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Directors Report of Oracle Financial Services Software Ltd.
Mar 31, 2025
The Directors present their report on the business and operations of Oracle Financial Services Software Limited (âCompanyâ) along with the Annual Report and audited financial statements for the financial year 2024-25.
|
As per Consolidated financial statements: |
(Amounts in f million) |
|
|
Particulars |
Year ended March 31, 2025 |
Year ended March 31, 2024 |
|
Revenue from operations |
68,468 |
63,730 |
|
Other income |
3,042 |
3,422 |
|
Total income |
71,510 |
67,152 |
|
Operating expenses |
(37,710) |
(36,186) |
|
Depreciation and amortization |
(691) |
(743) |
|
Total expenses |
(38,401) |
(36,929) |
|
Profit before tax |
33,109 |
30,223 |
|
Tax expenses |
(9,313) |
(8,029) |
|
Profit for the year |
23,796 |
22,194 |
|
Other comprehensive income for the year |
679 |
108 |
|
Total comprehensive income for the year |
24,475 |
22,302 |
|
As per Standalone financial statements: |
(Amounts in f million) |
|
|
Particulars |
Year ended March 31, 2025 |
Year ended March 31, 2024 |
|
Revenue from operations |
50,991 |
47,845 |
|
Other income |
17,210 |
2,396 |
|
Total income |
68,201 |
50,241 |
|
Operating expenses |
(24,502) |
(23,282) |
|
Depreciation and amortization |
(598) |
(598) |
|
Total expenses |
(25,100) |
(23,880) |
|
Profit before tax |
43,101 |
26,361 |
|
Tax expenses |
(9,594) |
(6,082) |
|
Profit for the year |
33,507 |
20,279 |
|
Other comprehensive (loss) / income for the year |
(32) |
69 |
|
Total comprehensive income for the year |
33,475 |
20,348 |
On a consolidated basis, the Company''s revenue stood at f 68,468 million during the current financial year, up 7% compared to f 63,730 million of the previous financial year. The net income for the current financial year was f 23,796 million, up 7% compared to f 22,194 million of the previous financial year. On a standalone basis, the Company''s revenue stood at f 50,991 million during the current financial year, increase of 7% compared to f 47,845 million of the previous financial year. The net income for the current financial year was f 33,507 million, up 65% compared to f 20,279 million of the previous financial year.
A detailed analysis of the financials is given in the Management''s discussion and analysis report that forms part of this Annual Report.
The Board of Directors of the Company ("the Board") declared an interim dividend of f 265 per equity share of f 5 each on April 25, 2025, for the financial year ended March 31, 2025. They have not recommended any additional final dividend for the financial year 2024-25.
The Company has not transferred any amount to the reserves during the year under review.
Particulars of loans, guarantees or investments
In terms of Section 186 of the Companies Act, 2013 ("Act"), the particulars of loans, guarantees and investments have been disclosed in the financial statements.
During the financial year 2024-25, the Company issued and allotted 191,445 equity shares of face value of f 5 each to the employees and Directors of the Company and its subsidiaries who exercised their stock options under the prevailing Employee Stock Option Scheme of the Company. As a result, the issued, subscribed and paid-up equity share capital of the Company as on March 31, 2025 was f 434,315,505 divided into 86,863,101 equity shares of face value of f 5 each.
Pursuant to Section 92(3) read with 134(3)(a) of the Act, the Annual Return (in e-form MGT-7) for the financial year ended March 31, 2025 is available on the Company''s website at https://investor.ofss.oracle.com.
Directors and key managerial personnel
Mr. Harinderjit Singh (DIN: 06628566) and Mr. Makarand Padalkar (DIN: 02115514), Directors of the Company, would retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The resolutions seeking the Members'' approval for their re-appointment along with other required details forms part of the Notice.
On April 6, 2025, on the recommendation of the Nomination and Remuneration Committee and the Board, the Members of the Company approved through a postal ballot the appointment of Ms. Kavita Venugopal (DIN: 07551521) as a Non-Executive, Independent Director, not liable to retire by rotation, for a term of five consecutive years with effect from March 3, 2025 up to March 2, 2030. In the opinion of the Board, Ms. Venugopal possess requisite integrity, expertise, experience and proficiency.
Mr. Sridhar Srinivasan (DIN: 07240718), Independent Director of the Company, retired as a Director and member/ chairperson of the Board and a number of Committees of the Board, on completion of his tenure with effect from close of business hours of March 31, 2025. The Board places on record its appreciation for the contributions made by him during his tenure with the Company.
Mr. Yong Meng Kau (DIN: 08234739), Non-Executive, Non-Independent Director of the Company, resigned from the Board with effect from close of business hours of May 30, 2025. The Board places on record its appreciation for the contributions made by him as a member of the Board.
On the recommendation of the Nomination and Remuneration Committee, Mr. Nian Nian Yuan (DIN: 11107498), has been appointed by the Board as an Additional Director of the Company with effect from June 11, 2025 in the capacity of Non-Executive, Non-Independent Director, liable to retire by rotation, subject to approval of the Members of the Company. The resolution seeking the Members'' approval for his appointment as a Director of the Company forms part of the Notice.
All the Independent Directors of the Company have submitted declarations that they meet the criteria of Independence as provided in Section 149 of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ). The Independent Directors have registered their names in the Independent Directors'' Databank as per Rule 6 of the Companies (Appointments and Qualifications of Directors) Rules, 2014.
Key managerial personnel
Pursuant to the provisions of Section 203 of the Act, Mr. Makarand Padalkar, Managing Director and Chief Executive Officer, Mr. Avadhut Ketkar, Chief Financial Officer and Mr. Onkarnath Banerjee, Company Secretary and Compliance Officer were the Key Managerial Personnel of the Company as on March 31,2025. During the year, there were no changes to the Key Managerial Personnel.
Number of meetings of the Board
Seven meetings of the Board were held during the financial year 2024-25. For details of the meetings of the Board, please refer to the Corporate Governance Report which is a part of this Annual Report.
The Company has established several committees of its Board. The details pertaining to each of the Committees of the Board outlining composition, terms of reference and attendance of the Directors at the meetings held during the year are included in the Corporate Governance Report which is a part of this Annual Report.
The Company has the following policies as required by the Act and Listing Regulations:
|
Particulars |
Details |
Website link for policy / details |
|
Code of ethics and business conduct policy |
This code defines and implements Oracle''s ethical business values and sets forth key rules and employee responsibilities. The Code also covers the vigil mechanism and whistle blower policy. |
|
|
Code of practices and procedures for fair disclosure of UPSI |
This code defines the principles for fair disclosure of Unpublished Price Sensitive Information (âUPSIâ). |
https://www.oracle.com/a/ocom/docs/ industries/financial-services/code- |
|
Corporate social responsibility policy |
This policy governs Corporate Social Responsibility (âCSRâ) program of the Company. |
https://www.oracle.com/a/ocom/docs/ |
|
Directors'' appointment policy |
This policy governs the manner of appointment of Directors of the Company. |
https://www.oracle.com/a/ocom/docs/ |
|
Dividend distribution policy |
This policy details the factors to be considered by the Board while deciding or recommending any dividend. |
https://www.oracle.com/a/ocom/docs/ |
|
Material events and information policy |
This policy provides framework for determination of material events / information and sets out classes and types of material events / information that require disclosure to stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Policy for determining material subsidiaries |
This policy defines the criterion for deciding material subsidiaries and describes related actions to be taken by the Company with respect to significant transactions with them. |
https://www.oracle.com/a/ocom/docs/ |
|
Record archival policy |
This policy provides the framework for archival of the communications with the stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Related party transactions policy |
This policy sets out the principles and processes that apply in respect of transactions entered into by the Company with a related party. |
https://www.oracle.com/a/ocom/docs/ |
|
Remuneration policy |
This policy establishes principles governing remuneration of the directors, key managerial personnel and senior management of the Company. |
https://www.oracle.com/a/ocom/docs/ |
All related party transactions entered into by the Company during the financial year 2024-25 were at an arm''s length basis and in the ordinary course of business. Form AOC-2 as required under the Act is enclosed as Annexure 1 to this report.
Management''s discussion and analysis report
The Management''s discussion and analysis report for the financial year 2024-25 as stipulated under Regulation 34 of the Listing Regulations forms a part of this Annual report.
The Risk Management Committee of the Board frames, reviews and monitors implementation of risk management policy for the Company and ensure its effectiveness. The Committee periodically reviews the Risk Management Policy by considering the changing industry dynamics and evolving complexities. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the Company are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management plan have been covered in the Management''s discussion and analysis report that forms a part of this Annual Report.
Pursuant to the provisions of the Act and Listing Regulations, annual evaluation of the performance of the individual Directors, the Board as a whole and its Chairperson was conducted. Various parameters such as knowledge and expertise of
directors, their attendance, information sharing, functioning, effectiveness of meetings/processes, etc. were assessed. The Board evaluation report for the financial year 2024-25 was adopted at the Board Meeting held on March 26, 2025.
The Company has subsidiaries in Chile, Greece, India, Mauritius, the People''s Republic of China, Singapore, the Netherlands and the United States of America. The Company does not have any associate or joint venture company within the meaning of Section 2(6) of the Act.
Pursuant to provisions of Section 129(3) of the Act, a statement containing the salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 forms a part of the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company and separate annual accounts of its subsidiaries are available on the Company''s website at https://investor.ofss.oracle.com.
Research and development (R&D) is essential for driving innovation and helping the Company gain an edge in the market. Because of its investments in R&D, the Company continues to be the leader in a dynamic and ever-evolving space and be relevant to the global financial services industry. The Company''s dedicated in-house R&D centers have produced a number of IT products that are used by banks in more than 150 countries around the world for running their critical operations, and helping them gain an edge in their business. The investment the Company makes in building applications, coupled with access to Oracle''s technology, provides a unique competitive edge to its offerings.
During the financial year 2024-25, the Company has not accepted any deposits within the meaning of Sections 73 and 76 of the Act, and as such, no amount of principal or interest on deposits was outstanding as of the date of the Balance Sheet.
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate from Mr. Prashant Diwan, Practicing Company Secretary, with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms a part of this Annual Report. A certificate from Mr. Diwan has also been received stating that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as a Director of the Company by the SEBI, MCA or any such statutory authority.
Secretarial auditor and secretarial audit report
In terms of Section 204 of the Act and the Rules made thereunder, the Board had appointed Mr. Prashant Diwan, Practicing Company Secretary, as the Secretarial Auditor of the Company to carry out secretarial audit for the financial year 2024-25. The Secretarial Audit report in Form MR-3 is annexed as Annexure 2 to this report. The Secretarial Audit report does not contain any qualification, reservation, adverse remark or disclaimer.
Further, pursuant to the provisions of Regulation 24A & other applicable provisions of the Listing Regulations read with Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and on recommendation of the Audit Committee, the Board of Directors at its meeting held on June 11, 2025 has approved appointment of M/s P. Diwan & Associates, Practicing Company Secretaries (Firm Registration Number - MU000011288) as Secretarial Auditors for a period of five consecutive years commencing from the financial year 2025-26 till financial year 2029-30. The resolution seeking the Members'' approval for the appointment of Secretarial Auditor of the Company forms part of the Notice.
Business responsibility and sustainability report (BRSR)
BRSR along with Independent Assurance Statement on BRSR Core indicators pursuant to the Listing Regulations for the financial year 2024-25 that forms part of this Annual Report has been hosted on the Company''s website at https://investor.ofss.oracle.com.
Employee stock option plan (ESOP)
The Members of the Company at their Annual General Meeting held on August 14, 2001 had approved grants of ESOPs to the employees / Directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced up to 12.5% of the issued and paid-up capital of the Company as approved by the Members at their Annual General Meeting held on August 18, 2011. This extended limit is an all-inclusive limit applicable to the stock options (âoptionsâ) granted in the past, in force, and those that will be granted by the Company in future.
Pursuant to ESOP scheme approved by the Members of the Company, below are the details of issue of Options to the employees and directors of the Company and its subsidiaries:
Particulars Shareholders'' Board Approval Issue of Options
Approval
2002 Employees Stock Option Plan ("Scheme 2002") August 14, 2001 March 4, 2002 4,753,600
Employees Stock Option Plan 2010 Scheme ("Scheme 2010") August 14, 2001 August 25, 2010 618,000
Employees Stock Option Plan 2011 Scheme ("Scheme 2011") August 18, 2011 August 18, 2011 Up to 12.5% of
share capital
Oracle Financial Services Software Limited Stock Plan 2014 August 18, 2011 August 7, 2014 Up to 12.5% of
("Scheme 2014") share capital
The summary of the options and/or OFSS Stock Units (âOSUsâ) granted under the Scheme 2002, Scheme 2010, Scheme 2011 and Scheme 2014 to eligible employees / Directors of the Company and its subsidiaries in conformation to applicable regulations from time to time till March 31, 2025, is given below:
Particulars Scheme Scheme Scheme Scheme Scheme Total
2002 2010 2011 2014 2014
(Options) (OSUs)
Pricing Formula At the market price as on the date of grant f 5
Variation of terms of grant None None None None None
Granted* 5,167,920 638,000 1,950,500 178,245 1,820,597 9,755,262
Lapsed and forfeited (620,725) (304,362) (650,576) (74,144) (231,757) (1,881,564)
Exercised and allotted (4,547,195) (333,638) (1,299,924) (68,158) (1,049,092) (7,298,007)
Exercised (pending allotment) - - - (525) (2,737) (3,262)
Total number of options / OSUs in - - - 35,418 537,011 572,429
force as on March 31,2025 * Including the grants out of options / OSUs added back to pool due to forfeiture.
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted vest on completion of 12, 24, 36, 48 and 60 months from the date of grant. In respect of the Scheme 2014, each of 25% of the total options / OSUs granted vest on completion of 12, 24, 36 and 48 months from the date of grant. Any vesting is subject to continued employment with the Company or its subsidiaries. Options / OSUs have an exercise period of 10 years from the date of grant. The employee / Director pays the exercise price and applicable taxes upon exercise of vested options / OSUs.
All the above-mentioned Schemes of the Company are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 applicable from time to time. Applicable disclosures relating to Employees Stock Option Schemes, pursuant to SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are placed on the Company''s website at https://investor.ofss.oracle.com.
The details of the Company''s ESOP schemes are disclosed in note 28 (b) in the notes to accounts of the standalone financials of the Company that form part of this Annual Report.
The details of OSUs granted to Directors and Senior Management under Scheme 2014 during the financial year ended March 31, 2025 are as follows:
|
Name |
Designation |
Number of OSUs |
|
Mr. Makarand Padalkar |
Managing Director & Chief Executive Officer |
4397 |
|
Mr. Arvind Gulhati |
Vice President - Business Planning and Ops |
1337 |
|
Mr. Avadhut Ketkar |
Chief Financial Officer |
1424 |
|
Mr. Dharpan Koul |
Regional Vice President - Consulting |
616 |
|
Mr. Goutam Chatterjee |
Vice President - Consulting |
132 |
|
Mr. Karthick Prasad |
Vice President - Software Development |
880 |
|
Mr. Onkarnath Banerjee |
Company Secretary & Compliance Officer |
480 |
|
Mr. Rajaram Vadapandeshwara |
Vice President - Software Development |
1320 |
|
Mr. Sanjay Bajaj |
Vice President - Development Operations |
660 |
|
Mr. Sanjay Ghosh |
Regional Vice President - Consulting |
352 |
|
Mr. Surendra Shukla |
Vice President - Product Support |
1188 |
|
Mr. Tushar Chitra |
Vice President - Product Strategy & Marketing |
660 |
|
Mr. Unmesh Pai |
Vice President - Software Development |
880 |
|
Mr. Venkatraman H |
Senior Director - Human Resource |
722 |
|
Mr. Vinayak Hampihallikar |
Regional Vice President - Consulting |
1583 |
|
Mr. Vivek Jalan |
Vice President - Real Estate & Facilities |
159 |
|
(a) Any other employee who receives grant in any one year amounting to 5% or more of options / OSUs granted during the year |
None |
|
|
(b) Identified employees who were granted options / OSUs, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant |
None |
|
|
(c) Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in |
f 383.73 |
|
|
accordance with Indian Accounting Standard (Ind AS) 33 âEarnings Per Share'' issued by the Institute of Chartered Accountants of India |
||
The compensation cost arising on account of grant of options and OSUs is calculated using the fair value method.
The reported profit for the financial year 2024-25 is after considering the cost of employee stock compensation of f 858 million using fair value method on options / OSUs.
The weighted average share price for the year over which options / OSUs were exercised was f 10,036. Money realized was f 128 million on allotment of 191,445 fresh equity shares as a result of exercise of options / OSUs during the financial year 2024-25. The Company has recovered from the employees / Directors the perquisite tax applicable on exercise of options / OSUs. The weighted average fair value of OSUs granted during the year was f 11,145 calculated as per the Black Scholes valuation model, with details of features incorporated, as stated in 28 (b) in the notes to accounts of the standalone financials.
Transfer of equity shares and unpaid / unclaimed dividend to Investor Education and Protection Fund (IEPF)
Pursuant to applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (âIEPF Rulesâ), all unpaid or unclaimed dividends, if not claimed for a period of seven years from the date of transfer to Unpaid Dividend Account of the Company, are required to be transferred by the Company to the IEPF. The details of unpaid / unclaimed amounts lying with the Company as on March 31, 2025 and the shares transferred to IEPF are available on the Company''s website at https://investor.ofss.oracle.com and on the website of the Ministry of Corporate Affairs at www.iepf.gov.in.
The Company is committed to fostering a positive, engaging and inclusive work environment that aligns with its strategic goals. The employees are the most valuable asset of the Company and it invests in their growth by building capabilities across diverse areas. By continually attracting, developing, and retaining talent, the Company strengthens its competitive advantage and adapts to evolving business landscape. The focus remains on cultivating a collaborative and inclusive culture supported by effective talent management systems, ensuring an enriching career experience for all employees.
As of March 31,2025, the Company had 8,887 employees (March 31, 2024 - 8,754) including employees of the subsidiaries.
The Company has policies prohibiting any kind of harassment, including sexual harassment, or discrimination. Employee safety, health and open culture is of paramount importance and the Company is committed to providing a safe and respectful work environment that is free from harassment or discrimination irrespective of background of the employees. The Company has Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act"). Frequent communication of this policy is done through various programs. The Company has setup Internal Complaints Committee at every location where it operates in India as per the regulations to redress and resolve any complaints arising under the POSH Act.
The details of complaints pertaining to sexual harassment filed, disposed of and pending resolution during the financial year are provided in the Corporate Governance report which is a part of this Annual Report.
Corporate social responsibility
The Company has constituted a Corporate Social Responsibility (âCSRâ) Committee in accordance with the provisions of the Act. The details of the CSR Committee are provided in the Corporate Governance Report which is a part of this Annual Report.
Pursuant to Section 135 of the Act read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on the CSR activities for the financial year ended March 31, 2025 is annexed as Annexure 3 to this report.
Internal financial controls and its adequacy
The Board has adopted adequate policies and procedures as a part of Internal Financial Controls that are commensurate with the size, scale and complexity of the Company''s operations. Such policies and procedures ensure orderly and efficient conduct of business, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The Internal Audit team monitors and evaluates the efficacy and adequacy of the internal control system, its compliance with the risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. The Internal Audit team reports to the Audit Committee.
Directors'' responsibility statement
As required under Section 134(5) of the Act, for the financial year ended on March 31,2025, the Directors hereby confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b. the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors have prepared the annual accounts on a going concern basis;
e. the directors have laid down internal financial controls and that such internal financial controls are adequate and were operating effectively; and
f. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Members of the Company have appointed M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, (ICAI Firm Registration No. 101049W), as the Statutory Auditors of the Company for a term of five consecutive years from the conclusion of the 33rd Annual General Meeting held on August 3, 2022 till the conclusion of the 38th Annual General Meeting to be held in the year 2027 as required under Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014.
Reporting of frauds by auditors
During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143(12) of the Act any instances of fraud committed in the Company by its officers or employees.
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.
Material changes and commitments
There are no material changes and commitments which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this report.
Significant and material orders
During the year under review, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
|
Issue of equity shares with differential rights as to dividend, voting or otherwise, sweat equity shares and buyback of shares |
Not applicable |
|
The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof |
Not applicable |
|
The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year |
Not applicable |
|
The details of instance of one time settlement with any Banks or Financial Institutions |
Not applicable |
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act and the relevant information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
The Company strives to conserve energy and use energy efficient computers and illumination systems. The Company also deploys sophisticated office automation and infrastructure management equipment which optimize energy consumption. The Company continues to support Oracle''s global sustainability goals of reducing waste to landfill and conserving energy.
The Company regularly strives to utilize newer technologies with a view to conserve energy and create an environmentally friendly ecosystem. The initiatives taken by the Company are summarized below:
Network: The Company continues to invest in upgrading and modernizing its networks thereby increase uptime of the network infrastructure, increase capacity and enable greater collaboration. Network infrastructure is being migrated to the next generation cloud platform and network tooling; processes are being made seamless between the applications and the cloud platforms thereby enabling unified operational process, while securing the network infrastructure to provide a secure remote computing environment for the Company''s employees and customers.
Cloud deployment: The Company operates the infrastructure on a next generation cloud platform. All corporate applications are hosted on the Oracle next generation cloud. This move significantly reduces infrastructure costs as well as space and power
utilization across the globe. Leveraging the cloud platform, the Company has consolidated data centers and manages increasing demand through flexible infrastructure utilization.
Business Resiliency: The Company has successfully implemented disaster recovery initiatives for critical infrastructure services. This has been adequately tested during the pandemic crisis, minor deficiencies were mitigated, and the plan has been made more efficient and effective.
Virtual presence: The Company has made significant investments in providing a near virtual working environment for its employees through multiple collaboration tools. Multifunctional and multiple methods of collaboration across geographies have enhanced business operations. This facilitates communication across the globe minimizing travel and increasing efficiencies from a support perspective by making self-service operations easier and effective. Conference room facilities have been enhanced and standardized across the organization to ensure smooth and seamless operations from any of the Company''s location.
All these initiatives provide a secure, efficient and environment friendly operating environment to the employees.
|
Foreign exchange earnings and outgo: |
(Amounts in f million) |
|
Foreign exchange earnings |
60,611 |
|
Foreign exchange outgo (including capital goods and other expenditure) |
5,237 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans: The Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to broaden and deepen various potential markets globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for the Company.
The banking and financial services industry is a significant transformation, driven by the disruptive technologies and new age customers who have very different needs and expectations. The consumption pattern of technology over a more standardized cloud service opens up lot of opportunities for the banks to undertake progressive transformation that address specific areas. The regulatory pressures that require more invasive approach is also influencing the need investment in new-age technologies. Such technologies also open up opportunities for the bank to generate newer insights in their business that help uncover new opportunities. To succeed in this complex landscape, financial institutions need to demonstrate agility and innovation while undertaking digital transformation, and deal with the competition from non-banking players.
Your Company is at the forefront of developing state-of-the-art solutions that enhance customer experience, improve operational efficiency, and enable better risk & compliance management for financial institutions. Our cloud-native platforms with embedded Artificial Intelligence (AI) and Machine Learning (ML), empower banks and financial institutions to scale efficiently and become agile in delivering to the changing customer expectations.
Statement on compliance of applicable Secretarial Standards
The Company complies with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section includes the details of employees and only of those Directors to whom the remuneration has been paid by the Company and excludes remuneration of the employees of overseas branches, subsidiaries, and the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
|
Name of the Director |
Ratio to median remuneration |
|
Non-Executive, Independent Directors |
|
|
Mr. Sridhar Srinivasan |
2 |
|
Ms. Jane Murphy |
2 |
|
Ms. Kavita Venugopal* |
Not Applicable |
|
Mr. Mrugank Paranjape |
2 |
|
Executive Director |
|
|
Mr. Makarand Padalkar |
10 |
|
* Appointed with effect from March 3, 2025. |
|
i. |
The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company secretary in the financial year: |
|
|
Name and Title |
Percentage increase / (decrease) of remuneration in FY 2025 as compared to FY 2024 |
|
|
Non-Executive, Independent Directors |
||
|
Mr. Sridhar Srinivasan |
38% |
|
|
Ms. Jane Murphy |
18% |
|
|
Ms. Kavita Venugopal* |
Not Applicable |
|
|
Mr. Mrugank Paranjape** |
Not Applicable |
|
|
Managing Director and Chief Executive Officer |
||
|
Mr. Makarand Padalkar |
17% |
|
|
Chief Financial Officer |
||
|
Mr. Avadhut Ketkar** |
Not Applicable |
|
|
Company Secretary and Compliance Officer |
||
|
Mr. Onkarnath Banerjee |
2% |
|
|
* Was a Director only for a part of the financial year 2024-25. ** Was a Director / Chief Financial Officer only for a part of the financial year 2023-24. |
||
ii. The percentage increase in the median remuneration of employees in financial year 2025, as compared to financial year 2024:
-1%.
iii. The number of permanent employees on the rolls of the Company:
8,045 as on March 31, 2025.
iv. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2024-25, the average remuneration of employees other than the key managerial personnel increased by 6% over the previous year. During the same period, average remuneration of the key managerial personnel increased by 12%.
v. Affirmation that the remuneration is as per the remuneration policy of the Company:
The remuneration is as per the remuneration policy of the Company.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
The Directors place on record their sincere appreciation for the continued support and co-operation received during the year by the Company from its stakeholders, customers, members, vendors, bankers, stock exchanges, regulatory authorities and all other stakeholders. The Directors also wish to thank the Government of India, the State Governments in the jurisdictions it operates and their various agencies and departments. The Directors place on record their appreciation for the excellent contributions made by the employees of the Company through their commitment, co-operation and diligence. The Directors look forward to the long-term future with confidence.
Mar 31, 2024
The Directors present their report on the business and operations of the Company along with the Annual Report and audited financial statements for the financial year 2023-24.
|
As per Consolidated financial statements: |
(Amounts in Rs. Million) |
|
|
Particulars |
Year ended March 31, 2024 |
Year ended March 31, 2023 |
|
Revenue from operations |
63,729.61 |
56,983.09 |
|
Finance income |
3,316.71 |
1,672.84 |
|
Other income, net |
105.21 |
245.59 |
|
Total income |
67,151.53 |
58,901.52 |
|
Operating expenses |
(36,185.60) |
(32,395.86) |
|
Depreciation and amortization |
(742.58) |
(806.62) |
|
Total expenses |
(36,928.18) |
(33,202.48) |
|
Profit before tax |
30,223.35 |
25,699.04 |
|
Tax expenses |
(8,029.73) |
(7,637.63) |
|
Profit for the year |
22,193.62 |
18,061.41 |
|
Other comprehensive income for the year |
107.74 |
1,104.20 |
|
Total comprehensive income for the year |
22,301.36 |
19,165.61 |
|
As per Unconsolidated financial statements: |
(Amounts in ? million) |
|
|
Particulars |
Year ended March 31, 2024 |
Year ended March 31, 2023 |
|
Revenue from operations |
47,844.96 |
42,555.81 |
|
Finance income |
2,407.86 |
1,335.58 |
|
Other income, net |
(11.70) |
258.65 |
|
Dividend from subsidiary company |
- |
932.14 |
|
Total income |
50,241.12 |
45,082.18 |
|
Operating expenses |
(23,281.92) |
(21,066.35) |
|
Depreciation and amortization |
(597.62) |
(583.85) |
|
Total expenses |
(23,879.54) |
(21,650.20) |
|
Profit before tax |
26,361.58 |
23,431.98 |
|
Tax expenses |
(6,082.39) |
(5,706.90) |
|
Profit for the year |
20,279.19 |
17,725.08 |
|
Other comprehensive income for the year |
68.63 |
39.78 |
|
Total comprehensive income for the year |
20,347.82 |
17,764.86 |
On a consolidated basis, the Company''s revenue stood at ? 63,729.61 million during the current financial year, up 12% compared to ? 56,983.09 million of the previous financial year. The net income for the current financial year was ? 22,193.62 million, up 23% compared to ? 18,061.41 million of the previous financial year. On an unconsolidated basis, the Company''s revenue stood at ? 47,844.96 million during the current financial year, increase of 12% compared to ? 42,555.81 million of the previous financial year. The net income for the current financial year was ? 20,279.19 million, up 14% compared to ? 17,725.08 million of the previous financial year.
A detailed analysis of the financials is given in the Management''s discussion and analysis report that forms part of this Annual Report.
The Board of Directors of the Company declared an interim dividend of ? 240 per equity share of ? 5 each on April 24, 2024, for the financial year ended March 31, 2024. They have not recommended any additional final dividend for the financial year 2023-24.
The Company has not transferred any amount to the reserves during the year under review.
Particulars of loans, guarantees or investments
In terms of Section 186 of the Companies Act, 2013 ("the Act"), the particulars of loans, guarantees and investments have been disclosed in the financial statements.
During the financial year 2023-24, the Company allotted 274,477 equity shares of face value of f 5 each to its eligible employees and Directors of the Company and its subsidiaries who exercised their stock options under the prevailing Employee Stock Option Schemes of the Company. As a result, the paid-up equity share capital of the Company as on March 31, 2024 was f 433,358,280 divided into 86,671,656 equity shares of face value of f 5 each.
Pursuant to Section 92(3) read with 134(3) of the Act, the Annual Return (in e-form MGT-7) for the financial year ended March 31, 2024 is available on the Company''s website at https://investor.ofss.oracle.com.
Directors and key managerial personnel
Pursuant to provisions of Section 152 of the Act and the Articles of Association of the Company, Ms. Kimberly Woolley (DIN: 07741017) and Mr. Vincent Secondo Grelli (DIN: 08262388), Directors of the Company, would retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The resolutions seeking Members'' approval for their re-appointment along with other required details form part of the Notice.
Changes in the Board of Directors during the year (appointment, re-appointment and retirement) -
- The Members of the Company at the Annual General Meeting held on July 27, 2023 approved the re-appointment of Ms. Jane Murphy (DIN: 08336710) as Non-Executive, Independent Director, not liable to retire by rotation, for a further term of five years with effect from January 1, 2024 up to December 31, 2028.
- Mr. Chaitanya Kamat (DIN: 00969094), retired from the position of Managing Director and Chief Executive Officer of the Company with effect from the close of business hours of October 4, 2023. The Board placed on record its appreciation for his contributions during the tenure with the Company.
- The Members of the Company vide resolutions passed through postal ballot on November 30, 2023 approved appointments of:
a. Mr. Makarand Padalkar (DIN: 02115514) as the Managing Director and Chief Executive Officer of the Company for a term of three consecutive years with effect from October 5, 2023 up to October 4, 2026, liable to retire by rotation; and
b. Mr. Gopala Ramanan Balasubramaniam (DIN: 02785489) as Non-Executive, Non-Independent Director of the Company with effect from October 5, 2023, liable to retire by rotation.
- The Members of the Company vide resolution passed through postal ballot on January 11,2024 approved appointment of Mr. Mrugank Paranjape (DIN: 02162026) as Non-Executive, Independent Director, not liable to retire by rotation, for a term of five consecutive years with effect from December 4, 2023 up to December 3, 2028.
- Mr. S Venkatachalam (DIN: 00257819) and Mr. Richard Jackson (DIN: 06447687), Independent Directors of the Company, retired as members of the Board of Directors on completion of their tenure with effect from close of business hours of March 31, 2024. The Board placed on record its appreciation for their valuable contributions and guidance during their tenure with the Company.
All the Independent Directors of the Company have submitted declarations that they meet the criteria of Independence as provided in Section 149 of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ). The Independent Directors have registered their names in the Independent Directors'' Databank as per Rule 6 of the Companies (Appointments and Qualifications of Directors) Rules, 2014.
Key managerial personnel
Mr. Makarand Padalkar (DIN: 02115514), the Whole-time Director and Chief Financial Officer was appointed as the Managing Director and Chief Executive Officer of the Company effective October 5, 2023.
The Board of Directors of the Company at its meeting held on October 3, 2023, approved the appointment of Mr. Avadhut Ketkar as the Chief Financial Officer effective October 5, 2023.
Pursuant to provisions of Section 203 of the Act, Mr. Makarand Padalkar, Managing Director and Chief Executive Officer, Mr. Avadhut Ketkar, Chief Financial Officer and Mr. Onkarnath Banerjee, Company Secretary and Compliance Officer were the Key Managerial Personnel of the Company as on March 31, 2024.
Number of meetings of the Board
Nine meetings of the Board were held during the financial year 2023-24. For details of the meetings of the Board, please refer to the Corporate Governance Report which is a part of this Annual Report.
The Company has established several Board Committees as a part of best Corporate Governance practices and to comply with the requirements of the relevant provisions of the laws. The details pertaining to the Committees of the Board and their meetings during the year are included in the Corporate Governance Report which is a part of this Annual Report.
The Company has formed following policies as required by the Act and Listing Regulations:
|
Particulars |
Details |
Website link for policy / details |
|
Code of ethics and business conduct policy |
This code defines and implements Oracle''s ethical business values and sets forth key rules and employee responsibilities. The Code also covers the vigil mechanism and whistle blower policy. |
|
|
Code of practices and procedures for fair disclosure of UPSI |
This code defines the principles for fair disclosure of Unpublished Price Sensitive Information (âUPSIâ). |
https://www.oracle.com/a/ocom/docs/ industries/financial-services/code- |
|
Corporate social responsibility policy |
This policy governs Corporate Social Responsibility (âCSRâ) program of the Company. |
https://www.oracle.com/a/ocom/docs/ |
|
Directors'' appointment policy |
This policy governs the manner of appointment of Directors of the Company. |
https://www.oracle.com/a/ocom/docs/ |
|
Dividend distribution policy |
This policy details the factors to be considered by the Board while deciding or recommending any dividend. |
https://www.oracle.com/a/ocom/docs/ |
|
Material events and information policy |
This policy provides framework for determination of material events / information and sets out classes and types of material events / information that require disclosure to stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Policy for determining material subsidiaries |
This policy defines the criterion for deciding material subsidiaries and describes related actions to be taken by the Company with respect to significant transactions with them. |
https://www.oracle.com/a/ocom/docs/ |
|
Record archival policy |
This policy provides the framework for archival of the communications with the stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Related party transactions policy |
This policy sets out the principles and processes that apply in respect of transactions entered into by the Company with a related party. |
https://www.oracle.com/a/ocom/docs/ |
|
Remuneration policy |
This policy establishes principles governing remuneration of the directors, key managerial personnel and senior management of the Company. |
https://www.oracle.com/a/ocom/docs/ |
All related party transactions entered into by the Company during the financial year 2023-24 were at an arm''s length basis and in the ordinary course of business. Form AOC-2 as required under the Act is enclosed as Annexure 1 to this report.
Management''s discussion and analysis report
Management''s discussion and analysis report as stipulated under Regulation 34 of the Listing Regulations forms a part of this Annual report.
The Risk Management Committee of the Board frames and monitors implementation of risk management policy for the Company and ensure its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the Company are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management plan have been covered in the Management''s discussion and analysis report that forms part of this Annual Report.
Pursuant to the provisions of the Act and Listing Regulations, the Nomination and Remuneration Committee of the Board of Directors has conducted the evaluation of the performance of the Board and its Committees based on various criteria such as composition, effectiveness of processes / meetings, information sharing, functioning, etc. The Board evaluation report for the financial year 2023-24 was adopted at the Board Meeting held on March 27, 2024.
The Company has subsidiaries in Chile, Greece, India, Mauritius, the People''s Republic of China, Singapore, the Netherlands and the United States of America. The Company does not have any associate or joint venture company within the meaning of Section 2(6) of the Act.
Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 forms part of the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company and separate annual accounts of its subsidiaries are available on the Company''s website at https://investor.ofss.oracle.com.
Research and development (R&D) is essential for driving innovation and helping customers gain an edge in their business. Because of its investments in R&D, the Company continues to be the leader in a dynamic and ever-evolving space and be relevant to the global financial services industry today and tomorrow. The Company''s dedicated in-house R&D centers have produced a number of IT products that are used by banks in more than 150 countries around the world for running their critical operations. The investment the Company makes in building applications, coupled with access to Oracle''s technology, provides a unique competitive edge to its offerings.
During the financial year 2023-24, the Company has not accepted any deposits within the meaning of Sections 73 and 76 of the Act and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet.
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate from Mr. Prashant Diwan, Practicing Company Secretary, with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms part of this Annual Report. A certificate from Mr. Diwan, Practicing Company Secretary & Secretarial auditor has also been received stating that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as a Director of the Company by the SEBI, MCA or any such statutory authority.
There are no qualifications, reservations, adverse remarks or disclaimers in the Statutory Auditors'' report.
In terms of Section 204 of the Act and the Rules made thereunder, the Board has appointed Mr. Prashant Diwan, Practicing Company Secretary, as the Secretarial Auditor of the Company to carry out secretarial audit for the financial year 2023-24. The Secretarial Audit report is annexed as Annexure 2 to this report. The Secretarial Audit report does not contain any qualifications, reservations, adverse remarks or disclaimers.
Business responsibility and sustainability report (BRSR)
Business Responsibility and Sustainability Report pursuant to Regulation 34 of the Listing Regulations for the financial year 2023-24 that forms part of this Annual Report has been hosted on the Company''s website at https://investor.ofss.oracle.com.
Employee stock option plan (ESOP)
The Members of the Company at their Annual General Meeting held on August 14, 2001 had approved grants of ESOPs to the employees / Directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced up to 12.5% of the issued and paid-up capital of the Company and approved by the Members at their Annual General Meeting held on August 18, 2011. This extended limit is an all-inclusive limit applicable to the stock options (âoptionsâ) granted in the past, in force, and those that will be granted by the Company in future.
Pursuant to ESOP scheme approved by the Members of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the 2002 Employees Stock Option Plan (âScheme 2002â) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. Under the Scheme 2002, the Company granted 4,548,920 options prior to its Initial Public Offer ("IPOâ) in 2002 and 619,000 options at various dates after IPO (including the grants of options out of options forfeited earlier). On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme (âScheme 2010â) for issue of 618,000 options to the employees and Directors of the Company and its subsidiaries. Under the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).
Further, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme (âScheme 2011â) on August 18, 2011 and Oracle Financial Services Software Limited Stock Plan 2014 (âOFSS Stock Plan 2014â) on August 7, 2014.
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted vest on completion of 12, 24, 36, 48 and 60 months from the date of grant. In respect of the OFSS Stock Plan 2014, each of 25% of the total options / OFSS Stock Units (âOSUsâ) granted vest on completion of 12, 24, 36 and 48 months from the date of grant. Any vesting is subject to continued employment with the Company or its subsidiaries. Options / OSUs have an exercise period of 10 years from the date of grant. The employee / Director pays the exercise price and applicable taxes upon exercise of vested options / OSUs.
All the above-mentioned Schemes of the Company are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 applicable from time to time. Applicable disclosures relating to Employees Stock Option Schemes, pursuant to SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are placed on the Company''s website at https://investor.ofss.oracle.com.
The details of the Company''s ESOP schemes are disclosed in note 29 (b) in the notes to accounts of the unconsolidated financials of the Company that form part of this Annual Report. As at March 31,2024, there are no options outstanding under Scheme 2002 and Scheme 2010.
The summary of the options and/or OSUs granted under the Scheme 2002, Scheme 2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees/ Directors of the Company and its subsidiaries in conformation to applicable regulations from time to time till March 31, 2024, is given below:
|
Particulars |
Scheme Scheme Scheme OFSS Stock OFSS Stock Total 2002 2010 2011 Plan 2014 Plan 2014 |
|
|
(Options) |
(OSUs) |
|
|
Pricing Formula |
At the market price as on the date of grant |
? 5 |
|
Variation of terms of grant |
None None None None |
None |
|
Granted |
5,167,920 638,000 1,950,500 178,245 1,719,811 9,654,476 |
|
|
Lapsed and forfeited |
(620,725) (304,362) (650,576) (68,144) (195,267) (1,839,074) |
|
|
Exercised |
(4,547,195) (333,638) (1,299,924) (31,902) (893,903) (7,106,562) |
|
|
Total number of options / OSUs in force as on March 31, 2024 |
- - - 78,199 630,641 708,840 |
|
|
The details of OSUs granted to Directors and Senior Management under OFSS Stock Plan 2014 during the financial year ended March 31,2024 are as follows: |
||
|
Name |
Designation |
Number of OSUs |
|
Mr. Makarand Padalkar |
Managing Director & Chief Executive Officer |
21714 |
|
Mr. Arvind Gulhati |
Vice President - Business Planning |
4188 |
|
Mr. Avadhut Ketkar |
Chief Financial Officer |
6449 |
|
Mr. Dharpan Koul |
Regional Vice President - Consulting |
2816 |
|
Mr. Goutam Chatterjee |
Vice President - Consulting |
347 |
|
Mr. Onkarnath Banerjee |
Company Secretary & Compliance Officer |
1315 |
|
Mr. Rajaram Vadapandeshwara |
Vice President - Software Development |
1164 |
|
Mr. Sanjay Bajaj |
Vice President - Development Operations |
931 |
|
Mr. Sanjay Ghosh |
Regional Vice President - Consulting |
547 |
|
Mr. Surendra Shukla |
Vice President - Product Support |
2094 |
|
Mr. Tushar Chitra |
Vice President - Product Strategy & Marketing |
1280 |
|
Mr. Unmesh Pai |
Vice President - Software Development |
1745 |
|
Mr. Venkatraman H |
Senior Director - Human Resource |
1861 |
|
Mr. Vikram Gupta |
Group Vice President - Banking Development |
15120 |
|
Mr. Vinayak Hampihallikar |
Regional Vice President - Consulting |
3280 |
|
Mr. Vivek Jalan |
Vice President - Real Estate and Facilities |
481 |
|
(a) Any other employee, who receives grant in any one year amounting to 5% or more of options / OSUs granted during the year |
None |
|
|
(b) Identified employees who were granted options / OSUs, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant |
None |
|
|
(c) Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard (Ind AS) 33 âEarnings Per Share'' issued by the Institute of Chartered Accountants of India |
? 232.78 |
|
The compensation cost arising on account of grant of options and OSUs is calculated using the fair value method.
The reported profit for the financial year 2023-24 is after considering the cost of employee stock compensation of ? 649.52 million, using fair value method on options / OSUs.
The weighted average share price for the year over which options / OSUs were exercised was ? 5,801. Money realized on allotment of 274,477 fresh equity shares as a result of exercise of options / OSUs during the financial year 2023-24 was ? 204.68 million. The Company has recovered from the employees / directors the perquisite tax applicable on exercise of options / OSUs. The weighted average fair value of OSUs granted during the year was ? 4,217 calculated as per the Black Scholes valuation model, with details of features incorporated, as stated in 29 (b) in the notes to accounts of the unconsolidated financials.
Transfer of equity shares and unpaid / unclaimed dividend to Investor Education and Protection Fund
Pursuant to applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (âIEPF Rulesâ), during the year, the Company has transferred unclaimed and unencashed dividends of f 6,344,412.00. Further, 28 corresponding equity shares on which dividends were unclaimed for seven consecutive years were transferred as per the requirements of the IEPF Rules. The details of unpaid / unclaimed amounts lying with the Company as on March 31, 2024 and the shares transferred to IEPF are available on the Company''s website at https://investor.ofss.oracle.com and on the website of the Ministry of Corporate Affairs at www.iepf.gov.in.
Employees are critical assets of the organization and their success and wellbeing is key to the Company''s performance. Your Company endeavors to constantly hire and retain the best talent and be among the preferred employers in the industry. The Company constantly invests in building capabilities of its employees in the areas of technology, industry domain and soft skills; and emphasizes on building an inclusive and collaborative work culture along with systems that promote and enable high performance, offering an enriching career to the employees.
As of March 31,2024, your Company had 8,754 employees (March 31,2023 - 8,593) including employees of the subsidiaries.
Your Company has zero tolerance towards any kind of harassment, including sexual harassment, or discrimination. Employee safety, health and open culture is of paramount importance to your Company and is committed to providing a safe and respectful work environment that is free from harassment or discrimination irrespective of background of the employees. Sexual or other harassments or discrimination against applicants or employees is strictly forbidden. The Company has Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act"). Frequent communication of this policy is done through various programs. The Company has setup Internal Complaints Committee at every location where it operates in India as per the regulations to redress and resolve any complaints arising under the POSH Act.
The details of complaints pertaining to sexual harassment that were filed, disposed of and pending during the financial year are provided in the Corporate Governance report which is a part of this Annual Report.
Corporate social responsibility
The Company has constituted Corporate Social Responsibility (âCSRâ) Committee in accordance with the provisions of the Act. The details of the CSR Committee are provided in the Corporate Governance Report which is a part of this Annual Report.
Pursuant to Section 135 of the Act read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on the CSR activities for the financial year ended March 31,2024 is annexed as Annexure 3 to this report.
Internal financial controls and its adequacy
The Board has adopted adequate policies and procedures in terms of Internal Financial Controls commensurate with the size, scale and complexity of the Company''s operations. Such policies and procedures ensure orderly and efficient conduct of business, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The Internal Audit team monitors and evaluates the efficacy and adequacy of the internal control system commensurate with the size of the business operations of the Company, its compliance with risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. The Internal Audit team reports to the Audit Committee.
Directors'' responsibility statement
As required under Section 134(5) of the Act, for the financial year ended on March 31,2024, the Directors hereby confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b. the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors have prepared the annual accounts on a going concern basis;
e. the directors have laid down internal financial controls and that such internal financial controls are adequate and were operating effectively; and
f. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Members of the Company have appointed M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, (ICAI Firm Registration No. 101049W), as the Statutory Auditors of the Company for a term of five consecutive years from the conclusion of the 33rd Annual General Meeting held on August 3, 2022 till the conclusion of the 38th Annual General Meeting to be held in the year 2027, as required under Section 139 of the Act.
Reporting of frauds by auditors
During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143(12) of the Act any instances of fraud committed against the Company by its officers or employees.
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.
Material changes and commitments
There have been no material changes and commitments which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this report.
Significant and material orders
During the year under review, there are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
|
The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof |
Not applicable |
|
The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year |
Not applicable |
|
The details of instance of one time settlement with any Banks or Financial Institutions |
Not applicable |
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act and the relevant information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
The Company strives to conserve energy and use energy efficient computers and illumination systems. The Company also deploys sophisticated office automation and infrastructure management equipment which optimize energy consumption. The Company continues to support Oracle''s global sustainability goals of reducing waste to landfill and conserving energy.
The Company regularly strives to utilize newer technologies with a view to conserve energy and create an environmentally friendly ecosystem. The initiatives taken by the Company are summarized below:
Network: The Company continues to invest in upgrading and modernizing its networks thereby increase uptime of the network infrastructure, increase capacity and enable greater collaboration. Network infrastructure is being migrated to the next generation cloud platform and network tooling; processes are being made seamless between the applications and the cloud platforms thereby enabling unified operational process, while securing the network infrastructure to provide a secure remote computing environment for our employees and customers.
Cloud deployment: The Company operates the infrastructure on a next generation cloud platform. All corporate applications are hosted on the Oracle next generation cloud. This move significantly reduces infrastructure costs as well as space and power utilization across the globe. Leveraging the cloud platform, the Company has consolidated data centers and manages increasing demand through flexible infrastructure utilization.
Business Resiliency: The Company has successfully implemented disaster recovery initiatives for critical infrastructure services. This has been adequately tested during the pandemic crisis, minor deficiencies were mitigated, and the plan has been made more efficient and effective.
Virtual presence: The Company has made significant investments in providing a near virtual working environment for its employees through multiple collaboration tools. Multifunctional and multiple methods of collaboration across geographies have enhanced business operations. This facilitates communication across the globe minimizing travel and increasing efficiencies from a support perspective by making self-service operations easier and effective. Conference room facilities have been enhanced and standardized across the organization to ensure smooth and seamless operations from any of the Company''s location.
All these initiatives provide a secure, efficient and environment friendly operating environment to the employees.
|
Foreign exchange earnings and outgo: |
(Amounts in ? million) |
|
Foreign exchange earnings |
42,146.10 |
|
Foreign exchange outgo (including capital goods and other expenditure) |
2,071.32 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans: The Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to broaden and deepen various potential markets globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for the Company.
