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    ANNUAL REPORT 2009 - 2010 Oracle Financial Services Software Limited


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    Oracle provides the world’s most complete, open, and integrated business software and hardware systems, including a comprehensive footprint of business applications built on open standards. Today, 20 of the world’s top 20 banks rely on Oracle to deliver higher levels of business productivity. Oracle FLEXCUBE, Oracle Reveleus, Oracle Mantas and Oracle Financial Services Consulting are key components of this portfolio.


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    “Oracle Financial Services Software is providing us with a flexible, best- in-class solution that fits well with our current and future business requirements. Oracle Reveleus is a proven solution and we are impressed by how it has consistently delivered value to tier-1 banks across the world. We expect that we will be able to significantly improve our operational efficiency using Oracle Reveleus.” Deepak Katyal, Vice President, Information Technology, TAIB Bank. “Being a large bank in Azerbaijan, our interest is in the welfare of the general public and our esteemed shareholders. In order to serve them in the best possible way, a high-end solution is the answer and for this reason we are using Oracle FLEXCUBE to serve our customers and also obtain a competitive edge. About 700,000 of our customers have already benefited from improved customer service and we are confident this association will continue to be an enduring and beneficial one.“ Emil Mustafayev, First Deputy Chairman, International Bank of Azerbaijan. * All quotes are from the press releases issued during the 2009 – 2010 fiscal


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    From the Chairman’s desk Oracle Financial Services Software has completed another remarkable year. In 2009-2010, despite the financial services industry being adversely affected by a global economic crisis we delivered a 36% increase in the operating income. Our mission of enabling financial institutions to reach their full potential continues to inspire us. We continued to invest in enhancing our portfolio and improving our value proposition to our customers. We gained new customers and momentum with a number of new releases of Oracle Financial Services Analytical Applications that address enterprise risk, fraud and financial crime and enterprise performance management. In the same year, we launched Oracle FLEXCUBE Release 11 to help our customers set new standards of efficiency for both their domestic and global operations. Our products and services continue to win industry accolades and recognition. In May 2010, leading independent analyst firm, Forrester Research, Inc., recognized Oracle as a “Global Power Seller” for banking platform deals in its Global Banking Platform Deals 2009 report. Our customers have also won numerous awards for their innovation and leadership. Jibun Bank, Japan, won The Asian Banker IT Implementation Awards for “Best Core Banking Project.” It was also given an Honorable Mention for “Most Innovative Entry,” for the project’s innovation in enabling a complete bank on a mobile phone. UBank, a division of National Australia Bank, has won the CANSTAR CANNEX Innovation Excellence Award for its USaver online savings account that showed innovation through its rate reassurance and online application process. USaver was also judged as the Best Online Savings Account 2010 in Money magazine’s ‘Best of the Best’ awards. After the events of 2008 and 2009, financial institutions are preparing for the “new normal” that has emerged. Regulators now expect banks to conduct regular stress tests for capital and liquidity. During the fiscal year we introduced offerings that address these requirements and have won deals in top tier banks. We value the contribution of our employees to the Company’s success. Their tireless efforts, limitless passion, and commitment to our mission have placed us firmly on the path of excellence. We look forward to another exciting year ahead at Oracle Financial Services Software. Regards, William T Comfort, Jr. Chairman Oracle Financial Services Software Limited 3


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    Contents Financials at a Glance 6 Corporate Information 8 Directors’ Report 11 Corporate Governance Report 18 Financials Indian GAAP – Unconsolidated 33 – Consolidated 83 Annual General Meeting (AGM) Notice 123 Attendance Slip & Proxy Form 135 Oracle Financial Services Software – Annual Report 2009-10


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    Announcements 2009 – 2010 • Oracle Financial Services Software announces Oracle FLEXCUBE Enterprise Limits and Collateral April 14, 2009 Management • Jibun Bank wins prestigious award for best core banking implementation May 12, 2009 • Bank of London and The Middle East plc goes live on Oracle FLEXCUBE Private Banking May 13, 2009 • Leading independent analyst firm names Oracle a ‘Global Power Seller’ in 2008 Banking Platform Deals June 4, 2009 • Oracle Financial Services Software leads OpRisk & Compliance Annual Compliance Software Rankings June 25, 2009 • National Bank of Cambodia selects Oracle FLEXCUBE as banking platform June 30, 2009 • Cambodia's PRASAC Microfinance Institution selects Oracle FLEXCUBE Universal Banking June 30, 2009 • International Bank of Azerbaijan goes live on Oracle FLEXCUBE Universal Banking July 14, 2009 • Oracle Financial Services Software reports Q1 net income of Rs. 186 Crore July 30, 2009 • Leading analyst firm positions Oracle FLEXCUBE in ‘Leaders Quadrant’ in International Retail Core August 5, 2009 Banking Report • Oracle Financial Services Software announces new release of Oracle Mantas Fraud September 1, 2009 • TAIB Bank uses Oracle Reveleus to accelerate time to Basel II compliance September 10, 2009 • Oracle announces new Financial Services Analytical Applications for Enterprise Performance September 11, 2009 Management • Oracle Financial Services Software announces new release of Oracle FLEXCUBE Universal Banking September 14, 2009 • Oracle Announces Oracle Financial Services Revenue Management and Billing for Banking September 14, 2009 • Oracle awarded SWIFTReady Labels September 14, 2009 • Leading analyst firm positions Oracle Financial Services Software in ‘Leaders Quadrant’ in its 2009 September 29, 2009 Operational Risk Management Software Report • Caribbean Development Bank goes live on Oracle FLEXCUBE Universal Banking to improve October 1, 2009 operational efficiency • Oracle Announces new financial services solution for enterprise-wide stress testing October 13, 2009 • Oracle Financial Services Software reports Q2 net income of Rs. 205 Crore October 30, 2009 • Oracle Financial Services Software announces Oracle FLEXCUBE Universal Banking Release 11.0 January 7, 2010 • Oracle Financial Services Software reports Q3 net income of Rs. 227 Crore January 29, 2010 • Oracle Financial Services announces the latest release of Oracle FLEXCUBE Investor Servicing February 25, 2010 5


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    Financials at a glance Key performance indicators 2009-2010 As per Indian GAAP Consolidated results Fiscal year 2009‑10 break up in terms of operating revenue by region, operating revenue by portfolio and expense by category Latin America and BPO Services Middle East, India Caribbean 2% 3% and Africa 13% USA 32% Services 32% Products Asia Pacific 65% 21% Europe 32% Operating revenue by region Operating revenue by portfolio Other expenses Facility costs 7% 3% Professional fees 7% Travel cost 10% Staff cost 73% Expense by category (All figures in Rs. millions except EPS & Book Value) Our 10 years in the industry As per Indian GAAP Consolidated results 2000‑01* 2001‑02 2002‑03 2003‑04 2004‑05 2005‑06 2006‑07 2007‑08 2008‑09 2009‑10 Operating Revenue 3,038.55 4,157.18 6,141.21 7,881.29 11,385.93 14,823.00 20,609.38 23,802.36 29,276.20 28,739.74 Interest and Other Income (expense) 172.66 138.09 97.93 136.58 259.28 290.54 367.28 631.16 1,763.89 (858.03) Total Revenue 3,211.21 4,295.27 6,239.14 8,017.87 11,645.21 15,113.54 20,976.66 24,433.52 31,040.09 27,881.71 Total Expenses 2,016.85 2,991.95 4,277.53 5,703.26 8,693.82 12,176.60 16,837.91 19,835.95 22,839.30 18,947.38 EBT 1,194.36 1,303.32 1,961.61 2,314.61 2,951.39 2,936.94 4,138.75 4,597.57 8,200.79 8,934.33 Tax 94.15 150.33 252.73 526.75 627.06 560.41 415.95 441.68 835.36 1,197.69 EAT 1,100.21 1,152.99 1,708.88 1,787.86 2,324.33 2,376.53 3,722.80 4,155.89 7,365.43 7,736.64 EPS 13.12 13.75 20.38 21.32 27.72 28.34 44.40 49.56 87.84 92.26 Book Value 37.86 56.19 92.16 111.25 136.58 164.53 281.66 331.17 417.97 511.55 Notes: All EPS and Book Values are computed based on the current equity capital base of 83,854,857 shares as on March 31, 2010 * As per Indian GAAP Unconsolidated Results Oracle Financial Services Software – Annual Report 2009-10


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    Key metrics 2000 – 2010 Operating revenue Net income 29,276.2028,739.74 8,000.00 7,736.64 30,000.00 7,365.43 7,000.00 25,000.00 23,802.36 20,609.38 6,000.00 in Rs. million 20,000.00 in Rs. million 5,000.00 4,155.89 14,823.00 3,722.80 15,000.00 4,000.00 11,385.93 3,000.00 10,000.00 2,324.33 2,376.53 7,881.29 6,141.21 2,000.00 1,708.88 1,787.86 4,157.18 1,100.21 1,152.99 5,000.00 3,038.55 1,000.00 0.00 0.00 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 Economic Value Added Earnings Per Share 3,000 2,859.79 100.00 92.26 87.84 90.00 2,500 2,335.05 80.00 70.00 2,000 in Rs. million 60.00 in Rs. 49.56 1,500 1,294.00 50.00 44.40 1,149.83 40.00 1,000 903.50 911.58 27.72 28.34 669.33 720.91 30.00 20.38 21.32 548.39 472.33 20.00 13.75 500 13.12 10.00 0 0.00 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 Earnings per share is computed on the equity capital base of 83,854,857 shares as on March 31, 2010 Book value Number of employees including subsidiaries 600.00 12,000 11,386 11,006 511.55 10,451 500.00 10,000 9,068 Number of Employees 417.97 400.00 8,000 6,858 331.17 in Rs. 300.00 281.66 6,000 4,747 200.00 164.53 4,000 2,974 136.58 111.25 2,327 92.16 2,032 100.00 2,000 1,590 56.19 37.86 0.00 0 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 Book Value is computed on the equity capital base of 83,854,857 shares as on March 31, 2010 Customers serviced Country presence 1,000 922 150 137 137 882 133 128 814 123 800 753 120 108 112 Number of Customers 642 93 Country Base 600 544 90 84 480 74 404 400 345 60 281 200 30 0 0 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 00-01* 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 7


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    Corporate information Oracle Financial Services Software Board of Directors G Narasimhan Surendra Shukla Ganesh Ramakrishnan Tejus Sheth Derek H Williams George Thomas Teresa O’Leary Dorian Daley Girish Chhatpar Thomas Mathew Frank Brienzi H S Teji Uttam Gadkary Joseph John (Whole-time Director) Jambu Natarajan V Srinivasan N R Kothandaraman (N R K Raman) Junichi Kohara V Srivatsan (Managing Director and CEO) K Kochappan Davis Varun Rajpal Tarjani Vakil K Laxminarayan Venkata Subramanian William Corey West K Surya Vijay Alexander William T Comfort, Jr. (Chairman) Karthick R Prasad Vinayak Hampihallikar Y M Kale Kiran Narsu K Sanjay Iyer Senior Management Laura Balachandran Company Secretary Loganathan Damodaran Hoshi D Bhagwagar Executive Vice Presidents M Ravikumar V Shankar Madhukar Harbanslal Kapoor Chief Financial Officer Kishore Kapoor Mahesh Rao Makarand Padalkar Rajesh Makhija Senior Vice Presidents Manoj Narayan Kulkarni Chief Accounting Officer Atul Gupta Meenakshy Iyer Avadhut (Vinay) Ketkar Vikram Gupta Mini S Muralidhar Manmath Kulkarni Mohan Bhatia Solicitors S Hariharan Mustafa Moonim Ramesh P Makhija & Co. S Sundararajan Naveen Grover Sajal Mukherjee Nikos G Goutsoulas Auditors Vijay Sharma O’Laughlin Patrick T S. R. Batliboi & Associates Vivek Govilkar P Prasannavadanan R Narasimhan P Suresh Kumar Bankers Kapil Gupta Peter Martin Hill Bank of India Pradeep Godbole Canara Bank Vice Presidents R Ramamurthi Central Bank of Libya A Srinivasan Rajendra Potdar Citibank N.A. Abhik Ray Ranjan Roy HDFC Bank Ltd. Ajay Bhatia Ravi Mahadevan Kotak Mahindra Bank Ltd. Anand Pitre Ravi Pandit Syndicate Bank Ashit Shah Ravikumar V State Bank of Mauritius Ltd. Bharat B Mehta Salmon Seth P Yes Bank Ltd. Bhaskar Jayaraman Sanjay Bajaj Bimal Gupta Sanjay V Deshpande Registrars & Transfer Agents Buddhadeb Das Gupta Sanjeet Prakash Rao Link Intime India Private Limited Chandrasekaran Balsubramanian Shahab Alam C/13 Pannalal Silk Mills Compound Dinakar Kuntadi Kini Sivaramakrishnan G L.B.S. Road, Bhandup (West) Dinesh Shetty Sridhar Ramachandran Mumbai 400078 Don Ganguly Sunder Annamraju Oracle Financial Services Software – Annual Report 2009-10


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    Registered Office Global Axis Plot # 152/1, EPIP Zone Oracle Financial Services Software Limited Whitefield Oracle Park Bangalore 560066 Karnataka, India Off Western Express Highway Goregaon (East) 99, Venkatnarayana Road Mumbai 400063 Maharashtra, India T Nagar Chennai 600017 Tamil Nadu, India Offices Green I Tech, # 5 399, Subhash Road Muthiah Mudali Street Vile Parle (East) Off Cathedral Road Mumbai 400057 Maharashtra, India Chennai 600086 Tamil Nadu, India Nirlon Compound 18 Krasnopresnenskaya nab., Off Western Express Highway Block C, 9th floor Goregaon (East) Moscow 123317, Russia Mumbai 400063 Maharashtra, India Building No. 03 SDF 1, Unit 10 & 11 128, 1st floor SEEPZ 205, 207, 2nd floor Andheri (East) Dubai Internet City, P.O. Box: 500053 Mumbai 400096 Maharashtra, India Dubai, UAE 1st floor, ‘C’ Building Subsidiary Offices – India Shah Industrial Estate Saki-Vihar Road, Andheri (East) Oracle (OFSS) ASP Private Limited Mumbai 400072 Maharashtra, India (Formerly known as Flexcel International Private Limited) Plot No. 24 – 25, Street No. 9 Lohia Jain IT Park Behind Hotel Tunga Paradise Paud Road, Kothrud MIDC, Andheri (East) Pune 411029 Maharashtra, India Mumbai 400093 Maharashtra, India Oracle Park Oracle (OFSS) Processing Services Limited Ambrosia (Formerly known as i-flex Processing Services Limited) Pune 411021 Maharashtra, India 399, Subhash Road Vile Parle (East) Pride Silicon Plaza Mumbai 400057 Maharashtra, India 2nd Floor Senapati Bapat Road SDF-1, Unit 12 Pune 411053 Maharashtra, India SEEPZ - SEZ Andheri (East) 9A, Ambrosia Mumbai 400096 Maharashtra, India Bavdhan Khurd Taluka Mulshi Block A, NR Enclave, 4th Floor Pune 411021 Maharashtra, India Plot No. 1, EPIP Industrial Area Village limits of Hoodi Embassy Business Park Krishnarajapuram Hobli C.V. Raman Nagar Whitefield Bangalore 560093 Karnataka, India Bangalore 560066 Karnataka, India #333, Millenium Tower Subsidiary Offices – Asia Pacific Brookefields Kundalahalli Road Oracle Financial Services Software (Shanghai) Limited Mahadevapura 11th Floor, China Life Tower Bangalore 560037 Karnataka, India No. 16 Chao Wai Dajie Beijing 100020, China #150, Diamond District B Tower, Lower Ground Floor Oracle Financial Services Software Pte. Ltd. Kodihalli, Airport Road 27, International Business Park Bangalore 560008 Karnataka, India #02-01 iQUEST@IBP Building Singapore 609924 SJR I Park Ground & First floor, Tower 2 Offices EPIP Zone, Whitefield Road, Whitefield Bangalore 560066 Karnataka, India Room 806, Central Plaza No. 227 HuangPi Road North RMZ NXT Shanghai 200003, China Campus 1, Block B, 3rd Floor EPIP Zone, Whitefield 1st Floor, Incubator Building 2-A Bangalore 560066 Karnataka, India No. 2 Beijing Zhongguancun Software Park Haidian District Dong Bei Wang Beijing, China 9


