Dear Members,
We are pleased to present the 12th Annual Report on our business and operations for the
year ended March 31, 2023 of Intellect Design Arena Limited ("the Company).
This is our ninth year of business operations.
1. Results of operations |
(In Rs. Million, except EPS data) |
|
Standalone |
Consolidated |
Description |
Year ended March 31 |
|
2023 |
2022 |
2023 |
2022 |
Revenue from operations (including other income) |
15,145 |
12,914 |
22,826 |
19,187 |
Operating expenses (excluding, depreciation and finance cost) |
12,299 |
9,550 |
17,961 |
14,061 |
Profit before interest, depreciation and tax |
2,846 |
3,364 |
4,865 |
5,126 |
Finance cost |
22 |
30 |
32 |
43 |
Depreciation and amortisation |
801 |
690 |
1,215 |
976 |
Profit before share of profit from associate and tax |
2.023 |
2,644 |
3,618 |
4,107 |
Add: Share of profit on associate companies (net of tax) |
- |
- |
15 |
25 |
Profit before tax |
2,023 |
2,644 |
3,633 |
4,132 |
Income tax expenses |
683 |
623 |
947 |
628 |
Profit after tax |
1,340 |
2,021 |
2,686 |
3,504 |
Remeasurement (losses)/gains on defined benefit plans |
(102) |
16 |
(101) |
16 |
Exchange differences on translation of foreign operations |
- |
- |
257 |
(5) |
Net movement on cash flow hedges |
(488) |
155 |
(487) |
155 |
Other comprehensive (loss)/income for the year, net of tax |
(590) |
171 |
(330) |
166 |
Total comprehensive income for the year, net of tax |
1,190 |
2,192 |
2,355 |
3,671 |
Less: Non-controlling interest |
- |
- |
(14) |
17 |
Total comprehensive income for the year (attributable to owners of the Company) |
750 |
2,192 |
2,359 |
3,654 |
EPS |
|
|
Basic Rs. |
9.98 |
15.19 |
19.90 |
26.25 |
Diluted Rs. |
9.64 |
14.55 |
19.23 |
25.14 |
Table No. 1.1 |
Function wise classification of statement of consolidated Profit and Loss
|
|
In Rs. Million |
|
Year Ended |
|
March 31, 2023 |
March 31, 2022 |
INCOME |
|
|
Income from software product license and related services |
22,460 |
18,565 |
Total income |
22,460 |
18,565 |
EXPENDITURE |
|
|
Software development expenses |
10,180 |
7,976 |
Gross margin |
12,280 |
10,589 |
Gross margin % |
55% |
57% |
Selling and marketing, general and administrative expenses |
6,054 |
4,898 |
Research and engineering expenses |
1,724 |
1,187 |
Total expenditure |
17,958 |
14,061 |
EBITDA |
4,502 |
4,504 |
Depreciation and amortisation |
(1,215) |
(976) |
Hedge impact |
(147) |
217 |
Fx reinstatement gain/ (loss) |
129 |
(32) |
Other income |
384 |
342 |
Profit before tax |
3,621 |
4,055 |
Tax expenses |
(947) |
(628) |
Profit after tax (attributable to owners of the Company) |
2,673 |
3,491 |
Table No. 1.2 |
|
|
2. State of Company's affairs
The consolidated revenue from operations (including other income) for the year ended
March 31, 2023 stood at Rs. 22,826 million, registering a growth of 19%, over the previous
year's revenue of Rs. 19,187 million. The consolidated profit after tax for the year ended
March 31, 2023 and 2022 stood at Rs. 2,686 million and Rs. 3,504 million, respectively.
The consolidated reserves and surplus as of March 31, 2023 stood at Rs. 19,898 million as
against Rs.17,414 million as of March 31, 2022. For FY 23, the Company has not transferred
any amount to the reserves.
3. Material Changes and Commitments
There were no material changes and commitments from the end of the financial year till
the date of this report.
4. Dividend
The Board at its meeting held on May 11, 2023 has proposed a final dividend of Rs. 2.50
per share at face value of Rs. 5 for the financial year ended March 31, 2023, subject to
the approval of shareholders at the ensuing Annual General Meeting and if approved would
result in the cash flow of Rs. 339 million.
The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 ("Listing Regulations") is uploaded on the Company's website.
The weblink of the Dividend Distribution Policy is https://
www.intellectdesign.com/investor/general/2018-apr-dividend-distribution-policy.pdf.
5. Subsidiary and Associate Companies
Details of Subsidiary Companies, Associate Companies, and their financial position.
Your Company has 22 (12 direct and 10 step down) subsidiary companies and 2 associate
companies as on March 31, 2023. The information as required under the first provision to
sub-section (3) of Section 129 is given in Form AOC-1 in Annexure 1.
6. Cash Position
Your Company has a cash position of Rs. 5,477 million.
7. Share Capital
The paid-up capital of the Company increased to Rs. 67,86,12,875 through share
allotments made against exercise of Options (11,68,961 equity shares) under the ASOP /
ISOP / IIPS Schemes, and comprises 13,57,22,575 equity shares at a face value of Rs. 5
each as on March 31, 2023.
The details of all the stock option plans, including terms of reference, and the
requirements are set out in Annexure 2.
8. Corporate Governance
Your Company has been complying with the provisions of Corporate Governance as
stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
(referred as "Listing Regulations"). A separate report on Corporate Governance,
along with the Certificate on Compliance of the Corporate Governance norms as stipulated
under Chapter IV of the Listing Regulations is provided elsewhere in this Annual Report.
The Management's Discussion & Analysis Report forming part of this report, is provided
elsewhere in this Annual Report.
9. Transfer to Investor Education and Protection Fund
As required under the provisions of Section 125 and other applicable provisions of
Companies Act, 2013 (hereinafter "the Act"), dividend that remains unpaid/
unclaimed for a period of seven years, are to be transferred to the account administered
by the Central Government viz: Investor Education and Protection Fund ("IEPF").