The banking and financial services industry is undergoing a significant transformation driven by rapid changes in technology, business environment, regulatory mandates and customer expectations. To succeed in this complex landscape, financial institutions need to demonstrate agility and innovation while undertaking digital transformation with the help of a technology partner. Your Company is at the forefront of developing state-of-the-art solutions that enhance customer experience, improve operational efficiency, and enable better risk & compliance management for financial institutions.
Your Company is a leader in the industry and invests in research and development, strategic partnerships, and is positioned as a key enabler of the digital transformation reshaping the financial services landscape.
Statement on compliance of applicable Secretarial Standards
The Company complies with all applicable mandatory provisions of Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section includes the details of employees and only of those Directors to whom the remuneration has been paid by the Company and excludes remuneration of the employees of overseas branches, subsidiaries, and the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
i. Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
|
Name of the Director |
Ratio to median remuneration |
|
Non-Executive, Independent Directors |
|
|
Mr. S Venkatachalam |
2 |
|
Mr. Richard Jackson |
2 |
|
Mr. Sridhar Srinivasan |
2 |
|
Ms. Jane Murphy |
2 |
|
Mr. Mrugank Paranjape* |
Not Applicable |
|
Executive Directors |
|
|
Mr. Chaitanya Kamat** |
Not Applicable |
|
Mr. Makarand Padalkar |
8 |
|
*Appointed with effect from December 4, 2023. **Retired with effect from close of business hours of October 4, 2023. |
|
ii. The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company secretary in the financial year:
|
Name and Title |
Percentage increase / (decrease) of remuneration in FY 2024 as compared to FY 2023 |
|
Non-Executive, Independent Directors |
|
|
Mr. S Venkatachalam |
Nil |
|
Mr. Richard Jackson |
Nil |
|
Mr. Sridhar Srinivasan |
Nil |
|
Ms. Jane Murphy |
Nil |
|
Mr. Mrugank Paranjape* |
Not Applicable |
|
Managing Director and Chief Executive Officer |
|
|
Mr. Chaitanya Kamat* |
Not Applicable |
|
Mr. Makarand Padalkar# |
7 |
|
Chief Financial Officer |
|
|
Mr. Avadhut Ketkar* |
Not Applicable |
|
Company Secretary and Compliance Officer |
|
|
Mr. Onkarnath Banerjee |
4 |
|
*Part of the year as Director/KMP. #During the year the Whole-time Director and Chief Financial Officer was appointed as the Managing Director and Chief Executive Officer. |
|
iii. The percentage increase in the median remuneration of employees in financial year 2024, as compared to financial year 2023:
-7%.
iv. The number of permanent employees on the rolls of the Company:
7,890 as on March 31, 2024.
v. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2023-24, the average remuneration of employees other than the key managerial personnel increased by 3% over the previous year. During the same period, average remuneration of the key managerial personnel increased by 6%.
vi. Affirmation that the remuneration is as per the remuneration policy of the Company:
The remuneration is as per the remuneration policy of the Company.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
The Directors place on record their sincere thanks for the continued support and co-operation received by the Company from its stakeholders, customers, members, vendors, bankers, stock exchanges, regulatory authorities and all other stakeholders during the year. The Directors also wish to thank the Government of India, the State Governments in the jurisdictions it operates and their various agencies and departments. The Directors place on record their appreciation for the excellent contributions made by the employees of the Company through their commitment, co-operation and diligence. The Directors look forward to the long-term future with confidence.
Mar 31, 2023
The Directors present their report on the business and operations of your Company along with its Annual Report and audited financial statements for the financial year 2022-23.
|
As per Consolidated financial statements: |
(Amounts in f million) |
|
|
Particulars |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
|
Revenue from operations |
56,983.09 |
52,214.55 |
|
Finance income |
1,672.84 |
901.85 |
|
Other income, net |
245.59 |
441.57 |
|
Total income |
58,901.52 |
53,557.97 |
|
Depreciation and amortization |
(806.62) |
(927.99) |
|
Profit before tax |
25,699.04 |
25,282.77 |
|
Tax expenses |
(7,637.63) |
(6,394.51) |
|
Profit for the year |
18,061.41 |
18,888.26 |
|
Other comprehensive income for the year |
1,104.20 |
(35.69) |
|
Total comprehensive income for the year |
19,165.61 |
18,852.57 |
|
As per Unconsolidated financial statements: |
(Amounts in f million) |
|
|
Particulars |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
|
Revenue from operations |
42,555.81 |
38,961.33 |
|
Finance income |
1,335.58 |
839.39 |
|
Other income, net |
258.65 |
220.07 |
|
Dividend from subsidiary company |
932.14 |
1,500.66 |
|
Total income |
45,082.18 |
41,521.45 |
|
Depreciation and amortization |
(583.85) |
(679.81) |
|
Profit before tax |
23,431.98 |
23,761.51 |
|
Tax expenses |
(5,706.90) |
(5,649.42) |
|
Profit for the year |
17,725.08 |
18,112.09 |
|
Other comprehensive income for the year |
39.78 |
(83.95) |
|
Total comprehensive income for the year |
17,764.86 |
18,028.14 |
On a consolidated basis, your Company''s revenue stood at f 56,983.09 million during the current financial year, up 9% compared to f 52,214.55 million of the previous financial year. The net income for the current financial year was f 18,061.41 million, down by 4% compared to f 18,888.26 million of the previous financial year. On an unconsolidated basis, your Company''s revenue stood at f 42,555.81 million during the current financial year, increase of 9% compared to f 38,961.33 million of the previous financial year. The net income for the current financial year was f 17,725.08 million, down by 2% compared to f 18,112.09 million of the previous financial year.
A detailed analysis of the financials is given in the Management''s discussion and analysis report that forms part of this Annual Report.
The Company declared an interim dividend of f 225 per equity share of f 5 each on April 26, 2023, for the financial year ended March 31, 2023. The Board of Directors has not recommended any additional final dividend for the financial year 2022-23.
The Company has not transferred any amount to the reserves during the year under review.
Particulars of loans, guarantees or investments
In terms of Section 186 of the Companies Act, 2013 ("the Act"), the particulars of loans, guarantees and investments have been disclosed in the financial statements.
During the financial year 2022-23, the Company allotted 150,714 equity shares of face value of f 5 each to its eligible employees and Directors who exercised their stock options under the prevailing Employee Stock Option Schemes of the Company. As a result, the paid-up equity share capital of the Company as on March 31, 2023 was f 431,985,895 divided into 86,397,179 equity shares of face value of f 5 each.
Pursuant to Section 92(3) read with 134(3) of the Act, Annual Return (in e-form MGT-7) for the financial year ended March 31, 2023 is available on the Company''s website at https://investor.ofss.oracle.com.
Directors and key managerial personnel
Mr. Harinderjit Singh and Mr. Chaitanya Kamat, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Brief profile of the Directors proposed to be re-appointed, the nature of their expertise, and the names of companies in which they hold directorships and chairpersonships / memberships of board committees, etc. are provided in the Notice to Members (âNoticeâ) forming part of this Annual Report. The Directors seeking re-appointment are not disqualified / debarred from holding the office of Director in terms of Section 164 of the Act, or by any order of SEBI, MCA, RBI or any other such authority. The Board recommends to the Members the resolutions for re-appointment of Mr. Harinderjit Singh and Mr. Chaitanya Kamat as Directors of the Company, liable to retire by rotation. Resolutions seeking Members'' approval for their re-appointment forms part of the Notice.
All the Independent Directors of the Company have given declaration under Section 149(6) of the Act and regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) confirming that they meet the criteria of independence and that they have complied with Schedule IV of the Act and the Company''s Code of Ethics & Business Conduct.
The Members of the Company, at the Thirtieth Annual General Meeting held on August 8, 2019, had appointed Ms. Jane Murphy as an Independent Director of the Company to hold office for a term up to December 31,2023. In accordance with the provisions of Sections 149, 150, 152 and 197 of the Act and applicable provisions of the Listing Regulations, and based on the performance evaluation and recommendation of the Nomination and Remuneration Committee of the Company, it is proposed to re-appoint Ms. Jane Murphy as an Independent Director for a further term of five years from January 1,2024 to December 31,2028. A special resolution to this effect forms part of the Notice. The Board recommends to the Members this resolution.
During the financial year 2022-23, there were no changes to the Key Managerial Personnel.
Number of meetings of the Board
Five meetings of the Board were held during the financial year 2022-23. For details of the meetings of the Board, please refer to the Corporate Governance Report which is a part of this Annual Report.
The details pertaining to the Committees of the Board and their meetings during the year are included in the Corporate Governance Report which is a part of this Annual Report.
The Company has formed following policies as required by the Act and Listing Regulations:
|
Particulars |
Details |
Website link for policy / details |
|
Code of ethics and business conduct policy |
This code defines and implements Oracle''s ethical business values and sets forth key rules and employee responsibilities. The Code also covers the vigil mechanism and whistle blower policy. |
|
|
Code of practices and procedures for fair disclosure of UPSI |
This code defines the principles for fair disclosure of Unpublished Price Sensitive Information (âUPSIâ). |
https://www.oracle.com/a/ocom/docs/ industries/financial-services/code- |
|
Corporate social responsibility policy |
This policy governs Corporate Social Responsibility (âCSRâ) program of the Company. |
https://www.oracle.com/a/ocom/docs/ |
|
Directors'' appointment policy |
This policy governs the manner of appointment of Directors of the Company. |
https://www.oracle.com/a/ocom/docs/ |
|
Dividend distribution policy |
This policy details the factors to be considered by the Board while deciding or recommending any dividend. |
https://www.oracle.com/a/ocom/docs/ |
|
Particulars |
Details |
Website link for policy / details |
|
Material events and information policy |
This policy provides framework for determination of material events / information and sets out classes and types of material events / information that require disclosure to stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Policy for determining material subsidiaries |
This policy defines the criterion for deciding material subsidiaries and describes related actions to be taken by the Company with respect to significant transactions with them. |
https://www.oracle.com/a/ocom/docs/ |
|
Record archival policy |
This policy provides the framework for archival of the communications with the stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Related party transactions policy |
This policy sets out the principles and processes that apply in respect of transactions entered into by the Company with a related party. |
https://www.oracle.com/a/ocom/docs/ |
|
Remuneration policy |
This policy establishes principles governing remuneration of the directors, key managerial personnel and senior management of the Company. |
https://www.oracle.com/a/ocom/docs/ |
All related party transactions entered into by the Company during the financial year 2022-23 were at an arm''s length basis and in the ordinary course of business. As required under the Act, form AOC-2 is annexed as Annexure 1 to this report.
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company and ensure its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the Company are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management plan have been covered in the Management''s Discussion and Analysis Report that forms part of this Annual Report.
In accordance with the requirements of Section 178 of the Act and Regulation 17(10) of the Listing Regulations, the Chairperson of the Nomination and Remuneration Committee conducted the evaluation of the performance of the Board and its Committees by seeking inputs from all the Directors based on various criteria such as composition, effectiveness of processes / meetings, information sharing, functioning, etc. The Board evaluation report for financial year 2022-23 was adopted at the Board Meeting held on April 26, 2023.
Your Company has subsidiaries in Greece, India, Chile, China, Mauritius, Singapore, the Netherlands and the United States of America. The Company does not have any associate or joint venture company within the meaning of Section 2(6) of the Act.
Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
Pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company and separate annual accounts of its subsidiaries are available on the website of the Company at https://investor.ofss.oracle.com.
Your Company continuously makes significant investments in research and development (R&D) to offer Information Technology solutions that the global financial services industry needs today and will need tomorrow. Your Company''s dedicated in-house R&D centers have produced a number of IT products that are used by banks in more than 150 countries around the world for running their critical operations. The investment your Company makes in building applications, coupled with access to Oracle''s technology, provides a unique competitive edge to its offerings.
During the financial year 2022-23, the Company has not accepted any deposits within the meaning of Sections 73 and 76 of the Act and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet.
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate from Mr. Prashant Diwan, Practicing Company Secretary, with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms part of this Annual Report. A certificate from Mr. Prashant Diwan, has also been received stating that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as a Director of the Company by the SEBI, MCA or any such statutory authority.
There are no qualifications, reservations, adverse remarks or disclaimers in the Statutory Auditors'' report.
In terms of Section 204 of the Act and the Rules made thereunder, the Board has appointed Mr. Prashant Diwan, Practicing Company Secretary, as the Secretarial Auditor of the Company for the financial year 2022-23. The Secretarial Audit report is annexed as Annexure 2 to this report. The Secretarial Audit report does not contain any qualifications, reservations, adverse remarks or disclaimers.
Business Responsibility and Sustainability Report
Business Responsibility and Sustainability Report pursuant to Regulation 34 of the Listing Regulations for the financial year 2022-23 that forms part of this Annual Report has been hosted on the website of the Company at https://investor.ofss.oracle.com.
Employee Stock Option Plan (ESOP)
The Members of the Company at their Annual General Meeting held on August 14, 2001 had approved grants of ESOPs to the employees / Directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced and approved up to 12.5% of the issued and paid-up capital of the Company by the Members at their Annual General Meeting held on August 18, 2011. This extended limit is an all-inclusive limit applicable to the stock options (âoptionsâ) granted in the past, in force, and those that will be granted by the Company in future.
Pursuant to ESOP scheme approved by the Members of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the 2002 Employees Stock Option Plan (âScheme 2002â) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to its Initial Public Offer ("IPOâ) in 2002 and 619,000 options at various dates after IPO (including the grants of options out of options forfeited earlier). On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme (âScheme 2010â) for issue of 618,000 options to the employees and Directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier). As at March 31,2023, there are no options outstanding under ESOP Scheme 2002 and ESOP Scheme 2010.
Pursuant to ESOP Schemes approved by the Members of the Company, the Board of Directors have further approved the Employees Stock Option Plan 2011 Scheme (âScheme 2011â) and Oracle Financial Services Software Limited Stock Plan 2014 (âOFSS Stock Plan 2014â). The details of the Company''s ESOP schemes are disclosed in note 29 (b) in the notes to accounts of the unconsolidated financials of the Company that form part of this Annual Report.
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted vest on completion of 12, 24, 36, 48 and 60 months from the date of grant. In respect of the OFSS Stock Plan 2014, each of 25% of the total options / OSUs granted vest on completion of 12, 24, 36 and 48 months from the date of grant. Any vesting is subject to continued employment with the Company or its subsidiaries. Options / OSUs have an exercise period of 10 years from the date of grant. The employee / Director pays the exercise price and applicable taxes upon exercise of vested options / OSUs.
All the above mentioned Schemes of the Company are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 applicable from time to time. Applicable disclosures relating to Employees Stock Option Schemes, pursuant to SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are placed on the website of the Company at https://investor.ofss.oracle.com.
The details of the options and/or OFSS Stock Units (âOSUsâ) granted under the Scheme 2002, Scheme 2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees / Directors of the Company and subsidiaries from time to time till March 31,2023 are given below:
|
Particulars |
Scheme 2002 |
Scheme 2010 |
Scheme 2011 |
OFSS Stock Plan 2014 |
OFSS Stock Plan 2014 |
Total |
|
(Stock Options) |
(OSUs) |
|||||
|
Pricing Formula |
At the market price as on the date of grant |
f 5 |
||||
|
Variation of terms of grant |
None |
None |
None |
None |
None |
|
|
Granted |
5,167,920 |
638,000 |
1,950,500 |
1 78,245 |
1,465,030 |
9,399,695 |
|
Lapsed and forfeited |
(620,725) |
(304,362) |
(606,276) |
(65,694) |
(132,159) |
(1,729,216) |
|
Exercised |
(4,547,195) |
(333,638) |
(1,251,851) |
(15,886) |
(683,515) |
(6,832,085) |
|
Total number of options in force as on March 31, 2023 |
92,373 |
96,665 |
649,356 |
838,394 |
||
The details of OSUs granted to Directors and Senior Managerial Personnel under OFSS Stock Plan 2014 during the financial year ended March 31,2023 are as follows:
|
Name |
Designation |
Number of OSUs* |
|
Mr. Chaitanya Kamat |
Managing Director & Chief Executive Officer |
38367 |
|
Mr. Makarand Padalkar |
Whole-time Director & Chief Financial Officer |
19151 |
|
Mr. Arvind Gulhati |
Vice President - Business Planning and Ops |
6506 |
|
Mr. Avadhut Ketkar |
Chief Accounting Officer |
4940 |
|
Mr. Goutam Chatterjee |
Vice President - Consulting Quality & Testing |
490 |
|
Mr. Karthick Prasad |
Vice President, Product Development |
2972 |
|
Ms. Laura Balachandran |
Vice President - Business Planning and Ops |
396 |
|
Mr. Mahesh Rao |
Regional Vice President - Consulting |
2197 |
|
Mr. Onkarnath Banerjee |
Company Secretary and Compliance Officer |
2470 |
|
Mr. Rajaram Vadapandeshwara |
Vice President - Software Development |
988 |
|
Mr. Sanjay Bajaj |
Vice President - OFSAA Development Operations |
906 |
|
Mr. Sanjay Ghosh |
Regional Vice President - Consulting |
824 |
|
Mr. Surendra Shukla |
Vice President - Product Support |
2635 |
|
Mr. Tushar Chitra |
Vice President - Product Strategy & Marketing |
1647 |
|
Mr. Unmesh Pai |
Vice President, Software Development |
1647 |
|
Mr. Vikram Gupta |
Group Vice President - Banking Development |
20419 |
|
Mr. Vinayak Hampihallikar |
Vice President - Consulting |
5789 |
|
Mr. Vivek Jalan |
Vice President Real Estate and Facilities |
553 |
|
*Grant price of each OSU is f 5 |
||
|
(a) Any other employee, who receives grant in any one year amounting to 5% or more of options / OSUs granted during the year - None |
||
|
(b) Identified employees who were granted options / OSUs, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant - None |
||
|
(c) Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard (Ind AS) 33 âEarnings Per Share'' issued by the Institute of Chartered Accountants of India - f 204.37 |
||
The compensation cost arising on account of grant of options and OSUs is calculated using the fair value method.
The reported profit for financial year 2022-23 is after considering the cost of employee stock compensation of f 584.81 million, using fair value method on options / OSUs.
The weighted average share price for the year over which options / OSUs were exercised was f 3,181. Money realized on allotment of 150,714 fresh equity shares as a result of exercise of options / OSUs during the financial year 2022-23 was f 793.42 million. The Company has recovered from the employees / directors the perquisite tax applicable on exercise of options / OSUs. The weighted average fair value of OSUs granted during the year was f 3,053 calculated as per the Black Scholes valuation model, with details of features incorporated, as stated in 29 (b) in the notes to accounts of the unconsolidated financials.
Transfer of equity shares and unpaid / unclaimed dividend to IEPF
Pursuant to applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has transferred to the credit of Investor Education and Protection Fund (âIEPFâ) set up by the Government of India, equity shares in respect of which dividend had remained unpaid/ unclaimed for a period of seven (7) consecutive years within the timelines prescribed under the Act. Unpaid / unclaimed dividend for seven (7) years or more has also been transferred to the IEPF.
Employees are critical assets of the organization and their success and wellbeing is key to the Company''s performance. Your Company endeavors to constantly hire and retain the best talent and be among the preferred employers in the industry. The Company constantly invests in building capabilities of its employees in the areas of technology, industry domain and soft skills; and emphasizes on building an inclusive and collaborative work culture along with systems that promote and enable high performance offering an enriching career to the employees.
Employee safety, health and open culture is of paramount importance to your Company and is committed to providing a safe and respectful work environment that is free from harassment or discrimination irrespective of background of the employees. Sexual or other harassments or discrimination against applicants or employees is strictly forbidden. The Company has Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Frequent communication of this policy is done through various programs and communications. The Company has setup Internal Complaints Committees at every location where it operates in India as per the regulations.
As of March 31,2023, your Company had 8,593 employees (March 31,2022 - 7,884) including employees of the subsidiaries.
The details of complaints pertaining to sexual harassment that were filed, disposed of and pending during the financial year are provided in the Corporate Governance report which is a part of this Annual Report.
Corporate social responsibility
The Company has constituted Corporate Social Responsibility (âCSRâ) Committee in accordance with the provisions of the Act. The details of the CSR Committee are provided in the Corporate Governance Report which is a part of this Annual Report.
Pursuant to Rule 8 of the Companies (Corporate Social Responsibility) Rules, 2014, the annual report on the CSR activities for the financial year ended March 31,2023 is annexed as Annexure 3 to this report.
The Board has adopted adequate policies and procedures in terms of Internal Financial Controls commensurate with the size, scale and complexity of the Company''s operations. Such policies and procedures ensure orderly and efficient conduct of business, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The Internal Audit team monitors and evaluates the efficacy and adequacy of the internal control system commensurate with the size of the business operations of the Company, its compliance with risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. The Internal Audit team reports to the Audit Committee.
Directors'' responsibility statement
As required under Section 134(5) of the Act, for the financial year ended on March 31,2023, the Directors hereby confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b. the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors have prepared the annual accounts on a going concern basis;
e. the directors have laid down internal financial controls and that such internal financial controls are adequate and were operating effectively; and
f. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Members of the Company have appointed M/s. S. R. Batliboi & Associates LLP, Chartered Accountants, (ICAI Firm Registration No. 101049W), as the Statutory Auditors of the Company till the conclusion of the 38th Annual General Meeting to be held in the year 2027.
Reporting of frauds by Auditors
During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143(12) of the Act any instances of fraud committed against the Company by its officers or employees.
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.
Material changes and commitments
There have been no material changes and commitments which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this report.
Significant and material orders
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not applicable.
The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year - Not applicable.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act and the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
The Company strives to conserve energy and use energy efficient computers and illumination systems. The Company also deploys sophisticated office automation and infrastructure management equipment which optimize energy consumption. The Company continues to support Oracle''s global sustainability goals of reducing waste to landfill and conserving energy.
The Company regularly strives to utilize newer technologies with a view to conserve energy and create an environmentally friendly ecosystem. The initiatives taken by the Company are summarized below:
Network: The Company continues to invest in upgrading and modernizing its networks thereby increase uptime of the network infrastructure, increase capacity and enable greater collaboration. Network infrastructure is being migrated to the next generation cloud platform and network tooling; processes are being made seamless between the applications and the cloud platforms thereby enabling unified operational process, while securing the network infrastructure to provide a secure remote computing environment for our employees and customers.
Cloud deployment: The Company operates the infrastructure on a next generation cloud platform. All corporate applications are hosted on the Oracle next generation cloud. This move significantly reduces infrastructure costs as well as space and power utilization across the globe. Leveraging the cloud platform, the Company has consolidated datacenters and manages increasing demand through flexible infrastructure utilization.
Business Resiliency: The Company has successfully implemented disaster recovery initiatives for critical infrastructure services. This has been adequately tested during this pandemic crisis, minor deficiencies were mitigated, and the plan has been made more efficient and effective.
Virtual presence: The Company has made significant investments in providing a near virtual working environment for its employees through multiple collaboration tools. Multifunctional and multiple methods of collaboration across geographies have enhanced business operations. This facilitates communication across the globe minimizing travel and increasing efficiencies from a support perspective by making self-service operations easier and effective. Conference room facilities have been enhanced and standardized across the organization to ensure smooth and seamless operations from any of the Company''s location.
All these initiatives provide a secure, efficient and environment friendly operating environment to the employees.
|
Foreign exchange earnings and outgo: |
(Amounts in f million) |
|
Foreign exchange earnings |
37,771.57 |
|
Foreign exchange outgo (including capital goods and other expenditure) |
2,317.74 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans: Your Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to broaden and deepen various potential markets globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for your Company.
The banking and financial services industry continued to face disruptions due to geopolitical and economic shockwaves. New age and nimble fintechs are nibbling away segments of their businesses, especially in the growth areas. These disruptions have accelerated the need for the financial institutions to transform themselves to meet the changing customer expectations. To address these challenges, banks and FIs are accelerating digital revolution, coupled with harnessing data to deliver actionable insights, and drive progressive modernization to offer an enhanced user experience.
Your Company''s innovation-led approach enables digital transformation across critical business areas. Your Company caters to the customers ranging from small and medium banks operating in small regions to large banks and financial institutions operating across the globe. The Company''s solutions deliver flexibility of deployment and interoperability to cater to the needs of all categories of clients. Its deep expertise in a wide spectrum of solutions in banking ensures that the Company can meet the next level of expectations. Within these disciplines, your Company continues to provide products and services for retail banking, corporate banking, universal banking, payments, life insurance, annuities, health insurance, and asset management.
The best-in-class solutions are built on top of a common core of technologies and enterprise applications to offer financial institutions a pre-integrated full stack that delivers a comprehensive set of solutions that can save cost, drive efficiency, and scale. As the markets are slowly evolving into software-as-a-service model, your Company has adapted its offerings for SaaS / cloud but can also be offered on-premise depending upon the customers'' choice. Oracle''s integrated cloud platform serves as the core for innovation and applications that enable digital banking, integrated finance, accounting and performance, financial crime compliance management, revenue management, billing, and human capital management - all to help organizations effectively adapt, grow, and stay relevant in the industry.
Statement on compliance of applicable Secretarial Standards
The Company complies with all applicable mandatory provisions of Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section includes the details of employees and only of those Directors to whom the remuneration has been paid by the Company and excludes remuneration of the employees of overseas branches, subsidiaries, and the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
|
i. Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year: |
|||
|
Name of the Director |
Ratio to median remuneration |
||
|
Non-Executive, Independent Directors |
|||
|
Mr. S Venkatachalam |
2 |
||
|
Mr. Richard Jackson |
2 |
||
|
Mr. Sridhar Srinivasan |
2 |
||
|
Ms. Jane Murphy |
2 |
||
|
Executive Directors |
|||
|
Mr. Chaitanya Kamat* |
26 |
||
|
Mr. Makarand Padalkar* |
7 |
||
|
*Excludes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options. |
|||
|
ii. |
The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company secretary in the financial year: |
||
|
Name and Title |
Percentage increase / (decrease) of remuneration in FY 2023 as compared to FY 2022 |
||
|
Non-Executive, Independent Directors |
|||
|
Mr. S Venkatachalam |
Nil |
||
|
Mr. Richard Jackson |
Nil |
||
|
Mr. Sridhar Srinivasan |
Nil |
||
|
Ms. Jane Murphy |
Nil |
||
|
Managing Director and Chief Executive Officer# |
|||
|
Mr. Chaitanya Kamat |
9 |
||
|
Whole-time Director and Chief Financial Officer# |
|||
|
Mr. Makarand Padalkar |
6 |
||
|
Company Secretary and Compliance Officer# |
|||
|
Mr. Onkarnath Banerjee |
9 |
||
#Excludes the (perquisite) value towards difference between the fair market value on the date of exercise of options and the exercise price.
iii. The percentage increase in the median remuneration of employees in fiscal 2023, as compared to fiscal 2022:
10%
iv. The number of permanent employees on the rolls of the Company:
v. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2022-23, the average remuneration of employees other than the key managerial personnel increased by 16% over the previous year. During the same period, average remuneration of the key managerial personnel increased by 9%.
vi. Affirmation that the remuneration is as per the remuneration policy of the Company:
The remuneration is as per the remuneration policy of the Company.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
The Directors gratefully acknowledge the continued support received by the Company from its stakeholders, customers, members, vendors, bankers and regulatory authorities during the year. The Directors also wish to thank the Government of India, the State Governments in the jurisdictions it operates and their various agencies and departments. The Directors place on record their appreciation for the excellent contributions made by the employees of the Company through their commitment, co-operation and diligence.
For and on behalf of the Board
S Venkatachalam
Chairperson DIN: 00257819
Mar 31, 2022
The Directors present their report on the business and operations of your Company along with the Annual Report and audited financial statements of the Company for the financial year 2021-22.
|
As per Consolidated financial statements: |
(Amounts in ? million) |
|
|
Particulars |
Year ended |
Year ended |
|
March 31, 2022 |
March 31,2021 |
|
|
Revenue from operations |
52,214.55 |
49,839.37 |
|
Finance income |
901.85 |
1,138.65 |
|
Other income, net |
441.57 |
181.01 |
|
Total income |
53,557.97 |
51,159.03 |
|
Depreciation and amortization |
(927.99) |
(1,041.11) |
|
Profit before tax |
25,282.77 |
24,773.32 |
|
Tax expenses |
(6,394.51) |
(7,154.77) |
|
Profit for the year |
18,888.26 |
17,618.55 |
|
Other comprehensive income for the year |
(35.69) |
50.58 |
|
Total comprehensive income for the year |
18,852.57 |
17,669.13 |
|
As per Unconsolidated financial statements: |
(Amounts in ? million) |
|
|
Particulars |
Year ended |
Year ended |
|
March 31, 2022 |
March 31,2021 |
|
|
Revenue from operations |
38,961.33 |
36,452.12 |
|
Finance income |
839.39 |
1,071.12 |
|
Other income, net |
220.07 |
93.69 |
|
Dividend from subsidiary company |
1,500.66 |
- |
|
Total income |
41,521.45 |
37,616.93 |
|
Depreciation and amortization |
(679.81) |
(802.03) |
|
Profit before tax |
23,761.51 |
21,878.81 |
|
Tax expenses |
(5,649.42) |
(5,485.96) |
|
Profit for the year |
18,112.09 |
16,392.85 |
|
Other comprehensive income for the year |
(83.95) |
(29.82) |
|
Total comprehensive income for the year |
18,028.14 |
16,363.03 |
On a consolidated basis, your Companyâs revenue stood at ? 52,214.55 million this year, up 5% compared to ? 49,839.37 million of the previous financial year. The net income for the current financial year was ? 18,888.26 million, an increase of 7% compared to ? 17,618.55 million of the previous year. On an unconsolidated basis, your Companyâs revenue stood at ? 38,961.33 million during the current financial year, increase of 7% compared to ? 36,452.12 million of the previous year. The net income for the current financial year was ? 18,112.09 million, an increase of 10% compared to ? 16,392.85 million of the previous year. Previous yearsâ figures have been re-arranged / re-classified, wherever necessary, as per the applicable regulations.
A detailed analysis of the financials is given in the Managementâs discussion and analysis report that forms part of this Annual Report.
The Company declared an interim dividend of ? 190 per equity share of ? 5 each on May 4, 2022 for the financial year ended March 31, 2022. The Board of Directors has not recommended any additional final dividend for the financial year 2021-22.
The Company has not transferred any amount to the reserves during the year under review.
Particulars of loans, guarantees or investments
In terms of Section 186 of the Companies Act, 2013 (âthe Actâ), the particulars of loans, guarantees and investments have been disclosed in the financial statements.
During the financial year 2021-22, the Company allotted 184,232 equity shares of face value of f 5 each to its eligible employees and Directors who exercised their stock options under the prevailing Employee Stock Option Schemes of the Company. As a result, the paid-up equity share capital of the Company as on March 31, 2022 was ? 431,232,325 divided into 86,246,465 equity shares of face value of f 5 each.
Pursuant to Section 92(3) read with 134(3) of the Act, Annual Return (in e-form MGT-7) for the financial year ended March 31, 2022 is available on the Companyâs website at: www.oracle.com/financialservices.
Directors and key managerial personnel
Mr. Makarand Padalkar and Mr. Yong Meng Kau, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Brief resumes of the Directors proposed to be re-appointed, the nature of their expertise, and the names of companies in which they hold directorships and Chairpersonships / Memberships of Board Committees, etc. are provided in the Notice to Members forming part of this Annual Report. The Directors seeking re-appointment are not debarred from holding the office of Director pursuant to any Securities and Exchange Board of India (SEBI) order. The Board recommends to the Members the resolutions for re-appointment of Mr. Makarand Padalkar and Mr. Yong Meng Kau as Directors of the Company, liable to retire by rotation. Resolutions seeking Membersâ approval for their re-appointment forms part of the Notice.
All the Independent Directors of the Company have given declaration under Section 149(6) of the Act and regulation 16(1 )(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) confirming that they meet the criteria of independence and that they have complied with Schedule IV of the Act and the Companyâs Code of Conduct.
Mr. Chaitanya Kamat, Chief Executive Officer of the Company was re-appointed as the Managing Director and Chief Executive Officer of the Company at the Annual General Meeting held on August 4, 2021 for a term of five consecutive years from October 25, 2021 to October 24, 2026.
During the year, there were no changes to the Key Managerial Personnel.
Number of meetings of the Board
Six meetings of the Board were held during the financial year 2021-22. For details of meetings of the Board, please refer to the Corporate Governance Report which is a part of this Annual Report.
The details pertaining to the Committees of the Board and their meetings during the year are included in the Corporate Governance Report which is a part of this Annual Report.
The Company has formed following policies as required by the Act and Listing Regulations:
|
Particulars |
Details |
Website link for policy / details |
|
Code of ethics and business |
This code defines and implements Oracle ethical |
|
|
conduct policy |
business values and sets forth key rules and employee responsibilities. It also provides a context to handle any questions, issues, or concerns. The Code also covers the vigil mechanism and whistle blower policy. |
176732.pdf |
|
Code of Practices and |
This code defines the principles for fair disclosure |
|
|
Procedures for Fair Disclosure |
of Unpublished Price Sensitive Information (UPSI) |
industries/financial-services/code- |
|
of UPSI |
with respect to its securities which is likely to affect price of the securities. |
of-practices-and-procedures-for-fair- disclosure-upsi.pdf |
|
Corporate social responsibility |
This policy governs corporate social responsibility |
|
|
policy |
program of the Company and covers details of CSR activities that it can undertake and how to implement, monitor, and report on these activities. |
industries/financial-services/ofss-social- responsibility.pdf |
|
Directors'' appointment policy |
This policy governs the manner of appointment of Directors of the Company. |
https://www.orade.eom/a/ocom/docs/ industries/financial-services/directors- appointment-policy.pdf |
|
Dividend distribution policy |
This policy details the factors to be considered by the Board while deciding or recommending any dividend. |
https://www.orade.eom/a/ocom/docs/ industries/financial-services/ofss- dividend-distribution-policy.pdf |
|
Particulars |
Details |
Website link for policy / details |
|
Material events and information policy |
This policy provides framework for determination of material events / information and sets out classes and types of material events / information that require disclosure to stock exchanges. |
https://www.orade.eom/a/ocom/docs/ industries/financial-services/material- events-information-policy.pdf |
|
Policy for determining material subsidiaries |
This policy defines material subsidiaries and describes related actions to be taken by the Company with significant transactions with them. |
https://www.orade.eom/a/ocom/docs/ industries/financial-services/policy- determining-material.pdf |
|
Record archival policy |
The policy provides the framework for archival of the communication made to the stock exchanges. |
https://www.orade.eom/a/ocom/docs/ industries/financial-services/record- archival-policy.pdf |
|
Related party transactions policy |
This policy sets out the principles and processes that apply in respect of transactions entered into by the Company with a related party. |
https://www.orade.eom/a/ocom/docs/ industries/financial-services/ofss-party- transactions-policy.pdf |
|
Remuneration policy |
This policy establishes principles governing remuneration of the directors, key managerial personnel and senior management of the Company. |
https://www.orade.eom/a/ocom/docs/ industries/financial-services/ofss- remuneration-policy.pdf |
All related party transactions entered into by the Company during the financial year 2021-22 were at an armâs length basis and in the ordinary course of business. Form AOC-2 providing the details of related party transactions of the Company is annexed as Annexure 1 to this report.
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management''s Discussion and Analysis Report that forms part of this Annual Report.
In accordance with the requirements of the Section 178 of the Act and Regulation 17(10) of the Listing Regulations, the Chairperson of the Nomination and Remuneration Committee conducts the Board evaluation. The performance of the Board and its Committees was evaluated by seeking inputs from all the directors on the basis of various criteria such as its composition and structure, effectiveness of processes / meetings, information sharing and functioning, etc. The Board evaluation report for financial year 2021-22 was adopted at the Board Meeting held on May 4, 2022.
Your Company has subsidiaries in Greece, India, Chile, China, Mauritius, Singapore, the Netherlands and the United States of America. The Company does not have any associate or joint venture Companies within the meaning of Section 2(6) of the Act.
Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
During the year, the Company completed the acquisition of its Indian step down subsidiary, Oracle (OFSS) BPO Services Limited. Now it is a wholly owned direct subsidiary of the Company.
Pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company and separate annual accounts of its subsidiaries are available on the website of the Company at www.oracle.com/financialservices.
Your Company continuously makes significant investments in research and development (R&D) to offer solutions that the global banking industry needs today and will need tomorrow. Your Companyâs dedicated in-house R&D centers have produced a number of information technology products that are used by banks in more than 150 countries around the world for running their critical operations. The investment your Company makes in building applications, coupled with access to Oracleâs technology, provides a unique competitive edge to its offerings.
During the financial year 2021-22, the Company has not accepted any deposits within the meaning of Sections 73 and 76 of the Act and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet.
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate from Mr. Prashant Diwan, Practicing Company Secretary, with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms part of this Annual Report. A certificate from Mr. Prashant Diwan, Practicing Company Secretary, has also been received 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 the Company by the SEBI, Ministry of Corporate Affairs (MCA) or any such statutory authority.
There are no qualifications, reservations, adverse remarks or disclaimers in the Statutory Auditorsâ report.
In terms of Section 204 of the Act and the Rules made thereunder, the Board has appointed Mr. Prashant Diwan, Practicing Company Secretary, as Secretarial Auditor of the Company for the financial year 2021-22. The Secretarial Audit report is annexed as Annexure 2 to this report. The Secretarial Audit report does not contain any qualifications, reservations or adverse remarks.
Business responsibility report
Business Responsibility Report pursuant to Regulation 34 of the Listing Regulations for the financial year 2021-22 that forms part of this Annual Report has been hosted on the website of the Company at www.oracle.com/financialservices.
Employee Stock Option Plan (ESOP)
The Members of the Company at their Annual General Meeting held on August 14, 2001 had approved grants of ESOPs to the employees / directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced and approved up to 12.5% of the issued and paid-up capital of the Company by the Members at their Annual General Meeting held on August 18, 2011. This limit is an all-inclusive limit applicable to the stock options (âoptionsâ) granted in the past, in force, and those that will be granted by the Company in future.
Pursuant to ESOP Schemes approved by the Members of the Company, the Board of directors have approved the 2002 Employees Stock Option Plan (âScheme 2002â), Employees Stock Option Plan 2010 Scheme (âScheme 2010â), Employees Stock Option Plan 2011 Scheme (âScheme 2011â) and Oracle Financial Services Software Limited Stock Plan 2014 (âOFSS Stock Plan 2014â). The details of the Companyâs ESOP schemes are disclosed in note 29 (b) in the notes to accounts of the unconsolidated financials of the Company that forms part of this Annual Report.
The details of the options / OSUs granted under the Scheme 2002, Scheme 2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees / directors of the Company from time to time till March 31,2022 are given below:
|
Particulars |
Scheme Scheme Scheme |
OFSS Stock |
OFSS Stock |
Total |
|
2002 2010 2011 |
Plan 2014 |
Plan 2014 |
||
|
(Stock Options) |
(OSUs) |
|||
|
Pricing Formula |
At the market price as on the date of |
grant |
?5 |
|
|
Variation of terms of grant |
None None None |
None |
None |
|
|
Granted |
5,167,920 638,000 1,950,500 |
178,245 |
1,183,643 |
9,118,308 |
|
Lapsed and forfeited |
(620,725) (304,362) (509,506) |
(50,069) |
(118,581) |
(1,603,243) |
|
Exercised |
(4,547,195) (333,638) (1,226,886) |
(15,486) |
(558,166) |
(6,681,371) |
|
Total number of options in force March 31,2022 |
ason - - 214,108 |
112,690 |
506,896 |
833,694 |
|
The details of OSUs granted to Directors and Senior Managerial Personnel under OFSS Stock Plan 2014 during the financial year |
||||
|
ended March 31,2022 are as follows: |
||||
|
Name |
Designation |
Number of OSUs* |
||
|
Mr. Chaitanya Kamat |
Managing Director & Chief Executive Officer |
25000 |
||
|
Mr. Makarand Padalkar |
Whole-time Director & Chief Financial Officer |
14000 |
||
|
Mr. Arvind Gulhati |
Business Planning VP-Ops |
4200 |
||
|
Mr. Avadhut Ketkar |
Chief Accounting Officer |
2300 |
||
|
Ms. Bindu Venkatesh |
Vice President - Human Resources & Training |
2475 |
||
|
Mr. Goutam Chatterjee |
Consulting VP - Quality & Testing |
350 |
||
|
Mr. Karthick Prasad |
Vice President, Software Development |
2500 |
||
|
Ms. Laura Balachandran |
Business Planning VP-Ops |
200 |
||
|
Mr. Mahesh Rao |
Consulting RVP |
1400 |
||
|
Mr. Onkarnath Banerjee |
Company Secretary and Compliance Officer |
2500 |
||
|
Mr. Rajaram Vadapandeshwara |
Software Development VP |
750 |
||
|
Mr. Sanjay Bajaj |
VP - OFSAA Development Operations |
450 |
||
|
Name |
Designation |
Number of OSUs* |
|
Mr. Sanjay Ghosh |
Consulting RVP |
550 |
|
Mr. Sanjib Chakraborty |
Group VP Oracle Health Insurance Consulting |
1200 |
|
Mr. Surendra Shukla |
Product Support VP |
1400 |
|
Mr. Tushar Chitra |
VP - Product Strategy & Marketing |
1500 |
|
Mr. Vikram Gupta |
GVP Banking Development |
10000 |
|
Mr. Vinayak Hampihallikar |
Consulting RVP |
3500 |
|
Mr. Vivek Jalan |
Vice President Real Estate and Facilities |
350 |
|
*Grant rate per OSU is ? 5/- |
||
|
(a) Any other employee, who receives grant in any one year of option / OSUs amounting to 5% or more |
of options / OSUs |
|
|
granted during the year -1 |
Nil |
|
|
(b) Identified employees who |
were granted options / OSUs, during any one year, equal to or exceeding 1% of the issued |
|
|
capital (excluding outstanding warrants and conversions) of the Company at the time of grant - Nil |
||
|
(c) Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian |
||
|
Accounting Standard (IND AS) 33 âEarnings Per Shareâ issued by the Institute of Chartered Accountants of India ? 209.08 |
||
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted vest on completion of 12, 24,36,48 and 60 months from the date of grant. In respect of the OFSS Stock Plan 2014, each of 25% of the total options / OSUs granted vest on completion of 12, 24, 36 and 48 months from the date of grant. Any vesting is subject to continued employment of the employee with the Company or its subsidiaries. Options / OSUs have an exercise period of 10 years from the date of grant. The employee pays the exercise price and applicable taxes upon exercise of options / OSUs.
All the above mentioned Schemes of the Company are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 applicable from time to time. Applicable disclosures relating to Employees Stock Option Schemes, pursuant to SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, are placed on the website of the Company at www.oracle.com/financialservices.
The compensation cost arising on account of options and OSUs is calculated using the fair value method. The reported profit is after considering the cost of employee stock compensation of ? 496.91 million, using fair value method on options / OSUs.
The weighted average share price for the year over which options / OSUs were exercised was ? 4,111. Money realized by exercise of options / OSUs during the financial year 2021-22 was ? 257.72 million and 184,232 fresh equity shares were allotted as a result of exercise of options. The Company has recovered perquisite tax on the options / OSUs exercised by the employees during the year. The weighted average fair value of OSUs granted during the year was ? 4,309 calculated as per the Black Scholes valuation model, with details of features incorporated, as stated in 29 (b) in the notes to accounts of the unconsolidated financials.
Transfer of equity shares and unpaid / unclaimed dividend to IEPF
Pursuant to applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has transferred to the credit of Investor Education and Protection Fund (IEPF) set up by the Government of India, equity shares in respect of which dividend had remained unpaid / unclaimed for a period of seven (7) consecutive years within the timelines prescribed under the Act. Unpaid / unclaimed dividend for seven (7) years or more has also been transferred to the IEPF.
Human Resources are key assets of your Company and your Company invests continuously in imparting latest technology skills together with a range of soft skills to help them excel in their roles. Your Company has a strong performance management system together with a formal talent management processes to nurture employee careers, groom future leaders, and create a high-performance workforce.
Your Companyâs total employees as at March 31,2022 were 7,884 (March 31, 2021 -7,977) including employees of subsidiaries. The Company is committed to provide a healthy environment to all its employees and thus does not tolerate any discrimination and / or harassment in any form. The Company has in place a Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Frequent communication of this policy is done through various programs and at regular intervals. The Company has setup Internal Complaints Committees (ICC), both at the registered office and at every location where it operates in India, which have men and women committee members as per the regulations, are chaired by senior woman employees and have external women representation.
The details of complaints pertaining to sexual harassment that were filed, disposed of and pending during the financial year are provided in the Corporate Governance report which is a part of this Annual Report.
Corporate social responsibility
The Company has constituted Corporate Social Responsibility (CSR) Committee in accordance with the provisions of the Act. The details pertaining to composition of the CSR Committee is provided in the Corporate Governance Report which is a part of this Annual Report.
Pursuant to Rule 8 of the Companies (Corporate Social Responsibility) Rules, 2014, the annual report on the Corporate Social Responsibility activities for the financial year ended March 31, 2022 is annexed as Annexure 3 to this report.
The Board has adopted adequate policies and procedures in terms of Internal Financial Controls commensurate with the size, scale and complexity of the Companyâs operations. Such policies and procedures ensure orderly and efficient conduct of business, adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system commensurate with the size of the business operations of the Company, its compliance with risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. The Internal Audit team reports to the Audit Committee.
Directors'' responsibility statement
As required under Section 134(5) of the Act, for the financial year ended on March 31,2022, the Directors hereby confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit of the Company for that period;
c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. the directors, had laid down internal financial controls followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
M/s. Mukund M. Chitale & Co., Chartered Accountants (ICAI Firm Registration No. 106655W), were appointed as the Statutory Auditors of the Company by the Members at their 28th Annual General Meeting held on September 20, 2017 to hold office till the conclusion of the ensuing 33rd Annual General Meeting to be held in the year 2022.
Pursuant to Section 139 of the Companies Act, 2013 (âthe Actâ) and the rules made thereunder, the Board of Directors of the Company on recommendation of the Audit Committee, has proposed the appointment of M/s. S R Batliboi & Associates LLP, Chartered Accountants (ICAI Firm Registration No. 101049W), as the Statutory Auditors of the Company, to hold office from the conclusion of the ensuing 33rd Annual General Meeting to be held in the year 2022 till the conclusion of the 38th Annual General Meeting to be held in the year 2027, subject to the approval of the Members of the Company. The Company has received from M/s. S R Batliboi & Associates LLP, a written consent that they satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed thereunder. Accordingly, a resolution, proposing the appointment of M/s. S R Batliboi & Associates LLP as Statutory Auditors of the Company for a term of five consecutive years forms part of the Notice convening the 33rd Annual General Meeting. The Board recommends to the Members the resolution for appointment of M/s. S R Batliboi & Associates LLP as the Statutory Auditors of the Company.
Reporting of frauds by Auditors
During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143(12) of the Act any instances of fraud committed against the Company by its officers or employees.
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.
Material changes and commitments
There have been no material changes and commitments which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this report.
Significant and material orders
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companyâs operations in future.
The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not applicable.
The details of application made or any proceeding pending underthe Insolvency and Bankruptcy Code, 2016 duringthe year along with their status as at the end of the financial year - Not applicable.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
Conservation of energy
The Company strives to conserve energy and use energy efficient computers and illumination systems. The Company also deploys sophisticated office automation and management equipment which optimizes energy consumption. The Company continued to support Oracleâs global sustainability goal of reducing waste to landfill and conversing energy.
Technology absorption
The Company regularly strives to utilize newer technologies with a view to conserve the energy and create an environmentally friendly work environment. The initiatives taken by the Company are summarized below:
Network: The Company continues to invest in upgrading and modernizing its networks thereby increase uptime of the network infrastructure, increase capacity and enable greater collaboration. Network infrastructure is being migrated to the next generation cloud platform and network tooling; processes are being made seamless between the applications and the cloud platforms thereby enabling unified operational process, while securing the network infrastructure, to provide a secure remote computing environment for our employees and customers.