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    Oracle Aoyama Center 3F Suite 22 2-5-8 Kita Aoyama Portes de la Defense Minato-ku 15, boulevard Charles de Gaulle Tokyo 107-0061 Japan 92700 Colombes France 3/F Samhwa Building Subsidiary Office - Greece Samsung-dong Kangnam-Gu Oracle Financial Services Software SA Seoul, South Korea 6-8 Kifisias Avenue 151 25 Marousi 35F, No.66, Sec. 1, Athens, Greece Chung Hsiao W. Rd., Taipei 10018, Taiwan, R.O.C Subsidiary Offices – North America 39/F The Lee Gardens Oracle Financial Services Software America, Inc., 33 Hysan Avenue Oracle Financial Services Software, Inc. & Mantas Inc. Causeway Bay, Hong Kong 399 Thornall Street, 6th Floor Edison, NJ 08837 USA 19/F Pacific Star Building Sen. Gil Puyat corner Makati Avenue Offices Makati City, Philippines 8000 Norman Center Drive Suite 38.01-04 Level 38 Menara Citibank Bloomington, MN 55437 165 Jalan Ampang Kuala Lumpur 50450 Malaysia 1900 Oracle Way, 3rd Floor Reston, VA 20190 USA Level 10, Margaret Street Sydney, NSW 2000 Australia 1250 Hancock Street Quincy, Massachusetts 02169 Level 4, 4 Julius Avenue North Ryde 6505 Blue Lagoon Drive, Suite #400 Sydney, NSW 2113 Australia Miami, FL 33126 USA Oracle Financial Services Consulting Pte. Ltd. Mantas Inc. (subsidiary of Oracle Financial Services Software Pte. Ltd.) 13650 Dulles Technology Drive, Suite 100 27, International Business Park Herndon, VA 20171 USA #04-05 iQUEST@IBP Building Singapore 609924 Oracle Financial Services Software, Inc. 145 King Street West Subsidiary Office - Europe Suite 500 Toronto, Ontario M5H 1J8, Canada Oracle Financial Services Software B.V. Claude Debussylaan 32 Subsidiary Office – Mauritius 14th floor/Vinoly Building 1082 MD Amsterdam ISP Internet (Mauritius) Company Limited The Netherlands C/o Multiconsult Limited Rogers House, Offices 5 President John Kennedy Street Port Louis, Mauritius Mainzer Landstrasse 49a 60329 Frankfurt am Main, Germany Offices 121, Meridian Place i-flex Processing Services Inc. Off Marsh Wall, South Quay 17682, Mitchell North, Suite 201 London E14 9FE, UK Irvine CA 92614 USA Level 25 40 Bank Street, Canary Wharf Oracle (OFSS) BPO Services Limited London E14 5NR, UK (Formerly known as Equinox Global Services Limited) A-16/9, Poorvi Marg Molyneux House Vasant Vihar Bride Street New Delhi-110 057 Dublin 8 Ireland DLF Infinity Tower A, 3rd Floor Eastpoint Business Park DLF Cyber City, Phase II Fairview Gurgaon 122002 Haryana, India Dublin 3 Ireland Oracle Financial Services Software – Annual Report 2009-10


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    Directors’ report Financial year 2009-10 Dear Members, The Directors are delighted to present their report on the business and operations of your Company along with the Annual Report and audited financial statements for the financial year 2009–2010. Financial highlights As per Indian GAAP Unconsolidated financial statements: (All amounts in millions of Indian Rupees) Year ended Year ended March 31, 2010 March 31, 2009 Revenue 22,434.70 22,126.23 Income from operations before depreciation & amortization 8,530.50 6,537.37 Depreciation & amortization (374.10) (428.41) Interest/other income (expenses) (682.72) 1,682.86 Exceptional item – (468.90) Income before taxes 7,473.68 7,322.92 Provision for tax (865.19) (365.80) Net income 6,608.49 6,957.12 Balance brought forward 15,075.43 8,118.31 Profit available for appropriation 21,683.92 15,075.43 Appropriations – – Balance carried forward 21,683.92 15,075.43 As per Indian GAAP Consolidated financial statements: (All amounts in millions of Indian Rupees) Year ended Year ended March 31, 2010 March 31, 2009 Revenue 28,739.74 29,276.19 Income from operations before depreciation & amortization 10,281.02 7,754.79 Depreciation & amortization (488.65) (557.94) Impairment loss – (291.05) Interest/other income (expenses) (856.17) 1,789.41 Exceptional item – (468.90) Income before taxes 8,936.20 8,226.31 Provision for tax (1,197.69) (835.36) Net income for the year before minority interest, share of profit (loss) of associate 7,738.51 7,390.95 Minority interest (1.87) (12.93) Share of profit (loss) of associate – (12.59) Net income 7,736.64 7,365.43 Performance On an unconsolidated basis, your Company’s revenue grew to Rs. 22,434 million during the financial year 2009–2010 from Rs. 22,126 million last year. This represents a growth of 1.39%. The Company’s net income dropped by 5.02% over the previous financial year and decreased to Rs. 6,608 million. Revenue, on the basis of consolidated financials, stood at Rs. 28,740 million this year, a drop of 2% from Rs. 29,276 million as compared to the previous financial year. The net income increased to Rs. 7,737 million this year, an increase of 5%. A detailed analysis of the financials is given in the Management Discussion and Analysis report that forms part of this Annual Report. Dividend Your Company has plans to capitalize on the opportunities emerging from the current market conditions and needs to invest in business growth. Keeping this in view, the Board has decided not to declare a dividend for the financial year 2009-2010. The funds will be used to further invest in new product development, infrastructure expansion and other growth opportunities to enhance the solution offerings, market reach and delivery capabilities and sustain the leadership position of your Company. 11


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    Transfer to reserves The Company does not propose to transfer any amount to the General Reserve out of the amount available for appropriation. An amount of Rs. 21,683.92 million is proposed to be retained in the Profit & Loss Account. Share capital During the year, the Company allotted 85,471 equity shares of face value of Rs. 5/- each to its employees/directors, who exercised their options under the Employee Stock Option Plan. As a result, as on March 31, 2010, the paid up equity share capital of the Company increased to Rs. 419,274,285/- divided into 83,854,857 equity shares of face value of Rs. 5/- each. Oracle’s holding in the Company As of March 31, 2010, Oracle Global (Mauritius) Limited held 67,481,698 equity shares (80.47% of the equity capital) of the Company. Directors Mr. Y M Kale and Mr. William T Comfort, Jr., Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Ms. Tarjani Vakil is liable to retire by rotation at the ensuing Annual General Meeting and has not offered herself for re-appointment. Mr. Rajesh Hukku has taken a broader role at Oracle Corporation as Chief Strategy Officer, Financial Services. Mr. R Ravisankar has been promoted to Chief Operating Officer, Oracle Financial Services Global Business Unit. Both of them have resigned from the Board of Directors of the Company with effect from April 29, 2010. Mr. Charles Phillips resigned from the Board of Directors of the Company with effect from July 22, 2010. The Board places on record its appreciation for the contributions made by Mr. Rajesh Hukku, Mr. R Ravisankar and Mr. Charles Phillips as members of the Board. Pursuant to Section 260 of the Companies Act, 1956, Mr. Frank Brienzi, General Manager, Oracle FSGBU and Mr. Joseph John, Executive Vice President, Banking Products Division of the Company were appointed as Additional Directors of the Company on April 29, 2010. Mr. William Corey West, Senior Vice President, Corporate Controller and Chief Accounting Officer, Oracle Corporation was appointed as an Additional Director of the Company on July 22, 2010. They hold office up to the date of the ensuing Annual General Meeting. The Company has received Notices in writing from Members, pursuant to Section 257 of the Companies Act, 1956, proposing the candidature of Mr. Frank Brienzi, Mr. Joseph John and Mr. William Corey West for the office of a Director. Pursuant to the provisions of Sections 198, 269, 309 and 310 of the Companies Act, 1956, Mr. Joseph John was appointed as Whole-time Director of the Company for a period of three years i.e. from April 29, 2010 to April 28, 2013. Mr. Joseph John shall be liable to retire by rotation. As stipulated under Clause 49 of the Listing Agreement entered into with the stock exchanges, brief resumes of the Directors proposed to be appointed/re-appointed, nature of their expertise in specific functional areas and the names of companies in which they hold directorships and membership/chairmanship of Board Committees, are provided in the Report on Corporate Governance forming part of the Annual Report. The Board recommends to the members the resolutions for re-appointment of Mr. Y M Kale and Mr. William T Comfort, Jr. as Directors of the Company. The Board also recommends the appointment of Mr. Frank Brienzi, Mr. Joseph John and Mr. William Corey West as Directors. It further recommends the appointment and remuneration payable to Mr. Joseph John as Whole-time Director of the Company and revision in remuneration payable to Mr. N R K Raman, Managing Director of the Company. Infrastructure During the year, your Company made the following changes to its infrastructure: Bangalore We rationalized our facilities in Bangalore and surrendered one floor (2nd Floor) of our RMZ office on August 3, 2009. Your Company has obtained SEZ approval for the Global Axis office, on March 29, 2010. This office covers an area of about 1 million sq. ft. and is coming up at Bangalore. Pune Renovation work is in progress at Ambrosia owned premises. It has an area of 360,000 sq. ft. and a portion of this office is expected to be ready for occupation by the end of July 2010. Chennai We have taken new office premises on lease at Chennai – Green Valley Shelters (GVS), w.e.f. February 1, 2010 for a 3 year lease period. Oracle Financial Services Software – Annual Report 2009-10


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    We have de-leased our NGM premises w.e.f. May 31, 2010 and all our staff from Nungambakkam have moved to the GVS office premises. Corporate developments To reflect the close strategic and operational alignment within the Company, the names of the following subsidiary companies were changed during the year from: • ‘Equinox Global Services Limited’ to “Oracle (OFSS) BPO Services Limited” w.e.f. March 9, 2010 • ‘i‑flex Processing Services Limited’ to “Oracle (OFSS) Processing Services Limited” w.e.f. March 19, 2010 • ‘Flexcel International Private Limited’ to “Oracle (OFSS) ASP Private Limited” w.e.f. March 22, 2010 Global alliances Your Company attaches great importance to building and expanding its partner network with organizations, which can promote, sell, implement and support its offerings around the world. The partner network currently comprises more than 35 resellers and 45 implementation partners. Leading System Integration (SI) Partners play an active role in delivering solutions to customers of your Company. The SI Partners deliver projects in the CIS, Latin America, Middle East, Japan and India. The highlight of our engagement with partners this year has been the acceleration of our efforts to enable our partners to sell, implement and support our product suite – including Oracle FLEXCUBE, Oracle Reveleus, Oracle Mantas and Oracle Daybreak. We have also begun the migration of your company’s partner network to the Oracle Partner Network (OPN). This migration will speed the enablement of partners, leverage existing Oracle relationships to promote growth, and benefit both sides of the partner relationship. Subsidiaries Your Company has subsidiaries in India, the USA, Singapore, the Netherlands, Canada, Mauritius, Greece, China and Chile to handle operations, strengthen marketing and sales efforts, ensure deeper sales penetration and provide post-sales support in these regions. Pursuant to Section 212 of the Companies Act, 1956 (“the Act”), the Company is required to attach to its Annual Report, the Balance Sheet, Profit and Loss Account, Director’s Report and the Report of the Auditors (collectively referred to as ‘the accounts and reports’), of its subsidiaries for the year ended March 31, 2010. Since the Company presents audited consolidated financial statements under Indian GAAP in its Annual Report, the Company had applied to the Central Government for an exemption from attaching the accounts and reports of its subsidiaries to the Annual Report. The approval of the Central Government in this regard has been received vide letter no. 47/272/2010‑CL‑III dated April 20, 2010 exempting the Company from attaching the accounts and reports of subsidiary companies under the provisions of Section 212 of the Act. As such, the accounts and reports of the subsidiary companies are not attached to the Annual Report of the Company. The Company will make available the accounts and related information of the subsidiary companies upon request by any member/investor of the Company or its subsidiaries. Further, the accounts and related information of the subsidiary companies will be kept open for inspection by any member, at the registered office of the Company and at the registered office of the subsidiaries during office hours of the Company/subsidiaries and the same will also be available on the website of the Company www.oracle.com/financialservices. Fixed deposits During the financial year 2009‑2010, the Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and as such, no amount of principal or interest was outstanding as of the date of the Balance Sheet. Corporate governance The Company has taken appropriate steps and measures to comply with all the applicable mandatory provisions of Clause 49 of the listing agreement entered with stock exchanges and Section 292A of the Companies Act, 1956. Your Company has constituted five committees consisting of Board members and other senior officials of the Company, namely, an Audit Committee, Compensation Committee, ESOP Allotment Committee, Transfer Committee and Shareholders’ Grievances Committee. A separate report on Corporate Governance, along with a certificate of Statutory Auditors of the Company, is annexed herewith. A certificate from the Managing Director and Chief Financial Officer of the Company confirming internal controls and checks pertaining to financial statements for the year ended March 31, 2010 was placed before the Board of Directors and the Board has noted the same. 13


