Sonata Software Ltd
Directors Reports
Dear Members,
Your Directors have pleasure in presenting the Twenty-Eight (28th) Annual
Report of your Company together with the Audited Standalone and Consolidated Financial
Statements for the Financial Year ended 31st March, 2023.
The consolidated performance of the Company and its subsidiaries has been referred to
wherever required.
FINANCIAL RESULTS
Your Company's financial performance (standalone and consolidated) for the year ended
31st March, 2023 is summarized below:
Rs in lakhs
|
Standalone |
Consolidated |
| Description |
Financial Year ended 31.03.2023 |
Financial Year ended 31.03.2022 |
Financial Year ended 31.03.2023 |
Financial Year ended 31.03.2022 |
| Total Income |
108,054 |
92,238 |
751,994 |
565,535 |
| Total Expenditure |
79,090 |
61,582 |
684,499 |
508,962 |
| EBITDA |
28,964 |
30,656 |
67,495 |
56,573 |
| Depreciation and Amortization Expense |
1,851 |
1,755 |
5,913 |
4,732 |
| Finance Cost |
696 |
878 |
1,854 |
1,805 |
| Profit before Tax & Exceptional Items |
26,417 |
28,023 |
59,728 |
50,036 |
| Provision for Tax (Net) |
4,380 |
4,504 |
14,538 |
12,393 |
| PAT before non-controlling interest |
22,037 |
23,519 |
45,190 |
37,643 |
| Non-controlling interest |
- |
- |
- |
- |
| PAT after non-controlling interest |
22,037 |
23,519 |
45,190 |
37,643 |
| Basic Earnings Per Share (in |
15.89 |
16.97 |
32.58 |
27.17 |
STANDALONE FINANCIALS
Total Income has shown a growth of 17%. The Earnings before Interest, taxes,
Depreciation and Amortization (EBITDA) stood at 27% of total income and Net Profit at 20%
of total income with Earnings per share at Rs 15.89.
CONSOLIDATED FINANCIALS
Total income has shown a growth of 33%. The Earnings before Interest, taxes,
Depreciation and Amortization (EBITDA) stood at 9% of total income and Net Profit at 6% of
total income with Earnings per share at Rs 32.58.
Analyzing your Company's consolidated results by the two segments it operates in,
International IT services contributed 26% of total revenues and 69% of PAT while Domestic
products and services contributed to 74% of the total revenues and 31% of PAT.
International IT Services total revenue is Rs 192,035 lakhs, growth of 29% Y-o-Y and $
240.94 million in US $ terms with a growth of 31% in revenues. Your Company has managed to
declare good results consistently because of its focus on serving and growing its existing
customers, addition of 59 new customers throughout the Financial Year, and maintaining
resource utilization at 86.4% over the Financial Year under review.
Your Company during the Financial Year had a stronger consolidated Balance Sheet and
has approximately Rs 74,754 Lakhs of cash and cash equivalents, showing Return on Capital
employed (ROCE) of its 35% and Earnings per share at Rs 32.58.
The audited Standalone and Consolidated Financial Statements of your Company, which
form a part of this Annual Report, have been prepared in accordance with Indian Accounting
Standards ("Ind AS") prescribed under Section 133 of the Companies Act, 2013
read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant
amendment rules issued thereafter.
WORK FROM HOME & WELLNESS
In the aftermath of COVID and the subsequent return to normalcy, our operations
continued to operate smoothly inspite of majority of the workforce working from home in
line with industry trends and employee expectations. However, as part of the
return-to-work program, senior management and key functions started operating in a hybrid
mode while continuing to focus on employee well-being and overall engagement. Regular
connect sessions by the HR team, communication townhalls with CEO and leadership team
ensured that employee engagement improves. Similarly, key events such as Annual Awards,
Tech Fest, Sonata Spark, festival celebrations, team outings and sports events were
conducted in person while maintaining necessary safety protocols in line with the changing
context. This also gave employees an opportunity to experience camaraderie which they
missed during the pandemic. Your Company has now put in place a robust return-to-work plan
through a hybrid work arrangement aimed at strengthening belongingness, collaboration, and
productivity. Wellbeing of our people continues to be a key priority. Towards that end,
Sonata Wellness week and periodic webinars/sessions on related topics were conducted.
BUSINESS PERFORMANCE
FY23 was a year of transformation for your Company. We sowed the seeds of Modernization
driven hypergrowth. We began our journey to achieve revenue of US$ 1.5 B (US$ 0.5B from
International Services Business and US$ 1B from Domestic IT Products) by the end of FY26
and be known as a specialist firm in Modernization Engineering, leveraging its unique
Platformation framework and set of 'Lightening' Tools.
Your Company redefined focus across Verticals and Markets to drive Modernization. We
verticalized our US region towards our key industry verticals - Telecom, Media, and
Technology (TMT); Retail & Manufacturing; Banking, Financial Services, and Insurance
(BFSI); and Healthcare and Life Sciences (HLS). For geographies outside of the USA, we
continued with the GEO structure but have a defined focus on our key industry verticals
across the UK, Europe, APAC, and ANZ. In Europe, we expanded our business in the Nordic
region.
We continued to grow our matured 'Harvest Verticals' - TMT and Retail &
Manufacturing - and invested in building strong sales and delivery capabilities in' Invest
Verticals'- BFSI and HLS, where we see strong growth opportunities over the next 3-5
years.
Your Company invested in key GTMs - Cloud, Data, Dynamics, Managed Services, and
Contact Centre - all focused-on Modernization and Automation in the key Markets. We
increased our investments in Generative AI as we scaled our AI capabilities, including MS
partnership with OpenAI and we won our first engagement on Generative AI in Q3.
