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DIRECTOR'S REPORT

ABM Knowledgeware Ltd.

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Market Cap. (₹) 113.71 Cr. P/BV 0.71 Book Value (₹) 80.30
52 Week High/Low (₹) 99/51 FV/ML 5/1 P/E(X) 7.26
Bookclosure 08/08/2018 EPS (₹) 7.83 Div Yield (%) 2.20
Year End :2018-03 

The Directors are delighted to present the 25th Annual Report of the Company along with the Audited Financial Statements (Consolidated & Standalone) for the financial year ended 31st March, 2018.

1. FINANCIAL PERFORMANCE OF THE COMPANY (STANDALONE & CONSOLIDATED) :

( In Rs. Thousand)

Standalone

Consolidated

Particulars

Year ended 31.03.2018

Year ended 31.03.2017

Year ended 31.03.2018

Gross Income

7,40,218

11,25,834

7,65,060

Profit Before Interest and Depreciation

2,10,658

3,11,182

2,07,645

Finance Charges

3,158

2,438

3,166

Gross Profit

2,07,500

3,08,744

2,04,479

Provision for Depreciation

15,931

26,746

16,192

Net Profit Before Tax

1,91,569

2,81,998

1,88,287

Provision for Tax

47,025

98,740

47,280

Non-Controlling Interest (on

-

-

2,801

Net Profit After Tax

1,44,544

1,83,258

1,43,808

Surplus - Opening Balance

12,35,411

10,81,804

12,35,411

Amount Available for Appropriation

13,79,954

12,65,062

13,79,218

Other Comprehensive (Income) / Loss (net of tax)

402

443

418

Dividend and Dividend tax paid during the year

30,093

30,093

30,093

Surplus - closing balance

13,50,263

12,35,412

13,49,543

Note: Result for the year ended 31st March, 2018 are in compliance with the Indian Accounting Standards (Ind-AS) notified by Ministry of Corporate Affairs. Consequently result for the year ended 31st March, 2017 and transition date of 1st April, 2016 have been restated to comply with Ind-AS to make them comparable.

2. OPERATIONS OF THE COMPANY :

The last year has been a tougher year due to closure of many long term and profitable contracts. However the geographical spread of the operations of the company has increased and projects of varying sizes were undertaken in 23 states of India compared to 11 states last year. All the projects have been implemented and reached the logical end or are on right track. This has been one of the hallmarks of your company whereby almost all projects undertaken by your company are implemented successfully despite of huge challenges faced during implementation of project. This year includes the operations of the subsidiary Instasafe Technologies Pvt. Ltd. ABM continues to operate from offices in New Delhi, Patna, Mumbai, Bhopal and office of the subsidiary in Bangalore.

3. DIVIDEND:

After considering earnings, requirement of funds and with the objective of rewarding the Shareholders, your Directors have recommended a Final Dividend of 25% (i.e Rs.1.25/- per Equity Share of Face Value of Rs. 5/- each) for the year ended 31st March, 2018, subject to the approval of Members at the ensuing Annual General Meeting. The dividend, if approved, will result in a cash outflow of Rs.3,00,92,710/- including dividend distribution tax.

4. TRANSFER TO RESERVES:

Your Directors do not propose to transfer any amount to the General Reserve out of the current year's profit.

5. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND :

In terms of the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 / Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs.2,93,627/- of unpaid / unclaimed dividends were transferred during the year to the Investor Education and Protection Fund (IEPF).

6. SHARE CAPITAL:

As on 31st March, 2018 the Authorized share capital of your Company was Rs.12,50,00,000/- consisting of 2,50,00,000 Equity Shares of Rs.5/- each and paid up equity share capital was Rs.10,24,15,000/- consisting of 2,00,02,200 fully paid up equity shares and 6,97,800 forfeited equity shares of Rs.5/- each.