According to Section 124 of Companies Act, 2013 the Company has transferred unpaid or
unclaimed dividend amount within 7 days after expiry of thirty days to the account opened
by the Company on that behalf in the bank called the Unpaid Dividend Account. Further
pursuant to sub-section (5) of section 124 if the amount has not been paid or claimed for
seven consecutive years or more shall be transferred by the company to the Investor
Education and Protection Fund (IEPF).
10. Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 134 (3) (m) of the Companies Act, 2013 read
with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in Annexure 3 of this
Report.
11. Particulars of employees
(a) 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) Rules, 2014 does not form part of this report. In
terms of Section 136 of the Act, the same is open for inspection during working hours at
the registered office of your company. A copy of this statement may be obtained by the
members by writing to the Company Secretary.
(b) The ratio of remuneration of each director to the median remuneration of the
employees of the Company and other details in terms of Section 197 (12) of the Companies
Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are part of this report as Annexure 4.
12. Business Responsibility and Sustainability Report
In accordance with Regulation 34(2)(f) of the Listing Regulations, Business
Responsibility and Sustainability Report ("BRSR") covering disclosures in the
prescribed format for FY 2022-23 forming part of this report, is provided elsewhere in the
Annual Report.
13. Directors' Responsibility Statement as required under Section 134 (5) of the
Companies Act, 2013
Pursuant to the provisions of Section 134 (3) (c) of the Companies Act, 2013 the
Directors of your Company confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have
been followed and there are no material departures;
b) they have selected such accounting policies, 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) they 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;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company and
that such internal financial controls are adequate and were operating effectively; and
f) they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
14. Board Meetings, Board of Directors, Key Managerial Personnel & Committees of
Directors
(a) Board Meetings:
The Board of Directors of the Company met 5 times during the year 202223. The details
of various Board Meetings are provided in the Corporate Governance Report. The gap
intervening between two meetings of the board is as prescribed in the Act.
(b) Re-Appointment
Mrs. Vijaya Sampath (DIN:00641110) was appointed as an Independent Woman Director at
the 8th Annual General Meeting with effect from October 25, 2018 to hold office for first
term for a period of 5 (five) years upto the conclusion of 12th Annual General
meeting of the Company to be held in the calendar year 2023 and whose term of office is
liable to expire on October 24, 2023.
Based on the recommendation of the Nomination, Remuneration and Compensation Committee
and subject to the approval of shareholders, wherever applicable, the Board of Directors
has at its meeting held on May 11, 2023 approved the re-appointment of Mrs. Vijaya Sampath
(DIN: 00641110) as an Independent Woman Director for a period of 5 years with effect from
October 25, 2023 to October 24, 2028. Brief Profile of Mrs. Vijaya Sampath form part of
the Notice convening the 12th Annual General Meeting of the Company.
(c) Director liable to retire by rotation
In terms of Section 152 (6) of the Companies Act, 2013 and as per Article 34 (l) of the
Articles of Association of the Company, one third of the Directors other than Independent
Directors are liable to retire by rotation at the Annual General Meeting of the Company.
Mr. Anil Kumar Verma Whole Time Director, is liable to retire by rotation and offers
himself for reappointment.
(d) Independent Directors
Mr. Arun Shekhar Aran (DIN: 00015335) was appointed as an Independent Director for a
term of three (3) years on May 3, 2016 and re-appointed at the 8th AGM held on August 21,
2019 for a second term of Five (5) years upto May 1, 2024.
Mrs. Vijaya Sampath (DIN: 00641110) was appointed as an Independent Director w.e.f.
October 25, 2018 for the first term of 5 years and was regularised at the AGM held on
August 21, 2019.
Mr. Abhay Anant Gupte (DIN: 00389288) was appointed as an Independent Director w.e.f.
June 15, 2020 for the first term of 5 years and was regularised at the AGM held on August
21, 2020.
Mr. Ambrish Pandey Jain (DIN: 07068438) was appointed as an Additional Independent
Director w.e.f May 05, 2022 and was regularised at the AGM held on July 29, 2022 to hold
office for a term consisting of 5 years until May 4, 2027.
No Directors resigned during the financial year 2022-2023.
The Company has received necessary declarations from each Independent Director of the
Company under Section 149 (7) of the Companies Act, 2013, that they meet the criteria of
independence as laid down in Section 149 (6) of the Act and in accordance with Regulation
25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Further, no Independent Director is a non-independent Director of another company on the
Board on which any non-independent Director of the listed entity is an Independent
Director and no Director has been debarred by any order / judgement of any regulator in
force.
(e) Details of remuneration to Directors: The information relating to remuneration
of directors as required under Section 197(12) of the Companies Act, 2013, is given
elsewhere in the report.
(f) Board Committees
The Company has the following Board Committees:
1. Audit Committee
2. Nomination, Remuneration & Compensation Committee
3. Stakeholders' Relationship Committee
4. Corporate Social Responsibility Committee
5. Risk Management Committee
Sub-committees:
1. Share Transfer Committee
2. Cyber Security Committee
The composition of each of the above Committees, their respective role and
responsibility is as detailed in the Report of Corporate Governance.
The policy framed by the Nomination, Remuneration and Compensation Committee under the
provisions of Section 178(4) of the Act, is as below:
(g) Remuneration policy
The remuneration policy of the Company has been so structured as to match the market
trends of the IT industry. The Board, in consultation with the Nomination and Remuneration
& Compensation Committee, decides the remuneration policy for Directors. The Company
has made adequate disclosures to the members on the remuneration paid to the Directors
from time to time. Remuneration / Commission payable to Directors is determined by the
contributions made by the respective Directors for the growth of the Company.