Your Company made tremendous progress towards the strategic goals of M&A and Large
Deals:
• Acquired Quant Systems Inc., a Texas (USA) based IT Solutions and Software
company. The M&A aligned with our strategy to focus and invest in BFSI and HLS
verticals. Quant delivered $37M revenue and mid 30's EBITDA in CY 22. Quant added two
clients to Sonata's top 5 clients. In addition, the acquisition provided access to a rich
talent pool of Salesforce experts, data privacy specialists, and engineering professionals
in the US. Furthermore, it augmented our nearshore capabilities in Mexico and Costa Rica.
• Won 2 large deals in Q2 and 4 in Q3 and were delighted to win 3 large deals in
Q4, including our historic largest DEAL, from a US-based consumer retail company, with a
total contract value (TCV) of $160 million. The client, a net-new Sonata logo, made a
direct entry in our 'Top 5 Clients' list.
We started our endeavor to build trusted partnerships with leading hyper-scalers and
other key Industry partners who can strengthen our Modernization play. Once again, we
received the Microsoft Business Applications 2022/2023 Inner Circle award, and we are now
Microsoft Cloud Solution Partner and have completed 13 more Advanced Specializations. We
also put in motion the efforts to enhance our partnership status with AWS from current
Advanced to a higher level.
We continued to grow and strengthen our India business, focusing on gaining market
share in e2e annuity contracts in Cloud-Data modernization opportunities. We endeavor to
move up the value chain and make Sonata a preferred partner for everything cloud and data
in India.
Towards our commitment to ESG goals, we were proud to receive a score of 'B'
(Management Category) by CDP 2022 (Carbon Disclosure Project) for all our actions and
efforts towards sustainable practices in business and transparent and open reporting. This
recognition places us amongst 27% of companies in the IT sector and above average in the
APAC region.
At Sonata, honesty, integrity, and transparency are core values, and good corporate
governance translates those values into day-to-day practices and processes. We are
delighted that Sonata bagged the Golden Peacock Award for Excellence in Corporate
Governance 2022, the second time in a row.
People success remains one of your Company's core tenets as we build the organization
to scale and grow. We continued to invest in capability building with upskilling,
cross-training, and certifications. We launched Sonata Career Academy for Learning
Excellence (SCALE) to offer access to vast content and opportunities for Sonatians to
learn using the latest technologies and remain relevant. We are being future-ready on
talent by doubling down on building nearshore delivery centers in Europe and the Americas.
To continue to build Sonata as a global firm - Diversity and Inclusiveness will be a
high focus area for us as we grow. We set up a Global D&I Council to drive Sonata's
Diversity & Inclusion agenda globally. As part of our women empowerment initiative, we
associated with the Women's Premier League - a women's Twenty20 cricket franchise. The
association helped Sonata gain Brand salience internally and externally in India and some
of our key markets.
We launched the 'Play Big' theme campaign to energize the organization and motivate
Sonatians to go all-out to achieve the goal we have set for ourselves. Your Company is now
the Play Big Sonata.
Your Company witnessed a steady reduction in attrition over the quarters. We will
continue to take steps to mitigate attrition risks through increased focus on proactive
retention, employee engagement, talent management, and a strong talent fulfillment engine.
The CEO succession transition process was completed from Mr. P. Srikar Reddy to Mr. Samir
Dhir as Managing Director & CEO during the year. Your Company further strengthened its
senior leadership with rich talent, and details of which are covered in Management
Discussion and Analysis, which forms part of the Annual Report. This diverse Global
Leadership Team is aligned for growth.
Coming to Financial performance, despite an uncertain macroeconomic environment due to
geopolitical instability and high inflation, we reported strong revenue growth in both the
International IT Services and Domestic IT Products segments. The International IT Services
business witnessed a 29% Y-o-Y basis growth to T 1,920 crores, and the Domestic IT
Products business grew by 36% Y-o-Y basis to T 5,540 crore. A detailed analysis of the
Company's business performance forms part of the Management Discussion and Analysis, a
separate section of this Annual Report.
In summary: Your Company remains optimistic about its long-term growth prospects.
HUMAN RESOURCE MANAGEMENT
Your Company continued to invest in talent, capacity and culture to support its growth
strategy. In line with this, leadership talent- from within and outside-across levels,
functions and geographies has been inducted;and so has the intake of entry-level talent
increased significantly. A new organization structure with business and geographical
verticals led jointly by Delivery and Sales leaders, supported by enabling functions, has
been put in place in line with the business strategy. This has resulted in role
enhancement and career growth for leadership talent from within who have taken up these
roles. Most importantly, significant efforts have been invested in deploying initiatives
aimed at cementing the culture required for the business to scale and grow and for Sonata
to be a preferred employer. We are confident that these measures will further strengthen
our capabilities to execute with speed and agility while focusing on people success.
Further details are provided elsewhere in this Annual Report.
CYBER SECURITY INITIATIVES
Training sessions are conducted to create awareness. Cyber security training material
(PDFs, Presentations, video lessons etc.) are made available on the internal portal of the
Company and Information security quiz is conducted online.
CYBER SECURITY
Your Company has implemented security policies in line with ISO 27001:2013 standard to
ensure confidentiality integrity and availability of information. Additionally, your
Company has highest level of data security and data protection mechanism, and has a
secured method of sharing data with Board members and external stakeholders. Further,
Company is certified to a standard ISO 9001:2015. Sonata has Implemented SIEM and SASE
tool to ensure computing and access is secured.
Your Company being ISO 27001 certified has zero tolerance to the fraud, most of our
processes are foolproof and a well-defined Incident Management process is in place, which
is subjected to the audit of ISO and has regular standards for sharing data for outsiders
such as project data and customer delivery.
A detailed analysis of Company's operations in terms of performance in markets,
business outlook, risks and concerns and senior leadership forms part of the Management
Discussion and Analysis, a separate section of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report as required under Regulation 34 and Schedule
V of the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015, amended from time to time, is disclosed separately in
this Annual Report.
