Disclosure in board of directors report explanatory

Directors Report

To The Members,

Your Directors have pleasure in presenting the Thirty First Annual Report on the business and operations of the Company together with the Audited Accounts for the year ended March 31, 2015.

Results

The Companys operations during the year ended March 31, 2014 have resulted in:

Rs. mn

The companys revenues, at Rs. 11,773 mn during the year under review, were up by 28% over the previous year and its EBITDA, at Rs. 893 mn, was 8% higher than that of the previous year. Your Company continues to grow at a fast pace and revenue growth over the last 5 years (CAGR) has averaged 39%.

On a consolidated basis, the SIS Group (consisting of SIS and all its subsidiaries worldwide) earned Net revenues of Rs. 37.23 billion (previous year - Rs. 32.26 billion) and an EBITDA of Rs. 1.84 billion (previous year - Rs. 1.70 billion). The SIS Group is amongst the largest manpower security services company in the Asia-Pacific region.  The companys revenues continue to grow at a very healthy rate far in excess of the industry growth rate. The Groups consolidated revenues from operations in India was Rs. 14,444 mn (previous year Rs. 10796 mn) while EBITDA from operations (before other income) was Rs. 720.8 mn (previous year Rs. 673.9 mn). This translates to a revenue growth of 34% and an EBITDA growth of 6.9%.

Operations and Business Performance

During the year, the Companys net revenue grew from Rs. 8,245 mn in FY 2013-14 to Rs. 10,563 mn in FY 2014-15. The fiscal 2014-15 marked the first year in which the companys annual turnover exceeded Rs. 10,000 million, emerging as only the second company in the countrys manned guarding industry and the first Indian owned company to achieve this significant milestone. The Company also registered the largest increase in turnover among all guarding companies in India in 2014-15. As a result, SIS continues to be the fastest growing manned guarding company in the world and the SIS Group is among the worlds Top 15 security companies

MSS Security (Australia)

The companys business and operations in Australia, where it provides manned guarding services through its wholly owned subsidiary, MSS Security Pty Ltd., recorded revenues of AUD 428 mn in FY 2014-15 as against AUD 381 mn in FY 2013-14.  This is a growth of 12.2%, which is noteworthy considering that the Australian economy is growing at around 2.5% and it is a fairly developed and stable market.  Greater focus was laid on casual revenue and emergency response services which resulted in boosting the overall revenue in the fiscal year. Also notable was the fact that it won new business of AUD 68.5 mn, which has been the highest ever and has set the business sets the revenue base at a much stronger level for FY 2015-16.

Cash Logistics (SIS Cash Services, a joint venture with Prosegur)

SIS Cash Services continues to be the fastest growing cash logistics business in India and has grown to become the second largest operator in the industry. Organically, the business grew by 37% during the year, which is the fastest amongst all players in the market.

In a significant development during the year, this business acquired the Cash and Valuables Services Division (CVS) of ISS SDB Security Services Private Limited (ISS), the erstwhile second largest cash services business in the country, on a slump sale basis in accordance with the terms and conditions set out in the Business Transfer Agreement, for a consideration of Rs. 928,320. The service has been rebranded as SISCO under a subsidiary, SIS Prosegur Holdings Private Ltd. The business has 63 dedicated branches, 38 vaults/ strong rooms, and provides cash replenishment services, cash-in-transit services and cash pick up and drop services across the country, with a very strong presence in the southern and western parts of the country. This acquisition has made the SIS-Prosegur JV the clear No. 2 in the cash logistics market, with the capability to offer services across the country. Further, it is expected that there would be synergy benefits from integration of common infrastructure and costs, which would reflect in the coming years. The purchase of the CVS was completed on December 1, 2014.

On a consolidated basis, the cash logistics business had revenues of Rs. 2,021 mn, a growth of 83% over the previous year. As this reflects only 4 months of operations of SISCO, growth in this vertical would remain high in FY 2015-16. We now service over 18,000 ATMs and operate over 1,800 cash vans and 57 vaults and strong rooms across the country.

Mechanised Cleaning (ServiceMaster Clean)

The companys cleaning business, operated by its subsidiary, Service Master Clean Limited, reported another year of growth. Net revenues were up 17.7% from Rs. 483 mn in FY 2013-14 to Rs. 569 mn in FY 2014-15. The EBITDA increased marginally to Rs. 3.52 mn to Rs. 5.75 mn. The company continues to win new business and has made significant progress during the last quarter, winning significant new business, and setting up a base for a much higher growth in FY 2015-16.

Pest Control (Terminix SIS, a joint venture with Terminix)

During the year, this business expanded its presence to Mumbai, and it now operates from 11 branches across 5 cities. The year saw Terminix-SIS more focused on its commercial clients, resulting in their contribution to the revenue increasing from 62% in FY 2013-14 to 75% in FY 2014-15. Healthcare and hospitality are the focus segments given their demand for high quality pest management services. The company was also able to grow its operating revenue by 54% from Rs. 28.4 mn in the previous financial year to Rs. 43.7 mn in the year under review.

Electronic Security Solutions (Tech SIS)

During the year, Tech SIS extended its services to the cities of Kochi, Hyderabad, Bangalore and Bhopal. It also diversified its portfolio by adding home automation and fire detection systems, and started serving power generation PSUs and logistics companies. Tech SIS also ventured into Electronic security as a service (ESAS), which is a long term solution to the customers without them having to own or manage the system. Under this model, the customers pay a monthly service charge and leave the design, installation, management and maintenance to Tech SIS. the addition of this service, along with the product and installation business, will give Tech SIS access to customers who are not willing to invest in the significant capital expenditure of owning the security systems. The company was also able to grow its the operating revenue from Rs. 33.5 mn in the previous financial year to Rs. 60.3 mn in the year under review.

Significant Developments

The SIS Prosegur joint venture acquired the Cash and Valuables Services Division (CVS) of ISS SDB Security Services Private Limited (ISS), the second largest cash services business in the country, on a slump sale basis in accordance with the terms and conditions set out in the Business Transfer Agreement, for a consideration of Rs. 928,320. The service has been rebranded as SISCO under a subsidiary, SIS Prosegur Holdings Private Ltd. The purchase of the CVS was completed on December 1, 2014.

In March 2015, the SIS Group entered into a long term financing arrangement with National Australian Bank for a loan of AUD 80 mn in order to finance growth and investment opportunities that may arise from time to time.

Outlook

The global economy has been a mixed bag. While the economy of USA has been growing after years of decline, the economies of Europe and China have been under pressure. Global growth is projected at 3.3 percent in 2015 by IMF, marginally lower than in 2014, with a gradual pickup in advanced economies and a slowdown in emerging market and developing economies. In 2016, IMF expects growth to strengthen to 3.8 percent.

In India, while the economy continued to be sluggish with the GDP, the sentiment became significantly positive with the election of a new government in 2014. While growth on the ground is expected to take time, the initial signals are that the government would focus on pushing reforms and development policies. Programmes like Make in India should augur well for industry and service providers such as us, if they do take off.