The remuneration policy of the Company and other matters as required under Section 178
(3) of the Act can be accessed through
https://www.intellectdesign.com/investor/general/remuneration- policy.pdf. There has been
no change in the policy since the last fiscal year. We affirm that the remuneration paid
to the Directors are as per the terms laid out in the remuneration policy of the Company.
(h) Board Evaluation
As required under the provisions of Section 134 (3) (p) of the Companies Act, 2013 and
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has
carried out an annual performance evaluation of its own performance and that of its
committees and individual directors. The manner in which such performance evaluation was
carried out is as under:
The performance evaluation framework is in place. Dr. Ashok Korwar, a renowned
management consultant, has had technical education at IIT Bombay, completing a B.Tech
Degree. Subsequently, he also studied management at Indian Institute of Management,
Ahmedabad and completed Ph.D at UCLA Anderson School of Management. He specialises in
strategic thinking, go to market strategies and executing coaching. He has created and
developed workshops on account management, finance for project managers and Design
Thinking. He was appointed to evaluate the performance of the Directors and made a
presentation to the Board summarising the views and suggestions made by the individual
Directors and the Board. The performance of the Board was evaluated on the basis of
criteria such as the Board composition and structure, effectiveness of Board processes,
information and functioning, etc.
The performance of the committees was evaluated by the Board after seeking inputs from
the committee members on the basis of criteria such as the composition of committees,
effectiveness of committee meetings, etc. The Board and the Nomination, Remuneration and
Compensation Committee reviewed the performance of Individual Directors on the basis of
criteria such as exercise of responsibilities in a bonafide manner in the interest of the
Company, striving to attend meetings of the Board of Directors / Committees of which
he/she is a member / general meetings, participating constructively and actively in the
meetings of the Board/committees of the Board, etc.
In a separate meeting of independent directors held on March 22, 2023, performance of
Non-Independent Directors, performance of the Chairman of the Company and the performance
of the Board as a whole were evaluated.
(i) Vigil Mechanism
The Company has established a whistle-blower policy and also a mechanism for Directors
and employees to report their concerns. The details of the same is explained in the
Corporate Governance Report.
(j) Related Party Transactions
All related party transactions that were entered during the financial year were on
arm's length basis and were in the ordinary course of business. There are no other
materially significant related party transactions made by the Company with Promoters,
Directors, Key Managerial Personnel or other designated persons which may have a potential
conflict with the interest of the Company at large.
The details of the related party transactions as required under Section 134 (3) (h)
read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Form AOC-2 in
Annexure 5.
15. Auditor reports and auditors
Statutory Auditors: M/s. S.R. Batliboi & Associates LLP, Chennai, Chartered
Accountants have been appointed at the Annual General Meeting held on August 21, 2019 to
hold office as statutory auditors until the conclusion of the 13th Annual General Meeting
of the Company. There are no qualifications or adverse remarks in the Auditor's Report for
the financial year ended March 31, 2023.
Secretarial Auditors: Pursuant to the provisions of Section 204 of the Companies
Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, Secretarial Audit has been carried out by M/s B Ravi & Associates, Company
Secretaries, and their report is annexed as Annexure 6.
In connection with the observations made in Annexure 6, though not in the nature of
qualifications, the management herewith provides the following clarifications to avoid any
ambiguity:
(i) The Company has complied with Regulation 3(5) & 3(6) of SEBI (Prohibition of
Insider Trading) Regulations, 2015 as on 31.03.2023 which was also affirmed by the
Secretarial Auditor in his Secretarial Compliance Report for the year ended 31.03.2023.
(ii) There was a minor delay by a few hours in intimating to the stock exchanges
regarding the grant of Options / RSU's to the employees under the schemes in force.
Internal Auditors:
Pursuant to Section 138 of the Companies Act, 2013, M/s. ANB & Co. was re-appointed
as the Internal Auditors of the Company for a period of 6 months with effect from April
01, 2022 and was subsequently re-appointed for another period of 6 months with effect from
October 01, 2022 and whose term of office had expired on March 31, 2023. Reports of the
Internal Auditors' has been reviewed and taken on record by the Audit Committee of the
Board of Directors of the Company.
Pursuant to the provisions of Section 138 of the Companies Act 2013 read with Rule 13
of the Companies (Accounts) Rules, 2014 and other applicable provisions, the Board has
appointed M/s. Sharp & Tannan, Chartered Accountants having FRN-109983W as Internal
Auditors of the Company for a period of 2 (Two) Years with effect from April 01, 2023.
Cost Records and Cost Audit:
Maintenance of cost records and requirements of cost audit as prescribed under Section
148(1) of the Companies Act, 2013 are not applicable for the business activities carried
out by the Company.
16. Deposits
The Company has not accepted any deposits during the financial year and as such, no
amount of principal or interest was outstanding as on March 31, 2023.
17. Reporting of fraud:
During the year under review, there were no instances of fraud as required to be
reported by the Statutory Auditors / Secretarial auditors of the Company.
18. Social Connect Ullas Trust
Is the collective social responsibility of Intellect that brings together our
associates with the adolescent young minds in the communities we live and work in, and
even going to back our roots in the districts, to experience the magic of mentoring young
minds! Magic as one experiences the joy of shaping young minds, but also the reverse
learning that one receives from these bright sparks that inspires every mentor to do more
and be more. Since its inception in 1997, Ullas has grown into a thriving community of
dedicated associate volunteer mentors from Intellect, from our Clients, and other
Corporates; partners from Civil Society Organisations, and youth from Colleges - all
united by the common purpose of shaping the thinking of adolescent young minds. Over the
25 years, Ullas has sown the seed of a dream, ignited and nurtured over 18 lakh young
minds across 115 Districts, in 8 States and 2 Union Territories.
Primary motive of the Trust continues to be - to ignite young minds and nurture them
during their most vulnerable space in life (adolescence). This is accomplished through
seeding the "Can Do" spirit, encouraging them to dream big with conviction,
positive role model influences, and enrichment programs delivered by mentors to nurture
them towards achieving their potential and their dreams.
