Security deposits^
Loans and advances to employees*
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
6
9,206
5,258
533
104
15,107
8
8,539
4,517
503
133
13,700
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
194
37. Fair value hierarchy (contd.)
Particulars
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*
Lease liabilities^
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
-
9,043
256
9,299
2,210
1,646
2
4,867
8,725
1
3,946
672
4,619
2,879
834
82
-
3,795
* 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.
38. Financial risk management:
The Group’s activities expose it to the following risks:
i. Credit risk
ii.
Interest rate risk
iii. Liquidity risk
iv. Market risk
i. Credit risk
Credit Risk is the risk that 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
(` in Lakhs)
As at
March 31, 2020
As at
March 31, 2019
9,206
5,258
14,464
8,539
4,517
13,056
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
195
38. Financial risk management: (contd.)
The movement in credit loss allowance on customer balance is as follows :
(` in Lakhs)
Opening balance
Add: Provided during the year
Less: Bad-debts written-off
Add: Translation difference
Closing balance
As at
As at
March 31, 2020
March 31, 2019
1,789
289
(25)
125
2,178
1,346
459
(19)
3
1,789
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 does not have any debt outstanding as at March 31, 2020 and as at March 31, 2019. Also, the Group’s investments are
primarily in fixed rate interest bearing investments. Hence, the Group is not significantly exposed to interest rate risk.
iii. Liquidity risk
The Group’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Group
believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is perceived.
The break-up of cash and cash equivalents and deposits is as below:
Particulars
Cash and cash equivalents
Other balances with banks
(` in Lakhs)
As at
As at
March 31, 2020
March 31, 2019
9,043
256
9,299
3,947
254
4,201
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.
(` in Lakhs)
Particulars
As at March 31, 2020
Trade payables
Lease Liability*
Other financial liabilities
As at March 31, 2019
Trade payables
Other financial liabilities
On demand
0-180 Days
181-365 Days More than 365 Days
Total
92
-
-
92
128
-
128
1,554
705
2,212
4,471
706
2,961
3,667
-
705
-
705
-
-
-
-
4,334
-
4,334
-
-
-
1,646
5,744
2,212
9,602
834
2,961
3,795
*Includes future cash outflow toward estimated interest on lease liabilities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
196
38. Financial risk management: (contd.)
iv. Market risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The Group’s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Group
has exposures to United States Dollars (‘USD’), Great Britain Pound (‘GBP’), Euro (‘EUR’), United Arab Emirates Dirham (‘AED’) and other
currencies. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group operating activities and
financing activities.
Below is the summary of foreign currency exposure of Group’s financial assets and liabilities.
As at March 31, 2020
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)
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)
Sensitivity analysis
USD
5,682
531
2,776
8,989
900
900
8,089
USD
5,128
1,145
2,250
8,523
290
290
8,233
Denominated currency
GBP
-
-
-
-
-
-
-
EUR
1,322
281
1,125
2,728
132
132
2,596
Others
770
382
412
1,564
19
19
1,545
Denominated currency
GBP
EUR
Others
-
-
-
-
3
3
(3)
1,407
354
271
2,032
277
277
1,755
1,118
229
691
2,038
551
551
1,487
(` in Lakhs)
Total
7,774
1,194
4,313
13,281
1,051
1,051
12,230
(` in Lakhs)
Total
7,653
1,729
3,212
12,594
1,121
1,121
11,473
Every 1% appreciation or depreciation in the respective foreign currencies against functional currency of the each of the group entities
would cause the profit before exceptional items in proportion to revenue to increase or decrease respectively by 0.34% (March 31, 2019:
0.33%).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
197
39. 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, 2020, considering losses incurred in past years, the Company does not have
the obligation to incur expenses in relation to CSR.
Amount spent during the previous 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
-
-
(` in Lakhs)
Total
-
14
40. 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, 2020 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.