The Indian security industry has continued to expand and we expect that it will continue to see growth rates of ~20% over the next few years. This is driven by increased outsourcing of support services, and increasing importance to safety and security. At the same time, the shift from small unorganized security providers to larger organized security providers in the market continues at a strong pace, due to increasing importance to quality and compliance by the users of the service.  SIS, which has the largest pan-India presence with 127 branches across the country, excellent compliance and operational standards and rigorous training and development systems continues to benefit from this trend, allowing it to grow at rates well in excess of the market.

In Australia, the security industry is expected to continue to grow at around 6% and growth is being driven mainly by government installations, building construction growth, and the general growth of banks and other financial institutions. MSS, as the leader in the Australian security industry, is strongly placed in all the major markets in Australia and we are confident that we would be able to continue to add clients and increase our services in markets of growth.

The cash logistics industry has also been witnessing huge growth on the back of the massive increase in the number of ATMs and increasing outsourcing by banks of ATM management. This is expected to continue for the next few years given the importance being given by the Government to have an inclusive banking system, and new bank licenses.

The facility management and pest control industry is still largely dominated by unorganised players with localized operations. There continues to be a steady shift from the unorganized to the organized players and this market is expected to grow at over 30%. While IT/ITES have been the first users, we see an increasing shift towards outsourcing by hotels, hospitals, retail, airports, metros, commercial outlets and small retail or F&B outlets as well. The trend towards outsourcing non-critical operations (FMS being prime among them) continues to be strong and as the market and industry expands, the scope of service offerings will expand, bringing in more revenue for the industry.

We are seeing the increasing focus on customers to invest in electronic security systems. At the same time, there is an increasing segment of consumers who are adopting electronic security as a service (ESAS). This presents a huge opportunity for players such as SIS, who can provide man-tech solutions which provide integrated security solution to the customers.

We believe that SIS is positioned to be able to deliver growth in each of its target segment. Our focus is to drive strong organic growth and at the same time continuously look to expand or acquire on our service offerings by acquiring businesses. We believe that by continuously investing in systems, processes, training and recruiting the best personnel and managers, we would be able to deliver superior services to customers and would help us continue with the momentum and delivering better results to our shareholders.

Material changes and commitments

No material changes and commitments affecting the financial position of the company occurred between the end of the financial year to which this financial statement relates and the date of this report.

Dividend

In view of the continued strong financial performance of the Group, including the subsidiaries, during the year under review, the Directors recommended and declared interim dividends of 26% (Rs. 26 per Equity share), aggregating to Rs. 160.55 mn on December 13, 2014.

Share capital and reserves

The directors have resolved to transfer a sum of INR 950 mn from the balance lying in Surplus Balance in Profit & Loss Account to the General reserves and to be treated as free reserves under the Companies Act 2013.

In view of the balance lying as free reserves of the Company, and in the event of a public offering and listing of the Companys shares with a stock exchange, with a view to encouraging the participation of small investors in such an offering by making equity shares of the Company affordable, it is proposed to issue bonus shares in proportion of 20 equity shares for every equity share held, as on a record date to be determined by the Board.

It is proposed that these bonus shares be issued by capitalising an equal amount from the free reserves of the Company, viz., General Reserves. This proposed issue of bonus shares is subject to members approval in terms of Section 63 of the Companies Act, 2013 and any other applicable statutory and regulatory approvals.

To facilitate this proposed issue of bonus shares, it is also necessary to increase the authorised capital of the Company from the existing Rs. 280,000,000 (Rupees two hundred eighty million only) divided into 28,000,000 (twenty eighty million) Equity shares of Rs. 10/- each to Rs. 1,350,000,000 (Rupees one thousand three hundred and fifty million only) divided into 135,000,000 (One hundred and thirty five million) Equity shares of Rs. 10/- each. This will also result in an amendment to Clause V of the Memorandum of Association of the Company.

Since Section 13 and Section 61 of the Companies Act, 2013 requires any amendment in the capital clause of the Memorandum of Association of the Company and increase in the Authorised Capital of the Company to be approved by the shareholders in general meeting, the same is being placed before the members for approval at the forthcoming annual general meeting.

Loans, guarantees and investments

The particulars of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 (Act) are given in the Notes 3, 4, 9, 15 and 17 of the standalone financial statements.

Public deposits

Your Company has not accepted any deposit during the year under review, from the public/members, under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Corporate Governance

The SIS Groups business and operations are managed by professional managers led by the Group Chief Executive Officer under the supervision and control of the Board of Directors. In order to draw on the expertise of the experienced members of the Board and to assist the Board and the Chairman-cum-Managing Director in carrying out its duties, the Board has constituted the following committees. The role, powers and duties of these committees have also been defined and laid down by the Board from time to time. While some of these committees are required by law, the Board felt it useful and necessary to constitute additional committees like Finance Committee, Share Allotment committee, in order to distribute the functions and to help in the business operations by providing guidance and advice on a more frequent and regular basis.

Audit Committee           

Members:

1.       Mr. Amrendra Prasad Verma, Chairperson

2.       Mr. Arun Kumar Batra

3.       Mr. Ajay Relan

Roles and functions

  To recommend the appointment, remuneration and terms of appointment of auditors of the company;

  To review and monitor the auditors independence and performance, and effectiveness of audit process;

  To examine the financial statements and the auditors report thereon;

  To provide approval or any subsequent modification of transactions of the company with related parties;

  Scrutiny of inter-corporate loans and investments;

  Valuation of undertakings or assets of the company, wherever it is necessary;

  Evaluation of internal financial controls and risk management systems;

  Monitoring the end use of funds raised through public offers and related matters;

  Call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statements before their submission to the Board and may also discuss any related issues with the internal and statutory auditors and the management of the company; and

  To investigate into any matter in relation to the items mentioned above or referred to it by the Board and have power to obtain professional advice from external sources and have full access to information contained in the records of the company

Nomination and Remuneration Committee       

Members

1.         Mr. Devdas Apte

2.         Mr. Arun Kumar Batra

3.         Mr. Ajay Relan

Roles and functions

  To identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every directors performance.

  To formulate the criteria for determining qualifications, positive attributes and independence of a director.

  To recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees.