Academic Year 2022-23 also marked the coming back of Ullas from 2 years of virtual
engagements to in person mode of engagements successfully. It was with renewed energy and
vigour that Ullas along with its selfless volunteers and mentors reached out to Young
Achievers, Young Leaders and the schools and delivered the interventions under Summit,
Touch the Soil and Higher Education Scholarship Program in alignment with the purpose of
"igniting young minds", and sowing the seeds of "Can Do" spirit in
every intervention.
Highlights of this Academic Year:
Silver Jubilee Year of Ullas - Ullas Trust celebrated its silver jubilee by
recognising young achievers and inspiring them to pursue their dreams, during their annual
"Can Do" workshop held in Music Academy, Chennai. Dr J Radhakrishnan (IAS,
Principal Secretary to Government of Tamil Nadu) and Kalaimamani V K T Balan (Chairman,
Madura Travel Service Pvt Ltd) were the Guests of Honour at the event. The workshop was
followed with similar workshops at Delhi, Mumbai and Hyderabad. These workshops recognized
2169 students from Corporation, Government and Government-Aided Schools by awarding merit
scholarships.
From Teenager to Achiever: Book authored by Mr. Arun Jain - Commemorating the
25th year since inception, Founder Arun Jain released a book 'From Teenager to Achiever',
that he has authored. The book has been specially written to unleash the potential of
teenagers and has been designed as a unique self-improvement book. From Teenager to
Achiever is a culmination of the experience of working with high school students for 25
years through the Ullas Trust and his own experiences as a teenager.
Summit Enrichment Program: Ullas continued to nurture the dreams of 3,130
students from 354 schools across 5 States (Delhi NCR, Haryana, Maharashtra, Tamil Nadu and
Telangana) through the Summit interventions. These interventions brought cheer all around
- from the volunteer mentors to the Young Achievers and Young Leaders - everyone coming
alive as they met each other after a gap of 2 years. It was a joy to witness the essence
and ethos of Ullas continue to flourish creating the intended impact.
Touch The Soil - reconnecting to our roots: With greater resolve Team Ullas took
Ullas interventions to students in the classrooms of district schools. The enthusiasm of
reaching out to children in district schools after pandemic could be easily seen on the
faces of volunteers. Ullas delivered "Can Do" and "Planning" workshops
to 1,54,082 students from 1,025 Schools, 106 Districts across 5 States.
Mission Samriddhi Clusters: Across the Mission Samriddhi Clusters spread across
13 districts and 3 states - UP (1 district), Maharashtra (3 districts) and Tamil Nadu(9
districts) Ullas coordinators ensured vibrant, inspiring interactions with young minds to
Dream Big, with deep conviction. With the support of teachers and role models from the
community, the intervention programs were powerful in driving home the "Can Do"
spirit.
Ullas Young Leaders Program: The Higher Education Scholarship saw fresh intake
of 75 scholars across Chennai, Delhi and Hyderabad. SIDDHOPAMA the first in person
interaction with the scholars. HES Scholars were engaged in all the key activities in
Ullas from Can do Workshop to Summit Classes leading to their skill development. Career
Guidance program and Talks at Ullas were conducted to to further ones professional
standing.
Ullas - a community of Engaged Givers: "The greatness of a community is
most accurately measured by the compassionate actions of its members - Coretta Scott
King". Especially during the most uncertain and perilous times. These words reflect
what the Ullas community is all about - a community made up of our incredible volunteer
mentors - Friends of Ullas as they are known, our awesome Alumni from across the globe,
our very own inspiring Young Leaders who came together to collectively lift the spirits of
young minds through the various programs. Be it a 2 hour Summit intervention or a 1-1
mentoring program, our Ullas community was not just empathetic but "compassion in
action"! We could not have done this without this ONE team!
Yet another extraordinary year where the "purity of purpose" of Ullas
continued to shine bright!
Mission Samriddhi
Mission Samriddhi was founded in 2016, which gave your Company a platform to explore
the agenda of holistic rural development and expand our Social canvas. We are proud to be
associated with a multitude of initiatives in promoting Education, Health, Economic
upliftment and Self Governance in the rural domain.
Mission Samriddhi is a social impact platform dedicated to strengthening communities
and institutions to achieve holistic, collective and sustainable rural development.
Mission Samriddhi addresses the complex challenges to development by following a holistic
and integrated approach and applying design thinking and empower the rural and
marginalised communities to become the agents of their own development and dream the
change by enhancing their self-worth.
Key initiatives in financial year 2022-2023 are:
Holistic Collective Farming (HOCO)
HOCO is an initiative of Mission Samriddhi, integrating the principles of natural
farming with the strengths and values of collective farming. The initiative is currently
being implemented at Shiratoki, a small tribal hamlet in the Yavatmal district, where 40
households have pooled 125 acres of their land to practice collective farming. Technical
inputs on aspects of crop
planning, water management and harvesting and natural farming practices are provided by
a team of subject experts to the farmers. The overall plan has facilitated the
establishment of water structures to harvest an estimated 200 crore litres of water
through farm ponds, compartment bunding and CCTs.
Mobile Therapy Project: Community Based Rehabilitation
The Mobile Therapy Project (MTP) of Sristi Foundation, supported by the CSR initiatives
of your Company, emerged as a response to a comprehensive survey conducted in 47 gram
panchayats in Mailam Block of Villupuram District in Tamil Nadu. The study screened 2,229
youngsters and identified 155 children in 88 villages who were in need of therapy. Of
these, 127 children were selected as beneficiaries under the MTP pilot project. Under this
project, a Mobile Therapy Unit would travel to the homes of children with disability and
provide them with physiotherapy, occupational therapy, speech therapy, special education,
parental counselling and support in accessing government schemes
Currently 86 children are actively benefiting from the project and of these, 48
children receive physiotherapy support and 59 children receive special education. By the
end of the pilot project in August 2022, 1117 physiotherapy, special education &
speech therapy services had been provided to these children, and 138 community awareness
programs on disability and inclusion had been conducted to reach the communities of 88
villages.
