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You can view full text of the latest Director's Report for the company.

BSE: 500304ISIN: INE161A01038INDUSTRY: IT Training Services

BSE   ` 91.00   Open: 89.75   Today's Range 87.65
+2.35 (+ 2.58 %) Prev Close: 88.65 52 Week Range 60.80
Year End :2017-03 


Dear NIIT Shareowner,

The Directors take pleasure in presenting the 34th Annual Report along with the Audited Financial Statement for the financial year ended March 31, 2017.

Financial Highlights

The highlights of your Company's financial results for the financial year ("FY") April 1, 2016 to March 31, 2017 are as follows:

(Rs. Mn.)












Net Sales (Income from operations)





Other Income





Total Income





Total Expenditure





Profit before Depreciation and Taxes





Depreciation and Amortization





Exceptional Items (Net)





Net Tax Provision





Net Profit/ (Loss) before share of Associates' Profit & Minority Interest





Share of Associates' Profit and Minority Interest



Net Profit/(Loss)





Basic EPS (Rs.)





Diluted EPS (Rs.)





During the year, your Company's consolidated total income was Rs.12,001 million as against Rs.10,145 million in the previous year and net profit (after share of associates' profit and minority interest) was Rs. 651 million as against Rs. 672 million in the previous year.

The Company's total income for the year under review on a standalone basis was Rs. 4,088 million as compared to Rs. 4,219 million in the previous year and net loss of Rs. 51 million as compared to net profit of Rs. 1 million in the previous year.

Business Operations

Your Company continues to see a strong momentum in the Corporate Learning business. During the year, the Corporate Learning Group (CLG) achieved a growth of 35%. Excluding additional revenue from its strategic sourcing business, CLG witnessed strong growth of 18% in constant currency terms and adjusted EBITDA margin of 11%. Growth was driven by the increased demand for Managed Training Services (MTS) as global companies continued to move towards greater outsourcing of training. Revenue contribution from MTS to CLG revenue increased to 95% as compared to 90% in FY16. CLG added 4 new MTS customers during FY17 taking the number of global MTS customers to 34. CLG contributed 65% to the total consolidated revenue of NIIT.

Your Company had successfully turned around the Skills and Careers business in FY16 and expected to accelerate growth and margin improvement during FY1 7, driven by the Digital Renewal initiatives including DigiNxt and Stack Route. While these initiatives performed better than expected, a sharp decline in hiring by the IT Industry led to a sharper decline in old IT skills portfolio. The temporary impact of demonetization impacted growth during the year. Despite this, the SNC business achieved 74% improvement in EBITDA on a small base. This could be achieved due to improvement in business mix towards higher realization courses and a strong focus on cost optimization. Also, the business achieved robust growth in revenue from International markets and in B2B offerings in India.

Overall, the revenue achieved by the Skills & Careers business declined 3% year-on-year versus a growth of 1% in FY16. The business had a positive 3% EBITDA margin as compared to 2% EBITDA margin in FY16, an improvement of 123 basis points. The Skills & Careers business contributed 27% to NIIT's consolidated revenue.

In the School Learning Business, the Company continued its transformation and stayed away from capex-driven business models. While this continued to impact revenue, it helped improve its liquidity and capital efficiency. The focus for the School Learning Group (SLG) on growing the asset-light, IP-driven product offerings helped the go forward business grow 29% during the year which helped improve overall margins for schools business by 143% in FY17.

For the year, revenue from SLG declined 8% year-on-year due to the planed phasing out off the government school business. The business had 5% EBITDA margin for the year versus 2% in FY16, an improvement of 338 basis points. SLG contributed 8% to NIIT's revenues for FY17.

On an overall basis, NIIT achieved revenues of Rs. 11,877 million, a growth of 18% as compared to the previous Financial Year. The strong growth in Corporate Learning and turn around in Skills and Careers Business helped to overcome planned ramp down of revenue from government schools. EBITDA was Rs. 760 million as compared to Rs. 712 million last year.