41. The Board of Directors in its meeting held on February 07, 2020, has approved a scheme of Capital Reduction in accordance with
Section 52 of the Companies Act, 2013 and Section 66 of the Companies Act, 2013 read with National Company Law Tribunal (‘NCLT’)
(Procedure for reduction of share capital of Company) Rules, 2016 and other applicable provisions of the Companies Act, 2013. Subject
to the consent of the Shareholders and the approval from NCLT and other statutory authorities as and where applicable, the Accumulated
Losses of ` 38,401 Lakhs as at December 31, 2019 shall be written off against the paid-up share capital of the Company for an amount of
` 28,100 Lakhs by reducing the face value of the equity shares from ` 10/- to ` 5/- each and Securities Premium Account balance for an
amount of ` 10,301 lakhs.
42. The Group has considered internal and certain external sources of information including economic forecasts, budgets required to meet
performance obligations and likely delays on contractual commitments, upto the date of approval of these consolidated Ind AS financial
statements, in determining the possible impact from the COVID-19 pandemic. The Group has used the principles of prudence in applying
judgements, estimates and assumptions and based on the current estimates, the Group expects to fully recover the carrying amount of
its assets. The impact of the global health pandemic may be different from that estimated as at the date of approval of these consolidated
Ind AS financial statements and the Group will continue to closely monitor any material changes to its assessment of economic impact
of COVID- 19 pandemic.
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
per Rajeev Kumar
Partner
Membership No.: 213803
Place: Bengaluru, India
Date: May 11, 2020
Vinod Kumar Padmanabhan
Managing Director & CEO
DIN : 06563872
Place: Bengaluru, India
Venkatraman G S
Chief Financial Officer
Place: Bengaluru, India
Date: May 11, 2020
Anil Singhvi
Chairman & Independent Director
DIN : 00239589
Place: Mumbai, India
G V Krishnakanth
Company Secretary
Place: Bengaluru, India
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended March 31, 2020Subex Annual Report 2019-20
198
“SHAREHOLDERS’ INFORMATION”
REGISTERED OFFICE
The Registered office of the Company is located at RMZ Ecoworld, Outer Ring Road, Devarabisanahalli, Bengaluru – 560 103.
DATE AND VENUE OF THE 26TH ANNUAL GENERAL MEETING (AGM)
Date
Mode
Time
: Friday, September 25, 2020
: Video Conferencing (“VC”)/Other Audio Visual Means (“OAVM”)
: 03.00 pm (IST)
E-voting date : September 22, 2020, 9.00 am (IST) to September 24, 2020, 5.00 pm (IST)
DATES OF BOOK CLOSURE
September 19, 2020 – September 25, 2020 (inclusive of both days)
BOARD MEETINGS & FINANCIAL CALENDAR
Financial year 2020-21 : April 01, 2020 to March 31, 2021
Calendar of Board Meetings to adopt the accounts
For quarter ended June 30, 2020
For quarter ending September 30, 2020
For quarter ending December 31, 2020
For the year ending March 31, 2021
DIVIDEND
2nd week of August 2020
2nd week of November 2020
2nd week of February 2021
4th week of May 2021
The Directors have not proposed any dividend to be paid for the financial year 2019-20.
LISTING ON STOCK EXCHANGES
Equity Shares of the Company are quoted on the National Stock Exchange of India Limited (NSE) since September 5, 2003 and on the
BSE Limited (BSE) since July 31, 2000. The Company has paid listing fees for the year 2019-20 in accordance with the provisions of the
SEBI (LODR) Regulations, 2015
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- 400 051
BSE Limited,
Phiroze Jeejeebhoy Towers
Dalal Street, Mumbai 400 001
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.
Subex Annual Report 2019-20 199
CUSTODIAL FEE
Pursuant to the Securities and Exchange Board of India (SEBI) Circular No. MRD/DoP/SE/Dep/Cir-4/2005 dated January 28, 2005 issuer
companies are required to pay custodial fees to the depositories with effect from April 1, 2005. The said circular has been partially
modified vide SEBI’s Circular No. MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009. The Company, in accordance with the aforesaid
circulars, paid custodial fees for the year 2019-20 to NSDL and CDSL on the basis of the number of beneficial accounts maintained by
them as on March 31, 2019.
