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DIRECTOR'S REPORT

Mastek Ltd.

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Market Cap. (₹) 1133.37 Cr. P/BV 1.58 Book Value (₹) 298.73
52 Week High/Low (₹) 645/365 FV/ML 5/1 P/E(X) 11.17
Bookclosure 16/07/2019 EPS (₹) 42.31 Div Yield (%) 1.80
Year End :2018-03 

Directors' Report

Dear Shareholders,

The Directors have great pleasure in presenting the 36th Directors' Report for the financial year ended March 31, 2018:

1. HIGHLIGHTS OF CONSOLIDATED AND STANDALONE FINANCIAL RESULTS

Rs, in Lakhs

Particulars

Consolidated

Standalone

2017-18

2016-17

2017-18

2016-17

Revenue from operations

81,721

56,016

16,232

16,948

Other Income

2,099

1,260

2,323

1,282

Total Income

83,820

57,276

18,555

18,230

Expenses

71,755

51,160

14,683

14,259

Depreciation and amortisation expenses

1,876

1,493

1,119

1,204

Finance costs

586

377

19

24

Exceptional items

-

340

-

340

Profit before tax

9,603

3,906

2,734

2,403

Tax expense

2,607

665

1,160

91

Profit after tax

6,996

3,241

1,574

2,312

Other comprehensive income

(248)

(4,157)

(1,315)

790

Total Comprehensive income

6,748

(916)

259

3,102

Equity Holders

6,748

(916)

259

3,102

Dividend

(1,056)

(233)

(1,056)

(233)

Dividend Distribution Tax

(12)

-

(12)

-

EPS

-Basic

29.74

13.96

6.69

9.96

-Diluted

28.14

13.38

6.33

9.55

2. OVERVIEW OF THE FINANCIAL PERFORMANCE

A. MASTEK OPERATIONS

On a Consolidated basis, the Group registered revenue from operations of Rs, 81,721 lakhs for the year ended March 31, 2018 as compared to Rs, 56,016 lakhs in the year ended March 31, 2017, which is an increase of 45.9%. The Group registered a net profit of Rs, 6,996 lakhs in the year ended March 31, 2018 as compared to Rs, 3,241 lakhs in the year ended March 31, 2017, thereby registering an increase of 115.9%.

On a Standalone basis, Mastek registered revenue from operations of Rs, 16,232 lakhs for the year ended March 31, 2018, as compared to Rs, 16,948 lakhs for the year ended March 31, 2017. The Company made a Net profit of Rs, 1,574 lakhs for the year ended March 31, 2018 as compared to Net Profit of Rs, 2,312 lakhs for the year ended March 31, 2017. Further details are included in notes to the Accounts of Standalone Financial Statement.

The Consolidated and Standalone Financial Statements of the Company for the year ended March 31, 2018 are prepared in compliance with the applicable provisions of the Companies Act, 2013 and Indian Accounting Standards (IND-AS). The said financial statements have been prepared on the basis of the audited financial statements of the Company and un-audited financial statements of its subsidiaries which have been reviewed by the Statutory Auditors.

No material changes or commitments have occurred between the end of the Financial Year and the date of this Report which affect the financial statements of the Company in respect of the Financial Year under review.

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Standalone and Consolidated Financial Statements along with the

Directors' Report and Auditors' Report thereon form part of this Annual Report. The Financial Statement of the Company and its subsidiaries are also available on the website of the Company and can be accessed at the weblink: http://www.mastek.com/financial-information.

B. BREAKUP OF THE OPERATING REVENUE BY REGIONS

Region

Year ended March 31, 2018

Year ended March 31, 2017

Rs, in Lakhs

% of Revenue

Rs, in Lakhs

% of Revenue

UK

56,315

68.9%

46,040

82.2%

North America

23,715

29.0%

7,078

12.6%

Others (India/Asia Pacific)

1,691

2.1%

2,898

5.2%

Total

81,721

100.0%

56,016

100.0%

The U.K. operations contributed Rs, 56,315 lakhs in total operating revenue for the year 2017-18 as compared to Rs, 46,040 lakhs for the year ended 2016-17, resulting in a growth of 22.3%. This growth was driven by increased business in the Government vertical followed by Retail and Finance vertical. UK business grew by 27.6% on constant currency basis.