  The Committee, while formulating the above policy, should ensure that-

      the level and composition of remuneration be reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

      relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

      remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals

Finance Committee       

Members

1.         Mr. Ravindra Kishore Sinha

2.         Mrs. Rita Kishore Sinha

3.         Mr. Devdas Apte

4.         Mr. Ajay Relan        

Roles and functions

  Opening and Closing of Bank Accounts

  Change of signatories to Bank accounts

  Taking of Temporary Overdraft facilities

  Approve borrowings for specified purposes and within the limits laid down by the Board from time to time

  Authorise various Corporate, regional and branch personnel for:

      Filing and submitting applications, returns, forms and other documents with, and appearing before, Government Authorities on behalf of the Company for specific purposes, including, but not limited to, obtaining labour license, service tax registration number, license under Private Security (Agencies) Regulation Act, Profession Tax, Employees State insurance, Provident Fund, Regional Transport authority

      Filing and submitting applications, returns, forms and other documents with Service providers of electricity, water, telephones, telecommunications

      Entering into lease agreements for premises for business operations

Share Allotment Committee     

Members

1.         Mr. Ravindra Kishore Sinha

2.         Mrs. Rita Kishore Sinha

3.         Mr. Devdas Apte

4.         Mr. A K Mattoo      

Roles and functions

  To approve the issue, allotment, forfeiture, splitting of, and consolidation, of shares, transfer and transmission of shares, issue of duplicate certificates in lieu of misplaced/ lost certificates, in respect of shares issued under the Employee Stock Option Scheme, and to do all such acts, deeds, matters and things as it may in its absolute discretion deem necessary or desirable for such purpose.

Corporate Social Responsibility Committee (CSR)

Members

1.         Mr. Ravindra Kishore Sinha

2.         Dr. Ajoy Kumar

3.         Mr. Devdas Apte

Roles and Functions

  To formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013.

  To recommend the amount of expenditure to be incurred on the activities (referred in clause (a) of sub-section (3) of Section 135 of the Companies Act, 2013.

  To monitor the Corporate Social Responsibility Policy of the Company from time to time

In addition, the Company has adopted policies on:

  Prevention of sexual harassment which:

      Defines sexual harassment

      Provides a complaint redressal mechanism

      Lays down the relief available to the complainant

      Stipulates actions and punishment in cases of sexual harassment

  Vigil/whistle blower mechanism/policy which:

      Encourages Directors and employees to bring to the Companys attention, instances of unethical behaviour, actual or suspected incidents of fraud or violation of the SIS Code of Ethics and Conduct that could adversely impact the Companys operations, business performance and / or reputation

      Provides that the Company investigates such incidents, when reported, in an impartial manner and takes appropriate action to ensure that the requisite standards of professional and ethical conduct are always upheld.

      Provides for adequate safeguards against victimisation of employees and directors who avail of the vigil mechanism and also provide for direct access to the Chairperson of the Audit Committee in exceptional cases.

      More details about this mechanism and policy can be found on the companys website www.sisindia.com.

Corporate Social Responsibility Policy (CSR Policy)

The SIS Group comprising Security and Intelligence Services (India) Limited and its subsidiaries and joint ventures (SIS), has been at the forefront of bringing social change in the lives of thousands of people in India. It employs more than 90,000 people in India, of which a large majority come from the less privileged sections of society with limited means for education, development and livelihood. SIS has been instrumental in improving lives of these people through training, development and providing them employment opportunities.

Our Board of Directors, our Management and all of our employees subscribe to the philosophy of compassionate care. We believe that a business has to give back to society and to the environment and community in which they operate such that it helps in building a secure, healthy, knowledgeable, and sustainable society and business.

Corporate Social Responsibility (CSR) has been an integral part of the way that the SIS group does its business since inception. The SIS Group set up the SEWA trust for the betterment of lives of the employees. The Group has engaged in various activities in the communities that our employees live in, which has benefited thousands of people over the years. The company has also been at the forefront in imparting and encouraging skills based training to people from backward and less developed communities across the country.

This CSR Policy of the Company has been formalized based on the vision on the vision and principles of the SIS Group. The main objective of this CSR Policy is to lay down guidelines to make CSR a key business process for sustainable and beneficial engagement with the society and the environment in which the Group operates. It aims at enhancing welfare measures of the society based on the immediate and long term social and environment consequences of the Groups activities. This Policy specifies the projects and programmes that can be undertaken, directly or indirectly, the modalities of execution and the monitoring thereof.

The scope of the Policy has been kept as wide as possible, so as to allow the SIS Group to respond to changing and immediate societal needs and maintain flexibility, but at the same time focus on a specific set of activities that bring long term benefit to society.

One of the internal objectives of the CSR Policy is to seek an active participation of employees of the Company at all the locations. Employees will be encouraged to volunteer their time and effort in respect of SIS sponsored programme or on their initiatives. The Company will recognize the efforts put in by employees in CSR activities. A widespread awareness of the CSR initiatives of SIS will be conducted and the Group seeks and active and wide participation from employees and encourages any suggestions and project ideas from them.

The Annual Report on Corporate Social Responsibility (CSR) Activities is enclosed as Annexure I.

Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013

The Company is committed to provide safe and conducive work environment to its employees. During the year under review, no case of sexual harassment was reported.

Nomination and Remuneration policy

Directors and their Appointment

The Nomination & Remuneration Committee of the Board has approved the criteria for determining qualifications, positive attributes and independence of Directors in terms of the Act and the Rules thereunder, both in respect of Independent Directors and other Directors as applicable. This policy, inter alia, requires that Non-Executive Directors, including Independent Directors, be drawn from amongst eminent professionals with experience in business / finance / law / public administration & enterprises. It endeavours to create a broad-basing in the composition of the Board to make available the right balance of skills, experience and diversity of perspectives appropriate to the Company. The Articles of Association of the Company provide that the strength of the Board shall not be fewer than three nor more than twelve. Directors are generally appointed / re-appointed with the approval of the members for a period of three to five years or a shorter duration, in accordance with any arrangements and/or guidelines as determined by the Board from time to time. The initial appointment of Executive Directors is normally made in consultation with the members of the Board and the Chairman-cum-Managing Director. All Directors, other than Independent Directors, are liable to retire by rotation, unless otherwise approved by the members or provided under any statute or arrangement. One-third of the Directors who are liable to retire by rotation, retire every year and are eligible for re-election. The Independent Directors of your Company have confirmed that they meet the criteria of independence as prescribed under Section 149(6) of the Act.

Remuneration Policy

The Companys Remuneration Policy is designed to attract and retain high quality talent, that gives each of its businesses a unique competitive advantage and enables the Company achieve its objectives. This policy is a key and integral component of the strategy of the Company and, whilst focusing on remuneration and related aspects of performance management, is aligned with and reinforces the employee value proposition of a superior quality of work life, that includes an enabling work environment, an empowering and engaging work culture and opportunities to learn and grow. The policy is designed:

   i.      To ensure that its remuneration practices support and encourage meritocracy.

 ii.      To leverage Remuneration as an effective instrument to enhance performance and therefore, to link a varying component of remuneration to both individual and collective performance outcomes.

iii.      To design Remuneration practices such that they reinforce SIS values and culture and to implement them in a manner that complies with all relevant regulatory requirements.

The Companys Policy relating to remuneration of Directors, Key Managerial Personnel and other employees is provided in Annexure II.

Related party transactions.

All contracts or arrangements with related parties, entered into or modified during the financial year, were on an arms length basis and in the ordinary course of business. All such contracts or arrangements have been approved by the Audit Committee. Accordingly, no transactions are being reported in Form No. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014.