Cloud deployment and migration: The Company is working towards migrating infrastructure to the next generation cloud platform. All corporate applications will be hosted on the Oracle next generation cloud. This move significantly reduces infrastructure costs as well as reduces space and power utilization across the globe.
Datacenter: Datacenter consolidation, the next logical consequence of cloud migration, is also in progress keeping in mind the reducing need for physical datacenters and increasing demand for flexible infrastructure utilization. Various automation initiatives on compute operations and application support have been crucial in reducing human effort for routine activities.
Business Resiliency: The Company has successfully implemented disaster recovery initiatives for critical infrastructure services. This has been adequately tested during this pandemic crisis, minor deficiencies were mitigated, and the plan has been made more efficient and effective.
Virtual presence: The Company has made significant investments in providing a near virtual working environment for its employees through multiple collaboration tools. Multifunctional and multiple methods of collaboration across geographies have enhanced business operations. This facilitates communication across the globe minimizing travel, increasing efficiencies from a support perspective by making self-service operations easier and effective. Conference room facilities have been enhanced and standardized across the globe to ensure smooth and seamless operations from any Oracle location.
All these initiatives provide a more secure and efficient operating environment to the employees with utilization of innovative technology.
Foreign exchange earnings and outgo:
|
(Amounts in ? million) |
|
|
Foreign exchange earnings |
36,952.73 |
|
Foreign exchange outgo (including capital goods and other expenditure) |
1,946.83 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans: Your Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to focus on tapping various potential markets available globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for your Company.
The financial services industry has, over the past few years, shifted from monolithic, end-to-end solutions to component solutions. The industry landscape changed on account of the pandemic with more and more banks and financial institutions relying on SaaS providers for business-critical applications. With the technology disruptions, evolving regulations, and transformation of global business, the BFSI sector has now started adopting cloud and digital transformation enabled by advances in technology. More and more organizations are now adopting Artificial Intelligence (Al), Machine Learning (ML), Blockchain, and Digital Assistants (Chatbots). Cloud and Al are assisting banks in making faster and more informed decisions for their clients by allowing them to do a rapid risk analysis.
Your Company possesses a unique combination of the expertise gained through years of experience and the agility developed through a consistent focus on disruptive innovations. We offer end-to-end comprehensive solutions for banking, financial crime and compliance, and risk management as well as offerings based on a componentized architecture facilitating continuous, progressive modernization. To ensure minimal disruption to the customers, we follow a bottom-up domain-driven design approach and a microservices architecture.
The last few years have witnessed the emergence of a variety of non-traditional competitors who operate in niche areas. Our products easily integrate with these through our API-driven integrations.
Your Company has always focused on innovations that deliver tangible business outcomes. Leveraging our capabilities in Al / ML, predictive analytics, blockchain, loT, NLP, and leveraging the most modern microservices architecture we are now enabling faster credit decisioriing, reduced false positives, usage-based lease pricing, real-time cross-border payments, intelligent next best offers etc.
As the market are slowly evolving to a software-as-a-service model, your Company has adapted its offerings so that they are now built for SaaS but can also be offered on-premise depending upon the customersâ choice. A large portion of your Companyâs banking product portfolio is now available as a cloud service, as are the offerings for insurance, risk and finance, and financial crime and compliance management. In the coming years, the entire range of products will be available on the cloud, as the BFSI sector will move towards the Software-as-a-Service model.
Statement on compliance of applicable Secretarial Standards
The Company complies with all applicable mandatory provisions of Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section includes the details of employees and only of those Directors to whom the remuneration has been paid by the Company and excludes remuneration of the employees of overseas branches, subsidiaries, and the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
i. Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
|
Name of the Director |
Ratio to median remuneration |
|
Non-Executive, Independent Directors |
|
|
Mr. S Venkatachalam |
2 |
|
Mr. Richard Jackson |
2 |
|
Mr. Sridhar Srinivasan |
2 |
|
Ms. Jane Murphy |
2 |
|
Executive Directors |
|
|
Mr. Chaitanya Kamat |
26 |
|
Mr. Makarand Padalkar* |
7 |
|
*ExcIudes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options. |
|
|
ii. The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company |
|
|
secretary in the financial year: |
|
|
Name and Title |
Percentage increase / (decrease) |
|
of remuneration in FY 2022 |
|
|
as compared to FY 2021 |
|
|
Non-Executive, Independent Directors |
|
|
Mr. S Venkatachalam |
Nil |
|
Mr. Richard Jackson |
Nil |
|
Mr. Sridhar Srinivasan |
Nil |
|
Ms. Jane Murphy |
Nil |
|
Managing Director and Chief Executive Officer |
|
|
Mr. Chaitanya Kamat |
Nil |
|
Whole-time Director and Chief Financial Officer# |
|
|
Mr. Makarand Padalkar |
20 |
|
Company Secretary and Compliance Officer* |
|
|
Mr. Onkarnath Banerjee |
7 |
|
#Excludes the (perquisite) value towards difference between the fair market value on the date of exercise of options and the exercise price. |
|
iii. The percentage increase in the Median Remuneration of Employees in fiscal 2022, as compared to fiscal 2021:
22%
iv. The number of permanent employees on the rolls of the Company:
6,805 as on March 31, 2022.
v. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2021-22, the average remuneration of employees other than the key managerial personnel increased by 19% over the previous year. During the same period, average remuneration of the key managerial personnel increased by 4%.
vi. Affirmation that the remuneration is as per the remuneration policy of the Company:
The remuneration is as per the remuneration policy of the Company.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
The Directors gratefully acknowledge the continued support received by the Company from its stakeholders, customers, members, vendors, bankers and regulatory authorities during the year. The Directors also wish to thank the Government of India and the State Governments in the jurisdictions it operates and their various agencies, and departments. The Directors place on record their appreciation for the excellent contributions made by the employees of the Company through their commitment, co-operation and diligence.
For and on behalf of the Board
S Venkatachalam
Chairperson DIN: 00257819
June 15,2022
Mar 31, 2021
The Directors present their report on the business and operations of your Company along with the Annual Report and audited financial statements of the Company for the financial year 2020-21.
|
As per Consolidated financial statements: |
(Amounts in ? million) |
|
|
Particulars |
Year ended March 31,2021 |
Year ended March 31, 2020 |
|
Revenue from operations |
49,839.37 |
48,612.76 |
|
Finance income |
1,138.65 |
1,658.14 |
|
Other income, net |
181.01 |
115.25 |
|
Total income |
51,159.03 |
50,386.15 |
|
Depreciation and amortization |
(1,041.11) |
(1,063.81) |
|
Profit before tax |
24,773.32 |
22,522.81 |
|
Tax expenses |
(7,154.77) |
(7,900.64) |
|
Profit for the year |
17,618.55 |
14,622.17 |
|
Other comprehensive income for the year |
50.58 |
1,035.89 |
|
Total comprehensive income for the year |
17,669.13 |
15,658.06 |
|
As per Unconsolidated financial statements: |
(Amounts in ? million) |
|
|
Particulars |
Year ended March 31,2021 |
Year ended March 31, 2020 |
|
Revenue from operations |
36,452.12 |
35,255.08 |
|
Finance income |
1,071.12 |
1,508.73 |
|
Other income, net |
93.69 |
182.86 |
|
Total income |
37,616.93 |
36,946.67 |
|
Depreciation and amortization |
(802.03) |
(831.72) |
|
Profit before tax |
21,878.81 |
20,085.79 |
|
Tax expenses |
(5,485.96) |
(4,259.23) |
|
Profit for the year |
16,392.85 |
15,826.56 |
|
Other comprehensive income for the year |
(29.82) |
(33.54) |
|
Total comprehensive income for the year |
16,363.03 |
15,793.02 |
On consolidated basis, your Company''s revenue stood at f 49,839.37 million this year, up 3% compared to f 48,612.76 million of the previous financial year. The net income for the current financial year was f 17,618.55 million, an increase of 20% compared to f 14,622.17 million of the previous year. On an unconsolidated basis, your Company''s revenue stood at f 36,452.12 million during the current financial year, increase of 3% compared to f 35,255.08 million of the previous year. The net income for the current financial year was f 16,392.85 million, an increase of 4% compared to f 15,826.56 million of the previous year. Previous years'' figures have been re-arranged / re-classified, wherever necessary, as per the applicable regulations.
A detailed analysis of the financials is given in the Management''s discussion and analysis report that forms part of this Annual Report.
The Company declared an interim dividend of f 200 per equity share of f 5 each on May 5, 2021 for the financial year ended March 31, 2021. The Board of Directors has not recommended any additional final dividend for the financial year 2020-21.
The Company has not transferred any amount to the reserves during the year under review.
Particulars of loans, guarantees or investments
In terms of Section 186 of the Companies Act, 2013 ("the Act") the particulars of loans, guarantees and investments have been disclosed in the financial statements.
During the financial year 2020-21, the Company allotted 182,935 equity shares of face value of f 5 each to its eligible employees and Directors who exercised their stock options under the prevailing Employee Stock Option Schemes of the Company. As a result, the paid-up equity share capital of the Company as on March 31, 2021 was f 430,311,165 divided into 86,062,233 equity shares of face value of f 5 each.
Change in registrar and share transfer agent
The Company has appointed KFin Technologies Private Limited (SEBI Registration No. INR000000221) as its new Registrar and Share Transfer Agent with effect from December 5, 2020, in place of Link Intime India Private Limited.
Pursuant to Section 92(3) read with 134(3) of the Act, Annual Return (in e-form MGT-7) for the financial year ended March 31, 2021 is available on the Company''s website at: www.oracle.com/financialservices.
Directors and key managerial personnel
The Members of the Company at the Annual General Meeting held on August 18, 2020 approved appointment of Mr. Harinderjit Singh, as Non-Executive, Non-Independent Director of the Company and Mr. Chaitanya Kamat, as Managing Director and Chief Executive Officer of the Company, who retired by rotation and being eligible offered themselves for re-appointment.
The current term of appointment of Mr. Chaitanya Kamat as the Managing Director and Chief Executive Officer of the Company expires on October 24, 2021. It is proposed to re-appoint Mr. Chaitanya Kamat as the Managing Director and Chief Executive Officer of the Company for a further period of five years from October 25, 2021 to October 24, 2026. Mr. Kamat shall be liable to retire by rotation. The Board recommends to the Members the resolution for re-appointment of Mr. Kamat as the Managing Director and Chief Executive Officer of the Company for a further period of five years. Resolutions seeking Members'' approval and terms and conditions of Mr. Kamat''s re-appointment forms part of the Notice.
Ms. Kimberly Woolley and Mr. Vincent Secondo Grelli, Directors of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers themselves for re-appointment. Brief resumes of the Directors proposed to be re-appointed, the nature of their expertise, and the names of companies in which they hold directorships and Chairpersonships / Memberships of Board Committees, etc. are provided in the Notice to Members forming part of this Annual Report. The Directors seeking re-appointment are not debarred from holding the office of Director pursuant to any Securities and Exchange Board of India (âSEBIâ) order. The Board recommends to the Members the resolutions for re-appointment of Ms. Kimberly Woolley and Mr. Vincent Secondo Grelli as Directors of the Company, liable to retire by rotation. Resolutions seeking Members'' approval for their re-appointment forms part of the Notice.
All the Independent Directors of the Company have given declaration under Section 149(6) of the Act and regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) confirming that they meet the criteria of independence and that they have complied with Schedule IV of the Act and the Company''s Code of Conduct.
During the year, there were no changes to the Key Managerial Personnel.
Number of meetings of the Board
Seven meetings of the Board were held during the financial year 2020-21. For details of meetings of the Board, please refer to the Corporate Governance Report which is a part of this Annual Report.
The details pertaining to Committees of the Board are included in the Corporate Governance Report which is a part of this Annual Report.
The Company has formed following policies as required by the Act and Listing Regulations:
|
Particulars |
Details |
Website link for policy / details |
|
Code of ethics and business conduct policy |
This code defines and implements Oracle ethical business values and sets forth key rules and employee responsibilities. It also provides a context to handle any questions, issues, or concerns. The Code also covers the vigil mechanism and whistle blower policy. |
|
|
Corporate social responsibility policy |
This policy governs corporate social responsibility program of the Company and covers details of CSR activities that it can undertake and how to implement, monitor, and report on these activities. |
http://www.oracle.com/us/industries/ |
|
Directors'' appointment policy |
This policy governs the manner of appointment of Directors of the Company. |
https://www.oracle.com/a/ocom/docs/ |
|
Particulars |
Details |
Website link for policy / details |
|
Dividend distribution policy |
This policy details the factors to be considered by the Board while deciding or recommending any dividend. |
http://www.oracle.com/us/industries/ |
|
Familiarization program |
Details of Company''s familiarization program for its new directors including independent directors. |
https://www.oracle.com/a/ocom/docs/ |
|
Material events and information policy |
This policy provides framework for determination of material events / information and sets out classes and types of material events / information that require disclosure to stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Policy for determining material subsidiaries |
This policy defines material subsidiaries and describes related actions to be taken by the Company with significant transactions with them. |
http://www.oracle.com/us/industries/ |
|
Record archival policy |
The policy provides the framework for archival of the communication made to the stock exchanges. |
https://www.oracle.com/a/ocom/docs/ |
|
Related party transactions policy |
This policy sets out the principles and processes that apply in respect of transactions entered into by the Company with a related party. |
http://www.oracle.com/us/industries/ |
|
Remuneration policy |
This policy establishes principles governing remuneration of the directors, key managerial personnel and senior management of the Company. |
http://www.oracle.com/us/industries/ |
All related party transactions entered into during the financial year 2020-21 were at an arm''s length basis and in the ordinary course of business. Form AOC-2 providing the details of related party transactions of the Company is annexed as Annexure 1 to this report.
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management''s Discussion and Analysis Report, which forms part of this Annual Report.
In accordance with the requirements of the Section 178 of the Act and Regulation 17(10) of the Listing Regulations, the Chairperson of the Nomination and Remuneration Committee conducts the Board evaluation. The performance of the Board and its Committees was evaluated by seeking inputs from all the directors on the basis of various criteria such as its composition and structure, effectiveness of processes / meetings, information sharing and functioning, etc. The Board evaluation report for financial year 2020-21 was adopted at the Board Meeting held on May 5, 2021.
Your Company has subsidiaries in Greece, India, Chile, China, Mauritius, Singapore, the Netherlands and the United States of America. The Company does not have any associate or joint venture Companies within the meaning of Section 2(6) of the Act.
Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
Pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company and separate annual accounts of its subsidiaries are available on the website of the Company at www.oracle.com/financialservices.
Your Company continuously makes significant investments in research and development (R&D) to develop solutions that the global banking industry needs today and will need tomorrow. Your Company''s dedicated in-house R&D centers have produced a number of products that are used by banks in more than 150 countries around the world for running their critical operations. The investment your Company makes in building applications, coupled with access to Oracle''s technology, provides a unique competitive edge to its offerings.
During the financial year 2020-21, the Company has not accepted any deposits within the meaning of Sections 73 and 76 of the Act and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet.
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate from Mr. Prashant Diwan, Practicing Company Secretary, with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms part of this Annual Report. A certificate from Mr. Prashant Diwan, Practicing Company Secretary, has also been received 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 the Company by the SEBI, Ministry of Corporate Affairs (MCA) or any such statutory authority.
There are no qualifications, reservations, adverse remarks or disclaimers in the Statutory Auditors'' report.
In terms of Section 204 of the Act, and the Rules made thereunder, the Board has appointed Mr. Prashant Diwan, Practicing Company Secretary, as Secretarial Auditor of the Company for the financial year 2020-21. The Secretarial Audit report is annexed as Annexure 2 to this report. The Secretarial Audit report does not contain any qualification, reservation or adverse remarks.
Business responsibility report
Business Responsibility Report pursuant to Regulation 34 of the Listing Regulations for the financial year 2020-21 that forms part of this Annual Report has been hosted on the website of the Company at www.oracle.com/financialservices. The Members, who wish to obtain a copy of the report, may write to the Company Secretary at the Registered Office of the Company.
Employee Stock Option Plan (âESOPâ)
The Members at their Annual General Meeting held on August 14, 2001 approved grant of ESOPs to the employees / directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced and approved up to 12.5% of the issued and paid-up capital of the Company from time to time, by the Members at their Annual General Meeting held on August 18, 2011. This limit is an all-inclusive limit applicable to the stock options (âoptionsâ) granted in the past and in force and those that will be granted by the Company.
Pursuant to ESOP Schemes approved by the Members of the Company, the Board of directors have approved the 2002 Employees Stock Option Plan (âScheme 2002â), Employees Stock Option Plan 2010 Scheme (âScheme 2010â), Employees Stock Option Plan 2011 Scheme (âScheme 2011â) and Oracle Financial Services Software Limited Stock Plan 2014 (âOfSs Stock Plan 2014â). The details of Company''s ESOP schemes are disclosed in note 30 (b) in the notes to accounts of the unconsolidated financials.
The details of the options / OSUs granted under the Scheme 2002, Scheme 2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees / directors from time to time till March 31, 2021 are given below:
|
Particulars |
Scheme 2002 |
Scheme 2010 |
Scheme 2011 |
OFSS Stock Plan 2014 |
OFSS Stock Plan 2014 |
Total |
|
(Stock Options) |
(OSUs) |
|||||
|
Pricing Formula |
At the market price as on the date of grant |
f 5 |
||||
|
Variation of terms of grant |
None |
None |
None |
None |
None |
- |
|
Granted |
5,167,920 |
638,000 |
1,950,500 |
178,245 |
1,027,428 |
8,962,093 |
|
Lapsed and forfeited |
(620,725) |
(304,362) |
(485,580) |
(43,950) |
(97,392) |
(1,552,009) |
|
Exercised |
(4,547,195) |
(333,638) |
(1,140,804) |
(9,067) |
(466,435) |
(6,497,139) |
|
Total number of options in force as on March 31,2021 |
- |
- |
324,116 |
125,228 |
463,601 |
912,945 |
The details of OSUs granted to Directors and Senior Managerial Personnel under OFSS Stock Plan 2014 during the financial year ended March 31, 2021 are as follows:
|
Particulars |
Number of OSUs |
Number of OSUs |
|
|
i. Directors: |
|||
|
Mr. Chaitanya Kamat |
30,000 |
Mr. Makarand Padalkar |
15,000 |
|
ii. Senior Managerial Personnel: |
|||
|
Mr. Arvind Gulhati |
6,400 |
Mr. Rajaram Vadapandeshwara |
800 |
|
Mr. Avadhut Ketkar |
2,100 |
Mr. Sanjay Bajaj |
500 |
|
Ms. Bindu Venkatesh |
2,750 |
Mr. Sanjay Ghosh |
600 |
|
Mr. Goutam Chatterjee |
425 |
Mr. Surendra Shukla |
1,000 |
|
Mr. Karthick Prasad |
2,000 |
Mr. Tushar Chitra |
1,000 |
|
Ms. Laura Balachandran |
400 |
Mr. V Ravikumar |
400 |
|
Mr. Mahesh Rao |
1,700 |
Mr. Vikram Gupta |
10,000 |
|
Mr. Manish Gupta |
500 |
Mr. Vinayak Hampihallikar |
3,050 |
|
Mr. Onkarnath Banerjee |
2,000 |
Mr. Vivek Jalan |
450 |
|
iii. Any other employee, who receives grant in any one year of option / OSUs amounting to 5% or more of options / OSUs granted during the year |
Nil |
|
iv. Identified employees who were granted options / OSUs, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant |
Nil |
|
v. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard (IND AS) 33 âEarnings Per Share'' issued by the Institute of Chartered Accountants of India |
f 189.80 |
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted vest on completion of 12, 24, 36, 48 and 60 months from the date of grant. In respect of the OFSS Stock Plan 2014, each of 25% of the total options / OSUs granted vest on completion of 12, 24, 36 and 48 months from the date of grant. Any vesting is subject to continued employment of the employee with the Company or its subsidiaries. Options / OSUs have an exercise period of 10 years from the date of grant. The employee pays the exercise price and applicable taxes upon exercise of options / OSUs.
All the above mentioned Schemes of the Company are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 applicable from time to time. Applicable disclosures relating to Employees Stock Option Schemes, pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, are placed on the website of the Company at www.oracle.com/financialservices.
The compensation cost arising on account of options and OSUs is calculated using the fair value method. The reported profit is after considering the cost of employee stock compensation of f 426.61 million, using fair value method on options / OSUs.
The weighted average share price for the year over which options / OSUs were exercised was f 3,005. Money realized by exercise of options / OSUs during the financial year 2020-21 was f 55.83 million. The Company has recovered perquisite tax on the options / OSUs exercised by the employees during the year. The weighted average fair value of OSUs granted during the year was f 3,039 calculated as per the Black Scholes valuation model as stated in 30 (b) in the notes to accounts of the unconsolidated financials.
Human Resources are key assets of your Company and your Company invests continuously in imparting latest technology skills together with a range of soft skills to help them excel in their roles. Your Company has a strong performance management system together with a formal talent management processes to nurture employee careers, groom future leaders, and create a high-performance workforce.
Your Company''s total employees as at March 31, 2021 were 7,977 (March 31, 2020 - 8,001) including employees of subsidiaries. The Company is committed to provide a healthy environment to all its employees and thus does not tolerate any discrimination and / or harassment in any form. The Company has in place a Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Frequent communication of this policy is done through various programs and at regular intervals. The Company has setup an Internal Complaints Committees (ICC), both at the registered office and at every location where it operates in India, which have men and women committee members as per the regulations, are chaired by senior woman employees and have external women representation.
The details of complaints pertaining to sexual harassment that were filed, disposed off and pending during the financial year are provided in the Corporate Governance report which is a part of this Annual Report.
Corporate social responsibility
The Company has constituted Corporate Social Responsibility (âCSRâ) Committee in accordance with the provisions of the Act. The CSR Committee was constituted comprising of members of the Board of Directors of the Company. The Committee presently consists of three Directors and the Chairperson of the Committee is a Non-Executive, Non-Independent Director.
Pursuant to Rule 8 of the Companies (Corporate Social Responsibility) Rules, 2014, annual report on the Corporate Social Responsibility activities for the financial year ended March 31,2021 is annexed as Annexure 3 to this report.
The Board has adopted adequate policies and procedures in terms of Internal Financial Controls commensurate with the size, scale and complexity of the Company''s operations. Such policies and procedures ensure orderly and efficient conduct of business, adherence to the Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system commensurate with the size of the business operations of the Company, its compliance with risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. The Internal Audit team reports to the Audit Committee.
Directors'' responsibility statement
As required under Section 134(5) of the Act, for the financial year ended on March 31,2021, the Directors hereby confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit of the Company for that period;
c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. the directors, had laid down internal financial controls followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Members of the Company have appointed M/s. Mukund M. Chitale & Co., Chartered Accountants, (ICAI Firm Registration No. 106655W), as the Statutory Auditors of the Company till the conclusion of the 33rd Annual General Meeting to be held in the year 2022.
Reporting of frauds by Auditors
During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143(12) of the Act any instances of fraud committed against the Company by its officers or employees.
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.
Material changes and commitments
There have been no material changes and commitments which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this report.
Significant and material orders
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
The Company strives to conserve energy and use energy efficient computers and illumination systems. The Company also deploys sophisticated office automation and management equipment which optimizes energy consumption. The year 2021 was undoubtedly a difficult one, as a Company we continued to support Oracle''s global sustainability goal of reducing waste to landfill and conversing energy.
The Company regularly strives to utilize newer technologies with a view to conserve the energy and create an environmentally friendly work environment. The initiatives taken by the Company are summarized below:
Network: The Company continues to invest in upgrades and modernization of the networks thereby increase uptime of the network infrastructure, increase capacity and enable greater collaboration. Network infrastructure is being migrated to the next generation cloud platform and network tooling; processes are being made seamless between the applications and the cloud platforms thereby enabling unified operational process, while securing the network infrastructure, to provide a secure remote computing environment for our employees and customers.
End Point Hardware and Software: The End Point security suite has been enhanced to protect the various end-points connecting to Oracle network, keeping in mind a global working scenario. Oracle end-point policies and infrastructure have been upgraded to enhance security and compliance requirements, thereby keeping Oracle and its customers secure.
Cloud deployment and migration: The Company is working towards migrating infrastructure to the next generation cloud platform. All corporate applications will be hosted on the Oracle next generation cloud. This move significantly reduces infrastructure costs as well as reduces space and power utilization across the globe.
Datacenter: Datacenter consolidation, the next logical consequence of cloud migration, is also in progress keeping in mind the reducing need for physical datacenters and increasing demand for flexible infrastructure utilization. Various automation initiatives on compute operations and application support has been crucial in reducing human effort for routine activities.
Business Resiliency: The Company has successfully implemented disaster recovery initiatives for critical infrastructure services. This has been adequately tested during this pandemic crisis, minor deficiencies were mitigated and the plan has been made more efficient and effective.
Virtual presence: The Company has made significant investments in providing a near virtual working environment for its employees through multiple collaboration tools. Multifunctional and multiple methods of collaboration across geographies, has enhanced business operations. This enhances communication across the globe minimizing travel, increasing efficiencies from a support perspective by making self-service operations easier and effective. Conference room facilities have been enhanced and standardized across the globe to ensure smooth and seamless operations from any Oracle location.
All these initiatives would provide a more secure and efficient operating environment with the utilization of innovative technology. Foreign exchange earnings and outgo:
|
(Amounts in f million) |
|
|
Foreign exchange earnings |
33,169.04 |
|
Foreign exchange outgo (including capital goods and other expenditure) |
2,254.57 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans: Your Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to focus on tapping various potential markets available globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for your Company.
Financial institutions are digitizing their customer journeys and looking for agile ways to exceed customer expectations and stay competitive which continue to be the main drivers. Technology plays a key role in enabling this journey. New digital banks are offering a completely new customer experience delivered at a far lower cost. The need therefore for a modern, agile, scalable and secure technology is clear.
This is driving the theme of investments for the financial institutions. They favor highly adaptable architecture, allowing a bank to quickly compose an architecture to suit the requirements of different business and operating models, enables machine learning / Artificial Intelligence (''AI'') and increasing adoption of cloud. Financial institutions deal with concerns over regulatory compliance, reliability, availability and the difficulty of integration with existing systems amongst various factors that inhibit.
Regulatory requirements are becoming more complex and demanding, leading banks to invest in the right risk mitigation tools to meet complex reporting needs and improve data collaboration. There is tremendous opportunity for forward-looking financial institutions to use data to turn their finance and risk functions into key drivers of added value and competitive advantage.
Your Company''s solution strategy is to help financial institutions build digital ecosystems that empower customers to manage and enrich their financial lives. With our data-driven solutions, financial institutions can get in-depth insights that enable them to make better business-critical decisions. Combining AI, machine learning, advanced analytics, and automation, your Company is investing in solutions that can help financial institutions evolve and respond to market forces. Our solutions drive organizations to be more agile, and scale resources with great speed and elasticity.
Statement on compliance of applicable Secretarial Standards
The Company complies with all applicable mandatory provisions of Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section includes the details of employees and only of those Directors to whom the remuneration has been paid by the Company and excludes remuneration of the employees of overseas branches, and the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
i. Ratio of the remuneration of each director to the median remuneration of the employees of the Company for th< financial year:
|
Name of the Director |
Ratio to median remuneration |
|
Non-Executive, Independent Directors |
|
|
Mr. S Venkatachalam |
3 |
|
Mr. Richard Jackson |
3 |
|
Mr. Sridhar Srinivasan |
2 |
|
Ms. Jane Murphy |
3 |
|
Executive Directors |
|
|
Mr. Chaitanya Kamat* |
31 |
|
Mr. Makarand Padalkar* |
7 |
*Excludes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options.
ii. The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company secretary in the financial year:
|
Name and Title |
Percentage increase / (decrease) of remuneration in FY 2021 as compared to FY 2020 |
|
Non-Executive, Independent Directors |
|
|
Mr. S Venkatachalam |
- |
|
Mr. Richard Jackson |
- |
|
Mr. Sridhar Srinivasan |
- |
|
Ms. Jane Murphy |
1% |
|
Managing Director and Chief Executive Officer# |
|
|
Mr. Chaitanya Kamat |
8% |
|
Whole-time Director and Chief Financial Officer@ |
|
|
Mr. Makarand Padalkar |
Not Applicable |
|
Company Secretary and Compliance Officer# |
|
|
Mr. Onkarnath Banerjee |
1% |
#Excludes the (perquisite) value towards difference between the fair market value on the date of exercise of options and the exercise price.
@ Appointed as Whole-time Director and Chief Financial Officer effective from May 9, 2019.
iii. The percentage increase in the Median Remuneration of Employees in fiscal 2021, as compared to fiscal 2020:
6%.
iv. The number of permanent employees on the rolls of the Company:
6,527 as on March 31,2021.
v. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2020-21, the average remuneration of employees other than the key managerial personnel increased by 5% over the previous year. During the same period, average remuneration of the key managerial personnel increased by 6%.
vi. Affirmation that the remuneration is as per the remuneration policy of the Company:
The remuneration is as per the remuneration policy of the Company.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
COVID-19 has its impact on the people and the global economy. Unprecedented lockdowns disrupted global trade. The impact of the same being felt even in the current scenario. Since March 2020, the Company has switched to 100% work from home model and has undertaken various initiatives for Employee Wellbeing which includes extended insurance coverage, 24/7 helpline to help with anxiety and uncertainty, on-line training / guidance on ergonomics, etc.
During the year 2020-21, the Company directed its entire Corporate Social Responsibility efforts on providing pandemic-related relief to the community, with a focus especially on vulnerable populations: women, children, and migrant workers. In addition, the Company also made a contribution of f 125 million to the Prime Minister''s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund), a public charitable trust that provides relief and assistance to address public health emergencies or any other kind of emergency, calamity, or distress by rendering financial assistance and grants to affected populations.
The Directors place on record their appreciation for the excellent contributions made by the employees of the Company through their commitment, co-operation and diligence. The Directors gratefully acknowledge the continued support received by the Company from its stakeholders, customers, members, vendors, bankers and regulatory authorities during the year. The Directors also wish to thank the Government of India and the State Governments in the jurisdictions it operates and their various agencies, and departments. The Directors appreciate and value the contribution made by every member of the Oracle family. The Directors are deeply grateful and have immense respect for every person who risked their life and safety to fight this prevailing pandemic.
For and on behalf of the Board
S Venkatachalam
Chairperson DIN: 00257819
June 16,2021
Mar 31, 2019
Dear Members,
The Directors present their report on the business and operations of your Company along with the Annual Report and audited financial statements of the Company for the financial year 2018-19.
Financial highlights
As per Consolidated financial statements: (Amounts in Rs. million)
|
Particulars |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
|
Revenue from operations |
49,589.03 |
45,274.72 |
|
Finance income |
1,319.73 |
794.84 |
|
Other income, net |
441.19 |
112.06 |
|
Total income |
51,349.95 |
46,181.62 |
|
Depreciation and amortization |
(537.17) |
(614.63) |
|
Profit before tax |
22,669.87 |
18,404.41 |
|
Tax expenses |
(8,810.89) |
(6,034.00) |
|
Profit for the year |
13,858.98 |
12,370.41 |
|
Other comprehensive income for the year |
226.49 |
461.62 |
|
Total comprehensive income for the year |
14,085.47 |
12,832.03 |
As per Unconsolidated financial statements: (Amounts in Rs. million)
|
Particulars |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
|
Revenue from operations |
35,808.97 |
38,617.27 |
|
Finance income |
1,173.47 |
722.62 |
|
Other income, net |
216.03 |
163.65 |
|
Total income |
37,198.47 |
39,503.54 |
|
Depreciation and amortization |
(501.98) |
(573.53) |
|
Profit before tax |
19,864.15 |
14,869.14 |
|
Tax expenses |
(7,039.45) |
(4,809.24) |
|
Profit for the year |
12,824.70 |
10,059.90 |
|
Other comprehensive income for the year |
25.83 |
32.79 |
|
Total comprehensive income for the year |
12,850.53 |
10,092.69 |
Performance
On consolidated basis, your Companyâs revenue stood at Rs. 49,589.03 million this year, an increase of 10% from Rs. 45,274.72 million of the previous financial year. The net income this year was Rs. 13,858.98 million, an increase of 12% over the previous year. On an unconsolidated basis, your Companyâs revenue stood at Rs. 35,808.97 million during the financial year 2018-19, decrease of 7% from the previous year. The Companyâs net income for the financial year 2018-19 was Rs. 12,824.70 million, an increase of 27%. Previous yearâs figures have been re-arranged / re-classified, wherever necessary, as per the applicable regulations.
A detailed analysis of the financials is given in the Managementâs discussion and analysis report that forms a part of this Directorsâ report.
Dividend
The Board has decided to conserve the funds for investment in the business and accordingly, has not recommended a dividend for the financial year 2018-19.
Transfer to reserves
The Company does not propose to transfer any amount to the General Reserve out of the amount available for appropriation.
Particulars of loans, guarantees or investments
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
Share capital
During the financial year 2018-19, the Company allotted 362,254 equity shares of face value of Rs. 5 each to its eligible employees and Directors who exercised their stock options under the prevailing Employee Stock Option Schemes of the Company. As a result, the paid-up equity share capital of the Company as on March 31, 2019 was Rs. 428,895,735 divided into 85,779,147 equity shares of face value of Rs. 5 each.
Extract of annual return
Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of Annual Return (in form MGT-9) is annexed as Annexure 1 to this report.
Directors and key managerial personnel
Ms. Kimberly Woolley, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. A resolution seeking Membersâ approval for her re-appointment forms part of the Notice.
During the year, Mr. Robert K Weiler who was liable to retire by rotation at the Twenty Ninth Annual General Meeting held on August 14, 2018 did not opt for re-appointment as a Non-Executive, Non-Independent Director. As such he ceased to be a Director of the Company on August 14, 2018.
Mr. S Venkatachalam and Mr. Richard Jackson were re-appointed as Independent Directors of the Company at the Twenty Ninth Annual General Meeting held on August 14, 2018 to hold office for a further term of five consecutive years, i.e., from April 1, 2019 up to March 31, 2024.
Mr. Vincent Secondo Grelli and Mr. Yong Meng Kau were appointed as Additional Directors of the Company in the capacity of Non-Executive, Non-Independent Directors at the Board Meeting held on November 2, 2018 and their term ends at the ensuing Annual General Meeting. Resolutions seeking Membersâ approval for their appointment as Directors of the Company forms part of the Notice.
Ms. Jane Murphy was appointed as an Additional Director of the Company in the capacity of Non-Executive, Independent Director at the Board meeting on February 13, 2019. Resolution seeking Membersâ approval for her appointment as a Director of the Company for a term of five consecutive years, not liable to retire by rotation, forms part of the Notice.
The Members of the Company, at the Twenty Sixth Annual General Meeting held on September 11, 2015, had appointed Mr. Sridhar Srinivasan as an Independent Director of the Company to hold office for a term of five consecutive years up to March 31, 2020. In accordance with the provisions of Section 149, 152 of the Companies Act, 2013 and applicable provisions of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) and based on the performance evaluation and recommendation of the Nomination and Remuneration Committee, it is proposed to re-appoint Mr. Sridhar Srinivasan as an Independent Director for a further term of five consecutive years from April 1, 2020 up to March 31, 2025. A special resolution to this effect forms part of the Notice.
Mr. Makarand Padalkar, Chief Financial Officer of the Company, was appointed as an Additional Director of the Company at the Board Meeting held on May 9, 2019 to hold office up till the ensuing Annual General Meeting in the capacity of Whole-time Director and Chief Financial Officer of the Company for a term of five consecutive years from May 9, 2019 up to May 8, 2024, liable to retire by rotation. A resolution seeking Membersâ approval for his appointment as a Whole-time Director and Chief Financial Officer of the Company forms part of the Notice.
Ms. Maria Smith resigned as a Non-Executive, Non-Independent Director of the Company with effect from May 9, 2019. The Board places on record its appreciation for the contributions made by her as a member of the Board.
Pursuant to Listing Regulations, the Company has appointed the following of its Independent Directors on the Boards of its material subsidiaries:
- Mr. Richard Jackson has been appointed as a Director of Oracle Financial Services Software, Inc., USA.
- Ms. Jane Murphy has been appointed as a Director of Oracle Financial Services Software B.V, Netherlands and Oracle Financial Services Software Pte. Ltd., Singapore.
Brief resumes of the Directors proposed to be appointed / re-appointed, the nature of their expertise, and the names of companies in which they hold directorships and Chairpersonships / Memberships of Board Committees, etc. are provided in the Notice to Members forming part of this Annual Report.
The Directors seeking appointment / re-appointment are not debarred from holding the office of Director pursuant to any Securities and Exchange Board of India (âSEBIâ) order. All the Independent Directors of the Company have given declaration under Section 149(6) of the Companies Act, 2013 confirming that they meet the criteria of independence.
During the year, there were no changes to the Key Managerial Personnel.
Number of meetings of the Board
Six meetings of the Board were held during the financial year 2018-19. For details of meetings of the Board, please refer to the Corporate Governance Report which is a part of this Annual Report.
Board Committees
The details pertaining to Committees of the Board are included in the Corporate Governance Report which is a part of this Annual Report.
Board policies
The Company has formed following policies as required by the Companies Act, 2013 and Listing Regulations:
|
Particulars |
Details |
Website link for policy / details |
|
Record retention policy |
The policy details the requirements for retention and destruction of the Companyâs records in hard copy and electronic media. |
http://www.oracle.com/us/industries/ |
|
Directors'' appointment policy |
This policy governs the manner of appointment of Directors of the Company. |
https://www.oracle.com/a/ocom/ |
|
Remuneration policy |
This policy establishes principles governing remuneration of the directors, key managerial personnel and senior management of the Company. |
http://www.oracle.com/us/industries/ |
|
Policy on determination of material events / information |
This policy provides framework for determination of material events / information, and sets out classes and types of material events / information that require disclosure to stock exchanges. |
http://www.oracle.com/us/industries/ |
|
Code of ethics and business conduct, and vigil mechanism / whistle blower policy |
This code defines and implements Oracle ethical business values and sets forth key rules and employee responsibilities. It also provides a context to handle any questions, issues, or concerns. |
|
|
Related party transactions policy |
This policy sets out the principles and processes that apply in respect of transactions entered into by the Company with a Related Party. |
http://www.oracle.com/us/industries/ |
|
Dividend distribution policy |
This policy details the factors to be considered by the Board while deciding or recommending any dividend. |
http://www.oracle.com/us/industries/ |
|
Policy for determining material subsidiaries |
This policy defines material subsidiaries and describes related actions to be taken by the Company with significant transactions with them. |
http://www.oracle.com/us/industries/ |
|
Directorsâ familiarization program |
Details of Companyâs familiarization program for its new directors including independent directors. |
|
|
Corporate social responsibility policy |
This policy governs corporate social responsibility program of the Company and covers details of CSR activities that it can undertake and how to implement, monitor, and report on these activities. |
http://www.oracle.com/us/industries/ |
Related party transactions
All related party transactions entered into during the financial year 2018-19 were at an armâs length basis and in the ordinary course of business. Form AOC-2 providing the details of related party transactions of the Company is annexed to this report as Annexure 2.
Risk management
The Companyâs principles and processes have been established by Risk Management Policy with regard to identification, analysis and management of applicable risks. The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
Board evaluation
In accordance with the requirements of the Section 178 of the Companies Act, 2013 and Regulation 17(10) of the Listing Regulations, the Chairperson of the Nomination and Remuneration Committee conducts the Board evaluation. The performance of the board and its committees was evaluated by seeking inputs from all the directors on the basis of various criteria such as its composition and structure, effectiveness of processes / meetings, information sharing and functioning, etc. The Board Evaluation Report for financial year 2018-19 was tabled at the Board Meeting on May 9, 2019.
Subsidiaries
Your Company has subsidiaries in Greece, India, Chile, China, Mauritius, Singapore, the Netherlands and the United States of America.
Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Companyâs subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
On May 9, 2019, the Board of Directors of the Company approved restructuring of ownership of its Indian step down subsidiaries for acquiring majority stake in Mantas India Private Limited and Oracle (OFSS) BPO Services Limited.
Pursuant to the provisions of Section 136 of the Companies Act, 2013, the standalone and consolidated financial statements of the Company and separate annual accounts of its subsidiaries are available on the website of the Company at www.oracle.com/financialservices
Research and development
Your Company continuously makes significant investments in research and development (R&D) to develop solutions that the global banking industry needs today and will need tomorrow. Your Companyâs dedicated in-house R&D centers have produced a number of products that are used by banks in more than 150 countries around the world for running their critical operations. The investment your Company makes in building applications, coupled with access to Oracleâs technology, provides a unique competitive edge to its offerings.
Five in-house R&D centers in India of your Company have been accorded recognition by the Department of Scientific and Industrial Research (DSIR) from February 26, 2016. The aggregate expenditure on research and development activities in these in-house R&D centers is as follows:
(Amounts in Rs. million)
|
Particulars |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
|
Revenue Expenditure |
2,081.89 |
2,058.24 |
|
Capital Expenditure |
519.36 |
82.06 |
Fixed deposits
During the financial year 2018-19, the Company has not accepted any fixed deposits within the meaning of Rule 2(c) of the Companies (Acceptance of Deposits) Rules, 2014, and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate from Mr. Prashant Diwan, Practicing Company Secretary, with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms part of this Annual Report.
A certificate from Mr. Prashant Diwan, Practicing Company Secretary, has also been received 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 SEBI, Ministry of Corporate Affairs (MCA) or any such statutory authority.
Statutory Auditorsâ report
There are no qualifications, reservations, adverse remarks or disclaimers in the Statutory Auditorsâ report.
As mentioned in Para 4 of the Independent Auditors Report dated May 9, 2019 attached to the Financial Statements of the Company for the year ended March 31, 2019, the Statutory Auditors are required to report any material misstatements in âother informationâ in the Annual Report. The âother informationâ was made available to the statutory auditors by the Company after the date of adoption of financial statements on May 9, 2019 by the Board of Directors. The Statutory Auditors have communicated that they have read the âother informationâ included in the Annual Report and that there is no material misstatement therein.
With regard to the Statutory Auditorsâ comment in the CARO report concerning delays in payment of foreign taxes, the Company has no outstanding demand or claim from any authority in this respect. The Company however evaluates potential material tax liabilities and records provisions accordingly. The said liabilities are regularly monitored.
Secretarial audit report
In terms of Section 204 of the Companies Act, 2013, and the Rules made thereunder, the Board has appointed Mr. Prashant Diwan, Practicing Company Secretary, as Secretarial Auditor of the Company for the financial year 2018-19. The Secretarial Audit report is annexed to this report as Annexure 3. This report does not contain any qualification, reservation or adverse remark.
Business responsibility report
Business Responsibility Report for the financial year 2018-19 that forms part of this Annual Report has been hosted on the website of the Company at www.oracle.com/financialservices. The Members, who wish to obtain a printed copy of the report, may write to the Company Secretary at the Registered Office of the Company.
Employee Stock Option Plan (âESOPâ)
The Members at their Annual General Meeting held on August 14, 2001 approved grant of ESOPs to the employees / directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced and approved up to 12.5% of the issued and paid-up capital of the Company from time to time, by the Members at their Annual General Meeting held on August 18, 2011. This extended limit is an all-inclusive limit applicable to the stock options (âoptionsâ) granted in the past and in force and those that will be granted by the Company under this authorization.
Pursuant to ESOP scheme approved by the Members of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme (âScheme 2002â) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the Initial Public Offering (IPO) and 619,000 options at various dates after the IPO (including the grants of options out of options forfeited earlier). On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme (âScheme 2010â) for issue of 618,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).
Pursuant to ESOP scheme approved by the Members of the Company in their meeting held on August 18, 2011, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme (âScheme 2011â). Accordingly, the Company has granted 1,950,500 options under the Scheme 2011. Nomination and Remuneration Committee in their meeting held on August 7, 2014 approved Oracle Financial Services Software Limited Stock Plan 2014 (âOFSS Stock Plan 2014â). This plan enables issue of deeply discounted options at the face value and referred to as OFSS Stock Units (âOSUsâ) for convenience. Accordingly, the Company granted 178,245 Stock Options and 712,203 OFSS Stock Units (âOSUsâ) under OFSS Stock Plan 2014. The issuance terms of OSUs are the same as for Stock Options, employees may elect to receive 1 OSU in lieu of 4 awarded Stock Options at their respective exercise price.
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted will vest on completion of 12, 24, 36, 48 and 60 months from the date of grant and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have an exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of options.
In respect of the OFSS Stock Plan 2014, each of 25% of the total stock options / OSUs granted will vest on completion of 12, 24, 36 and 48 months from the date of grant and is subject to continued employment of the employee with the Company or its subsidiaries. Options / OSUs have an exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of options / OSUs.
All the above mentioned Schemes of the Company are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014. Applicable disclosures relating to Employees Stock Options Schemes, pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, are placed on the website of the Company at www.oracle.com/financialservices
The details of the options / OSUs granted under the Scheme 2002, Scheme 2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees / directors from time to time are given below:
|
Particulars |
Scheme 2002 |
Scheme 2010 |
Scheme 2011 |
OFSS Stock Plan 2014 |
OFSS Stock Plan 2014 |
Total |
|
(Stock Options) |
(OSUs) |
|||||
|
Pricing Formula |
At the market price as |
on the date of grant |
Rs. 5 |
|||
|
Variation of terms of Option / OSUs |
None |
None |
None |
None |
None |
|
|
Number of options / OSUs granted till March 31, 2019 |
5,167,920 |
638,000 |
1,950,500 |
178,245 |
712,203 |
8,646,868 |
|
Number of options / OSUs lapsed and forfeited |
(620,725) |
(283,332) |
(453,630) |
(32,358) |
(68,909) |
(1,458,954) |
|
Number of options / OSUs exercised |
(4,547,195) |
(317,603) |
(1,114,646) |
(8,792) |
(225,817) |
(6,214,053) |
|
Total number of Options in force as on March 31, 2019 |
â |
37,065 |
382,224 |
137,095 |
417,477 |
973,861 |
The details of options / OSUs granted to Directors and Senior Managerial Personnel under OFSS Stock Plan 2014 during the
financial year ended March 31, 2019 are as follows:
|
Particulars |
Number of Stock Options |
Number of OSUs |
|
i. Director: |
||
|
Mr. Chaitanya Kamat |
22,500 |
|
|
ii. Senior Managerial Personnel: |
||
|
Mr. Arvind Gulhati |
4,750 |
|
|
Mr. Avadhut Ketkar |
1,600 |
|
|
Ms. Bindu Venkatesh |
2,125 |
|
|
Mr. Dinakar K Kini |
150 |
|
|
Mr. Edwin Moses |
1,750 |
|
|
Mr. Mahesh Rao |
1,750 |
|
|
Mr. Makarand Padalkar |
8,750 |
|
|
Mr. Onkarnath Banerjee |
500 |
|
|
Mr. Prajakt Deshpande |
300 |
|
|
Mr. Rajaram Vadapandeshwara |
750 |
|
|
Mr. Sanjay Bajaj |
250 |
|
|
Mr. Surendra Shukla |
1,000 |
250 |
|
Mr. Vikram Gupta |
4,750 |
|
|
Mr. Vinayak Hampihallikar |
2,500 |
625 |
|
iii. Any other employee, who receives grant in any one year of Option / OSUs amounting to 5% or more of Option / OSUs granted during the year |
Nil |
|
|
iv. Identified employees who were granted options / OSUs, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant |
Nil |
|
|
v. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard (Ind AS) 33 âEarnings Per Shareâ |
Rs. 149.01 |
|
All stock options were granted at market price on the date of grant and OSUs were granted at the face value of the equity shares. The compensation cost arising on account of stock options and OSUs is calculated using the fair value method. The reported profit is after considering the cost of employee stock compensation (Rs. 488.71 million), using fair value method on stock options / OSUs.