During the year under review, the Company has not issued any shares or Bonus shares. The company has not issued shares with differential voting rights. It has neither issued employee stock options nor sweat equity shares. The Company has not bought back any of its equity shares.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):

In accordance with the provisions of the Section 152 of Companies Act, 2013, Mrs. Supriya P. Rane, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offer herself for re-appointment. Board recommends her re-appointment.

A brief profile of Mrs. Supriya P. Rane has been given in the Report on the Corporate Governance as well as in the Notice of the ensuing Annual General Meeting of the Company.

Pursuant to provisions of Section 149 of the Companies Act, 2013, your Board of Directors are seeking the appointment of Mr. Devendra Parulekar as an Independent Director for 5 (five) consecutive years commencing 10th August, 2018 up to 9th August 2023.

The Independent Directors of your Company have given the certificate of independence to your Company stating that they meet the criteria of independence as mentioned under Section 149 (6) of the Companies Act, 2013.

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company atwww.abmindia.com. The Company has issued a formal letter of appointment to the Independent Director in the manner as provided in the Compan ies Act, 2013. The terms and conditions of the appointment have been disclosed on the website of the Company.

There has been no change in the Key Managerial Personnel (KMPs) of your Company during the year under review.

The policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director, and also remuneration for Key Managerial Personnel and other employees, forms part of the Corporate Governance Report of this Annual Report. Annual Board Evaluation process for Directors has also been provided under the Report on Corporate Governance.

8. MEETINGS:

During the year five Board Meetings and five Audit Committee Meetings were convened and held. For the details of the meetings of the Board and its Committees, please refer to the Report on Corporate Governance, which forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

9. PUBLIC DEPOSITS:

During the year under review, your Company did not accept any public deposits under Chapter V of Companies Act, 2013 and no amount on account of principal and interest on public deposits was outstanding on the date of the balance sheet.

10. SU BSIDIARIES, JOINT VENTU RES AND ASSOCIATE COM PANIES:

InstaSafe Technologies Private Limited ("InstaSafe"), a subsidiary of your Company, is a leading Cloud based Security-as-a-Service solution provider delivering comprehensive and uncompromising protection to mobile and remote workers enabling them to safely and securely access enterprise apps, email and web from anywhere on any network.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of subsidiary company in Form AOC 1 is attached herewith. The separate audited financial statements in respect of the subsidiary company shall be kept open for inspection at the Registered Office of the Company during working hours for a period of 21 days before the date of the Annual General Meeting. Your Company will also make available these documents upon request by any member of the Company interested in obtaining the same.

As on 31st March, 2018 the Company does not have any Joint venture or Associate Company.

11. PERFORMANCE OF SUBSIDIARY COMPANY:

Cybersecurity is one of the foremost challenges of the digital age. The global growth of networks and data, fuelled by technological innovation, has enabled society to make quantum leaps & breakthroughs. This rapid, sweeping change has also created a long-term challenge: managing inherent security risks in an increasingly interconnected world economy as hacking threats escalate. InstaSafe was founded with the mission to make organ izations more safe, secure & productive by leveraging the power of the cloud by an experienced cross functional team.

InstaSafe products include:

InstaSafe Secure Access - (A Next Generation Cloud Based Secure Access Solution) - InstaSafe Secure Access solution provides an identity based granular access control solution based on the principles of Software Defined Perimeter (SDP). SDP concepts have been derived from the military, especially the Defense Information Systems Agency (DISA), where every device is pre-attested before it can 'connect' to the network followed by verification of the identity of the user using MFA leading to knowing exactly what device was being used and by whom to access the application. With the device & user's knowledge, we are able to ensure that the device and the user are able to only 'see' and 'access' the data, that they have ' prior approval' to see or access -the ' need-to-know' access model.

SafeHats - (Managed Bug Bounty and Vulnerability Coordination Platform) - The SafeHats Launchpad platform connects security conscious Enterprises, Financial Institutions and Governments with the WhiteHat hacker community to have their products tested against vulnerabilities. SafeHats is a cybersecurity marketplace platform where on one side there are enterprises that want to do security testing of their application and on another side there are Security researchers / Ethical Hackers who work as on-demand basis and perform security penetration testing of the application.