DIVIDEND / TRANSFER TO RESERVES
In line with the practice of rewarding members, based on your Company's performance and
future outlook, your Directors are pleased to recommend a final dividend of * 8.75/- per
equity share at 875% on par value of Rs 1/- each, subject to the approval of the
shareholders at the ensuing Annual General Meeting ("AGM") and shall be subject
to deduction of income tax at source.
The final dividend is in addition to the interim dividend. The interim dividend of *
7/- per equity share, was declared by the Board of Directors on 18th October,
2022.
The total dividend for FY 2023 amounts to Rs 15.75/- per equity share and would involve
a total cash outflow of Rs 22,083 lakhs.
If approved by the Members at the ensuing AGM, the final dividend will be paid on or
after 8th August, 2023 to all those equity shareholders whose names appear on
the Register of Members of your Company on 21st July, 2023, and to those whose
names appear as beneficial owners in the records of the National Security Depository
Limited and Central Depository Services (India) Limited on the said date.
Your Company has not transferred any amounts to reserve for the Financial Year ended 31st
March, 2023.
The dividend paid and recommended is in accordance with your Company's Dividend
Distribution Policy.
DIVIDEND DISTRIBUTION POLICY
As required under Listing Regulations, your Company has established Dividend
Distribution Policy. The Dividend Distribution Policy is available on the website of your
Company https://www.sonata-software.com/about-us/ investor-relations/corporate-governance
SHARE CAPITAL CHANGES & BONUS ISSUE
During the year under review, the Issued, Subscribed and Paid-up Equity Share Capital
of your Company was increased from ^105,159,306/- (Rupees One Hundred Five Million, One
Hundred Fifty-Nine Thousand,
Three Hundred and Six only) divided into 105,159,306 (One Hundred Five Million, One
Hundred Fifty-Nine Thousand, Three Hundred & Six only) Equity Shares of face value of
T 1/- (Rupees One only) to T 140,212,408/- (Rupees One Hundred Forty Million, Two Hundred
Twelve Thousand, Four Hundred & Eight only) divided into 140,212,408 (One Hundred
Forty Million, Two Hundred Twelve Thousand, Four Hundred & Eight only) Equity Shares
of face value of T 1/- (Rupees One only) each due to allotment of 35,053,102 (Thirty-Five
Million, Fifty- Three Thousand, One Hundred and Two) Bonus Equity Shares of face value of
T 1/- (Rupees One only) each.
The Board of Directors at their meeting held on 25th July, 2022 recommended
issue of bonus equity shares, in the proportion of 1:3, i.e., 01 (One) new fully paid-up
equity share for every 03 (Three) existing fully paid-up equity shares. The said bonus
issue was approved by the Members of your Company vide resolution dated 2nd September,
2022 passed through postal ballot, subsequent to which 35,053,102 bonus shares were
allotted to the Members on 12th September, 2022, to those names that appeared
on the register of members as on 10th September, 2022, being the record date
fixed for this purpose.
As part of the aforesaid allotment 38,058 (rounded-off) bonus equity shares
representing fractional entitlements of eligible Members were consolidated and allotted to
the trustee appointed by the Board and such fractional shares were sold at prevailing
market price and the net sale proceeds were distributed among the eligible members in
proportion to their respective fractional entitlements.
BOARD MEETINGS
During the year under review, the Board of Directors met six (6) times. The meetings
were held on 7th April,
2022, 29th April, 2022, 25th July, 2022, 18th October,
2022, 24th January, 2023 and 9th March, 2023. The maximum interval
between any two meetings did not exceed 120 days, as prescribed by the Companies Act,
2013.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Viren Raheja (DIN: 00037592) Director, retires by rotation and being eligible,
offers himself for re-appointment at the ensuing Annual General Meeting (AGM). Brief
profile of Mr. Viren Raheja is provided in the notes to the Notice of the ensuing AGM. The
Board of Directors, pursuant to the recommendation of the Nomination and Remuneration
Committee, has recommended his re-appointment by the members at the ensuing AGM.
As a part of the Board's succession plan, pursuant to the recommendation of the
Nomination and Remuneration Committee, the Board of Directors at their meeting held on 24th
January, 2023, approved the appointment of Mr. Samir Dhir (DIN: 03021413), (earlier
appointed as the Whole-Time Director and Chief Executive Officer) as the Managing Director
& CEO of your Company w.e.f. 14th February, 2023 and also approved the
appointment of Mr. P Srikar Reddy (DIN: 00001401), (earlier appointed as Managing
Director) as Executive Vice Chairman and Whole-Time Director of your Company w.e.f. 14th
February, 2023. The said appointments were approved by the members of your Company through
postal ballot on 21st April, 2023.
The Company has devised, inter alia, the following: a) Terms and conditions for
appointment of Independent Directors; and b) Nomination and Remuneration Policy. The same
are available on the Company's website at www.sonata-software.com.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company's policy on appointment and remuneration of directors is available on the
Company's website at
https://www.sonata-software.com/about-us/investor-relations/corporate-governance.The
qualifications, positive attributes, and skills are covered in the Corporate Governance
Report which is a part of this Report.
INDEPENDENT DIRECTORS
Your Company has laid down and followed procedures for familiarizing the Independent
Directors with your Company, regarding their roles, rights, responsibilities in your
Company and to impart the required information and training to enable them to contribute
significantly to your Company.
As required under Section 149(7) of the Act, all the Independent Directors on the Board
of your Company have given their respective declarations that they fulfill and meet the
criteria of independence as laid down in Section 149(6) of the Act, read with Regulation
16(1)(b) and Regulation 25(8) of Listing Regulations. There has been no change in the
circumstances during the year under review affecting their status as Independent Directors
of your Company. The list of key skills, expertise, and core competencies of the Board,
including the Independent Directors, is provided elsewhere in this Annual Report.