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    A list of the committees of the Board and names of their members as on March 31, 2010 is given below. The scope of each of these committees and other related information are detailed in the enclosed Corporate Governance Report. Audit committee Compensation committee Transfer committee Mr. Y M Kale (Chairman) Mr. William T Comfort, Jr. (Chairman) Ms. Tarjani Vakil (Chairperson) Mr. William T Comfort, Jr. Mr. Y M Kale Mr. Makarand Padalkar Ms. Tarjani Vakil Mr. Charles Phillips ESOP allotment committee Shareholders’ grievances committee Ms. Tarjani Vakil (Chairperson) Mr. Makarand Padalkar Ms. Tarjani Vakil (Chairperson) Mr. Makarand Padalkar Allotment of ESOP shares The members of the Company had approved the Employees Stock Option Scheme (ESOP) of the Company in its Annual General Meeting of 2001. According to the said scheme, the Company has granted shares to eligible employees/directors from time to time. The details are given below: Financial year Total number of Options granted 2001 – 02 4,548,920 2002 – 03 80,000 2003 – 04 36,000 2004 – 05 60,000 2005 – 06 10,000 2006 – 07 373,000 2007 – 08 Nil 2008 – 09 Nil 2009 – 10 Nil Total 5,107,920 Pricing formula At the market price as on the date of grant Options vested at the end of the financial year 2009 – 2010 141,382 Options exercised during 2009 – 2010 85,471 Total number of shares arising as a result of exercise of options during 2009 – 2010 85,471 Options lapsed 2002 – 03 129,520 2003 – 04 112,500 2004 – 05 82,200 2005 – 06 87,600 2006 – 07 46,600 2007 – 08 35,900 2008 – 09 60,455 2009 – 10 21,000 Total 575,775 Variation of terms of options None Money realized by exercise of options during the financial year 2009 – 2010 Rs. 70,015,083 Total number of options in force 242,382 Employee‑wise details of options granted during the financial year ended March 31, 2010 to: Number of Options i. Director Nil ii. Any other employee, who receives grant in any one year of option amounting to 5% or more of option granted during that year Nil iii. Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil iv. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with accounting standard 20 ‘Earnings Per Share’ issued by the Institute of Chartered Accountants of India Rs. 78.72 Oracle Financial Services Software – Annual Report 2009-10


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    Had compensation cost for the Company’s ESOP been determined based on fair value at the grant dates, Company’s net income and earnings per share would have been reduced to proforma amounts indicated below: March 31, 2010 Net income as reported 6,608,488 Less: Compensation expense determined using fair value of options (5,659) Proforma net income 6,602,829 Basic income per share: As reported 78.87 Proforma 78.80 Diluted income per share: As reported 78.72 Proforma 78.65 All stock options under the 2002 Employee Stock Option Plan were granted at a prevalent market price on the date of grant. Accordingly, we have calculated the compensation cost arising on account of stock options granted using the intrinsic value method. Hence, the disclosure in terms of Clause 12.1(n) of the Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is not applicable. A summary of the activity in the Company’s ESOP is as follows: Year ended March 31, 2010 Shares arising Weighted average from options exercise price (Rs.) Outstanding at beginning of year 348,853 1,075 Exercised (85,471) 819 Forfeited (21,000) 1,232 Outstanding at end of the year 242,382 1,152 Human resources Employees are our key assets and we continuously invest in them to retain our competitive edge. We have created a healthy and productive environment, together with a strong performance management system to encourage excellence. Our HR practices are among the best in the industry. Our training initiative offers the best and latest in technology, domain expertise and leadership. This was a year of consolidation of our resources. Your Company continued to focus on productivity instead of investing in additional manpower. Our total manpower showed a little dip from the total staff strength from 11,386 by the end of March 2009 to 10,451 by end of March 2010. Corporate Social Responsibility An initiative to support children, originally rolled out as “i‑flex for children”, is in its eighth successful year. Our Corporate Social Responsibilities are managed by a committee of senior company officials and volunteers from divisions and locations in India. Our policy is to support activities which do not have any religious or political affiliation. Your Company encourages employees to actively participate in and drive such programs. We also support initiatives by our employees and their family members in rural India. The initiative is funded each year to support activities proposed to the committee by employees. A wide range of activities were supported during fiscal year 2009‑2010, including construction of additional facilities at schools and hospitals, scholarships for children with special needs and procuring buses to special need schools. For the past 4 years your Company has supported an annual athletic event for children. Directors’ responsibility statement As required under Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that: i. In preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. 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 the Company at the end of the financial year and of the profit of the Company for that period; iii. 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 the Company and for preventing and detecting fraud and other irregularities; iv. The Directors have prepared the annual accounts on a ‘going concern’ basis. 15


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    Auditors M/s S. R. Batliboi & Associates, Chartered Accountants, the present Statutory Auditors of the Company, hold office till the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if re-appointed. Auditors’ Report With regard to the Auditors’ comment in the CARO report concerning delays in payment of a few tax payment, e.g., Service Tax, Income Tax, Value Added Tax, Payroll Tax, the Company would like to state the following: i. The Company has sought help of tax experts in the interpretation of laws and regulations relating to corporate taxes and VAT in foreign countries. The Company has accrued the liabilities in the books taking a conservative approach, however the payments shall be made to the authorities in due course based on the final advice your Company receives. ii. Based on the opinion of tax experts and learned counsel, the Company has accrued for service tax liability on import of taxable services. The amount shall be paid in due course. iii. The Company continually assesses payroll tax implications in various jurisdictions outside India on salaries and travel related reimbursements paid to its employees posted therein and accordingly makes accruals in the books. As per the local laws of most host countries, the tax is payable by the employee, however in a few countries tax payment is a responsibility of the employer, which amounts to Rs. 2.82 Crore. The Company and the employees ensure tax compliance in such countries as advised by the tax consultants. Conservation of energy, technology absorption and foreign exchange earnings and outgo The particulars as prescribed under Sub-Section (1)(e) of Section 217 of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption on foreign exchange earnings and outgo are furnished hereunder: i. Conservation of energy and technology absorption: We believe in providing cutting edge technology to our users, to enhance their productivity and performance. Oracle Financial Services Software endeavors to fulfill its responsibility towards a green environment. We are an environmentally responsible company and some of our key technology initiatives to protect the environment are presented below: Virtualization: It is commonly observed that a large number of servers frequently run with underutilization of processing capability. Virtualization, leads to abstraction of resources. It helps in increasing operational efficiency by consolidating several physical servers onto one logical machine. Running multiple machines on one server increases capacity utilization, reduces power usage and related maintenance expenditure. With extensive adoption of Virtualization technology, the Company has made substantial savings in power consumption of up to 50%. Printer Control: As a part of the “Go Green” campaign at Oracle, the Company has adopted practices such as monitoring of printer usage and the automation of various activities to optimize paper usage. We have already reduced printing consumption by almost 40%. Our Company has also implemented green technologies such as intelligent lighting in datacenter, water and paper recycling, investment on power saving equipments etc. to ensure eco-friendly operations at various levels. The significance of conserving our environment is also conveyed periodically to employees through mailers and posters to elicit their active participation in this cause and to raise their awareness levels. ii. Foreign exchange earnings and outgo: (All amounts in millions of Indian Rupees) Foreign Exchange Earnings* 21,653.79 Foreign Exchange Outgo 6,014.87 (Including capital goods & other expenditure) * Excluding reimbursement of traveling expenses and interest income. Prospects With the change in the economic environment over the last 24 months, banks have reviewed their IT investments to realign them to address new business priorities. We see continued demand for core banking applications as banks expand by buying the assets of other banks, establish presence in new countries and standardize applications across regions. Banks have also sought centralization of banking services such as account opening and origination of credit. They want to do so to improve their service levels and productivity and gain greater control over processes that are coming under increasing regulatory scrutiny. Banks have worked hard to regain public trust. This declined after the recent downturn and in turn reduced transactions and floating capital making the financial system less efficient. Banks want the right technology to help them enhance security, improve risk and liquidity management, stress testing as well as process measurement and improvement. Oracle Financial Services Software – Annual Report 2009-10


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    Banks are evolving into intelligent investors who make informed decisions based on the business benefits that accrue from technology investments. Some of the more aggressive banks have experimented and successfully delivered new business services in their markets by leveraging technology. Such banks have completely differentiated themselves from competition and delivered a better banking experience to their customers. The next generations of these services are being actively considered by many existing Oracle customers as applications and technologies that are offered pre-integrated rather than implemented at the bank’s location. Your company has continued to invest in Oracle FLEXCUBE to address these emerging needs and help our customers achieve excellence through the effective use of information technology. Oracle FLEXCUBE 11.0 was announced in January 2010 to address important and evolving requirements of banks around the globe. Evolving regulations around Liquidity Risk, Stress Testing and Credit Risk continue to contribute to increasing traction at Tier 1 banks for our products. Over the past 12 months financial institutions have exhibited renewed interest in finance, risk and performance applications and in aligning these three areas to deliver better and more meaningful results. Risk Adjusted Performance Measurement (RAPM) that makes such alignment possible has received greater attention from regulators and from the boards of many banks. Capital reform is another area of focus for regulators. A key element of effective capital reform is better and more comprehensive adaptation of capital requirements to risks. The rules surrounding the Internal Capital Adequacy Assessment Process (ICAAP), Pillar 2 of Basel II, mandate financial institutions to develop internal procedures and systems to ensure that they possess adequate capital resources in the long term taking in to consideration all material risks. Many countries have also revised fraud and financial crime regulations to protect their consumers. The increasing sophistication of fraudulent activity continues to force financial institutions to be on guard when it comes to fighting financial crime. In addition, regulators in Asia, Africa and Latin America have also published guidelines asking financial institutions to comply with Anti Money Laundering regulations over the next 24-36 months. After an intense review of the financial events of 2008-2009, regulators have asked banks to align their internal processes to safeguard customer interest and avoid past failures in investment transactions. Capital markets around the world are witnessing increased activity post recession and a greater probability of fraud. Changes in the investment-banking environment have contributed to the increased adoption of broker compliance and trading compliance solutions. Financial institutions will also have to comply with energy trading compliance mandates from regulators as these markets have proved to be very volatile in the past. We have created a complete and fully integrated portfolio of analytical applications covering enterprise risk, regulatory compliance, performance management and customer insight. It is built on a shared analytical infrastructure consisting of a unified financial services data model, shared analytical computations and the industry leading Oracle Business Intelligence platform. IT services in leading markets are consolidating and are becoming more price sensitive. However, the use of these services has expanded as the pressure has spread to Tier 2 and Tier 3 banks to remain cost effective. Financial institutions continue to look at ways to maximize efficiency and rationalize their IT infrastructure usage. Customers are leveraging our service offerings to gain unmatched competitive advantage for their businesses. Employee particulars Information as per Section 217(2A) of the Companies Act, 1956 (“the Act”), read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Act, the Directors’ Report and the Accounts are being sent to the members excluding the statement giving particulars of employees under Section 217(2A) of the Act. Any member interested in obtaining a copy of the statement, may write to the Company Secretary at the Registered Office of the Company. Acknowledgements Your Directors take this opportunity to thank the Company’s customers, members, vendors and bankers for their continued support during the year. Your Directors also wish to thank the Government of India and its various agencies, Department of Electronics, the Software Technology Parks – Bangalore, Mumbai, Chennai and Pune, SEEPZ Special Economic Zone, the Customs and Excise Department, Ministry of Commerce, Ministry of Finance, Ministry of External Affairs, Ministry of Corporate Affairs, Department of Telecommunication, the Reserve Bank of India, the State Governments of Maharashtra, Karnataka, Haryana and Tamil Nadu and other local Government Bodies, for their support and look forward to their continued support in the future. Your Directors also place on record their appreciation for the excellent contribution made by employees of the Company through their commitment, competence, co-operation and diligence with a view to achieving consistent growth for the Company. For and on behalf of the Board, William T Comfort, Jr. Chairman July 22, 2010 17


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    Corporate governance report The detailed report on Corporate Governance of Oracle Financial Services Software Limited for the financial year ended 2009 – 2010 as per Clause 49 of the Listing Agreement entered with Stock Exchanges is set out below. 1. Company’s philosophy on code of governance The Company believes in adopting and adhering to globally recognized corporate governance practices and continuously benchmarking itself against such practices. The Company understands and respects its fiduciary role and responsibility to its members and strives to meet their expectations. 2. Board of Directors 2.1 Composition and category The composition of the Board of Directors of the Company (“the Board”) as on March 31, 2010, was as given below. Name Designation Category Directorships Chairpersonship Membership in other of Committees4 of Committees4 Companies of Boards of Boards of other of other Companies Companies Mr. William T Comfort, Jr. Chairman Non-Executive, Independent Director 5 Nil Nil Ms. Dorian Daley1 Director Non-Executive, Non- Independent Director 22 Nil Nil Mr. Rajesh Hukku2 Director Non-Executive, Non- Independent Director Nil Nil Nil Mr. Y M Kale Director Non-Executive, Independent Director 6 Nil Nil Mr. Charles Phillips3 Director Non-Executive, Non- Independent Director 2 Nil 1 Mr. N R Kothandaraman Managing Director Executive, Non- (N R K Raman) Independent Director 4 Nil Nil Mr. R Ravisankar2 Vice Chairman Executive, Non- Independent Director 6 Nil Nil Ms. Tarjani Vakil Director Non-Executive, Independent Director 8 3 3 Mr. Derek H Williams Director Non-Executive, Non- Independent Director 1 1 Nil 1 Ms. Dorian Daley was appointed as a Director in the Annual General Meeting of August 25, 2009. All her other directorships are in Foreign Companies. 2 Mr. Rajesh Hukku and Mr. R. Ravisankar ceased to be Directors with effect from April 29, 2010. 3 Mr. Charles Phillips ceased to be Director with effect from July 22, 2010. 4 Only the Audit Committee and Shareholders’ Grievances Committee are considered. Mr. Frank Brienzi and Mr. Joseph John were appointed as Additional Directors with effect from April 29, 2010. Mr. Joseph John was appointed as a Whole-time Director with effect from April 29, 2010. Mr. William Corey West was appointed as an Additional Director with effect from July 22, 2010. 2.2 Attendance of each Director at the Board Meetings and the last Annual General Meeting The Company holds regular Board Meetings. The detailed agenda along with the explanatory notes are circulated in advance. The Directors can suggest the inclusion of any item in the agenda at the Board Meeting. The independent Directors actively participate in the Board Meetings and contribute to the decision making process by expressing their opinions, views and suggestions. During the Financial Year 2009 – 2010, five Board Meetings were held on the following dates: May 15, 2009, July 30, 2009, August 25, 2009, October 30, 2009, January 29, 2010. Oracle Financial Services Software – Annual Report 2009-10