Future Plans

The Company continues to focus on an asset light, technology intensive and IP driven business opportunities. In the Corporate Learning Business, the trend of outsourcing to specialist training companies is expected to accelerate with increase in both number of companies deciding outsourcing and as well as scope of services that they outsource. Your Company has recently signed a large contract in Canada with Real Estate Council of Ontario (RECO). RECO has selected the Company as the Exclusive Designate to redesign, deliver, and maintain its flagship real estate education programs for professionals in the province of Ontario for a period of 5 years. Your Company continues to see large opportunities and is proactively investing in new capabilities to address these. The Company has started the current financial year with strong pipeline of MTS opportunities.

In the Skills and Careers Business, softness in hiring of IT graduates by the industry is expected to continue in the short term. However, the increasing trend of digitization across industries and disruption of traditional industries by start-ups is driving demand for Digital skills. NIIT program for Digital transformation of its portfolio of courses to align with increasing demand of such courses is ramping up and beginning to make up for decline in demand for old IT portfolio. In addition, in the medium to long term, your Company plans to transform training delivery from brick and mortar centers to a multimodal, multi-channel delivery modal involving a greater proportion of delivery online. is NIIT's new initiative launched in FY17, which will evolve into a 360 degree, multi-modal learning portal.

NIIT will continue to defocus capex driven business and exit capital intensive government schools business. The Company sees a large opportunity in the K-12 market and plans to leverage existing operations in the schools to offer comprehensive managed services to schools as well as offer products and services to students outside school through digital channels.


Your Directors have not recommended any dividend for the year under review.

Transfer to Reserves

Your Company has not transferred any sum to the General Reserve.


As per the provisions of Section 152(6) of the Companies Act, 2013, Mr. Vijay K Thadani will retire by rotation in the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment, as a Director.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors confirming that they meet the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 (the Act) and Regulation 25 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulation).

Meetings of the Board

During the year, seven (7) Board Meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Act and Listing Regulations. For further details, please refer Corporate Governance Report forming part of this Annual Report.

Subsidiary Companies

Pursuant to provisions of Section 129 (3) of the Act, a report on the performance and financial position of each of the Company's subsidiaries, associates and joint venture companies is provided in the prescribed Form AOC-1, at "Annexure A" forming part of this Report.

The Annual Financial Statements of the subsidiaries will be made available to the Members of the Company/ Subsidiary Companies seeking such information at any point of time. The Annual Financial Statements of the subsidiaries are also available for inspection for any Member, on all working days (i.e. except Saturdays, Sundays and holidays) between 10:00 a.m. to 1:00 p.m., at the Registered Office of the Company and subsidiary companies and the same can be accessed from the website of the Company i.e.

Consolidated Financial Statement

In compliance with Regulation 33 of the Listing Regulations and Section 129(3) of the Act read with the relevant rules made there under, the Consolidated Financial Statement are prepared in accordance with the Accounting Standard (AS) - 21 on Consolidated Financial Statements, AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures. The Consolidated Financial Statements together with Auditors' Report thereon form part of the Annual Report.

Pursuant to provisions of Section 136 of the Act, the audited financial Statement of the Company (standalone and consolidated) along with relevant documents are available on the website of the Company. The same are also available for inspection at the registered office of the Company.

Material changes and commitments, if any, affecting the financial position of the Company

No material change and commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company i.e., March 31, 2017 and the date of the Board's Report i.e. May 17, 2017.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134(3)(c) read with 134(5) of the Act, the Directors of your Company hereby state and confirm:

a) that in the preparation of the Annual Accounts, the applicable Accounting Standards were followed along with proper explanation relating to material departures;

b) that the directors had selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the Company for that period;

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) that the directors had prepared the Annual Accounts on a going concern basis;

e) that the directors had 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) that the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


Pursuant to the provisions of sections 139 and other applicable provisions of the Act and the Companies (Audit and Auditors) Rules, 2014, Price Waterhouse, Chartered Accountants, (FRN301112E) ("PWC") were appointed by the Members as Statutory Auditors of the Company for three years from the conclusion of 31st Annual General Meeting till the conclusion of 34th Annual General Meeting of the Company subject to ratification of the appointment at every Annual General Meeting, as PWC has already served for more than 10 years before the notification of the Companies Act, 2013 and applicable Rules therein. The term of Price Waterhouse, Chartered Accountants as Statutory Auditors shall expire at the conclusion of this 34th Annual General Meeting of the Company.