The Independent Directors have confirmed that they have complied with your Company's
Code of Conduct during the year under review. They have also further confirmed that they
have registered their names in the Independent Directors' Databank.
DIRECTORS' RESPONSIBILITY STATEMENT
As stipulated under the provisions contained in Section 134(3)(c) read with 134(5) of
the Act, the Directors, based upon the information and explanations obtained by them as
also documents made available to them and to the best of their knowledge and belief,
hereby confirm that:
a) in the preparation of the Annual Accounts, the applicable Accounting Standards have
been followed along with proper explanation relating to material departures.
b) the Directors 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 your Company at the end of the Financial Year and of
the profit and loss of your Company for that period;
c) the Directors have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this Act for safeguarding the
assets of your Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the Annual Accounts on a going concern basis;
e) the Directors have laid down Internal Financial Controls to be followed by your
Company and that such Internal Financial Controls are adequate and were operating
effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems were adequate and operating effectively.
MATERIAL CHANGES AND COMMITMENTS
There has been no material change and commitment affecting financial position of your
Company between the end of the Financial Year under review and date of this Report.
AUDIT COMMITTEE
Pursuant to the provisions of Section 177 of the Act and Regulation 18 of Listing
Regulations, the Audit Committee of the Board as at 31st March, 2023 comprised
of Mr. Pradip P Shah, Chairman, Mr. S B Ghia,
Ms. Radhika Rajan and Mr. Sanjay Asher as its Members. The Committee met five (5) times
during the year under review and recommendations made by the Audit Committee, during the
Financial Year have been accepted by the Board Committees of the Board.
NOMINATION AND REMUNERATION COMMITTEE & STAKEHOLDERS RELATIONSHIP COMMITTEE
Pursuant to the provisions of Section 178 of the Act and Regulation 19 of Listing
Regulations, the Nomination and Remuneration Committee of the Board as at 31st
March, 2023 comprised of Mr. Sanjay Asher, Chairman,
Mr. Viren Raheja and Mr. Pradip P Shah as its members. The Committee has laid down a
policy for remuneration of Directors, KMP and other Employees. A copy of the Policy is
available on the website of your Company
https://www.sonata-software.com/about-us/investor-relations/corporate-governance.
The composition of the Nomination and Remuneration Committee comprises of independent
and non-executive directors. The Committee met five (5) times during the year under
review.
Pursuant to the provisions of Section 178 of the Act and Regulation 20 of Listing
Regulations, the Stakeholders Relationship Committee of the Board as at 31st
March, 2023 comprised of Mr. S B Ghia, Chairman,
Mr. P Srikar Reddy, Ms. Radhika Rajan and Mr. Samir Dhir (appointed w.e.f. 14th
February, 2023) as its members. The Committee met four (4) times during the year under
review.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The Corporate Social Responsibility Committee as at 31st March, 2023
comprised of Ms. Radhika Rajan, Chairperson, Mr. P Srikar Reddy, Mr. S B Ghia and Mr.
Samir Dhir (appointed w.e.f. 14th February, 2023) as its members. The Committee
met four (4) times during the year under review. The brief outline of the Corporate Social
Responsibility (CSR) policy of your Company and the initiatives undertaken by your Company
on CSR activities during the year are set out in Annexure III of this report in the format
prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, as
amended.
RISK MANAGEMENT COMMITTEE
The Risk Management Committee as at 31st March, 2023 comprised of Mr. Pradip
P Shah, Chairman, Mr. Viren Raheja, Mr. P Srikar Reddy and Mr. Samir Dhir (appointed
w.e.f. 25th July, 2022) as its members. The Committee met two (2) times during
the year under review. The terms of reference are set out in the Corporate Governance
Report forming part of the Board's Report.
RISK MANAGEMENT
Your Company's Risk Management framework, strategies & practice seeks to sustain
the long-term vision and mission of your Company. Your Company continuously evaluates the
various risks surrounding the business and seeks to review and upgrade its risk management
strategies and process to mitigate the risks.
To further endeavour, your Board constantly formulates strategies directed at
mitigating these risks which get implemented at the Executive Management level and a
regular update is provided to the Board.
Further, details on the Risks and Concerns are covered in Management Discussion and
Analysis, which forms part of the Annual Report.
VIGIL MECHANISM
Your Company has adopted a process as a channel for receiving and redressing complaints
from employees and directors, as per the provisions of Section 177(9) and (10) of the
Companies Act, 2013, Regulation 22 of the Listing Regulations and Regulation 9A of
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.
Your Company has established Vigil Mechanism which also provides for direct access to
the Chairman of the Audit Committee in cases that require reporting about the unethical
behaviour, actual or suspected fraud or violation of code of conduct laid down by your
Company. This mechanism is governed by Vigil Mechanism Policy which covers unethical
behaviour, actual or suspected fraud, theft, bribery, misappropriation of Company's funds,
financial reporting violations, misuse of intellectual property, mismanagement,
significant environmental, safety or product quality issues, discrimination or harassment
including sexual harassment, Insider Trading, actual or potential conflicts of interest,
violation of Company's rules, Company's Policies or violation of Code of Conduct of your
Company.
Further, your Company has prohibited discrimination, retaliation, or harassment of any
kind against any employee who reports under the Vigil Mechanism or participates in the
investigation. There were no complaints received during the year under review under this
Policy. The Audit Committee periodically reviews the functioning of this mechanism. No
personnel of your Company were denied access to the Audit Committee.
The vigil mechanism policy can be accessed through
https://www.sonata-software.com/sites/default/files/ financial-reports/2019-09/Sonata
Vigil Mechanism.pdf
SUBSIDIARY COMPANIES, ASSOCIATES AND JOINT VENTURES
As on 31st March, 2023 your Company had 26 subsidiaries (including IBIS
Inc., the merged entity and Sonata Software FZ-LLC, the liquidated entity). The statement
pursuant to the Section 129(3) of the Companies Act, 2013, containing salient features of
the Financial Statements of your Company's Subsidiaries in Form AOC-1 is given in ANNEXURE
I. Audited financial statements together with related information and other reports of
each of the subsidiary companies have also been placed on the website of your Company at
www.sonata-software.com.