InstaSafe in this financial year has doubled its customer base and protected Microfinance institutions, Financial Services, Manufacturing, Retail & security conscious start-ups. InstaSafe in this period, has gained significant geographical spread and has now end-user deployment footprint across India, China, Canada, UK, USA. To ensure high availability and optimal performance, Instasafe has opted for data centres available across USA, India, Singapore, Hong Kong & South Africa. It has grown at 60% YoY, while the net loss decreased to Rs.63 lacs from Rs.117 lacs.

IntsaSafe has been selected as part of the Oracle Startup Cloud Accelerator (OSCA), received 2nd best workplace in India under BWpeople "Best workplaces among startups" ; been the recipient of the prestigious CIO Choice awards for the fourth consecutive time; winners of the Yourstory Top Tech 30 awards, Cybersecurity Excellence Award finalists for Cybersecurity Product of the Year; Cybersecurity Excellence Award for Cybersecurity Team of the Year (Asia/Pacific). InstaSafe has partnered with leading data centres including IBM, AWS, Microsoft azure to offer best-in-class product offerings.

Given that the Cloud Security space is still in its early stages & evolving, InstaSafe is in the initial phase of development and is positioned for long term value creation. This causes some short term fiscal stress. This is by design and inherent to the cybersecurity industry in its early stages of growth. InstaSafe continues to invest into building scalable products and scale globally.

The outlook for the coming financial year, is to expand into international markets and scale the product, sales & marketing efforts with global partnerships & alliances. Instasafe expects operating expenses to increase significantly over the next several years, particularly in fiscal 2019, as we continue to hire additional personnel, particularly in sales and marketing, expand our operations and infrastructure, both domestically and internationally, and continue to develop our platform.

12. AUDITORS :

M/s. Borkar & Muzumdar, Chartered Accountants were appointed as Statutory Auditors of the your Company at the Annual General Meeting held on 18th September, 2014 for a term of five consecutive years. As per the provisions of Section 139 of Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting.

In accordance with the Companies Amendment Act, 2017, enforced on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.

13. AUDITORS' REPORT :

The Report given by the Auditors on the Financial Statements of the Company is part of Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Hence, it is an unmodified opinion in terms of the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments.

14. SECRETARIAL AUDIT REPORT :

The Board had appointed Mr. Upendra Shukla, Practicing Company Secretary as Secretarial Auditor to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2017-18. The Secretarial Audit Report issued by Mr. Upendra Shukla in Form No. MR-3 forms part of this Annual Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

15. COMPLIANCE WITH SECRETARIAL STANDARDS :

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

16. INTERNAL AUDIT AND INTERNAL CONTROL SYSTEMS :

The Company has laid down certain guidelines and processes which enables implementation of appropriate internal financial controls across the organisation. Such internal financial controls encompass policies and procedures adopted by the Company for ensuring orderly and efficient conduct of business, including adherence to its policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Audit Committee reviews the reports submitted by the Internal Auditors in each of its meeting. The Management duly considers and takes appropriate action on recommendations made by the Statutory Auditors, Internal Auditors and Audit Committee of the Board of Di rectors.

The Company has appointed M/S. S.P. Sule & Associates, Chartered Accountants as Internal Auditor of the Company for the financial year 2017-2018.

17. CORPORATE GOVERNANCE :

Corporate Governance is a continuous process at ABM. It is about commitment to values and ethical business conduct. Systems, policies and frameworks are regularly upgraded to effectively meet the challenges of rapid growth in a dynamic external business environment. Your Company is committed to sound corporate practices based on conscience, openness, fairness, professionalism and accountability paving the way in building confidence among all its stakeholders for achieving sustainable long term growth and profitability. Your Company has complied with the governance requirements provided under the Companies Act, 2013 and listing regulations.