The North America operations contributed Rs, 23,715 lakhs in revenue for the year 2017-18 witnessing a growth of 235%, driven by full year revenue contribution and growth from TAISTech acquisition.

Revenue of other region i.e. India and Asia Pacific region is Rs, 1,691 lakhs for the year 2017-18 as compared to Rs, 2,898 lakhs for the year 2016-17, resulting in a decrease of (41.6%). The degrowth is due to selective bidding in this segment during the year as part of Group strategy.

C. BREAK UP OF REVENUE BY SERVICE LINES

Service Lines

2017-18

2016-17

Rs, in Lakhs

% of Revenue

Rs, in Lakhs

% of Revenue

Application Development

38,891

47.6%

32,480

58.0%

Digital Commerce

21,211

26.0%

5,614

10.0%

Application Support & Maintenance

8,008

9.8%

8,495

15.1%

BI & Analytics

6,484

7.9%

2,007

3.6%

Agile Consulting

4,771

5.8%

5,473

9.8%

Assurance & Testing

2,356

2.9%

1,947

3.5%

Total

81,721

100.0%

56,016

100.0%

PROFITABILITY

During the Year ended March 31, 2018, the Group earned a profit of Rs, 6,996 lakhs as compared to Rs, 3,241 lakhs for the year ended March 31 2017. The profits for the financial year ended 2017-18 achieved growth of 115.9%, driven by focused profitable growth in revenue, acquisition in US, operational improvement and better utilisation of existing investment in SG&A and capacity to service growth.

3. HOLDING AND SUBSIDIARIES

Your Company continues to be the Holding Company of Trans American Information Systems Private Limited and Mastek (UK) Limited, which in turn has IndigoBlue Consulting Ltd, UK and Digility Inc. USA as its wholly owned subsidiaries.

Digility Inc. USA, the step down subsidiary of your Company has TAISTech LLC, USA and Trans American Information Systems Inc. USA as its wholly owned subsidiaries and consequently, they are also step down wholly owned overseas subsidiaries of the Company.

Your Company has two direct wholly owned subsidiaries, and four step down subsidiaries as at March 31, 2018 and the statement containing salient features of the financial statements of all the subsidiaries along with the highlights of the performance of the subsidiaries and their contribution to overall performance of the Company are provided in Form AOC-1 is annexed as Annexure 1.

4. BUSINESS

Your Company is a Global IT service provider focused on Enterprise Digital Transformation in agile manner. It combines the business knowledge and industry expertise of its domain specialists and the technical knowledge and implementation skills of its Delivery team leveraging its Tools, Platforms, Partnerships and Solutions in its Development Centers located across India, UK and US.

Your Company offers comprehensive services covering full range of the software development process starting with agile consulting, application development, testing, to ongoing support and maintenance. With over three decades of experience and excellent track record of delivery, manifesting in our 96% delivery success ratio, has empowered us with the capability to drive the growth of our diverse clients.

In the UK, rate of growth is likely to be subdued owing to uncertainty over the outcome of Brexit negotiations. However, it provides significant opportunity to Mastek as atleast 27 core systems across central government will need to be reconfigured. This includes immigration, borders and customs controls amongst other departments. Mastek holds successful long term client relationship with proven track record with Home office and Health which are expected to have bigger share of IT spend.

In the US, your Company is supporting its customers in Digital Commerce space to modernise and compete in evolving Retail sector which is undergoing disruption and significant transformation in acquiring and retaining customers.

Businesses across globe recognise the imperative to leverage new and emerging technologies to drive efficiencies. As per Forbes, more than 84% of digital transformation projects fail to meet expectations. Your Company, with proven capabilities in delivering large and complex enterprise-wide transformation projects, is well placed to successfully partner businesses from end-to-end in their transformational journeys.

For further details, please refer Management Discussion Analysis Report.

5. OUTLOOK

Your Company closed the financial year with a satisfactory performance, achieving growth across all the parameters as well as making Mastek a future-ready organisation. The Company is well poised to achieve its objectives defined under "Vision 2020" i.e. to be a global leader in digital transformation services. Mastek is eyeing for an all-round growth in agile and digital transformation space and geared up to unlock its potential.

For further details, please refer Management Discussion Analysis Report.