Risk management

Risk management is the process of identification, assessment and prioritization of risks followed by coordinated efforts to minimize, monitor and mitigate/control the probability and/or impact of unfortunate events to of maximize the realization of opportunities. The company has initiated the process of preparing a comprehensive risk Assessment and minimization procedure. These procedures are meant to ensure that executive management controls risk through means of a properly defined framework. The major risks are being identified by the company and its mitigation process/measures being formulated in areas of operations, recruitment, financial processes and reporting, human resources and statutory compliance.

Internal financial controls

Our rapid growth, while a matter of great satisfaction, continues to put pressure on our internal systems and processes. It is important that we work to ensure that these continue to keep pace with the business growth and that our policies remain current and relevant in the rapidly changing business landscape. Information systems are being continuously evaluated and revamped in order to deliver timely and relevant information to various stakeholders so as to arm them with the necessary information and tools to enable them to compete in a tough market and environment. We believe that IT and information systems are critical in todays world and we have several dedicated groups of people constantly working to continuously evolve and improve these systems to keep abreast of the fast changing environment.

The Companys system of continuous internal audits ensures that laid down processes and practices are followed and complied with and that quality processes are strictly adhered to. Financial discipline is emphasised at all levels of the business and adherence to quality systems and focus on customer satisfaction are critical for the Company to retain and attract customers and business and these are followed rigorously.

An Audit Committee comprising independent members of the Board has been constituted which plans and monitors the various Internal Audit programmes and reviews the reports and action plans arising therefrom. The Chief Executive Officer, Chief Operating Officer and the Chief Financial Officer are invitees to the meetings of the Committee.

The Internal Auditors, who are an independent function within the Group, reporting to the Audit Committee, review the adequacy and efficacy of the key internal controls. The scope of the audit activity is guided by the annual audit plan, which is approved by the Audit Committee of the Board. We also appoint professional and reputed audit firms from time to time to conduct internal audits of the larger and more critical operations of the Group.

Besides the financial audits, quality management system procedures are continuously audited by internal and external auditors to ensure that companys business practices conform to requirements of customers.

The directors believe that the Company has in place adequate internal financial controls with reference to financial statements. The Companys internal control systems are commensurate with the nature, size and complexity of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information. Internal Audit team of the company, evaluates the functioning and quality of internal controls and reports its adequacy and effectiveness through periodic reporting. During the year under review, such controls were tested and no reportable material weakness in the design or operation were observed.

Subsidiaries/ Associates and Joint Ventures

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of our Subsidiaries and Associates and Joint Ventures in the prescribed format AOC-1 appears in Note 6 under Other Notes to Accounts in Note 26.

The statement provides the details of performance, financial position of each of the Subsidiaries and Associates and Joint Ventures.

SIS Group International Holdings Pty Ltd was incorporated as a 100% indirect subsidiary of the company on June 13, 2014.

SIS Prosegur Holdings Private Limited was incorporated as a 100% subsidiary of SIS Cash Services Private Limited July 21, 2014.

On August 22, 2014, the Company purchased all the outstanding shares in Sunrays Overseas Private Limited and Vardan Overseas Private Limited, which thus became wholly owned subsidiaries of the Company. The consideration paid for these shares was INR 125,000 and INR 125,000 respectively.

Subsequently, on March 23, 2015, Service Master Clean Limited, another subsidiary, acquired all of the outstanding shares of these two entities for a total consideration of INR 250,000.

Loans, guarantees and investments

The particulars of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes 3, 4, 9, 15 and 17 of the Standalone Financial Statements.

People and Training

Your Companys foundation and core of its philosophy is its commitment to its Human Resources. We continue to improve and develop tools and processes to recognise and reward employees at all levels and we value their contribution to the Companys financial performance over the years. We continue to invest in the training and development of all our employees. Our competency-based systems have recently undergone a transformational change and we implemented a new Performance Management Process in the Company. We have now commenced rolling out the new PMP to other companies and subsidiaries in the Group. The new PMP is designed to scientifically measure and track the performance of employees at all levels and we believe this will which will help us to recognise and reward performance, and also retain, reward, attract and sustain talent and to have a common platform of performance management across the Group. The total employees in the SIS Group at the end of the year under review were 98,223.

Particulars of Employees

The information required under Section 197(12) of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure III, which is forming part of this Report.

Employee Stock Option Plan (ESOP)

In 2014, the ESOP Remuneration Committee announced an Employee Stock Option Plan (ESOP 2014) under which a total of 30,500 options were granted to 4 employees including one employee of a subsidiary in the Group. The said 30,500 options are to vest in tranches over the next 8 years. 

The Employee Stock Option Plan 2008 (ESOP 2008), which was followed, by the Employee Stock Option Plan 2010 (ESOP 2010) and Employee Stock Option Plan 2014 (ESOP 2014) has been successful in enhancing employee commitment, retention and in giving them a sense of ownership in the company.

During the year under review, a total of 535 options lapsed on account of resignation of the respective employees and a total of 30,500 options were granted under ESOP 2014 thus making a total of 41,217 options outstanding as of March 31, 2015.

The information pursuant to the provisions of Section 62(1) (b) of the Companies Act, 2013 read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 are as follows:

Directors and key managerial personnel (KMP)

The Members of the Company at the 30th Annual General Meeting held on 29th September 2014 had approved appointment of Mr. Devdas Apte, Mr. Ashok Kumar Mattoo, Mr. Arun Kumar Batra, Mr. Amrendra Prasad Verma and Dr. Ajoy Kumar as Independent Directors of the Company to hold office for a period of three consecutive years effective September 29, 2014, with an option to retire from the office at any time during the term of appointment. The Company had issued letters of appointment to all the Independent Directors as per Schedule IV to the Companies Act, 2013. No Director resigned from the Company during the year under review.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ajay Relan, Director, retires by rotation at the ensuing Annual General Meeting and, being eligible, offer himself for reappointment.

There was no change in the Key Managerial Personnel since the date of the last report.

The board is seeking members approval at the ensuing Annual General Meeting for:

  The remuneration payable to Mr. Ravindra Kishore Sinha, Chairman-cum- Managing Director at the same level as existing and as more fully laid out in the notice

  Modification in the terms of appointment of Mr. Uday Singh, Whole time director and Chief Executive Officer, by increasing his remuneration as more fully laid out in the notice

Declaration by independent directors

All the Independent Directors have given a declaration under sub-section (7) of Section 149 of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013.

Number of board meetings

During the year ended March 31, 2015, 9 (nine) meetings of Board of the Board were held:

Auditors

M/s. A Mitra and Associates, Chartered Accountants (Firm Registration No. 5268/C), statutory auditors of the Company, were appointed with your approval at the thirtieth AGM, to hold such office till the conclusion of the thirty third annual general meeting of the Company scheduled to be held in 2017 and such appointment to be subject to ratification by the members at every annual general meeting to be held in the intervening period.