The Consolidated Financial Statements of your Company and its Subsidiaries viz., Sonata
Information Technology Limited, India, Sonata Software Solutions Limited, India, Encore
I.T. Services Solutions Private Limited, India, Sonata Software North America Inc., USA,
Sonata Software Intercontinental Limited, Ireland, Sonata Software GmbH, Germany, Sonata
Europe Limited, UK, Sonata Software FZ LLC, Dubai, Sonata Software (Qatar) LLC, Qatar,
Sonata Australia Pty Ltd. (formerly known as Scalable Data Systems Pty Ltd.), Australia,
Sopris Systems LLC., USA, Encore Software Services Inc., USA, Sonata Software Canada
Limited, Canada, Sonata Latin America S. de R.L. de C.V, Mexico, GAPbuster Limited., UK,
GAPbuster Europe Limited, UK, GAPbuster Inc.,
USA, GAPbuster Worldwide Pty Limited, Australia, Kabushiki Kaisha GAPbuster Japan,
Japan, GAPbuster China Co. Limited, China, GAPbuster Worldwide Malaysia Sdn Bhd, Malaysia,
Quant Systems Inc., USA, Quant Cloud Solutions Private Limited, India and Quant Systems
CRC Inc SRL, Costa Rica, Woodshed LLC, USA duly audited/ unaudited/reviewed are presented
as part of this Report in accordance with the Companies Act, 2013, Ind AS 110 and the
Listing Regulations, wherever applicable.
During the Year under review, your Company incorporated a step-down subsidiary in
Mexico named Sonata Latin America, S. DE R.L. DE C.V. Your Company completed the
acquisition of Quant Systems Inc., a US registered Company along with its subsidiaries,
through Sonata Software North America Inc., (SSNA) a wholly owned Subsidiary of your
Company and completed the merger of Interactive Business Information Systems Inc. (IBIS,
Inc.) with SSNA.
The branch office of your Company was opened in New Jersey, USA and became operational
during the year. Further, Sonata Software FZ LLC., Dubai (Wholly owned subsidiary of your
Company) was liquidated.
In terms of your Company's Policy on determining "material subsidiary",
during the financial year ended
31st March, 2023 Sonata Information Technology Limited, Sonata Software
Solutions Limited and Sonata Software North America Inc., are considered as material
subsidiaries pursuant to SEBI Listing regulations as, material subsidiaries whose income
exceeds 10% of the consolidated income of your Company in the immediately preceding
financial year. Further details on the subsidiary monitoring framework have been provided
as part of the Corporate Governance report.
Your Company has a "Policy for determining Material Subsidiaries", so that
your Company could identify such Subsidiaries and set out a governance framework for them.
The Policy is put up on the website at https://www.
sonata-software.com/about-us/investor-relations/corporate-governance.
EMPLOYEE STOCK OPTION PLAN "ESOP"
Your Company has an Employee Stock Option Plan, 2013 (Plan) in accordance with the SEBI
(Share Based Employee Benefits) Regulations, 2014. The principal objectives of this Plan
are to:
• Attract, retain and motivate talented and critical Employees;
• Encourage Employees to align individual performance with the Group's objectives;
• Reward Employee performance with ownership in proportion to their contribution;
and
• Align Employee interest with those of the Group.
Pursuant to the requirements of the Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021, a certificate has been issued by
the Secretarial Auditor of your Company confirming that the Plan has been implemented in
accordance with the said Regulations and in accordance with the resolution of your Company
in the General Meeting.
As required under the Securities and Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021, the applicable disclosures regarding the
details of options granted, number of shares arising as a result of exercise of options,
etc., as on 31st March, 2023 are uploaded on the website of your Company
www.sonata-software.com.
During the year under review, your Company has issued options under Employee Stock
Option Plan of 2013, pursuant to issuance of Bonus Equity Shares of the Company.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had
appointed Mr. Parameshwar G Hegde, Practicing Company Secretary as the Secretarial Auditor
for the Financial Year 2022-23 to conduct Secretarial Audit of your Company. The
Secretarial Audit Report in Form MR-3 for the Financial Year ended 31st March,
2023 is annexed to this Report as ANNEXURE II. The report does not contain any
qualifications, reservations or adverse remarks.
MAINTENANCE OF COST RECORDS AND APPOINTMENT OF COST AUDITOR
The provisions of Companies (Cost Records and Audit) Rules, 2014 are not applicable to
your Company.
STATUTORY AUDITORS
B S R & Co. LLP, Chartered Accountants, Bengaluru, (Firm Registration No.
101248W/W-100022) were appointed as Statutory Auditors of your Company from the conclusion
of Twenty Seventh (27th) Annual General Meeting (AGM) till conclusion of Thirty
Second (32nd) AGM, as required under Section 139 of the Companies Act, 2013
read with Companies (Audit and Auditors) Rules, 2014.
For the year under review, the statutory auditors have confirmed that they satisfy the
independence criteria required under the Companies Act, 2013.
The Auditors' Report contains 'Unmodified Opinion' on the financial statements
(standalone and consolidated) of your Company, for the year ended 31st March,
2023 and there are no qualifications reservations or adverse remarks in their report.
REPORTING OF FRAUDS BY AUDITORS
During the year under review, neither the Statutory Auditors nor the Secretarial
Auditor have reported to the Audit Committee under Section 143 (12) of the Companies Act,
2013, any instances of fraud committed against your Company by its officers or employees.
SECRETARIAL STANDARDS
During the year, your Company has complied with all the applicable provisions of the
Secretarial Standard 1 on Meetings of the Board of Directors & Secretarial Standard 2
on General Meetings issued by the Institute of Company Secretaries of India.