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    The attendance of the Directors at the Board Meetings and the Annual General Meeting held during the financial year 2009 – 2010 are as given below: Name of the Director Number of Board Number of Board Meetings attended Last AGM Meetings attended Attended In person On phone/video conference Mr. William T Comfort, Jr. 5 4 1 Yes Ms. Dorian Daley1 3 1 2 Yes Mr. Rajesh Hukku 5 3 2 Yes Mr. Y M Kale 5 5 – Yes Mr. Charles Phillips 4 1 3 Yes Mr. N R K Raman 5 5 – Yes Mr. R Ravisankar 5 3 2 Yes Ms. Tarjani Vakil 5 5 – Yes Mr. Derek H Williams 5 2 3 Yes 1 Ms. Dorian Daley was appointed as a Director on August 25, 2009. 2.3 Details of other directorships Details of the directorships of the Company’s Directors in other companies as on March 31, 2010 are given below: Name of the Director Other directorships Mr. William T Comfort, Jr. Citigroup Venture Capital Court Square Capital Partners Limited Deutsche Annington (DAIG) Nabors Industries CX Partners Ms. Dorian Daley BEA Crossgain International BEA International BEA Systems Ireland Holding Limited Eontec Limited J.D. Edwards Europe Limited Netsure Telecom Limited OCAPAC Distributor Partner OCAPAC Holding Company OCAPAC Research Company OCAPAC Research Partner Oracle America Inc. Oracle Credit Corporation Oracle Global (Mauritius) Limited Oracle Global Holdings, Inc. Oracle International Corporation Oracle International Holding Company Oracle International Technology Corporation Oracle Systems Corporation Oracle Technology Company Siebel Systems Ireland Holding Limited Siebel Systems, Inc. Sun Microsystems Technology Ltd. Mr. Rajesh Hukku – Mr. Y M Kale Ashok Leyland Limited Gulf Oil Marine Limited Hinduja Foundries Limited Hinduja General Insurance Company Limited Hinduja Life Insurance Company Limited IndusInd Bank Limited Mr. Charles Phillips Oracle Corporation Viacom Inc. Mr. N R K Raman ISP Internet Mauritius Company Oracle Financial Services Software America Inc. Oracle Financial Services Software Inc. Oracle Financial Services Software SA 19


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    Name of the Director Other directorships Mr. R Ravisankar Castek inc. Castek RBG Inc. Castek Software Factory Limited Mantas Inc. Oracle Financial Services Software America Inc. Oracle Financial Services Software Inc. Ms. Tarjani Vakil Aditya Birla Nuvo Limited Aditya Birla Trustee Company Private Limited Alkyl Amines Chemicals Limited Asian Paints Limited Birla Sun Life Insurance Company Limited DSP BlackRock Trustee Company Private Limited Idea Cellular Limited Mahindra Intertrade Limited Mr. Derek H Williams Nihon Oracle Kabushiki Kaisha 2.4 Details of memberships of Board Committees None of the Directors of the Company hold memberships of more than ten committees nor is any Director a Chairperson of more than five Committees of the Boards of the companies where he/she holds directorship. For this purpose, “Committees” include Audit Committee and Shareholders’ Grievances Committee of a company. The details of the memberships of the Company’s Directors in the above mentioned committees of all the Companies of which they are members as on March 31, 2010 are given below: Name of the Director Audit Shareholders’ Grievances Committee Committee Chairperson Member Chairperson Member Mr. William T Comfort, Jr. – 1 – – Ms. Dorian Daley1 – – – – Mr. Rajesh Hukku – – – – Mr. Y M Kale 1 – – – Mr. Charles Phillips – 1 – – Mr. N R K Raman – – – – Mr. R Ravisankar – – – – Ms. Tarjani Vakil 3 4 1 – Mr. Derek H Williams 1 – – – 1 Ms. Dorian Daley was appointed as a Director on August 25, 2009. 2.5 Brief resume of Directors who will be retiring by rotation at the ensuing Annual General Meeting of the Company and, being eligible, offer themselves for re-appointment Mr. Y M Kale Mr. Y M Kale, born on November 4, 1947, was President of the Institute of Chartered Accountants of India (1995 – 1996) and is also a fellow member of the Institute of Chartered Accountants of England and Wales. He has contributed to various governmental and regulatory bodies such as the Securities and Exchange Board of India, the Committee of Offer Documents, the Committee of Takeovers and the Committee on Accounting for Corporates. He has participated as a member of the group for the Introduction of Concurrent Audit of Banks, which was organized by the Reserve Bank of India. He was also a member of the National Drugs and Pharmaceutical Development Council of the Government of India. He was also on the Board of the International Accounting Standards Committee from 1995 to 1998 as India’s representative. Mr. Kale does not hold any equity shares of the Company as on date. Mr. William T Comfort, Jr. Mr. William T Comfort, Jr., born on August 3, 1937, is the Chairman of Citigroup Venture Capital. He received his B.A. and LL.B. and was honored with the Doctorate of Humane Letters (D.H.L) at the University of Oklahoma. He received an LL.M. at the New York University Law School. He is a trustee of the New York University Law Center Foundation, the John A. Hartford Foundation, Inc., and was an adjunct professor at the Columbia Business School. He is currently Chairman of Citigroup Venture Capital and Chairman of the Investment Committee of Court Square Capital Partners. He is also a member of the Board of Directors of Deutsche Annington (DAIG - Germany), and Nabors Industries (Bermuda). Mr. Comfort has been associated with the Company as a board member since 2002 and was appointed as Chairman of its Board of Directors on March 24, 2009. Mr. Comfort does not hold any equity shares of the Company as on date. Oracle Financial Services Software – Annual Report 2009-10


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    2.6 Brief resume of Directors proposed to be appointed at the ensuing Annual General Meeting of the Company Mr. Frank Brienzi Mr. Frank Brienzi, born on February 25, 1962, is Senior Vice President and General Manager of Oracle’s Financial Services Global Business Unit. He brings more than 25 years of financial services experience and expertise to his role at Oracle. Mr. Brienzi began his career with EDS in 1984, as part of the financial services strategic business unit responsible for large-scale banking and insurance development, sales and account management. For the past 15 years, he was a managing partner at Accenture, helping to grow their global financial services business and leading Accenture’s Application Outsourcing practice in North America, Asia Pacific, Europe, Africa and Latin America. Mr. Brienzi has written several articles for major magazines including Forbes and InformationWeek. He currently serves on the board of Aidmatrix and is Vice-Chairman for NPower, Texas. He is an active member in United Way programs and Stonebriar Community Church. Mr. Brienzi holds double majors in mathematics and management information systems from the University of Northern Colorado. Mr. Brienzi does not hold any equity shares of the Company as on date. Mr. Joseph John Mr. Joseph John, born on December 15, 1957, is a member of the board of directors and head of the banking products division of Oracle Financial Services Software Limited. He is responsible for the development, implementation and support for the Oracle FLEXCUBE suite of products. Mr. John joined Oracle Financial Services Software Limited (then a part of Citicorp Overseas Software Limited) in 1988, where he undertook wide-ranging Business Process Reengineering and Software Project Management assignments for customers in North America and Europe. Since 1992, he has been spearheading the product development strategy of the Company. He was product development head for its product MicroBanker, and thereafter headed the Banking Products Division, which is responsible for product development, consulting, and support of its flagship product Oracle FLEXCUBE, which is deployed in over 125 countries. Prior to his tenure at Oracle, he was part of the software division at International Data Management. Mr. John holds a bachelors degree in Engineering. Mr. John holds 36,650 equity shares of the Company as on date. Mr. William Corey West Mr. William Corey West, born on May 4, 1962, is Senior Vice President, Corporate Controller and Chief Accounting Officer of Oracle Corporation. He brings more than 25 years of finance, accounting and executive management experience and expertise to his role at Oracle. Mr. West began his career with Arthur Andersen in 1984, as part of the accounting and audit practice. He served clients in a variety of industries for 14 years and left Arthur Andersen in 1998 as a partner. After leaving Arthur Andersen he worked in finance, accounting and executive management positions at RPC, Adecco, Cadence Design Systems, The Gap and Intuit. Mr. West joined Oracle Corporation on April 2, 2007. Mr. West graduated from the University of Washington in December 1984 with a bachelor’s degree in business, accounting and finance concentration. Mr. William Corey West does not hold any equity shares of the Company as on date. 3. Audit committee 3.1 Primary objectives and powers of the Audit Committee The primary objective of the Audit Committee is to monitor and provide effective supervision of the management’s financial reporting process and to ensure accurate, timely and proper disclosures and transparency, integrity and quality of financial reporting. The powers of the Audit Committee include the following: 1. To investigate any activity within its terms of reference. 2. To seek information from any employee. 3. To obtain outside legal or other professional advice. 4. To secure attendance of outsiders with relevant expertise, if it considers necessary. 21


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    3.2 Broad terms of reference The terms of reference of the Audit Committee are as follows: 1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees. 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors. 4. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of Section 217 (2AA) of the Companies Act, 1956 b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions g. Qualifications in the draft audit report 5. Reviewing, with management, the quarterly financial statements before submission to the Board for approval. 6. Reviewing, with management, the performance of statutory and internal auditors and the adequacy of the internal control systems. 7. Reviewing the adequacy of the internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit. 8. Discussion with internal auditors regarding any significant findings and any follow-up required. 9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. 10. Discussion with statutory auditors, before the audit commences, about the nature and scope of the audit as well as post-audit discussion to determine any area of concern. 11. To determine the reasons for any substantial defaults in the payment to depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors. 12. To review the functioning of the Whistle Blower function. 13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. 3.3 Composition of the committee The composition of Audit Committee as on March 31, 2010 was as follows: Mr. Y M Kale Chairman, Non-Executive, Independent Director Mr. William T Comfort, Jr. Member, Non-Executive, Independent Director Ms. Tarjani Vakil Member, Non-Executive, Independent Director 3.4 Meetings and attendance During the Financial Year 2009 – 2010, six meetings of the Committee were held on April 22, 2009, May 15, 2009, July 28, 2009, August 25, 2009, October 29, 2009, and January 28, 2010. The member’s attendance at the Committee Meetings was as given below: Name Number of meetings attended In person On phone Mr. Y M Kale 6 – Mr. William T Comfort, Jr. 4 2 Ms. Tarjani Vakil 6 – The auditors of the Company were invited for the meetings. Oracle Financial Services Software – Annual Report 2009-10


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    3.5 Audit committee’s recommendations The Committee reviewed the financial results of the Company prepared in accordance with Indian GAAP (including consolidated results) as at and for the quarters ended June 30, 2009, September 30, 2009 and December 31, 2009 as also for the year ended March 31, 2010 and recommended the same to the Board for adoption. The Committee recommended to the Board the re-appointment of M/s. S. R. Batliboi & Associates, Chartered Accountants, as Statutory Auditors of the Company for the financial year 2010 – 2011. The Committee also recommended the re-appointment of M/s. Axis Risk Consulting Pvt. Ltd. as the internal auditors of the Company to conduct the internal audit for the financial year 2010 – 2011. The Committee reviewed Internal Auditors’ reports and related reports on actions taken, risk management policies, compliance with the clause 49 of the Listing Agreement, etc. from time to time. 4. Compensation committee 4.1 Brief description of terms of reference The scope of Compensation Committee is to determine the compensation of the Directors and any profit linked bonus policies of the Company. The Compensation Committee also approves, allocates and administers the Employee Stock Option Plan 2002, reviews performance appraisal criteria and sets norms for ESOP allocation. 4.2 The Composition of the Committee The Composition of Compensation Committee as on March 31, 2010 was as follows: Mr. William T Comfort, Jr. Chairman, Non-Executive, Independent Director Mr. Y M Kale Member, Non-Executive, Independent Director Mr. Charles Phillips Member, Non-Executive, Non-Independent Director 4.3 Meeting and attendance During the year, one meeting of the Committee was held on August 25, 2009 and all the members of the Committee were present for the meeting. 4.4 Compensation policy The Compensation Committee determines and recommends to the Board the compensation payable to the Directors. The limit for the commission to be paid to the Board members and the remuneration payable to the Managing Director of the Company are approved by the members of the Company. The annual compensation of the non-executive directors is approved by the Compensation Committee, within the parameters set by the members at the members’ meetings. The criteria for payment of commission to the non-executive directors include a base commission plus incremental commission depending on the number and type of committees where they are Members or Chairpersons. The Committee also has the mandate to review and recommend compensation payable to the Senior Executives of the Company. It also sets norms for ESOP allocation. 4.5 Details of remuneration paid to the Directors during the financial year 2009-2010 are as follows: Name of Director ESOPs granted Commission Salary Contribution to Total Amount under ESOP paid (Rs. ‘000) PF (Rs. ‘000) paid Plan during the (Rs. ‘000) (Rs. ‘000) year Mr. William T Comfort Jr. – – – – – Ms. Dorian Daley1 – – – – – Mr. Rajesh Hukku – – – – – Mr. Y M Kale – 1,200 – – 1,200 Mr. Charles Phillips – – – – – Mr. N R K Raman – – 21,422 477 21,899 Mr. R Ravisankar – – – – – Ms. Tarjani Vakil – 900 – – 900 Mr. Derek H Williams – – – – – Total – 2,100 21,422 477 23,999 1 Ms. Dorian Daley was appointed as a Director on August 25, 2009. The Company accrues for gratuity benefit, compensated absences and bonus for all employees as a whole. It is not possible to ascertain the provision for individual director and hence the same has not been disclosed above. The Company discloses such benefits on cash basis. 23