A separate Report on Corporate Governance together with Auditor's Certificate confirming compliance with the conditions of Corporate Governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to this Report.

18. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. Industry Structure and Development:

Last year, the IT industry faced significant challenges on account of adverse changes in visa policies in important markets for software companies engaged in export. Another challenge faced by IT industry is on account of new technologies leading to automation of processes causing serious impact on the growth of jobs and need for re-skilling the existing employees on new technologies.

The domestic market dominated by govt. sector continues to face the age old challenges of cost and time overruns, payment delays, tenders with difficult terms and conditions etc. There is a lot of attention seemingly given to the use of IT in govt. operations. However there is a need for institutionalized mechanism whereby the important aspects like proper budgeting, fair terms for tendering, vendor finalization using blend of quality and cost parameters, time bound implementation and sustenance etc. are achieved to attract capable IT companies to govt. segment. There are some bright spots where a few companies like ABM have successfully executed e governance projects. This has built confidence that e governance projects are capable of delivering good results and can give good RoI to all stake holders including govt. and citizens.

Govt has shown willingness to support startups to boost innovation and adoption of new technologies. However, the same needs to be well supported by necessary procurement processes. There are massive initiatives being taken for reskilling which is a good step forward.

On one hand there are many tenders which do not get adequate bidders and on the other hand there are some regional companies which continue to bid aggressively by quoting unviable prices and finally resulting into project failures in most of such cases. Important projects like Smart Cities are rolled out but the progress is not as satisfactory as expected by govt compared to the support given by central govt.

In general, there is willingness and even availability of budget from govt. to push e-governance but there is a need to create a conducive environment for IT industry to participate in the govt. programs with more interest and enthusiasm.

B. Existing Opportunities and Outlook :

The last year has been particularly challenging as some of the big long term contracts of your company have seen tapering of scope as well as some contracts have come to an end. This is in line with outlook mentioned in the last annual report as a known business threat. This has impacted topline and bottom line. However, even in general for past couple of years your company has been following a cautious approach of doing selective bidding by giving higher priority to ability of the company to execute the project " successfully and profitably".

ABM understands the huge opportunity offered by this market segment and would like to harness it with utmost caution rather that uncalled for aggressiveness. As mentioned in the earlier annual report as per Gartner (Source: All Press Release on February 13, 2017 on Gartner Website), the governments in India could have spent $7.8 billion (9.5 percent growth over previous year) on IT products and services last year. This included spending on internal services, software, IT services, data centers, devices and telecom services by local, state and Union governments. IT services would include consulting, software support, business process outsourcing, IT outsourcing and implementation.

However, there are several IT companies who have shown limited understanding of this market segment resulting into catastrophic impact on their business during last 3-5 years. This includes many MNCs who were new entrants into the market as well established large and SMEs in India. Difficulties faced by such companies offer immense learning to established companies like ABM about the avoidable errors. This aspect shapes the ongoing business strategies of your company.

The approach of selective bidding adopted by your company has surely limited the opportunities where ABM participates. This can impact business in short to medium term. Considering the current market conditions, ABM feels that it is necessary to focus on some of the niche areas where company has strengths and conserve resources for implementation of growth plans being evolved and experimented. Your company is one of the few IT companies in e government sector in India which has five state-wide roll out projects, 3 of which have been successfully executed and rest under implementation. All the existing customers have shown preference to remain associated with ABM subject to following due process of procurement. Your company has managed to keep its outstanding payment under control and ensured that resources will not be inadequate for right opportunities. This kind of profile is not enjoyed by many IT compan ies dealing in e government market space.

C. Business Threats :

As we have been outlining in most of the annual reports the company faces various risks and threats associated with e government business. It includes possible payment delays, Time and Cost overruns, Disruptions in the project when head of the organization is changed, challenges in attracting good talent to work in less developed states and in interior regions of India etc. You company has been adopting a cautious approach of building business brick by brick rather than a big bang approach. Inexperienced competition remains a threat and results into loss some of the opportunities.