6. DIVIDEND & RESERVES

The Board of Directors at its meeting held on October 26,

2017 approved payment of Interim Dividend of Rs, 2/- per share (Face value of Rs, 5/- each) i.e. @ 40% which was paid on November 15, 2017.

Further, the Board of Directors at its Meeting held on April 18, 2018 were pleased to recommend the payment of a final dividend @ of Rs, 4/- per equity share (face value of Rs, 5/- each) i.e. @80%, subject to the approval of the Shareholders at the ensuing 36th Annual General Meeting.

Therefore, the total dividend for the financial year ended March 31, 2018 stands at Rs, 6/- per share, involving an total outflow approximately of Rs, 1,422 lakhs compared to Rs, 3.50/- per share paid during the previous year

The final dividend, if approved, at the ensuing 36th Annual General Meeting (AGM), will be paid to those shareholders whose names appears on the Register of Members of the Company as of the end of the day on July 12, 2018, being the record date.

During the year, under review, no amount from profit was transferred to General Reserves.

7. PARTICULARS OF LOANS, GUARANTEE OR INVESTMENT UNDER SECTION 186 OF THE COMPANIES ACT, 2013

In compliance with the provisions of the Companies Act, 2013, there were no loans or investment made by the Company. Further the details of guarantee provided and outstanding are given in the respective Notes to the Financial Statements.

Company had provided a Corporate guarantee in December,

2016 for an amount of USD 12 mn. and also security/ charge/ mortgage over its Property as a Security for a term loan facility availed of an aggregate principal amount not exceeding USD 10 million from Bank valid for a period of

5 (five) years for acquisition of 100% share-holding in two US based software services companies by Digility Inc. a first level step-down subsidiary of the Company.

8. OTHER DISCLOSURES UNDER THE COMPANIES ACT, 2013

i) 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 is annexed as Annexure 2.

ii) Number of Board Meetings:

The Board of Directors met 5 (Five) times during the financial year 2017-18. The details of the board meetings and the attendance of the Directors there at, are provided in the Corporate Governance Report, appearing elsewhere as a separate section in this Annual Report.

iii) Change in Share Capital:

During the year, the Company allotted 3,14,523 Equity Shares of face value of Rs, 5/- each for a total nominal value of Rs, 15,72,615 under various ESOP Plans to the eligible employees of the Company, who exercised their vested Employee Stock Options. These Equity Shares rank pari passu in all respects with the existing Equity Shares of the Company

As on March 31, 2018, the issued, subscribed and paid up share capital of your Company stood at Rs, 11,84,60,280/- comprising 2,36,92,056 Equity shares of Rs,5/- each. (Previous Year Rs, 11,68,87,665 comprising 2,33,77,533 Equity shares of Rs, 5/- each.)

iv) Composition of Audit Committee:

Mastek has an Audit Committee that currently comprises of four Independent Directors and one Non-Executive Director. The Chairman of the Audit Committee is an Independent Director. The Independent Directors are accomplished professionals from the corporate fields. The Group Chief Financial Officer attends the meetings on invitation. The Company Secretary act as the Secretary to the Committee.

During the year ended March 31, 2018 the Committee met 4 (Four) times. The details of the Audit Committee Meetings and the attendance of the Members there at, are provided in the Corporate Governance Report, appearing elsewhere as a separate section in this Annual Report.

During the year all the recommendations of the Audit Committee were accepted by the Board.

v) Related Party Transactions:

In line with the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulation"), the Company has formulated a Policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. The same has been posted on the website of the Company at https://www.mastek.com/ corporate-governance

All the Related Party Transactions are entered into at an arm's length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI Listing Regulations. There are no materially significant Related Party Transactions made by the Company with Promoters, Directors or Key Managerial Personnel, etc., which may have potential conflict with the interest of the Company at large.

Omnibus approval is given by Audit Committee for the transactions which are foreseen and are repetitive in nature. A statement of all Related Party Transactions is presented before the Audit Committee and the Board on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The said transactions were unanimously approved by the Audit Committee as well as by the Board.