The Board of Directors, based on the evaluation criteria, as well as the eligibility & consent letter, has recommended the appointment of M/s S R Batliboi & Associates LLFJ Chartered Accountants, Gurgaon (FRN 101049W/ E300004) as Statutory Auditor of the Company for a period of five (5) years from the conclusion of ensuing 34th Annual General Meeting till the conclusion of 39th Annual General Meeting. Further, this appointment shall be subject to ratification at each Annual General Meeting held after 34th Annual General Meeting.

Auditors' Report

The Auditors' Report to the Shareholders does not contain any qualification, reservation or adverse remarks. The notes on financial Statement referred to in the Auditors' Report are self-explanatory and do not require any further comments.

During the year under review, the Auditors had not reported any matter under Section 143(12) of the Act. Hence, no detail is required to be disclosed under Section 134(3)(ca) of the said Act.

Secretarial Auditors

Pursuant to provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Nityanand Singh & Co., Company Secretaries, New Delhi as Secretarial Auditors to conduct secretarial audit of the Company for the financial year 2016-17. The Secretarial Audit Report is annexed herewith as "Annexure- B". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Auditors

In terms of Section 148 of the Act read with Companies (Cost Records and Audit) Rules, 2014, the Company has appointed M/s Ramanath Iyer and Co., Cost Accountants, New Delhi, as Cost Auditors of the Company, to carry out the cost audit for the financial year 2016-17. The ratification of remuneration payable to Cost Auditors is being sought from the Members of the Company at the ensuing AGM.

Corporate Governance Report

Your Company has complied with all the mandatory requirements relating to Corporate Governance as stipulated in Para C of Schedule V of Listing Regulation. Corporate Governance Report is given as a separate section and forms a part of this Report. The Certificate from the Practicing Company Secretary confirming the compliance to the conditions of the Corporate Governance stipulated in Para E of Schedule V of Listing Regulations is annexed to the Corporate Governance Report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report as prescribed under Regulation 34(2)(e) read with Para B of Schedule V of the Listing Regulation, is provided as a separate section and forms a part of this Report.

Related Party Transactions

All related party transactions entered into by the Company during the year are in the ordinary course of business and on an arm's length basis. There is no materially significant related party transaction 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 Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a Related Party Transactions Policy for identifying, reviewing and approving transactions between the Company and Related Parties, in compliance with the applicable provisions of the Listing Regulation, the Act and Rules there under.

Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) read with Section 188 of the Act, in Form AOC 2 is annexed here with as "Annexure D". All Related Party Transactions are approved by the Audit Committee and are also approved by the Board as a good Corporate Governance.

Particulars of Loans, Guarantees or Investments

Details of Loans, Guarantees or Investments covered under the provisions of Section 186 of the Act are given in the Notes to the Financial Statement.

Adequacy of Internal Financial Controls

A detailed note on Internal Financial Controls system and its adequacy has been given in Management Discussion and Analysis Report, forming part of this Report. The Company has designed and implemented a process driven framework for internal financial controls within the meaning of explanation to section 134(5)(e) of the Act. For the year ended March 31, 2017, the Board is of the opinion that the Company has sound Internal Financial controls commensurate with the nature and size of its business operations, wherein controls are in place and operating effectively and no material weaknesses exist.

Corporate Social Responsibility (CSR)

In compliance with the requirements of Section 135 of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has a Corporate Social Responsibility (CSR) Committee. The details of the Committee and its meetings are mentioned in the Corporate Governance Report, forming part of this Report. The CSR Policy of the Company is available on the website of the Company. The Report on CSR activities is given in "Annexure C" forming part of this Report, which was approved by the Committee on May 14, 2017.