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    During the financial year 2009-2010, Mr. N R K Raman, the Managing Director of the Company was paid remuneration within the limits envisaged in the Companies Act, 1956. Non-executive, Independent Directors of the Company were paid remuneration by way of commission as approved by the Board of Directors/shareholders of the Company subject however to the condition that the commission shall not exceed 1% of the net profits of the Company for all the Non-executive Directors in aggregate in one financial year. There were no sitting fees and/or perquisites paid to the Directors during the financial year 2009-2010 except as stated above. The terms of Employee Stock Options granted to the Directors are given below: Name of Director Scheme Options Options Grant price Expiry Date Equity shares outstanding exercised (Rs.) held as at as at during the March 31, 2010 March 31, 2010 year Mr. William T Comfort Jr. N.A. – – N.A. N.A. – Ms. Dorian Daley1 N.A. – – N.A. N.A. – Mr. Rajesh Hukku ESOP 2002 – – 265.00 N.A. 676,524 Mr. Y M Kale ESOP 2002 – – 418.92 N.A. – Mr. Charles Phillips N.A. – – N.A. N.A. – Mr. N R K Raman ESOP 2002 – – 265.00 N.A. 80,000 Mr. R Ravisankar ESOP 2002 – – 265.00 N.A. 274,272 Ms. Tarjani Vakil ESOP 2002 – 2,000 559.60 N.A. 9,400 Mr. Derek H Williams N.A. – – N.A. N.A. – 1 Ms. Dorian Daley was appointed as a Director on August 25, 2009. The above options were issued at Fair Market Value on the respective dates of grant. The options vest over a period of 5 years from the date of grant and are subject to continued employment/directorship with the Company. 5. Shareholders’ grievances committee 5.1 Composition of the Committee The composition of Shareholders’ Grievances Committee as on March 31, 2010 was as follows: Ms. Tarjani Vakil Chairperson, Non-Executive, Independent Director Mr. Makarand Padalkar Chief Financial Officer 5.2 Scope of shareholders’ grievances committee’s activities The scope of the Shareholders’ Grievances Committee is to review and address the grievances of the members in respect of share transfers, transmission, dematerialization and rematerialization of shares and other share related activities. During the year, three meetings of the Committee were held on May 13, 2009, October 29, 2009 and January 20, 2010. The member’s attendance at the Committee Meetings was as given below: Name Number of meetings attended In person Ms. Tarjani Vakil 3 Mr. Makarand Padalkar 3 6. Company Secretary and Compliance Officer Company Secretary and Compliance Officer Mr. Hoshi D Bhagwagar Address Oracle Financial Services Software Limited 399, Subhash Road Vile Parle (East) Mumbai 400057 Tel + 91-22-6718 5000 Fax + 91-22-2831 5593 e-mail hoshi.bhagwagar@oracle.com Oracle Financial Services Software – Annual Report 2009-10


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    7. Details of shareholders’ complaints received, resolved during the financial year 2009 – 2010 Sr. No. Nature of Complaints Opening Balance Received Cleared Pending 1 Non receipt of warrant – 2 2 – 2 Non receipt of certificate – – – – 3 Non receipt of demat credit/ – 2 2 – rejections 4 SEBI/Stock Exchange/Ministry of – – – – Corporate Affairs 5 Legal – – – – 6 Others – 4 4 – Total – 8 8 – Number of pending share transfers as on March 31, 2010 – Nil 8. Transfer Committee The composition of the Transfer Committee as on March 31, 2010 was as follows: Ms. Tarjani Vakil Chairperson, Non-Executive, Independent Director Mr. Makarand Padalkar Chief Financial Officer During the year, six meetings of the Committee were held on May 13, 2009, July 30, 2009, October 29, 2009, December 3, 2009, January 20, 2010 and February 19, 2010. The member’s attendance at the Committee Meetings was as given below: Name Number of meetings attended In person Ms. Tarjani Vakil 6 Mr. Makarand Padalkar 6 9. ESOP Allotment Committee The composition of the ESOP Allotment Committee as on March 31, 2010 was as follows: Ms. Tarjani Vakil Chairperson, Non-Executive, Independent Director Mr. Makarand Padalkar Chief Financial Officer During the year, three meetings of the Committee were held on December 3, 2009, January 20, 2010 and February 26, 2010. The member’s attendance at the Committee Meetings was as given below: Name Number of meetings attended In person Ms. Tarjani Vakil 3 Mr. Makarand Padalkar 3 10. General body meetings 10.1 Location, date and time where last three Annual General Meetings were held: Financial Year Venue Date Time 2008 – 2009 The Leela Kempinski, August 25, 2009 3.00 p.m. Sahar, Andheri (East), Mumbai 400059 2007 – 2008 The Leela Kempinski, August 22, 2008 3.00 p.m. Sahar, Andheri (East), Mumbai 400059 2006 – 2007 InterContinental The Grand Mumbai August 24, 2007 3.00 p.m. Sahar Airport Road, Andheri (East), Mumbai 400059 25


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    10.2 The details of Special Resolutions passed in AGMs during the last three years are given below: Financial Day, Date & Time Venue Gist of Special Resolution Passed Year 2008 – 09 Tuesday, The Leela No special resolution was passed. August 25, 2009 Kempinski, Sahar, At 3.00 p.m. Andheri (East), Mumbai 400059 2007 – 08 Friday, The Leela No special resolution was passed. August 22, 2008 Kempinski, Sahar, At 3.00 p.m. Andheri (East), Mumbai 400059 2006 – 07 Friday, InterContinental 1. Payment of commission to the Directors of the Company (excluding the August 24, 2007 The Grand Managing Director and Whole-time Directors), not exceeding in the At 3.00 p.m. Mumbai, Sahar aggregate one percent per annum of the net profits of the Company which Airport Road, shall be calculated in accordance with the provisions of Sections 198, 349 Andheri (East), and 350 of the Companies Act, 1956. Mumbai 400059 2. Amendment to the ‘2002 Employees Stock Option Plan’ of the Company providing that the eligible employees should bear or reimburse to the Company fringe benefit tax including related surcharge, cess, duty or any other levy, to the extent to which the Company is liable to pay the fringe benefit tax in relation to the value of fringe benefits provided to the eligible employee. 10.3 The details of Special Resolution passed in the EGM in the last three years are given below: Financial Year Day, Date & Time Venue Gist of Special Resolution Passed 2008 – 09 Monday, InterContinental 1. The Name of the Company be Changed from ‘i-flex solutions August 11, 2008 The Grand Limited’ to ‘Oracle Financial Services Software Limited’ and that At 3.00 p.m. Mumbai, Sahar the Name ‘i-flex solutions Limited’ wherever it appears in the Airport Road, Memorandum and Articles of Association of the Company and other Andheri (East), records be substituted by the new Name ‘Oracle Financial Services Mumbai 400059 Software Limited’. There were no EGMs held in the Financial Year 2006 – 07 and 2007 – 08. 10.4 There were no matters requiring approval of the members through Postal Ballot in previous year. 10.5 No special resolution is proposed to be conducted through postal ballot. 10.6 Procedure for the Postal ballot Process: After receiving the approval of the Board of Directors, notice of the Postal Ballot, text of the Resolution and Explanatory statement, Postal Ballot Form and self-addressed postage pre-paid envelopes are sent to the members to enable them to consider and vote for or against the proposal within a period of 30 days from the date of dispatch. The calendar of events containing the activity chart is filled with the Registrar of Companies within 7 days of the passing of the Resolution by the Board of Directors of the Company. After the last date for receipt of the ballots, the Scrutinizer after due verification, submits the results to the Chairman of the Board of Directors of the Company. Thereafter, the Chairman declares the result of the Postal ballot. The same is published in the Newspapers and displayed on the website and the Notice Board at the registered office of the Company. 11. Disclosures a. All the relevant information in respect of materially significant related party transactions, i.e., transactions of the Company of material nature with its promoters, directors or management or their relatives, subsidiaries of the Company, etc. has been disclosed in the respective financial statements presented in the Annual Report. The Company did not undertake any transaction with any related party having potential conflict with the interest of the Company at large. b. The Company has complied with statutory compliances and no penalty or stricture is imposed on the Company by the Stock Exchanges or Securities and Exchange Board of India (SEBI) or any other statutory authority on any matter related to the capital markets during the last three years. c. With regard to the Initial Public Offer (“IPO”) made by the Company in 2002, the office of the Registrar of Companies, Maharashtra at Mumbai (‘the ROC’) had vide its letters dated July 8, 2009 and July 13, 2009 sought information with regard to the utilization of IPO proceeds. The ROC also issued a show cause notice dated July 7, 2009 to the Company and its Directors and Officer alleging that the Company had utilized the IPO amount for giving loans to the subsidiary companies which was ultra virus against the object of the Prospectus and therefore violated the provisions of Section 62 of the Companies Act, 1956. The Oracle Financial Services Software – Annual Report 2009-10


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    Company provided the required information to the ROC vide its letter dated August 17, 2009. The Company also responded to the show cause notice vide letter dated August 17, 2009, stating that it had not used the IPO funds for purposes other than those stated in the Prospectus and had thus not violated the provisions of Section 62 of the Act. The Company has not received any further communication in this regard since then. d. The Company has a Whistle Blower Policy which provides an avenue for employees to raise concerns about any violations of the Code of Conduct, incorrect or misrepresentation of any financial statements and reports, unethical behavior, etc. The policy provides adequate safeguards to employees reporting such violations to the Company. No employee has been denied access to the Audit Committee. e. The Company is fully compliant with the applicable mandatory requirements of Clause 49 of the listing agreement with the Stock Exchanges. The Clause further states that the non-mandatory requirements may be implemented at the discretion of the Company. Thus, of the non-mandatory requirements, the Company has complied with the requirement of Compensation Committee and also has a Whistle Blower Policy in place. f. During the year, the Ministry of Corporate Affairs, Government of India, issued the Corporate Governance Voluntary Guidelines 2009 (“the Guidelines”). The objective of these Guidelines is to encourage companies to voluntarily adopt best practices in corporate governance. The Guidelines focuses on matters relating to functions of the Board, Audit Committee, Auditors role and Secretarial Compliance. The corporate governance framework of the Company already encompasses a significant portion of the recommendations contained in the Guidelines. 12. Means of communication During the Financial Year 2009-2010: – The quarterly, half yearly and annual results of the Company were published in the widely circulated English and Marathi newspapers, such as The Economic Times and The Sakal. – Company’s quarterly financial results and press releases are posted on the Company’s website www.oracle.com/financialservices – Detailed Management Discussion and Analysis Reports covering Indian GAAP un-consolidated and consolidated financials have been included in this Annual Report. – The Company has also posted information relating to its financial results and Distribution of shareholding on a quarterly basis on Electronic Data Information Filing and Retrieval System (EDIFAR) http://sebiedifar.nic.in. However, following a circular no. CIR/CFD/DCR/3/2010 dated April 16, 2010 issued by the SEBI, this practice has been discontinued with effect from April 1, 2010. – Since January 2008, pursuant to new provisions contained in the listing agreement executed by the Company with BSE and NSE, the Company has uploaded the information relating to its financial results, shareholding pattern and report on corporate governance on website – http://corpfiling.co.in. – The details of directors are also updated on Directors Database, a Corporate Governance initiative of the Bombay Stock Exchange Limited. 13. General shareholder information Annual General Meeting Day and Date Wednesday, August 25, 2010 Time 3.00 p.m. Venue The Leela Kempinski, Sahar, Andheri (East), Mumbai 400059 Financial Year April 1, 2009 to March 31, 2010 Date of Book Closure Saturday, August 21, 2010 to Wednesday, August 25, 2010 (both days inclusive) Listing on Stock Exchanges at Bombay Stock Exchange Limited (BSE); and National Stock Exchange of India Limited (NSE) Stock Code Bombay Stock Exchange Limited (BSE) 532466 National Stock Exchange of India Limited (NSE) OFSS Listing The annual listing fees for the year 2010 – 2011 have been paid to BSE and NSE. The Company has paid Custodial fees for the year 2010 – 2011 to National Securities Depository Limited and Central Depository Services (India) Limited on the basis of number of beneficial accounts maintained by them as on March 31, 2010. 27


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    14. Market price data Monthly high, low and volume of the shares of the Company traded on stock exchange from April 1, 2009 to March 31, 2010 are given below: Month and Year High (Rs.) Low (Rs.) Volume of High (Rs.) Low (Rs.) Volume of Shares Shares BSE NSE April 2009 950.00 742.00 1,082,562 950.00 731.00 2,415,676 May 2009 1,220.00 812.00 706,474 1,199.00 835.00 1,811,331 June 2009 1,365.00 1,153.15 402,314 1,375.00 1,152.25 1,452,380 July 2009 1,580.00 1,100.05 349,747 1,558.00 1,102.00 1,022,394 August 2009 1,826.00 1,460.00 489,061 1,823.60 1,460.00 1,566,029 September 2009 1,875.00 1,715.00 369,550 1,875.00 1,717.00 1,483,607 October 2009 2,250.00 1,772.00 947,471 2,250.00 1,772.30 3,294,783 November 2009 2,300.00 1,911.00 601,665 2,300.00 1,912.00 2,237,234 December 2009 2,364.70 2,043.00 550,259 2,357.30 2,042.05 2,497,438 January 2010 2,524.95 2,045.00 788,929 2,550.00 2,048.80 3,047,070 February 2010 2,301.00 2,099.00 382,303 2,299.00 2,075.00 1,798,517 March 2010 2,363.00 2,221.55 345,460 2,364.00 2,205.05 1,415,589 Relative movement chart The chart below shows the comparison of your Company’s share price movement on NSE vis-à-vis the movement of the S&P CNX NIFTY for the year 2009 – 2010. 7,000 3,000 6,000 2,500 5,000 S&P CNX NIFTY 2,000 OFSS Price 4,000 3,000 1,500 2,000 1,000 1,000 0 500 April 2009 June 2009 August 2009 October 2009 December 2009 February 2010 March 2010 S&P CNX NIFTY OFSS Price Oracle Financial Services Software – Annual Report 2009-10


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    The chart below gives the relative movement of the closing prices of the Company’s share and S&P CNX NIFTY relative to the closing prices since listing of our shares on NSE. 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 June 2002 June 2003 June 2004 June 2005 June 2006 June 2007 June 2008 June 2009 June 2010 OFSS S&P CNX NIFTY 15. Registrars and Transfer Agents Link Market Services Limited, an Australia-based global registry and financial services company, has acquired 51% stake as a strategic investment in Link Intime India Private Limited, the Registrars and Transfer Agents of the Company (“the Registrars”). Consequently, the name of the Registrars has been changed from ‘Intime Spectrum Registry Limited’ to ‘Link Intime India Private Limited’. The management and executive team as well as location and address of the Registrars remain unchanged. Name Link Intime India Private Limited Address C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai 400078 Tel +91-22-2594 6970 Fax +91-22-2594 6969 e-mail rnt.helpdesk@linkintime.co.in Branch 203, Davar House, 197/199 D. N. Road, Fort, Mumbai 400001 Tel +91-22-2269 4127 16. Physical share certificate transfer system The Registrars and Transfer Agents (“the Registrar”), on receipt of transfer deed with respective share certificate(s), scrutinizes the same and verifies signature(s) of transferor(s) on the transfer deed with specimen signature(s) registered with the Company. A list of such transfers is prepared and checked thoroughly and a transfer register is prepared. The transfer register is placed before the Transfer Committee Meeting for approval, which meets at regular intervals. During the last financial year Nil equity shares were transferred in physical mode. Secretarial Audit A qualified practicing Chartered Accountant has carried out secretarial audit every quarter to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the aggregate total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL. 29