A summary of the activities in the Companyâs Scheme 2010 and Scheme 2011 for the year ended March 31, 2019 are as follows:
|
Particulars |
Scheme 2010 |
Scheme 2011 |
||
|
Shares arising from Options |
Weighted average exercise price (Rs.) |
Shares arising from Options |
Weighted average exercise price (Rs.) |
|
|
Outstanding at the beginning of the year |
41,485 |
2,050 |
635,882 |
2,966 |
|
Granted |
â |
â |
â |
â |
|
Exercised |
(3,120) |
2,050 |
(241,558) |
3,034 |
|
Forfeited |
(1,300) |
2,050 |
(12,100) |
2,949 |
|
Outstanding at the end of the year |
37,065 |
2,050 |
382,224 |
2,924 |
|
Vested Options |
37,065 |
382,224 |
||
|
Unvested Options |
â |
â |
||
|
Options vested during the year |
â |
93,450 |
||
|
Options forfeited / lapsed during the year |
1,300 |
12,100 |
||
|
Particulars |
Shares arising from OSUs |
Weighted average exercise price Rs. |
Shares arising from Options |
Weighted average exercise price Rs. |
|
Outstanding at the beginning of the year |
422,298 |
5 |
138,371 |
3,481 |
|
Granted |
125,219 |
5 |
12,450 |
4,158 |
|
Exercised |
(114,070) |
5 |
(3,506) |
3,293 |
|
Forfeited |
(15,970) |
5 |
(10,220) |
3,611 |
|
Outstanding at the end of the year |
417,477 |
5 |
137,095 |
3,537 |
|
Vested OSUs / Options |
104,601 |
87,853 |
||
|
Unvested OSUs / Options |
312,876 |
49,242 |
||
|
Options vested during the year |
128,263 |
33,590 |
||
|
Options forfeited / lapsed during the year |
15,970 |
10,220 |
The weighted average share price for the year over which stock options / OSUs were exercised was Rs. 3,960. Money realized by exercise of options / OSUs during the financial year 2018-19 was Rs. 751.34 million. The Company has recovered perquisite tax on the options / OSUs exercised by the employees during the year. The weighted average fair value of stock options and OSUs granted during the year was Rs. 991 and Rs. 4,154 respectively, calculated as per the Black Scholes valuation model as stated in 26 (b) in the notes to accounts of the unconsolidated financials.
The details of Options unvested and Options vested and exercisable as on March 31, 2019 are as follows:
|
Exercise prices (Rs.) |
Number of options / OSUs |
Weighted average exercise price (Rs.) |
Weighted average remaining contractual life (Years) |
|
|
Options /OSUs unvested |
5 |
312,876 |
5 |
8.3 |
|
3,393 |
25,100 |
3,393 |
7.2 |
|
|
3,579 |
6,450 |
3,579 |
8.2 |
|
|
3,987 |
6,792 |
3,987 |
6.6 |
|
|
4,158 |
10,900 |
4,158 |
9.2 |
|
|
Options /OSUs vested and exercisable |
5 |
104,601 |
5 |
6.6 |
|
1,930 |
57,541 |
1,930 |
2.7 |
|
|
2,050 |
37,065 |
2,050 |
1.4 |
|
|
3,077 |
176,683 |
3,077 |
4.5 |
|
|
3,127 |
148,000 |
3,127 |
3.8 |
|
|
3,241 |
41,578 |
3,241 |
6.0 |
|
|
3,393 |
23,712 |
3,393 |
7.2 |
|
|
3,579 |
2,155 |
3,579 |
8.2 |
|
|
3,987 |
20,408 |
3,987 |
6.6 |
|
|
973,861 |
1,726 |
5.9 |
Employee Stock Purchase Scheme (âESPSâ)
The Company had adopted the ESPS administered through a Trust with the name i-flex Employee Stock Option Trust (âthe Trustâ) to provide equity based incentives to key employees of the Company. i-flex Solutions Trustee Company Limited is the sole Trustee of this Trust.
No allocation of shares to the employees have been made through the Trust since 2005 and all selected employees under the Trust have exercised their right of purchase of shares prior to March 31, 2014. In this regard, i-flex Solutions Trustee Company Limited had filed a petition in the Honâble Bombay High Court to seek directions for utilization of the remaining unallocated shares along with the other assets held by the Trust for the benefit of the employees of the Company. As per the order of the Honâble Bombay High Court dated August 1, 2016, the trust funds would be utilized for the benefit of the employees.
As at March 31, 2019, 27,160 equity shares of the Company were held by the Trust (March 31, 2018 - 70,600 equity shares).
Human resources
Human Resources are key assets of your Company and your Company invests continuously in imparting latest technology skills together with a range of soft skills to help them excel in their roles. Your Company has a strong performance management system together with a formal talent management processes to nurture employee careers, groom future leaders, and create a high performance workforce.
Your Companyâs total employees at the end of March 31, 2019, were 8,054 (March 31, 2018 - 8,818) including employees of subsidiaries.
The Company is committed to provide a healthy environment to all its employees and thus does not tolerate any discrimination and / or harassment in any form. The Company has in place a Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Frequent communication of this policy is done through various programs and at regular intervals. The Company has setup an Internal Complaints Committees (ICC), both at the registered office and at every location where it operates in India, which have men and women committee members as per the regulations, are chaired by senior woman employees and have external women representation.
The details of complaints pertaining to sexual harassment that were filed, disposed of and pending during the financial year are provided in the Corporate Governance report which is a part of this Annual Report.
Corporate social responsibility
Pursuant to Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014, annual report on the CSR activities for the financial year ended March 31, 2019 is annexed as Annexure 4 to this report.
Internal financial controls
The Board has adopted adequate policies and procedures in terms of Internal Financial Controls commensurate with the size, scale and complexity of the Companyâs operations. Such policies and procedures ensure orderly and efficient conduct of business, adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system of the Company, its compliance with risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. The Internal Audit team reports to the Audit Committee.
Directorsâ responsibility statement
As required under clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013, for the financial year ended on March 31, 2019, the Directors hereby confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit of the company for that period;
c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. the directors, had laid down internal financial controls followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Auditors
The Members of the Company have appointed M/s. Mukund M. Chitale & Co., Chartered Accountants, (ICAI Firm Registration No. 106655W), as the Statutory Auditors of the Company till the conclusion of the 33rd Annual General Meeting to be held in the year 2022.
Reporting of frauds by Auditors
During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the audit committee under Section 143(12) of the Companies Act, 2013 any instances of fraud committed against the Company by its officers or employees.
Cost records and cost audit
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.
Material changes and commitments
There have been no material changes and commitments which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this report.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (3)(m) of Section 134 of the Companies Act, 2013, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
Conservation of energy
The Company strives to conserve energy and use energy efficient computers and illumination systems. The Company also deploys sophisticated office automation and management equipment which optimizes energy consumption. During the year, the Company completed the projects to install photovoltaic solar panels at its campuses in Mumbai and Pune in an effort to increase the use of renewable energy. As part of an initiative to support Oracleâs global sustainability goal of reducing waste to landfill, a wet waste compost machine has been installed at the Mumbai office with excess manure provided to NGO âGreen Yatraâ where waste is used for tree plantation projects. Green Yatra also recognized the Company with a certificate of appreciation for contributions to increasing local green cover.
Technology absorption
The Company regularly strives to utilize newer technologies with a view to conserve the energy and create an environmentally friendly work environment. The initiatives taken by the Company are summarized below:
Network: Efficient networks are essential to support our global business and the Company continues to invest in upgrades and modernization of the networks thereby increase uptime of the network infrastructure, increase capacity and enable greater collaboration. Your Company has made significant changes in the Wi-Fi environment across the organization, migrating to a faster, more secure next generation wireless network. Not only it is more secure, but it is also two to four times faster on average than the previously used network. This also provides easy access to the internet for employees as well as guests based on their respective access requirement. In line with this initiative, technology refresh of the Wi-Fi infrastructure and access points was also completed. This high performance Wi-Fi, with increased density of access points, will eventually bring down the need for wired ports, which would correspondingly lead to significant energy and cost savings. There has also been significant investment into securing the network infrastructure, to provide a secure computing environment for our employees and customers.
Cloud migration: Your Company is working towards migrating infrastructure to the next generation cloud platform. All corporate applications will be hosted on the Oracle next generation cloud. This move significantly reduces infrastructure costs as well as reduces space and power utilization across the globe. This migration has been initiated and will span across a couple of years. Datacenter consolidation, the next logical consequence of cloud migration, is also in progress keeping in mind the reducing need for physical datacenters and increasing demand for flexible infrastructure utilization.
Business Resiliency: Resiliency is the key to effective management of operations, and your Company has successfully implemented disaster recovery initiatives for critical infrastructure services ensuring a balance between tolerance to downtime and effective technology investments. The cloud migration initiative is also instrumental in planning effective resiliency requirements for critical infrastructure.
Virtual presence: Your Company has made significant investments in providing a near virtual working environment to its employees. Multifunctional and multiple methods of collaboration across geographies, has enhanced business operations. This enhances communication across the globe, minimizing travel, increasing efficiencies from a support perspective as well by making self-service operations easier and effective.
All these initiatives would provide a more secure and efficient operating environment with the utilization of innovative technology
Foreign exchange earnings and outgo:
(Amounts in Rs. million)
|
Foreign exchange earnings |
32,845.50 |
|
Foreign exchange outgo (including capital goods and other expenditure) |
2,662.04 |
|
Net equity dividend remitted in foreign exchange |
8,196.66 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans:
Your Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to focus on tapping various potential markets available globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for your Company.
Prospects
A rapid evolution of technologies, rise of consumer forces, and the increasing scope and speed of regulations is driving a fundamental transformation in the financial services industry.
Financial institutions are investing in newer technologies to create insightful and context aware solutions for the digitally savvy customers. Institutions are deploying analytical tools that deliver insights in customer behavior combined with a powerful digital engagement platform, to gain an edge over their competition. FinTechs offering niche solutions are becoming an important partner in banksâ strategies, and therefore, open banking technology that can easily co-exist with the FinTech world is a priority area for the banks.
Regulatory compliance is a major focus area for the financial institutions and requires extensive usage of big-data and data analytics to effectively meet evolving compliance requirements.
Increasing complexity of the markets has changed the banking needs of corporates. Corporate customers need innovation in the areas of credit, liquidity, cash management, trade finance and payments. Banks are in need of solutions that improve efficiency, centralize processing, provide real-time data, and reduce operating costs. Payments is another field where speed of innovation is creating new opportunities in the areas of newer channels, reduced cost of transaction, and speed and reliability of the service.
Your Companyâs commitment to innovation is a driving factor that keeps it in the forefront of the information technology industry. Our continuous planned investments in research and development and unwavering focus on excellence allow us to evolve with the industry and help our customers reach their goals. Our products and solutions are designed to help financial institutions drive transformation initiatives, harness the potential of disruptive technologies and successfully manage regulatory demands.
Statement on compliance of applicable Secretarial Standards
The Company complies with all applicable mandatory provisions of Secretarial Standards issued by the Institute of Company Secretaries of India.
Employee particulars
The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section includes the details of employees and only of those Directors to whom the remuneration has been paid by the Company and excludes remuneration of the employees of overseas branches, and the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
(i) Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
|
Name of the Director |
Ratio to median remuneration |
|
Non-Executive, Independent Directors |
|
|
Mr. S Venkatachalam |
3 |
|
Mr. Richard Jackson |
3 |
|
Mr. Sridhar Srinivasan |
2 |
|
Ms. Jane Murphy |
Not Applicable |
|
Executive Director |
|
|
Mr. Chaitanya Kamat* |
28 |
* Excludes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options.
(ii) The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company secretary in the financial year:
|
Name and Title |
Percentage increase / (decrease) of remuneration in FY 2019 as compared to FY 2018 |
|
Non-Executive, Independent Directors* |
|
|
Mr. S Venkatachalam |
35% |
|
Mr. Richard Jackson |
41% |
|
Mr. Sridhar Srinivasan |
41% |
|
Ms. Jane Murphy |
Not Applicable |
|
Managing Director and Chief Executive Officer# |
|
|
Mr. Chaitanya Kamat |
(3%) |
|
Key Managerial Personnel# |
|
|
Mr. Makarand Padalkar, Chief Financial Officer |
1% |
|
Mr. Onkarnath Banerjee, Company Secretary |
4% |
* The remuneration structure of the Non-Executive, Independent Directors was revised during the year, the earlier revision was in the year 2014.
# Excludes the (perquisite) value towards difference between the fair market value on the date of exercise of options and the exercise price.
(iii) The percentage increase in the Median Remuneration of Employees in fiscal 2019 as compared to fiscal 2018:
6%.
(iv) The number of permanent employees on the rolls of the Company:
6,503 as on March 31, 2019.
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2018-19, the average remuneration of employees other than the key managerial personnel increased by 5% over the previous year. During the same period, average remuneration of the key managerial personnel decreased by 1%.
(vi) Affirmation that the remuneration is as per the remuneration policy of the Company:
The remuneration is as per the remuneration policy of the Company
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Companies Act, 2013, the said annexure is open for inspection at the Registered Office of the Company. Any Member interested in obtaining a copy of the same may write to the Company Secretary.
Awards and recognition
Your Company was awarded the Financial Express CFO Award 2019 in the category of Large Enterprises â Services Industry. The Company was named âLeaderâ in IDCâs Worldwide End-to-End Corporate Banking Solution Providers 2019 Vendor Assessment report. It was also named âCategory Leaderâ for Data Integrity and Control (DI&C) on Chartisâ FinTech Quadrant for DI&C solutions in Financial Services.
Acknowledgements
The Directors place on record their appreciation for the excellent contributions made by the employees of the Company through their commitment, co-operation and diligence. The Directors gratefully acknowledge the continued support received by the Company from its stakeholders, customers, members, vendors and bankers during the year. The Directors also wish to thank the Government of India and the State Governments in the jurisdictions it operates and their various agencies, and departments.
For and on behalf of the Board
S Venkatachalam
Chairperson
DIN: 00257819
June 20, 2019
Mar 31, 2018
Dear Members,
The Directors present their report on the business and operations of your Company along with the Annual Report and audited financial statements of the Company for the financial year 2017-18.
Financial highlights
As per Consolidated financial statements:
(Amounts in Rs, million)
|
Particulars |
Year ended March 31, 2018 |
Year ended March 31, 2017 |
|
Revenue from operations |
45,274.72 |
44,265.33 |
|
Finance income |
794.84 |
1,491.16 |
|
Other income, net |
112.06 |
72.53 |
|
Total income |
46,181.62 |
45,829.02 |
|
Depreciation and amortization |
(614.63) |
(701.92) |
|
Profit before exceptional item and tax |
18,404.41 |
18,198.03 |
|
Exceptional item |
- |
(628.25) |
|
Profit before tax |
18,404.41 |
17,569.78 |
|
Tax expenses |
(6,034.00) |
(5,715.93) |
|
Profit for the year |
12,370.41 |
11,853.85 |
As per Unconsolidated financial statements:
(Amounts in Rs, million)
|
Particulars |
Year ended |
Year ended |
|
March 31, 2018 |
March 31, 2017 |
|
|
Revenue from operations |
38,617.27 |
37,363.12 |
|
Finance income |
722.62 |
1,420.83 |
|
Other income, net |
163.65 |
215.76 |
|
Total income |
39,503.54 |
38,999.71 |
|
Depreciation and amortization |
(573.53) |
(667.99) |
|
Profit before exceptional item and tax |
14,869.14 |
14,663.34 |
|
Exceptional item |
- |
2,162.59 |
|
Profit before tax |
14,869.14 |
16,825.93 |
|
Tax expenses |
(4,809.24) |
(3,944.96) |
|
Profit for the year |
10,059.90 |
12,880.97 |
Performance
On consolidated basis, your Companyâs revenue stood at Rs, 45,274.72 million this year, an increase of 2% from Rs, 44,265.33 million of the previous financial year. The net income was Rs, 12,370.41 million this year, an increase of 4%. On an unconsolidated basis, your Companyâs revenue grew to Rs, 38,617.27 million during the financial year 2017-18, an increase of 3% from Rs, 37,363.12 million of the previous year. The Companyâs net income for the financial year 2017-18 was '' 10,059.90 million. Previous yearâs figures have been re-arranged/re-classified, wherever necessary, as per the applicable regulations.
A detailed analysis of the financials is given in the Managementâs discussion and analysis report that forms a part of this Directorsâ report.
Dividend
Your Board is pleased to recommend a final dividend of Rs, 130 per equity share of face value of Rs, 5 each for the financial year ended March 31, 2018.
The Register of Members and Share Transfer books will remain closed from Wednesday, August 8, 2018 till Tuesday, August 14, 2018, both days inclusive, for the purpose of payment of final dividend for the financial year ended March 31, 2018 and the Annual General Meeting. The Annual General Meeting is scheduled to be held on Tuesday, August 14, 2018. The dividend, if approved at the forthcoming Annual General Meeting, will be paid to those Members whose names appear on the Register of Members as on the close of business hours of Tuesday, August 7, 2018.
Transfer to reserves
The Company does not propose to transfer any amount to the General Reserve out of the amount available for appropriation.
Particulars of loans, guarantees or investments
Pursuant to Section 186 of the Companies Act, 2013 (âthe Actâ), there are no new loans granted or investments made by the Company during the financial year 2017-18.
Share capital
During the financial year 2017-18, the Company allotted 310,487 equity shares of face value of Rs, 5 each to its eligible employees and Directors who exercised their stock options under the prevailing Employee Stock Option Schemes of the Company. As a result, the paid-up equity share capital of the Company as on March 31, 2018 was Rs, 427,084,465 divided into 85,416,893 equity shares of face value of Rs, 5 each.
Extract of annual return
Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of Annual Return (in form MGT-9) is annexed as Annexure 1 to this report.
Directors and key managerial personnel
Mr. Chaitanya Kamat and Mr. Harinderjit Singh, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.
The Board recommends to the Members the resolutions for re-appointment of Mr. Chaitanya Kamat and Mr. Harinderjit Singh as Directors of the Company, liable to retire by rotation.
Mr. Robert K Weiler, Director of the Company, who retires by rotation at the forthcoming Annual General Meeting, has informed the Company that he does not wish to offer himself for re-appointment as a Director of the Company.
The Members of the Company, at the Annual General Meeting held on September 12, 2014, had appointed Mr. S Venkatachalam and Mr. Richard Jackson, as Independent Directors of the Company to hold office for a term of five consecutive years till March 31, 2019. In accordance with the provisions of Section 149, 152 of the Companies Act, 2013 and applicable provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, it is proposed to re-appoint Mr. S Venkatachalam and Mr. Richard Jackson for a further term of five consecutive years from April 1, 2019 up till March 31, 2024.
The Board recommends to the Members the special resolutions for re-appointment of Mr. S Venkatachalam and Mr. Richard Jackson as Independent Directors of the Company.
The Directors seeking re-appointment are not debarred from holding the office of Director pursuant to any SEBI order.
Brief resumes of the Directors proposed to be re-appointed, the nature of their expertise in specific functional areas and the names of companies in which they hold directorships and Chairpersonships / Memberships of Board Committees, etc. are provided in the Notice to Members and Report on Corporate Governance forming part of this Annual Report.
All the Independent Directors of the Company have given declaration under Section 149(6) of the Companies Act, 2013 confirming that they meet the criteria of independence.
During the year, there were no changes to the Key Managerial Personnel.
Board policies Board evaluation policy
In accordance with the requirements of the Section 178 of the Companies Act, 2013 and Regulation 17(10) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), the Chairperson of the Nomination and Remuneration Committee conducts the Board evaluation. The report on Board evaluation tabled at the meeting was noted by the Board.
Record retention policy
Pursuant to Regulation 9 and 30(8) of Listing Regulations, the Company has framed a Record retention policy.
Risk management policy
The Company''s principles and processes have been established by Risk Management Policy with regard to identification, analysis and management of applicable risks.
Remuneration policy
The Nomination and Remuneration Committee determines the remuneration payable to the Directors within the limits approved by the Members. The Independent, Non-Executive Directors are paid commission based on the Committee Chairpersonships/ Memberships.
The remuneration to Executive Directors, Key Managerial Personnel and Senior Management consists of fixed pay and incentive pay, in compliance with the policies of the Company.
The Committee reviews and approves the stock options and other share based awards / payments to Executive Directors, Key Managerial Personnel and employees of the Company. The Remuneration policy is available on the website of the Company at: http://www.oracle.com/us/industries/financial-services/ofss-remuneration-policy-4492725.pdf
Policy on determination of material events and information
The Company has a policy on determination of material events and information and sets out the classes and types of material events or information which require disclosure to stock exchanges. The policy is available on the website of the Company at: http://www.oracle.com/us/industries/financial-services/policy-determination-events-2889567.pdf
Vigil mechanism / whistle blower policy
The Company has established a Code of Ethics and Business Conduct (âCodeâ) which is applicable to its Directors and employees. The Code also extends to the Companyâs suppliers and partners. Regular dissemination of the Code and trainings are conducted to reinforce the concepts and ensure that any changes are communicated. The Companyâs vigil mechanism deals with reporting and dealing with instances of fraud and mismanagement, and forms part of the Code. The Company has in place a confidential reporting mechanism for any whistle blower to report a matter.
In terms of Companies Act, 2013 and Regulation 46 of the Listing Regulations, the Vigil Mechanism/Whistle Blower Policy forms part of the Companyâs Code of Ethics and Business Conduct which is available on website of the Company at: http://www.oracle.com/us/corporate/investor-relations/cebc-176732.pdf
Related party transactions policy
The Company has framed a related party transactions policy in accordance with the provisions of the Companies Act, 2013 and the Listing Regulations. All related party transactions entered into during the financial year 2017-18 were at an armâs length basis and in the ordinary course of business. Form AOC-2 providing the details of related party transactions of the Company is annexed to this report as Annexure 2. The policy is available on website of the Company at:
http://www.oracle.com/us/industries/financial-services/ofss-party-transactions-policy-2288144.pdf
Dividend distribution policy
As per Regulation 43A of the Listing Regulations, the Company has framed a dividend distribution policy and the same is available on website of the Company at:
http://www.oracle.com/us/industries/financial-services/ofss-dividend-distribution-policy-3125465.pdf
Directors'' familiarization program
The Company has formulated familiarization program for its new directors including independent directors. The program provides an insight into the Companyâs products, markets, competition, emerging technologies, etc. to gain a better understanding of the business environment and also covers the regulatory landscape. The familiarization program is available on Companyâs website at: http://www.oracle.com/us/industries/financial-services/financial-familarization-program-2547373.pdf
Subsidiaries
Your Company has subsidiaries in Greece, India, Chile, China, Mauritius, Singapore, the Netherlands and the United States of America.
The Company has during the year sold its entire stake in an associate company, Login SA, France and holds nil shares as on March 31, 2018.
Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Companyâs subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of the Company, its consolidated financial statements along with relevant documents, and separate annual accounts in respect of subsidiaries, are available on the website of the Company at www.oracle.com/financialservices
Research and development
Your Company continuously makes significant investments in research and development to develop solutions that the global banking industry needs today and will need tomorrow. Your Company strives to be at the forefront of innovation, at the same time taking the technology risk away from the banks. Your Companyâs dedicated in-house research and development (R&D) centers have produced a number of products that are today used by banks in more than 130 countries around the world for running their most critical operations. The investment your Company makes in building applications coupled with access to Oracleâs technology provides a unique competitive edge to its offerings.
Five in-house R&D centers in India of your Company have been accorded recognition by the Department of Scientific and Industrial Research (DSIR) from February 26, 2016. The aggregate expenditure on research and development activities in these in-house R&D centers is as follows:
(Amounts in Rs, million)
|
Particulars |
Year ended March 31, 2018 |
Year ended March 31, 2017 |
|
Revenue Expenditure |
2,058.24 |
2,100.73 |
|
Capital Expenditure |
82.06 |
230.35 |
Fixed deposits
During the financial year 2017-18, the Company has not accepted any fixed deposits within the meaning of Rule 2(c) of the Companies (Acceptance of Deposits) Rules, 2014, and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate of Practicing Company Secretary with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms part of this Annual Report.
Secretarial audit
In terms of Section 204 of the Companies Act, 2013, and the Rules made thereunder, the Board has appointed Mr. Prashant Diwan, Practicing Company Secretary, as Secretarial Auditor of the Company for the financial year 2017-18. The Secretarial Audit report issued by Practicing Company Secretary is annexed as Annexure 3 to this report.
Business responsibility report
Business Responsibility Report for the financial year 2017-18 that forms part of this Annual Report has been hosted on the website of the Company at www.oracle.com/financialservices. The Members, who wish to obtain a printed copy of the report, may write to the Company Secretary at the Registered Office of the Company.
Employee Stock Option Plan ("ESOP")
The Members at their Annual General Meeting held on August 14, 2001 approved grant of ESOPs to the employees / directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced and approved up to 12.5% of the issued and paid-up capital of the Company from time to time, by the Members at their Annual General Meeting held on August 18, 2011. This extended limit is an all-inclusive limit applicable to the stock options (âoptionsâ) granted in the past and in force and those that will be granted by the Company under this authorization.
Pursuant to ESOP scheme approved by the Members of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme (âScheme 2002â) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the IPO and 619,000 options at various dates after the IPO (including the grants of options out of options forfeited earlier). On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme (âScheme 2010â) for issue of 618,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).
Pursuant to ESOP scheme approved by the Members of the Company in their meeting held on August 18, 2011, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme (âScheme 2011â). Accordingly, the Company has granted 1,950,500 options under the Scheme 2011. Nomination and Remuneration Committee in their meeting held on August 7, 2014 approved Oracle Financial Services Software Limited Stock Plan 2014 (âOFSS Stock Plan 2014â). This plan enables issue of deeply discounted options at the face value and referred to as OFSS Stock Units (âOSUsâ) for convenience. Accordingly, the Company granted 165,795 Stock Options and 586,984 OFSS Stock Units (âOSUsâ) under OFSS Stock Plan 2014. The issuance terms of OSUs are the same as for Stock Options, employees may elect to receive 1 OSU in lieu of 4 awarded Stock Options at their respective exercise price.
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted will vest on completion of 12, 24, 36, 48 and 60 months from the date of grant and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have an exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of options.
In respect of the OFSS Stock Plan 2014, each of 25% of the total stock options / OSUs granted will vest on completion of
12, 24, 36 and 48 months from the date of grant and is subject to continued employment of the employee with the Company or its subsidiaries. Options / OSUs have exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of options/OSUs.
All the above mentioned Schemes of the Company are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014. Applicable disclosures relating to Employees Stock Options Schemes, pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, are placed on the website of the Company at www.oracle.com/financialservices
The details of the options / OSUs granted under the Scheme 2002, Scheme 2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees / directors from time to time are given below:
|
Particulars |
Scheme 2002 |
Scheme 2010 |
Scheme 2011 |
OFSS Stock Plan 2014 |
OFSS Stock Plan 2014 |
Total |
|
(Stock Options) |
(OSUs) |
|||||
|
Pricing Formula |
At the market price as on the date of grant |
Rs, 5 |
||||
|
Variation of terms of options/ OSUs |
None |
None |
None |
None |
None |
|
|
Number of options/OSUs granted till March 31, 2018 |
5,167,920 |
638,000 |
1,950,500 |
165,795 |
586,984 |
8,509,199 |
|
Number of options/OSUs lapsed and forfeited |
(620,725) |
(282,032) |
(441,530) |
(22,138) |
(52,939) |
(1,419,364) |
|
Number of options/OSUs exercised |
(4,547,195) |
(314,483) |
(873,088) |
(5,286) |
(111,747) |
(5,851,799) |
|
Total number of options in force as on March 31, 2018 |
- |
41,485 |
635,882 |
138,371 |
422,298 |
1,238,036 |
The details of Options / OSUs granted to Directors and Senior Managerial Personnel under OFSS Stock Plan 2014 during the financial year ended March 31, 2018 are as follows:
|
Particulars |
Number of OSUs (OFSS Stock Plan 2014) |
|
i. Directors: |
|
|
Mr. Chaitanya Kamat |
25,000 |
|
ii. Senior Managerial Personnel: |
|
|
Mr. Arvind Gulhati |
4,750 |
|
Mr. Edwin Moses |
1,750 |
|
Mr. Mahesh K Rao |
1,750 |
|
Mr. Manmath Kulkarni |
2,250 |
|
Mr. Makarand Padalkar |
10,000 |
|
Mr. Onkarnath Banerjee |
500 |
|
Mr. Prajakt Deshpande |
750 |
|
Mr. Surendra Shukla |
500 |
|
Mr. Vikram Gupta |
4,750 |
|
Mr. Vinayak Hampihallikar |
1,250 |
|
iii. Any other employee, who receives grant in any one year of option/OSUs amounting to 5% or more of option / OSUs granted during the year |
Nil |
|
iv. Identified employees who were granted Options/OSUs, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant |
Nil |
|
v. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard 33 âEarnings Per Shareâ issued by the Institute of Chartered Accountants of India |
Rs, 117.21 |
All stock options were granted at market price on the date of grant and OSUs were granted at the face value of the equity shares. The compensation cost arising on account of stock options and OSUs is calculated using the fair value method. The reported profit is after considering the cost of employee stock compensation (Rs, 623.33 million), using fair value method on stock options/OSUs.
A summary of the activities in the Companyâs Scheme 2002, Scheme 2010 and Scheme 2011 for the year ended March 31, 2018 are as follows:
|
Particulars |
Year ended March 31, 2018 |
|||||
|
Scheme 2002 |
Scheme 2010 |
Scheme 2011 |
||||
|
Shares arising from options |
Weighted average exercise price O |
Shares arising from options |
Weighted average exercise price O |
Shares arising from options |
Weighted average exercise price O |
|
|
Outstanding at beginning of year |
12,000 |
2,333 |
56,675 |
2,050 |
860,798 |
2,922 |
|
Granted |
- |
- |
- |
- |
- |
- |
|
Exercised |
(12,000) |
2,333 |
(14,600) |
2,050 |
(196,016) |
2,753 |
|
Forfeited |
- |
- |
(590) |
2,050 |
(28,900) |
3,100 |
|
Outstanding at end of the year |
- |
- |
41,485 |
2,050 |
635,882 |
2,966 |
|
Vested options |
- |
41,485 |
540,332 |
|||
|
Unvested options |
- |
- |
95,550 |
|||
|
Options vested during the year |
- |
- |
188,000 |
|||
|
Options forfeited / lapsed during the year |
- |
590 |
28,900 |
|||
A summary of the activities in the Companyâs OFSS Stock Plan 2014 for the year ended March 31, 2018 are as follows:
|
Particulars |
Year ended March 31, 2018 OFSS Stock Plan 2014 |
|||
|
Shares arising from OSUs |
Weighted average exercise price (T) |
Shares arising from Options |
Weighted average exercise price (T) |
|
|
Outstanding at beginning of year |
395,578 |
5 |
138,959 |
3,466 |
|
Granted |
129,383 |
5 |
9,000 |
3,579 |
|
Exercised |
(83,358) |
5 |
(4,513) |
3,330 |
|
Forfeited |
(19,305) |
5 |
(5,075) |
3,391 |
|
Outstanding at end of the year |
422,298 |
5 |
138,371 |
3,481 |
|
Vested OSUs / Options |
92,910 |
61,687 |
||
|
Unvested OSUs / Options |
329,388 |
76,684 |
||
|
OSUs / Options vested during the year |
101,643 |
33,427 |
||
|
OSUs / Options forfeited / lapsed during the year |
19,305 |
5,075 |
||
The weighted average share price for the year over which stock options/OSUs were exercised was '' 3,795. Money realized by exercise of options/OSUs during the financial year 2017-18 was '' 588.80 million. The Company has recovered perquisite tax on the options/OSUs exercised by the employees during the year. The weighted average fair value of stock options/OSUs granted during the year was Rs, 987 and Rs, 3,575 respectively, calculated as per the Black Scholes valuation model as stated in 26 (b) in the notes to accounts of the standalone financials.
The details of options unvested and options vested and exercisable as on March 31, 2018 are as follows:
|
Exercise prices (T) |
Number of options/OSUs |
Weighted average exercise price (T) |
Weighted average remaining contractual life (Years) |
|
|
Options /OSUs unvested |
5 |
329,388 |
5 |
8.4 |
|
3,077 |
95,550 |
3,077 |
5.5 |
|
|
3,241 |
11,994 |
3,241 |
7.0 |
|
|
3,393 |
40,901 |
3,393 |
8.2 |
|
|
3,579 |
9,000 |
3,579 |
9.2 |
|
|
3,987 |
14,789 |
3,987 |
7.6 |
|
|
Options /OSUs vested and exercisable |
5 |
92,910 |
5 |
7.5 |
|
1,930 |
73,133 |
1,930 |
3.7 |
|
|
2,050 |
41,485 |
2,050 |
2.4 |
|
|
3,077 |
200,489 |
3,077 |
5.5 |
|
|
3,127 |
266,710 |
3,127 |
4.9 |
|
|
3,241 |
34,445 |
3,241 |
7.0 |
|
|
3,393 |
12,556 |
3,393 |
8.2 |
|
|
3,987 |
14,686 |
3,987 |
7.6 |
|
|
1,238,036 |
1,983 |
6.3 |
Employee Stock Purchase Scheme ("ESPS")
The Company had adopted the ESPS administered through a Trust with the name i-flex Employee Stock Option Trust (âthe Trustâ) to provide equity based incentives to key employees of the Company. i-flex Solutions Trustee Company Limited is the sole Trustee of this Trust.
No allocation of shares to the employees have been made through the Trust since 2005 and all selected employees under the Trust have exercised their right of purchase of shares prior to March 31, 2014. In this regard, the Trustee Company had filed a petition in the Hon''ble Bombay High Court to seek directions for utilization of the remaining unallocated shares along with the other assets held by the Trust for the benefit of the employees of the Company. As per the order of the Hon''ble Bombay High Court dated August 1, 2016, the trust funds would be utilized for the benefit of the employees.
As at March 31, 2018, 70,600 equity shares of the Company were held by the Trust (March 31, 2017 - 166,142 equity shares).
Human resources
Your Company maintains a healthy and productive environment and offers clean and ergonomic workspace. Human Resources are key assets of your Company, and your Company invests continuously in imparting latest technology skills together with a range of soft skills to help them excel in their roles. Your Company has a strong performance management system together with a formal talent management processes to nurture employee careers, groom future leaders, and create a high performance workforce.
Your Companyâs total employees, at the end of March 31, 2018, were 8,818 (March 31, 2017 - 8,818) including employees of subsidiaries.
During the financial year, one complaint was filed under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The complaint was pending resolution as at the end of financial year and has been resolved as on date.
Corporate social responsibility
The Company has constituted a Corporate Social Responsibility Committee and has formulated the Corporate Social Responsibility (âCSRâ) Policy. The CSR Policy is in line with the provisions listed in Section 135 and Schedule VII of the Companies Act, 2013. The policy is available on the website of the Company at: http://www.oracle.com/us/industries/financial-services/ofss-social-responsibility-2437852.pdf
Pursuant to Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014, annual report on the CSR activities for the financial year ended March 31, 2018 is annexed as Annexure 4 to this report.
Internal financial controls
The Board has adopted adequate policies and procedures in terms of Internal Financial Controls commensurate with the size, scale and complexity of the Companyâs operations. Such policies and procedures ensure orderly and efficient conduct of business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The scope and authority of the Business Assessment & Audit team (âBAAâ) function is defined in the Internal Audit Charter. The Internal Audit function reports to the Chairperson of the Audit Committee.
The BAA monitors and evaluates the efficacy and adequacy of internal control system of the Company, its compliance with risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of BAA, the Company undertakes corrective actions in their respective areas thereby strengthening the controls. Significant audit observations and corrective actions thereon are presented by the BAA to the Audit Committee.
Directors'' responsibility statement
As required under clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013, for the financial year ended on March 31, 2018, the Directors hereby confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit of the company for that period;
c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis;
e. the directors, had laid down internal financial controls followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Auditors
M/s. Mukund M Chitale & Co., Chartered Accountants, (ICAI Firm Registration No. 106655W), were appointed as the Statutory Auditors of the Company by the Members at their 28th Annual General Meeting held on September 20, 2017 to hold office till the conclusion of the 33rd Annual General Meeting to be held in the year 2022, subject to annual ratification by Members at every Annual General Meeting. The Board recommends to the Members the resolution for ratifying their appointment from the conclusion of the ensuing Annual General Meeting till the conclusion of the Annual General Meeting to be held in the year 2022.
The Ministry of Corporate Affairs has vide notification dated May 7, 2018 omitted the requirement of annual ratification of the appointment of statutory auditors by the members of the Company at every Annual General Meeting. Hence the annual ratification shall not be required with effect from the Annual General Meeting to be held in the year 2019.
Auditors'' report
With regard to the Auditorsâ comment in the CARO report concerning delays in payment of some foreign taxes, the Company has recorded, as appropriate, all material tax liabilities. The said liabilities are continuously evaluated and payments are made based on advise of the tax experts.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (1)(e) of Section 134 of the Companies Act, 2013 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
Conservation of energy
The Company strives to conserve the energy and use energy efficient computers. The Company also deploys sophisticated office automation and management equipment which optimizes energy consumption. During the year, the Company also completed the projects to install photovoltaic solar panels at its campus in Mumbai and Pune, India in an effort to increase the use of renewable energy. As part of an initiative to support Oracleâs global sustainability goal of reducing waste to landfill, a wet waste compost machine has been installed at the Mumbai office with excess manure provided to NGO âGreen Yatraâ where waste is used for tree plantation projects. Green Yatra also recognized the Company with a certificate of appreciation for contributions to increasing local green cover.
Technology absorption
The Company regularly strives to utilize newer technologies with the view to conserve the energy and create an environmentally friendly work environment. The initiatives taken by the Company are summarized below:
Network: Efficient networks are essential to support our global business and the Company continues to invest in upgrades and modernization of the networks thereby increases uptime of the network infrastructure, increase capacity and enable greater collaboration. Your Company has made significant changes in the Wi-Fi environment across the organization, migrating to a faster, more secure Next generation wireless (Wi-Fi) network. Not only is it more secure, but it is also two to four times faster on average than the previously used network. This also provides easy access to the internet for employees as well as guests based on their respective access requirement. This high performance Wi-Fi, with increased density of access points, will eventually bring down the need for wired ports, which would correspondingly lead to significant energy and cost savings.
Virtual presence: Your Company has made significant investments in providing a near virtual working environment to its employees. This enhances communication across the globe, minimizing travel, increasing efficiencies from a support perspective as well by making self-service operations easier and effective. Your Company is also in the process of implementing a Unified Communications system across the organization to optimize on connectivity, energy and support efforts and costs.
Peripheral Devices: Your Company is upgrading its rental printers, scanners etc. to Multi-functional Devices (all-in-one) thereby creating efficiencies from a space, support perspective.
Datacenter consolidation activities are also in progress, in order to optimize on space, power and energy.
All these initiatives would provide a more secure and efficient operating environment with the utilization of innovative technology.
Foreign exchange earnings and outgo:
(Amounts in Rs, million)
|
Foreign exchange earnings |
35,943.60 |
|
Foreign exchange outgo (including capital goods and other expenditure) |
9,731.96 |
|
Net equity dividend remitted in foreign exchange |
10,718.70 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans:
Your Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to focus on tapping various potential markets available globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for your Company.
Prospects
Financial institutions today are dedicating a larger part of their resources to making the customer experience as frictionless as possible. Inspiring trust, ensuring speed and delivering personalization in every financial transaction are now the key priorities.
During the early stage of digital disruption financial institutions launched several digital initiatives. Developed in isolation these initiatives addressed specific customer requirements largely from a transactional view point. We are now in the wave of digital disruption, where data analytics, artificial intelligence (AI), machine learning, and blockchain technology will coalesce into systems that are increasingly autonomous.
Interconnected banking where banks collaborate and partner closely with the ecosystem of FinTechs and customer IT systems are gaining traction. These connected ecosystems will enable sharing of data and services to provide unprecedented value to their customers through innovative, personalized and convenient services anywhere, any time. At the same time, there is an increasing focus on maintaining privacy of customer data, protecting the institution from cyber threats and implementing a robust governance model. Regulators across the world are also aware of the risks in these areas and are framing new regulations.
In todayâs marketplace open banking is becoming a necessity for financial institutions to effectively participate in this ecosystem and start ''consuming'' and âsharingâ information via open APIs.
These priorities open up exciting opportunities for your Company. Your Companyâs portfolio of solutions is well equipped to address these very needs. Having made significant investments in machine learning, AI and block chain technologies, your Company is in a good position to help financial institutions leverage these technology shifts and find new ways of delivering value. Financial institutions need to transform their ageing core systems to leverage these opportunities. Leveraging your Companyâs solutions, financial institutions can securely collaborate in this dynamic environment and adapt to this constant cycle of innovation.
Employee particulars
The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
Following guidelines have been used while preparing this statement. For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section excludes the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
(i) Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
|
Name of the Director* |
Ratio to median remuneration |
|
Non-Executive Directors |
|
|
Mr. S Venkatachalam® |
3 |
|
Mr. Richard Jackson |
2 |
|
Mr. Sridhar Srinivasan |
2 |
|
Executive Director |
|
|
Mr. Chaitanya Kamat® |
30 |
*The details mentioned above are of only those Directors to whom the remuneration has been paid.
®Excludes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options.
(ii) The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company secretary in the financial year:
|
Name and Title |
Percentage increase / (decrease) of remuneration in |
|
FY 2018 as compared to FY 2017 |
|
|
Mr. S Venkatachalam® |
0% |
|
Mr. Richard Jackson |
0% |
|
Mr. Sridhar Srinivasan |
0% |
|
Mr. Chaitanya Kamat® |
(30%) |
|
Mr. Makarand Padalkar, Chief Financial Officer® |
11% |
|
Mr. Onkarnath Banerjee, Company Secretary® |
14% |
® Excludes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options.
(iii) The percentage increase in the Median Remuneration of Employees in fiscal 2018, as compared to fiscal 2017:
1%
(iv) The number of permanent employees on the rolls of the Company:
7,149 as on March 31, 2018
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2017-18, the average percentile change in the remuneration of employees other than the managerial personnel was an increase of 7%. The Average percentile change in the remuneration of KMP was a decrease of 21%.
(vi) Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms remuneration is as per the remuneration policy of the Company.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Companies Act, 2013, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
Acknowledgements
Your Directors place on record their appreciation for the excellent contribution made by employees of the Company through their commitment, co-operation and diligence.
Your Directors gratefully acknowledge the continued support received by the Company from its stakeholders, customers, members, vendors and bankers during the year.
Your Directors also wish to thank the Government of India and its various agencies, Department of Electronics, the Software Technology Parks - Bengaluru, Chennai, Mumbai, and Pune, Special Economic Zone authorities at SEEPZ and Cochin, the Customs and Excise Department, Ministry of Commerce, Ministry of Finance, Ministry of External Affairs, Ministry of Corporate Affairs, Department of Telecommunication, the Reserve Bank of India, the State Governments of Maharashtra, Karnataka, Haryana and Tamil Nadu and other local Government Bodies, for their support and look forward to their continued support in the future.
For and on behalf of the Board
S Venkatachalam
Chairperson
DIN: 00257819
Date: July 3, 2018
Mar 31, 2017
Financial year 2016-17
Dear Members,
The Directors present their report on the business and operations of your Company along with the Annual Report and audited financial statements of the Company for the financial year 2016-17.
Financial highlights
As per Consolidated financial statements:
(Amounts in Rs, million)
|
Particulars |
Year ended |
Year ended |
|
March 31, 2017 |
March 31, 2016 |
|
|
Revenue from operations |
44,265.33 |
41,312.17 |
|
Finance income |
1,491.16 |
2,180.22 |
|
Other income, net |
72.53 |
(72.82) |
|
Total income |
45,829.02 |
43,419.57 |
|
Depreciation and amortization |
(701.92) |
(529.27) |
|
Profit before exceptional item and tax |
18,198.03 |
17,695.22 |
|
Exceptional item |
(628.25) |
(219.33) |
|
Profit before tax |
17,569.78 |
17,475.89 |
|
Tax expenses |
(5,715.93) |
(6,986.96) |
|
Profit for the year |
11,853.85 |
10,488.93 |
As per Unconsolidated financial statements:
(Amounts in Rs, million)
|
Particulars |
Year ended March 31, 2017 |
Year ended March 31, 2016 |
|
Revenue from operations |
37,363.12 |
35,284.31 |
|
Finance income |
1,420.83 |
2,151.82 |
|
Other income, net |
215.76 |
(23.14) |
|
Total income |
38,999.71 |
37,412.99 |
|
Depreciation and amortization |
(667.99) |
(497.71) |
|
Profit before exceptional item and tax |
14,663.34 |
14,681.02 |
|
Exceptional item |
2,162.59 |
- |
|
Profit before tax |
16,825.93 |
14,681.02 |
|
Tax expenses |
(3,944.96) |
(5,703.47) |
|
Profit for the year |
12,880.97 |
8,977.55 |
Performance
On consolidated basis, your Companyâs revenue stood at Rs, 44,265.33 million this year, an increase of 7% from Rs, 41,312.17 million of the previous financial year. The net income was Rs, 11,853.85 million this year, an increase of 13%.
On an unconsolidated basis, your Companyâs revenue grew to Rs, 37,363.12 million during the financial year 2016-17 from Rs, 35,284.31 million last year. This represents a growth of 6%. The Companyâs net income for the financial year 2016-17 was Rs, 12,880.97 million, an increase of 43% over the previous financial year.
A detailed analysis of the financials is given in the Managementâs discussion and analysis report that forms a part of this Directorsâ report.
Previous yearâs figures have been re-arranged/re-classified, wherever necessary, as per the applicable regulations.
Dividend
The Company distributed an interim dividend of Rs, 170 per equity share of Rs, 5 each in April 2017 for the financial year ended March 31, 2017. The Board of Directors has not recommended any additional final dividend for the financial year 2016-17.
Transfer to reserves
The Company does not propose to transfer any amount to the General Reserve out of the amount available for appropriation.
Particulars of loans, guarantees or investments
Pursuant to Section 186 of the Companies Act, 2013 (âthe Actâ), there are no new loans granted or investments made by the Company during the financial year 2016-17.
Share capital
During the financial year 2016-17, the Company allotted 250,228 equity shares of face value of Rs, 5 each to its eligible employees who exercised their stock options under the prevailing Employee Stock Option Schemes of the Company. As a result, as on March 31, 2017, the paid-up equity share capital of the Company was Rs, 425,532,030 divided into 85,106,406 equity shares of face value of Rs, 5 each.
Extract of annual return
Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of Annual Return (in form MGT-9) is annexed as Annexure 1 to this report.
Directors and key managerial personnel
Ms. Maria Smith, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. Pursuant to Section 161 of the Companies Act, 2013, Ms. Kimberly Woolley was appointed as an Additional Director of the Company on March 29, 2017 and holds office up to the date of ensuing Annual General Meeting. The Company has received Notice in writing from a Member, pursuant to Section 160 of the Companies Act, 2013, proposing the candidature of Ms. Kimberly Woolley for the office of the director.
The Board recommends to the Members the resolution for re-appointment of Ms. Maria Smith and appointment of Ms. Kimberly Woolley as Directors of the Company, liable to retire by rotation.
Mr. Derek H Williams, Non-Executive, Non-Independent Director of the Company, expired on July 23, 2016. The Board, while condoling the death of Mr. Williams, places on record its appreciation for the contributions made by him as a Member of the Board.
Ms. Samantha Wellington, Non-Executive, Non-Independent Director of the Company, resigned from the Board with effect from October 28, 2016. The Board places on record its appreciation for the contributions made by her as a Member of the Board.
Brief resumes of the Directors proposed to be appointed / re-appointed, the nature of their expertise in specific functional areas and the names of companies in which they hold directorships and Chairpersonships / Memberships of Board Committees, etc. are provided in the Notice to Members and Report on Corporate Governance forming part of this Annual Report.