D. Business Strategies and Planning:

As mentioned above, the business strategy will be dominated by avoidance of mistakes made by fellow travellers in this market segment on one hand and careful exploitation of the immense opportunity offered by this segment on the other hand. Focus will remain on successful completion of the projects on hand and minimizing cost overruns / payment outstanding.

The focus segment will be e Municipality where your company is a leader in India with impeccable record. Smart Cities will also be a focus on case to case basis. Many municipalities which are already automated by your company are part of the smart city and those projects are tendered without the component of the e governance.

The need and scope for cybersecurity is discussed in this report while explaining the performance of the subsidiary. Cybersecurity solutions from our subsidiary will also be part of the focus for upselling and cross selling to govt. segment. We have noticed good interest from govt. customers in our initial go to market initiatives and efforts will be done to build on the initial traction.

ABM is planning to develop solution for Smart Water Management. Water is crucial for a country's development and economic growth. Though India is endowed with bounty of rainfall, unplanned development and management of water is leading to water scarcity, economic and environmental strain which may increase manifold in the coming decades. Some of the major issues with Water Management are related to Water source and extraction, storage & purification, water distribution, consumption & billing and waste water management. ABM has a strong track record providing solution for automation of water billing, accounting and MIS. This strength will be leveraged for building a Smart Water Management System. This system will be using various ICT interventions to achieve effective water management end-to-end water management i.e. from source to tap. Use of technologies like IoT will be the core to the strategy of building this solution.

Your company will also consider developing competence in the new technology areas. Pilot projects for implementing block chain are won by ABM through its subsidiary. Avenue for further acquisitions in the new technologies like Analytics, IoT and AI will be examined subject to availability of right companies.

The strategy of working closely with existing prestigious customers and retaining them will continue with due consideration to the increased competition in some of the key accounts of your company.

E. Human Resource Management:

Aim of Human Resource Management

- To enable ABM to attract, integrate, develop and retain the best talent to deliver business growth.

- Fulfill business demand, deliver consistently high utilization rates and keep manpower costs within the desired range as per Business plan.

- Deploy meaningful practices to enhance the engagement, capability and competitiveness of our workforce.

i) Headcount

S. No.

Year

Current Headcount

1

April 2016 - March 2017

769

2

April 2017 - March 2018

434

ii) HR Events

- Quarterly mentorship & feedback program.

- "Saturday Funday" challenge was endorsed to hunt the hidden talent within the team.

- Employee get-together was organized at many locations.

iii) Recognition

- Career Enhancement opportunities

- Recognized employees' performance with an appreciation letter to family.

- Hired talented Professional Graduates from the reputed universities and Institutes.

iv) Motivational and Focus Areas

- The Company continues to invest in the form of training for enhancing its Human Capital by providing opportunities to its employees to develop their skills and competencies relevant to the business requirements.

- We follow Equal Opportunities & Non Discrimination Policy and do not discriminate on basis of race, color, gender, caste or religion.

- The Company's relentless pursuit to connect with employees on a regular basis, communicate in an open and transparent manner, provide opportunities to learn and grow within the organization are yielding desired results as is evident from the high retention rate and the motivation and engagement levels of the employees.

F. Discussion on financial performance with respect to the operational performance (Standalone) :

( In Rs.Thousand)

Particulars

Year ended 31.03.2018

Year ended 31.03.2017

Gross Income

7,40,218

11,25,834

Less: Service Tax /GST

1,10,479

1,45,926

Gross Income (net of Service Tax/GST)

6,29,739

9,79,908

Less : Total expenditure

4,54,101

7,24,657

Gross profit before Depreciation & Taxation

1,75,638

2,55,251

There is significant impact of various factors on performance of your company. These are discussed in detail in the Management Discussion and Analysis.