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    17. Distribution of Shareholding as on March 31, 2010 Shares of nominal value of (Rs.) Number of % Share amount (Rs.) % to Equity Shareholders UPTO 2,500 18,793 91.23 3,995,100 0.95 2,501 – 5,000 424 2.06 1,637,235 0.39 5,001 – 10,000 400 1.94 2,996,770 0.71 10,001 – 20,000 341 1.66 5,134,450 1.22 20,001 – 30,000 149 0.72 3,727,135 0.89 30,001 – 40,000 100 0.49 3,501,520 0.84 40,001 – 50,000 55 0.27 2,537,890 0.61 50,001 – 100,000 176 0.85 12,222,800 2.92 100,001 & ABOVE 160 0.78 383,521,385 91.47 Total 20,598 100.00 419,274,285 100.00 18. Shareholding per Category as on March 31, 2010 Category of shareholders Number of shares % Promoters: Oracle Global (Mauritius) Limited 67,481,698 80.47 Mutual Funds/UTI 3,488,154 4.16 Financial Institutions/Banks 27,044 0.03 Insurance Companies 10,335 0.01 Foreign Institutional Investors 1,300,437 1.55 Bodies Corporate 641,085 0.76 Individuals- i. Holding nominal share capital upto Rs. 1 lakh 5,317,196 6.34 ii. Holding nominal share capital in excess of Rs. 1 lakh 2,397,565 2.86 Clearing Member 29,831 0.04 Market Maker 2,057 0.00 Foreign Nationals 22,000 0.03 NRI (Repatriate) 349,428 0.42 NRI (Non-Repatriate) 1,506,859 1.80 Overseas Corporate Bodies 800 0.00 Directors 1,040,196 1.24 Trust 219,826 0.27 HUF 20,346 0.02 Total 83,854,857 100.00 During the financial year 2009-2010: 1. The Company issued and allotted 85,471 equity shares to its employees/directors who exercised their ESOPs during the year. 2. The Company has not issued any ADR/GDR. 3. The promoters have not pledged any of the shares held in the Company. 19. Dematerialization of shares and liquidity The shares of the Company are under compulsory demat mode. Under the Depository System, the International Securities Identification Number (ISIN) allotted to the Company’s shares is INE881D01027. As on March 31, 2010, 98.51% of the shares of the Company were in electronic form. 20. Address for correspondence Registered Office Oracle Financial Services Software Limited Oracle Park Off Western Express Highway Goregaon (East) Mumbai 400063 Maharashtra India Tel +91-22-6718 3000 Fax +91-22-6718 3001 e-mail: investors-vp-ofss_in@oracle.com The details of other office addresses in India have been mentioned in the Corporate information section of the annual report. Oracle Financial Services Software – Annual Report 2009-10


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    Annexure to Directors’ report To The Board of Directors Oracle Financial Services Software Limited Mumbai This is to certify that: (a) We have reviewed financial statements and the cash flow statement of Oracle Financial Services Software Limited (“the Company”) for the financial year ended March 31, 2010 and that to the best of our knowledge and belief: (i) These statements do not contain any materially untrue statement/figures or omit any material fact or contain statements/ figures that might be misleading; (ii) These statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations. (b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the financial year ended March 31, 2010 which are fraudulent, illegal or violative of the Company’s code of conduct. (c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies. (d) We have indicated to the auditors and the Audit Committee: (i) Significant changes in internal control over financial reporting during the financial year ended March 31, 2010, if any; (ii) Significant changes in accounting policies during the financial year ended March 31, 2010, if any; and that the same have been disclosed in the notes to the financial statements; and (iii) instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting. (e) We further declare that all Board members and Senior Management Personnel have affirmed compliance with Codes of Conduct for the financial year ended March 31, 2010. For Oracle Financial Services Software Limited N R K Raman Makarand Padalkar Managing Director and CEO Chief Financial Officer May 7, 2010 31


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    Auditors’ certificate To The Members of Oracle Financial Services Software Limited We have examined the compliance of conditions of corporate governance by Oracle Financial Services Software Limited (the ‘Company’), for the year ended on March 31, 2010, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchange. The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For S. R. Batliboi & Associates Firm registration number:101049W Chartered Accountants per Amit Majmudar Partner Membership No.: 36656 Mumbai, India July 22, 2010


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    Financials Financial statements for the year ended March 31, 2010 prepared in accordance with Indian Generally Accepted Accounting Principles (Indian GAAP) (Unconsolidated).


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    “Jibun Bank and Oracle Financial Services Software demonstrated a remarkable degree of collaboration to implement the core banking project where both teams had to truly think out of the box to produce an innovative, highly customized solution that was nonetheless rolled out fairly rapidly. With the implementation of this technology, Jibun Bank managed to acquire 500,000 accounts in just eight months.” Ms. Elena Torrijos, Managing Editor and Project leader, The Asian Banker. Jibun Bank and Oracle Financial Services Software bagged The Asian Banker IT Implementation Awards for “Best Core Banking Project.” “We see technology as a key enabler in the modernization of our financial system and are taking steps to deploy a core banking system that provides a platform for effectively and efficiently managing growth. In Oracle FLEXCUBE, we have found a solution with the comprehensive functionality we require as a central bank. The overall solution offered an integrated technology set that we expect will enable a straightforward implementation and a platform that we can build on for future initiatives. We are also pleased to be able to use local partners, Interflex and Neeka, in combination with our strategic relationship with Oracle Financial Services Software.” Mr. Thai Saphear, Head of the Governor’s Office, National Bank of Cambodia * All quotes are from the press releases issued during the 2009 – 2010 fiscal


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    Management’s discussion and analysis of financial condition and results of operations The following discussion is based on our audited standalone financial statements, which have been prepared in conformity with accounting principles generally accepted in India and complying in all material respects with the notified Accounting Standards by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956. You should read the following discussion of our financial condition and results of operations together with the detailed standalone Indian GAAP financial statements and the notes to those statements. Our fiscal year ends on March 31 of each year. Information technology in the financial services industry Financial institutions today face a significantly altered competitive landscape. New business models have emerged together with other opportunities and threats including deregulation. Competitors from within and outside the industry have effectively differentiated themselves and the preferences and power of buyers have changed. The focus of financial institutions is on the transformation of their business models. They seek to identify revenue enhancing opportunities at the same time as they attempt cost-optimization by strengthening their ability to offer targeted services and improved service levels to their customers. To stay competitive, financial institutions need to offer a variety of integrated and global products in different markets. They also need to ensure that their activities are in sync with market dynamics and changing regulatory mandates. With the emergence of new customer segments banks have chosen “next generation” models and offer new and innovative products and services. The recent turmoil in global financial markets has important lessons for the risk management of financial institutions. A key lesson is that even if financial institutions are well capitalized their viability could be threatened by a liquidity crunch. The management of liquidity risk is seen as vital for the sound management of financial institutions and the stability of the financial system. Over the last two years central banks and regulatory bodies have actively reviewed the framework for financial regulation and supervision, including that regulating the provision of liquidity. The increasing operational complexity of financial institutions has been accompanied by innovation in the measurement and monitoring of their risk exposure. One such innovation is Stress Testing. It can be defined as the examination of the impact of exceptional though plausible events on a firm or financial system’s well being. Financial institutions are using stress and scenario testing to identify, analyze and manage the risks inherent in their businesses and it is becoming an important part of their planning and risk management process. Financial institutions have to cope with a stringent regulatory environment as also with the increasing sophistication of fraudulent activity. Fraudsters have mastered the use of techniques to circumvent processes designed to detect and address fraud. Financial institutions are therefore turning towards technology to tackle fraud and meet dynamic compliance mandates. Banks also require services that address their need for renewal in areas such as consumer regulation, security and process consistency. Overview Oracle Financial Services Software Limited, majority owned by Oracle, is a world leader in providing IT solutions to the financial services industry. With its experience of delivering value-based IT solutions to global financial institutions, Oracle Financial Services Software understands the specific challenges that financial institutions face such as the need for building customer intimacy and competitive advantage through cost-effective solutions while, simultaneously, adhering to the stringent demands of a dynamic regulatory environment. Our mission is to enable financial institutions to excel through the effective use of information technology. We offer financial services institutions the world’s most comprehensive and contemporary banking applications and technology footprint that addresses their complex IT and business requirements. We are organized by region and business segment. We have two major business segments - the products business (comprising product licensing, customization, implementation and, support) and consulting services (comprising IT application and technology services). These segments are described in detail below: Products Unmatched banking solutions footprint Together with Oracle, Oracle Financial Services Software offers the world’s most comprehensive and contemporary banking applications and technology footprint. This footprint spans the distribution, manufacturing, risk and finance and corporate administration functions of a financial institution. Each solution in the financial services application footprint is best-of-breed, open and integrated. 35


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    Oracle FLEXCUBE Oracle FLEXCUBE is a complete banking product suite for consumer, corporate, investment, mobile and internet banking, consumer lending, asset management and investor servicing, including payments. Oracle FLEXCUBE enables banks to standardize operations across multiple countries, transform their local operations as well as address niche business models like direct banking, Islamic banking and mobile banking. Financial institutions use Oracle FLEXCUBE to respond faster to market dynamics, define and track processes and ensure compliance. The suite is also equipped with SWIFT 2007 enhancements and supports SEPA payment processing. Oracle FLEXCUBE can help financial institutions address the fast growing market for cross-border remittances and initiate, process, and disburse remittances. Oracle FLEXCUBE release 11.0 brings together Oracle’s vast experience in supporting banks across the globe. Banks can take advantage of the solution’s entire range of functionality. They can also earn a higher return on investment through multi-product origination, support for broker-aided distribution, end-to-end lending and mortgage lifecycle management. Supported by an exhaustive set of Web services, SOA-enabled Oracle FLEXCUBE enables accelerated deployment and easy integration with a bank’s existing application landscape. Release 11 offers complete lifecycle support for consumer, commercial, syndicated, Islamic banking and mortgage processing -- including origination, servicing, and collections. Oracle FLEXCUBE Enterprise Limits and Collateral Management offers a single source for managing exposure across a business portfolio. It enables centralized collateral management, limits definition, tracking and exposure measurement for effective exposure management and resource utilization. Oracle FLEXCUBE Private Banking is a comprehensive solution for private banking. It gives wealth managers a unified view and analyses of their customers’ wealth across asset classes. It provides the added benefit of performance tracking and improved customer relationship management. The application is a comprehensive, customer-centric solution. It offers a wealth management portal, a customer interaction tool, and portfolio management capabilities – all of which can be integrated with the existing core banking solutions used by a bank. Oracle FLEXCUBE Investor Servicing is a process enabled transfer agency and investor servicing solution. It helps financial institutions manage the complete fund lifecycle and reduce operational costs through process automation across fund structures, intermediary hierarchies, and investors. The ISO 20022 and 15022 compliant Oracle FLEXCUBE Investor Servicing ensures enhanced STP processing through support for a wide variety of SWIFT NET 4.0 messages. With a comprehensive business rules engine for products – hedge funds, mutual funds and unit-linked insurance products, funds, and fee structures, Oracle FLEXCUBE Investor Servicing allows fund management companies to configure and launch new products rapidly. Oracle Analytics for Financial Services is a complete and fully integrated portfolio of analytical solutions. Financial institutions need an integrated approach that enables them to address present and future requirements, including regulatory requirements, which encompass enterprise risk, performance management, regulatory compliance and customer insight. Oracle Analytics for Financial Services fulfills this need. It combines a diverse set of compliance and risk solutions and is built upon a shared analytical infrastructure that consists of a unified financial services data model, shared analytical computations and the industry-leading Oracle Business Intelligence platform. Unlike other hard-coded solutions, it provides both prebuilt rules and the capability to create and modify rules. This flexibility allows financial institutions to easily create custom rules for their own analytical requirements and to cost-effectively address ever-changing compliance regulations. Any rule can be viewed and audited for its underlying definition to enable supervisory oversight. Support services Oracle Financial Services Support offers support services for Oracle FLEXCUBE, Oracle Reveleus and Oracle Mantas. These services help our customers accelerate adoption, reduce the time, effort, and cost of operating applications thereby allowing them to achieve a higher return on their investments. These services also enable our customers to manage their applications more effectively and take advantage of the latest technological enhancements. Oracle Financial Services Consulting Oracle Financial Services Consulting offers Consulting Services, Application Services and Technology Services to financial institutions. Consulting Services We offer an end-to-end consulting partnership. It provides comprehensive business and technology solutions that enable financial services enterprises to improve process efficiency, optimize costs, meet risk and compliance requirements, define IT architecture and manage the transformation process. We offer consulting services in the areas of business transformation, risk and compliance, program management, IT architecture, IT governance and process improvement. PrimeSourcing Application Services We provide comprehensive customized IT solutions for banking, securities and insurance that encompasses the complete lifecycle of an IT application asset--from conceptualization to creation and maintenance. These high-quality IT solutions reflect the division’s Oracle Financial Services Software – Annual Report 2009-10


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    domain expertise in financial services. This includes the knowledge gleaned while developing solutions for specialized practice lines like payments, business intelligence, CRM, Oracle Technology and Applications and testing. Customers can take advantage of the division’s in-depth expertise across a range of technologies such as Java, Microsoft, Mainframe and Open Source. Its IT processes are certified as CMMI V1.1 Level 5 and it has well-established CoBIT-compliant global infrastructure and development centers. This includes a comprehensive pool of proprietary methodologies, tools and best practices. PrimeSourcing Technology Services We offer expertise in conceptualization, design, evaluation, implementation and management of IT infrastructure for financial institutions under two service lines of Technology Management Services and Remote Infrastructure Management. These services are based on best practices such as ITIL (IT Infrastructure Library) and COBIT (Control Objectives for Information and related Technology) governance models (globally accepted standards for IT management and control) and are certified under ISO 27001 (Information Security Management System) and ISO 20000 (IT Services Management). Corporate development Oracle Global (Mauritius) Limited (‘‘Oracle’’) ownership interest in the Company is 80.47 % as on March 31, 2010. On November 26, 2009, we formed a wholly owned subsidiary company in Chile by name Oracle Financial Services Software Chile Limitada. On February 23, 2010, we formed a wholly owned subsidiary company in China by name Oracle Financial Services Software (Shanghai) Limited. Business metrics Our total revenues in fiscal 2010 were Rs. 22,434.7 million, representing an increase of 1% from Rs. 22,126.2 million in fiscal 2009. The net income in fiscal 2010 was Rs. 6,608.5 million, against Rs. 6,957.1 million in fiscal 2009. Our net income margin in fiscal 2010 is at 29% as against 31% in fiscal 2009. We define net income margins for a particular period as the ratio of net income to total revenues during the period. We had 9,083 employees as on March 31, 2010 as against 9,755 at the end of the previous year. Products business (All amounts in millions of Indian Rupees) Year ended Year ended March 31, 2010 March 31, 2009 Product revenues 15,178.5 14,391.6 Cost of product revenues (6,159.7) (6,236.4) Sales and marketing expenses (359.1) (876.1) General and administrative expenses (839.0) (851.9) Depreciation and amortization (159.1) (194.9) Income from operations 7,661.6 6,232.3 Operating margin* 50% 43% * Operating margin is defined as income from operations from the products business (excluding corporate expenses) as a percentage of total products revenue. Products revenues Our products revenues represented 68% of the total revenues for fiscal year ended 2010 and 65% for year ended 2009. Our products revenues were Rs. 15,178.5 million during the fiscal year ended March 31, 2010; an increase of 5% from Rs. 14,391.6 million during the fiscal year ended March 31, 2009. Our products revenues comprise license fees, professional fees for implementation & enhancement services and annual maintenance contract (Post Contract Support - PCS) fees for our products. License fee Our products are offered as perpetual use licenses which are priced based on number of accounts, or application users or subscribers, or assets under management or processor based or a combination of these depending on the solutions deployed. Implementation fee Along with licensing for our products, customers can also optionally avail services related to the implementation of products at customer sites, integration with other customer systems and enhancement of products to address their specific requirements. The customer is typically charged a service fee either on a fixed-price basis or a time and materials basis. 37