ANNUAL RETURN
Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, your
Company has placed a copy of the annual return as at 31st March, 2023 on its
website at https://www.sonata-software.com/about-us/investor-
relations/corporate-governance under heading Shareholders information.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the provisions of Section 124 (5) of the Companies Act, 2013 and IEPF
rules, during the year under review, your Company has transferred the unclaimed and
un-encashed dividends of Rs 48,11,867. Pursuant to the provisions of Section 124 (6) of
the Companies Act, 2013 and IEPF rules, 22,442 corresponding equity shares of Rs 1/- each
on which dividends were unclaimed for seven consecutive years were transferred as per the
requirements of the IEPF Rules. The details of the resultant benefits arising out of said
shares already transferred to the IEPF, year-wise amounts of unclaimed / un-encashed
dividends lying in the unpaid dividend account up to the year, and the corresponding
equity shares, which are liable to be transferred, are provided in the Shareholder
information section of the Corporate Governance report and are also available on our
website, at
https://www.sonata-software.com/about-us/investor-relations/corporate-governance.
The Company has appointed a Nodal Officer under the provisions of IEPF, the details of
which are available on the website of your Company at
https://www.sonata-software.com/about-us/investor-relations
KEY AWARDS AND RECOGNITIONS
During the year under review, your Company was felicitated with the following key
awards and recognitions:
• Winner of the prestigious 'Golden Peacock Award for Excellence in Corporate
Governance' for 2022 in National category under IT Sector by the Institute of Director
(IOD), second year in a row.
• Member of the prestigious Inner Circle for Microsoft Business Applications, for
2022/2023.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO
(A) Conservation of energy
The provisions relating to conservation of energy, technology absorption, are not
applicable to the Company. However, your Company is committed towards conservation of
energy which is reaffirmed in its Sustainability Policy and is relentlessly working
towards making the world a better place by empowering local communities. Being in the
Services sector, Company doesn't have large energy-intensive processes, but has always
looked for methods to operate more efficiently and conserve energy including by utilising
newer technology and innovation to increase productivity and improve the quality of goods
and services. Every effort has been taken to improve energy efficiency, prevent waste, and
conserve energy. Your Company continued to implement the following energy-saving
initiatives as part of a continuing process for energy conservation:
• Renewable energy is used for the electricity requirement of Sonata Global
Village offices in Bengaluru. This move is a testament to Company's commitment to reducing
the carbon footprint and promoting eco-friendliness.
• 42% of total energy requirement of sonata is fulfilled by renewable energy.
• After regular business hours, maintaining constant surveillance of the floor and
turning off the lights.
• Switching off the air conditioning units during off-peak hours and on weekends.
• Performing routine maintenance on UPS and AC plants to ensure optimal
functioning of the equipment.
• Ensure complete removal of dead loads during weekends, including turning off or
unplugging heating elements of vending machines, switching off lighting circuits, and
cutting off all manually operated loads.
• The washroom water management system named HUIDA helps to reduce the water
consumption significantly as compare to normal Commode flush.
• Used sustainable building materials for its newly started Tower F building in
Global Village, Bengaluru. This has helped your Company to achieve IGBC Platinum
Certification for the said building.
The IGBC Green Building certificate signifies that a building has been constructed or
retrofitted using sustainable and environment-friendly practices, leading to reduced
carbon footprint, energy savings, and improved occupant health and wellbeing
These initiatives will achieve 10-15% reduction in utility cost.
(B) Technology absorption
During the Fiscal under review, your Company focused its efforts and built competencies
in areas of new technologies around Modernization aligned to Platformation. We further
strengthened our capabilities in AI, Machine learning, Automation, expanded Dynamics to
include Contact centre, Power platform. This also included our core themes around large
deal constructs, multi cloud capability, modernizing data estates, infrastructure &
cloud security. Your Company has also invested directionally on new capabilities like
SalesForce, Chat GPT, and considerably enhanced capabilities on AWS stack. Your Company
continued to invest in differentiated IP and platforms across industry verticals of
Retail, Distribution and Manufacturing, Technology and invested in new verticals BFSI,
Healthcare, with particular focus on AI being embedded on all our service offerings. This
highlights your Company's ability to invent with impact, and explore futuristic ideas with
the wider academic ecosystem.
The best of your Company's innovation capabilities, and practices were brought to
customers through experiential initiatives. Your Company constantly connects with
customers to all organizational capabilities in innovation, technology and industry
expertise, and hosted several events and workshops showcasing its strengths.
(C) Foreign exchange earnings and Outgo
During the Fiscal under review, 83% of the revenue came from exports of developed
software and related services to clients mainly in USA, UK, Australia, Germany, UAE,
Japan, Singapore, Denmark and Europe.
Foreign Exchange outgo on account of travelling, professional and legal charges,
subsistence/living costs, overseas salaries, capital goods, etc. was Rs 10,403 Lakhs and
Foreign Exchange inflow on account of export of software services (net), goods and other
operating revenues was Rs 75,987 Lakhs.
PUBLIC DEPOSITS
Your Company has not accepted any deposits from the public under Chapter V of the
Companies Act, 2013, during the year under review.
DISCLOSURES AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company is committed to provide a healthy environment to all employees that
enables them to work without the fear of prejudice and gender bias. Your Company has in
place a gender neutral Prevention of Sexual Harassment (POSH) Policy and framework in line
with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013.
Your Company through this Policy has constituted an Internal committee and has
established a grievance procedure for protection against victimization.
Following are some of the programs and initiatives in place to train Employees and the
Internal Committee (IC) for POSH during the year.
1. Each Employee is required to undergo a mandatory e-learning module on 'Prevention of
Sexual Harassment at Workplace'.
2. All new joiners are trained in person on Prevention of Sexual Harassment during
their induction program.
3. Special workshops have been conducted for the Senior Management Team and for women
employees.
