DIRECTORS' REPORT Dear Shareholders, Your Directors are pleased to present the Ninth Annual Report and audited accounts for the financial year ended March 31, 2015. Operations The fees collected, after considering discount and concessions stood at Rs.17,992.69 lakhs as against Rs.17,647.07 lakhs for the previous year registering an increase of around 1.96 %. The operating income stood at Rs.1,913.95 lakhs (Previous year Rs.1,201.36 lakhs). Earnings before interest, depreciation, tax and amortization (EBIDTA) increased by around 4.75 % and stood at Rs.4,455.35 lakhs as compared to previous year's figure of Rs.4,253.09 lakhs. Profit after tax increased by 26.67 % from Rs.2,199.36 lakhs in the previous year to Rs.2,785.94 lakhs in the current year. Dividend During the financial year 2014-15, your Directors have declared and paid an interim dividend of Re.0.60 (6.00 %) per equity shares of Rs.10/- each on a paid-up share capital of 39,79,41,400 divided into 3,97,94,140 Equity shares. The total dividend payout, including dividend distribution tax of Rs.47.74 lakhs was Rs.286.50 lakhs. Your Directors recommended a final dividend of 20.5% i.e. Rs.2.05 per equity shares of the face value of Rs.10/- each aggregating to Rs.979.54 lakhs including dividend distribution tax of Rs.163.22 lakhs. Share Capital The Paid-up Equity Share Capital as at 31st March, 2015 stood at Rs.3,979 lakhs. During the year under review, the Company has not issued any shares with differential voting rights. Company implemented the Employee Stock Options Scheme "ESOP 2011 - II" in accordance with the Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the "SEBI Guidelines"). The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2015 are provided in Annexure 1 to this Report. Management's Discussion and Analysis Report Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the listing agreement, entered into with The BSE Limited (BSE) and the National Stock Exchange of India Ltd. (NSE) is presented in a separate section forming part of this Annual Report. Consolidated Financial Statements The Consolidated Financial Statements of the Company are prepared in accordance with relevant Accounting Standard viz. AS-21 (Consolidated Financial Statements) issued by the Institute of Chartered Accountants of India and forms part of this Annual Report. Performance of Subsidiary Companies MT Education Services Pvt. Ltd. The gross revenue of the Company for the financial year 2014-15 stood at Rs.132.33 Lakhs (Previous Year Rs.44.38 Lakhs). Profit after tax / (loss) for the year stood at Rs.28.99 Lakhs (Previous Year Rs.(19.45) Lakhs). Chitale's Personalized Learning Pvt. Ltd. The gross revenue of the Company for the financial year 2014-15 stood at Rs.389.52 Lakhs (Previous Year Rs.385.39 Lakhs). Profit after tax/(loss) for the year stood at Rs.87.59 Lakhs (Previous Year Rs.(30.62) Lakhs) Lakshya Educare Pvt. Ltd. The gross revenue of the Company for the financial year 2014-15 stood at Rs.1,420.21 Lakhs (Previous Year Rs.417.47 Lakhs). Profit after tax / (loss) for the year stood at Rs.290.66 Lakhs (Previous Year Rs. (53.24) Lakhs) Lakshya Forum for Competitions Pvt. Ltd. The gross revenue of the Company for the financial year 2014-15 stood at Rs.1,233.91 Lakhs (Previous Year Rs.1,241.19 Lakhs). Loss for the year stood at Rs.286.98 Lakhs (Previous Year Rs.20.35 Lakhs) Sri Gayatri Educational Services Pvt. Ltd The Company was incorporated on 18/06/2014.The Company did not generate any revenue during the financial year 2014-15. The Loss stood at Rs.0.51 Lakhs. Corporate Governance As per Clause 49 of the listing agreement, entered into with The BSE Limited (BSE) and the National Stock Exchange of India Ltd. (NSE), a separate section on corporate governance practice followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms part of this Report. Extract of Annual Return The details forming part of the extract of the Annual Return in form MGT-9 as required under Section 92 of the Companies Act, 2013 is included in this report as Annexure 2 and forms an integral part of this Report. Directors In accordance with the provision of Section 152 of the Companies Act, 2013 and Company's Articles of Association Mr. Naarayanan Iyer, Director of the Company retires by rotation and being eligible, offer himself for re-appointment at the ensuing Annual General Meeting. All Independent Directors have given a declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Board Evaluation Pursuant to the provision of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire was prepared after taking into consideration various aspects of the Board's functioning, composition of the Board and its Committee, culture, execution and performance of specific duties, obligations and governance. The performance evaluation of independent Directors was completed. The performance evaluation of the Chairman and Non-Independent Directors was carried out by the independent Directors. The Board of Directors expressed their satisfaction with the evaluation process. Number of Meetings of the Board: The details of the number of meetings of the Board held during the Financial Year 2014-15 forms part of the Corporate Governance Report. Particulars of Loans, Guarantee and Investments by the Company: Details of Loans, Guarantees and Investments covered under the provision of Section 186 of the Companies Act, 2013 are given in notes to Financial Statements. Whistle Blower Policy The Company has a Whistle Blower Policy to report genuine concern or grievance. The Whistle Blower