STOCK MARKET DATA RELATING TO EQUITY SHARES LISTED IN INDIA
Monthly high and low quotes during each month in the financial year 2019-20 as well as the volume of shares traded on NSE and BSE
are as under:
NSE
BSE
High Price
Low Price
Number of shares
High Price
Low Price
Number of shares
Month
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
7.55
7.50
7.05
6.60
5.85
6.05
5.55
6.05
6.05
6.50
7.35
6.40
traded (in lakhs)
299.92
324.70
166.96
144.08
135.65
122.45
106.64
170.55
117.29
136.25
367.78
287.29
5.75
6.15
5.65
5.15
5.20
5.30
4.35
5.10
5.40
5.90
5.10
2.90
SUBEX LIMITED SHARE PRICE VERSUS NSE S&P CNX NIFTY AND SENSEX
Month
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
BSE Sensex
39,031.55
39,714.20
39,394.64
37,481.12
37,332.79
38,667.33
40,129.05
40,793.81
41,253.74
40,723.49
38,297.29
29,468.49
5.71
6.20
5.65
4.82
5.20
5.30
4.50
5.11
5.45
5.87
5.13
2.80
traded
48,98,777
54,48,329
2,11,03,569
75,35,873
22,82,201
85,52,234
72,74,242
21,13,374
20,64,391
46,06,974
2,73,05,746
1,58,79,330
7.54
7.44
7.04
6.55
5.83
6.04
5.60
6.09
6.23
6.45
7.36
6.24
Nifty 50
11,787.15
11,945.90
12,088.55
11,946.75
11,109.65
11,600.20
11,877.45
12,151.15
12,271.80
12,362.30
12,201.20
11,303.30
Subex Annual Report 2019-20 200
45,000.00
40,000.00
35,000.00
30,000.00
25,000.00
20,000.00
15,000.00
10,000.00
15,000.00
10,000.00
5,000.00
0.00
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Sensex Close
Subex BSE Close
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Nifty Close
Subex NSE Close
25
20
15
10
5
0
25
20
15
10
5
0
Subex Annual Report 2019-20 CREDIT RATING
The India Ratings and Research organisation (Ind-Ra) in their letter dated August 07, 2019 confirmed that the Company’s credit rating
remained unchanged at "IND A-".
Rating History is as mentioned below:
Instrument Type
Current Rating/Outlook
Historical Rating Outlook
Rating Type
Rated Limits
Rating
26 July 2018
20 July 2017
22 July 2016
(million)
Issuer Rating
Long-Term
-
IND A-/Stable
IND A-/Stable
IND A-/Stable
IND BBB+/Stable
201
SHAREHOLDING PATTERN
(As per records of the RTA)
Distribution of Shareholding:
No. of Equity shares held
As on March 31, 2020
As on March 31, 2019
No. of share holders % to total share holders No. of share holders
% to total share holders
1 – 5000
5001 – 10000
10001 – 20000
20001 –30000
30001 – 40000
40001 – 50000
50001 – 100000
100001 and above
TOTAL
Categories of Shareholders:
Categories of Shareholders
Promoter & Promoter group
Public
Non-Promoter, Non-Public *
TOTAL
51,234
16,528
10,926
4,787
2,324
3,468
4,577
5,164
99,008
51.75
16.69
11.04
4.83
2.35
3.50
4.62
5.22
100
54,503
18,334
12,193
5,358
2,644
3,898
5,221
5,759
1,07,910
50.51
16.99
11.30
4.97
2.45
3.61
4.84
5.33
100
No. of Shares of face value of ` 10 each
% of holding
Nil
53,97,84,728
2,22,18,207
56,20,02,935
Nil
96.05
3.95
100
*Includes shares held by the Subex Employee Welfare and ESOP Benefit Trust
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,
Bangalore - 560 003, were appointed as ‘Registrar & Transfer Agents’ 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.
The Board at its meeting held of February 07, 2020 considered the appointment of Kfin Technologies Private Limited as the Registrar &
Transfer Agents of the Company having its registered office at Selenium, Tower B, Plot No- 31 & 32, Financial District, Nanakramguda,
Serilingampally, Hyderabad - 500032 with effect from April 15, 2020. However due to the current pandemic situation of COVID-19, the
change of RTA was deferred to May 31, 2020. Further since the lockdown was relaxed conditionally and transfer of electronic and physical
data from Canbank Computer Services Limited to Kfin Technologies Private Limited was still pending, the Board was requested to extend
the date of change of Registrar & Transfer Agents of the Company to July 31, 2020. The said change took effect from July 24, 2020.
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. For matters regarding transfer of shares, change of address etc., shareholders are requested to contact M/s. Kfin Technologies
Private Limited, R&T Agent.
Subex Annual Report 2019-20 202
B. Share transfers and other communication regarding Share certificates, updation of records, email addresses, etc. may be
addressed to:
M/s Kfin Technologies Private Limited
Selenium Tower B, Plot Nos. 31 & 32
Financial District, Nanakramguda
Serilingampally Mandal,
Hyderabad - 500032 | India
Tel No. +91-40-6716 2222
Fax No. +91 40 2343 1551
email: einward.ris@kfintech.com
Website: www.kfintech.com
SHARES HELD IN PHYSICAL AND DEMATERIALISED FORM
As on March 31, 2020, 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, 2020, the outstanding GDRs were 2,43,207. There are no outstanding convertible instruments in the company.
LOCATIONS
Broomfield, Colorado USA
Harrow, Middlesex, UK
Burlington Square, Singapore
Sharjah Airport International Free Zone, Sharjah, UAE
Dhaka, Bangladesh
LEGAL PROCEEDINGS
There are no legal proceedings against the Company which are material in nature.
On January 23, 2020, the Company has entered into settlement agreement with former MD & CEO and former COO of the company
in respect of litigation wherein certain claims were made against the Company. In terms of the settlement agreement, the Company has
paid an amount of ` 820 lakhs (net of ` 234 lakhs recoverable from such ex-employees) which has been provided for as at December
31, 2019.
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 from the R&T Agents of the Company. 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 & Transfer Agent (RTA) for the period from April 01, 2019 to March 31, 2020
are as stated below. Additionally, the Company has attended to all the investor grievances/correspondence received through emails or
telephone on a timely manner.
Nature of complaints (excluding the grievances received through emails or telephone)
Received
Cleared
Non-receipt of share certificates/refund orders/call money notice/allotment advice/dividend warrant/
annual report
Letters from Depositories, 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
0
0
0
0
0
0
0
0
0
0
0
0
Subex Annual Report 2019-20 203
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.
Subex Annual Report 2019-20 204
Notes
Subex Annual Report 2019-20 India
Subex Limited
(CIN: L85110KA1994PLCO16663)
Regd. office: RMZ Ecoworld, Outer
Ring Road, Devarabisanahalli,
Bengaluru-560103
Tel: +91 80 6659 8700
Fax: +91 80 6696 3333
UK
Subex (UK) Limited
1st Floor, Rama Apartment,
17 St Ann’s Road, Harrow,
Middlesex, HA1 1JU
Middle East
Subex Middle East (FZE)
Executive Desk Q1-04-098/B,
P.O. Box: 513156,
Sharjah Airport International
Free Zone, Sharjah, UAE
USA
Subex Inc.
12303 Airport Way, Bldg. 1,
Suite. 390, Broomfield,
CO 80021
Singapore
Subex (Asia Pacific)
Pte Limited
175A Bencoolen Street
#08-03 Burlington Square
Singapore - 189650
Canada
Subex Americas Inc.
C/O BDO Canada LLP,
5494, Manotick Main Street
Box. 918, Manotick, Ontario
Canada, K4M1A8
Bangladesh
Subex Bangladesh Private Limited
Anamicka Concord, 11 -F, 583
West Shawrapara,
Mirpur, Dhaka, PO : 1216,
Bangladesh
www.subex.com | Regional offices: Dubai, Ipswich