The Board, in terms of Section 139 of the Act, on the recommendation of the Audit Committee, has recommended for the ratification of the members the appointment of M/s. A Mitra and Associates from the conclusion of the ensuing AGM till the conclusion of the thirty-second AGM at such remuneration as may be mutually agreed between Board of Directors of the Company and the Auditors. Appropriate resolution in respect of the above is appearing in the Notice convening the thirty-first AGM of the Company.

A confirmation has been received from M/s. A Mitra and Associates that their appointment, if confirmed by the Company in the forthcoming general meeting, would be within the limits specified in Section 141(3)(g) of the Companies Act, 2013.

Secretarial audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Suryakant Kumar, a practicing Company Secretary in Practice (Membership Number-27610 and holding a Certificate of practice Number-10207) to undertake the Secretarial Audit of the Company for the Financial Year 2014-15. The Secretarial Audit Report is given as Annexure IV forming part of this Report.

Conservation of Energy, Research and Development, Technology Absorption

The particulars as prescribed under section 134 (m) of the Companies Act, 2013 and the rules framed there under are not applicable to the Company.

Foreign Exchange Earnings and Outgo

The relevant information appears in the Notes to the Accounts.

Extract of annual return

The information required under Section 134 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, is annexed as Annexure V.

Significant & material orders passed by the regulators 

There were no significant and material orders passed by the Regulators or Courts or Tribunals during the year impacting the going concern status and the Companys operations in future.

Directors Responsibility Statement

In terms of the provisions of Section 134 (5) of the Companies Act, 2013 the board of directors the Directors of your Company confirms that:

  In the preparation of the Accounts for the year ended March 31, 2015 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

  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 and Loss of the Company for the year;

  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;

  The Directors have prepared the Annual Accounts on a going concern basis.

  The company being unlisted, sub clause (e) of section 134 (3) of the Companies Act, 2013 pertaining to laying down internal financial controls is not applicable to the company

  The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Appreciation/Acknowledgement

Your Directors place on record their gratitude to the Central Government, various State Governments and Companys Bankers and advisors for the valuable advice, guidance, assistance, co-operation and encouragement they have extended to the SIS Group. The Directors also take this opportunity to thank the Companys customers, suppliers and shareholders for their consistent support to the Company.

Last but not the least, the Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company.

          For and on Behalf of the Board of Directors

New Delhi                                                                                                                                                           Ravindra Kishore Sinha

July 31, 2015                                                                                                                               Chairman-cum-Managing Director

ANNEXURE I

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1.       A brief outline of the Companys CSR Policy, including overview of Projects or Programs proposed to be undertaken and a reference to the web link to the CSR Policy and Projects or Programs:

a.       Brief outline of CSR Policy:

This Corporate Social Responsibility (CSR) Policy of the Company has been formalized based on the vision on the vision and principles of the SIS Group. The main objective of this CSR Policy is to lay down guidelines to make CSR a key business process for sustainable and beneficial engagement with the society and the environment in which the Group operates. It aims at enhancing welfare measures of the society based on the immediate and long term social and environment consequences of the Groups activities. This Policy specifies the projects and programmes that can be undertaken, directly or indirectly, the modalities of execution and the monitoring thereof.

b.      Role of the CSR Committee:

  The Committee shall formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013.

  The Committee shall recommend the amount of expenditure to be incurred on the activities (referred in clause (a) of sub-section (3) of Section 135 of the Companies Act, 2013.

  The Committee shall monitor the Corporate Social Responsibility Policy of the Company from time to time

c.       Programmes / Projects:

The CSR activities of SIS will focus on projects and activities in the following focus areas but not necessarily in that order of priority and may also include and extend to other specific projects/ programs as permitted under the law from time to time. The Companys stakeholder representation is varied, calling for an integrated approach to development comprising several layers of interventions which are summarised below:

                         i.     Education: Promoting education to children including primary, secondary and university education, Building schools, colleges and training institutions including provision for full time residential institutions and full student sponsorship, Promoting and sponsoring girl education at all levels, Women education and self-employment training and Other educational projects.                      ii.     Vocational Training / Education and Livelihood Enhancement: Vocational training in security, cleaning, gardening, plumbing, electricals, and other specialities/vocations, Government Programs under the skill development sector, Computer literacy training, Building training schools and facilities for vocational skills, Local community camps for skill developments in various specialities, Other vocational training initiatives.                       iii.     Sanitation and drinking water: Drinking water projects for local communities, Domestic bathroom and sanitation for rural and urban households, Community bathroom and sanitation in urban and rural areas, Women sanitation projects, and other water conservation and sanitation programs.                      iv.     Health: Local community health check camps, Building hospitals, clinics, diagnostic centres and associated infrastructure, Blood donation camps and other specific ailment camps, Other programs towards betterment of health and nutrition.                        v.     Others: Promoting local artisans, craftsmen and protecting traditional arts, Promotion of sports in athletics, swimming, archery, shooting, Protection of national heritage, Programs for the benefit of the benefit of armed forces veterans and their dependents, planting of trees and protection of indigenous flora and fauna

2.       Composition of the CSR Committee: CSR Committee comprises of the following Directors:

              i)            Mr. Ravindra Kishore Sinha;

             ii)            Dr. Ajoy Kumar; and

           iii)            Mr. Devdas Apte.

3.       Average net profit of the Company for last three Financial Years: Rs. 38,76,27,814/-

4.       Prescribed CSR Expenditure (two percent of the amount as in item 3 above): Rs. 77,52,556/-

5.       Details of CSR spent during the Financial Year:

(a)    Total amount spent for the Financial Year: Rs. 85,71,450/-

(b)   Amount unspent, if any: N.A.

(c)    Manner in which the amount spent during the Financial Year is detailed below:

The CSR committee confirms that the implementation and monitoring of CSR Policy is in compliance with CSR objectives and Policy of the Company.

ANNEXURE II

REMUNERATION OF DIRECTORS, KMP AND OTHER EMPLOYEES

Remuneration Policy

SIS Remuneration Policy is designed to attract and retain high quality talent, that gives each of its businesses a unique competitive advantage and enables the Company achieve its objectives. This policy is a key and integral component of the strategy of the Company and, whilst focusing on remuneration and related aspects of performance management, is aligned with and reinforces the employee value proposition of a superior quality of work life, that includes an enabling work environment, an empowering and engaging work culture and opportunities to learn and grow. The policy is designed:

iv.      To ensure that its remuneration practices support and encourage meritocracy.

 v.      To leverage Remuneration as an effective instrument to enhance performance and therefore, to link a varying component of remuneration to both individual and collective performance outcomes.

vi.      To design Remuneration practices such that they reinforce SIS values and culture and to implement them in a manner that complies with all relevant regulatory requirements.

Remuneration of Directors/ Managing Director/ Whole-time Director or Manager

1.       The remuneration / compensation / commission to the Directors/ Managing Director/ Whole-time Director or Manager will be determined by the committee and recommended to the Board for approval.

2.       The remuneration and commission to be paid to the Directors/ Managing Director/ Whole-time Director or Manager shall be in accordance with the provisions of the Companies Act, 2013, and the rules made thereunder.