4. The IC Members are provided relevant training by an external agency during quarterly
meetings of the IC.
5. The Prevention of Sexual Harassment policy is available on the intranet portal for
the employees to access as and when required.
6. Penal consequences of sexual harassment and the constitution of the IC are displayed
at conspicuous places. Annual Report has been filed with the relevant authorities as
required under the Act.
No complaints were received under this Policy during the Financial Year 2022-23.
INTERNAL FINANCIAL CONTROLS
Internal Financial Controls are an integrated part of the risk management process,
addressing financial and financial reporting risks. The controls are commensurate with the
size and nature of Company's operations. The internal financial controls have been
embedded in the respective business processes.
Assurance on the effectiveness of internal financial controls is done through
management reviews and review by internal auditors and statutory auditors during the
course of their audits. The internal financial controls provide reasonable assurance that
they are designed effectively with regard to recording and providing reliable financial
and operational information, complying with applicable statutes, safeguarding assets from
unauthorized use, executing transactions with proper authorization and ensuring compliance
with Company's policies. The Audit Committee reviews the reports submitted by internal
auditors, suggestions for improvement are considered and the corrective action are
undertaken.
Sonata's Management assessed the effectiveness of the Company's internal control over
financial reporting as of 31st March, 2023, B S R & Co. LLP, the Statutory
Auditors have audited the financial statements included in this Annual Report and have
issued an attestation report on the Company's Internal Control over financial reporting.
The Audit Committee also meets statutory and internal auditors to ascertain, inter
alia, their views on the adequacy of internal control systems and keeps the Board of
Directors informed of its major observations periodically. Based on its evaluation, the
Audit Committee has concluded that, as of 31st March, 2023, the Company's
internal financial controls were adequate and operating effectively.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL
During the year under review, there were no significant and material orders passed by
the Regulators or Courts or Tribunals impacting the going concern status of your Company
and its future operations.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the Financial Year under review, your Company had given Inter Corporate Deposits
at prevailing bank lending rate to its Wholly Owned Subsidiaries, Sonata Information
Technology Limited, and Sonata Software Solutions Limited for meeting its working capital
requirements. The balance outstanding as on 31st March, 2023 is nil. The
maximum amount outstanding at any point of time during the Financial Year has been T 4,510
Lakhs.
Also, your Company has given Corporate Guarantees on behalf of Subsidiaries for
facilitating its business needs. The outstanding amount as on 31st March, 2023
is as below:
| Name of the Subsidiary |
Amount in Rs Lakhs |
| Sonata Software North America Inc., USA |
6,163 |
| Sonata Information Technology Limited, India |
33,368 |
CORPORATE SOCIAL RESPONSIBILTY (CSR)
The CSR policy is formulated by the Corporate Social Responsibility Committee and
approved by the Board of Directors of the Company. The policy can be accessed at
www.sonata-software.com.
During this Financial Year, your Company has spent T 463.2 lakhs (as against its
obligation of T 416 lakhs) towards CSR activities. Your Company has a CSR policy in place
and as part of its implementation program(s), it has identified and participated in the
following initiatives:
Sonata Software has supported Agastya International Foundation for their project
- "Lab on Tab" which helped Rural students to get access to Science and
Mathematics experiments at their doorstep in Rural schools. Sonata has provided the
technical support for enhancing the portal and Application functionality and knowledge
repository of an existing android app-based learning platform- Lab on Tab.
Sonata Software is supporting Industree Crafts Foundation for developing an
Online Repository for Artisans to store Designs and Products for Artisans. The Co Create
app is developed that will feature a centralized Master Bank which stores information
about Artisans and their artworks throughout India. Additionally, this app aims to assist
Artisans from all over the nation in enrolling themselves and showcasing their
handicrafts.
Sonata has collaborated with MAP Foundation to promote inclusivity, education,
and accessibility to art and
culture for diverse audiences. As part of its Corporate Social Responsibility
initiative, Sonata has developed a Museum Management System to manage a broad range of
events.
Sonata Software has supported INTACH (Indian National Trust for Art and Cultural
Heritage) for developing a Digital Platform for Someshwara Temple in Ulsoor,
Bengaluru, to enhance its accessibility and enable visitors to learn about its history and
significance. This includes development of an interactive website that offers a 360-degree
virtual tour, visual map, and up-to-date information on the latest developments at
Someshwara Temple in Bangalore. This website will benefit not only tourists but also
historians and those interested in heritage education.
Sonata Software is helping ISDM (Indian School of Development Management) to
provide technical assistance for revamping the existing ISDM website into a new website
that will be acting as a digital reflection of ISDM as an institution, encompassing all
the different facets, from the post-graduate program to strategic capacity building to
research and building the body of knowledge on development management to the centers of
excellence. ISDM recognizes the need to 'professionalize' the Leading and Managing of
Social Purpose Organizations (SPOS).
Sonata Software has provided relief to Orissa flood victims through
Sweetheart Foundation.
Sonata Software has provided the grant fund to Hyderabad Public School for
Promotion of Science and Technology among young students. The engagement included the
Indian Science Festival organized by Hyderabad Public School and sponsored by Sonata which
had featured fireside chats, panel discussions, immersive workshops, interactive demos,
film screenings, and exhibits, covering a range of scientific topics and panel discussion
between speakers from prestigious institutions.
Sonata Software is working with Farmers for Forest (Efficient Ecosystem
Protection Association) for empowering the marginalized farmers by improving their income
along with reducing the carbon emissions to environment by planting 6,000 trees over 15
acres of unused and degraded land.
Sonata Software is collaborating with Centum Foundation for promotion of
education and enhancement of employment of underprivileged diversified youth in IT sector.
Under this engagement, Full Stack Development course will be provided to 500 beneficiaries
which includes 300 women, 100 specially abled, 100 rest of under need students, along with
placement assistance.