19. RISK MANAGEMENT :

The Company has developed and adopted a Risk Management Policy. This policy identifies all perceived risk which might impact the operations and on a more serious level also threaten the existence of the Company. Risks are assessed department wise such as financial risks, information technology related risks, legal risks, accounting fraud, etc. The Risk Management Committee assists the Board in fulfilling its corporate governance oversight responsibilities with regard to the identification, evaluation and mitigation of operational, strategic and external environment risks. The Committee also ensures that the Company is taking appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.

The details of the Committee and its terms of reference are set out in the Corporate Governance report forming part of this report.

The following elements of risks which in the opinion of the Board can impact the performance of the company.

1. Industry: Industry risks are competition, newer business models like PPP, and disruptive technologies like Artificial Intelligence, Machine Learning, Virtual Reality (VR) and Augmented Reality (AR), Automation, slower decision making due to impending elections in coming year.

2. Supply side risk for talent acquisition: With growing customer base and mission critical projects, unavailability of right skilled resources at right time in right quantity can pose a risk. The company constantly trains and re-trains existing resources for different skills and technologies. Suitable HR practices are adopted to minimise the attrition rate. Lateral hiring is done to bring in fresh leaders.

3. Operational efficiency: The operational risk is mainly associated with client acquisition, execution of projects, information security and continuity of customer's business operations. The company has project level monitoring where such risks are identified and escalated to board for suitable corrective measures on time.

4. Reputation: The Company's projects are in Government sector which are necessarily funded by public finance. This may expose the company to the risk of motivated public scrutiny from elements which are adversely affected by success of project leading to transparency as well as some times by competition. The company strictly follows the Govt. processes of procurement and executes the projects with highest possible standards of ethics and best industry processes. Employees are made well aware of the company policy and ensure the proper code of conduct is followed across projects uniformly. Company has published its own code of conduct for benefit of employees. This has been helping company so far to win over the confidence of customers, even in the situations of motivated public scrutiny which is aimed at hurting reputation of the Company.

20. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

There are no planned material changes or commitments made by company that will affect the financial position of the company during the above mentioned period except the balance investment commitment of approximately Rs. 4 crores in the subsidiary subject to satisfactory progress. The liquid cash available with the company may also be utilized if the plans for acquisition fructify faster than envisaged.

21. CODE OF CONDUCT:

The Company has adopted the Code of Conduct and ethics for all Board Members and Senior Management and this is strictly adhered to. A copy of the Code of Conduct is available on the website of the Company www.abmindia.com. In addition, members of the Board and Senior Management also submit, on an annual basis, the details of individuals to whom they are related and entities in which they hold interest and such disclosures are placed before the Board. The members of the Board inform the Company of any change in their directorship(s), chairmanship(s) / membership(s) of the Committees, in accordance with the requirements of the Companies Act, 2013 and Listing Regulations.

The members of the Board and Senior Management have affirmed their compliance with the code and a declaration signed by the Managing Director is annexed to th is report.

22. AUDIT COMMITTEE COMPOSITION:

The Composition of the Audit Committee is as described in the Corporate Governance Report, which forms part of this report. During the year all the recommendations of the Audit Committee were accepted by the Board.

23. VIGIL MECHANISM:

Pursuant to the provisions of Section 177(9) of the Act and rules made thereunder, the Board of Directors had approved the Policy on Vigil Mechanism / Whistle Blower Policy to provide a mechanism for the Directors and employees to report their grievances, genuine concerns about unethical behaviour, actual or suspected fraud, and violation of the Company's Code of Conduct. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee.

Brief details about the policy are provided in the Corporate Governance Report attached to this Report. The Whistle Blower Policy is available on the website of the Company.