In accordance with Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contract or arrangement entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 in FORM AOC-2 is annexed as Annexure 3.

vi) Changes in the Nature of Business:

There has been no change in the nature of business of the Company during the financial year ended March 31, 2018.

vii) Listing with Stock Exchanges:

Your Company is listed with the BSE Limited and National Stock Exchange of India Limited.

viii) Compliance with Secretarial Standards on Board and Annual General Meeting:

The Company has complied with the Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries of India on Meetings of Board of Directors and General Meetings.

ix) Insurance:

The Company has sufficiently insured itself under various Insurance policies to mitigate risks arising from third party or customer claims, property, casualty, etc.

x) Equity shares with differential rights:

Your Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

9. CREDIT RATING

The Company enjoys a good reputation for its sound financial management and the ability to meet its financial obligations. During the year under review, ICRA Limited, a reputed Rating Agency, had reaffirmed the ratings assigned for the bank facilities as [ICRA]A (Stable) rating for fund based limits and [ICRA]A1 for non-fund based limits for the Working Capital facilities granted to the Company by its Bankers.

10. MANAGEMENT OF RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES

Whistle Blower Policy / Vigil Mechanism

In compliance with the requirement of the Companies Act, 2013 and SEBI Listing Regulations, the Company has established a Whistle Blower Policy / Vigil Mechanism Policy and the same is placed on the web site of the Company, viz https://www.mastek.com/corporate-governance

The Company has a Vigil Mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct. The mechanism provides for adequate safeguards against victimization of Director(s) and Employee(s) who avail of the mechanism.

The Company has also adopted Anti Bribery Policy and all concerned staff / employees are trained to avoid falling foul of the laws in the respective geographies where Company operates.

The employees of the Company are made aware of the said policy at the time of joining the Company and are also provided online training.

11. INDUSTRY RECOGNITION

Mastek Group received following awards / accolades, during the year:

- Mastek was a Finalist at the European Testing Awards 2017 within the 'Best Test Automation Category - Functional';

- 3rd prize in all India level NASSCOM Hackathon -"Build for India & Women in Technology";

- UK IT Industry Awards - 2017.

12. DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, audit and reviews performed by the internal auditors, statutory auditors and secretarial auditors and the reviews undertaken by the management and the Audit Committee, the Board is of the opinion that the Company's internal financial controls have been adequate and effective during the year under review.

Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, and to the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements:

(a) that in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(b) that such accounting policies as mentioned in Note 1 of the Notes to the Financial statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profits of the Company for the year ended on that date;

(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) that the annual financial statements have been prepared on a going concern basis;

(e) that proper internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

(f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

13. STATUTORY AUDITORS, THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS AND FRAUD, IF ANY

As per the requirements of the Companies Act, 2013, the Audit Committee and the Board of Directors at their meeting held on April 20, 2017 appointed M/s. Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N/N500013), as the Statutory Auditors of the Company and the shareholders of the Company at the 35th Annual General Meeting (AGM) appointed M/s. Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N/N500013), as Statutory Auditors of the Company, for a period of 5 years, commencing from the conclusion of 35th AGM till the conclusion of the 40th AGM, subject to ratification by members every year

Ratification of the appointment of the Statutory Auditors, as recommended by the Board, is being sought from the Shareholders at the ensuing 36th Annual General Meeting of the Company.

Further, the report of the Statutory Auditors along with the notes is enclosed with the financial statements. The observations made in the Auditors' Report which contains unmodified opinion are self-explanatory and does not contain any qualification/modified opinion. Therefore, it does not call for any further comments. Also the Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.

14. SECRETARIAL AUDIT

I n terms of Section 204 of the Companies Act, 2013 and Rules made there under, the Board of Directors at their Meeting held on April 20, 2017 appointed Mr. Soumitra Mujumdar, Practicing Company Secretary, as Secretarial Auditor of the Company for the financial year 2017-18. However, Mr. Soumitra Mujumdar had resigned w.e.f. November 30, 2017 as Secretarial Auditor voluntarily and to fill the casual vacancy in his place, Mr. Prashant S. Mehta, Practising Company Secretary was appointed by the Board of Directors at their Meeting held on January 18, 2018 as the Secretarial Auditor for the Financial Year 2017-18 to conduct Secretarial Audit and issue the Secretarial Audit Report pursuant to the provisions of Section 204 of the Companies Act, 2013.