Statutory Committees

Details of the Committees of the Board viz Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders Relationship Committee constituted in compliance of the provisions of the Act and Listing Regulations are provided in the Corporate Governance Report, forming part of this Report.

Statutory Policies

In compliance of the various provisions of the Act and Listing Regulation, the Company has following policies:

- Policy on materiality of and dealing with related party transactions

- Policy for determining material subsidiaries of the company

- Policy on determination of material/ price sensitive information

- Corporate Social Responsibility Policy

- Whistle Blower Policy

- Remuneration Policy

- Archival Policy

The Company has a Policy on "Prevention of Sexual Harassment of Women at Workplace" and matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013". There was no incident to report during the year.

Information relating to Conservation of Energy, Technology Absorption, Research and Development, Exports, Foreign Exchange Earnings and Outgo.

a) Conservation of energy

Although the operations of the Company are not energy intensive, the management has been highly conscious of the criticality of conservation of energy at all the operational levels and efforts are made in this direction on a continuous basis. Adequate measures have been taken to reduce energy consumption whenever possible by using energy efficient equipment. The requirement of disclosure of particulars with respect to conservation of energy as prescribed in Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014, is not applicable to the Company and hence not provided.

b) Technology absorption

Your Company believes that in addition to progressive thought, it is imperative to invest in research and development to ascertain future exposure and prepare for challenges. In its endeavor to obtain and deliver the best, your Company has entered into alliances / tie-ups with major global players in the Information Technology industry to harness and tap the latest and the best of technology in its field, upgrade itself in line with the latest technology in the world and deploy /absorb technology wherever feasible, relevant and appropriate.

c) Research and Development

The Company believes that technological obsolescence is a reality. Only progressive research and development will help us to measure up to future challenges and opportunities. We invest in and encourage continuous innovation. During the year under review, expenditure on research and development is not significant in relation to the nature and size of operations of your Company.

d) Foreign exchange earnings and outgo

(i) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services and export plans.

The Company exports customized learning content to its overseas clients to meet their varying learning needs. The Company develops content in a range of subjects for widely varied audience. The Company will continue to strengthen its presence in USA, Europe, China, Africa, South East Asia etc. with a view to increase exports.

(ii) Total foreign exchange earned and used

The details of foreign exchange earnings and outgo are mentioned in Notes Nos. 33 to 34 contained in the Notes forming part of the Financial Statement (standalone) for the financial year ended March 31, 2017.

Extract of Annual Return

An extract of the Annual Return in form MGT-9, pursuant to the provisions of Section 92(3) of the Act, is annexed herewith as "Annexure E" and forms part of the Report.

Public Deposits

In terms of the provisions of Section 73 to 76 of the Act read with the relevant rules made there under, your Company has not accepted any deposits from the public.

Share Capital

During the year, the Company has allotted 248,653 equity shares on the exercise of stock options under the NIIT Employee Stock Option Scheme - 2005.

The Company did not issue any equity shares with differential voting rights or sweat equity shares under the Companies (Share Capital and Debentures) Rules, 2014.

Key Managerial Personnel

As on March 31, 2017, following officials were the 'Key Managerial Personnel' of the Company under the Act:

- Mr. Vijay K Thadani - Vice Chairman & Managing Director

- Mr. P Rajendran - Joint Managing Director

- Mr. Rahul Keshav Patwardhan - Chief Executive Officer

- Mr. Amit Roy - Chief Financial Officer

- Mr. Deepak Bansal - Company Secretary During the year under review:

- Ms. Arpita B Malhotra resigned as Company Secretary of the Company w.e.f. close of business hours on July 25, 2016 and Mr. Deepak Bansal was appointed as the Company Secretary of the Company w.e.f. July 26, 2016.

- Mr. Rohit Kumar Gupta resigned as Chief Financial Officer of the Company w.e.f. close of the business hours on February 28, 2017 and Mr. Amit Roy was appointed as the Chief Financial Officer of the Company w.e.f. March 1, 2017.