Specifically in the financial year 2022-23, 380 special services
(Physiotherapy, Speech education and Speech therapy services) were provided to these
children and 69 awareness programs for mothers needing ante-natal care were carried out.
Additionally, 18 medical referral services were provided and 1356 beneficiaries were
reached through Disability camps to provide disability certificates, UDID cards and other
benefits.
TN-CDP (Tamil Nadu-Cluster Development Programme)
The Cluster Development Programme in Tamil Nadu (TN-CDP), supported by the CSR
initiatives of your Company, is being implemented in 46 Gram Panchayats spread over 8
Blocks and 8 Districts of Tamil Nadu, TNCDP addresses the holistic development needs of
75,609 Households and 2.25 lac population
An OORKUDI App has been developed for the field staff to complete primary
socio-economic data collection of all the households in these 46 Panchayats. The Elected
Representatives of the 46 GPs have undergone a Design Thinking driven leadership
development program to help them chart out and implement their plans for the holistic and
sustainable development of their communities. In fact, all the 46 Panchayats have passed
resolutions in their respective Gram Sabha meetings that they will collaborate with
Mission Samriddhi as their holistic development partner.
The flagship Ullas Trust program interventions that include the SUMMIT Classes as well
as the Touch the Soil Workshops have been successfully implemented covering 1338 children.
51 students from these clusters also received scholarships. A novel economic empowerment
initiative to enhance the livelihoods of marginal farmers in Namakkal CDP cluster through
the cultivation and sale of mushrooms is under progress.
19. Audit Committee Recommendation
During the year, all the recommendations of the Audit Committee were accepted by the
Board. The Composition of the Audit Committee is as described in the Corporate Governance
Report.
20. Annual Return
Pursuant to Section 92 (3) read with Section 134 (3) (a) of the Companies Act, 2013,
the Annual Return in Form MGT 7 shall be placed on the website of the company at
www.intellectdesign.com/investor-relations after the conclusion of the 12th Annual General
Meeting.
21. Significant & Material Orders passed by the Regulators or Courts
During the financial year 2022-23, no order has been passed by any Regulatory
authorities or Courts.
22. Particulars of Loans, Guarantees and Investments u/s 186
During the financial year, there was no loan given or guarantee given or security
provided pursuant to Section 186 of the Companies Act, 2013 and the relevant provisions as
applicable have been compiled by the Company. Details of investments made by the Company
are given in the Notes to the Financial Statements
23. Risk Management Policy
Intellect being a pioneer in the Intellectual property led Business in India, the
company is continuously focussing and committing itself to have a Risk Management system
suited for the Products business.
Towards this, the Board has formed a Risk Management Committee with Directors, the
Chief Financial Officer and the Chief Risk Officer as members of the committee. The
Committee works to mitigate any inherent risks faced by the Business and to meet the
increasing demand of Customer's liability through different means within the overall
framework listed below.
Risk Management Framework Objective
The Organisation is subject to certain risks that may affect our ability to operate,
may disrupt our business model due to changes in competitive landscape, changes in
Technology which may render our capabilities obsolete, and thus hamper our ability to
serve our customers and protect assets. These risks could adversely affect Customer
projects, Employees, Shareholders, liability to Third Party and risks to Property among
others. Controlling these risks through a formal process is necessary for the well being
of the Organization and its stakeholders.
The organisation's Risk policy facilitates identification of these Risks on a
continuous basis and proposes mitigation measures. Our risk policy aims to minimize
adverse impact of these risks on Company's growth, Profit margins and People engagement
besides Regulatory Compliance. Risk Management has been made an integral part of the
Organisation by encouraging Risk Awareness among employees.
Risk Management Committee
The Risk Management Committee (RMC) of the Board of Directors oversees the Risk
Management process under the overall direction of the Board of Directors. The Risk
Management Committee consists of the Board of Directors, Chief Financial Officer and the
Chief Risk Officer. The Organisation use BELIEF (Brand, End Customer Capital, Leadership,
Intellectual Property, Execution and Finance) framework for its risk classification. The
RMC is supported by Information and Cyber Security Sub Committee, Cloud Risk Council and
Enterprise Risk Department to execute the overall risk management plan and periodically
update the Risk Management Committee.
Risk Management Process
Risk Management is a continuous and developing process which runs throughout the
Organisation's strategy and the implementation of that strategy. The Risk Management helps
the organisation to proactively manage uncertainties in the internal and external
environment and to limit the negative impacts and benefit on the opportunities. The
process includes risk identification, risk evaluation, risk prioritsation, risk
mitigation, risk monitoring & review.
Some of the major risks are classified using BELIEF framework as follows
BRAND CAPITAL
1. Reputation Risk
The brand / reputation risk may arise in case of issues around product implementation,
customer relationships & escalations etc. Risk may accentuate due to increased use of
social media & other internet based applications in the corporate world. The risk is
mitigated by adoption of Product, Delivery & Customer Excellence processes to manage
implementations & relationships effectively.
END CUSTOMER CAPITAL
2. Business Risk
2.1 Economic, Political and Social Outlook Risk
Volatility in the financial markets coupled with political uncertainties, trade war,
inflationary trends, recession, pandemic or unforeseen external events may have resulting
cascading effects on the financial sectors such as cost reduction measures etc. Further
demographic shift in usage of technology or financial services by consumer in general may
have adverse impact on sale of Intellect products. Intellect's global presence, wide range
of products to cater different segments within the financial sectors, penetration into
diversified market & various geographies; spread of product concentration and
increased partnerships facilitates to mitigate the risk.