All the Independent Directors of the Company have given declaration under Section 149(6) of the Companies Act, 2013 confirming that they meet the criteria of independence.
During the year, there were no changes to the Key Managerial Personnel.
Board policies Board evaluation policy
In accordance with the requirements of the Section 178 of the Companies Act, 2013 and the Regulation 17(10) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), the Chairperson of the Nomination and Remuneration Committee conducts the Board evaluation. The report of the evaluation is tabled at the Board meeting.
Record retention policy
Pursuant to Regulation 9 and 30(8) of Listing Regulations, the Company has framed a Record retention policy.
Risk management policy
The Company''s principles and processes has been established by Risk Management Policy with regard to identification, analysis and management of applicable risks.
Remuneration policy
The Nomination and Remuneration Committee determines the remuneration payable to the Directors within the limits approved by the shareholders. The Independent, Non-Executive Directors are paid commission based on the committee Chairpersonships/ Memberships.
The remuneration to Executive Directors, Key Managerial Personnel and Senior Management consists of fixed pay and incentive pay, in compliance with the policies of the Company.
The Committee reviews and approves the stock options and other share based awards / payments to Executive Directors, Key Managerial Personnel and employees of the Company.
Policy on determination of material events and information
The Company has a policy on determination of material events and information and sets out the classes and types of material events or information which require disclosure to stock exchanges. The policy is available on the Companyâs website at: http://www.oracle.com/us/industries/financial-services/policy-determination-events-2889567.pdf
Vigil mechanism / whistle blower policy
The Company has established a Code of Ethics and Business Conduct (âCodeâ) which is applicable to its Directors and employees. The Code also extends to the Companyâs suppliers and partners. Regular dissemination of the Code and trainings are conducted to reinforce the concepts and ensure that any changes are communicated. The Companyâs vigil mechanism deals with reporting and dealing with instances of fraud and mismanagement, and forms part of the Code. The Company has in place a confidential reporting mechanism for any whistle blower to report a matter.
In terms of Companies Act, 2013 and Regulation 46 of the Listing Regulations, the Vigil Mechanism / Whistle Blower Policy forms part of the Companyâs Code of Ethics and Business Conduct which is available on website of the Company at: http://www.oracle.com/us/corporate/investor-relations/cebc-176732.pdf
Related party transactions policy
The Company has framed a related party transactions policy in accordance with the provisions of the Companies Act, 2013 and the Listing Regulations. All related party transactions which were entered into during the financial year 2016-17 were on an armâs length basis and in the ordinary course of business. Form AOC-2 providing the details of related party transactions of the Company is annexed to this report as Annexure 2. The policy is available on website of the Company at: http://www.oracle.com/us/industries/financial-services/ofss-party-transactions-policy-2288144.pdf
Dividend Distribution policy
As per Regulation 43A of the Listing Regulations, the Company has framed a dividend distribution policy and the same is made available on website of the Company at:
http://www.oracle.com/us/industries/financial-services/ofss-dividend-distribution-policy-3125465.pdf
Directors'' familiarization program
The Company has a formulated familiarization program for its new directors including independent directors. The program provides an insight into the Companyâs products, competition, emerging technologies, etc. to gain a better understanding of the business environment and also covers the regulatory landscape. The familiarization program is available on Companyâs website at: http://www.oracle.com/us/industries/financial-services/financial-familarization-program-2547373.pdf
Subsidiaries
Your Company has subsidiaries in Greece, India, Republic of Chile, Peopleâs Republic of China, Republic of Mauritius, Singapore, the Netherlands and the United States of America.
Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Companyâs subsidiaries in Form AOC-1 is attached to the financial statements of the Company.
Further, pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of the Company, its consolidated financial statements along with relevant documents, and separate annual accounts in respect of subsidiaries, are available on the website of the Company at www.oracle.com/financialservices
Indian Accounting Standards (Ind AS)
Your Company adopted Ind AS with effect from April 1, 2016 pursuant to the Ministry of Corporate Affairsâ notification dated February 16, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015. Your Company has published Ind AS Financials for the year ended March 31, 2017 along with comparable figures for the previous financial year and Opening Statement of Assets and Liabilities as on April 1, 2015.
Research and development
Your Company continuously makes significant investments in research and development to develop solutions that the global banking industry needs today and will need tomorrow. Your Company strives to be at the forefront of innovation, at the same time taking the technology risk away from the banks. Your Companyâs dedicated in-house research and development (R&D) centers have produced a number of products that are today used by banks in more than 120 countries around the world for running their most critical operations. The investment your Company makes in building applications coupled with access to Oracleâs technology provides a unique competitive edge to its offerings.
Six in-house R&D centers in India of your Company have been accorded recognition by the Department of Scientific and Industrial Research (DSIR) from February 26, 2016. The aggregate expenditure on research and development activities in these in-house R&D centers is as follows:
(Amounts in Rs, million)
|
Particulars |
Year ended March 31, 2017 |
Year ended March 31, 2016 |
|
Revenue Expenditure |
2,100.73 |
2,711.00 |
|
Capital Expenditure |
230.35 |
35.27 |
Fixed deposits
During the financial year 2016-17, the Company has not accepted any fixed deposits within the meaning of Rule 2(c) of the Companies (Acceptance of Deposits) Rules, 2014, and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all the corporate governance regulations and related requirements as envisaged under Regulation 27 of the Listing Regulations. A separate report on Corporate Governance along with a certificate of Practicing Company Secretary with regard to compliance of conditions of Corporate Governance as stipulated in Regulation 34(3) of the Listing Regulations forms part of this Annual Report.
Secretarial audit
In terms of Section 204 of the Companies Act, 2013, and the Rules made thereunder, the Board has appointed Mr. Prashant Diwan, Practicing Company Secretary as Secretarial Auditor of the Company for the financial year 2016-17. The Secretarial Audit report issued by Practicing Company Secretary is annexed as Annexure 3 to this report.
Business responsibility report
Business Responsibility Report for financial year 2016-17 that forms part of this Annual Report has been hosted on the Companyâs website at www.oracle.com/financialservices. The Members, who wish to obtain a printed copy of the report, may write to the Company Secretary at the Registered Office of the Company.
Employee Stock Option Plan ("ESOP")
The Members at their Annual General Meeting held on August 14, 2001 approved grant of ESOPs to the employees / directors of the Company and its subsidiaries up to 7.5% of the issued and paid-up capital of the Company from time to time. This said limit was enhanced and approved up to 12.5% of the issued and paid-up capital of the Company from time to time, by the Members at their Annual General Meeting held on August 18, 2011. This extended limit is an all-inclusive limit applicable to the stock options granted in the past and in force and those that will be granted by the Company under this authorization.
Pursuant to ESOP scheme approved by the Members of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme (âScheme 2002â) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the IPO and 619,000 options at various dates after the IPO (including the grants of options out of options forfeited earlier). On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme (âScheme 2010â) for issue of 618,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).
Pursuant to ESOP scheme approved by the Members of the Company in their meeting held on August 18, 2011, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme (âScheme 2011â). Accordingly, the Company has granted 1,950,500 options under the Scheme 2011. Nomination and Remuneration Committee in their meeting held on August 7, 2014 approved Oracle Financial Services Software Limited Stock Plan 2014 (âOFSS Stock Plan 2014â). This plan enables issue of deeply discounted options at the face value and referred to as OFSS Stock Units (âOSUsâ) for convenience. Accordingly, the Company granted 156,795 Stock Options and 457,601 OSUs under OFSS Stock Plan 2014. The issuance terms of OSUs are the same as for Stock Options, employees may elect to receive 1 OSU in lieu of 4 awarded Stock Options at their respective exercise price.
As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted will vest on completion of 12, 24, 36, 48 and 60 months from the date of grant and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have an exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of options.
In respect of the OFSS Stock Plan 2014, each of 25% of the total stock options / OSUs granted will vest on completion of 12, 24, 36 and 48 months from the date of grant and is subject to continued employment of the employee with the Company or its subsidiaries. Options / OSUs have exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of options/OSUs.
All the above mentioned Schemes of the Company is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014. Applicable disclosures relating to Employees Stock Options Schemes, pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, are placed on the website of the Company at www.oracle.com/financialservices
The details of the options / OSUs granted under the Scheme 2002, Scheme 2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees / directors from time to time are given below:
|
Particulars |
Scheme 2002 |
Scheme 2010 |
Scheme 2011 |
OFSS Stock Plan 2014 |
OFSS Stock Plan 2014 |
Total |
|
(Stock Options) |
(OSUs) |
|||||
|
Pricing Formula |
At the market price as on the date of grant |
''5 |
||||
|
Variation of terms of options/ OSUs |
None |
None |
None |
None |
None |
|
|
Number of options/OSUs granted till March 31, 2017 |
5,167,920 |
638,000 |
1,950,500 |
156,795 |
457,601 |
8,370,816 |
|
Number of options/OSUs lapsed and forfeited |
(620,725) |
(281,442) |
(412,630) |
(17,063) |
(33,634) |
(1,365,494) |
|
Number of options/OSUs exercised |
(4,535,195) |
(299,883) |
(677,072) |
(773) |
(28,389) |
(5,541,312) |
|
Total number of options in force as on March 31, 2017 |
12,000 |
56,675 |
860,798 |
138,959 |
395,578 |
1,464,010 |
The details of Options / OSUs granted to Directors and Senior Managerial Personnel under OFSS Stock Plan 2014 during the financial year ended March 31, 2017 are as follows:
|
Particulars |
Number of OSUs (OFSS Stock Plan 2014) |
|
i. Directors: |
|
|
Mr. Chaitanya Kamat |
25,000 |
|
ii. Senior Managerial Personnel: |
|
|
Mr. Arvind Gulhati |
5,000 |
|
Mr. Edwin Moses |
2,000 |
|
Mr. Gregory Chapple |
2,500 |
|
Mr. M Ravikumar |
1,875 |
|
Mr. Mahesh Rao |
2,000 |
|
Mr. Makarand Padalkar |
10,000 |
|
Mr. Mudit Govil |
625 |
|
Mr. Mustafa Moonim |
2,500 |
|
Mr. Onkarnath Banerjee |
500 |
|
Mr. Prajakt Deshpande |
3,000 |
|
Mr. Sanjay Deshpande |
1,500 |
|
Mr. Vikram Gupta |
4,750 |
|
Mr. Vinayak Hampihallikar |
2,250 |
|
iii. Any other employee, who receives grant in any one year of Options/OSUs amounting to 5% or more of Options/OSUs granted during the year |
Nil |
|
iv. Identified employees who were granted Options/OSUs, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant |
Nil |
|
v. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard 33 âEarnings Per Shareâ issued by the Institute of Chartered Accountants of India |
'' 151.06 |
All stock options were granted at market price on the date of grant and OSUs were granted at the face value of the equity shares. The compensation cost arising on account of stock options and OSUs is calculated using the fair value method. The reported profit is after considering the cost of employee stock compensation (? 780.37 million), using fair value method on stock options/OSUs.
|
Particulars |
Year ended March 31, 2017 |
|||||
|
Scheme 2002 |
Scheme 2010 |
Scheme 2011 |
||||
|
Shares arising from options |
Weighted average exercise price |
Shares arising from options |
Weighted average exercise price |
Shares arising from options |
Weighted average exercise price |
|
|
Outstanding at beginning of year |
23,000 |
1,835 |
95,344 |
2,062 |
1,119,925 |
2,882 |
|
Granted |
- |
- |
- |
- |
- |
- |
|
Exercised |
(5,000) |
1,290 |
(30,869) |
2,088 |
(185,197) |
2,660 |
|
Forfeited |
- |
- |
(7,800) |
2,050 |
(73,930) |
2,970 |
|
Lapsed |
(6,000) |
1,290 |
- |
- |
- |
- |
|
Outstanding at end of the year |
12,000 |
2,333 |
56,675 |
2,050 |
860,798 |
2,922 |
|
Vested options |
12,000 |
56,675 |
559,948 |
|||
|
Unvested options |
- |
- |
300,850 |
|||
|
Options vested during the year |
- |
4,000 |
290,200 |
|||
|
Options forfeited / lapsed during the year |
6,000 |
7,800 |
73,930 |
|||
A summary of the activities in the Companyâs OFSS Stock Plan 2014 are as follows:
|
Particulars |
Year ended March 31, 2017 OFSS Stock Plan 2014 |
|||
|
Shares arising from OSUs |
Weighted average exercise price (T) |
Shares arising from Options |
Weighted average exercise price (T) |
|
|
Outstanding at beginning of year |
293,116 |
5 |
93,245 |
3,539 |
|
Granted |
156,523 |
5 |
61,250 |
3,393 |
|
Exercised |
(28,389) |
5 |
(773) |
3,241 |
|
Forfeited |
(25,672) |
5 |
(14,763) |
3,632 |
|
Outstanding at end of the year |
395,578 |
5 |
138,959 |
3,466 |
|
Vested OSUs / Options |
75,607 |
33,660 |
||
|
Unvested OSUs / Options |
319,971 |
105,299 |
||
|
OSUs / Options vested during the year |
69,326 |
20,691 |
||
|
OSUs / Options forfeited / lapsed during the year |
25,672 |
5 |
14,763 |
|
The weighted average share price for the year over which stock options/OSUs were exercised was '' 3,407. Money realized by exercise of options/OSUs during the financial year 2016-17 was '' 589.42 million. The Company has recovered perquisite tax on the options/OSUs exercised by the employees during the year. The weighted average fair value of Stock options/OSUs granted during the year was '' 993 and '' 3,372 respectively, calculated as per the Black Scholes valuation model as stated in 26 (b) in the notes to accounts of the standalone financials.
|
Exercise prices (T) |
Number of options/OSUs |
Weighted average exercise price (T) |
Weighted average remaining contractual life (Years) |
|
|
Options /OSUs unvested |
5 |
319,971 |
5 |
8.8 |
|
3,077 |
204,100 |
3,077 |
6.5 |
|
|
3,127 |
96,750 |
3,127 |
5.9 |
|
|
3,241 |
26,049 |
3,241 |
8.0 |
|
|
3,393 |
56,425 |
3,393 |
9.2 |
|
|
3,987 |
22,825 |
3,987 |
8.6 |
|
|
Options /OSUs vested and exercisable |
5 |
75,607 |
5 |
8.2 |
|
1,930 |
130,788 |
1,930 |
4.7 |
|
|
2,050 |
56,675 |
2,050 |
3.4 |
|
|
2,333 |
12,000 |
2,333 |
3.6 |
|
|
3,077 |
192,205 |
3,077 |
6.5 |
|
|
3,127 |
236,955 |
3,127 |
5.9 |
|
|
3,241 |
26,060 |
3,241 |
8.0 |
|
|
3,987 |
7,600 |
3,987 |
8.6 |
|
|
1,464,010 |
2,147 |
6.8 |
Employee Stock Purchase Scheme ("ESPS")
The Company had adopted the ESPS administered through a Trust with the name i-flex Employee Stock Option Trust (âthe Trustâ) to provide equity based incentives to key employees of the Company. i-flex Solutions Trustee Company Limited is the sole Trustee of this Trust.
No allocation of shares to the employees have been made through the Trust since 2005 and all selected employees under the Trust have exercised their right of purchase of shares prior to March 31, 2014. In this regard, the Trustee Company had filed a petition in the Honorable Bombay High Court to seek directions for utilization of the remaining unallocated shares along with the other assets held by the Trust for the benefit of the employees of the Company. As per the order of the Honorable Bombay High Court dated August 1, 2016, the trust funds would be utilized for the benefit of the employees.
As at March 31, 2017, the Trust is holding 166,142 equity shares (March 31, 2016 - 166,142 equity shares) of Oracle Financial Services Software Limited.
Human resources
Your Company maintains a healthy and productive environment and offers clean and ergonomic workspace. Human Resources are key assets of your Company, and your Company invests continuously in imparting latest technology skills together with a range of soft skills to help them excel in their roles. Your Company has a strong performance management system together with a formal talent management processes to nurture employee careers, groom future leaders, and create a high performance workforce.
Your Company follows global best HR practices. Your Companyâs total manpower at the end of March 31, 2017 was 8,818 as compared to 8,733 as on March 31, 2016 (including employees of subsidiaries).
During the financial year, two complaints were filed under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. These were resolved per process. There was no complaint outstanding as at the end of financial year.
Corporate social responsibility
The Company has constituted a Corporate Social Responsibility Committee and has formulated the Corporate Social Responsibility (âCSRâ) Policy. The CSR Policy is in line with the provisions listed in Section 135 and Schedule VII of the Companies Act, 2013. The policy is available on the Companyâs website at: http://www.oracle.com/us/industries/financial-services/ofss-social-responsibility-2437852.pdf
Pursuant to Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014, a report on the CSR activities for the financial year ended March 31, 2017 is annexed as Annexure 4 to this report.
Internal financial controls
The Board has adopted adequate policies and procedures in terms of Internal Financial Controls commensurate with the size, scale and complexity of the Companyâs operations. Such policies and procedures ensure orderly and efficient conduct of business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The scope and authority of the Business Assessment & Audit team (âBAAâ) function is defined in the Internal Audit Charter. The Internal Audit function reports to the Chairperson of the Audit Committee.
The BAA monitors and evaluates the efficacy and adequacy of internal control system of the Company, its compliance with risk management system, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of BAA, the Company undertakes corrective actions in their respective areas thereby strengthening the controls. Significant audit observations and corrective actions thereon are presented by the BAA to the Audit Committee.
Directors'' responsibility statement
As required under clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013, for the financial year ended on March 31, 2017, the Directors hereby confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit and loss of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis; and
e) the directors, had laid down internal financial controls followed by the Company and that such internal financial controls are adequate and were operating effectively.
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Auditors
M/s. S. R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration no.101049W/E300004), were appointed as the Statutory Auditors of the Company by the Members at their 25th Annual General Meeting held on September 12, 2014 to hold office till the conclusion of the ensuing 28th Annual General Meeting to be held in the year 2017 subject to annual ratification by Members at every Annual General Meeting.
Pursuant to Section 139 of the Companies Act, 2013 (âthe Actâ) and the rules made there under, the Board of Directors of the Company on recommendation of the Audit Committee, has proposed the appointment of M/s. Mukund M Chitale & Co., Chartered Accountants, (ICAI Firm Registration No. 106655W) as the Statutory Auditors of the Company, to hold office from the conclusion of the ensuing 28th Annual General Meeting to be held in the year 2017 till the conclusion of the 33rd Annual General Meeting to be held in the year 2022, subject to the approval of the Members of the Company, and subject to the annual ratification by Members at every Annual General Meeting to be held in the years 2018 to 2021. The Company has received from M/s. Mukund M Chitale
& Co. written consent that they satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed there under. Accordingly, a resolution, proposing the appointment of M/s. Mukund M Chitale & Co., as the Statutory Auditors of the Company for a term of five consecutive years forms part of the Notice convening the 28th Annual General Meeting.
Auditors'' report
With regard to the Auditorsâ comment in the CARO report concerning delays in payment of some foreign income taxes, the Company is continuously evaluating and accruing towards any material tax exposures in the books of account taking a conservative approach and payments are made based on the advice of the tax experts.
The Company also assesses withholding of foreign payroll tax implications on salaries and travel related reimbursements paid to its employees posted outside India and accordingly makes accruals in the books of account. The Company is in the process of filing the returns for Payroll Tax in such jurisdiction for which the provision is made in the books.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The particulars as prescribed under sub-section (1)(e) of Section 134 of the Companies Act, 2013 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are furnished hereunder:
Conservation of energy
The Company strives to conserve the energy and use energy efficient computers. The Company also deploys sophisticated office automation and management equipment which optimizes energy consumption.
Technology absorption
The Company regularly strives to utilize newer technologies with the view to conserve the energy and create an environmentally friendly work environment. The initiatives taken by the Company are summarized below:
Network: Efficient networks are essential to support our global business and the Company continues to invest in upgrades and modernization of the networks thereby increases uptime of the network infrastructure, increase capacity and enable greater collaboration. Your Company regularly carries out a refresh of network devices across the Company to deploy modern and energy efficient machines. This has brought about significant savings in power, strengthened operating effectiveness and security.
Virtual presence: Your Company has made significant investments in providing a near virtual working environment to its employees. This enhances communication across the globe, minimizing travel, increasing efficiencies from a support perspective as well by making self service operations easier and effective.
All these planned initiatives lead to a more secure and efficient operating environment, with the utilization of current cutting edge technology ensuring consistent and superior support to the business.
Foreign exchange earnings and outgo:
(Amounts in Rs, million)
|
Foreign Exchange Earnings (including dividend received from foreign subsidiaries) |
37,743.78 |
|
Foreign Exchange Outgo (including capital goods & other expenditure) |
9,404.71 |
|
Net equity dividend remitted in foreign exchange |
6,305.12 |
Activities relating to exports; initiatives taken to increase exports; development of new export markets for products and services; and export plans:
Your Company has established an extensive global presence across leading markets through its sales and marketing network. The Company will continue to focus on tapping various potential markets available globally. Experienced sales and marketing specialists focus on building strong international business presence to develop new export markets for your Company.
Prospects
A new organizational paradigm is emerging where banks need to move past traditionally defined boundaries. Today, they have to work in a hyper connected ecosystem; one that is continually enriched by fintechs and other non-traditional players underpinned by digital acceleration.
While fintechs enter the industry with innovative products and services and target the most lucrative business segments through their nimble footed offerings, banks have their traditional strengths namely strong regulatory knowledge, strength of balance sheet and multiple avenues to access capital, and most importantly customerâs trust. Partnering with fin techs and collaborating with this extended ecosystem of third party players allows financial institutions to integrate their services and deliver solutions that are superior in terms of cost, speed, and convenience.
Banks are now investing in infrastructure that is flexible and agile enough to work with these new norms and the operational challenges that come with this complex network of hyper connected systems. Digitization and connected devices continue to evolve and exude their influence on virtually all aspects of the business. To lock step with this transition financial institutions are increasingly looking to develop end-to-end digital engagement strategies and comprehensive digital operating models that address the needs of suppliers, employees and partners just as much as customers.
Financial institutions are reshaping their businesses and operating models to collaborate, compete and grow. Cloud adoption is gaining ground within the financial services industry. The most common strategies use a mix of private, public, or hybrid cloud environments. Organizations are finding that using cloud-based platform offerings to develop and deploy applications can eliminate the cost and complexity of managing the underlying application platforms.
To achieve success in this environment, it is essential for organizations to realign their IT strategy to deliver capabilities of exceptional digital experience, enhanced digital engagement and a responsive back-end. Combining the power of analytics and big data, banks can gain operational and customer insights mitigate risks and comply with regulations.
Your Companyâs portfolio of solutions is well equipped to address these very needs and the Company is in a good position to help financial institutions leverage technology shifts and find new ways of delivering value.
Employee particulars
The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given below:
Following guidelines have been used while preparing this statement. For statistically relevant computation of median value of employee remuneration, employees who have served the entire 12 months in the corresponding fiscal year were considered. The expression âmedianâ means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers is found by arranging all the observations from lowest value to highest value and picking the middle one; and if there is an even number of observations, the median is the average of the two middle values. The remuneration used for the analysis in this section excludes the (perquisite) value of the difference between the fair market value and the exercise price on the date of exercise of options, to make the comparisons relevant.
(i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
|
Name of the Director* |
Ratio to median remuneration |
|
Non-Executive Directors |
|
|
Mr. S Venkatachalam |
3 |
|
Mr. Richard Jackson |
2 |
|
Mr. Sridhar Srinivasan |
2 |
|
Executive Director |
|
|
Mr. Chaitanya Kamat@ |
44 |
* The details mentioned above are of only those Directors to whom the remuneration has been paid.
@ Excludes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options.
(ii) The percentage increase in remuneration of each director, chief executive officer, chief financial officer and company secretary in the financial year:
|
Name and Title |
Percentage increase of remuneration in FY 2017 as compared to FY 2016 |
|
Mr. S Venkatachalam |
0% |
|
Mr. Richard Jackson |
0% |
|
Mr. Sridhar Srinivasan* |
NA |
|
Mr. Chaitanya Kamat@ |
47% |
|
Mr. Makarand Padalkar, Chief Financial Officer@ |
0% |
|
Mr. Onkarnath Banerjee, Company Secretary*@ |
NA |
* Comparison is not applicable as the previous financial year was a partial period.
@ Excludes the (perquisite) value towards difference between the fair market value and the exercise price on the date of exercise of options.
(iii) The percentage increase in the Median Remuneration of Employees in fiscal 2017, as compared to fiscal 2016:
12%
(iv) The number of permanent employees on the rolls of the Company:
7,093 as on March 31, 2017
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
During the financial year 2016-17, the average percentile change in the remuneration of employees other than the managerial personnel was an increase of 12%. The Average percentile change in the remuneration of KMP was an increase of 35%.
(vi) Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms remuneration is as per the remuneration policy of the Company.
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Companies Act, 2013, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
Acknowledgements
Your Directors gratefully acknowledge the continued support received by the Company from its customers, members, vendors and bankers during the year. Your Directors also wish to thank the Government of India and its various agencies, Department of Electronics, the Software Technology Parks - Bengaluru, Chennai, Mumbai, and Pune, Special Economic Zone authorities at SEEPZ and Cochin, the Customs and Excise Department, Ministry of Commerce, Ministry of Finance, Ministry of External Affairs, Ministry of Corporate Affairs, Department of Telecommunication, the Reserve Bank of India, the State Governments of Maharashtra, Karnataka, Haryana and Tamil Nadu and other local Government Bodies, for their support and look forward to their continued support in the future.
Your Directors also place on record their appreciation for the excellent contribution made by employees of the Company through their commitment, co-operation and diligence with a view to achieving consistent growth for the Company.
For and on behalf of the Board
S Venkatachalam
Chairperson
DIN: 00257819
July 12, 2017
Mar 31, 2015
Dear Members,
The Directors present their report on the business and operations of
your Company along with the Annual Report and audited financial
statements of the Company for the financial year 2014-15.
Financial highlights
As per Indian GAAP Consolidated financial statements:
(Amounts in Rs. million)
Particulars Year ended Year ended
March 31,
2015 March 31,
2014
Revenue from operations 39,049.05 37,413.21
Other income, net 3,481.34 6,736.48
Total income 42,530.39 44,149.69
Depreciation and amortization (680.92) (716.72)
Profit before tax 18,308.37 20,013.61
Tax expenses (6,385.17) (6,420.42)
Profit for the year 11,923.20 13,593.19
As per Indian GAAP Unconsolidated financial statements:
(Amounts in Rs. million)
Particulars Year ended Year ended
March 31,
2015 March 31,
2014
Revenue from operations 33,410.95 31,594.68
Other income, net 3,758.99 6,209.16
Total income 37,169.94 37,803.84
Depreciation and amortization (634.37) (643.46)
Profit before tax 16,136.29 17,308.05
Tax expenses (5,556.09) (5,824.43)
Profit for the year 10,580.20 11,483.62
Performance
On consolidated basis, your Company''s revenue stood at Rs. 39,049
million this year, an increase of 4.4% from Rs. 37,413 million of the
previous financial year. The net income was Rs. 11,923 million this
year, a decrease of 12.3% primarily on account of lower interest
income.
On an unconsolidated basis, your Company''s revenue grew to Rs. 33,411
million during the financial year 2014-15 from Rs. 31,595 million last
year. This represents a growth of 5.8%. The Company''s net profit for
the financial year 2014-15 was Rs. 10,580 million, a decrease of 7.9%
over the previous financial year primarily on account of lower interest
income.
A detailed analysis of the financials is given in the Management''s
discussion and analysis report that forms a part of this Directors''
report.
Dividend
The Company had distributed an interim dividend of Rs. 485 per equity
share of Rs. 5 each in September 2014. Further, your Board is pleased
to recommend a final dividend of Rs. 180 per equity share of face value
of Rs. 5 each for the financial year ended March 31, 2015.
The Register of Members and Share Transfer Books will remain closed
from Monday, September 7, 2015 to Friday, September 11, 2015 for the
purpose of payment of the final dividend for the financial year ended
March 31, 2015, and the Annual General Meeting. The Annual General
Meeting is scheduled to be held on Friday, September 11, 2015. The
dividend, if approved at the forthcoming Annual General Meeting, will
be paid to those shareholders whose names appear on the Register of
Members as on Friday, September 4, 2015.
Transfer to reserves
The Company does not propose to transfer any amount to the General
Reserve out of the amount available for appropriation.
Particulars of loans, guarantees or investments
Pursuant to Section 186 of the Companies Act, 2013, there are no new
loans granted or investments made by the Company during the financial
year 2014-15.
Share capital
During the year the Company allotted 470,725 equity shares of face
value of Rs. 5 each to its eligible employees who exercised their
options under the prevailing Employee Stock Option Schemes of the
Company. As a result, as on March 31, 2015, the paid-up equity share
capital of the Company was Rs. 423,074,295 divided into 84,614,859
equity shares of face value of Rs. 5 each.
Extract of annual return
Pursuant to Section 92(3) of the Companies Act, 2013 ("the Act") and
Rule 12(1) of the Companies (Management and Administration) Rules,
2014, extract of annual return (in form MGT-9) is annexed as Annexure
1.
Directors and key managerial personnel
Mr. Derek H Williams, Mr. Chaitanya Kamat and Ms. Samantha Wellington,
Directors of the Company, retire by rotation at the ensuing Annual
General Meeting and being eligible, offer themselves for
re-appointment.
Pursuant to Section 161 of the Companies Act, 2013, Ms. Maria Smith and
Mr. Sridhar Srinivasan were appointed as Additional Directors of the
Company on July 23, 2015 and hold office up to the date of ensuing
Annual General Meeting. The Company has received Notices in writing
from Members, pursuant to Section 160 of the Companies Act, 2013,
proposing the candidature of Ms. Maria Smith and Mr. Sridhar Srinivasan
for the office of the Director.
In accordance with provisions of Sections 149, 152 read with Schedule
IV and any other applicable provisions of the Companies Act, 2013 and
the Companies (Appointment and Qualification of Directors) Rules, 2014
and Clause 49 of the Listing Agreement, Mr. Sridhar Srinivasan is
recommended to be appointed as an Independent Director of the Company
for a term up to March 31, 2020, not liable to retire by rotation.
The Board recommends to the Members the resolutions for re-appointment
of Mr. Derek H Williams, Mr. Chaitanya Kamat and Ms. Samantha
Wellington as Directors of the Company and appointments of Ms. Maria
Smith as a Director and Mr. Sridhar Srinivasan as an Independent
Director of the Company.
Mr. Y M Kale, Non-Executive Independent Director, resigned with effect
from December 15, 2014. The Board placed on record its appreciation of
the valuable contributions rendered by Mr. Kale during his tenure as a
Director of the Company.
Mr. William Corey West, Non-Executive Non-Independent Director,
resigned with effect from July 22, 2015. The Board placed on record its
appreciation of the valuable contributions rendered by Mr. William
Corey West during his tenure as a Director of the Company.
Every new independent director of the Board attends a familiarization
program. The program provides an insight into the Company''s products,
competition, emerging technologies, etc. to gain a better understanding
of the business environment as also covers the regulatory landscape.
The familiarization program for Independent Directors is available on
Company''s website,
http://www.oracle.com/us/industries/financial-services/financial-
familarization-program-2547373.pdf
A formal letter of appointment outlining his/her role, function, duties
and responsibilities is issued to the Independent Director at the time
of appointment. The model of the letter of appointment of Independent
Director is available on Company''s website, http://www.oracle.com/us/
industries/financial-services/model-letter-appointment-director
-2399432.pdf
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 Clause 49 of the Listing Agreement.
As stipulated under Clause 49 of the Listing Agreement, brief resumes
of the Directors proposed to be appointed / re-appointed, the nature of
their expertise in specific functional areas and the names of companies
in which they hold directorships and membership / chairmanship of Board
Committees, etc. are provided in the Notice and / or Report on
Corporate Governance forming a part of the Annual Report.
The Board of Directors at its meeting held on May 16, 2014 appointed
Mr. Chaitanya Kamat, Managing Director & CEO, Mr. Makarand Padalkar,
Chief Financial Officer and Mr. Hoshi D Bhagwagar, Company Secretary
and Compliance Officer as the whole-time Key Managerial Personnel (KMP)
of the Company effective April 1, 2014. Mr. Hoshi D Bhagwagar resigned
as the Company Secretary and Compliance Officer with effect from June
6, 2014. Mr. Jayant Joshi was appointed as the Company Secretary and
Compliance Officer of the Company with effect from September 29, 2014.
Mr. Jayant Joshi relinquished the position as the Company Secretary and
Compliance Officer with effect from May 31, 2015. The Board of
Directors at its meeting held on May 15, 2015 has appointed Mr.
Onkarnath Banerjee as the Company Secretary and Compliance Officer and
a whole-time Key Managerial Personnel (KMP) of the Company effective
June 1, 2015.
Board diversity policy
The Board Diversity Policy sets out the guidelines for composition of
the Board comprising of members with relevant professional
qualifications and wide industry experience. The policy also sets out
the gender diversity norms and composition of independent directors in
compliance with the Companies Act, 2013 and the Listing Agreement.
Board evaluation policy
In accordance with the requirements of the Companies Act, 2013 and the
Clause 49 of the Listing Agreement, the Directors perform annual
evaluation of the Board. The evaluation process is led by the Chairman
of the Nomination and Remuneration Committee who obtains the feedback
of the Board members on contribution of the members, effectiveness of
Board processes and areas of improvement. The feedback is used to
enhance Board effectiveness and helps in validating that the Board has
the right level of expertise.
During the year, the performance of the Board and its Committees was
evaluated after seeking inputs from all the directors on the basis of
the criteria such as the contribution, participation, effectiveness of
Board processes, timeliness and relevance of information to the Board,
etc. The evaluation also included evaluation of individual directors.
In a separate meeting of Independent Directors, performance of
non-independent directors, performance of the Board as a whole and
performance of the Chairman was evaluated, taking into account the
views of executive directors and non-executive directors. The same was
discussed in the board meeting that followed.
Directors'' appointment policy
The Nomination and Remuneration Committee ("NRC") of the Company has
formulated the policy on Directors'' Appointment. As per the Policy,
NRC frames the criteria in terms of skills and experience based on the
feedback from the Board and executive management. NRC may utilize
services of a search firm or use other networks to shortlist the
candidates. The selection process involves meetings / review of the
candidates by at least three other directors.
The tenure of the Independent Directors shall not exceed two
consecutive terms of 5 years each.
Remuneration policy
The Nomination and Remuneration Committee determines the quantum of
commission payable to the Directors within the limits approved by the
shareholders. Periodic review of the commission paid to the Independent
Non-Executive Directors is made based on industry benchmarks.
The remuneration to Key Managerial Personnel and Senior Management
consists of fixed pay and incentive pay, in compliance with the
policies of the Company.
The Committee determines the stock options and other share based awards
/ payments to be made to Key Managerial Personnel and employees of the
Company.
Material subsidiary policy
The Company has framed a Material Subsidiary Policy for identification
and governance of the same. The policy is available at Company''s
website, http://www.oracle.com/us/industries/financial-services/
policy-determining-material-2615655.pdf
Subsidiaries
Your Company has subsidiaries in Greece, India, Republic of Chile,
Republic of China, Republic of Mauritius, Singapore, The Netherlands
and United States of America.
The Ministry of Corporate Affairs has issued a General Circular No.:
2/2011 dated February 8, 2011 granting a general exemption to the
companies stating that the provisions of Section 129 of the Companies
Act, 2013 shall not apply in relation to subsidiaries of companies
subject to the company fulfilling certain conditions stated in the said
circular.
The Company is in compliance with the conditions stipulated by the
Ministry of Corporate Affairs. Therefore, the accounts and related
reports of the subsidiary companies are not attached to the Annual
Report of the Company for the year ended March 31, 2015. Pursuant to
sub-section 3 of Section 129 of the Companies Act, 2013 ("the Act"),
the statement containing the salient feature of the financial statement
of the subsidiaries is attached to the financial statements in form
AOC-1.
The Company will make available the accounts and related information of
the subsidiary companies upon request by any member / investor of the
Company or its subsidiaries. Further, the accounts and related
information of the subsidiary companies will be kept open for
inspection by any Member, at the registered office of the Company and
at the registered office of the subsidiaries during office hours of the
Company / subsidiaries and the same will also be made available on the
website of the Company www.oracle.com/financial services
Related party transactions
The Company has framed a related party transactions policy in
accordance with the provisions of the Companies Act, 2013 and the
Listing Agreement. All related party transactions which were entered
into during the financial year 2014-15 were on an arm''s length basis
and in the ordinary course of business. Form AOC-2 providing the
details of related party transactions of the Company is annexed to this
report as Annexure 2.
The policy is available at: http://www.oracle.com/us/industries/
financial-services/ofss-party-transactions-policy-2288144.pdf
Partners and alliances
Your Company continues to focus on building, nurturing and growing a
robust partner ecosystem, which helps deliver the solutions that
address the nuanced needs of diverse countries, regions and markets of
the world efficiently. Your Company conducts periodic knowledge
transfer for its products and services offerings empowering the
partner, as indeed the user, community. These programs provide users
with superior product knowledge and services capabilities, as well as a
better understanding of partners'' resources and implementation
capabilities.
In August 2014, your Company hosted the third annual Oracle FLEXCUBE
Developers Conclave in India. More than 150 customers and partners from
40 countries attended and received training on how to leverage Oracle
FLEXCUBE open development tools to meet new business requirements by
leveraging Oracle FLEXCUBE web services for integration. Besides, the
new Oracle University certifications for Oracle FLEXCUBE have also been
made available, allowing partners to train and obtain certification for
functional, technical, and advanced levels.
Research and Development
Your Company continuously makes significant investments in research and
development to develop solutions that the global banking industry needs
today and will need tomorrow. Your Company strives to be at the
forefront of innovation, at the same time taking the technology risk
away from the banks by future proofing their investments. Your
Company''s dedicated in-house research and development (R&D) centres
have produced a number of products that are today used by banks in more
than 120 countries around the world for running their most critical
operations. The investments your Company makes in building applications
coupled with access to Oracle''s technology provides a unique
competitive edge to its offerings.
Fixed deposits
During the financial year 2014-15, the Company has not accepted any
fixed deposits within the meaning of Rule 2(c) of the Companies
(Acceptance of Deposits) Rules, 2014, and as such, no amount of
principal or interest was outstanding as of the date of the Balance
Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all
the corporate governance regulations and related requirements as
envisaged under Clause 49 of the Listing Agreement entered with the
stock exchanges.
Your Company has constituted seven committees consisting of Board
Members and other senior officials of the Company, namely, Audit
Committee, Nomination and Remuneration Committee, ESOP Allotment
Committee, Transfer Committee, Stakeholder''s Relationship Committee,
Corporate Social Responsibility Committee and Risk Management
Committee. There is a separate report on Corporate Governance which
forms a part of this Annual Report alongwith a certificate of
Practicing Company Secretary with regard to compliance of conditions of
Corporate Governance as stipulated in Clause 49 of the Listing
Agreement.
The Practicing Company Secretary has noted in his certificate on
Corporate Governance, and Secretarial Audit Report that the Composition
of Board of Directors of the Company was not as per Section 149(4) of
the Companies Act, 2013 and Clause 49IIA(2) of the Listing Agreement
during the period from 15th December, 2014 to 31st March, 2015. The
Directors clarify that the Company had initiated all necessary steps to
fill in the position as quickly as possible. After following the
appropriate selection process, the Company has appointed Mr. Sridhar
Srinivasan, as a Non-Executive, Independent director on July 23, 2015.
Accordingly, the composition of the Board of Directors and its
Committees is as per aforesaid regulations.
A certificate from the Managing Director & CEO and Chief Financial
Officer of the Company confirming internal controls and checks
pertaining to financial statements, as also declaring that all Board
Members and Senior Managerial Personnel have affirmed compliance with
the Code of Ethics and Business Conduct for the financial year ended
March 31, 2015, was placed before the Board of Directors and the Board
had noted the same. The said certificate is annexed to the Directors''
report.
Secretarial audit
In terms of Section 204 of the Companies Act 2013, and the Rules made
thereunder, the Secretarial Audit report issued by Practicing Company
Secretary is enclosed as Annexure 3 to this report.
Vigil mechanism / whistle blower policy
The Company has established a Code of Ethics and Business Conduct
("Code") which is applicable to its employees. The Code also extends to
the Company''s suppliers and partners. Regular dissemination of the Code
and trainings are conducted to reinforce the concepts and ensure that
any changes are communicated. The Company''s vigil mechanism deals with
reporting and dealing with instances of fraud and mismanagement, and
forms part of the Code. The Company has in place a confidential
reporting mechanism for any whistle blower to report a matter.
In terms of Companies Act, 2013 and Clause 49 of the Listing Agreement
entered with the stock exchanges, the Vigil Mechanism / Whistle Blower
Policy forms part of the Company''s Code of Ethics and Business Conduct
which is placed on website of the Company at
http://www.oracle.com/us/industries/financial-services/046571.html
Business responsibility report
Securities and Exchange Board of India (SEBI) through circular dated
August 13, 2012, has mandated the inclusion of Business Responsibility
Report ("BR Report") as part of the Annual Report for the top 100
listed entities based on their market capitalization on BSE Limited and
National Stock Exchange of India Limited as at March 31, 2012. The SEBI
circular is effective from financial year ending on or after December
31, 2012. In line with the press release and FAQ''s dated May 10, 2013
issued by SEBI, the BR Report which forms part of this Annual Report
has been hosted on the Company''s website
www.oracle.com/financialservices. The members who wish to obtain a
printed copy of the report, may write to the Company Secretary at the
Registered Office of the Company.
Employee stock option plan ("ESOP")
The Members at their Annual General Meeting held on August 14, 2001
approved grant of ESOPs to the employees / directors of the Company and
its subsidiaries up to 7.5% of the issued and paid-up capital of the
Company from time to time. This said limit was enhanced and approved up
to 12.5% of the issued and paid-up capital of the Company from time to
time, by the Members at their Annual General Meeting held on August 18,
2011. This extended limit is an all inclusive limit applicable for
stock options granted in the past and in force and those that will be
granted by the Company under this authorization.
Pursuant to ESOP scheme approved by the shareholders of the Company on
August 14, 2001, the Board of Directors, on March 4, 2002 approved the
Employees Stock Option Scheme ("Scheme 2002") for issue of 4,753,600
options to the employees and directors of the Company and its
subsidiaries. According to the Scheme 2002, the Company has granted
4,548,920 options prior to the IPO and 619,000 options at various dates
after IPO (including the grants of options out of options forfeited
earlier). On August 25, 2010, the Board of Directors approved the
Employees Stock Option Plan 2010 Scheme ("Scheme 2010") for issue of
618,000 options to the employees and directors of the Company and its
subsidiaries. According to the Scheme 2010, the Company has granted
638,000 options (including the grants of options out of options
forfeited earlier).
Pursuant to ESOP scheme approved by the shareholders of the Company in
their meeting held on August 18, 2011, the Board of Directors approved
the Employees Stock Option Plan 2011 Scheme ("Scheme 2011").
Accordingly, the Company has granted 1,950,500 options under the Scheme
2011. Nomination and Remuneration Committee in their meeting held on
August 7, 2014 approved Oracle Financial Services Software Limited
Stock Option Plan 2014 ("OFSS Stock Plan 2014") and during the year
2014-15, the Company granted 58,370 Stock Options and 147,889
Restricted Stock Units (RSUs) under OFSS Stock Plan 2014.
The Stock Options granted under the Scheme 2002, Scheme 2010 and Scheme
2011, each of 20% of the total options granted will vest on completion
of 12, 24, 36, 48 and 60 months from the date of grant and is subject
to continued employment of the employee or directorship of the director
with the Company or its subsidiaries. Options have exercise period of
10 years from the date of grant. The employee pays the exercise price
upon exercise of option.
The Stock Options / RSUs granted in Financial year 2014-15 under OFSS
Stock Plan 2014, each of 25% of the total Stock Options / RSUs will
vest on completion of 12, 24, 36 and 48 months from the date of grant
and is subject to continued employment of the employee of the Company
or its subsidiaries. Options have exercise period of 10 years from the
date of grant. The employee pays the exercise price upon exercise of
option.
The details of the options / RSUs granted under the Scheme 2002, Scheme
2010, Scheme 2011 and OFSS Stock Plan 2014 to eligible employees /
directors from time to time are given below:
Particulars Scheme Scheme Scheme OFSS Stock
2002 2010 2011 Plan 2014
(Stock
Options)
Pricing Formula At the market price as on the date of grant
Variation of terms of
options / RSUs None None None None
Number of options /
RSUs granted till 5,167,920 638,000 1,950,500 58,370
March 31, 2015
Number of options /
RSUs lapsed* 614,725 267,962 208,250 -
Number of options /
RSUs exercised 4,516,795 205,348 327,622 -
Total number of
options / RSUs
in force as 36,400 164,690 1,414,628 58,370
on March 31, 2015
Particulars OFSS Stock Total
Plan 2014 (RSUs)
Pricing Formula Rs. 5
Variation of terms of options/RSUs None
Number of options/RSUs granted till
March 31, 2015 147,889 7,962,679
Number of options/RSUs lapsed - 1,090,937
Number of options/RSUs exercised - 5,049,765
Total number of options/RSUs in
force as on March 31, 2015 147,889 1,821,977
The details of Options / RSUs granted to Directors and Senior
Managerial Personnel under Scheme 2011 and OFSS Stock Plan 2014 during
the financial year ended March 31, 2015 are as follows:
Particulars Number Number of
of Options RSUs (OFSS
(Scheme 2011) Stock Plan
2014)
i. Director:
Mr. Chaitanya Kamat Nil 25,000
Senior Managerial Personnel:
Mr. Arvind Gulhati Nil 5,000
Mr. Avadhut Ketkar Nil 1,687
Mr. Edwin N Moses Nil 3,750
Mr. Jayant Joshi Nil 2,000
Mr. Mahesh Rao Nil 3,750
Mr. Makarand Padalkar Nil 10,000
Mr. Manmath Kulkarni Nil 3,125
Ms. Meenakshy Iyer Nil 375
Mr. Mohamed Yacob Nil 250
Mr. M. Ravikumar Nil 3,125
Mr. Vikram Gupta Nil 5,000
Mr. Vinayak Hampihallikar Nil 1,750
ii. Any other employee, who receives
grant in any one year of option amounting
to 5% or more of option / RSUs granted
during the year Mr. James Finnegan 15,000 Nil
iii. Identified employees who were
granted option / RSUs, during any one
year, equal Nil Nil
to or exceeding 1% of the issued capital
(excluding outstanding warrants and
conversions) of the Company at the
time of grant
iv. Diluted Earnings Per Share (EPS)
pursuant to the issue of shares
on exercise of option Rs. 124.86
calculated in accordance with Accounting
Standard 20 ''Earnings Per Share'' issued
by the Institute of Chartered Accountants
of India
Had compensation cost for the Company''s ESOP been determined based on
fair value at the grant dates, the Company''s net profit and earnings
per share would have been reduced to preformed amounts indicated below:
(Amounts in Rs. million, except per share data)
Particulars Year ended
March 31, 2015
Profit as reported 10,580.20
Add: Employee stock compensation under intrinsic
value method Nil
Less: Employee stock compensation under fair value
method (643.82)
Performa profit 9,936.38
Earnings per share Basic
- As reported 125.38
- Performa 117.75
Diluted
- As reported 124.86
- Performa 117.39
All stock options were granted at market price on the date of grant and
RSUs were granted at the face value of the equity shares. The
compensation cost arising on account of stock options and RSUs is
calculated using the Intrinsic value method. Accordingly the
disclosures in terms of Regulation 14 (C) (vii) of the SEBI (Share
Based Employee Benefits) Regulations, 2014, are not applicable.
A summary of the activities in the Company''s Scheme 2002, Scheme 2010
and Scheme 2011 for the year ended March 31, 2015 are as follows:
Particulars Scheme 2002 Scheme 2010
Shares Weighted Shares Weighted
arising
from average
exercise arising
from average
exercise
options price
(Rs.) options price
(Rs.)