Policy has been posted on the website of the Company (www.mteducare.com) Remuneration and Nomination Policy The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel, and Senior Management of the Company. The policy also lays down the criteria for selection and appointment of Board Members. The details of this policy are given in the Corporate Governance Report. Related Party Transactions All transactions entered into with Related Parties for the year under review are on arm's length basis and in the ordinary course of business and that the provision of Section 188 of the Companies Act, 2013 are not attracted. Further, there are no Material Related Party Transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. The Company has entered into transactions with related parties as entered in Form No. AOC-2 annexed to this report as Annexure 5. Your Company has developed Standard Operating Procedure for identification and monitoring of such transactions. All Related Party Transactions are placed before the Audit Committee and also to the Board for approval. Omnibus approval was obtained for transactions which are of repetitive nature. The Policy on Related Party Transaction has been uploaded on the website of the Company. The web link of the same has been provided in the Corporate Governance Report. None of the Directors have any pecuniary relationship of transactions vis-a-vis the Company. Significant and Material Orders Passed by the Regulators or Courts There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations. To the best of knowledge and belief and according to the information and explanation obtained by them, your Directors make the following statement in terms of Section 134 (3)(c) of the Companies Act, 2013: (i) that in the preparation of the Annual Accounts for the year under review, all applicable accounting standards have been followed along with proper explanation relating to material departures, if any; (ii) 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 as at March 31, 2015 and of the profit of the Company for the year ended on that date; (iii) that the Directors have taken proper and sufficient care 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; (iv) that the annual accounts have been prepared on a 'going concern' basis; and (v) that the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year; (vi) that the Directors have devised proper system to ensure compliance with the provision of all applicable laws and that such systems were adequate and operating effectively. Statutory Auditors M/s. Shaparia Mehta & Associates LLP, Chartered Accountants, (Firm Registration No. 1 12350W/W-100051), Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting are recommended for re-appointment to audit the accounts of the Company for the financial year 2015-16. As required under the provision of Section 139 of the Companies Act, 2013 the Company has received written confirmation from M/s. Shaparia Mehta & Associates LLP that their appointment, if made, would be in conformity with the limits prescribed in the said Section. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. Cost Audit As per the requirement of the Central Government and pursuant to the provision of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been required to maintain cost records to drive in transparency and keep a check on its costing. The notification classified four broad sectors for which cost records need to be maintained and cost audit filed with the government, one of them being companies operating in areas involving public interest such as railway or tramway locomotives; mineral products including cement and companies engaged in education services etc. The Board of Directors on the recommendation of the Audit Committee have appointed M/s Joshi Apte & Associates, Cost Accountants (Registration No. 00240) as Cost Auditor to audit the Cost Account of the Company for the financial year 2014-15 at a remuneration of Rs.1,25,000 (Rupees One Lakh Twenty Five Thousand only) plus service tax as applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013 a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting. Secretarial Audit Pursuant to the provision of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company has appointed Mr. Paresh G. Shah, Company Secretary in Practice (C.P.No 7115) to undertake Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure 3 and forms integral part of the Report. Internal Control System and their Adequacy Your Company has an effective internal control and risk-mitigation system, which are assessed and strengthened with new / revised standard operating procedures. The Company's internal control system is commensurate with its size, scale and modalities of operation. The Internal Audit is entrusted to M/s Mukund N. Chitale & Co., Chartered Accountants. The main trust of the audit is to test and review controls, appraisal of risk and business process. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of the internal control system and suggests improvement to strengthen the same. The Company has strong Management Information System, being an integral part of control mechanism. The Audit Committee, Statutory Auditors and the Business Heads are periodically appraised of the internal audit findings and corrective actions taken. Audit plays an important role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee. Proper steps have been taken to ensure and maintain objectivity and independence of Internal Audit. Risk Management Although the company has long been following the principle of risk minimization as is the norm in every industry, it has now become a compulsion. Therefore, in accordance with Clause 49 of the listing agreement the Board members were informed about risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the company The main objective of this plan is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the plan establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. In today's challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Regulations, competition, Business risk, Technology obsolescence, Investments, retention of talent and expansion of facilities. Business risk, inter-alia, further includes financial risk, political risk, fidelity risk, legal risk. As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same. Corporate Social Responsibility As part of its initiative under the Corporate Social Responsibility ('CSR') the Company has under taken project of coaching 14,000 students of Standard IX and 9,200 students of Standard X (English / Hindi / Marathi and Urdu medium) of 130 BMC Schools across Mumbai. The projects are in accordance with Schedule VII of the Companies Act, 2013 and the Company's CSR policy. The Report on CSR Activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure 4 forming part of this Report. Apart from the CSR Activities under the Companies Act, 2013 the Company continues to voluntarily support the following social initiatives / NGO's like (a) Aasara , (b) Amcha Ghar, (c) Vanvashi Kalyan Ashram, (d) Navjivan Arogya Sanstha, (e ) Bal Kalyan Nagari etc. to name a few. Environment and Safety The operations of the Company are conducted in such a manner that it ensures safety of all concerned and a pleasant working environment. As required by the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013 the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. Its redressal is informed to the concerned and also placed on the intranet for the benefits of its employee. During the year under review, no complaints were reported to the Board. Human Resource and Industrial Relations The Company takes pride in the commitment, Competence and dedication shown by its employee and Visiting Faculties in all areas of operations. The Company has a structured induction process and management development programs /Teacher training workshops to upgrade skills of managers / Faculties. Objective appraisal systems based on Key Result Areas are in place for senior management staff. The Company is dedicated to enhancing and retaining top talent through superior learning and organizational development, as this being the pillar to support the Company's growth and sustainability in the future. Statutory Information The information on energy conservation, technology absorption and foreign exchange earnings and outgo as required to be disclosed under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given below: i. Part A & B of the Rules pertaining to Conversation of Energy and Technology Absorption are not applicable to your Company. ii. Foreign Exchange Earnings and Outgo: Earnings: Rs.31.14 lakhs - (Previous year Rs.204.80 lakhs) Outgo: Rs.9.13 lakhs (Previous year Rs.275.82 lakhs) 4 persons employed throughout the year were in receipt of remuneration of Rs.60 lakhs per annum or more amounting to Rs.320 lakhs and no persons were employed for the part of year who were in receipt of remuneration of Rs.5 lakhs per month or more. During FY 2014-15 the Company had 2500+ Employees including 1200+ Visiting Faculties. The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors' Report for the year ended 31st March, 2015 is given in a separate Annexure to this Report. The above Annexure is not being sent with this Report to the members of the Company in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by members at the Registered Office of the Company, 21 days before the 9th Annual General Meeting and up to the date of the ensuing Annual General Meeting between 11.00 a.m. and 1.00 p.m. on all working days (except Saturday, Sunday and Public Holidays). None of the employee listed in the said Annexure is a relative of any director of the Company. None of the employee holds (by himself or along with his spouse and dependent Children) more than two percent of the Equity shares of the Company. During the year under review, the Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit Rules), 2014. The Business Responsibility Reporting as required by Clause 55 of the Listing Agreement with the Stock Exchanges is not applicable to your Company for the financial year ending March 31, 2015. Code of Conduct Compliance A declaration signed by the Chairman and Managing Director affirming compliance for the Financial Year 2014-15, with the Company's Code of Conduct by the Directors and Senior Management as required under Clause 49 of the Listing Agreement with Stock Exchanges, is annexed and forms part of the Directors' Report. Cautionary Statement The statements contained in the Board's Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations. Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results. Appreciation Your Directors wish to express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also express their appreciation to all the visiting faculty, lecturers, and employees of MT Educare FAMILY for their hard work, commitment, dedicated services and collective contribution. For and on behalf of the Board of Directors Mahesh R. Shetty Chairman and Managing Director Date: May 13, 2015 Place: Mumbai |