The Report on CSR in the prescribed format is enclosed to this Report as ANNEXURE III.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Pursuant to Regulation 34(2)(f) of the Listing Regulations, your Company's Business
Responsibility and Sustainability Report ("BRSR") forms part of the Annual
Report. The BRSR includes details on performance against the nine principles of the
National Guidelines on Responsible Business Conduct and a report under each principle,
which is divided into essential and leadership indicators. The said report comprehensively
covers your Company's philosophy and describes the initiatives taken by the Company from
an environmental, social and governance perspective on corporate social responsibility,
its sustainability activities pertaining to efforts on conservation of environment,
conducting green awareness events, its commitment towards society, enhancing primary
education, initiatives and activities taken up as part of this philosophy for the year
2022-23.
Environmental, Social and Governance (ESG): Your Company has launched ESG initiatives.
The CSR Committee discharges oversight responsibility on matters related to organization
wide ESG initiatives, priorities, and leading ESG practices. The quarterly review and
progress made on ESG are reported to the Board of Directors every quarter, the details on
ESG are given elsewhere in the Annual Report.
RELATED PARTY TRANSACTIONS
The policy on related party transactions is available on your Company's website at
https://www.sonata-software. com/about-us/investor-relations/corporate-governance.
All related party transactions are placed on a quarterly basis before the Audit
Committee and the Board for approval. Prior omnibus approval of the Audit Committee and
the Board is obtained for the transactions which are foreseeable and of a repetitive
nature. Particulars of the contracts or arrangements with related parties referred to in
Section 188(1) in the format specified as Form AOC- 2 forms part of this Report as
ANNEXURE - IV.
Pursuant to Regulation 23(9) of the Listing Regulations, your Company has filed the
disclosures on related party transactions in prescribed format with the Stock Exchanges.
JUSTIFICATION FOR ENTERING INTO RELATED PARTY TRANSACTIONS
All the Related Party Transactions entered into by your Company with the Related
Parties including rendering of services, sharing of expenses, providing of inter-corporate
loans and guarantees to its subsidiaries are in the ordinary course of business and are
carried out at arm's length pricing.
BOARD EVALUATION
During the Year under review, as mandated by the Companies Act, 2013, and SEBI Listing
Regulations, Annual Evaluation was conducted by the Board of its own performance and that
of its committees and individual Directors and the Independent Directors. As part of the
evaluation process, individual criteria for each of the exercise was formulated. The said
criteria specified certain parameters like attendance, acquaintance with business,
communication inter se between board members, effective participation, domain knowledge,
compliance with code of conduct, vision and strategy, benchmarks established by global
peers etc., which is in compliance with applicable laws, regulations and guidelines. From
these, formal questionnaire listing various parameters on which each of the categories
were required to be evaluated was shared with each member of the Board / Committee /
Director. They were then required to rate individually on each of the parameters and also
provide feedback based on ratings.
In a separate meeting of independent directors, performance of non-independent
directors, the Board as a whole and Chairman of the Company was evaluated, taking into
account the views of executive directors and non-executive directors. Performance
evaluation of independent directors was done by the entire Board, excluding the
independent director being evaluated.
The outcome of the Board Evaluation for the financial year 2022-23 was discussed by the
Independent Directors/Board/Committee. The Board of Directors of the Company noted the
actions taken in improving Board effectiveness based on feedback given in the previous
year. Further, the Board also noted areas requiring more focus in the future, which
include Board diversity, Strategy discussion on succession planning, and Risk management.
REMUNERATION TO DIRECTOR AND EMPLOYEES
The policy on remuneration and other matters provided in Section 178(3) of the Act has
been disclosed in the Corporate Governance Report, which is a part of this report and is
also available on the Company's website at www.sonata-software.com.
Details / Disclosures of ratio of Remuneration to each Director to the median
employee's remuneration and details of remuneration paid to Employees is given as ANNEXURE
- V.
A statement comprising the names of top 10 employees in terms of remuneration drawn and
every person employed throughout the year, who were in receipt of remuneration in terms of
Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, forms an integral part of this Report. However, the same is not being sent along
with this Annual Report to the Members of your 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 investor@sonata-software.com and these documents will be made
available for inspection electronically from the date of circulation of this Annual Report
up to the date of AGM i.e. 31st July, 2023.
CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standards of Corporate Governance and
adheres to the Corporate Governance requirements set out by the Securities and Exchange
Board of India ("SEBI"). Your Company has also implemented several best
governance practices. The report on Corporate Governance as stipulated under the Listing
Regulations forms part of the Annual Report.
A Certificate from Mr. Parameshwar G Hegde, Practicing Company Secretary, confirming
the compliance with the conditions of Corporate Governance as stipulated under the said
Listing Regulations is attached to this report.
Other Disclosures
a) Your Company confirms that it has paid the Annual Listing Fees for the year 2022-23
to NSE and BSE where your Company's shares are listed.
b) Your Company has not issued shares with differential voting rights and sweat equity
shares during the year under review.
c) There are no proceedings initiated/pending against your Company under the Insolvency
and Bankruptcy Code, 2016 which materially impact the business of the Company.
d) There were no instances where your Company required the valuation for one time
settlement or while taking the loan from the Banks or Financial institution.
ACKNOWLEDGEMENTS
Your Directors take this opportunity and place on record their gratitude for all the
guidance and co-operation received from all its clients, investors, vendors, bankers,
financial institutions, business associates, advisors, regulatory and government
authorities. Your Directors also take this opportunity to thank all its Shareholders and
Stakeholders for their continued support, and look forward to their continued support in
the future and all the Sonatians for their valuable contribution and dedicated service.
The consistent growth was made possible by their hard work, solidarity, co-operation and
support.
|
FOR AND ON BEHALF OF THE BOARD |
| Place: Mumbai |
PRADIP P SHAH |
| Date: 13th May, 2023 |
Chairman |