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    Annual maintenance contract fees Customers typically sign an Annual Maintenance Contract with us under which we provide technical support, maintenance, problem resolution and upgrades for licensed products. These support agreements typically cover a period of 12 months and generates another revenue stream for us. The revenue generated from license fees and implementation and enhancement services rendered by us depends on factors such as the number of new customers added, milestones achieved, implementation time, etc. Therefore, such revenues typically vary from year to year. The annual maintenance contracts generate steady revenues and would grow to the extent that new customers enter into the support phase of their lifecycle with us. The percentages of our revenues from these streams are as follows: Year ended Year ended March 31, 2010 March 31, 2009 License fees 18% 23% Implementation and customization fees 59% 57% PCS arrangements 23% 20% Total 100% 100% Cost of products revenues and operating expenses The cost of product revenue consists of costs attributable to the implementation, enhancement, maintenance and continued development, including research and development effort, of our core product offerings - the Oracle FLEXCUBE suite of products, Oracle Reveleus and other products. These costs primarily consist of compensation expenses for all the software professionals working in the products business, project-related travel expenses, professional fees paid to software services vendors and the cost of application software for internal use. Research and development costs are expensed as incurred. Software product development costs are expensed as incurred until technological feasibility is established. Software product development cost incurred subsequent to the achievement of technological feasibility is not material and is expensed as incurred. Our operating expenses include selling and marketing expenses and general and administrative expenses. These consist of commissions payable to our partners, product advertising and marketing expenses. These also includes allocated overhead expenses associated with support and monitoring functions such as human resources, facilities and infrastructure expenses, quality assurance and financial control as well as depreciation and amortization. Services business (All amounts in millions of Indian Rupees) Year ended Year ended March 31, 2010 March 31, 2009 Services revenues 7,256.2 7,734.6 Cost of services revenues (5,174.0) (5,691.2) Sales and marketing expenses (61.8) (164.2) General and administrative expenses (558.6) (680.4) Depreciation and amortization (175.5) (177.6) Income from operations 1,286.3 1,021.3 Operating margin* 18% 13% * Operating margin is defined as income from operations from the Services Business (excluding corporate expenses) as a percentage of total services revenue. Services revenues Our services revenue represented 32% and 35% of our total revenues for the fiscal year ended March 31, 2010 and 2009 respectively. Our services revenues were Rs. 7,256.2 million in the fiscal year ended March 31, 2010, representing a decrease of 6% from Rs. 7,734.6 million in the fiscal year ended March 31, 2009. The contracts relating to our services business are either time or material contracts or fixed price contracts. The percentage of total services revenues from time and material contracts was 64% in fiscal 2010 and 72% in fiscal 2009, with the remainder of our services revenues attributable to fixed price contracts. We render services through offshore centers located in India, onsite teams operating at our customers’ premises and our development centers located in other parts of the world. Offshore services revenues consists of revenues from work conducted at our development centers in India and for Indian customers at their locations. Onsite revenues consist of work conducted at customer premises outside India and our development centers outside India. The composition of our onsite and offshore revenues is determined by the project lifecycle. Typically, the work involving the design of new systems or relating to a system roll-out would be conducted onsite, while the core software development, maintenance and support activity may be conducted offshore. We received 62% and 59% of our services revenues from onsite work and 38% and 41% from offshore work during the fiscal years 2010 and 2009 respectively. Oracle Financial Services Software – Annual Report 2009-10


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    Cost of services revenues and operating expenses The cost of revenues for services consists primarily of compensation expenses for our software professionals, cost of application software for internal use, travel expenses and professional fees paid to software services vendors. We recognize these costs as incurred. Our operating expenses include selling, general and administrative expenses and allocated overhead expenses associated with support and monitoring functions such as human resources, corporate marketing, information management systems, quality assurance and financial control and depreciation. Geographic breakup of revenues Our overall revenues continue to be well diversified. The following table represents the percentage breakup of our revenues for products and services business by region: Year ended March 31, 2010 Year ended March 31, 2009 Products Services Total Products Services Total Revenues Revenues Revenues Revenues Revenues Revenues United States of America 14% 52% 27% 10% 49% 24% Europe 40% 18% 33% 45% 19% 36% Asia Pacific 22% 24% 22% 16% 25% 20% Middle East, India and Africa 21% 5% 16% 25% 7% 18% Latin America and Caribbean 3% 1% 2% 3% 0% 2% Total 100% 100% 100% 100% 100% 100% Customer concentration Our operations and business depend on our relationships with a number of large customers. Our revenues from our top ten customers for fiscal 2010 were 30% and 29% for fiscal year 2009, as a percentage of our total revenues. The top-ten customers in our services business contributed 43% of the total services revenues and the top ten customers in the products business contributed 34% of the total products revenues during fiscal 2010. The accompanying table provides the percentage of total revenues that we derived from our largest customer, top five customers and top ten customers during fiscal years 2010 and 2009. In the table, various affiliates of Citigroup are classified as separate customers and the last row sets forth the percentage of total revenues we earned from the various affiliates of Citigroup with respect to our products and services business individually and with respect to our business taken as a whole. Products Revenues Services Revenues Total Revenues 2010 2009 2010 2009 2010 2009 Largest customer 5% 6% 7% 10% 4% 5% Largest 5 customers 25% 18% 28% 29% 22% 18% Largest 10 customers 34% 27% 43% 45% 30% 29% Citigroup and its affiliates 12% 10% 36% 34% 20% 18% Trade receivables Trade receivables as of fiscal March 31, 2010 and 2009 were Rs. 8,772.35 million and Rs. 11,710.4 million respectively. Our days sales outstanding (which is the ratio of sundry debtors to total sales in a particular year multiplied by 365) for fiscal 2010 and 2009 were approximately 143 and 193 respectively. The Company periodically reviews its account receivables outstanding as well as the aging, quality of the account receivable, customer relationship and history of the client. The following table presents the age profile of our sundry debtors: Year ended Year ended March 31, 2010 March 31, 2009 Period in days 0 – 180 87% 76% More than 180 13% 24% Total 100% 100% Foreign currency and treasury operations A substantial portion of our revenues is generated in foreign currency while a majority of our expenses are incurred in Indian Rupees with the remaining expenses are incurred in US Dollars (USD) and European currencies. Our philosophy for treasury operations is conservative and we invest funds predominantly in time deposits with well-known and highly rated Indian and foreign banks. The Company has ensured adequate internal controls over asset management including cash management operations, credit management and debt collection. The Company also maintains funds in USD accounts or INR deposits based on the comparative exchange rates, interest rates and currency requirements. The Company books forward cover from time to time in line with its treasury management philosophy. 39


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    Income taxes Currently, we partially benefit from the tax holidays the Government of India provides to software products and IT services exporters from specially designated software technology parks in India. As a result of these incentives, our operations have been subject to relatively lower tax liabilities in India. These tax incentives currently include a 10-year tax holiday from Indian corporate income-taxes for the operations of seven of our Indian facilities. As a result a substantial portion of our pre-tax income has not been subject to tax in recent years. The Finance Act, 2000, restricts the ten-year tax holiday available from the fiscal year in which the undertaking begins to manufacture or produce, or until fiscal 2011 (as extended in Finance Act, 2009), whichever is earlier. For seven of our facilities, these benefits expire in stages through 2011. Income taxes also include foreign taxes representing income taxes payable overseas by us in various countries. Employee Stock Purchase Scheme (‘ESPS’) The Company has adopted an ESPS administered through a Trust (“the Trust”) to provide equity based incentives to key employees of the Company. The Trust purchases shares of the Company from the market using the proceeds of loans obtained from the Company. Such shares are offered by the Trust to employees at an exercise price, which approximates the fair value on the date of the grant. The employees can purchase the shares in a phased manner over a period of five years based on continued employment, until which time, the Trust holds the shares for the benefit of the employee. The employee will be entitled to receive dividends, bonus, etc., that may be declared by the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees. On acceptance of the offer, the selected employee shall undertake to pay within ten years from the date of acceptance of the offer the cost of the shares incurred by the Trust including repayment of the loan relatable thereto. The repayment of the loan by the Trust to the Company would be dependent on employee repaying the amount to the Trust. In case the employee resigns from employment, the rights relating to shares, which are eligible for exercise, may be purchased by payment of the exercise price whereas, the balance shares shall be forfeited in favor of the Trust. The Trustees have the right of recourse against the employee for any amounts that may remain unpaid on the shares accepted by the employee. The shares that an employee is eligible to exercise during the initial five-year period merely go to determine the amount and scheduling of the loan to be repaid on exercise by the employee. The Trust shall repay the loan obtained from the Company on receipt of payments from employees against shares exercised or otherwise. The Securities and Exchange Board of India (‘SEBI’) has issued the Employee Stock Option Scheme and Stock Purchase Guidelines, 1999 (‘SEBI guidelines’), which are applicable to stock purchase schemes for employees of all listed Companies. In accordance with these guidelines, the excess of market price of the underlying equity shares on the date of grant of the stock options over the exercise price of the options is to be recognized in the books of account and amortized over the vesting period. However, no compensation cost has been recorded as the scheme terms are fixed and the exercise price equals the market price of the underlying stock on the grant date. A summary of the activity in the Company’s ESPS is as follows: Year ended Year ended March 31, 2010 March 31, 2009 Number of shares Number of shares Opening balance of unallocated shares 165,145 158,963 Shares forfeited during the year 5 6,182 Closing balance of unallocated shares 165,150 165,145 Opening balance of allocated shares 134,834 221,101 Shares exercised during the year (80,281) (80,085) Shares forfeited during the year (5) (6,182) Closing balance of allocated shares 54,548 134,834 Shares eligible for exercise 54,548 74,534 Shares not eligible for exercise – 60,300 Total allocated shares 54,548 134,834 Employee Stock Option Plan (‘ESOP’) Pursuant to the ESOP scheme approved by the shareholders of the Company held on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme (‘the Scheme’) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme, the Company has granted 4,548,920 options prior to the IPO and 559,000 options at various dates after IPO (including the grants of options which were granted earlier but forfeited subsequently). As per the scheme, each of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months and is subject to continued employment of the employee or director with the Company or its subsidiaries. The options have an exercise period of 10 years. The employee pays the exercise price upon exercise of option. Oracle Financial Services Software – Annual Report 2009-10


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    A summary of the activity in the Company’s ESOP is as follows: Year ended March 31, 2010 Year ended March 31, 2009 Shares arising Weighted average Shares arising Weighted average from options exercise price (Rs.) from options exercise price (Rs.) Outstanding at beginning of year 348,853 1,075 431,253 1,025 Exercised (85,471) 819 (21,945) 491 Forfeited (21,000) 1,232 (60,455) 930 Outstanding at end of the year 242,382 1,152 348,853 1,075 The weighted average share price for the year over which stock options were exercised was Rs. 2,250. The details of options unvested and options vested and exercisable as on March 31, 2010 are as follows: Range of Shares Weighted average Weighted average exercise prices (Rs.) exercise price (Rs.) remaining contractual life (Years) Options unvested 419 – 560 – – – 1,291 – 1,291 101,000 1,291 6.1 Options vested and exercisable 265 – 265 32,800 265 1.9 419 – 560 32 514 3.3 1,291 – 1,291 108,550 1,291 6.1 242,382 1,152 5.5 The details of options unvested and options vested and exercisable as on March 31, 2009 were as follows: Range of Shares Weighted average Weighted average exercise prices (Rs.) exercise price (Rs.) remaining contractual life (Years) Options unvested 419 – 560 2,000 560 5.4 1,291 – 1,291 165,300 1,291 7.1 Options vested and exercisable 265 – 265 40,400 265 2.9 419 – 560 39,003 462 3.9 1,291 – 1,291 102,150 1,291 7.1 348,853 1,075 6.3 Analysis of our financial results Comparison of fiscal 2010 with fiscal 2009 Revenues Our total revenues in the fiscal year ended March 31, 2010, were Rs. 22,434.7 million, an increase of 1% over our total revenues of Rs. 22,126.2 million in the fiscal year ended March 31, 2009. The increase in revenues was primarily attributable to an increase in the revenues from our products business. Products revenues Our products revenues in the fiscal year ended March 31, 2010, stood at Rs. 15,178.5 million, an increase of 5% over our products revenues of Rs. 14,391.6 million in the fiscal year ended March 31, 2009 on the strength of large customer wins in USA and Europe. The revenues from license fees comprised 18% of revenues, implementation fees comprised 59%, and Annual Maintenance Contracts comprised 23% of revenues for the fiscal 2010. Services revenues Our services revenues represented 32% and 35% of our total revenues in the fiscal year ended March 31, 2010 and 2009. Our services revenues were Rs. 7,256.2 million in the fiscal year ended March 31, 2010; decrease of 6% from Rs. 7,734.6 million in the fiscal year ended March 31, 2009. Revenues from time and material contracts comprised 64% of the revenues and fixed price contracts comprised 36% for the fiscal 2010. 41