The report of the Secretarial Auditors is annexed as Annexure 4 to this report. The report is self-explanatory and does not contain any qualification. Therefore, it does not call for any further comments.

15. HUMAN RESOURCES

Mastek deploys its intellectual capability to create and deliver Intellectual Property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek continually undertakes measures to attract and retain such high quality talent.

As on March 31, 2018 Mastek Group had a total Head count of 2,058. Your Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review at all levels.

The disclosure required under Section 197(12) of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure 5 and forms part of this report.

16. EMPLOYEE STOCK OPTION PLANS

During the year under review, the Company had allotted

3,14,523 equity shares under Employee Stock Option Plans to its eligible employee. The Board of Directors confirms that there is neither new plan introduced nor their are any material change in the existing ESOP Plans and all the existing ESOP Plans are in compliance with the SEBI Guidelines. The required disclosures in this regard are annexed as Annexure 6 and forms part of this report.

17. ENTERPRISE RISK MANAGEMENT (ERM)

I n terms of the requirement of the Companies Act, 2013, the Company has developed and implemented the Risk Management Policy and the Board and the Governance Committee of the Board reviews the risks and remedial measures taken on a periodical basis.

The risks are identified and discussed at regular intervals. The various risks are categorized as High risk, Medium risk and Low risk and appropriate mitigation steps/measures are taken/ initiated to mitigate the identified risks from time to time.

The Company's Risk Management Policy with a robust supporting risk management structure & frame work facilitates identification and assessment of new risks and review of already identified risks. The process is based on identified risks and the risk events or factors which require regular assessment and quick response. Based on the probability & impact of the risk, the requisite controls and mitigation action plans have been designed and implemented for risk treatment.

The objective of Risk Management in the Company is to act as an enabler in maintaining its knowledge edge, sustaining and expanding the business, being competitive and ensuring execution of projects within budgeted cost, time and quality, resulting in improved turnover and profitability

Risk compliance verifications are reviewed regularly to test the compliance of controls & mitigation action plans and the summary is reported to the Board. This spreads awareness about various risk management activities/achievement, new topics/ practices/ updates on ERM and to create enthusiasm in them to proactively control risks in their work processes & areas. Mastek is committed to further strengthen its risk management capabilities in order to protect interests and enhance shareholder value.

18. UPDATES ON BOARD OF DIRECTORS/KEY MANAGERIAL PERSONNEL (KMP)

A brief profile of all the Directors has been given in the Corporate Governance Section which forms part of the Annual Report.

A. Manner of Evaluation of the Board's Performance

In compliance with Companies Act, 2013 and SEBI Listing Regulations, the Board of Directors has carried out an annual evaluation of its own performance, Board Committees, Individual Directors, Chairpersons and the Managing Director for the year under review.

In respect of individual Directors including the Non Executive Chairman and the Managing Director, their personal performance was carried out using a peer review process, facilitated by an outside subject matter expert with confidential processing of inputs, interpretation of findings followed by one-on-one meeting of the individual Directors, and concluding with an aggregate presentation to the entire Board.

Board and Committees functioning was reviewed and evaluated on the basis of responses from Directors, Committee Members and the Managing Director to structured questionnaires, covering various aspects of the composition and functioning of the Board and its Committees.

In a separate meeting of the Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman were also evaluated, taking into account the views of Executive Director and Non Executive Directors. The Directors were asked to provide their valuable feedback and suggestions about the overall functioning of the Board and its Committees and its areas of improvement for a higher degree of engagement with the Management.

The Board expressed its satisfaction with the Evaluation results, which reflects the high degree of engagement of the Board and its Committees with the Company and its Management. Based on the outcome of the evaluation and assessment cum feedback of the Directors, the Board and the Management have also agreed on some action points which will be implemented over an agreed time-frame.

B. Induction and familiarization programme for Directors

The details of the induction and familiarization program for the Directors are given in the Corporate Governance Report which forms part of the Annual Report.

C. Independent Directors

Mr. S. Sandilya, Ms. Priti Rao, Mr. Atul Kanagat and Mr. Keith Bogg have been the Independent Directors on the Board of the Company as at March 31, 2018.