2.2 Market Competition Risk
The company faces competition from large Multinational companies, local companies in
the geography in which we operate and Indian Product companies. While many of these
companies are established companies, the start-ups may also disrupt our business. This may
pose challenges to maintain or sustain the business growth or profitability in a longer
run. Company makes focussed investments in R&D with continuous evaluations of product
endurance across segments / geographies to keep products relevant & competitive in
market place. Ongoing efforts made to enhance the customer experience through deployments
of innovative products, competitive pricing through operational efficiencies, cost
optimisation measures & improved implementations with minimal no. of defects helps us
to remain ahead in the innovation curve.
2.3 Business Model Risk
With increased usage of cloud hosting across the industry, a strategic shift from
traditional License / AMC based model to cloud model may pose risk to the Company's
existing business model. Moreover, the disruptive technologies such as Big data, ML &
AI coupled with usage of social and smart devices can change the way business is done. The
Company keeps a close eye on the changing business model scenario and takes appropriate
required actions. A certain portion of our revenue is already derived from the Cloud model
through SaaS & subscription. The Company also makes focused investment in R&D to
keep the products relevant and competitive in market place and create products with
Digital technologies.
2.4 Business Concentration Risk
The company is specialised in BFSI space and could face the risk of concentration in a
single space. Significant reliance on a particular product, customer, segments or
geography may heighten the risk of revenue loss & consequential impact on the
profitability in case of adverse conditions such as customer exit, volatile geo-political
scenarios, sector specific slowdown etc. However, this risk is mitigated to a large extent
by fairly diversifying the concentration across lines of business, market segments &
geographies. The company has presence in all the 4 sub segments of BFSI namely Corporate
Banking, Retail Banking, Capital Markets and Insurance. These 4 sub segments have
different boom and bust cycle and therefore protect the company. Further Company has
multiple products and client base to further de-risk the product / business concentration.
Intellect mitigates its geography concentration risk by having its presence across
different geographies. Multiple products and client base further de-risk the product /
business concentration.
2.5 Customer Service Management Risk
Intellect has the contractual agreements with multiple clients from different countries
with varied needs, requirements and their legal & operating environment. Morever, the
nature of the contracts are long term and relationships if not managed appropriately could
have repercussions on the customer persistency & business growth. The risk is
mitigated through regular assessment of the customer relationships through customer
feedback and satisfaction scores. Mechanisms are built in to monitor adherence to the
contractual clauses with its customers. The robust longterm strategic relationships are
built with the customers to enhance customer satisfaction & value maximisation along
with designing, developing & implementing the products according to industry needs and
requirements.
2.6 Contractual Compliance Risk
As a product based company, Intellect bears the risk of IP infringements arising from
the use of its products and non-performance of its contractual obligations. These risks
may accentuate if the contractual obligations are not aligned to Intellect's risk
appetite. The Company has an established process in place to review all contracts. As a
policy its obligation under each contract are restricted appropriately. The Company has
adequate Insurance obtained to mitigate against risk of Errors and Omissions, Commercial
General Liability etc.
LEADERSHIP CAPITAL
3.1 People Risk
The Company operates in niche BFSI product space which requires people with specialised
skill, as against mass recruitment that was followed in Services business. Lately the
overall IT industry has experienced the challenges of high attrition and retention of
critical talent in the organisation. The Company minimises the risk through in-depth
in-house training & recruitment from top end Engineering colleges , B Schools, Tier 2
cities & lateral hires. The Background Checks (BGC) is mandated for all new hirers and
is audited from time to time. Emphasis prevails on conduct of indepth & in-house
training.
3.2 Associate Conduct Risk
Mechanisms to prevent or minimise inappropriate conduct such as fraud, sexual
harassment, criminal attempts, bribery or violation of Company policies such as code of
conduct, conditions of employment, Insider trading or any other professional negligence,
errors & omissions etc. if not adequate may jeopardise work culture / reputation /
asset / property damage or business performance. Established various policies &
process, adequate trainings and awareness programmes on policies & procedures for its
associates conducted along with regular monitoring. Policies on whistle blower,
escalations, incident management & response mechanisms in conjunction with the
established disciplinary committee facilitates to effectively address the inappropriate
conducts, if any.
INTELLECTUAL PROPERTY CAPITAL
4.1 Information & Cyber Security Risk
Internal and external cyber threats if not appropriately managed can potentially result
in data leakage, source code compromise etc. which may significantly disrupt core
operations and may damage Company's Brand Image / reputation. The risk is mitigated
through Information & Cyber Security Forum and Central Security Group which administer
the Information & Cyber security programme for the organisation. through internal and
external assessments in the form of Audits and Certifications like ISO 27001, ISO 27017,
ISO27018, PCI DSS and SOC2. Intellect Security policy is institutionalized across the
organization. Moreover, Cyber liability insurance is obtained to safeguard against any
loss arising out of any security breaches.
4.2 Data Protection & Privacy Risk
The confidential data of the customers / associates are subject to data privacy laws of
various states. Procedures to effectively handle the confidentiality and privacy if not
robust can lead to data breaches. The risk gets accentuated on account of heightened
regulations or guidelines such as GDPR, widespread usage of emerging technologies used to
enhance customer experience also may pose challenges to protect data & the privacy
elements. The risk is mitigated by putting data authorisation process in place, provision
of necessary guidance to the delivery teams with data security practices. GDPR related
compliance reviews are facilitated for applicable business / functional teams.
Vulnerability Assessment & Penetration Test (VAPT) and Dynamic Application
Security Testing (DAST) is being enforced across all Product releases. Further, there is
an adopting new contractual provisions in existing and new contracts.
4.3 Intellectual Property Rights Infringement Risk:
a) IP protection: The Company may face challenges to protect the Intellectual
property rights which are pivotal for its revenue generation. The risk is mitigated
through registration of IPs in the countries having robust protection laws.
b) Risk of use of "Open Source" Software
"Open Source" Software may be used in some of our solutions. Failure to abide
with the terms of the open source licenses could have a negative impact on our business.