3.       Increments to the existing remuneration/ compensation structure of Directors/ Managing Director/ Whole-time Director or Manager, shall be recommended by the committee to the Board, and shall be subject to approval by the shareholders and subject to such other approvals as may be required from time to time.

4.       If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay remuneration to its Managing Director, Whole-time Director or Manager in accordance with the provisions of Schedule V of the Companies Act, 2013 or, if it is not able to comply with such provisions, with the prior approval of the Central Government.

Remuneration to non-executive / independent directors

1.       All the remuneration of the Non- Executive / Independent Directors shall be subject to the ceiling/ limits as provided under Companies Act, 2013 and the rules made there under or any other enactment for the time being in force. The amount of such remuneration shall be such as may be recommended by the Nomination and Remuneration Committee and approved by the Board of Directors or shareholders, as the case may be.

2.       The Non-executive and Independent Directors will receive remuneration by way of fees for attending meetings of the Board or Committee thereof, provided that such fees shall not exceed the maximum amount as provided in the Companies Act, 2013 and the rules made thereunder, per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.

3.       Independent directors shall not be entitled to any stock option of the Company.

Remuneration of KMPs and other employees

The Key Managerial Personnel, Senior Management Personnel and other employees shall be paid remuneration as per the Annual Compensation Review and Restructuring of Bands Policy of the Company as conducted through the Annual Performance Management process from time to time. Apart from fixed elements of remuneration and benefits / perquisites, Whole-time Directors, Key Managerial Personnel and Senior Management and other managers at middle and senior levels are also eligible for Performance Bonus and Employee Stock Options that are linked to their individual performance and potential, with benefits vesting in phases over a period of time, and the overall performance of the Company. These elements of compensation design, facilitate alignment of the priorities of Executive Directors, Key Managerial Personnel and Senior Management with the long-term interests of stakeholders.

Insurance

Where any insurance is taken by the Company on behalf of its Directors, KMPs and any other employees for indemnifying them against any liability, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel. Provided that if such person is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration.

ANNEXURE III

Information pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

ANNEXURE IV

FORM No MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2015

[Pursuant to section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]

Secretarial audit report for the financial year ended 31st March 2015

To,

The Members,

Security and Intelligence Services (India) Limited

Annapoorna Bhawan, Telephone Exchange Road,

Kurji, Patna-800010, Bihar.

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Security and Intelligence Services (India) Limited (hereinafter called the company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.

Based on my verification of the Security and Intelligence Services (India) Limiteds books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the company has, during the audit period covering the financial year ended on 31st March, 2015 complied with the statutory provisions listed hereunder and also the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

I have examined the books, papers, minute books, forms and returns filed and other records maintained by Security and Intelligence Services (India) Limited (the company) for the financial year ended on 31st March, 2015 according to the provisions of:

   i)      The Companies Act, 2013 (the Act) and the rules made there under;

 ii)      The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made there under;

iii)      The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;

iv)      Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings.

 v)      The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act)-

a)      The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Not applicable to the Company during the Audit Period);

b)      The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (Not applicable to the Company during the Audit Period).

c)       The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (Not applicable to the Company during the Audit Period).

d)      The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (Not applicable to the Company during the Audit Period).

e)      The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (Not applicable to the Company during the Audit Period).

f)       The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client (Not applicable to the Company during the Audit Period).

g)      The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Not applicable to the Company during the Audit Period).

h)      The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (Not applicable to the Company during the Audit Period).

I have also examined compliance with the applicable clauses of the following:

        i)            Secretarial Standards issued by The Institute of Company Secretaries of India.

       ii)            The Listing Agreement entered into by the Company with Stock Exchange (Not applicable).

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above.

I further report that

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members views, if any, are captured and recorded as part of the minutes.

I further report that there are adequate systems and process in the company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

I further report that during the Audit period there was no specific events/actions having a major bearing on the Companys affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards etc., referred to above.

Note: This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.

Annexure-A

To,

The Members,

Security and Intelligence Services (India) Limited

Annapoorna Bhawan, Telephone Exchange Road,

Kurji, Patna-800010, Bihar.

My report of even date is to be read along with this letter.

1.       Maintenance of secretarial record is the responsibility of the management of the company. My responsibility is to be express an opinion on these secretarial records based on our audit.

2.       I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the processes and practices, we followed provide a reasonable basis of my opinion.

3.       I have not verified the correctness and appropriateness of financial records and Books of Accounts of the company.

4.       Where ever required, I have obtained the Management representation about the compliance of laws, rules, and regulations and happenings of events etc.

5.       The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. My examination was limited to the verification of procedures on test basis.

6.       The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.

Suryakant Kumar

Practising Company Secretary

Membership No- 27610, CP No - 10207

Date:     July 31, 2015

Place:    Patna

ANNEXURE V

FORM NO. MGT-9

EXTRACT OF ANNUAL RETURN

As on the financial year ended on March 31, 2015

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I.            Registration and other details:

II.            Principal business activities of the company

(contributing 10 % or more of the total turnover of the company)

III.            Particulars of holding, subsidiary and associate companies

IV.            Share holding pattern (Equity Share Capital Breakup as percentage of Total Equity)

              i)               Category-wise Share Holding

            ii)               Shareholding of Promoters

          iii)               Change in Promoters Shareholding (please specify, if there is no change)

          iv)               Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

            v)               Shareholding of Directors and Key Managerial Personnel:

V.            INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

VI.            REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

              i)               Remuneration to Managing Director, Whole-time Directors and/or Manager:

            ii)               Remuneration to other directors:

          iii)               Remuneration to key managerial personnel other than MD/manager/WTD:

VII.            PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Against the Company, Directors and other Officers in Default under the Companies Act, 2013: None