Outstanding at beginning
of year 91,300 1,976 311,050 2,069
Granted - - - -
Exercised (54,900) 1,975 (141,028) 2,075
Forfeited - - (5,332) 2,050
Outstanding at end of
the year 36,400 1,978 164,690 2,064
Vested options 24,400 91,901
Unvested options 12,000 72,789
Options vested during
the year 12,000 70,103
Options forfeited /
lapsed during Nil 5,332
the year
Particulars Scheme 2011
Shares Weighted
arising from average
exercise
options price (Rs.)
Outstanding at beginning of year 1,703,125 2,783
Granted 15,000 3,076
Exercised (274,797) 2,535
Forfeited (28,700) 2,667
Outstanding at end of the year 1,414,628 2,837
Vested options 347,178
Unvested options 1,067,450
Options vested during the year 344,550
Options forfeited / lapsed during
the year 28,700
The weighted average share price for the year over which stock options
were exercised was Rs. 3,347. Money realized by exercise of options
during the financial year 2014-15 was Rs. 1,097.6 million. The Company
has recovered perquisite tax on the options exercised by the employees
during the year.
A summary of the activities in the Company''s OFSS Stock Plan 2014 are
as follows:
Particulars Year ended March 31, 2015
OFSS Stock Plan 2014
Shares Weighted
average Shares Weighted
arising
from RSUs exercise
price
(Rs.) arising exercise
from price
Options (Rs.)
Outstanding at beginning
of year - - - -
Granted 147,889 5 58,370 3,241
Exercised - - - -
Forfeited - - - -
Outstanding at end of
the year 147,889 5 58,370 3,241
Vested RSUs / Options - -
Unvested RSUs / Option 147,889 58,370
The fair value of stock options / RSUs granted on granted on July 14,
2014 under Scheme 2011 was Rs. 1,542 and Stock Options and RSUs granted
on March 30, 2015 under OFSS Stock Plan 2014 was Rs. 2,753, calculated
as per the Black Scholes valuation model as stated in 24b in the notes
to accounts. There were no Options / RSUs vested during the financial
year 2014-15.
The details of options unvested and options vested and exercisable as
on March 31, 2015 are as follows:
Particulars Exercise
price (Rs.) Number of
options Weighted
average Weighted
average
exercise
price
(Rs.) remaining
contrac
tual life
(Years)
Options unvested 5 147,889 5 10.0
1,930 180,700 1,930 6.7
2,032 16,000 2,032 6.7
2,050 64,789 2,050 5.4
2,333 12,000 2,333 5.6
2,342 8,000 2,342 6.3
3.076 15,000 3,076 9.3
3.077 499,800 3,077 8.5
3,127 355,950 3,127 7.9
3,241 58,370 3,241 10.0
Options vested and
exercisable 1,291 12,400 1,291 1.1
1,930 123,428 1,930 6.7
2,050 91,901 2,050 5.4
2,333 12,000 2,333 5.6
3,077 52,700 3,077 8.5
3,127 171,050 3,127 7.9
1,821,977 2,533 7.8
Employee stock purchase scheme ("ESPS")
The Company has adopted the ESPS administered through a Trust with name
i-flex Employee Stock Option Trust ("the Trust") to provide equity
based incentives to key employees of the Company. i-flex Solution
Trustee Company Ltd. is the Trustee of this Trust. As per the scheme,
the Trust can purchase shares of the Company from market using the
proceeds of loans obtained from the Company. Such shares are allocated
by the Trust to nominated employees at an exercise price, which
approximates the fair value on the date of the grant. The shares vest
in the employees over a period of five years and the employees can
purchase the shares from the Trust over a period of ten years based on
continued employment, until which, the Trust holds the shares for the
benefit of the employees. The employees are entitled to receive
dividends, bonus, etc., that may be declared by the Company from time
to time for the entire portion of shares held by the Trust on behalf of
the employees.
On the acceptance of the offer, the selected employee undertakes to
purchase the shares from the Trust within ten years from the date of
grant. In case an employee resigns from employment, the rights relating
to vested shares, which are eligible for exercise, may be purchased by
the employee by payment of the exercise price whereas, the balance
shares are forfeited in favour of the Trust. The Trustees have the
right of recourse against the employees for any amounts that may remain
unpaid on the shares accepted by them. As of the balance sheet date,
the Trust has repaid the entire loan obtained from the Company on
receipt of payments from employees against shares exercised.
No allocation of shares to the employees have been made through the
Trust since 2005 and all selected employees under the Trust have
exercised their right of purchase of shares prior to March 31, 2014. In
this regard, the Trustee Company has also filed a petition in the
Hon''ble Bombay High Court to seek directions for utilization of the
remaining unallocated shares along with the other assets held by the
Trust for the benefit of the employees of the Company and the matter is
presently pending before the Hon''ble Bombay High Court.
A summary of the activities in the Company''s ESPS is as follows:
(Number of shares)
Particulars Year ended
March 31,
2015 March 31,
2014
Opening balance of unallocated shares 166,142 166,142
Shares forfeited during the year - -
Closing balance of unallocated shares 166,142 166,142
Opening balance of allocated shares - 2,750
Shares exercised during the year - (2,750)
Shares forfeited during the year - -
Closing balance of allocated shares - -
Shares eligible for exercise - -
Shares not eligible for exercise - -
Total allocated shares - -
Human resources
Your Company maintains a healthy and productive environment and offers
clean and ergonomic workspaces. Human Resources are key assets of the
your Company, and your Company invests continuously in imparting latest
technology skills together with a range of soft skills to help them
excel in their roles. Your Company has a strong performance management
system together with a formal talent management processes to nurture
employee careers, groom future leaders, and create a high performance
workforce. Your Company follows global best HR practices.
Your Company''s total manpower at the end of March 31, 2015 was 8,928 as
compared to 9,220 as on March 31, 2014 (including employees of
subsidiaries).
During the financial year, one complaint was filed under Section 22 of
the Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013, during the financial year and the same was
resolved. There was no complaint outstanding as at the end of financial
year.
Corporate social responsibility
The Company has constituted a Corporate Social Responsibility Committee
and the Committee has formulated the Company''s Corporate Social
Responsibility ("CSR") Policy. The CSR Policy is in line with the
provisions listed in Section 135 and Schedule VII of the Companies Act,
2013.
The policy is available at:
http://www.oracle.com/us/industries/financial-services/ofss-social
-responsibility-2437852.pdf
Pursuant to Rule 8 of Companies (Corporate Social Responsibility)
Rules, 2014, a report on the CSR activities for the financial year
ended March 31, 2015 is enclosed as Annexure 4.
Risk management policy
The Company has established a Risk Management Policy ("Policy") which
sets out the Company''s principles and processes with regard to
identification, analysis and management of applicable risks. The policy
mandates the ways in which respective risks are expected to be
mitigated and monitored.
The Board has constituted a Risk Management Committee to monitor and
review the Risk Management Plan for the Company.
Internal financial controls
The Company has an Internal Control System, commensurate with the size,
scale and complexity of its operations. The scope and authority of the
Business Assessment & Audit team ("BAA") function is defined in the
Internal Audit Charter. To maintain its objectivity and independence,
the Internal Audit function reports to the Chairman of the Audit
Committee.
The BAA monitors and evaluates the efficacy and adequacy of internal
control system in the Company, its compliance with operating systems,
risk management system, accounting procedures and policies at all
locations of the Company and its subsidiaries. Based on the report of
BAA, the Company undertakes corrective actions in their respective
areas thereby strengthening the controls. Significant audit
observations and corrective actions thereon are presented by the BAA to
the Audit Committee.
Directors'' responsibility statement
As required under clause (c) of sub-section 3 of Section 134 of the
Companies Act, 2013, for the financial year ended on March 31, 2015,
the Directors hereby confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) the directors had selected such accounting policies and applied them
consistently and 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 at the end of the financial year and of the profit and loss
of the company for that period;
c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern
basis; and
e) the directors, had laid down internal financial controls followed by
the Company and that such internal financial controls are adequate and
were operating effectively.
f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Auditors
M/s. S.R. Batliboi & Associates LLP, Chartered Accountants (Firm
Registration no. 101049W), were appointed as the Statutory Auditors of
the Company by the Members at their Twenty Fifth Annual General Meeting
held on September 12, 2014 to hold office till the conclusion of the
Annual General Meeting to be held in the year 2017, subject to the
ratification of their appointment at every Annual General Meeting. M/s.
S.R. Batliboi & Associates LLP have confirmed their eligibility and
willingness to accept office as the Statutory Auditors and also
confirmed that they have not been disqualified to be appointed as the
Statutory Auditors at the ensuing Annual General Meeting.
Auditors'' report
With regard to the Auditors'' comment in the CARO report concerning
delays in payment of a few tax payments, e.g., Foreign Income Taxes,
Foreign Value Added Tax and Foreign Withholding Tax, the Company would
like to state the following:
i. The Company has engaged international tax experts in the
interpretation of laws and regulations relating to corporate taxes and
VAT in foreign countries. The Company has however, been continuously
evaluating and accruing towards any material tax exposures in the books
taking a conservative approach and payments are made based on the
advice of the tax experts.
ii. The Company continually assesses Payroll Tax implications in
various jurisdictions outside India on salaries and travel related
reimbursements paid to its employees posted therein and accordingly
makes accruals in the books. The Company is in the process of filing
the returns for Payroll Tax in such jurisdiction for which the
provision is already made in the books. As per the local laws of most
host countries, the tax is payable by the employee, however in a few
countries tax payment is a responsibility of the employer, which
amounts to Rs. 1.88 Crs. The Company and the employees ensure tax
compliance in such countries as advised by the tax consultants.
Conservation of energy and technology absorption and foreign exchange
earnings and outgo
The particulars as prescribed under sub-section (1)(e) of Section 134
of the Companies Act, 2013 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, the
relevant data pertaining to conservation of energy, technology
absorption and foreign exchange earnings and outgo are furnished
hereunder:
i. Conservation of energy and technology absorption
The Company regularly strives to utilize newer technologies with the
view to conserve the energy and create an environmentally friendly work
environment. The initiatives taken by the Company are summarized below:
Desk-top / workstation refresh: Your Company carried out a major
refresh of the laptops and desktops across the Company to deploy modern
and energy efficient workstations. This has brought about significant
savings in power, strengthened IT Security architecture.
Network Migration: As an organization wide initiative migration of the
enterprise networks to MPLS technology has commenced. This migration
was strategized and designed during this financial year. The
implementation has also commenced and will continue to progress through
the next 6 months. The technology reduces latency thereby increasing
operational efficiencies. This is possible through a mesh network
architecture vis-Ã -vis point to point architecture. This also
improvises on the data and control plane protection aspects of the
unified network architecture thereby creating a more secure operating
environment.
Online trainings: A new initiative launched during this financial year
is the new online internal video platform. From individual contributors
to executives, every employee now has access to securely find, share,
record and store high-quality video content internally. This platform
empowers individual to create and edit video messages, slides
accompanied by audio, web camera recordings. This enhances
communication across the globe, minimizing travel, increasing
efficiencies from a support perspective as well by making self service
operations easier and effective.
Mobile Device Management: Management of external devices to an
organization is constant challenge and this year, your Company
introduced the Mobile Device Management platform which tracks, monitors
and has the capability to delete company information from mobile
devices in the event that it device is lost / stolen. This has led to
better control over corporate data and thereby minimized the
possibility of data loss or compromise.
Availability Management: As a part of improvising on the availability
requirements across the organization, there has been a dual initiative
of management and back up of product source codes, as well as
provisioning of infrastructure to manage any business disruption based
on the criticality of business requirements. This has lead to a more
robust operating environment, creating increased operating
efficiencies.
VOIP: During the year, your Company further expanded the communication
infrastructure with the objective to provide a seamless multi-channel
communication to all the employees by significantly enhancing the video
calling options. Apart from improving productivity, this helps in
reducing carbon footprint by reducing the travel.
Virtualization: Virtualization has been further ingrained into the OFSS
IT architecture, wherein the OFSS computing environment is almost
completely virtualized. This has lead to better performance, better
utilization of resources (i.e., space and power), increased operating
efficiencies and leads to a greener work environment.
All these initiatives planned lead to a more secure and efficient
operating environment.
Activities relating to exports; initiatives taken to increase exports;
development of new export markets for products and services; and export
plans
Your Company has established an extensive global presence across
leading markets through its sales and marketing network. The Company
will continue to focus on tapping various potential markets available
globally. Experienced sales and marketing specialists focus on building
strong international business presence to develop new export markets
for your Company.
Prospects
A variety of changes are shaping the complexion and direction of the
Banking and Financial Services (BFSI) industry, these challenges also
raise several new opportunities. World-over, the banks are in a hurry
to become relevant and competitive in the changing business landscape,
and they aspire to adopt the same tools and technologies that have run
one of the finest global banks.
The compelling drive for banks to final a response to the digital
opportunities, adopting globally proven product that enable them to
take a several notches up in their capability, the need to leverage the
power of technology such as big data, cloud and analytics to deliver
superior customer experience.
Digitization is sweeping the banking world. Digitization means
utilizing the right technology to deliver memorable customer
experiences well into the future. Facing severe disruptive threats from
young and nimble players that promise a unique financial convenience
through the use of technology, financial institutions are urgently
called upon to deliver superior customer experiences at the time and
place determined by customers. The young generation with their here and
now demand creates an opportunity for the banks to use their wealth of
experience and strength of reliability to create a delightful customer
experience. Banks are now strategically investing in platforms that are
highly flexible, process-centric, scalable and sustainable well into
the future.
With a portfolio of offerings that addresses this very need, your
Company sees this as a significant opportunity, and is maintaining an
unremitting focus on it. Your Company''s wins in the last year have
demonstrated that its products are relevant not just large banks in
developed markets, but also small and specialized institutions in
emerging and frontier markets. Through these and other similar
successes, your Company has helped banks achieve their business vision
by providing technology which preserves their investments for the
long-term. Your Company will continue to pursue such opportunities
vigorously.
Employee particulars
The information required under Section 197 of the Act read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is given below:
Following guidelines have been used when preparing this statement. For
statistically relevant computation of median value of employee
remuneration, employees who have served the entire 12 months in the
corresponding fiscal year were used. Further, the expression "median"
means the numerical value separating the higher half of a population
from the lower half and the median of a finite list of numbers may be
found by arranging all the observations from lowest value to highest
value and picking the middle one; and if there is an even number of
observations, the median is the average of the two middle values. The
remuneration used for the analysis in this section excludes the
(perquisite) value of the difference between the fair market value and
the exercise price on the date of exercise of options, to make the
comparisons relevant.
(i) The ratio of the remuneration of each Director to the median
remuneration of the employees of the Company for the financial year:
Name of the Director Ratio to median remuneration
Non Executive Directors
Mr. S Venkatachalam1 3
Mr. Derek H Williams -
Mr. Harinderjit Singh -
Mr. Richard Jackson 2
Mr. Robert K Weiler -
Ms. Samantha Wellington -
Mr. William Corey West -
Mr. Y M Kale2 2
Executive Directors
Mr. Chaitanya Kamat1 43
1 Excludes the value towards difference between the fair market value
and the exercise price on the date of exercise of options.
2 For the period April 1, 2014 to December 15, 2014.
(ii) The percentage increase in remuneration of each Director, Chief
Executive Officer, Chief Financial Officer and Company Secretary in the
financial year:
Name and Title Percentage increase
of remuneration in
FY 2015 as compared
to FY 2014
Mr. S Venkatachalam1 9%
Mr. Derek H Williams -
Mr. Harinderjit Singh -
Mr. Richard Jackson2 32%
Mr. Robert K Weiler -
Ms. Samantha Wellington -
Mr. William Corey West -
Mr. Y M Kale3 -
Mr. Chaitanya Kamat1 (18%)
Mr. Makarand Padalkar1, Chief Financial Officer (5%)
Mr. Hoshi Bhagwagar4, Company Secretary NA
Mr. Jayant Joshi5, Company Secretary NA
1 Excludes the (perquisite) value towards difference between the fair
market value and the exercise price on the date of exercise of options.
2 Increase on account of additional committee memberships in line with
compensation policy of the Company.
3 For the period April 1, 2014 to December 15, 2014 and being for part
of the year, comparison with the previous year is not relevant.
4 For the period April 1, 2014 to June 6, 2014 and being for part of
the year, comparison with the previous year is not relevant.
5 For the period September 29, 2014 to March 31, 2015 and being for
part of the year, comparison with the previous year is not relevant.
(iii) The percentage increase in the Median Remuneration of Employees
in fiscal 2015, as compared to fiscal 2014: 17%.
(iv) The number of permanent employees on the rolls of the Company:
7,151
(v) The explanation on the relationship between average increase in
remuneration and Company performance:
The increase in the remuneration is based on individual performance of
each employee within overall budget reflecting the overall performance
of the Company, strategic priorities, and talent market dynamics. On a
consolidated basis, Company''s operating income in the fiscal 2015
increased by 12% as compared to fiscal 2014. During the year the
employees received average increase in the compensation of 13%.
(vi) Comparison of the remuneration of the Key Managerial Personnel
against the performance of the Company:
The remuneration of key managerial personnel is compared with the
consolidated revenue (Rs. 39,049 million) and net profits (Rs. 11,923
million) of the Company for the fiscal 2015.
(Amounts in Rs. thousand)
Name of the key managerial
personnel (KMP) Remuneration in As % of As %
of Net fiscal 2015 Revenues profit
Aggregate remuneration of
KMP1 53,030 0.14% 0.44%
1 Excludes an amount of Rs. 126,040 towards perquisite on ESOPs
exercised in financial year 2014-15. Including this, the percentages
above would have been 0.46% and 1.5% respectively.
(vii) Variations in the market capitalization of the Company, price
earnings ratio as at the closing date of the current financial year:
Particulars March 31,
2015 March 31,
2014 % Change
Market Capitalization as per NSE
Price (Rs. Crs.) 27,585 25,979 6.2%
Price Earnings Ratio 26 23 15.0%
Percentage increase over decrease in the market quotations of the
shares of the Company in comparison to the rate at which the Company
came out with the last public offer on June 28, 2002:
Particulars March 31, 2015 June 28, 2002* Change
Market Price (NSE) Rs. 3,260.05 Rs. 250.53 1,201%
Market Price (BSE) Rs. 3,257.60 Rs. 249.73 1,204%
*Adjusted for any corporate actions.
(viii) Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration:
During the financial year 2014-15, the average increments given to the
employee other than the managerial personnel was around 13%. The
Average percentile change in the compensation of KMP shows decrease of
17% as compared to previous financial year excluding the perquisite
value of the options exercised.
(ix) Comparison of the each remuneration of the Key Managerial
Personnel against the performance of the Company;
The comparison of the remuneration of key managerial personnel is done
with the consolidated revenue (Rs. 39,049 million) and net profits (Rs.
11,923 million) of the Company for the fiscal 2015.
(Amounts in Rs. thousand)
Name of the key managerial
personnel (KMP) Remuneration in As % of As % of Net
fiscal 2015 Revenues profit
Mr. Chaitanya Kamat1,
Managing Director and CEO 41,542 0.11% 0.35%
Mr. Makarand Padalkar2,
Chief Financial Officer 9,047 0.02% 0.08%
Mr. Hoshi Bhagwagar3,
Company Secretary 1,522 NA NA
Mr. Jayant Joshi4,
Company Secretary 919 NA NA
1 Excludes an amount of Rs. 92,894 towards perquisite on ESOPs
exercised in FY 2014-15. Including this, the percentages above would
have been 0.34% and 1.13% respectively.
2 Excludes an amount of Rs. 32,717 towards perquisite on ESOPs
exercised in FY 2014-15. Including this, the percentages above would
have been 0.11% and 0.35% respectively.
3 For the period April 1, 2014 to June 6, 2014; Excludes an amount of
Rs. 429 towards perquisite on ESOPs exercised in FY 2014-15 and being
for part of the year, the percentages to revenue and net profit are not
relevant.
4 For the period September 29, 2014 to March 31, 2015 and being for
part of the year, the percentages to revenue and net profit are not
relevant.
(x) The key parameters for any variable component of remuneration
availed by the directors:
The Independent directors are entitled for such fees and remuneration
including commission as the Board or the Nomination and Remuneration
Committee may approve from time to time within the limits as approved
by the Members in the past and subject to such limits, prescribed under
the Companies Act, 2013.
Managing Director and CEO is entitled for Performance linked Bonus
which is Payable annually or at other intervals, as may be decided by
the Board of Directors of the Company ("the Board") or the Nomination
and Remuneration Committee of the Board as approved by the Members in
the past and subject to such limits, prescribed under the Companies
Act, 2013.
(xi) The ratio of the remuneration of the highest paid director to that
of the employees who are not directors but receive remuneration in
excess of the highest paid director during the year:
During the Financial year 2014-15, no employee received remuneration in
excess of the highest-paid director.
(xii) Affirmation that the remuneration is as per the remuneration
policy of the Company:
The Company affirms remuneration is as per the remuneration policy of
the Company.
The statement containing particulars of employees as required under
Section 197(12) of the Act read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, is
provided in a separate annexure forming part of this report. Further,
the report and the accounts are being sent to the members excluding the
aforesaid annexure. In terms of Section 136 of the Act, the said
annexure is open for inspection at the Registered Office of the
Company. Any shareholder interested in obtaining a copy of the same may
write to the Company Secretary.
Acknowledgements
Your Directors take this opportunity to thank the Company''s customers,
members, vendors and bankers for their continued support during the
year. Your Directors also wish to thank the Government of India and its
various agencies, Department of Electronics, the Software Technology
Parks - Bangalore, Chennai, Mumbai, and Pune, Special Economic Zone
authorities at SEEPZ and Cochin, the Customs and Excise Department,
Ministry of Commerce, Ministry of Finance, Ministry of External
Affairs, Ministry of Corporate Affairs, Department of
Telecommunication, the Reserve Bank of India, the State Governments of
Maharashtra, Karnataka, Haryana and Tamil Nadu and other local
Government Bodies, for their support and look forward to their
continued support in the future.
Your Directors also place on record their appreciation for the
excellent contribution made by employees of the Company through their
commitment, competence, co-operation and diligence with a view to
achieving consistent growth for the Company.
For and on behalf of the Board
S Venkatachalam
Chairman
DIN: 00257819
July 23, 2015
Mar 31, 2014
Dear Members,
The Directors present their report on the business and operations of
your Company along with the Annual Report and audited financial
statements for the financial year 2013-2014.
Financial highlights
As per Indian GAAP Consolidated financial statements:
(Amounts in Rs. million)
Particulars Year ended Year ended
March 31, 2014 March 31, 2013
Revenue from operations 37,413.21 34,739.99
Other income, net 6,736.48 4,595.44
Total income 44,149.69 39,335.43
Depreciation and amortization (716.72) (655.02)
Profit before tax 20,013.61 16,132.01
Tax expenses (6,420.42) (5,380.58)
Profit for the year 13,593.19 10,751.43
As per Indian GAAP Unconsolidated financial statements:
(Amounts in Rs. million)
Particulars Year ended Year ended
March 31, 2014 March 31, 2013
Revenue from operations 31,594.68 29,377.01
Other income, net 6,209.16 4,403.20
Total income 37,803.84 33,780.21
Depreciation and amortization (643.46) (586.08)
Profit before tax 17,308.05 15,047.60
Tax expenses (5,824.43) (4,755.00)
Profit for the year 11,483.62 10,292.60
Performance
On consolidated basis, your Company''s revenue stood at Rs. 37,413.21
million this year, an increase of 8% from Rs. 34,739.99 million as
compared to the previous financial year. The net income increased to Rs.
13,593.19 million this year, an increase of 26%.
On an unconsolidated basis, your Company''s revenue grew to Rs. 31,594.68
million during the financial year 2013-2014 from Rs. 29,377.01 million
last year. This represents a growth of 8%. The Company''s profit for the
financial year 2013-2014 has increased to Rs. 11,483.62 million, an
increase of 12% over the previous financial year.
A detailed analysis of the financials is given in the Management''s
discussion and analysis report that forms a part of this Directors''
report.
Dividend
The Board has decided to conserve the funds of the Company for organic
and inorganic growth opportunities. Accordingly, the Board has decided
not to declare a dividend for the financial year 2013-2014.
Transfer to reserves
The Company does not propose to transfer any amount to the General
Reserve out of the amount available for appropriation. An amount of Rs.
64,032.26 million is proposed to be retained in the Profit & Loss
Account.
Share capital
During the year, the Company allotted 78,656 equity shares of face
value of Rs. 5 each to its eligible employees, who exercised their
options under the prevailing Employee Stock Option Schemes of the
Company. As a result, as on March 31, 2014, the paid-up equity share
capital of the Company was Rs. 420,720,670 divided into 84,144,134 equity
shares of face value of Rs. 5 each.
Oracle''s holding in the Company
As on March 31, 2014, Oracle Global (Mauritius) Limited, the Promoter
held 63,051,197 equity shares constituting 74.93% of the equity capital
of the Company.
Directors
Mr. Robert K Weiler and Mr. William Corey West, Directors of the
Company, retire by rotation at the ensuing Annual General Meeting and
being eligible, offer themselves for re-appointment.
In accordance with the provisions of Sections 149, 152 read with
Schedule IV and any other applicable provisions of the Companies Act,
2013 and the Companies (Appointment and Qualification of Directors)
Rules, 2014 and Clause 49 of the Listing Agreement, Mr. Y M Kale, Mr. S
Venkatachalam and Mr. Richard Jackson, who were appointed as Directors
liable to retire by rotation are being appointed as Independent
Directors of the Company for a term of five consecutive years up to
March 31, 2019, not liable to retire by rotation.
As stipulated under Clause 49 of the Listing Agreement entered into
with the stock exchanges, brief resumes of the Directors proposed to be
appointed / re-appointed, the nature of their expertise in specific
functional areas and the names of companies in which they hold
directorships and membership / chairmanship of Board Committees, etc.
are provided in the Notice and / or Report on Corporate Governance
forming a part of the Annual Report.
The Board recommends to the Members the resolutions for re-appointment
of Mr. Robert K Weiler and Mr. William Corey West as Directors of the
Company and appointment of Mr. Y M Kale, Mr. S Venkatachalam and Mr.
Richard Jackson, as Independent Directors of the Company.
Infrastructure
The Company maintains optimal infrastructure for its operations. The
Company continues to upgrade its infrastructure to provide a productive
work environment to its staff.
Global alliances
Your Company pursued the previous years'' initiative to strengthen the
partner ecosystem as a way of enlarging the Company''s outreach to
customers across geographies and market segments. The programs launched
to enhance the product knowledge of partners'' resources and
implementation capabilities, resulted in the expansion of the partner
base capable of providing high quality services.
In addition to the programs, partner certifications launched on Oracle
FLEXCUBE Universal Banking and Oracle FLEXCUBE direct banking versions
12, further enhanced the demonstrability of partners'' FLEXCUBE
knowledge in the market. This has resulted in a vibrant partner
ecosystem that is well appreciated by customers.
Subsidiaries
Your Company has subsidiaries in Greece, India, Republic of Chile,
Republic of China, Republic of Mauritius, Singapore, The Netherlands
and USA for sales and marketing and customer support in these regions.
The Ministry of Corporate Affairs has issued a General Circular No.:
2/2011 dated February 8, 2011 granting a general exemption to the
companies stating that the provisions of Section 212 of the Companies
Act, 1956 ("Act") shall not apply in relation to subsidiaries of
companies subject to the company fulfilling certain conditions stated
in the said circular. The Company is in compliance with the conditions
stipulated by the Ministry of Corporate Affairs. Therefore, the
accounts and related reports of the subsidiary companies are not
attached to the Annual Report of the Company for the year ended March
31, 2014. The Company will make available the accounts and related
information of the subsidiary companies upon request by any member /
investor of the Company or its subsidiaries. Further, the accounts and
related information of the subsidiary companies will be kept open for
inspection by any Member, at the registered office of the Company and
at the registered office of the subsidiaries during office hours of the
Company / subsidiaries and the same will also be made available on the
website of the Company www.oracle.com/financialservices
Fixed deposits
During the financial year 2013-2014, the Company has not accepted any
fixed deposits within the meaning of Section 58A of the Companies Act,
1956, and as such, no amount of principal or interest was outstanding
as of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all
the corporate governance and related requirements as envisaged under
Clause 49 of the Listing Agreement entered with stock exchanges and
Section 292A of the Companies Act, 1956.
Your Company has constituted six committees consisting of Board Members
and other senior officials of the Company, namely, Audit Committee,
Compensation Committee, ESOP Allotment Committee, Transfer Committee,
Shareholders'' Grievances Committee and Business Responsibility
Committee. There is a separate report on Corporate Governance which
forms a part of this Annual Report. A certificate of Statutory
Auditors, M/s. S. R. Batliboi & Associates LLP, Chartered Accountants,
with regard to compliance of conditions of Corporate Governance as
stipulated in Clause 49 of the Listing Agreement is annexed herewith.
The Company is also supporting the Go Green initiative announced by the
Ministry of Corporate Affairs allowing paperless compliance.
A certificate from the Managing Director & CEO and Chief Financial
Officer of the Company confirming internal controls and checks
pertaining to financial statements, as also declaring that all Board
Members and senior managerial personnel have affirmed compliance with
the Code of Ethics and Business Conduct for the financial year ended
March 31, 2014, was placed before the Board of Directors and the Board
has noted the same. The said certificate is annexed to the Directors''
report.
A list of the committees of the Board, names of their Members, scope
and other related information are detailed in the Corporate Governance
Report.
Business Responsibility Report
Securities and Exchange Board of India (SEBI) through circular dated
August 13, 2012, has mandated the inclusion of Business Responsibility
Report ("BR Report") as part of the Annual Report for the top 100
listed entities based on their market capitalization on BSE Limited and
National Stock Exchange of India Limited as at March 31, 2012. The SEBI
circular is effective from financial year ending on or after December
31, 2012. In line with the press release and FAQ''s dated May 10, 2013
issued by SEBI, the BR Report which forms part of this Annual Report
has been hosted on the Company''s website
www.oracle.com/financialservices. Members who wish to obtain a printed
copy of the report, may write to the Company Secretary at the
Registered Office of the Company.
Employee Stock Option Plan ("ESOP")
The Members at their Annual General Meeting held on August 14, 2001
approved grant of ESOPs to the employees / directors of the Company and
its subsidiaries up to 7.5% of the issued and paid-up capital of the
Company from time to time. This said limit was enhanced and approved up
to 12.5% of the issued and paid-up capital of the Company from time to
time, by the Members at their Annual General Meeting held on August 18,
2011. This extended limit is an all inclusive limit applicable for
stock options granted in the past and in force and those that will be
granted by the Company under this authorization.
Pursuant to ESOP scheme approved by the Members of the Company on
August 14, 2001, the Board of Directors, on March 4, 2002 approved the
Employees Stock Option Scheme ("Scheme 2002") for issue of 4,753,600
options to the employees and directors of the Company and its
subsidiaries. According to the Scheme 2002, the Company has granted
4,548,920 options prior to the IPO and 619,000 options at various dates
after IPO (including the grants of options out of options forfeited
earlier).
On August 25, 2010, the Board of Directors approved the Employees Stock
Option Plan 2010 Scheme ("Scheme 2010") for issue of 618,000 options to
the employees and directors of the Company and its subsidiaries.
According to the Scheme 2010, the Company has granted 638,000 options
(including the grants of options out of options forfeited earlier).
Pursuant to ESOP scheme approved by the Members of the Company in their
meeting held on August 18, 2011, the Board of Directors approved the
Employees Stock Option Plan 2011 Scheme ("Scheme 2011") for issue of
5,100,000 options to the employees and directors of the Company and its
subsidiaries. According to the Scheme 2011, the Company has granted
1,935,500 options till March 31, 2014.
As per the above schemes, each of 20% of the total options granted will
vest to the eligible employees and directors on completion of 12, 24,
36, 48 and 60 months from the date of grant and is subject to continued
employment of the employee or directorship of the director with the
Company or its subsidiaries. Options have exercise period of 10 years
from the date of grant. The employee / directors pays the exercise
price upon exercise of option.
All stock options under the Employee Stock Option Plans were granted at
market price on the date of grant. Accordingly, we have calculated the
compensation cost arising on account of stock options granted using the
intrinsic value method. Hence, the disclosure in terms of Clause
12.1(n) of the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is
not applicable.
The fair value of stock options granted during the financial year
2013-2014 under ESOP 2011 Scheme was Rs. 1,712 (granted on September 13,
2013), calculated as per the Black Scholes valuation model as stated in
23b in the notes to accounts.
The Company has recovered Perquisite Tax on the options exercised by
the employees during the year.
Employee Stock Purchase Scheme ("ESPS")
The Company has the ESPS administered through a Trust ("the Trust") to
provide equity based incentives to key employees of the Company. As per
the scheme, the Trust can purchase shares of the Company from market
using the proceeds of loans obtained from the Company. Such shares are
allocated by the Trust to nominated employees at an exercise price,
which approximates the fair value on the date of the grant. The shares
vest in the employees over a period of five years and the employees can
purchase the shares from the Trust over a period of ten years based on
continued employment, until which, the Trust holds the shares for the
benefit of the employees. The employees are entitled to receive
dividends, bonus, etc., that may be declared by the Company from time
to time for the entire portion of shares held by the Trust on behalf of
the employees.
On the acceptance of the offer, the selected employee undertakes to
purchase the shares from the Trust within ten years from the date of
acceptance of the offer. In case an employee resigns from employment,
the rights relating to vested shares, which are eligible for exercise,
may be purchased by the employee by payment of the exercise price
whereas, the balance shares are forfeited in favor of the Trust. The
Trustees have the right of recourse against the employees for any
amounts that may remain unpaid on the shares accepted by them. As of
the balance sheet date, the Trust has repaid the entire loan obtained
from the Company on receipt of payments from employees against shares
exercised.
The Securities and Exchange Board of India (''''SEBI'''') has issued the
Employee Stock Option Scheme and Stock Purchase Guidelines, 1999
(''''SEBI guidelines''''), which are applicable to stock purchase schemes
for employees of all Indian listed companies. In accordance with these
guidelines, the excess of market price of the underlying equity shares
on the date of grant of the stock options over the exercise price of
the options is to be recognized in the books of account and amortized
over the vesting period. However, no compensation cost has been
recorded as the scheme terms are fixed and the exercise price equals
the market price of the underlying stock on the grant date.
A summary of the activities in the Company''s ESPS is as follows:
Human resources
Employees are our key assets and we continuously invest in them to
retain our competitive edge. We have created a healthy and productive
environment, together with a strong performance management system to
encourage excellence. Our HR practices are among the best in the
industry. Our people development initiative offers the best and latest
in technology, finance domain and develops contemporary leadership
attitude and practices in our employees.
Our total manpower at the end of March 2014 was 9,220 as compared to
9,969 as on March 2013 (including employees of the subsidiaries).
Corporate social responsibility
In May 2014, the Board has constituted the Corporate Social
Responsibility Committee (''''CSR Committee'''') comprising Directors Mr.
Chaitanya Kamat (Chairman of the Committee), Mr. S Venkatachalam and
Ms. Samantha Wellington, as its members.
The CSR Committee shall prepare and recommend to the Board the
Corporate Social Responsibility Policy ("CSR Policy"), recommend CSR
activities and the amount the Company should spend on CSR activities,
monitor the implementation of CSR Policy and activities from time to
time, ensure compliance with all matters relating to CSR and provide
regular updates to the Board.
Directors'' responsibility statement
As required under Section 217(2AA) of the Companies Act, 1956, for the
financial year ended on March 31, 2014, the Directors hereby confirm
that:
i. In preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and 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 at the end of the financial year and of the profit of
the Company for that period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
iv. The Directors have prepared the annual accounts on a ''going
concern'' basis.
Auditors
The Members may note that, M/s. S. R. Batliboi & Associates LLP,
Chartered Accountants (ICAI Firm Registration no. 101049W), were
appointed as the Statutory Auditors of the Company by the Members at
their Twenty Fourth Annual General Meeting held on August 14, 2013 to
hold office till the conclusion of the ensuing Annual General Meeting.
They have confirmed their eligibility and willingness to accept office
as the Statutory Auditors and also confirmed that they have not been
disqualified to be appointed as the Statutory Auditors at the ensuing
Annual General Meeting.
Pursuant to the provisions of Section 139 of the Companies Act, 2013
and the Rules framed thereunder, it is proposed to appoint M/s. S. R.
Batliboi & Associates LLP, Chartered Accountants (ICAI Firm
Registration no. 101049W), as the Statutory Auditors of the Company
from the conclusion of ensuing Annual General Meeting till the
conclusion of the Annual General Meeting to be held in the year 2017,
subject to ratification of the appointment by the Members at every
Annual General Meeting held after this Annual General Meeting.
Auditors'' Report
With regard to the Auditors'' comment in the CARO report concerning
delays in payment of a few tax payments, e.g., Foreign Income Taxes,
Foreign Value Added Tax and Foreign Withholding Tax, the Company would
like to state the following:
i. The Company has engaged international tax experts in the
interpretation of laws and regulations relating to corporate taxes and
VAT in foreign countries. The Company has however, been continuously
evaluating and accruing towards any material tax exposures in the books
taking a conservative approach and payments are made based on the
advice of the tax experts.
ii. The Company continually assesses Payroll Tax implications in
various jurisdictions outside India on salaries and travel related
reimbursements paid to its employees posted therein and accordingly
makes accruals in the books. The Company is in the process of filing
the returns for Payroll Tax in such jurisdiction for which the
provision is already made in the books. As per the local laws of most
host countries, the tax is payable by the employee, however in a few
countries tax payment is a responsibility of the employer, which
amounts to Rs. 23.57 million. The Company and the employees ensure tax
compliance in such countries as advised by the tax consultants.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
The particulars as prescribed under sub-section (1)(e) of Section 217
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, the
relevant data pertaining to conservation of energy, technology
absorption and foreign exchange earnings and outgo are furnished
hereunder:
i. Conservation of energy and technology absorption:
The Company regularly strives to utilize newer technologies with the
view to conserve the energy and create an environmentally friendly work
environment. The initiatives taken by the Company are summarized below:
Desk-top / workstation refresh: During the year, we carried out a major
refresh of the laptops and desktops across the Company to deploy modern
and energy efficient workstations. This has brought about significant
savings in power, strengthened IT Security architecture.
Communication Infrastructure: During the year, we further expanded the
communication infrastructure with the objective to provide a seamless
multi-channel communication to all our employees by significantly
enhancing the video calling options. Apart from improving productivity,
this helps in reducing carbon footprint by reducing the travel.
Virtualization: Virtualization has been further ingrained into the OFSS
IT architecture, wherein the OFSS computing environment is almost
completely virtualized. This has lead to better performance, better
utilization of resources (i.e., space and power), increased operating
efficiencies and leads to a greener work environment.
Energy Conservation: The Company has always been promoting usage of
energy efficient devices. During the year, we significantly upgraded
the lighting in the office areas with highly energy efficient devices
leading to energy saving.
Green Initiatives: In line with our corporate philosophy, we have a
special focus on green development of open areas around our offices.
During the year, we significantly developed the open areas around our
Pune offices by natural landscaping with water aeration using recycled
water.
ii. Foreign exchange earnings and outgo:
(Amounts in Rs. million)
Foreign Exchange Earnings 30,232.59
(excluding reimbursement of
travelling expenses)
Foreign Exchange Outgo 8,541.54
(including capital goods &
other expenditure)
Activities relating to exports; initiatives taken to increase exports;
development of new export markets for products and services; and export
plans
Your Company has established an extensive global presence across
leading markets through its sales and marketing network. We will
continue to focus on tapping various potential markets available
globally. Experienced sales and marketing specialists focus on building
strong international business presence to develop new export markets
for your Company.
Prospects
Banks around the world are witnessing new competition emerge as
regulators in many countries, for example in India, China, UK, have
started issuing new banking licenses to create or expand services of
existing non-banking financial services companies. Non-traditional
players with large consumer franchise such as retail and telco
companies are launching new products and services in financial services
business.
Financial institutions since the market events of 2008 face significant
challenges on the regulatory front. In 2013, 30 directives were
published and these impact - capital, liquidity, systemic risk,
supervision, governance, remuneration, customer treatments, traded
markets, accounting, crime and taxation at a financial institution.
Financial institutions now prepare to serve customers new and existing
that have a very different expectation of "service" in the digitized
world. The technology landscape for a financial institution is
undergoing a sea change with increasing adoption of Social, Mobile, Big
Data and the Cloud in the both segments i.e. consumer and enterprise.
Your Company has focused on delivering solutions to financial
institutions that face unprecedented challenges, as well as
opportunities. We enable financial institutions deliver a
differentiated customer experience driven by deep customer insight,
that is seamlessly available at any time and any place and on any
channel. We provide the ability to evolve a sustainable framework for
securely and efficiently keeping up with ever increasing regulations,
and offering a resilient, scalable and cost effective business
capability for servicing the customer needs.
The continuous planned investment in the applications and your
Company''s access to Oracle''s technology provides a competitive edge in
the address the opportunities in the market. Your Company''s
applications are tested for performance on Oracle platforms to ensure
best-in-class results to the banks when deployed together. Your Company
is uniquely positioned to address the emerging requirements at
Financial Institutions with the changes in the technology landscape and
consumer expectations.
Employee particulars
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 for the
financial year ended on March 31, 2014 forms part of this Report. As
per the provisions of Section 219(1)(b)(iv) of the Act, the Directors''
Report and the Accounts are being sent to the Members excluding the
statement giving particulars of employees under Section 217(2A) of the
Act.
Members who wish to obtain a copy of the statement, may write to the
Company Secretary at the Registered Office of the Company.
Acknowledgements
Your Directors take this opportunity to thank the Company''s customers,
members, vendors and bankers for their continued support during the
year. Your Directors also wish to thank the Government of India and its
various agencies, Department of Electronics, the Software Technology
Parks - Bangalore, Chennai, Mumbai, NOIDA and Pune, Special Economic
Zone authorities at SEEPZ and Cochin, the Customs and Excise
Department, Ministry of Commerce, Ministry of Finance, Ministry of
External Affairs, Ministry of Corporate Affairs, Department of
Telecommunication, the Reserve Bank of India, the State Governments of
Maharashtra, Karnataka, Haryana and Tamil Nadu and other local
Government Bodies, for their support and look forward to their
continued support in the future.
Your Directors also place on record their appreciation for the
excellent contribution made by employees of the Company through their
commitment, competence, co-operation and diligence with a view to
achieving consistent growth for the Company.
For and on behalf of the Board
S Venkatachalam
Chairman
July 24, 2014
Mar 31, 2013
Dear Members,
The Directors present their report on the business and operations of
your Company along with the Annual Report and audited financial
statements for the financial year 2012-2013.
Financial highlights
As per Indian GAAP Consolidated financial statements:
(Amounts in Rs. million)
Particulars Year ended Year ended
March 31,
2013 March 31,
2012
Revenue from operations 34,739.99 31,466.76
Other income, net 4,595.44 4,217.49
Total income 39,335.43 35,684.25
Depreciation and amortization (655.02) (466.17)
Profit before exceptional item and tax 16,132.01 14,862.34
Exceptional item - (693.32)
Profit before tax 16,132.01 14,169.02
Tax expenses (5,380.58) (5,076.29)
Profit for the year 10,751.43 9,092.73
As per Indian GAAP Unconsolidated financial statements:
(Amounts in Rs. million)
Particulars Year ended Year ended
March 31,
2013 March 31,
2012
Revenue from operations 29,377.01 26,058.54
Other income, net 4,403.20 3,750.34
Total income 33,780.21 29,808.88
Depreciation and amortization (586.08) (401.19)
Profit before exceptional items and tax 15,047.60 13,243.95
Exceptional items, net - 2,414.98
Profit before tax 15,047.60 15,658.93
Tax expenses (4,755.00) (4,766.60)
Profit for the year 10,292.60 10,892.33
Performance
On consolidated basis, your Company''s revenue, stood at Rs. 34,740
million this year, an increase of 10% from Rs. 31,467 million as
compared to the previous financial year. The net income increased to
Rs. 10,751 million this year, an increase of 18%.
On an unconsolidated basis, your Company''s revenue grew to Rs. 29,377
million during the financial year 2012-2013 from Rs. 26,058 million
last year. This represents a growth of 13%. The Company''s profit for
the financial year 2012-2013 has decreased to Rs. 10,293 million, a
decrease of 5.5% over the previous financial year.
A detailed analysis of the financials is given in the Management''s
discussion and analysis report that forms a part of this Directors''
report.
Dividend
The Board has decided to conserve the funds of the Company for organic
and inorganic growth opportunities. Accordingly, the Board has decided
not to declare a dividend for the financial year 2012-2013.
Transfer to reserves
The Company does not propose to transfer any amount to the General
Reserve out of the amount available for appropriation. An amount of Rs.
52,548.64 million is proposed to be retained in the Profit & Loss
Account.
Share capital
During the year, the Company allotted 91,721 equity shares of face
value of Rs. 5/- each to its eligible employees, who exercised their
options under the prevailing Employee Stock Option Schemes of the
Company. As a result, as on March 31, 2013, the paid-up equity share
capital of the Company was Rs. 420,327,390/- divided into 84,065,478
equity shares of face value of Rs. 5/- each.
Oracle''s holding in the Company
As on March 31, 2013, Oracle Global (Mauritius) Limited, the Promoter
held 67,481,698 equity shares constituting 80.27% of the equity capital
of the Company.
With reference to SEBI Guidelines including Clause 40A of the Listing
Agreement on Minimum Public Shareholding of 25%, Oracle Global
(Mauritius) Ltd. ("OGML"), the Promoter of the Company, had come
out with an "Offer for Sale through the Stock Exchange Mechanism"
on May 22, 2013 for reducing its holding from 80.27% to 75% as
required. Pursuant to the said offer for sale, the shareholding of OGML
as on May 24, 2013 was reduced to 75%. The current shareholding of OGML
is 74.99% and the Company is in compliance with the SEBI Guidelines
including Clause 40A of the Listing Agreement which requires a Minimum
Public Shareholding of 25% of the paid-up capital.
Directors
Mr. Derek H Williams and Mr. Chaitanya Kamat, Directors of the Company,
retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment.
The Board appointed Mr. Richard Jackson, Ms. Samantha Wellington and
Mr. Harinderjit Singh as Additional Directors with effect from December
12, 2012, April 10, 2013 and July 10, 2013 respectively. They hold
office up to the date of the ensuing Annual General Meeting. The
Company has received Notices in writing from Members, pursuant to
Section 257 of the Companies Act, 1956, proposing the candidature of
Mr. Richard Jackson, Ms. Samantha Wellington and Mr. Harinderjit Singh
for the office of a Director.
As stipulated under Clause 49 of the Listing Agreement entered into
with the stock exchanges, brief resumes of the Directors proposed to be
appointed/re-appointed, the nature of their expertise in specific
functional areas and the names of companies in which they hold
directorships and membership/chairmanship of Board Committees, etc. are
provided in the Notice and/or Report on Corporate Governance forming a
part of the Annual Report.
The Board recommends to the Members the resolutions for re-appointment
of Mr. Derek H Williams and Mr. Chaitanya Kamat as Directors of the
Company. The Board also recommends the appointment of Mr. Richard
Jackson, Ms. Samantha Wellington and Mr. Harinderjit Singh as
Directors.
Mr. William T Comfort, Jr., resigned as a Director and Chairman of the
Company with effect from May 11, 2012. The Board appointed Mr. S
Venkatachalam as the Chairman of the Board with effect from May 12,
2012. Mr. Frank Brienzi resigned as a Director of the Company with
effect from July 2, 2013. The Board placed on record its appreciation
of the services rendered by Mr. William T Comfort, Jr., and Mr. Frank
Brienzi during their tenure as Directors of the Company.
Infrastructure
The Company maintains optimal infrastructure for its operations. The
Company made significant addition to the communication infrastructure
in the year to facilitate remote working and team collaboration.