The Shareholders at the Extra Ordinary General Meeting held on March 05, 2015 had approved the appointment of Mr. S. Sandilya, Ms. Priti Rao and Mr. Atul Kanagat as Independent Directors of the Company for a term of four (4) years from April 01, 2015 to March 31, 2019 and Mr. Keith Bogg was appointed as an Independent Director for a period of

5 years with effect from January 17, 2017, and was confirmed by the shareholder at the 35th AGM of the Company held on June 22, 2017 as Non-Executive Independent Directors.

The Company has received and after due assessment took on record the necessary declarations from each of the Independent Directors under section 149(7) of the Companies Act, 2013, that they meets the criteria of Independence laid down in section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI Listing Regulations, and also in the opinion of the Board and as confirmed by these Directors, they fulfill the conditions specified in section 149 of the Companies Act, 2013 and the Rules made there under about their status as Independent Directors of the Company.

D. Director and Key Managerial Personnel (KMP):

There has been no change in the Board of Directors and Key Managerial Personnel of your Company since the last Annual General Meeting held on June 22, 2017. Pursuant to the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following are the Key Managerial Personnel of the Company:

- Mr. Sudhakar Ram - Vice Chairman & Managing Director;

- Mr. Abhishek Singh - Group Chief Financial Officer; and

- Mr. Dinesh Kalani - Company Secretary.

During the year under review, Mr. Abhishek Singh was re-designated from Chief Financial Officer to Group Chief Financial officer w.e.f July 19, 2017

E. Retirement by Rotation:

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ashank Desai retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment. Necessary resolution for approval of re-appointment of Mr. Ashank Desai as a Director of the Company is included in the Notice of the ensuing Annual General Meeting. The Board recommends the resolution for your approval.

F. Code of Conduct:

Mastek has formulated a Code of Business Conduct and Ethics for Board of Directors and

Senior Managerial Personnel. The confirmation of compliance of the same is obtained from all concerned on an annual basis. All Board Members and Senior Managerial Personnel have given their confirmation of compliance for the year under review. A declaration duly signed by Vice Chairman

& Managing Director is given under Corporate Governance Report appearing elsewhere as a separate section in this Annual Report. The Code of Business Conduct and Ethics for Board of Directors and Senior Managerial Personnel is also posted on the website of the Company at https://www.mastek.com/corporate-governance

19. COMPANY'S POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND SENIOR MANAGERIAL PERSONNEL

The Company has a policy on Remuneration of Directors and Senior Managerial Personnel. The policy has been approved by the Nomination & Remuneration Committee and the Board. The policy is available at the website of the Company at https://www.mastek.com/corporate-governance

The policy inter-alia covers:

1. Directors' appointment and remuneration; and

2. Remuneration of Key Managerial Personnel and other senior employees.

Please refer the Notes to Accounts and Corporate Governance Section for the details on Remuneration of Directors and Key Managerial Personnel.

20. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations.

21. INTERNAL FINANCIALS CONTROLS OVER FINANCIAL STATEMENT

A strong internal control system is pervasive in the Company. The Company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting.

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The Company has a robust financial closure, certification mechanism for certifying adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

22. INDIAN ACCOUNTING STANDARDS (IND AS)

Your Company has adopted Indian Accounting Standard (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 01, 2017. Accordingly, these financial results along with the comparatives have been prepared in accordance with the recognition and measurement principles stated therein, prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and the other accounting principles generally accepted in India.

The Consolidated and Standalone Financial Statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016, as applicable. Please note that the Company has transitioned to Indian Accounting Standard (Ind AS) with effect from April 01, 2017. Accordingly, the impact of transition has been provided in the opening reserves as at April 01, 2016 and figures for the financial year ended March, 2017 have been restated accordingly For all the periods up to the year ended March 31, 2017, the Company/Group had earlier prepared and presented its financial statements in accordance with Accounting Standards notified under section 133 of the Companies Act 2013 (Indian GAAP). These financial statements for the financial year ended March 31, 2018 are the first financial with comparatives, prepared under Ind AS. The adoption was carried out in accordance with Ind AS 101, First Time adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principle generally accepted in India as prescribed under Section 133 of the Act read with the Rule 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP), which was the previous GAAP. Reconciliations and description of the effect of the transition to Ind AS from Indian GAAP is given in Note 33 of the Consolidated Financial Statement and Note 32 of the Standalone Financial Statement.