After the end of the financial year 2016-17, Chief Executive Officer of the Company, Mr. Rahul Keshav Patwardhan, had tendered his resignation on April 7, 2017 due to compelling family reasons and requested to be relieved from the close of business hours of July 31, 2017. Further the Board of Directors had approved the appointment of Mr. Sapnesh Lalla as Chief Executive Officer Designate of the Company from April 7, 201 7and as Chief Executive Officer of the Company with effect from August 1, 2017.

Scheme of Arrangement

During the year under review, the Board of Directors had, at its meeting held on March 24, 2017, approved a Scheme of Amalgamation for merger of PIPL Management Consultancy and Investment Private Limited and Global Consultancy and Investment Private Limited (part of Promoter/Promoter Group) with the Company subject to approval of National Company Law Tribunal in accordance with the provisions of Sections 230-232 and any other applicable provisions, if any of the Act and other regulatory approvals.

Board Evaluation

Pursuant to the provisions of the Act and SEBI (Listing Obligation and Disclosure Requirements Regulation), the Board has carried out the annual performance evaluation of its own performance, the Directors individually (including Chairman of the Board) as well as the evaluation of the working of its Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders' Relationship Committee. A structured evaluation form was administered after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board Effectiveness, Key Stakeholders connect, Ethics and Compliances, Evaluation of Company's Performance, Project Management and Internal Control and Audits. A separate exercise was carried out to evaluate the performance of individual Directors including the Chairperson of the Board, who were evaluated on parameters such as level of engagement and contribution, effective participation in Board / Committee Meetings, independence of judgment, safeguarding the interest of the Company and its minority shareholders, providing expert advice to Board and contributing in deliberations while approving related party transactions.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed the Nomination and Remuneration Policy, as stated in the Corporate Governance Report.

Vigil Mechanism / Whistle Blower Policy

Pursuant to the provisions of section 177(9) & (10) of the Act and Regulation 22 of SEBI (Listing Obligation and Disclosure Requirements) Regulation, a Vigil Mechanism for Directors and employees to report genuine concerns has been established by the Company as stated in the Corporate Governance Report.

Particulars of Employees

The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Act read with Rule 5(1) and (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as "Annexure F" to this Report.

Details of significant and material orders passed by the regulators, courts, tribunals

During the year under review, no significant or material order was passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future.

Human Resources and Employee Stock Option Scheme

NIITians are the key resource for your Company. Your Company continued to have a favorable work environment that encourages innovation and meritocracy at all levels. A detailed note on human resources is given in Management Discussion & Analysis Report. Employee relations remained cordial at all the locations of the Company.

Issue of Employee Stock Options

The Company had established Employee Stock Option Scheme - 2005 (ESOP 2005) with the objective of attracting and motivating employees by rewarding performance and retaining the best talent. The aim is to develop a sense of ownership among the employees within the organization and to align your Company's stock option scheme with the best practice in the industry. The Nomination and Remuneration Committee has granted 320,000 Employee Stock Options (Grant #XVI) at Rs. 83.30 per option/share in June 2016 and 140,000 Employee Stock Options (Grant #XVII) at Rs. 73.60 per option/share in February 201 7 to the eligible employees under ESOP-2005.

Disclosure with respect to the Employee Stock Option Scheme, pursuant to Rule 12(9) of Companies (Share Capital and Debentures) Rules, 2014 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, is annexed herewith as "Annexure G" and forms part of the Report.


The Board of Directors would like to take this opportunity to place on record its appreciation for the committed services and contributions made by employees of the Company during the year at all levels. In addition, the Directors wish to thank the Company's customers, business partners, vendors, bankers & financial institutions, all government & non-governmental agencies, and other business associates for their continued support. We also thank Government of other countries where we have our operations. The Directors also acknowledge and appreciate the support and confidence of the Company's shareholders, and remain committed to enabling the Company achieve its growth objectives in the coming years.

For and on behalf of the Board

Rajendra S Pawar

Place : Gurugram Chairman

Date : May 17, 2017 DIN: 00042516