Global alliances
Your Company furthered its commitment to expand its footprint through
partners. In order to provide a specific focus, a dedicated group for
consulting partners was established. This group nurtures a robust
partner ecosystem and develops strategic partners with sound delivery
capabilities in the consulting services around the products.
Specific programs have been designed to build the capability of the
partners to deliver high quality implementation services. The programs
support partners and end-customers through all stages; from identifying
the right solution for the customers'' needs, progressing through the
various stages of implementation cycle, and even after go-live.
Subsidiaries
Your Company has subsidiaries in Greece, India, Republic of Chile,
Republic of China, Republic of Mauritius, Singapore, The Netherlands
and USA for sales and marketing and customer support in these regions.
The Ministry of Corporate Affairs has issued a General Circular No.:
2/2011 dated February 8, 2011 granting a general exemption to the
companies stating that the provisions of Section 212 of the Companies
Act, 1956 ("Act") shall not apply in relation to subsidiaries of
companies subject to the company fulfilling certain conditions stated
in the said circular. The Company is in compliance with the conditions
stipulated by the Ministry of Corporate Affairs. Therefore, the
accounts and related reports of the subsidiary companies are not
attached to the Annual Report of the Company for the year ended March
31, 2013. The Company will make available the accounts and related
information of the subsidiary companies upon request by any
member/investor of the Company or its subsidiaries. Further, the
accounts and related information of the subsidiary companies will be
kept open for inspection by any Member, at the registered office of the
Company and at the registered office of the subsidiaries during office
hours of the Company/subsidiaries and the same will also be made
available on the website of the Company
www.oracle.com/financialservices.
Fixed deposits
During the financial year 2012-2013, the Company has not accepted any
fixed deposits within the meaning of Section 58A of the Companies Act,
1956, and as such, no amount of principal or interest was outstanding
as of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all
the corporate governance and related requirements as envisaged under
Clause 49 of the Listing Agreement entered with stock exchanges and
Section 292A of the Companies Act, 1956, except that there was a delay
of 34 days beyond the specified time limit provided under clause
49{T)(C)(iy) in appointing a new Independent Director on the Board,
after the resignation of an existing Independent Director.
Your Company has constituted five committees consisting of Board
Members and other senior officials of the Company, namely, Audit
Committee, Compensation Committee, ESOP Allotment Committee, Transfer
Committee and Shareholders'' Grievances Committee. There is a separate
report on Corporate Governance which forms a part of this Annual
Report. A certificate of Statutory Auditors, M/s. S. R. Batliboi &
Associates LLP, Chartered Accountants, with regard to compliance of
conditions of Corporate Governance as stipulated in Clause 49 of the
Listing Agreement is annexed herewith. The Company is also supporting
the Go Green initiative announced by the Ministry of Corporate Affairs
allowing paperless compliance.
A certificate from the Managing Director & CEO and Chief Financial
Officer of the Company confirming internal controls and checks
pertaining to financial statements, as also declaring that all Board
Members and senior managerial personnel have affirmed compliance with
the Code of Ethics and Business Conduct for the financial year ended
March 31, 2013, was placed before the Board of Directors and the Board
has noted the same. The said certificate is annexed to the Directors''
report.
A list of the committees of the Board, names of their Members, scope
and other related information are detailed in the Corporate Governance
Report.
Business Responsibility Report
Securities and Exchange Board of India (SEBI) through circular dated
August 13, 2012, has mandated the inclusion of Business Responsibility
Report ("BR Report") as part of the Annual Report for the top 100
listed entities based on their market capitalization on BSE Limited and
National Stock Exchange of India Limited as at March 31, 2012. The SEBI
circular is effective from financial year ending on or after December
31, 2012. In line with the press release and FAQ''s dated May 10, 2013
issued by SEBI, the BR Report which forms part of this Annual Report
has been hosted on the Company''s website
www.oracle.com/financialservices. Members who wish to obtain a printed
copy of the report, may write to the Company Secretary at the
Registered Office of the Company.
Employee Stock Option Plan (''ESOP'')
The Members at their Annual General Meeting held on August 14, 2001
approved grant of ESOPs to the employees/directors of the Company and
its subsidiaries up to 7.5% of the issued and paid-up capital of the
Company from time to time. This said limit was enhanced and approved up
to 12.5% of the issued and paid-up capital of the Company from time to
time, by the Members at their Annual General Meeting held on August 18,
2011. This extended limit is an all inclusive limit applicable for
stock options granted in the past and in force and those that will be
granted by the Company under this authorization.
Pursuant to ESOP scheme approved by the Members of the Company on
August 14, 2001, the Board of Directors, on March 4, 2002 approved the
Employees Stock Option Scheme ("Scheme 2002") for issue of
4,753,600 options to the employees and directors of the Company and its
subsidiaries. According to the Scheme 2002, the Company has granted
4,548,920 options prior to the IPO and 619,000 options at various dates
after IPO (including the grants of options out of options forfeited
earlier).
On August 25, 2010, the Board of Directors approved the Employees Stock
Option Plan 2010 Scheme ("Scheme 2010") for issue of 618,000
options to the employees and directors of the Company and its
subsidiaries. According to the Scheme 2010, the Company has granted
638,000 options (including the grants of options out of options
forfeited earlier).
Pursuant to ESOP scheme approved by the Members of the Company in their
meeting held on August 18, 2011, the Board of Directors approved the
Employees Stock Option Plan 2011 Scheme ("Scheme 2011") for issue
of 5,100,000 options to the employees and directors of the Company and
its subsidiaries. According to the Scheme 2011, the Company has granted
1,285,500 options till March 31, 2013.
As per the above schemes, each of 20% of the total options granted will
vest to the eligible employees and directors on completion of 12, 24,
36, 48 and 60 months from the date of grant and is subject to continued
employment of the employee or directorship of the director with the
Company or its subsidiaries. Options have exercise period of 10 years
from the date of grant. The employee/director pays the exercise price
upon exercise of option.
The details of the options granted under the ESOP 2002, ESOP 2010 and
ESOP 2011 Schemes to eligible employees/directors from time to time are
given below:
Particulars Scheme Total
ESOP 2002 ESOP 2010 ESOP 2011
Number of options
granted till
March 31, 2013 5,167,920 638,000 1,285,500 7,091,420
Number of options
lapsed* 614,725 245,883 89,950 950,558
Number of options
exercised 4,439,915 36,254 24,215 4,500,384
Total number of
options in force
as on March 31, 2013 113,280 355,863 1,171,335 1,640,478
Pricing Formula At the market price as on the date of grant
Variation of terms
of options None None None
* includes number of options forfeited.
The details of options granted to Directors and Senior Managerial
Personnel under ESOP 2011 Scheme during the financial year ended March
31, 2013 are as follows:
Particulars Number of Options
i. Directors:
Mr. Chaitanya Kamat 100,000
Senior Managerial Personnel:
Mr. Atul Kumar Gupta 7,500
Mr. Avadhut Ketkar 3,000
Mr. Edwin N Moses 15,000
Mr. Hoshi D Bhagwagar 1,000
Mr. Kishore Kapoor 12,500
Mr. Makarand Padalkar 40,000
Mr. Manmath Kulkarni 17,250
Mr. Vikram Gupta 20,000
ii. Any other employee, who receives grant in any
one year of option amounting to 5% or more of option
granted during the year
Mr. Chaitanya Kamat 100,000
Mr. Makarand Padalkar 40,000
iii. Identified employees who were granted option,
during any one year, equal to or exceeding 1% of the Nil
issued capital (excluding outstanding warrants and
conversions) of the Company at the time of grant
iv. Diluted Earnings Per Share (EPS) pursuant to the
issue of shares on exercise of option calculated in Rs. 121.96
accordance with Accounting Standard 20 ''Earnings
Per Share'' issued by the Institute of Chartered
Accountants of India
Had compensation cost for the Company''s ESOP been determined based on
fair value at the grant dates, Company''s net profit and earnings per
share would have been reduced to proforma amounts indicated below:
(Amounts in Rs. million, except per share data)
Particulars Year ended March 31, 2013
Profit as reported 10,292.60
Add: Employee stock compensation under intrinsic
value method Nil
Less: Employee stock compensation under fair value
method (385.97)
Proforma profit 9,906.63
Earnings Per Share Basic
As reported 122.52
Proforma 117.93
Diluted
As reported 121.96
Proforma 117.59
All stock options under the Employee Stock Option Plans were granted at
market price on the date of grant. Accordingly, we have calculated the
compensation cost arising on account of stock options granted using the
intrinsic value method. Hence, the disclosure in terms of Clause
12.1(n) of the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is
not applicable.
A summary of the activities in the Company''s ESOP 2002, ESOP 2010 and
ESOP 2011 Schemes are as follows:
Particulars ESOP 2002 ESOP 2010
Shares
arising Weighted Shares
arising Weighted
from
options average from
options average
exercise
price exercise
price
(Rs.) (Rs.)
Outstanding at
beginning of year 145,212 1,721 428,344 2,064
Granted - - - -
Exercised (31,932) 1,290 (35,574) 2,050
Forfeited - - (36,907) 2,050
Outstanding at end
of the year 113,280 1,843 355,863 2,066
Vested options 77,280 121,853
Unvested options 36,000 234,010
Particulars Year ended March 31, 2013
ESOP 2011
Shares arising Weighted
from options average exercise
price (Rs.)
Outstanding at beginning of year 617,500 1,937
Granted 645,000 3,131
Exercised (24,215) 1,964
Forfeited (66,950) 1,984
Outstanding at end of the year 1,171,335 2,591
Vested options 88,935
Unvested Options 1,082,400
The weighted average share price for the year over which stock options
were exercised was Rs. 2,859. Money realized by exercise of options
during the financial year 2012-2013 was Rs. 161,669,419.
The details of options unvested and options vested and exercisable as
on March 31, 2013 are as follows:
Exercise
price Number of
options Weighted
average Weighted
average
(Rs.) exercise
price remaining
contractual
(Rs.) life (Years)
Options unvested 1,930 408,400 1,930 8.7
2,032 32,000 2,032 8.7
2.050 218,010 2,050 7.4
2.333 36,000 2,333 7.6
2.342 16,000 2,342 8.3
3,127 627,000 3,127 9.9
3,320 15,000 3,320 9.8
Options vested and
exercisable 1,291 53,280 1,291 3.1
1,930 88,935 1,930 8.7
2.050 117,853 2,050 7.4
2.333 24,000 2,333 7.6
2.342 4,000 2,342 8.3
1,640,478 2,426 8.7
The fair value of stock options granted during the financial year
2012-2013 under ESOP 2011 Scheme was Rs. 1,912 (granted on January 14,
2013) and Rs. 1,762 (granted on February 5, 2013), calculated as per
the Black Scholes valuation model as stated in 24b in the notes to
accounts.
The Company has recovered Perquisite Tax on the options exercised by
the employees during the year.
Employee Stock Purchase Scheme (''ESPS'')
The Company has the ESPS administered through a Trust ("the Trust")
to provide equity based incentives to key employees of the Company. As
per the scheme, the Trust can purchase shares of the Company from
market using the proceeds of loans obtained from the Company. Such
shares are allocated by the Trust to nominated employees at an exercise
price, which approximates the fair value on the date of the grant. The
shares vest in the employees over a period of five years and the
employees can purchase the shares from the Trust over a period of ten
years based on continued employment, until which, the Trust holds the
shares for the benefit of the employees. The employees are entitled to
receive dividends, bonus, etc., that may be declared by the Company
from time to time for the entire portion of shares held by the Trust on
behalf of the employees.
On the acceptance of the offer, the selected employee undertakes to
purchase the shares from the Trust within ten years from the date of
acceptance of the offer. In case an employee resigns from employment,
the rights relating to vested shares, which are eligible for exercise,
may be purchased by the employee by payment of the exercise price
whereas, the balance shares are forfeited in favor of the Trust. The
Trustees have the right of recourse against the employees for any
amounts that may remain unpaid on the shares accepted by them. As of
the balance sheet date, the Trust has repaid the entire loan obtained
from the Company on receipt of payments from employees against shares
exercised.
A summary of the activities in the Company''s ESPS is as follows:
(Number of shares)
Particulars Year ended Year ended
March 31,
2013 March 31,
2012
Opening balance of unallocated shares 166,142 166,142
Shares forfeited during the year - -
Closing balance of unallocated shares 166,142 166,142
Opening balance of allocated shares 18,817 29,081
Shares exercised during the year (16,067) (10,264)
Shares forfeited during the year - -
Closing balance of allocated shares 2,750 18,817
Shares eligible for exercise 2,750 18,817
Shares not eligible for exercise - -
Total allocated shares 2,750 18,817
Human resources
Employees are our key assets and we continuously invest in them to
retain our competitive edge. We have created a healthy and productive
environment, together with a strong performance management system to
encourage excellence. Our HR practices are among the best in the
industry. Our people development initiative offers the best and latest
in technology, finance domain and develops contemporary leadership
attitude and practices in our employees.
Our total manpower at the end of March 2013 was 9,969 as compared to
9,682 as on March 2012 (including employees of subsidiaries).
Directors'' responsibility statement
As required under Section 217(2AA) of the Companies Act, 1956, for the
financial year ended on March 31, 2013, the Directors hereby confirm
that:
i. In preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and 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 at the end of the financial year and of the profit of
the Company for that period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
iv. The Directors have prepared the annual accounts on a ''going
concern'' basis.
Auditors
The Members may note that, S.R. Batliboi & Associates, Chartered
Accountants (Registration no. 101049W), were appointed as the Statutory
Auditors of the Company by the Members at their Twenty Third Annual
General Meeting held on August 17, 2012 to hold office till the
conclusion of the ensuing Annual General Meeting. They have vide letter
dated April 1, 2013 intimated the Company about the change in their
name pursuant to their conversion as a Limited Liability Partnership.
Consequently, their name is changed from "S.R. Batliboi &
Associates" to "S.R. Batliboi & Associates LLP" with effect from
April 1, 2013. This change of name does not affect their rights and
obligations as the Statutory Auditors of the Company. Further, they
have confirmed their eligibility and willingness to accept office, if
appointed as the Statutory Auditors at the ensuing Annual General
Meeting.
Auditors'' Report
With regard to the Auditors'' comment in the CARO report concerning
delays in payment of a few tax payments, e.g., Foreign Income Taxes,
Foreign Value Added Tax and Foreign Withholding Tax, the Company would
like to state the following:
i. The Company has engaged international tax experts in the
interpretation of laws and regulations relating to corporate taxes and
VAT in foreign countries. The Company has however, been continuously
evaluating and accruing towards any material tax exposures in the books
taking a conservative approach and payments are made based on the
advice of the tax experts.
ii. The Company continually assesses Payroll Tax implications in
various jurisdictions outside India on salaries and travel related
reimbursements paid to its employees posted therein and accordingly
makes accruals in the books. The Company is in the process of filing
the returns for Payroll Tax in such jurisdiction for which the
provision is already made in the books. As per the local laws of most
host countries, the tax is payable by the employee, however in a few
countries tax payment is a responsibility of the employer, which
amounts to Rs. 3.94 crore. The Company and the employees ensure tax
compliance in such countries as advised by the tax consultants.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
The particulars as prescribed under sub-section (1)(e) of Section 217
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, the
relevant data pertaining to conservation of energy, technology
absorption and foreign exchange earnings and outgo are furnished
hereunder:
i. Conservation of energy and technology absorption:
The Company regularly strives to utilize newer technologies with the
view to conserve the energy and create an environmentally friendly work
environment. The initiatives taken by the Company are summarized below:
Data Center Consolidation: During the year, we consolidated and
modernized our data centers. This has brought about significant
business benefits such as space and power conservation, strengthened IT
Security architecture and a reduced network complexity.
Disaster recovery: A significant technology overhaul for the backup and
restoration technology was undertaken during the year. This has
significantly reduced the backup media requirement for a greener work
environment. This eventually leads to cost benefits due to decrease in
efforts, lesser number of tapes required for the same back up, longer
tape life, as well as lower probability of human error.
VOIP: During the year, we carried out a complete upgrade of the
communication infrastructure with the objective to provide a seamless
multi-channel communication to all our employees. The new
infrastructure supports a mobile office that enables employees to work
flexibly out of any location. This initiate has resulted in significant
direct as well as indirect cost benefits to the business. This has also
been beneficial in reducing carbon footprint by reducing the travel
cost.
Virtualization: Virtualization has been further ingrained into the OFSS
IT architecture, wherein the OFSS computing environment is almost
completely virtualized. This has lead to better performance, better
utilization of resources (i.e., space and power), increased operating
efficiencies and leads to a greener work environment.
Asset disposal: Disposal of End of Life equipment has been centralized
and standardized uniformly across the Company and follows the best
global practices. Secure means of disposal have been adopted which
helps secure e-waste as per the government guidelines as well as
ensures complete cleansing of any kind of confidential information.
Technology advancements supplemented by enhanced operating efficiencies
result in synchronized benefits to the organization, blending in cost
efficiency along with environment sustenance.
ii. Foreign exchange earnings and outgo:
(Amounts in Rs. million)
Foreign Exchange Earnings 28,094.87
(excluding reimbursement of travelling expenses)
Foreign Exchange Outgo 8,533.71
(including capital goods & other expenditure)
Activities relating to exports; initiatives taken to increase exports;
development of new export markets for products and services; and export
plans:
Your Company has established an extensive global presence across
leading markets through its sales and marketing network. We will
continue to focus on tapping various potential markets available
globally. Experienced sales and marketing specialists focus on building
strong international business presence to develop new export markets
for your Company.
Prospects
The prolonged period of slower growth in the global economy has
impacted banking operations. Banks are coping and realigning to earn,
sustain and grow their businesses. The increasing influence of new
consumer and banking regulations in the past 24 months across countries
continues to add to the existing challenges banks face.
Oracle is simplifying IT by engineering hardware and software to work
together-from servers and storage to the database and middleware to
applications. The idea behind Oracle''s integrated technology stack is
that the whole is greater than the sum of the parts. There are
best-of-breed products throughout the stack, and every product and
every layer of the technology stack are designed and engineered to work
together. That''s not all. Integrated solutions engineered for
specific industries make delivering IT simpler. In the past years,
your Company invested to build the Oracle Banking Platform to leverage
this vision. The general availability of Oracle Banking Platform for
banks to deploy was announced in September 2012. The new offering
already has gained the first two deployments in Asia. Oracle Banking
Platform strengthens the portfolio and capability of your Company to
address replacements at Tier 1 Retail Banking Institutions in Europe,
North America and Asia.
Your Company in the last fiscal year stayed focused to deliver
solutions to banks in countries that faced significant challenges. The
Oracle Financial Analytical Applications Suite has helped your Company
deliver and engage in multi-year transformation projects at Tier 1
banks. The application suite now supports new regulations for FATCA,
Capital Adequacy and Stress Testing. Your Company along with Oracle is
well placed to address the opportunity at banks by providing the
application that is complete and optimized on Oracle Hardware along
with the necessary services.
Your Company announced the availability of Oracle FLEXCUBE 12.0 during
the year. This release enables more personalized and convenient service
to customers across all channels. It also offers a harmonized
infrastructure and open development environment that allows more
flexible deployment options and upgrade paths. With this release, your
Company made a strategic shift including new versions Oracle FLEXCUBE
Private Banking and Oracle FLEXCUBE Direct Banking along with Oracle
FLEXCUBE 12.0. The past year we did see an increasing number of
partners who have invested to train, certify and provide services
around Oracle FLEXCUBE 12.0 to banks that deploy. Oracle FLEXCUBE
customers have leveraged the extreme performance on Oracle Exadata and
Oracle Exalogic for their operations.
Your Company''s products continue to win accolades from the
international analyst community for its leadership and execution
capability. Banking Technology named Oracle FLEXCUBE the Best Core
Banking Product for 2012. Banks who have deployed your Company''s
products have won the recognition too. EcoBank won the Euromoney Award
for the Best Bank in Africa. Mashreq Bank''s FLEXCUBE deployment won
the Asian Banker Technology Award for the Best Core Banking
Implementation in the Middle East.
Consulting Services provided by your Company are very valued by the
banks. This continues to play a key and vital role in your Company''s
annual revenue and profitability each year. Support services for our
applications continue to grow and banks see this service as vital for
operations at their banks.
Employee particulars
Information as per Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 for the
financial year ended on March 31, 2013 forms part of this Report. As
per the provisions of Section 219(1)(b)(iv) of the Act, the
Directors'' Report and the Accounts are being sent to the Members
excluding the statement giving particulars of employees under Section
217(2A) of the Act.
Members who wish to obtain a copy of the statement, may write to the
Company Secretary at the Registered Office of the Company.
Acknowledgements
Your Directors take this opportunity to thank the Company''s
customers, members, vendors and bankers for their continued support
during the year. Your Directors also wish to thank the Government of
India and its various agencies, Department of Electronics, the Software
Technology Parks - Bangalore, Chennai, Mumbai, NOIDA and Pune, Special
Economic Zone authorities at SEEPZ and Cochin, the Customs and Excise
Department, Ministry of Commerce, Ministry of Finance, Ministry of
External Affairs, Ministry of Corporate Affairs, Department of
Telecommunication, the Reserve Bank of India, the State Governments of
Maharashtra, Karnataka, Haryana and Tamil Nadu and other local
Government Bodies, for their support and look forward to their
continued support in the future.
Your Directors also place on record their appreciation for the
excellent contribution made by employees of the Company through their
commitment, competence, co-operation and diligence with a view to
achieving consistent growth for the Company.
For and on behalf of the Board
S Venkatachalam
Chairman
July 11, 2013
Mar 31, 2012
The Directors present their report on the business and operations of
your Company along with the annual report and audited financial
statements for the financial year 2011-2012.
Financial highlights
As per Indian GAAP Consolidated financial statements:
(Amounts in Rs million)
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Revenue from operations 31,466.76 29,969.32
Other income, net 4,217.49 1,668.26
Total income 35,684.25 31,637.58
Depreciation and amortization (466.17) (408.17)
Profit before exceptional
item and tax 14,862.34 12,602.08
Exceptional item (693.32) (122.07)
Profit before tax 14,169.02 12,480.01
Tax expenses (5,076.29) (1,370.12)
Profit for the year 9,092.73 11,109.89
As per Indian GAAP Unconsolidated financial statements:
(Amounts in Rs million)
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Revenue from operations 26,058.54 23,605.06
Other income, net 3,750.34 1,403.02
Total income 29,808.88 25,008.08
Depreciation and amortization (401.19) (336.49)
Profit before exceptional
items and tax 13,243.95 10,465.95
Exceptional items, net 2,414.98 (122.07)
Profit before tax 15,658.93 10,343.88
Tax expenses (4,766.60) (664.09)
Profit for the year 10,892.33 9,679.79
Performance
On consolidated basis, your CompanyÃs revenue, stood at Rs 31,467
million this year, an increase of 5% from Rs 29,969 million as compared
to the previous financial year. The net income decreased to Rs 9,093
million this year, a decrease of 18.15% primarily on account of
increase in tax expenses due to non availability of exemption u/s 10A
of the Income Tax Act, 1961 from the financial year 2011 Ã 2012
onwards.
On an unconsolidated basis, your CompanyÃs revenue grew to Rs 26,058
million during the financial year 2011 Ã 2012 from Rs 23,605 million
last year. This represents a growth of 10.39%. The CompanyÃs profit
for the financial year 2011 Ã 2012 has increased to Rs 10,892 million,
an increase of 12.53% over the previous financial year.
A detailed analysis of the financials is given in the ManagementÃs
discussion and analysis report that forms a part of this DirectorsÃ
report.
Dividend
Your Company has plans to capitalize from the opportunities emerging
from current market conditions and needs to invest in business growth.
Keeping this in view, the Board has decided not to declare a dividend
for the financial year 2011 Ã 2012. The funds will be used to further
invest in new product development, infrastructure expansion and other
growth opportunities. This will enhance our solution offerings, market
reach and delivery capabilities and sustain the leadership position of
your Company.
Transfer to reserves
The Company does not propose to transfer any amount to the General
Reserve out of the amount available for appropriation. An amount of Rs
42,256.04 million is proposed to be retained in the Profit & Loss
Account.
Share capital
During the year, the Company allotted 78,955 equity shares of face
value of Rs 5/- each to its eligible employees, who exercised their
options under the Employee Stock Option Scheme, 2002 and Employee Stock
Option Scheme, 2010. As a result, as on March 31, 2012, the paid-up
equity share capital of the Company was Rs 419,868,785/- divided into
83,973,757 equity shares of face value of Rs 5/- each.
Oracle's holding in the Company
As on March 31, 2012, Oracle Global (Mauritius) Limited held 67,481,698
equity shares (80.36% of the equity capital) of the Company.
Directors
Mr. Y M Kale, Mr. Frank Brienzi and Mr. William Corey West, Directors
of the Company, retire by rotation at the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment.
As stipulated under Clause 49 of the Listing Agreement entered into
with the stock exchanges, brief resumes of the Directors proposed to be
re-appointed, the nature of their expertise in specific functional
areas and the names of companies in which they hold directorships and
membership/chairmanship of Board Committees, are provided in the Notice
and/or Report on Corporate Governance forming a part of the Annual
Report.
The Board recommends to the members the resolutions for re-appointment
of Mr. Y M Kale, Mr. Frank Brienzi and Mr. William Corey West as
Directors of the Company.
Ms. Dorian Daley and Mr. William T Comfort, Jr., ceased to be Directors
of the Company with effect from August 18, 2011 and May 11, 2012,
respectively. Accordingly, Mr. William T Comfort, Jr. also ceased to be
the Chairman of the Board effective May 11, 2012. The Board appointed
Mr. S Venkatachalam as the Chairman of the Board effective May 12,
2012.
The Board placed on record its appreciation of the services rendered by
Ms. Dorian Daley and Mr. William T Comfort, Jr., during their tenure as
Directors of the Company.
Infrastructure
The Board has adopted a facilities consolidation plan to use its
premises more efficiently. Accordingly, the Company de-leased following
offices. The staff located at such premises was relocated to other
premises:
- Mumbai: Vile Parle premises and a portion of the Goregaon Annexe
office
- Pune: Leased offices located at Pride, Ambrosia II & Kothrud
- Bangalore: Leased offices at Diamond District, SJR Park &
Millennium Towers
- Chennai: Leased premises at T Nagar.
Global alliances
Your Company attaches great importance to building and expanding its
partner network with organizations which can promote, sell, implement
and support its offerings around the world.
Leading System Integration (SI) partners play an active role in
delivering solutions to customers of your Company. The SI partners
deliver projects in most countries around the world in which we are
active.
This past year we have made great progress in terms of broadening the
awareness of our products in the global partner community to implement
and sell our product suite à including Oracle FLEXCUBE and Oracle
Financial Services Analytical Applications. Your Company is taking
advantage of the larger Oracle Partner Network (OPN) to broaden its
reach. Your CompanyÃs partners have been migrated to the Oracle
Partner Network program. Partners are now offered online certifications
for several of our products. In addition, your Company conducted its
first ever FLEXCUBE Developersà Conclave in Bangalore in March 2012,
attracting over 160 partners and clients from around the world to a
five day event.
Subsidiaries
Your Company has subsidiaries in India, USA, Singapore, The
Netherlands, Republic of Mauritius, Greece, Republic of China and Chile
to handle operations, strengthen marketing and sales efforts, ensure
deeper sales penetration and provide post-sales support in these
regions.
Mantas Singapore Pte Ltd. and Mantas Ltd., subsidiaries of the Company
were dissolved with effect from March 1, 2012 and April 10, 2012,
respectively.
Pursuant to Section 212 of the Companies Act, 1956 ("the Act"), the
Company is required to attach to its Annual Report, the Balance Sheet,
Profit and Loss Account, Directorsà Report and the Report of the
Auditors (collectively referred to as 'the accounts and reportsÃ),
of its subsidiaries for the year ended March 31, 2012.
The Ministry of Corporate Affairs has issued a General Circular No.:
2/2011 dated February 8, 2011 granting a general exemption to the
companies stating that the provisions of Section 212 of the Act shall
not apply in relation to subsidiaries of companies subject to the
company fulfilling certain conditions stated in the said circular.
The Company is in compliance with the conditions stipulated by the
Ministry of Corporate Affairs. Therefore, the accounts and related
reports of the subsidiary companies are not attached to the Annual
Report of the Company for the year ended March 31, 2012.
The Company will make available the accounts and related information of
the subsidiary companies upon request by any member/investor of the
Company or its subsidiaries. Further, the accounts and related
information of the subsidiary companies will be kept open for
inspection by any member, at the registered office of the Company and
at the registered office of the subsidiaries during office hours of the
Company/subsidiaries and the same will also be available on the website
of the Company www.oracle.com/financialservices.
Fixed deposits
During the financial year 2011 - 2012, the Company has not accepted
any fixed deposit within the meaning of Section 58A of the Companies
Act, 1956 and as such, no amount of principal or interest was
outstanding as of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all
the corporate governance and related requirements as envisaged under
Clause 49 of the Listing Agreement entered with stock exchanges and
Section 292A of the Companies Act, 1956.
Your Company has constituted five committees consisting of Board
members and other senior officials of the Company, namely, an Audit
Committee, Compensation Committee, ESOP Allotment Committee, Transfer
Committee and Shareholdersà Grievances Committee. There is a separate
report on Corporate Governance which forms part of this annual report.
A certificate of Statutory Auditors, M/s. S. R. Batliboi & Associates,
Chartered Accountants, with regard to compliance of conditions of
Corporate Governance as stipulated in Clause 49 of the Listing
Agreement is annexed herewith. The Company is also supporting the Go
Green initiative announced by the Ministry of Corporate Affairs
allowing paperless compliance.
A certificate from the Managing Director and Chief Financial Officer of
the Company confirming internal controls and checks pertaining to
financial statements, as also declaring that all Board members and
senior managerial personnel have affirmed compliance with the Code of
Ethics and Business Conduct for the financial year ended March 31,
2012, was placed before the Board of Directors and the Board has noted
the same. The said certificate is annexed to the Directorsà report.
A list of the committees of the Board, names of their members, scope
and other related information are detailed in the Corporate Governance
Report.
Employee Stock Option Plan ('ESOP')
The shareholders at their Annual General Meeting held on August 14,
2001 approved grant of ESOPs to the employees/directors of the Company
and its subsidiaries up to 7.5% of the issued and paid-up capital of
the Company from time to time. This said limit was enhanced and
approved up to 12.5% of the issued and paid-up capital of the Company
from time to time, by the Shareholders at their Annual General Meeting
held on August 18, 2011. This extended limit is an all inclusive limit
applicable for stock options granted in the past and in force and those
that will be granted by the Company under this authorization.
Pursuant to ESOP resolutions approved by the shareholders of the
Company on August 14, 2001, the Board of Directors, on March 4, 2002
approved the Employees Stock Option Scheme ("Scheme 2002") for
issue of 4,753,600 options to the employees and directors of the
Company and its subsidiaries. According to the Scheme 2002, the Company
has granted 4,548,920 options prior to the IPO and 619,000 options at
various dates after IPO (including the grants of options out of options
forfeited earlier).
On August 25, 2010, the Board of Directors approved the Employees Stock
Option Plan 2010 Scheme ("Scheme 2010") for issue of 618,000
options to the employees and directors of the Company and its
subsidiaries. According to the Scheme 2010, the Company has granted
638,000 options (including the grants of options out of options
forfeited earlier).
Pursuant to ESOP resolutions approved by the shareholders of the
Company in their meeting held on August 18, 2011, the Board of
Directors approved the Employees Stock Option Plan 2011 Scheme
("Scheme 2011") for issue of 5,100,000 options to the employees and
directors of the Company and its subsidiaries. According to the Scheme
2011, the Company has granted 640,500 options till March 31, 2012.
As per the above schemes, each of 20% of the total options granted will
vest to the eligible employees and directors on completion of 12, 24,
36, 48 and 60 months from the date of grant and is subject to continued
employment of the employee or directorship of the director with the
Company or its subsidiaries. Options have an exercise period of 10
years from the date of grant. The employee pays the exercise price upon
exercise of option.
The details of the options granted under the ESOP 2002, ESOP 2010 and
ESOP 2011 Schemes to eligible employees/directors from time to time are
given below:
Financial year Total number of Options granted
Under ESOP 2002 Scheme
2001 - 2002 4,548,920
2002 - 2003 80,000
2003 - 2004 36,000
2004 - 2005 60,000
2005 - 2006 10,000
2006 - 2007 373,000
2007 - 2008 Nil
2008 - 2009 Nil
2009 - 2010 Nil
2010 - 2011 60,000
2011 - 2012 Nil
Under ESOP 2010 Scheme
2010 - 2011 618,000
2011 - 2012 20,000
Under ESOP 2011 Scheme
2011 - 2012 640,500
Total 6,446,420
Pricing formula At the market
price as on the date of grant
Options vested at the end of
the financial year 2011 - 2012 178,808
Options exercised during
2011 - 2012 78,955
Total number of shares
arising as a result of
exercise of options
during 2011 - 2012 78,955
Financial year Options lapsed*
2002 - 2003 129,520
2003 - 2004 112,500
2004 - 2005 82,200
2005 - 2006 87,600
2006 - 2007 46,600
2007 - 2008 35,900
2008 - 2009 60,455
2009 - 2010 21,000
2010 - 2011 72,735
2011 - 2012 198,191
Total 846,701
Variation of terms of options None
Money realized by exercise of
options during the financial year
2011 - 2012 74,326,994
Total number
of options in force as on
March 31, 2012 1,191,056
* Includes number of options forfeited.
The details of options granted to Directors and Senior Managerial
Personnel under ESOP 2011 Scheme during the financial year ended March
31, 2012 are as follows:
Particulars Number of Options
i. Directors:
Mr. Chaitanya Kamat 30,000
Mr. S Venkatachalam 10,000
Senior Managerial Personnel:
Mr. Kishore Kapoor 10,000
Mr. Makarand Padalkar 15,000
Mr. Atul Kumar Gupta 4,000
Mr. Vikram Gupta 10,000
Mr. Manmath Kulkarni 10,000
Mr. Edwin N Moses 40,000
Mr. Avadhut Ketkar 5,000
Mr. Hoshi D Bhagwagar 2,000
ii. Any other employee, who receives
grant in any one year of option
amounting to 5% or more of option
granted during the year
Mr. Edwin N Moses 40,000
iii. Identified employees who were granted
option, during any one year,
equal to or exceeding 1% of the Nil
issued capital (excluding
outstanding warrants and conversions)
of the Company at the time of grant
iv. Diluted Earnings Per Share (EPS)
pursuant to the issue of shares
on exercise of option calculated in Rs 129.65
accordance with Accounting
Standard 20 "Earnings Per Share"
issued by the Institute of
Chartered
Accountants of India
Had compensation cost for the Company's ESOP been determined based on
fair value at the grant dates, Company's net profit and earnings per
share would have been reduced to preformed amounts indicated below:
(Amounts in Rs million, except per share data)
Particulars Year ended March 31, 2012
Profit as reported 10,892.33
Less: Employee stock compensation
under fair value method (190.48)
Proforma profit 10,701.85
Earnings Per Share Basic
As reported 129.78
Proforma 127.51
Diluted
As reported 129.65
Proforma 127.44
All stock options under the Employee Stock Option Plans were granted at
market price on the date of grant. Accordingly, we have calculated the
compensation cost arising on account of stock options granted using the
intrinsic value method. Hence, the disclosure in terms of Clause
12.1(n) of the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is
not applicable.
A summary of activities in the Company's ESOP Scheme 2002 is as
follows:
Particulars Year ended March 31, 2012
Shares arising from options Weighted average exercise
price (Rs)
Outstanding at
beginning of
year 245,837 1,414
Granted - -
Exercised (78,275) 932
Forfeited (22,350) 1,107
Outstanding at
end of the year 145,212 1,721
Vested options 97,212
Unvested options 48,000
A summary of activities in the Company's ESOP Scheme 2010 is as
follows:
Particulars Year ended March 31, 2012
Shares arising from
options Weighted average exercise
price (Rs)
Outstanding at
beginning of year 561,865 2,050
Granted 20,000 2,342
Exercised (680) 2,050
Forfeited (152,841) 2,050
Outstanding at
end of the year 428,344 2,064
Vested options 81,596
Unvested options 346,748
A summary of activities in the CompanyÃs ESOP Scheme 2011 is as
follows:
Particulars Year ended March 31, 2012
Shares arising from
options Weighted average exercise
price (Rs)
Outstanding at
beginning of year - -
Granted 640,500 1,936
Exercised - -
Forfeited (23,000) 1,930
Outstanding at
end of the year 617,500 1,937
Vested options -
Unvested options 617,500
The weighted average share price for the year over which stock options
were exercised was Rs 2,234.
The details of options unvested and options vested and exercisable as
on March 31, 2012 are as follows:
Particulars Exercise
price (RS) Options Weighted average Weighted average
exercise price
(Rs) remaining
contractual
life (Years)
Options
unvested 1,929.95 577,500 1,929.95 9.7
2,031.75 40,000 2,031.75 9.7
2.050.00 326,748 2,050.00 8.4
2.333.45 48,000 2,333.45 8.6
2,342.05 20,000 2,342.05 9.3
Options
vested and
exercisable 514.53 32 514.53 1.3
1,290.85 85,180 1,290.85 4.1
2.050.00 81,596 2,050.00 8.4
2.333.45 12,000 2,333.45 8.6
1,191,056 1,956.03 8:8
The fair value of stock options granted during the financial year 2011
- 2012 under ESOP 2010 Scheme was Rs 1,403 (granted on June 29, 2011)
and under ESOP 2011 Scheme were Rs 1,247 (granted on December 1, 2011)
and Rs 1,185 (granted on December 20, 2011), calculated as per the Black
Scholes valuation model as stated in 24b in the notes to accounts.
The Company has recovered perquisite tax on the options exercised by
the employees during the year.
Employee Stock Purchase Scheme ('ESPS')
The Company has adopted the ESPS administered through a Trust ("the
Trust') to provide equity based incentives to key employees of the
Company. As per the scheme, the Trust can acquire shares from the
Company and/or purchase shares of the company from market using the
proceeds of loans obtained from the Company. Such shares are allocated
by the Trust to nominated employees at an exercise price, which
approximates the fair value on the date of the grant. The shares vest
in the employees over a period of five years and the employees can
purchase the shares from the Trust over a period of ten years based on
continued employment, until which, the Trust holds the shares for the
benefit of the employees. The employees are entitled to receive
dividends, bonus, etc., that may be declared by the Company from time
to time for the entire portion of shares held by the Trust on behalf of
the employees.
On the acceptance of the offer, the selected employee undertakes to
purchase the shares from the Trust within ten years from the date of
acceptance of the offer. In case an employee resigns from employment,
the rights relating to vested shares, which are eligible for exercise,
may be purchased by the employee by payment of the exercise price
whereas, the balance shares are forfeited in favor of the Trust. The
Trustees have the right of recourse against the employees for any
amounts that may remain unpaid on the shares accepted by them. As of
the Balance Sheet date, the Trust has repaid the entire loan obtained
from the Company on receipt of payments from employees against shares
exercised.
As per the Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999
('SEBI guidelinesÃ), which are applicable to stock purchase schemes
for employees of all Indian listed companies, the excess of market
price of the underlying equity shares on the date of grant of the stock
options over the exercise price of the options is to be recognized in
the books of account and amortized over the vesting period. However, no
compensation cost has been recorded as the scheme terms are fixed and
the exercise price equals the market price of the underlying stock on
the grant date.
A summary of activities in the Company's ESPS is as follows:
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Number of shares
Number of shares
Opening balance of
unallocated shares 166,142 165,150
Shares forfeited during the year - 992
Closing balance of
unallocated shares 166,142 166,142
Opening balance of
allocated shares 29,081 54,548
Shares exercised during the year (10,264) (24,475)
Shares forfeited during the year - (992)
Closing balance of allocated shares 18,817 29,081
Shares eligible for exercise 18,817 29,081
Shares not eligible for exercise - -
Total allocated shares 18,817 29,081
Human resources
We believe that people are our only non replaceable resource in our
endeavor to search new horizons of performance and corporate
excellence. We continuously invest in them to maintain our competitive
advantage in the market place. We have created a meritocratic culture
and organizational environment along with a differentiated performance
management and reward system to foster performance excellence. Our HR
practices are innovative, unique and can be counted one among the best
in the industry. Our people development initiative offers the best and
latest in the technology and finance domains and develops contemporary
leadership attitudes and practices in our employees.
Your Company continued to focus on domain expertise coupled with
technology expertise. Our total manpower at the end of March 2012 was
9,682 as compared to 9,652 as on March 2011.
Corporate social responsibility
An initiative to support children, originally rolled out as "i-flex
for children", is in its tenth successful year. Our Corporate Social
Responsibilities are managed by a committee of senior company officials
and volunteers from divisions and locations in India. Our endeavor is
to support activities which do not have any religious or political
affiliation. Your Company encourages employees to actively participate
in and lead, where possible, such programs. We actively fund
educational institutions in rural India which are non-profit oriented
and secular and all inclusive in approach. The initiative is funded
each year to support activities proposed to the committee by employees.
Continuing support was given to a wide range of activities during
fiscal year 2011 Ã 2012, including construction of additional
facilities at schools and hospitals, scholarships for children with
special needs and making transportation arrangements for special need
schools. For the past 6 years your Company has supported an annual
athletic event for children.
Directors' responsibility statement
As required under Section 217(2AA) of the Companies Act, 1956, for the
financial year ended on March 31, 2012, the Directors hereby confirm
that:
i. In preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and 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 at the end of the financial year and of the profit of
the Company for that period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
iv. The Directors have prepared the annual accounts on a 'going
concernà basis.
Auditors
M/s. S. R. Batliboi & Associates, Chartered Accountants (Registration
no. 101049W), the present Statutory Auditors of the Company, hold
office till the ensuing Annual General Meeting and have confirmed their
eligibility and willingness to accept the office, if re-appointed.
Auditors' Report
With regard to the Auditorsà comment in the CARO report concerning
delays in payment of a few tax payments, e.g., Service Tax, Foreign
Taxes, Income Tax, Value Added Tax (VAT), Foreign Withholding Tax, the
Company would like to state the following:
i. The Company has engaged international tax experts in the
interpretation of laws and regulations relating to corporate taxes and
VAT in foreign countries. The Company has accrued the liabilities in
the books taking a conservative approach, however the payments shall be
made to the authorities in due course based on the final advice your
Company receives from tax experts.
ii. The Company continually assesses Payroll Tax implications in
various jurisdictions outside India on salaries and travel related
reimbursements paid to its employees posted therein and accordingly
makes accruals in the books. The Company is in the process of filing
the returns for Payroll Tax in such jurisdiction for which the
provision is already made in the books. As per the local laws of most
host countries, the tax is payable by the employee, however in a few
countries tax payment is a responsibility of the employer, which
amounts to Rs 10.71 crore. The Company and the employees ensure tax
compliance in such countries as advised by the tax consultants.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
The particulars as prescribed under sub-section (1)(e) of Section 217
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, the
relevant data pertaining to conservation of energy, technology
absorption and foreign exchange earnings and outgo are furnished
hereunder:
i. Conservation of energy and technology absorption:
The Company seeks, through various technology initiatives, to enhance
computing standards to make its information technology infrastructure
virtual, secure, cost effective and environment friendly. It seeks to
provide its users with enhanced computing systems and also fulfill its
obligation to the society and the environment.
Virtualization: Virtualization, implemented a year ago for IT was
extended to the other business units as well. The Lines of Business
have adopted virtualization in operations and this has resulted in
significant reduction in direct costs associated with procurement of
additional infrastructure as well as indirect costs associated with
reduction in power utilization and space.
Virtualization has also helped remove and replace a lot of End of Life
(EOL) infrastructure, which otherwise was cost intensive due to AMC
charges, operational overheads, power and space utilization. The number
of physical servers in the Data Center post virtualization has
significantly undergone a reduction.
Adding to the consolidation through virtualization, the Datacenters at
various locations were consolidated to minimize duplication of efforts,
significant saving on power, lease charges and infrastructure
investments. This substantially brought down operating expenses and
built in a more concentrated operating model, in turn benefitting the
business users.
In addition to the existing technology reaping benefits, there has been
new technology deployment in the organization, providing the users with
advanced computing facilities, and building operational efficiencies,
key being defining an optimal balance between the two. A few
significant initiatives are as below:
Year ended March 31, 2012 has been the year of standardization. The
network/telephony refresh was initiated at the Company and an advanced
and standardized solution was deployed across the organization. This
has resulted in uniform technology, resulting in considerable cost
benefits through operational efficiencies.
Another major move towards standardization was a focus on customer
connectivity. The Oracle standard connectivity model is being adopted
and deployed for client connectivity. This connectivity model provides
employees working on customer projects with reliable and secure
connections to our customers.
Further, to enhance communication across the globe in a cost effective
manner, Next Gen Video conferencing facility is being implemented. This
technology has transformed communication between users, by making
possible better long distance communication. This has resulted in
substantial cost saving as well.
Finally, as a move to secure Confidential data residing on user
machines, end point encryption of the local hard disks has been
implemented ensuring safety of data in the event of theft or loss of
machine in the prevention of unauthorized access to the machine. This
initiative augments the overall mandate of protection and appropriate
usage of confidential information in the organization.
ii. Foreign exchange earnings and outgo:
(Amounts in Rs million)
Foreign Exchange Earnings 28,148.60
(excluding reimbursement
of travelling expenses)
Foreign Exchange Outgo 8,576.86
(including capital
goods & other expenditure)
Prospects
Due to continuing economic uncertainty around the globe, growth slowed
in 2011. Demand from developing countries did support higher output in
high-income economies. However, financial institutions in many western
economies are under pressure and a series of regulatory changes related
to capital and liquidity provisioning have been proposed.
Your Company recognized the opportunity to deliver integrated solutions
for risk management and finance functions to banks. The investments
over the past 36 months to integrate risk applications with Oracle
Financial Application Suite have given your Company a significant
advantage in its ability to execute very large transformation projects
at Tier 1 banks. This integrated solution now enables banks to take
advantage of the common ground that already exists between risk and
finance data. Financial Insights/IDC in its annual predictions*
suggested that risk management spending will top US$ 60 billion and
consume 15% of IT Spend worldwide.
Chartis, a leading provider of research and analysis covering the
global market for risk management technology, recognized Oracle to be a
leading vendor in the risk and finance integration technology market in
the report published in December 2011.
Your Company announced the availability of solutions for multi-channel
banking at the Oracle Financial Services & Insurance Forum, New York.
This release of the solution helps banks leverage trends in mobility
and personalization of financial services. Oracle FLEXCUBE was ranked
the #1 selling core banking solution by IBS Consulting in the Sales
League Table 2011.
Your Company now has expanded its presence in commercial banks in China
in addition to its existing implementations at international banks in
the greater China region. Your Company completed the core banking
transformation project at Ping An Bank in China. The implementation was
completed in a record timeframe of 18 months. The Ping An Bank team won
the "Best Core Banking Award for Commercial Banks in China" by The
Asian Banker.
Your Company hosted the first global Oracle FLEXCUBE Developers
Conclave, at Bangalore, India. At this event FLEXCUBE users from banks
and partners participated to gain in-depth knowledge and hands-on
development experience that will enable banks to easily customize,
extend and localize solutions to meet their unique needs.
Oracle has long had a vision for moving customers to a complete,
consolidated, and optimized computing environment that provides maximum
flexibility, scalability, and agility. Today, Oracle refers to this
vision in its corporate tag line "Hardware and Software Engineered to
Work Together". Modern enterprises understand and embrace the concept
like never beforehand Oracle is the only vendor that can deliver it.
Your Company by leveraging this vision has delivered extreme
performance for banks on an integrated stack and simplifying the effort
required by banks to integrate the various components during
implementation.
Consulting Services continue to play a key and vital role for your
Company and performs a very strategic role in engagements with the
leading banks. Your Company has renewed multi-year consulting
engagements with existing customers. Support services for our
applications continue to grow and banks see this service as vital for
operations at their banks.