The risk is mitigated through adoption of the open source policy which facilitates to
identify, monitor, review, report & thereby facilitate restricted & acknowledged
usage of the open source software's on ongoing basis. Usage of COTS are under agreement
and audited from time to time by our IT department. FOSS used by the respective business
units is reported to the IT Department
EXECUTION CAPITAL
5.1 Global Operations Risk
Global operations may get impacted on account of various factors inherent to the
international business activities and differences in the following: Laws and Regulations
in the banking & financial service, work practices (e.g. working from home), complex
tax regimes, licensing requirements, varied trade / tariff policies & corruption
perception index, data protection and privacy laws, economic sanctions, outbreaks of war,
hostilities, terrorism, mass immigration, international embargoes, economic sanctions and
boycotts and staffing challenges and immigration laws. Specific policies and procedures
put in place with regard to work practices, Code of Conduct, anti-bribery, anti-money
laundering, data protection and privacy etc.
Consultation support from reputated tax firms. is obtained from time to time.
5.2 Cloud Infrastructure Management Risk
With increased cloud adaptability, requirements to have highly skilled resources to
manage cloud environments, unique contractual agreements with the customers & cloud
service providers, ensuring adequacy of security measures by the service providers,
heightened regulations like GDPR, the company is exposed to a risk of SLA / security
breaches by cloud service providers which may result in financial implications (imposition
of fines & penalties) or reputation damage. The risk is mitigated by defining the
Cloud operational governance framework to consistently manage cloud environments across
the lines of businesses. Periodic reviews are performed to assess the security, internal
controls, DR, backup processes, SLAs, service contracts etc. with cloud service providers.
ISO 27018 certification obtained for cloud security.
5.3 Product Implementation Risk
Delays, errors or omissions in implementations could hamper our delivery capabilities
leading to multiple risks such as delay in collections, violation of contractual
commitments, fines / penalties and damages to Brand image. The risk is mitigated through
delivery excellence processes & continuous monitoring & reporting of
implementations through use of various tools. Further, Company adequately insures itself
for any liabilities arising on account of errors & omissions or any delays.
5.4 Defects or Security Vulnerability Risk
Inability to identify or detect defects or security vulnerabilities in the Intellect's
existing or new products either at development stage or subsequently in the various
versions or enhancements of the products. Inability to meet the customer expectations in
its entirety regarding the timeliness and the quality of the defect resolution process.
This may result in refunds, damage claims, termination of existing arrangements, product
replacement or negative publicity impacting future demand proposition of the product,
increased costs (service, maintenance & warranty cost etc.)
Intellect has a comprehensive Delivery Excellence framework and Quality Management
process in place as part of the software development lifecycle. Moreover, extensive
testing is performed to identify and resolve any issues which may adversely affect the
functionality, security and other performance of the products and offerings.
5.5 Compliance Risk
Inadequate or non compliances to the material laws & regulations applicable in the
respective countries having business presence may lead to fines / penalties / closure of
the offices resulting in revenue loss. The Company Secretarial team monitors the
secretarial & compliance related activities. Country specific statutory compliance
requirements of our Overseas Subsidiaries is regularly monitored and reported. The
subsidiary compliance is ensured periodically under various jurisdictions.
5.6 Legal Risk:
Intellect operates in multiple jurisdictions and therefore is subject to different
regulations. Any legal proceedings in geography are likely to have uncertain outcomes
resulting in damages or injunctive measures that could hinder Intellect's ability to
conduct business in these geographies. Monetary risks and other risks impacting the
company's financial condition and reputation are balanced off through the contract review
processes. The Company has a dedicated legal team which works closely with the business
and other stakeholders (through business) to ascertain the scope and risks of the deal.
5.7 Business Continuity Risk:
In light of recent pandemic scenario arising on account of Covid19, the significance of
business continuity is of paramount importance. The Business continuity plans for people,
processes & technology if not robust or inadequate may create challenges to manage
unforeseen crisis or events such as natural or man made calamities / disasters and may
disrupt the business performance. The risk is managed by designing appropriate recovery
strategies / business continuity plans. Intellect has an established enterprise Business
Continuity management framework and project level BCPs. Contract clauses provide
protection for Force Majeure incidents. Dedicated teams monitor the adequacy of the
business continuity arrangements. Periodic testing and simulations carried out on an
annual basis.
5.8 Fraud Risk:
Mechanisms to prevent, detect, measure, monitor and report the potential collusion
touch points, fraud events or criminal hackings if not robust may result in revenue
leakage, financial losses or the reputation damage for the Company. To mitigate the risk,
potential fraud areas are assessed as part of regular audit programmes including
performance of Vulnerability and Penetration testing across product release. Risks
associated with potential fraud for identified design gaps are reported to the Internal
Audit Committee with suitable action plans. Further, Crime insurance cover is obtained to
safeguard against any direct financial loss arising out of fraudulent activities by
associates.
5.9 New Country Entry Risk:
Failure to effectively study, evaluate, identify, analyse and address the country
specific risks at the time of entry into a particular geography could adversely affect
long term interests of the organisation. Any new business opportunity in a new country is
subject to a Country Risk Assessment which helps in developing a robust knowledge platform
and also to understand the local conditions and business culture at the early stages of
the business and design adequate risk mitigation measures to facilitate business in new
countries.
FINANCIAL CAPITAL
6.1 Market Risk (arising from Foreign Exchange / Currency Fluctuations)
The company earns a large portion of its revenue in foreign currencies and is exposed
to the risk of currency movements. To mitigate this risk, the company follows a 2 step
strategy.
As the first step, quotation in foreign currencies is restricted to few selected
major currencies. Quotation in any other currency is highly controlled.
The second leg of this strategy is to hedge the foreign earnings after
subtracting the local expenses.
6.2 Larger Order to Cash Cycle and Liquidity Risk
Our customers being large Banks and Financial Institutions the credit worthiness is in
comfort even though the cycle is long. The percentage of bad debts is also minimal. Since
the Products business has a long order to cash cycle, delays in conversion of REB into
invoicing or recovery of the billed invoices from the clients / customers may result in
strain over the company to meet their working capital requirements, recurring, fixed &
direct costs which may require increased borrowings, finance charges and thereby impact
the Company's profitability. The risk is mitigated by arrangement of required credit lines
through various Banks, regular monitoring of ageing of receivables / REB balances by the
management and robust recovery & follow-ups mechanisms with clients / customers.
The Company has identified Liquidity Risk as an area to monitor. The Finance
organisation headed by the CFO monitors the liquidity position consisting of cash and near
cash instruments on a continuous basis.
6.3 Financial Reporting Risk - Internal Financial Control (IFC)
The Company has to comply with additional controls enforced by Section 134 of the
Companies Act 2013. This is to report on the Internal Financial Control in the Directors
Report and also by the Statutory Auditors. Key internal controls over financial reporting
if not designed, identified and operate effectively may result in mis-statements going
unnoticed and impact the true and fair view of the financial / operational results of the
Company. To comply with this, the company assesses the existing control environment
through regular internal and statutory audits and ensures that the requirements are
complied.
Risk Mitigation through Insurance
The Company has appointed a Global leader for Risk & Insurance advisory to advice
on the risk and insurance coverage. The following Insurance coverage is taken to mitigate
risks.
1. Errors & Omissions Insurance - To safeguard against any loss arising of an
error, negligent act or omission which would result in failure in performing the
professional services or duties for others.
2. Cyber Liability Insurance - To safeguard against any loss arising out of a security
breach and or privacy breach that would result in sensitive or unauthorised data or
information being lost or compromised.
3. Crime Insurance - To safeguard against any direct financial loss of property, money
or securities arising out the fraudulent activities committed by the employee or in
collusion with others.
4. Directors & Officers Liability Insurance - To safeguard against any loss arising
out of a wrongful act made by the Directors, Officers and Employees of the organisation
with reference to the Company's business operations and activities.
5. Commercial General Liability Insurance - To safeguard against Third Party bodily
injury or property damage arising out of our business operations.
6. Standard Fire & Special Perils Insurance - To protect the Company's Assets
(movable & immovable Assets) from the risk of Fire or Perils.
24. Corporate Social Responsibility
The Company has formed Corporate Social Responsibility Committee on October 15, 2014
and reconstituted on July 24, 2019 and August 05, 2020. Following are the members of the
Committee:
a) Mr. Anil Kumar Verma - Chairman
b) Mr. Abhay Anant Gupte - Member
c) Mr. Arun Jain - Member
As per Section 135 of the Companies Act, 2013, a company meeting the applicability
threshold, needs to spend at least 2% of its average net profits for the immediately
preceding three financial years on CSR activities. The details of the policy developed and
implemented by the Company is given as a part of Annual Report on CSR as Annexure 7.
25. Secretarial Standards
The Company complies with all applicable mandatory secretarial standards as issued by
the Institute of Company Secretaries of India.
The Company has devised proper systems to ensure compliance with the provisions of all
applicable Secretarial Standards issued by the Institute of Company Secretaries of India
and that such systems are adequate and operating effectively
26. Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements
of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013. The Internal Complaints Committee ("ICC") has been set up to redress
the complaints received regarding sexual harassment. All employees are covered under this
policy. The following is the summary of the Complaints received and disposed off during
the financial year 2022-23:
a) No. of Complaints filed during the year: 01
b) No. of Complaints disposed during the year: Nil*
c) No. of Complaints pending as at end of the financial year: 01
*The Complaint was resolved after the financial year ended March 31, 2023
27. Listing Fees
The Company confirms that it has paid the annual listing fees for the year 2022-23 to
both the National Stock Exchange of India Limited and BSE Limited.
28. Certifications
Your Directors would like to appreciate the achievements of the Quality Department,
which enabled your Company to get certified at CMMi level 5 by CMMI Institute, USA for its
Global Consumer Banking (iGCB) business. Your Directors would also like to appreciate the
achievements of Cards Business team and Corporate Security Group for PCI - DSS
certification, and the achievements of iSEEC business team and Corporate Security Group
for SOC 2 certification for Insurance products. Your Directors would also like to
appreciate the achievements of the Corporate Security Group for ISO 27001, ISO 27017, ISO
27018 Certifications on Information Security Management System, Cloud Security Controls
and Cloud Privacy respectively. Your Directors would also like to appreciate the
achievements of the Administration Team for ISO 14001 Certification on Environment
Management System.
29. Insolvency and Bankruptcy Code, 2016 (31 of 2016)
There was no application made or any proceeding pending under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) during the financial year.
30. General
Your Directors state that no disclosure or reporting is required in respect of the
following items as there were no transactions/events on these items during the year under
review:
i. Issue of Equity Shares with differential rights as to Dividend, voting or otherwise.
ii. Issue of Sweat Equity Shares to employees of the Company under any scheme.
Difference between amount of valuation done at the time of one-time settlement and the
valuation done while taking loan from the Banks or Financial Institutions.
31. Acknowledgment
Your Directors take this opportunity to express the gratitude to all investors,
clients, vendors, Bankers, Regulatory and Government authorities, Stock Exchanges and
business associates and all other stakeholders for their cooperation, encouragement and
continued support extended to the Company. Your Directors also wish to place on record
their appreciation to the Associates for their continuing support and unstinting efforts
in ensuring an excellent all-round operational performance at all levels.
|
By Order of the Board |
|
For Intellect Design Arena Limited |
Place: Chennai |
Arun Jain |
Date : May 11, 2023 |
Chairman and Managing Director |
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DIN:00580919 |
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