24. PREVENTION OF INSIDER TRADING:

In compliance with the SEBI regulations on prevention of insider trading, the Company has in place (1) (i) a Code of Conduct to Regulate, Monitor and Report Trading by Insiders, the disclosure requirements and procedure thereto, Preservation of Price Sensitive Information, Trading while in possession of unpublished Price Sensitive Information, Prevention of misuse of Price Sensitive Information, etc.; and (2) a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information detailing the principles of fair disclosure. The same has been circulated to Directors and designated employees of the Company. They are regularly reminded about their obligation under the policies and also informed about prevention of insider trading into the securities of the Company.

The Company Secretary is responsible for implementation of the Code. All Board of Directors and the designated employees have confirmed compliance with the Code.

25. RELATED PARTY TRANSACTIONS:

In line with requirement of the Companies Act, 2013 and Listing Regulations, your Company has formulated a Policy on Related Party Transactions which is also available at Company's website www.abmindia.com. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis, which is reviewed and updated on quarterly basis.

All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arm's Length basis. No Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.

26. EXTRACT OF ANNUAL RETURN:

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 is appended as an Annexure to this Annual Report.

27. CORPORATE SOCIAL RESPONSIBILITY:

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. In compliance with requirements of Section 135 of the Companies Act, 2013, the Company has laid down a CSR Policy which is published on its website www.abmindia.com.

28. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

There were no loans or guarantees given by the Company under Section 186 of the Companies Act, 2013 during the year under review. The Particulars of investments have been disclosed in the Financial Statements.

29. PREVENTION OF SEXUAL HARASSMENT (POSH) AT WORKPLACE:

The Company has adopted a Policy for prevention of Sexual Harassment in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and rules thereunder. Company has formed an "Internal Complaints Committee" for prevention and redressal of sexual harassment at workplace. The Company has ensured a wide dissemination of the Policy and have conducted various awareness programmes in the organization. The Company has not received any complaint of sexual harassment during the financial year 2017-18.

30. PARTICULARS OF EMPLOYEES:

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been appended as Annexure to this Report. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

31. CONSERVATION OF ENERGY :

Your Company consumes energy mainly for the operation of its software development, thus the consumption of electricity is negligible. In order to conserve the electricity, the air conditioners are kept at a moderate temperature and all the electrical equipments are turned off, whenever they are not required by the office staff.

32. TECHNOLOGY ABSORPTION, ADOPTION & INNOVATION AND RESEARCH AND DEVELOPMENT:

Your Company has continued its focus on 'Productisation of Services' by innovative business models. Company is putting in efforts to adopt the latest technologies to address the demand for "Digital Business". The flagship products of the company have progressed well with respect to upgradation to the latest technology for reducing the total cost of ownership for customers and becoming more competitive in market. PoCs in block chain for application in govt space are undertaken.

33. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your company did not have any Foreign Exchange earnings or outgo in last year.

34. LISTING FEES:

Your Company's shares are listed in The Bombay Stock Exchange Limited, Mumbai and the Annual Listing fees for the year under review have been paid.

35. DIRECTORS ' RESPONSIBILITY STATEMENT:

The Directors hereby confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit or Loss 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 Companies Act, 2013, 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 for the Company and such internal financial controls are adequate and operating effectively; and

f) they have devised proper system to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

35. ACKNOWLEDGEMENT:

Your Board places on record their deep appreciation to employees at all levels for their perseverance, loyalty and unflinching efforts by their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain an innovative leader in Software & Services segment of Indian IT Industry. The Board places on record its appreciation for the support and co-operation your Company has been receiving from its business partners and others associated with our various software projects and services.

Your Directors also take this opportunity to thank all Shareholders, Clients, Vendors, Bankers, Central and State Government Organizations, Regulatory Authorities, for their continued support which was a great help to us in managing our continued growth. We acknowledge their contributions and commit ourselves to continue and strengthen this fruitful alliance in all times to come.

For and on behalf of the Board

Date : 30th May, 2018 Prakash B. Rane Sharadchandra D. Abhyankar

Place: Mumbai Managing Director Director

(DIN:00152393) (DIN:00108866)

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