* report entitled Worldwide Financial Services 2012 Top 10 Predictions:
Thriving or Just Surviving?
Employee particulars
Information as per Section 217(2A) of the Companies Act, 1956 ("the
Act"), read with the Companies (Particulars of Employees) Rules, 1975,
for the financial year ended on March 31, 2012, forms part of this
Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the
Directorsà Report and the Accounts are being sent to the members
excluding the statement giving particulars of employees under Section
217(2A) of the Act.
Members who wish to obtain a copy of the statement, may write to the
Company Secretary at the Registered Office of the Company.
Acknowledgements
Your Directors take this opportunity to thank the CompanyÃs
customers, members, vendors and bankers for their continued support
during the year. Your Directors also wish to thank the Government of
India and its various agencies, Department of Electronics, the Software
Technology Parks - Bangalore, Mumbai, Chennai and Pune, Special
Economic Zone authorities at SEEPZ and Cochin, the Customs and Excise
Department, Ministry of Commerce, Ministry of Finance, Ministry of
External Affairs, Ministry of Corporate Affairs, Department of
Telecommunication, the Reserve Bank of India, the State Governments of
Maharashtra, Karnataka, Haryana and Tamil Nadu and other local
Government Bodies, for their support and look forward to their
continued support in the future.
Your Directors also place on record their appreciation for the
excellent contribution made by employees of the Company through their
commitment, competence, co-operation and diligence with a view to
achieving consistent growth for the Company.
For and on behalf of the Board
S Venkatachalam
Chairman
July 10, 2012
Mar 31, 2011
Dear Members,
The Directors present their report on the business and operations of
your Company along with the Annual Report and audited financial
statements for the financial year 2010 Ã 2011.
Financial highlights
As per Indian GAAP Unconsolidated financial statements:
(All amounts in Rs. millions)
Particulars Year ended Year ended
March 31, 2011 March 31, 2010
Revenue 23,605.06 22,434.70
Income from operations before
depreciation & amortisation 9,302.76 8,530.50
Depreciation & amortisation (336.49) (374.10)
Provision for diminution in value
of investment (25.42) Ã
Interest/other income (expenses), net 1,383.95 681.02
Foreign exchange gain/(loss), net 19.07 (1,363.74)
Income before taxes 10,343.87 7,473.68
Provision for tax (664.07) (865.19)
Net income 9,679.80 6,608.49
Balance brought forward 21,683.92 15,075.43
Profit available for appropriation 31,363.72 21,683.92
Appropriations à Ã
Balance carried forward 31,363.72 21,683.92
As per Indian GAAP Consolidated financial statements:
(All amounts in Rs. millions)
Particulars Year ended Year ended
March 31, 2011 March 31, 2010
Revenue 29,969.32 28,739.74
Income from operations before
depreciation & amortisation 11,219.92 10,281.02
Depreciation & amortisation (408.17) (488.65)
Impairment loss à Ã
Interest/other income (expenses) 1,668.26 (856.17)
Exceptional item à Ã
Income before taxes 12,480.01 8,936.20
Provision for tax (1,370.12) (1,197.69)
Net income for the year before
minority interest, share of profit
(loss) of associate 11,109.89 7,738.51
Minority interest à (1.87)
Share of profit (loss) of associate à Ã
Net income 11,109.89 7,736.64
Performance
On an unconsolidated basis, your Company's revenue grew to Rs. 23,605
million during the financial year 2010 Ã 2011 from Rs. 22,435 million
last year. This represents a growth of 5.22%. The Company's net income
for the financial year 2010 Ã 2011 has increased to Rs. 9,680 million, an
increase of 46.49% over the previous financial year.
Revenue, on the basis of consolidated financials, stood at Rs. 29,969
million this year, an increase of 4.28% from Rs. 28,740 million as
compared to the previous financial year. The net income increased to Rs.
11,110 million this year, an increase of 43.60%.
A detailed analysis of the financials is given in the Management's
discussion and analysis report that forms a part of this Directors'
report.
Dividend
Your Company has plans to capitalise on the opportunities emerging from
current market conditions and needs to invest in business growth.
Keeping this in view, the Board has decided not to declare dividend for
the financial year 2010 Ã 2011. The funds will be used to further
invest in new product development, infrastructure expansion and other
growth opportunities to enhance the solution offerings, market reach
and delivery capabilities and sustain the leadership position of your
Company.
Transfer to reserves
The Company does not propose to transfer any amount to the General
Reserve out of the amount available for appropriation. An amount ofRs.
31,363.72 million is proposed to be retained in the Profit & Loss
Account.
Share capital
During the year, the Company allotted 39,945 equity shares of face
value ofRs. 5/Rs. each to its eligible employees, who exercised their
options under the Employee Stock Option Scheme 2002. As a result, as on
March 31, 2011, the paidRs.up equity share capital of the Company
increased to Rs. 419,474,010/Rs. divided into 83,894,802 equity shares of
face value ofRs. 5/Rs. each.
Oracle's holding in the Company
As on March 31, 2011, Oracle Global (Mauritius) Limited held 67,481,698
equity shares (80.44% of the equity capital) of the Company.
Directors
Mr. Derek H Williams and Mr. William T Comfort, Jr., Directors of the
Company, retire by rotation at the ensuing Annual General Meeting and
being eligible, offer themselves for reRs.appointment.
Ms. Dorian Daley is liable to retire by rotation at the ensuing Annual
General Meeting and has not offered herself for reRs.appointment.
Pursuant to Section 260 of the Companies Act, 1956, Mr. Chaitanya Kamat
and Mr. S Venkatachalam, were appointed as Additional Directors of the
Company on October 25, 2010. Mr. Robert K Weiler, Executive Vice
President of Oracle Corporation was appointed as Additional Director of
the Company on July 4, 2011. They hold office up to the date of the
ensuing Annual General Meeting. The Company has received Notices in
writing from Members, pursuant to Section 257 of the Companies Act,
1956, proposing the candidature of Mr. Chaitanya Kamat, Mr. S
Venkatachalam and Mr. Robert K Weiler for the office of a Director.
Pursuant to the provisions of Sections 198, 269, 309, 310 and other
applicable provisions, if any, of the Companies Act, 1956, the Board
subject to the approval of the members appointed Mr. Chaitanya Kamat as
the Managing Director and Chief Executive Officer of the Company for a
period of three years beginning from October 25, 2010 to October 24,
2013. Mr. Chaitanya Kamat shall be liable to retire by rotation.
As stipulated under Clause 49 of the Listing Agreement entered into
with the stock exchanges, brief resumes of the Directors proposed to be
appointed/reRs.appointed, the nature of their expertise in specific
functional areas and the names of companies in which they hold
directorships and membership/chairmanship of Board Committees, are
provided in the Report on Corporate Governance forming a part of the
Annual Report.
The Board recommends to the members the resolutions for reRs.appointment
of Mr. Derek H Williams and Mr. William T Comfort, Jr. as Directors of
the Company. The Board also recommends the appointment of Mr. Chaitanya
Kamat, Mr. S Venkatachalam and Mr. Robert K Weiler as Directors. It
further recommends the appointment and remuneration payable to Mr.
Chaitanya Kamat, Managing Director and Chief Executive Officer of the
Company.
During the year, the following ceased to be directors of the Company:
- Mr. Rajesh Hukku and Mr. R Ravisankar w.e.f. April 29, 2010
- Mr. Charles Phillips w.e.f. July 22, 2010
- Ms. Tarjani Vakil w.e.f. August 25, 2010
- Mr. N R Kothandaraman (N R K Raman) w.e.f. October 25, 2010
- Mr. Joseph John w.e.f. March 31, 2011.
The Board placed on record its appreciation of the services rendered by
Mr. Rajesh Hukku, Mr. R Ravisankar, Mr. Charles Phillips, Ms. Tarjani
Vakil, Mr. N R K Raman and Mr. Joseph John, during their tenure as
Directors of the Company.
Infrastructure
The Board has adopted a consolidation plan to save cost and use the
premises more efficiently. As such, the leases on the following office
premises were surrendered and staff relocated:
- Mumbai: the office premises at Andheri and staff relocated to the
Vile Parle office premises
- Pune: the office premises at Kothrud and staff relocated to the
Ambrosia owned premises
- Bangalore: the office premises at RMZ NXT and staff relocated to the
Millenium Tower office premises
- Chennai: the office premises at Nungambakkam and staff relocated to
the GVS office premises.
Corporate developments
During the year, the following developments took place on the
subsidiary front:
- Castek Inc., Castek Software Factory Ltd. and Castek RBG Inc.,
dissolved with effect from September 1, 2010
- The name of iRs.flex Processing Services Inc., was changed to Oracle
(OFSS) BPO Services Inc., with effect from February 22, 2011
- iRs.flex solutions Inc. (Canada) dissolved with effect from March 31,
2011.
Global alliances
Your Company attaches great importance to building and expanding its
partner network with organisations which can promote, sell, implement
and support its offerings around the world. The partner network
currently comprises more than 35 resellers and 45 implementation
partners.
Leading System Integration (SI) Partners play an active role in
delivering solutions to customers of your Company. The SI Partners
deliver projects in the Confederation of Independent States, Latin
America, Middle East, Japan and India.
The highlight of our engagement with partners this year has been the
acceleration of our efforts to enable our partners to sell, implement
and support our product suite à including Oracle FLEXCUBE and Oracle
Financial Services Analytical Applications. We have also begun the
migration of your Company's partner network to the Oracle Partner
Network (OPN) in earnest. This migration will speed the enablement of
partners, leverage existing Oracle relationships to promote growth, and
benefit both sides of the partner relationship.
Subsidiaries
Your Company has subsidiaries in India, USA, Singapore, the
Netherlands, Canada, Mauritius, Greece, China and Chile to handle
operations, strengthen marketing and sales efforts, ensure deeper sales
penetration and provide postRs.sales support in these regions.
Pursuant to Section 212 of the Companies Act, 1956 ("the Act"), the
Company is required to attach to its Annual Report, the Balance Sheet,
Profit and Loss Account, Directors' Report and the Report of the
Auditors (collectively referred to as Ãthe accounts and reports'), of
its subsidiaries for the year ended March 31, 2011.
The Ministry of Corporate Affairs has issued a General Circular No.:
2/2011 dated February 8, 2011 granting a general exemption to the
companies by stating that the provisions of Section 212 of the Act
shall not apply in relation to subsidiaries of companies subject to the
company fulfilling certain conditions stated in the said circular. We
are in compliance with the conditions stipulated by the Ministry of
Corporate Affairs. As such, the accounts and related reports of the
subsidiary companies are not attached to the Annual Report of the
Company for the year ended March 31, 2011.
The Company will make available the accounts and related information of
the subsidiary companies upon request by any member/investor of the
Company or its subsidiaries. Further, the accounts and related
information of the subsidiary companies will be kept open for
inspection by any member, at the registered office of the Company and
at the Registered Office of the subsidiaries during office hours of the
Company/subsidiaries and the same will also be available on the website
of the Company www.oracle.com/financialservices.
Fixed deposits
During the financial year 2010 Ã 2011, the Company has not accepted any
fixed deposits within the meaning of Section 58A of the Companies Act,
1956 and as such, no amount of principal or interest was outstanding as
of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all
the corporate governance and related requirements as envisaged under
Clause 49 of the listing agreement entered with stock exchanges and
Section 292A of the Companies Act, 1956.
Your Company has constituted five committees consisting of Board
members and other senior officials of the Company, namely, an Audit
Committee, Compensation Committee, ESOP Allotment Committee, Transfer
Committee and Shareholders' Grievances Committee. A separate report on
Corporate Governance, along with a certificate of Statutory Auditors of
the Company, is annexed herewith. The Company is also supporting the Go
Green initiative announced by the Ministry of Corporate Affairs
allowing paperless compliance.
A certificate from the Managing Director and Chief Financial Officer of
the Company confirming internal controls and checks pertaining to
financial statements, as also declaring that all Board members and
senior management personnel have affirmed compliance with the Code of
Conduct for the financial year ended March 31, 2011, was placed before
the Board of Directors and the Board has noted the same. The said
certificate is annexed to the Directors' report.
A list of the committees of the Board, names of their members, scope
and other related information are detailed in the Corporate Governance
Report.
Allotment of ESOP shares
The members of the Company at its Annual General Meeting held in 2001
had approved the issue of Stock Options to eligible
employees/directors. Accordingly, the Board approved the ESOP 2002 and
ESOP 2010 Schemes and granted options to eligible employees/directors
from time to time. The details are given below:
Financial year Total number of Options granted
Under ESOP 2002 Scheme
2001 Ã 2002 4,548,920
2002 Ã 2003 80,000
2003 Ã 2004 36,000
2004 Ã 2005 60,000
2005 Ã 2006 10,000
2006 Ã 2007 373,000
2007 Ã 2008 Nil
2008 Ã 2009 Nil
2009 Ã 2010 Nil
2010 Ã 2011 60,000
Under ESOP 2010 Scheme
2010 Ã 2011 618,000
Total 5,785,920
Pricing formula At the market price as on the
date of grant
Options vested at the end of
the financial year 2010 Ã 2011 141,537
Options exercised during 2010 Ã 2011 39,945
Total number of shares arising as a
result of exercise of options
during 2010 Ã 2011 39,945
Options lapsed
2002 Ã 2003 129,520
2003 Ã 2004 112,500
2004 Ã 2005 82,200
2005 Ã 2006 87,600
2006 Ã 2007 46,600
2007 Ã 2008 35,900
2008 Ã 2009 60,455
2009 Ã 2010 21,000
2010 Ã 2011 72,735
Total 648,510
Variation of terms of options None
Money realised by exercise of options
during the financial year 2010 Ã 2011 Rs. 50,126,813
Total number of options in force 807,702
EmployeeRs.wise details of options granted during the financial year
ended March 31, 2011 to:
Particulars Number of Options
i. Directors
Mr. Chaitanya Kamat à ESOP 2002 60,000
Mr. Joseph John à ESOP 2010 10,600
ii. Any other employee, who receives grant
in any one year of option amounting to 5%
or more of option granted during that year Nil
iii. Identified employees who were granted
option, during any one year, equal to or
exceeding 1% of the issued capital
(excluding outstanding warrants and
conversions) of the Company at the
time of grant Nil
iv. Diluted Earnings Per Share (EPS)
pursuant to the issue of shares on exercise
of option calculated in accordance
with accounting standard 20 ÃEarnings Per
Share' issued by the Institute of Chartered
Accountants of India Rs. 115.23
Had compensation cost for the Company's ESOP been determined based on
fair value at the grant dates, Company's net profit and earnings per
share would have been reduced to proforma amounts indicated below:
(All amounts in Rs. thousands, except per share data)
Particulars March 31, 2011
Profit as reported 9,679,797
Less: Employee stock compensation under fair
value method (132,716)
Proforma profit 9,547,081
Earnings Per Share
Basic
As reported 115.40
Proforma 113.82
Diluted
As reported 115.23
Proforma 113.68
All stock options under the Employee Stock Options Plans were granted
at a prevalent market price on the date of grant. Accordingly, we have
calculated the compensation cost arising on account of stock options
granted using the intrinsic value method. Hence, the disclosure in
terms of Clause 12.1(n) of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999, is not applicable.
A summary of the activity in the Company's ESOP (Scheme 2002) is as
follows:
Year ended March 31, 2011
Particulars Shares arising Weighted average
from options exercise
price (Rs.)
Outstanding at beginning of year 242,382 1,152
Granted 60,000 2,333
Exercised (39,945) 1,255
Forfeited (16,600) 1,291
Outstanding at end of the year 245,837 1,414
Vested options 141,537
Unvested options 104,300
A summary of the activity in the Company's ESOP (Scheme 2010) is as
follows:
Year ended March 31, 2011
Particulars Shares arising Weighted average
from options exercise
price (Rs.)
Outstanding at beginning of year à Ã
Granted 618,000 2,050
Exercised à Ã
Forfeited (56,135) 2,050
Outstanding at end of the year 561,865 2,050
Unvested options 561,865
The fair value of stock options granted during the financial year 2010
à 2011 under ESOP 2002 Scheme and ESOP 2010 Scheme was Rs. 949.32 and Rs.
834.01 respectively, calculated as per the Black Scholes valuation
model as stated in 6b in the notes to accounts.
Human resources
Employees are our key assets and we continuously invest in them to
retain our competitive edge. We have created a healthy and productive
environment, together with a strong performance management system, to
encourage excellence. Our HR practices are among the best in the
industry. Our training initiative offers the best and latest in
technology, domain expertise and leadership.
This was a year spent in the consolidation of our resources. Your
Company continued to focus on productivity. Our total manpower at the
end of March 2011 was 9,652 as compared to 10,451 as on March 2010.
Corporate Social Responsibility
An initiative to support children, originally rolled out as "iRs.flex for
children", is in its ninth successful year. Our Corporate Social
Responsibilities are managed by a committee of senior company officials
and volunteers from divisions and locations in India. Our policy is to
support activities which do not have any religious or political
affiliation. Your Company encourages employees to actively participate
in and drive such programs. We also support initiatives by our
employees and their family members in rural India. The initiative is
funded each year to support activities proposed to the committee by
employees.
Continuing support was given to a wide range of activities during
fiscal year 2010 Ã 2011, including construction of additional
facilities at schools and hospitals, scholarships for children with
special needs and making transportation arrangements for special need
schools. For the past 5 years your Company has supported an annual
athletic event for children.
Directors' responsibility statement
As required under Section 217(2AA) of the Companies Act, 1956, the
Directors hereby confirm that:
i. In preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. The Directors have selected such accounting policies and applied
them consistently and 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 at the end of the financial year and of the profit of
the Company for that period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities; and
iv. The Directors have prepared the annual accounts on a Ãgoing
concern' basis.
Auditors
M/s. S. R. Batliboi & Associates, Chartered Accountants, the present
Statutory Auditors of the Company, hold office till the ensuing Annual
General Meeting and have confirmed their eligibility and willingness to
accept the office, if reRs.appointed.
Auditors' Report
With regard to the Auditors' comment in the CARO report concerning
delays in payment of a few tax payments, e.g., Service Tax, Income Tax,
Value Added Tax, Payroll Tax, the Company would like to state the
following:
i. The Company has sought help of tax experts in the interpretation of
laws and regulations relating to corporate taxes and VAT in foreign
countries. The Company has accrued the liabilities in the books taking
a conservative approach, however the payments shall be made to the
authorities in due course based on the final advice your Company
receives from tax experts.
ii. The Company has accrued interest on service tax liability for
import of taxable services as well as the domestic taxable services.
The amount shall be paid in due course.
iii. The Company continually assesses payroll tax implications in
various jurisdictions outside India on salaries and travel related
reimbursements paid to its employees posted therein and accordingly
makes accruals in the books. The Company is in the process of filing
the returns for payroll tax in such jurisdiction for which the
provision is already made in the books. As per the local laws of most
host countries, the tax is payable by the employee, however in a few
countries tax payment is a responsibility of the employer, which
amounts to Rs. 4.87 crore. The Company and the employees ensure tax
compliance in such countries as advised by the tax consultants.
iv. The amount of Income Tax payable is due to retrospective amendment
to Section 115JB of the Income Tax Act, 1961, and it will be paid
during assessment proceedings.
Conservation of energy, technology absorption and Foreign exchange
earnings and outgo
The particulars as prescribed under subRs.section (1)(e) of Section 217
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, the
relevant data pertaining to conservation of energy, technology
absorption and foreign exchange earnings and outgo are furnished
hereunder:
i. Conservation of energy and technology absorption:
The company seeks, through various technology initiatives, to enhance
computing standards to make its information technology infrastructure
virtual, secure, cost effective and environment friendly. It seeks to
provide its users with enhanced computing systems and also fulfil its
obligation to the society and the environment.
Asset Disposal: Asset Management and disposal of old assets has been
one of the key initiatives of the year. The disposal of old assets was
done, keeping in mind eRs.waste and its impact on the environment. The
disposal was done in accordance with the government guidelines,
ensuring that the assets are disposed in a secure manner, without
impacting the environment.
Virtualisation: The benefits of virtualisation started accruing during
the first year of implementation. The key strategy for the previous
year was to optimise the benefits from the implementation. Virtualised
environments were extended from IT operations to client projects,
leading to reduction in overall cost and power consumption. This has
also enhanced client operations from an availability and security
perspective as well.
Office consolidation: On strategic analysis, it was observed that there
was a lot of duplication of effort and technology in managing IT
operations. Our focus shifted from technology advancement to ensuring
that this duplication did not lead to nonRs.standardisation of services
to users. Therefore we decided on office consolidation and Pune is the
first location to have achieved it in record time and without any
setbacks. This consolidation has enabled greater utilisation of human
effort as well as provided a platform for effective technology
management. This has reduced operating cost by one third due to
reduction in power consumption. This will be replicated across all
locations as part of the strategy for FY12.
The Datacentres at the new offices are designed to optimise on power
consumption and also incorporate environmentally friendly systems such
as high end gas suppression systems and early smoke detection systems.
Overall the efforts at Oracle are to optimise performance, minimise
costs and balance them keeping in mind our accountability to the
environment as well.
ii. Foreign exchange earnings and outgo:
(All amounts in Rs. millions)
Foreign Exchange Earnings* 22,666.87
Foreign Exchange Outgo 6,462.92
(Including capital goods & other expenditure)
* Excluding reimbursement of travelling expenses and interest income.
Prospects
The challenges various economies faced over the past 12 months are very
different from those they faced during the economic turbulence in 2008.
OECD forecasts (May 25, 2011) suggest that global GDP will grow by 4.2%
this year. But the rate of growth in various countries varies and some
countries face a challenge with rising unemployment.
In the financial services sector managing risk, liquidity, capital and
performance remain at the top of the agenda for both banks and
insurance companies. Governments and regulators are expected to discuss
and introduce a whole new set of regulations during 2011. That could
lead to changes in the way business operations are handled in most
financial institutions. Financial institutions are under pressure to
achieve cost savings and information technology provides them the scope
for continuous productivity increases while helping them differentiate
their products and services.
Over the past year, your Company has enriched its banking back office
offering, Oracle FLEXCUBE, to address many of these business
opportunities; this has led to our customers using it to deliver a
direct bank or consolidate their operations across countries in a
region. We have also engaged with existing Oracle banking customers to
sign up as a partner for their operations addressing expansion to a new
geography or new businesses like wealth management.
Since 2008, the boards at financial institutions have come to pay
greater attention to the process they use to review the performance of
their institutions. As a result, there has been wider adoption of Risk
Adjusted Performance Measurement. Over the last 24 months your Company
has invested in building and delivering critical components that are
part of the Oracle Financial Services Analytical Applications suite.
Oracle is now one of the leading players in this space with the ability
to deliver applications to financial institutions for compliance,
enterprise risk, liquidity, capital management, performance management
and customer analytics.
In a drive to boost efficiency in an increasingly complex global
financial marketplace, leading global banks have embarked on the
integration of their finance, risk and treasury operations. Oracle has
relationships with many of these banks who use enterprise financial
applications, financial planning applications and or business
intelligence applications from Oracle's portfolio. We have now engaged
with these banks to encourage them to use Oracle Financial Services
Analytical Applications to support business decisions and drive
efficiency through a consistent set of data and metrics.
To protect customers, regulators in Africa, Asia and South America have
made changes in their regulations with regard to Fraud and Financial
Crime. The increasing sophistication of fraudulent activity continues
to force financial institutions to be continuously on their guard. Your
Company has evolved Mantas, which was acquired in 2006, to automate the
surveillance of the trading activity of energy and commodities market
participants and for compliance for trading desks and brokers in the
leading economies.
Oracle's integrated applications and technology suite combines
applications, middleware, database, servers and storage. It is now
enabling your Company to leverage customer engagements for
transformation deals at banks and also differentiate its solution
offering in the market place.
Consulting Services continue to play a key and vital role for your
Company and performs a very strategic role in its customer engagements.
Leading banks have signed deals that include services from your Company
along with the application licenses. Support services for our
applications continue to grow and banks see this service as vital for
operations at their banks.
Employee particulars
Information as per Section 217(2A) of the Companies Act, 1956 ("the
Act"), read with the Companies (Particulars of Employees) Rules, 1975,
forms part of this Report. As per the provisions of Section
219(1)(b)(iv) of the Act, the Directors' Report and the Accounts are
being sent to the members excluding the statement giving particulars of
employees under Section 217(2A) of the Act.
Any member interested in obtaining a copy of the statement, may write
to the Company Secretary at the Registered Office of the Company.
Acknowledgements
Your Directors take this opportunity to thank the Company's customers,
members, vendors and bankers for their continued support during the
year. Your Directors also wish to thank the Government of India and its
various agencies, Department of Electronics, the Software Technology
Parks à Bangalore, Mumbai, Chennai and Pune, SEEPZ Special Economic
Zone, the Customs and Excise Department, Ministry of Commerce, Ministry
of Finance, Ministry of External Affairs, Ministry of Corporate
Affairs, Department of Telecommunication, the Reserve Bank of India,
the State Governments of Maharashtra, Karnataka, Haryana and Tamil Nadu
and other local Government Bodies, for their support and look forward
to their continued support in the future.
Your Directors also place on record their appreciation for the
excellent contribution made by employees of the Company through their
commitment, competence, coRs.operation and diligence with a view to
achieving consistent growth for the Company.
For and on behalf of the Board
William T Comfort, Jr.
Chairman
July 15, 2011
Mar 31, 2010
The Directors are delighted to present their report on the business and
operations of your Company along with the Annual Report and audited
financial statements for the financial year 2009Ã2010.
Financial highlights
As per Indian GAAP Unconsolidated financial statements:
(All amounts in millions of Indian Rupees)
Year ended Year ended
March 31, 2010 March 31, 2009
Revenue 22,434.70 22,126.23
Income from operations before
depreciation & amortization 8,530.50 6,537.37
Depreciation & amortization (374.10) (428.41)
Interest/other income (expenses) (682.72) 1,682.86
Exceptional item - (468.90)
Income before taxes 7,473.68 7,322.92
Provision for tax (865.19) (365.80)
Net income 6,608.49 6,957.12
Balance brought forward 15,075.43 8,118.31
Profit available for appropriation21,683.92 15,075.43
Appropriations -- --
Balance carried
forward 21,683.92 15,075.43
As per Indian GAAP Consolidated financial statements:
(All amounts in millions of Indian Rupees)
Year ended Year ended
March 31,2010 March 31, 2009
Revenue 28,739.74 29,276.19
Income from operations before
depreciation & amortization 10,281.02 7,754.79
Depreciation & amortization (488.65) (557.94)
Impairment loss - (291.05)
Interest/other income (expenses) (856.17) 1,789.41
Exceptional item - (468.90)
Income before taxes 8,936.20 8,226.31
Provision for tax (1,197.69) (835.36)
Net income for the year before
minority interest, share of profit
(loss) of associate 7,738.51 7,390.95
Minority interest (1.87) (12.93)
Share of profit (loss) of associate - (12.59)
Net income 7,7.36.64 7,365.43
Performance
On an unconsolidated basis, your Companys revenue grew to Rs. 22,434
million during the financial year 2009Ã2010 from Rs. 22,126 million
last year. This represents a growth of 1.39%. The Companys net income
dropped by 5.02% over the previous financial year and decreased to Rs.
6,608 million.
Revenue, on the basis of consolidated financials, stood at Rs. 28,740
million this year, a drop of 2% from Rs. 29,276 million as compared to
the previous financial year. The net income increased to Rs. 7,737
million this year, an increase of 5%.
A detailed analysis of the financials is given in the Management
Discussion and Analysis report that forms part of this Annual Report.
Dividend
Your Company has plans to capitalize on the opportunities emerging from
the current market conditions and needs to invest in business growth.
Keeping this in view, the Board has decided not to declare a dividend
for the financial year 2009-2010. The funds will be used to further
invest in new product development, infrastructure expansion and other
growth opportunities to enhance the solution offerings, market reach
and delivery capabilities and sustain the leadership position of your
Company.
Transfer to reserves
The Company does not propose to transfer any amount to the General
Reserve out of the amount available for appropriation. An amount of Rs.
21,683-92 million is proposed to be retained in the Profit & Loss
Account.
Share capital
During the year, the Company allotted 85,471 equity shares of face
value of Rs. 5/- each to its employees/directors, who exercised their
options under the Employee Stock Option Plan. As a result, as on March
31, 2010, the paid up equity share capital of the Company increased to
Rs. 419,274,285/- divided into 83,854,857 equity shares of face value
of Rs. 5/- each.
Oracles holding in the Company
As of March 31, 2010, Oracle Global (Mauritius) Limited held 67,481,698
equity shares (80.47% of the equity capital) of the Company.
Directors
Mr. Y M Kale and Mr. William T Comfort, Jr., Directors of the Company,
retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment.
Ms. Tarjani Vakil is liable to retire by rotation at the ensuing Annual
General Meeting and has not offered herself for re-appointment.
Mr. Rajesh Hukku has taken a broader role at Oracle Corporation as
Chief Strategy Officer, Financial Services. Mr. R Ravisankar has been
promoted to Chief Operating Officer, Oracle Financial Services Global
Business Unit. Both of them have resigned from the Board of Directors
of the Company with effect from April 29, 2010. Mr. Charles Phillips
resigned from the Board of Directors of the Company with effect from
July 22, 2010. The Board places on record its appreciation for the
contributions made by Mr. Rajesh Hukku, Mr. R Ravisankar and Mr.
Charles Phillips as members of the Board.
Pursuant to Section 260 of the Companies Act, 1956, Mr. Frank Brienzi,
General Manager, Oracle FSGBU and Mr. Joseph John, Executive Vice
President, Banking Products Division of the Company were appointed as
Additional Directors of the Company on April 29, 2010. Mr. William
Corey West, Senior Vice President, Corporate Controller and Chief
Accounting Officer, Oracle Corporation was appointed as an Additional
Director of the Company on July 22, 2010. They hold office up to the
date of the ensuing Annual General Meeting. The Company has received
Notices in writing from Members, pursuant to Section 257 of the
Companies Act, 1956, proposing the candidature of Mr. Frank Brienzi,
Mr. Joseph John and Mr. William Corey West for the office of a
Director.
Pursuant to the provisions of Sections 198, 269, 309 and 310 of the
Companies Act, 1956, Mr. Joseph John was appointed as Whole-time
Director of the Company for a period of three years i.e. from April 29,
2010 to April 28, 2013. Mr. Joseph John shall be liable to retire by
rotation.
As stipulated under Clause 49 of the Listing Agreement entered into
with the stock exchanges, brief resumes of the Directors proposed to be
appointed/re-appointed, nature of their expertise in specific
functional areas and the names of companies in which they hold
directorships and membership/chairmanship of Board Committees, are
provided in the Report on Corporate Governance forming part of the
Annual Report.
The Board recommends to the members the resolutions for re-appointment
of Mr. Y M Kale and Mr. William T Comfort, Jr. as Directors of the
Company. The Board also recommends the appointment of Mr. Frank
Brienzi, Mr. Joseph John and Mr. William Corey West as Directors. It
further recommends the appointment and remuneration payable to Mr.
Joseph John as Whole-time Director of the Company and revision in
remuneration payable to Mr. N R K Raman, Managing Director of the
Company.
Infrastructure
During the year, your Company made the following changes to its
infrastructure:
Bangalore
We rationalized our facilities in Bangalore and surrendered one floor
(2nd Floor) of our RMZ office on August 3, 2009-
Your Company has obtained SEZ approval for the Global Axis office, on
March 29, 2010. This office covers an area of about 1 million sq. ft.
and is coming up at Bangalore.
Pune
Renovation work is in progress at Ambrosia owned premises. It has an
area of 360,000 sq. ft. and a portion of this office is expected to be
ready for occupation by the end of July 2010.
Chennai
We have taken new office premises on lease at Chennai à Green Valley
Shelters (GVS), w.e.f. February 1, 2010 for a 3 year lease period.
We have de-leased our NGM premises w.e.f. May 31, 2010 and all our
staff from Nungambakkam have moved to the GVS office premises.
Corporate developments
To reflect the close strategic and operational alignment within the
Company, the names of the following subsidiary companies were changed
during the year from:
- Equinox Global Services Limited to "Oracle (OFSS) BPO Services
Limited" w.e.f. March 9, 2010
- i-flex Processing Services Limited to "Oracle (OFSS) Processing
Services Limited" w.e.f. March 19, 2010
- Flexcel International Private Limited to "Oracle (OFSS) ASP Private
Limited" w.e.f. March 22, 2010
Global alliances
Your Company attaches great importance to building and expanding its
partner network with organizations, which can promote, sell, implement
and support its offerings around the world. The partner network
currently comprises more than 35 resellers and 45 implementation
partners.
Leading System Integration (SI) Partners play an active role in
delivering solutions to customers of your Company. The SI Partners
deliver projects in the CIS, Latin America, Middle East, Japan and
India.
The highlight of our engagement with partners this year has been the
acceleration of our efforts to enable our partners to sell, implement
and support our product suite à including Oracle FLEXCUBE, Oracle
Reveleus, Oracle Mantas and Oracle Daybreak. We have also begun the
migration of your companys partner network to the Oracle Partner
Network (OPN). This migration will speed the enablement of partners,
leverage existing Oracle relationships to promote growth, and benefit
both sides of the partner relationship.
Subsidiaries
Your Company has subsidiaries in India, the USA, Singapore, the
Netherlands, Canada, Mauritius, Greece, China and Chile to handle
operations, strengthen marketing and sales efforts, ensure deeper sales
penetration and provide post-sales support in these regions.
Pursuant to Section 212 of the Companies Act, 1956 ("the Act"), the
Company is required to attach to its Annual Report, the Balance Sheet,
Profit and Loss Account, Directors Report and the Report of the
Auditors (collectively referred to as the accounts and reports), of
its subsidiaries for the year ended March 31, 2010. Since the Company
presents audited consolidated financial statements under Indian GAAP in
its Annual Report, the Company had applied to the Central Government
for an exemption from attaching the accounts and reports of its
subsidiaries to the Annual Report. The approval of the Central
Government in this regard has been received vide letter no.
47/272/2010-CL-III dated April 20, 2010 exempting the Company from
attaching the accounts and reports of subsidiary companies under the
provisions of Section 212 of the Act. As such, the accounts and reports
of the subsidiary companies are not attached to the Annual Report of
the Company.
The Company will make available the accounts and related information of
the subsidiary companies upon request by any member/investor of the
Company or its subsidiaries. Further, the accounts and related
information of the subsidiary companies will be kept open for
inspection by any member, at the registered office of the Company and
at the registered office of the subsidiaries during office hours of the
Company/subsidiaries and the same will also be available on the website
of the Company www.oracle.com/financialservices.
Fixed deposits
During the financial year 2009-2010, the Company has not accepted any
fixed deposits within the meaning of Section 58A of the Companies Act,
1956 and as such, no amount of principal or interest was outstanding as
of the date of the Balance Sheet.
Corporate governance
The Company has taken appropriate steps and measures to comply with all
the applicable mandatory provisions of Clause 49 of the listing
agreement entered with stock exchanges and Section 292A of the
Companies Act, 1956.
Your Company has constituted five committees consisting of Board
members and other senior officials of the Company, namely, an Audit
Committee, Compensation Committee, ESOP Allotment Committee, Transfer
Committee and Shareholders Grievances Committee. A separate report on
Corporate Governance, along with a certificate of Statutory Auditors of
the Company, is annexed herewith.
A certificate from the Managing Director and Chief Financial Officer of
the Company confirming internal controls and checks pertaining to
financial statements for the year ended March 31, 2010 was placed
before the Board of Directors and the Board has noted the same.
A list of the committees of the Board and names of their members as on
March 31, 2010 is given below.
The scope of each of these committees and other related information are
derailed in the enclosed Corporate Governance Report.
Audit committee Compensation committee Transfer committee
Mr. Y M Kale (Chairman) Mr. William T Comfort, J r. (Chairman) Ms.
Tarjani Vakil (Chairperson)
Mr. William T Comfort, Jr. Mr Y M Kale Mr. Makarand Padalkar
Ms. Tarjani Vakil Mr Charles Phillips
ESOP allotment committee Shareholders grievances
Ms. Tarjani Vakil (Chairperson)
Mr. Makarand Padalkar Ms. Tarjani Vakil (Chairperson)
Mr. Makarand Padalkar
Allotment of ESOP shares
The members of the Company had approved the Employees Stock Option
Scheme (ESOP) of the Company in its Annual General Meeting of 2001.
According to the said scheme, the Company has granted shares to
eligible employees/directors from time to time. The details are given
below:
Financial year Total number of Options granted
2001-02 4,548,920
2002-03 80,000
2003-04 36,000
2004-05 60,000
2005-06 10,000
2006-07 373,000
2007-08 Nil
2008-09 Nil
2009-10 Nil
Total 5,107,920
Pricing formula At the market price
as on the date of grant
Options vested at the end
of the financial year 2009-2010 141,382
Options exercised during 2009-2010 85,471
Total number of shares arising as a
result of exercise of options
during 2009 Ã 2010 85,471
Options lapsed
2002-03 129,520
2003-04 112,500
2004-05 82,200
2005-06 87,600
2006-07 46,600
2007-08 35,900
2008-09 60,455
2009-10 21,000
Total 575,775
Variation of terms of options None
Money realized by exercise of options
during the financial year 2009-2010 Rs. 70,015,083
Total number of options in force 242,382
Employee-wise details of options granted
during the financial year ended March 31,
2010 to: Number of Options
i. Director Nil
ii. Any other employee, who receives grant
in any one year of option
amounting to 5% or more of option granted
during that year Nil
iii. Identified employees who were granted
option, during any one year, equal to or
exceeding 1% of the issued capital (excluding
outstanding warrants and conversions) of the Company
at the time of grant Nil
iv. Diluted Earnings Per Share (EPS) pursuant
to the issue of shares on exercise of option
calculated in accordance with accounting standard
20 Earnings Per Share issued by the Institute of
Chartered Accountants of India Rs. 78.72
Had compensation cost for the Companys ESOP been determined based on
fair value at the grant dates, Companys net income and earnings per
share would have been reduced ro proforma amounts indicated below:
March 31,2010
Net income as reported 6,608,488
Less: Compensation expense determined using fair
value of options (5,659)
Proforma net income 6,602,829
Basic income per share:
As reported 78.87
Proforma 78.80
Dilured income per share:
As reported 78.72
Proforma 78.65
All srock options under the 2002 Employee Stock Option Plan were
granted at a prevalent market price on the date of grant. Accordingly,
we have calculated the compensation cost arising on account of stock
options granted using rhe intrinsic value method. Hence, the
disclosure in terms of Clause 12.1(n) of the Securiries and Exchange
Board of India (Employees Srock Option Scheme and Employee Srock
Purchase Scheme) Guidelines, 1999, is not applicable.
A summary of the activity in the Companys ESOP is as follows:
Year ended March 31, 2010
Shares arising Weighted average
from options exercise price (Rs.)
Outstanding at beginning
of year 348,853 1,075
Exercised (85,471) 819
Forfeited (21,000) 1,232
Outstanding at end of the year 242,382 1,152
Human resources
Employees are our key assets and we continuously invest in them to
rerain our comperitive edge. We have created a healthy and productive
environment, together with a strong performance management system to
encourage excellence. Our HR practices are among the best in the
industry. Our training initiative offers the best and latest in
technology, domain expertise and leadership.
This was a year of consolidation of our resources. Your Company
continued to focus on productivity instead of investing in additional
manpower. Our total manpower showed a little dip from the total staff
strength from 11,386 by the end of March 2009 to 10,451 by end of March
2010.
Corporate Social Responsibility
An iniriarive to supporr children, originally rolled out as "i-flex for
children", is in irs eighth successful year. Our Corporate Social
Responsibilities are managed by a committee of senior company officials
and volunreers from divisions and locations in India. Our policy is to
support activities which do not have any religious or political
affiliation. Your Company encourages employees ro actively participate
in and drive such programs. We also support initiatives by our
employees and their family members in rural India. The initiative is
funded each year to supporr activities proposed to the committee by
employees.
A wide range of activities were supported during fiscal year 2009-2010,
including construction of additional facilities at schools and
hospitals, scholarships for children with special needs and procuring
buses ro special need schools. For rhe past 4 years your Company has
supported an annual athletic event for children.
Directors responsibility statement
As required under Section 217(2AA) of the Companies Act, 1956, the
Direcrors hereby confirm that:
i. In preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relaring ro
material departures;
ii. The Directors have selecred such accounring policies and applied
them consistently and 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 at the end of the financial year and of the profit of
the Company for that period;
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. The Directors have prepared the annual accounts on a going
concern basis.
Auditors
M/s S. R. Batliboi & Associates, Chartered Accountants, the present
Statutory Auditors of the Company, hold office till the ensuing Annual
General Meeting and have confirmed their eligibility and willingness to
accept office, if re-appointed.
Auditors Report
With regard to the Auditors comment in the CARO report concerning
delays in payment of a few tax payment, e.g., Service Tax, Income Tax,
Value Added Tax, Payroll Tax, the Company would like to state the
following:
i. The Company has sought help of tax experts in the interpretation of
laws and regulations relating to corporate taxes and VAT in foreign
countries. The Company has accrued the liabilities in the books taking
a conservative approach, however the payments shall be made to the
authorities in due course based on the final advice your Company
receives.
ii. Based on the opinion of tax experts and learned counsel, the
Company has accrued for service tax liability on import of taxable
services. The amount shall be paid in due course.
iii. The Company continually assesses payroll tax implications in
various jurisdictions outside India on salaries and travel related
reimbursements paid to its employees posted therein and accordingly
makes accruals in the books. As per the local laws of most host
countries, the tax is payable by the employee, however in a few
countries tax payment is a responsibility of the employer, which
amounts to Rs. 2.82 Crore. The Company and the employees ensure tax
compliance in such countries as advised by the tax consultants.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
The particulars as prescribed under Sub-Section (l)(e) of Section 217
of the Companies Act, 1956 read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, the
relevant data pertaining to conservation of energy, technology
absorption on foreign exchange earnings and outgo are furnished
hereunder:
i. Conservation of energy and technology absorption:
We believe in providing cutting edge technology to our users, to
enhance their productivity and performance. Oracle Financial Services
Software endeavors to fulfill its responsibility towards a green
environment. We are an environmentally responsible company and some of
our key technology initiatives to protect the environment are presented
below:
Virtualization: It is commonly observed that a large number of servers
frequently run with underutilization of processing capability.
Visualization, leads to abstraction of resources. It helps in
increasing operational efficiency by consolidating several physical
servers onto one logical machine. Running multiple machines on one
server increases capacity utilization, reduces power usage and related
maintenance expenditure. With extensive adoption of Virtualization
technology, the Company has made substantial savings in power
consumption of up to 50%.
Printer Control: As a part of the "Go Green" campaign at Oracle, the
Company has adopted practices such as monitoring of printer usage and
the automation of various activities to optimize paper usage. We have
already reduced printing consumption by almost 40%.
Our Company has also implemented green technologies such as intelligent
lighting in datacenter, water and paper recycling, investment on power
saving equipments etc. to ensure eco-friendly operations at various
levels. The significance of conserving our environment is also conveyed
periodically to employees through mailers and posters to elicit their
active participation in this cause and to raise their awareness levels.
Prospects
With the change in the economic environment over the last 24 months,
banks have reviewed their IT investments to realign them to address new
business priorities. We see continued demand for core banking
applications as banks expand by buying the assets of other banks,
establish presence in new countries and standardize applications across
regions. Banks have also sought centralization of banking services such
as account opening and origination of credit. They want to do so to
improve their service levels and productivity and gain greater control
over processes that are coming under increasing regulatory scrutiny.
Banks have worked hard to regain public trust. This declined after the
recent downturn and in turn reduced transactions and floating capital
making the financial system less efficient. Banks want the right
technology to help them enhance security, improve risk and liquidity
management, stress testing as well as process measurement and
improvement.
Banks are evolving into intelligent investors who make informed
decisions based on the business benefits that accrue from technology
investments. Some of the more aggressive banks have experimented and
successfully delivered new business services in their markets by
leveraging technology. Such banks have completely differentiated
themselves from competition and delivered a better banking experience
to their customers. The next generations of these services are being
actively considered by many existing Oracle customers as applications
and technologies that are offered pre-integrated rather than
implemented at the banks location.
Your company has continued to invest in Oracle FLEXCUBE to address
these emerging needs and help our customers achieve excellence through
the effective use of information technology. Oracle FLEXCUBE 11.0 was
announced in January 2010 to address important and evolving
requirements of banks around the globe.
Evolving regulations around Liquidity Risk, Stress Testing and Credit
Risk continue to contribute to increasing traction at Tier 1 banks for
our products. Over the past 12 months financial institutions have
exhibited renewed interest in finance, risk and performance
applications and in aligning these three areas to deliver better and
more meaningful results. Risk Adjusted Performance Measurement (RAPM)
that makes such alignment possible has received greater attention from
regulators and from the boards of many banks.
Capital reform is another area of focus for regulators. A key element
of effective capital reform is better and more comprehensive adaptation
of capital requirements to risks. The rules surrounding the Internal
Capital Adequacy Assessment Process (ICAAP), Pillar 2 of Basel II,
mandate financial institutions to develop internal procedures and
systems to ensure that they possess adequate capital resources in the
long term taking in to consideration all material risks.
Many countries have also revised fraud and financial crime regulations
to protect their consumers. The increasing sophistication of fraudulent
activity continues to force financial institutions to be on guard when
it comes to fighting financial crime. In addition, regulators in Asia,
Africa and Latin America have also published guidelines asking
financial institutions to comply with Anti Money Laundering regulations
over the next 24-36 months.
After an intense review of the financial events of 2008-2009,
regulators have asked banks to align their internal processes to
safeguard customer interest and avoid past failures in investment
transactions. Capital markets around the world are witnessing increased
activity post recession and a greater probability of fraud. Changes in
the investment-banking environment have contributed to the increased
adoption of broker compliance and trading compliance solutions.
Financial institutions will also have to comply with energy trading
compliance mandates from regulators as these markets have proved to be
very volatile in the past.
We have created a complete and fully integrated portfolio of analytical
applications covering enterprise risk, regulatory compliance,
performance management and customer insight. It is built on a shared
analytical infrastructure consisting of a unified financial services
data model, shared analytical computations and the industry leading
Oracle Business Intelligence platform.
IT services in leading markets are consolidating and are becoming more
price sensitive. However, the use of these services has expanded as the
pressure has spread to Tier 2 and Tier 3 banks to remain cost
effective. Financial institutions continue to look at ways to maximize
efficiency and rationalize their IT infrastructure usage. Customers are
leveraging our service offerings to gain unmatched competitive
advantage for their businesses.
Employee particulars
Information as per Section 217(2A) of the Companies Act, 1956 ("the
Act"), read with the Companies (Particulars of Employees) Rules, 1975,
forms part of this Report. As per the provisions of Section
219(l)(b)(iv) of the Act, the Directors Report and the Accounts are
being sent to the members excluding the statement giving particulars of
employees under Section 217(2 A) of the Act.
Any member interested in obtaining a copy of the statement, may write
to the Company Secretary at the Registered Office of the Company.
Acknowledgements
Your Directors take this opportunity to thank the Companys customers,
members, vendors and bankers for their continued support during the
year. Your Directors also wish to thank the Government of India and its
various agencies, Department of Electronics, the Software Technology
Parks à Bangalore, Mumbai, Chennai and Pune, SEEPZ Special Economic
Zone, the Customs and Excise Department, Ministry of Commerce, Ministry
of Finance, Ministry of External Affairs, Ministry of Corporate
Affairs, Department of Telecommunication, the Reserve Bank of India,
the State Governments of Maharashtra, Karnataka, Haryana and Tamil Nadu
and other local Government Bodies, for their support and look forward
to their continued support in the future.
Your Directors also place on record their appreciation for the
excellent contribution made by employees of the Company through their
commitment, competence, co-operation and diligence with a view to
achieving consistent growth for the Company.
For and on behalf of the Board,
William T Comfort, Jr.
Chairman
July 22, 2010
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