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    Interest and other income (expenses) Our interest and other income (expenses) in the fiscal year ended March 31, 2010, was Rs. (682.7) million, as against Rs. 1,682.9 million in the fiscal year ended March 31, 2009. The overall decrease of Rs. 2,365.6 million in interest and other income (expenses) is attributable to lower interest income of Rs. 43.5 million and foreign exchange loss of Rs. 2,317.9 million during the year mainly due to sharp appreciation of Rupee against the US Dollar, GBP and Euro as compared to fiscal 2009. Cost of revenues and operating expenses Cost of revenues Our cost of revenues in the fiscal year ended March 31, 2010, was Rs. 11,333.6 million, a decrease of 5% over our cost of revenues of Rs. 11,927.6 million in the fiscal year ended March 31, 2009. Our cost of revenues as a percentage of total revenues was 51% in the fiscal year ended March 31, 2010 as compared to 54% in the fiscal year ended March 31, 2009. We have invested significantly both in our products and services businesses to meet emerging market requirements, and create a strong foundation for future growth. In the financial year 2009-2010, we continued to invest in enhancing our products. We announced the launch of Oracle FLEXCUBE 11.0 that helps financial institutions respond faster to market dynamics, define and track processes and ensure compliance. Our investments in the Oracle Analytics platform resulted in the launch of several new offerings. These included new OFSA Enterprise Performance Management applications as well as new Reveleus products for Capital Management and Stress Testing. Our cost of products revenues in the fiscal year ended March 31, 2010, was Rs. 6,159.7 million, a decrease of 1% over our cost of products revenues of Rs. 6,236.4 million in the fiscal year ended March 31, 2009. Our cost of products revenues as a percentage of products revenues was 41% in the fiscal year ended March 31, 2010, compared to 43% in the fiscal year ended March 31, 2009. Our cost of services revenues in the fiscal year ended March 31, 2010 was Rs. 5,174.0 million, a decrease of 9% over our cost of services revenues of Rs. 5,691.2 million in the fiscal year ended March 31, 2009. The cost of services revenues as a percentage of services revenues was 71% in the fiscal year ended March 31, 2010 compared to 74% in the fiscal year ended March 31, 2009. Sales and marketing expenses Our sales and marketing expenses in the fiscal year ended March 31, 2010, were Rs. 421.0 million, a decrease of 60% over our sales and marketing expenses of Rs. 1,040.2 million in the fiscal year ended March 31, 2009. Our sales and marketing expenses as a percentage of total revenues was 2% for the fiscal year ended March 31, 2010 and 5% in the fiscal year ended March 31, 2009. Our sales and marketing expenses for our Products business in the fiscal year ended March 31, 2010, were Rs. 359.1 million, a decrease of 59% over our sales and marketing expenses for our products business of Rs. 876.1 million in the fiscal year ended March 31, 2009. Sales and marketing expenses for our products business as a percentage of products revenues was 2% for the fiscal year ended March 31, 2010 and 6% in the fiscal year ended March 31, 2009. Our sales and marketing expenses for our services business in the fiscal year ended March 31, 2010 were Rs. 61.8 million, a decrease of 62% over our sales and marketing expenses for our services business of Rs. 164.2 million in the fiscal year ended March 31, 2009. Sales and marketing expenses for our services business as a percentage of services revenues was 1% for the fiscal year ended March 31, 2010 and 2% in the fiscal year ended March 31, 2009. General and administrative expenses Our general and administrative expenses in the fiscal year ended March 31, 2010 were Rs. 2,149.6 million, a decrease of 18% over our general and administrative expenses of Rs. 2,621.0 million in the fiscal year ended March 31, 2009. Our general and administrative expenses as a percentage of total revenues were at 10% in the fiscal year ended March 31, 2010 compared to 12% in the fiscal year ended March 31, 2009. General and administrative expenses for our products business in the fiscal year ended March 31, 2010, were Rs. 839.0 million, a decrease of 2% over general and administrative expenses for our products business of Rs. 851.9 million in the fiscal year ended March 31, 2009. Our general and administrative expenses for our products business as percentage of products revenues has remained at 6% in both the fiscal years ended March 31, 2010 and March 31, 2009. General and administrative expenses for our services business in the fiscal year ended March 31, 2010, were Rs. 558.6 million, a decrease of 18% over our general and administrative expenses for our services business of Rs. 680.4 million in the fiscal year ended March 31, 2009. Our general and administrative expenses for our services business as a percentage of services revenues for the fiscal years ended March 31, 2010, and March 31, 2009 is 8% and 9% respectively. Income taxes Our provision for income tax in the fiscal year ended March 31, 2010, was Rs. 865.2 million (including income tax expense of Rs. 544.5 million for previous years) an increase of 137% over the provision for income tax of Rs. 365.8 million in the fiscal year ended March 31, 2009. Our effective tax rate was 12% for the fiscal year ended March 31, 2010 as against 5% for the fiscal years ended March 31, 2009. The increase in the effective tax rate is primarily due to creation of tax provision for certain contingencies related to certain jurisdictions. Oracle Financial Services Software – Annual Report 2009-10


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    Exceptional items The Company has settled a dispute with a party for Rs. 468.9 million for full release of all alleged claims and has disclosed the same as an exceptional item in the financial results for the year ended March 31, 2009. Income from operations and net income As a result of the foregoing factors, income from operations increased by 34% to Rs. 8,156.4 million in fiscal 2010 from Rs. 6,109.0 million in fiscal 2009 and net income decreased by 5% to Rs. 6,608.5 million in fiscal 2010 from Rs. 6,957.1 million in fiscal 2009. Our net income margin is 29% in fiscal 2010 as against 31% in fiscal 2009. We define net income margins for a particular period as the ratio of net income to total revenues during such period. Liquidity and capital resources Our capital requirements relate primarily to financing the growth of our business. We have historically financed the majority of our working capital, capital expenditure and other requirements through our operating cash flow. During fiscal 2010 and 2009 we generated cash from operations Rs. 6,927.0 million and Rs. 4,322.4 million respectively. Oracle Financial Services Software is a zero debt company. We expect that our primary financing requirements in the future will be capital expenditure and working capital requirements in connection with the expansion of our business. We believe that the cash generated from operations will be sufficient to satisfy our currently foreseeable capital expenditure and working capital requirements. Human capital We recruit graduates from leading engineering and management institutions. We also hire functional experts from the banking industry. We had a net reduction of 672 employees during the fiscal year taking our employee strength to 9,083 employees as on March 31, 2010. The blend of functional knowledge and technical expertise, coupled with Oracle Financial Services Software training and experience make our employees unique. We enjoy cordial relationships with our employees and endeavor to give them an excellent, professionally rewarding and enriching work environment. We operate an effective performance management system with a focus on employee development. This measures key result areas, competencies and training needs, ensuring all-round employee development. Risks and concerns Quantitative and Qualitative Disclosures about Market Risk Our primary market risk exposures are due to the following: – Foreign exchange rate fluctuations, – Fluctuations in interest rates; and – Fluctuations in the value of our investments. As of March 31, 2010, we had Cash and Bank Balances of Rs. 17,592.3 million, out of which Rs. 14,025.6 million was in interest-bearing bank deposits. Consequently, we face an exposure on account of fluctuation in interest rates. These funds were invested in bank deposits of longer maturity (more than 90 days) to earn a higher rate of interest income. A substantial portion of our revenues is generated in foreign currencies, while a majority of our expenses are incurred in Indian Rupees and the balance in US Dollars and European currencies. Our functional currency for Indian operations is the Indian Rupee. We expect the majority of our revenues will continue to be generated in foreign currencies for the foreseeable future and a significant portion of our expenses, including personnel costs and capital and operating expenditure, to continue to be incurred in Indian Rupees. In addition, we face normal business risks such as global competition and country risks pertaining to countries that we operate in. SWOT analysis Strengths: – Deep domain expertise – Unmatched solutions portfolio with depth of offering in the retail, corporate and investment banking, funds, cash management, trade, treasury, payments, lending, private wealth management, asset management and business analytics areas – Superior quality and cost-efficient, end-to-end service capability, from business consulting, to application development and deployment, IT management – Solutions built on best-in-class technology and architecture – Continued momentum in new customer additions 43


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    – Extensive global client base – High quality manpower resources – Strong R&D capability – Acknowledged leadership in core banking, application services and governance, risk and compliance, Anti-Money laundering, operational risk and process outsourcing domains Weaknesses: – Exposure to various economies – Lack of local resources in new markets/opportunities Opportunities: – Increasing momentum in the acquisition of core banking systems by large and global financial institutions – Entry into hitherto untapped markets – Evolving needs due to regulatory pressures and economic outlook – Expanding solutions portfolio and entry into new market segments Consumer finance, business analytics, Basel II, Anti-Money Laundering, Private Wealth Management, Islamic banking, among others – The need for banks to improve performance and efficiency through effective use of information technology solutions Threats: – Unfavorable conditions in global markets – Customers negotiating harder as the financial position in many markets have changed – Restrictions by governments on the movement of people to protect local employment Outlook The worldwide market for financial services is undergoing rapid transformation. Emerging markets are becoming increasingly significant sources of growth for firms in mature economies. New asset classes such as private equity and hedge funds have seen Oracle Financial Services Software – Annual Report 2009-10


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    dramatic shifts in customer engagement and have altered the focus of capital markets. The payments space, a major source of revenue and profit for financial institutions, is being restructured, thus altering the fundamental dynamics of the banking industry. Over the last 24 months there have been significant changes in the economic environment. Your company views the current economic scenario as an opportunity to help financial institutions meet their emerging business needs. To sustain their growth and profitability, global financial institutions will need to excel in areas such as off-shoring, taxation and financial reporting, internal controls and service and process innovation. Financial institutions are also reviewing their existing IT investments to ensure that they are attuned to changing customer preferences and aligned to new business priorities. Core banking, risk management and compliance, investor service and internet banking are among the areas that continue to show significant potential. Financial institutions are innovating using available technologies to offer services to their customers on a ‘self service’ basis. We see demand for core banking applications continuing as banks expand by buying the assets of other banks, establish presence in new countries or standardize applications across regions. Banks are exploring how they can centralize banking services such as account opening and origination of credit to improve their service levels, increase productivity and gain greater control over processes that are subject to regulatory scrutiny. Global regulators have re-emphasized the importance of stress testing in the measurement of liquidity and credit risk and in evaluating how banks would fare under different scenarios. As a result of these factors we have gained increasing traction at Tier 1 banks for our products. Over the last 12 months banks have also exhibited renewed interest in aligning finance, risk and performance applications. Risk Adjusted Performance Measurements (RAPM), that can manage such alignment, has received interest from many regulators and has also attracted attention from the boards of many banks. Oracle has been ranked number one in the banking space by an independent vendor and is committed to maintaining its leadership position in financial services. Oracle will continue to invest in expanding its banking footprint through its own internal R&D and also seek “best-in-class” acquisition targets. With a process-driven approach based on a Service-Oriented Architecture, your company has the distinct advantage of offering banks the combined benefits of interoperability, extensibility and standardization. Together with Oracle we provide a complete banking footprint, spanning all major distribution, manufacturing and corporate administration functions. Internal control systems and their adequacy The Company has in place adequate systems of internal control and documented procedures covering all financial and operating functions. These systems have been designed to provide reasonable assurance with regard to maintaining proper accounting controls, monitoring economy and efficiency of operations, protecting assets from unauthorized use or losses and ensuring reliability of financial and operational information. The Company continuously strives to align all its processes and controls with global best practices. 45


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    Reconciliation Statement of profit as per Indian GAAP unconsolidated and Indian GAAP consolidated (All amounts in thousands of Indian Rupees) Year ended Year ended March 31, 2010 March 31, 2009 Net income as per Indian GAAP unconsolidated profit and loss account 6,608,488 6,957,116 Add: Revenue of subsidiaries, net Oracle Financial Services Software B.V. 7,851,792 8,234,392 Oracle Financial Services Software Pte. Ltd.- consolidated 5,536,927 5,209,744 Oracle Financial Services Software America, Inc.- consolidated 7,637,467 8,143,691 ISP Internet Mauritius Company - consolidated 533,061 519,968 Oracle (OFSS) Processing Services Limited 3,052 3,010 Oracle (OFSS) ASP Private Limited 82,403 177,070 Oracle Financial Services Software (Shanghai) Limited 228,440 – 21,873,142 22,287,875 Other income from subsidiaries, net (240,245) 180,129 21,632,897 22,468,004 Oracle Financial Services Software B.V. (7,186,992) (7,688,590) Oracle Financial Services Software Pte. Ltd.- consolidated (5,304,107) (5,053,565) Oracle Financial Services Software America, Inc.- consolidated (7,470,221) (8,744,861) ISP Internet Mauritius Company - consolidated (359,917) (387,808) Oracle (OFSS) Processing Services Limited 90,508 (6,317) Oracle (OFSS) ASP Private Limited (81,424) (165,956) Oracle Financial Services Software (Shanghai) Limited (192,594) – 1,128,150 420,907 Provision for diminution in value of investment – – Profit after consolidating subsidiaries 7,736,638 7,378,023 Profit/(Loss) on equity investment – (12,595) Net income as per Indian GAAP consolidated profit and loss account 7,736,638 7,365,428 Oracle Financial Services Software – Annual Report 2009-10


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    Auditors’ report To The Members of Oracle Financial Services Software Limited 1. We have audited the attached balance sheet of Oracle Financial Services Software Limited (the ‘Company’) as at March 31, 2010 and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditors’ Report) Order, 2003 (as amended) (‘the Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (‘the Act’), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act. v. On the basis of the written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act. vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; (a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2010; (b) in the case of the profit and loss account, of the profit for the year ended on that date; and (c) in the case of cash flow statement, of the cash flows for the year ended on that date. For S. R. Batliboi & Associates Firm registration number:101049W Chartered Accountants per Amit Majmudar Partner Membership No.: 36656 Mumbai, India May 7, 2010 47


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    Annexure referred to in paragraph 3 of our report of even date Re: Oracle Financial Services Software Limited (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and as informed, no material discrepancies were identified on such verification. (c) There was no substantial disposal of fixed assets during the year. (ii) Due to the nature of its business, paragraph 4 (ii) of the Order, relating to physical verification of inventory is not applicable to the Company. (iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, paragraph 4 (iii) (a) to 4 (iii) (d) of the Order is not applicable. (b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, paragraph 4 (iii) (e) to 4 (iii) (g) of the Order is not applicable. (iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets, sale of software licenses and for the sale of services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. Due to the nature of its business the Company does not purchase any inventory. (v) According to the information and explanations provided by the management, we are of the opinion that there are no contracts and arrangements that need to be entered into the register maintained under Section 301 of the Act. Accordingly, paragraph 4 (v) of the Order is not applicable. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act for the products of the Company. (ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it though there have been considerable delays in few cases of service tax, foreign taxes, income tax and value added tax. As explained to us, the Company did not have any dues of excise duty. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Act, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same. (b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows: Name of the Nature of the Amount (Rs.) Period to which the amount relates Due Date Date of statute dues Payment Service Tax Act, 1994 Service tax 20,197,607 April 2006 to September 2009 Various dates Not yet paid Foreign Tax Income Tax 121,077,496 January 2004 to August 2009 Various dates Not yet paid Value added Tax (VAT) 22,930,090 April 2007 to March 2009 Various dates Not yet paid Withholding Tax 28,203,155 September 2007 to September 2009 Various dates Not yet paid Income Tax Act, 1961 Income Tax 30,898,494 April 2007 to March 2008 19th August, 2009 Not yet paid Oracle Financial Services Software – Annual Report 2009-10

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