Description of state of companies affair

Operations and Business Performance During the year, the Companys net revenuegrew from Rs.8,245 mn in FY 2013-14 to Rs. 10,563 mn in FY 2014-15. The fiscal 2014-15 marked the first year in which the companys annual turnover exceeded Rs. 10,000 million, emerging as only the second company in the countrys manned guarding industry and the first Indian owned company to achieve this significant milestone. The Company also registered the largest increase in turnover among all guarding companies in India in 2014-15. As a result, SIS continues to be the fastest growing manned guarding company in the world and the SIS Group is among the worlds Top 15 security companies MSS Security (Australia) The companys business and operations in Australia, where it provides manned guarding services through its wholly owned subsidiary, MSS Security Pty Ltd., recorded revenues of AUD 428 mn in FY 2014-15 as against AUD 381 mn in FY 2013-14. This is a growth of 12.2%, which is noteworthy considering that the Australian economy is growing at around 2.5% and it is a fairly developed and stable market. Greater focus was laid on casual revenue and emergency response services which resulted in boosting the overall revenue in the fiscal year.Also notable was the fact that it won new business of AUD 68.5 mn, which has been the highest ever and has set the business sets the revenue base at a much stronger level for FY 2015-16. Cash Logistics (SIS Cash Services, a joint venture with Prosegur) SIS Cash Services continues to be the fastest growing cash logistics business in India and has grown to become the second largest operator in the industry. Organically, the business grew by 37% during the year, which is the fastest amongst all players in the market. In a significant development during the year, this business acquired the Cash and Valuables Services Division (CVS) of ISS SDB Security Services Private Limited (ISS), the erstwhile second largest cash services business in the country, on a slump sale basis in accordance with the terms and conditions set out in the Business Transfer Agreement, for a consideration of Rs. 928,320. The service has been rebranded as SISCO under a subsidiary, SIS Prosegur Holdings Private Ltd. The business has 63 dedicated branches, 38 vaults/ strong rooms, and provides cash replenishment services, cash-in-transit services and cash pick up and drop services across the country, with a very strong presence in the southern and western parts of the country. This acquisition has made the SIS-Prosegur JV the clear No.2 in the cash logistics market, with the capability to offer services across the country. Further, it is expected that there would be synergy benefits from integration of common infrastructure and costs, which would reflect in the coming years. The purchase of the CVS was completed on December1, 2014. On a consolidated basis, the cash logistics business had revenues of Rs. 2,021mn, a growth of 83% over the previous year. As this reflects only 4 months of operations of SISCO, growth in this vertical would remain high in FY 2015-16. We now service over 18,000 ATMs and operate over 1,800 cash vans and 57 vaults and strong rooms across the country. Mechanised Cleaning (ServiceMaster Clean) The companys cleaning business, operated by its subsidiary, Service Master Clean Limited, reported another year of growth. Net revenues were up 17.7% from Rs. 483mn in FY 2013-14 to Rs. 569mn in FY 2014-15. The EBITDA increased marginally to Rs.3.52mn to Rs.5.75 mn. The company continues to win new business and has made significant progress during the last quarter, winning significant new business, and setting up a base for a much higher growth in FY 2015-16. Pest Control (Terminix SIS, a joint venture with Terminix) During the year, thisbusiness expanded its presence to Mumbai, and it now operates from 11 branches across 5 cities.The year saw Terminix-SIS more focused on its commercial clients, resulting in their contribution to the revenue increasing from 62% in FY 2013-14 to 75% in FY 2014-15. Healthcare and hospitality are the focussegments given their demand for high quality pest management services. The company was also able to grow its operating revenue by 54% from Rs. 28.4 mn in the previous financial year to Rs.43.7 mn in the year under review. Electronic Security Solutions (Tech SIS) During the year, Tech SIS extended its services to the cities of Kochi, Hyderabad, Bangalore and Bhopal. It also diversified its portfolio by adding home automation and fire detection systems, and started serving power generation PSUs and logistics companies. Tech SIS also ventured into Electronic security as a service (ESAS), which is a long term solution to the customers without them having to own or manage the system. Under this model, the customers pay a monthly service charge and leave the design, installation, management and maintenance to Tech SIS. the addition of this service, along with the product and installation business, will give Tech SIS access to customers who are not willing to invest in the significant capital expenditure of owning the security systems. The company was also able to grow its the operating revenue from Rs. 33.5 mn in the previous financial year to Rs. 60.3 mn in the year under review. Significant Developments The SIS Prosegur joint venture acquired the Cash and Valuables Services Division (CVS) of ISS SDB Security Services Private Limited (ISS), the second largest cash services business in the country, on a slump sale basis in accordance with the terms and conditions set out in the Business Transfer Agreement, for a consideration of Rs. 928,320. The service has been rebranded as SISCO under a subsidiary, SIS Prosegur Holdings Private Ltd. The purchase of the CVS was completed on December 1, 2014. In March 2015, the SIS Group entered into a long term financing arrangement with National Australian Bank for a loan of AUD 80 mn in order to finance growth and investment opportunities that may arise from time to time. Operations and Business Performance During the year, the Company’s net revenuegrew from Rs.8,245 mn in FY 2013-14 to Rs. 10,563 mn in FY 2014-15. The fiscal 2014-15 marked the first year in which the company’s annual turnover exceeded Rs. 10,000 million, emerging as only the second company in the country’s manned guarding industry and the first Indian owned company to achieve this significant milestone. The Company also registered the largest increase in turnover among all guarding companies in India in 2014-15. As a result, SIS continues to be the fastest growing manned guarding company in the world and the SIS Group is among the world’s Top 15 security companies MSS Security (Australia) The company’s business and operations in Australia, where it provides manned guarding services through its wholly owned subsidiary, MSS Security Pty Ltd., recorded revenues of AUD 428 mn in FY 2014-15 as against AUD 381 mn in FY 2013-14. This is a growth of 12.2%, which is noteworthy considering that the Australian economy is growing at around 2.5% and it is a fairly developed and stable market. Greater focus was laid on casual revenue and emergency response services which resulted in boosting the overall revenue in the fiscal year.Also notable was the fact that it won new business of AUD 68.5 mn, which has been the highest ever and has set the business sets the revenue base at a much stronger level for FY 2015-16. Cash Logistics (SIS Cash Services, a joint venture with Prosegur) SIS Cash Services continues to be the fastest growing cash logistics business in India and has grown to become the second largest operator in the industry. Organically, the business grew by 37% during the year, which is the fastest amongst all players in the market. In a significant development during the year, this business acquired the Cash and Valuables Services Division (“CVS”) of ISS SDB Security Services Private Limited (“ISS”), the erstwhile second largest cash services business in the country, on a slump sale basis in accordance with the terms and conditions set out in the Business Transfer Agreement, for a consideration of Rs. 928,320. The service has been rebranded as SISCO under a subsidiary, SIS Prosegur Holdings Private Ltd. The business has 63 dedicated branches, 38 vaults/ strong rooms, and provides cash replenishment services, cash-in-transit services and cash pick up and drop services across the country, with a very strong presence in the southern and western parts of the country. This acquisition has made the SIS-Prosegur JV the clear No.2 in the cash logistics market, with the capability to offer services across the country. Further, it is expected that there would be synergy benefits from integration of common infrastructure and costs, which would reflect in the coming years. The purchase of the CVS was completed on December1, 2014. On a consolidated basis, the cash logistics business had revenues of Rs. 2,021mn, a growth of 83% over the previous year. As this reflects only 4 months of operations of SISCO, growth in this vertical would remain high in FY 2015-16. We now service over 18,000 ATMs and operate over 1,800 cash vans and 57 vaults and strong rooms across the country. Mechanised Cleaning (ServiceMaster Clean) The company’s cleaning business, operated by its subsidiary, Service Master Clean Limited, reported another year of growth. Net revenues were up 17.7% from Rs. 483mn in FY 2013-14 to Rs. 569mn in FY 2014-15. The EBITDA increased marginally to Rs.3.52mn to Rs.5.75 mn. The company continues to win new business and has made significant progress during the last quarter, winning significant new business, and setting up a base for a much higher growth in FY 2015-16. Pest Control (Terminix SIS, a joint venture with Terminix) During the year, thisbusiness expanded its presence to Mumbai, and it now operates from 11 branches across 5 cities.The year saw Terminix-SIS more focused on its commercial clients, resulting in their contribution to the revenue increasing from 62% in FY 2013-14 to 75% in FY 2014-15. Healthcare and hospitality are the focussegments given their demand for high quality pest management services. The company was also able to grow its operating revenue by 54% from Rs. 28.4 mn in the previous financial year to Rs.43.7 mn in the year under review. Electronic Security Solutions (Tech SIS) During the year, Tech SIS extended its services to the cities of Kochi, Hyderabad, Bangalore and Bhopal. It also diversified its portfolio by adding home automation and fire detection systems, and started serving power generation PSUs and logistics companies. Tech SIS also ventured into Electronic security as a service (ESAS), which is a long term solution to the customers without them having to own or manage the system. Under this model, the customers pay a monthly service charge and leave the design, installation, management and maintenance to Tech SIS. the addition of this service, along with the product and installation business, will give Tech SIS access to customers who are not willing to invest in the significant capital expenditure of owning the security systems. The company was also able to grow its the operating revenue from Rs. 33.5 mn in the previous financial year to Rs. 60.3 mn in the year under review. Significant Developments The SIS Prosegur joint venture acquired the Cash and Valuables Services Division (“CVS”) of ISS SDB Security Services Private Limited (“ISS”), the second largest cash services business in the country, on a slump sale basis in accordance with the terms and conditions set out in the Business Transfer Agreement, for a consideration of Rs. 928,320. The service has been rebranded as SISCO under a subsidiary, SIS Prosegur Holdings Private Ltd. The purchase of the CVS was completed on December 1, 2014. In March 2015, the SIS Group entered into a long term financing arrangement with National Australian Bank for a loan of AUD 80 mn in order to finance growth and investment opportunities that may arise from time to time. Outlook The global economy has been a mixed bag. While the economy of USA has been growing after years of decline, the economies of Europe and China have been under pressure. Global growth is projected at 3.3 percent in 2015 by IMF, marginally lower than in 2014, with a gradual pickup in advanced economies and a slowdown in emerging market and developing economies. In 2016, IMF expects growth to strengthen to 3.8 percent. In India, while the economy continued to be sluggish with the GDP, the sentiment became significantly positive with the election of a new government in 2014. While growth on the ground is expected to take time, the initial signals are that the government would focus on pushing reforms and development policies. Programmes like “Make in India” should augur well for industry and service providers such as us, if they do take off. The Indian security industry has continued to expand and we expect that it will continue to see growth rates of ~20% over the next few years. This is driven by increased outsourcing of support services, and increasing importance to safety and security. At the same time, theshift from small unorganized security providers to larger organized security providers in the market continues at a strong pace, due to increasing importance to quality and compliance by the users of the service. SIS, which has the largest pan-India presence with 127 branches across the country, excellent compliance and operational standards and rigorous training and development systems continues to benefit from this trend, allowing it to grow at rates well in excess of the market. In Australia, the security industry is expected to continue to grow at around 6% and growth is being driven mainly by government installations, building construction growth, and the general growth of banks and other financial institutions. MSS, as the leader in the Australian security industry, is stronglyplaced in all the major markets in Australia and we are confident that we would be able to continue to add clients and increase our services in markets of growth. The cash logistics industry has also been witnessing huge growth on the back of the massive increase in the number of ATMs and increasing outsourcing by banks of ATM management. This is expected to continue for the next few years given the importance being given by the Government to have an inclusive banking system, and new bank licenses. The facility management and pest control industry is still largely dominated by unorganised players with localized operations. There continues to be a steady shift from the unorganized to the organized players and this market is expected to grow at over 30%. While IT/ITES have been the first users, we see an increasing shift towards outsourcing by hotels, hospitals, retail, airports, metros, commercial outlets and small retail or F&B outlets as well. The trend towards outsourcing non-critical operations (FMS being prime among them) continues to be strong and as the market and industry expands, the scope of service offerings will expand, bringing in more revenue for the industry. We are seeing the increasing focus on customers to invest in electronic security systems. At the same time, there is an increasing segment of consumers who are adopting electronic security as a service (“ESAS”). This presents a huge opportunity for players such as SIS, who can provide man-tech solutions which provide integrated security solution to the customers. We believe that SIS is positioned to be able to deliver growth in each of its target segment. Our focus is to drive strong organic growth and at the same time continuously look to expand or acquire on our service offerings by acquiring businesses. We believe that by continuously investing in systems, processes, training and recruiting the best personnel and managers, we would be able to deliver superior services to customers and would help us continue with the momentum and delivering better results to our shareholders.