All applicable Ind AS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the consolidated/standalone financial statements under both Ind AS and Indian GAAP as of the Transition Date have been recognized directly in equity at the Transition Date. In preparing the financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101. Financial results for all the periods presented have been prepared in accordance with the recognition and measurement principles of IND AS 34, Interim Financial Reporting.

23. PUBLIC DEPOSITS

Your Company has not accepted any deposits from public in terms of Section 73 and/or 74 of the Companies Act, 2013.

24. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis comprising an overview of the financial results, operations / performance and the future prospects of the Company given elsewhere forms part of this Annual Report.

25. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Conservation of energy and Technology absorption

The Company is entirely a Services Company and thus essentially, a non-energy intensive organization. Additionally, the Company's facilities are set up at locations chosen for adequate availability and supply of energy, regardless of power shortages recently witnessed across many markets.

Further, The Company was able to reduce the power consumption by 18% over the previous year, through monitoring energy use and installing LED lights. To further save energy and improve efficiency, we implemented smarter solutions with automated controls to maintain optimal temperature at optimal power consumption. Edification of our offices as well as replacement of old power guzzler with new smarter solutions has helped to reduce energy costs as well. The Company is studying the viability of a solar powered energy / hot water solution for our cafeteria. The initiative is currently in the initial stage.

Company is also studying the viability of a solar powered energy / hot water solution for the cafeteria. The initiative is currently in the initial stages.

(b) Foreign exchange earnings and outgo

Total Foreign Exchange used and earned by the Company are given as follows:

Rs, in Lakhs

Particulars

Year Ended March 31, 2018

Year Ended March 31, 2017

Exchange Used

490

795

Exchange Earned

16,026

12,749

26. CORPORATE GOVERNANCE

The Company has complied fully with Corporate Governance requirements under the Companies Act, 2013 and SEBI Listing Regulations. A separate section on Corporate Governance practices followed by the Company together with the Certificate from Mr. Prashant Mehta, Practicing Company Secretary, appearing elsewhere in this report, forms an integral part of this report.

27. CORPORATE SOCIAL RESPONSIBILITY

In compliance with the provisions of Section 135 of the Companies Act, 2013 the Board of Directors of the Company have formed a Corporate Social Responsibility (CSR) Committee. The committee met two times during the year and a detailed report about CSR activities undertaken during the year is annexed as Annexure 7. Pursuant to the recommendation of the CSR Committee, the Board has approved a CSR Policy and the same has been uploaded on the website of the Company www.mastek.com/corporate-governance. The contents of the policy are as follows:-

Mastek CSR programmes shall fall under the following categories:

1. Promoting education, enhancing skills of children, and development of children and women working in red-light areas. We are also involved in special education and employment - enhancing vocation skills especially among women, elderly and the differently abled, and livelihood enhancement projects.

2. Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making safe drinking water available.

3. Promoting gender equality and empowering women: Activities include setting up homes / hostels for women and orphans, old age homes and other such facilities for senior citizens, day care centres, and measures to reduce inequalities faced by socially and economically backward groups.

4. Protection and up gradation of environmental conditions: These include ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining the quality of soil, air and water.

5. Any other projects with the approval of the Board. Corpus:

The corpus of the CSR policy includes:

- 2% of the average net profit of the preceding three years

- Any income arising there from

- Surplus arising out of the above activities

- Payroll contribution from the employees

- Fund-raising events

Mastek may pool its resources and CSR spending with other groups or associate companies on collaborative efforts that qualify as CSR spending.

Roles and Responsibilities:

- Decide CSR projects or programmes or activities to be taken up by the Company.

- Place before the Board, the CSR activities proposed to be taken up by the Company for approval each year.

- Oversee the progress of the initiatives rolled out under this policy

- Define and monitor the budgets for carrying out the initiatives.

- Submit a report to the Board of Directors on all CSR activities/projects spent during the financial year.

- Monitor and review the implementation of the CSR policy.

CSR Committee Composition:

The Chairperson of the Committee is Ms. Priti Rao, an Independent director. The other members are, Mr. Sudhakar Ram and Mr. Ashank Desai. The Company Secretary Act as the Secretary to the Committee.

During the financial year ended March 31, 2018 the Board approved a Budget of Rs, 84 lakhs. Based on the Average net profit of the Company for three immediately preceding financial years, the amount to be spent on CSR activities during the financial year 2017-18 was budgeted at Rs, 83.94 lakhs. A total sum of Rs, 84 lakhs was spent on Projects approved under Section 135 of the Companies Act, 2013 on CSR activities during the year.

The said expenditure is within the prescribed parameters and the Company is in compliance of the provisions of Section 135 of the Companies Act, 2013.

28. TRANSFER OF UNCLAIMED DIVIDEND AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company has transferred a sum Rs, 1,68,805/- of Final Dividend for the year 2009-10 during the financial year 2017-18 to Investor Education and Protection Fund (IEPF), established by Central Government in compliance with section 125 of the Companies Act, 2013. The said amounts represent unclaimed Dividends which were lying with the Company for a consecutive period of 7 (seven) years from their respective due dates of initial payment.

Pursuant to the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has already filed the necessary form and uploaded the details of unpaid / unclaimed amounts lying with the Company, as on the date of last Annual General Meeting (i.e. June 22, 2017), and with the Ministry of Corporate Affairs website.

TRANSFER OF CONCERNED EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY (IEPF AUTHORITY)

Pursuant to the provisions of Section 124 and 125 of the Companies Act and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, and amendments made thereunder all the concerned shares in respect of which dividend had not been claimed or remained unpaid for seven consecutive years or more had been transferred by the Company in the name of Investor Education and Protection Fund Authority ("IEPF Authority") in their Demat Account in November, 2017 and January, 2018.

The Company had identified and initiated the share transfer process with Depositories and transferred 48,285 shares in November, 2017 and 7,033 shares in January, 2018 (due to be transferred to IEPF based on Un-Paid Interim Dividend of year 2009-10 and Un-Paid Final Dividend of year 2009-10 in November 2017 and January, 2018 respectively) to Investor Education and Protection Fund Authority Demat Account to comply with the said Rules. The List of shares transferred to IEPF Authority is available on the Company's website at https:// www.mastek.com/investor-information

I n case the shareholders have any queries on the subject matter and the Rules, they may contact the Company's Share Transfer Agent, Karvy Computershare Private Limited. The Members / claimants whose shares, unclaimed dividend, etc. have been transferred to IEPF may claim their shares and unclaimed dividend or apply for refund by making an application to IEPF Authority in IEPF Form-5 (available on www.iepf.gov.in). The Member / claimant can file only one consolidated claim in a financial year as per the IEPF Rules. It is in the Members interest to claim any un-encashed dividends from IEPF and for future, to consider dematerialization of their shares and opt for Automated Clearing House (ACH) mode with the Company, so that dividends paid by the Company are credited to the investor's account on time.

29. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

Mastek has zero tolerance towards any action on the part of any employee which may fall under the ambit of 'Sexual Harassment' at workplace, and is fully committed to uphold and maintain the dignity of every women employee working in the Company. The Company's Policy provides for protection against sexual harassment of women employees at workplace and for prevention and redressal of such complaints.

The Company has a qualified Internal Committee, who along with the external member review the policy and framework on a regular basis. Additionally the company ensures that every new employee undergoes an awareness program which will sensitize them to uphold the dignity of their colleagues at workplace, particularly with respect to prevention of sexual harassment. During the year, no such case was reported.

30. ACKNOWLEDGEMENT

Your Directors are grateful to the Investors for their continued patronage and confidence in the Company. Your Directors also thank the Central and State Governments, other statutory and regulatory authorities for their continued support.

Your Directors thank all our esteemed clients for the faith and trust reposed in the Company. With continuous learning, skill up-gradation and technology development

Company will continue to provide world class professionalism and services to its clients.

Your Directors wish to thank all associates, vendors and contractors within the country and abroad, for their continued support without which Mastek could not have achieved the desired results.

Your Directors also wish to convey their appreciation to all employees at all levels for the valuable services and cooperation extended by them and are confident that they will continue to contribute their best towards achieving still better performance in future.

For and on behalf of the Board

Sudhakar Ram S. Sandilya

Vice Chairman & Non-Executive Chairman

Managing Director and Independent Director

Date : April 18, 2018

Place : Mumbai

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