Details regarding energy conservation

Conservation of Energy The particulars as prescribed under section 134 (m) of the Companies Act, 2013and the rules framed there under are not applicable to the Company.

Details regarding technology absorption

Conservation of Technology Absorption The particulars as prescribed under section 134 (m) of the Companies Act, 2013and the rules framed there under are not applicable to the Company.

Details regarding foreign exchange earnings and outgo

Foreign Exchange Earnings and Outgo The relevant information appears in the Notes to the Accounts. 1. Earning in foreign currency (on accrual basis) Year ended March 31, 2015 Year ended March 31, 2014 Fees for Investigation Works622Nil Total622Nil 2. Expenditure in foreign currency (on accrual basis) Year ended March 31, 2015 Year ended March 31, 2014 Travelling3,3593,770 Total3,3593,770

Disclosures in director’s responsibility statement

Directors’ Responsibility Statement In terms of the provisions of Section 134 (5) of the Companies Act, 2013 the board of directors the Directors of your Company confirms that: § In the preparation of the Accounts for the year ended March 31, 2015 the applicable Accounting Standards have been followed along with proper explanation relating to material departures; § 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 and Loss of the Company for the year; § 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; § The Directors have prepared the Annual Accounts on a going concern basis. § The company being unlisted, sub clause (e) of section 134 (3) of the Companies Act, 2013 pertaining to laying down internal financial controls is not applicable to the company § The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Disclosures relating to employee stock option scheme explanatory

In 2014, the ESOP Remuneration Committee announced an Employee Stock Option Plan (ESOP 2014) under which a total of 30,500 options were granted to 4 employees including one employee of a subsidiary in the Group. The said 30,500 options are to vest in tranches over the next 8 years. 

The Employee Stock Option Plan 2008 (ESOP 2008), which was followed, by the Employee Stock Option Plan 2010 (ESOP 2010) and Employee Stock Option Plan 2014 (ESOP 2014) has been successful in enhancing employee commitment, retention and in giving them a sense of ownership in the company.

During the year under review, a total of 535 options lapsed on account of resignation of the respective employees and a total of 30,500 options were granted under ESOP 2014 thus making a total of 41,217 options outstanding as of March 31, 2015.

The information pursuant to the provisions of Section 62(1) (b) of the Companies Act, 2013 read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 are as follows: