WNS (Holdings) Limited
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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þ |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended March 31, 2011
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Date of event requiring this shell company report |
Commission file number 001-32945
WNS (Holdings) Limited
(Exact name of Registrant as specified in its Charter)
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Not Applicable
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Jersey, Channel Islands |
(Translation of Registrants name into English)
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(Jurisdiction of incorporation or organization) |
Gate 4, Godrej & Boyce Complex
Pirojshanagar, Vikhroli(W)
Mumbai 400 079, India
(91-22) 4095-2100
(Address and Telephone number of principal executive offices)
Alok Misra
Group Chief Financial Officer
Gate 4, Godrej & Boyce Complex
Pirojshanagar, Vikhroli(W)
Mumbai 400 079, India
(91-22) 4095-2100
alok.misra@wns.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Title of each class
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Name of each exchange on which registered |
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American Depositary Shares, each represented by
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The New York Stock Exchange |
one Ordinary Share, par value 10 pence per share |
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Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuers classes of capital or common
stock as of the close of the period covered by the annual report.
As at March 31, 2011, 44,443,726 ordinary shares, par value 10 pence per share, were
issued and outstanding, of which 22,454,319 ordinary shares were held in the form of
American Depositary Shares, or ADSs. Each ADS represents one ordinary share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes o No þ
If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Yes o No þ
Note Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under
those Sections.
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o |
Indicate by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:
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U.S. GAAP þ
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International Financial Reporting
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Other o |
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Standards as issued |
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by the International Accounting |
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Standards Board o |
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If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow:
Item 17 o Item 18 o
If this report is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
TABLE OF CONTENTS
WNS (HOLDINGS) LIMITED
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145 |
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F-1 |
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Ex-4.7 Lease deed dated December 6, 2010 between DLF Assets Private Limited and WNS Global Services Private Limited with respect to lease of office premises |
Ex-4.8 Lease deed dated January 28, 2011 between BCR Real Estate Fund and WNS BPO Service Costa Rica, S.A. with respect to Lease premises |
Ex-4.13 Variation Agreement dated August 3, 2009 between Aviva Global Services (Management Services) Private Limited and WNS Capital Investment Limited |
Ex-4.14 Novation and Agreement of Amendment |
Ex-8.1 List of subsidiaries of WNS (Holdings) Limited |
Ex-12.1 Certification by the Chief Executive Officer to 17 CFR240, 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Ex-12.2 Certification by the Chief Financial Officer to 17 CFR 240, 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
Ex-13.1 Certification by the Chief Executive Officer to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Ex-13.2 Certification by the Chief Financial Officer to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Ex-15.1 Consent of Ernst and Young, independent registered public accounting firm |
Ex-15.2 Consent of Grant Thornton, independent registered public accounting firm |
Ex-15.3 Auditor letter of Ernst and Young, independent registered public accounting firm, pertaining to Item 16F |
EX-101 INSTANCE DOCUMENT |
EX-101 SCHEMA DOCUMENT |
EX-101 CALCULATION LINKBASE DOCUMENT |
EX-101 LABELS LINKBASE DOCUMENT |
EX-101 PRESENTATION LINKBASE DOCUMENT |
EX-101 DEFINITION LINKBASE DOCUMENT |
Page 1
CONVENTIONS USED IN THIS ANNUAL REPORT
In this annual report, references to US are to the United States of America, its territories and
its possessions. References to UK are to the United Kingdom. References to India are to the
Republic of India. References to $ or dollars or US dollars are to the legal currency of the
US and references to
or rupees or Indian rupees are to the legal currency of India.
References to pound sterling or £ are to the legal currency of the UK. References to pence
are to the legal currency of Jersey, Channel Islands. Our financial statements are presented in US
dollars and are prepared in accordance with US generally accepted accounting principles, or US
GAAP. Beginning with the fiscal year ending March 31, 2012, we intend to report our financial results
under International Financial Reporting Standards, or IFRS, as issued by the International
Accounting Standards Board, or IASB. References to a particular fiscal year are to our fiscal year ended March 31 of that year.
Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.
Names of our clients are listed in alphabetical order in this annual report, unless otherwise
stated.
In this annual report, unless otherwise specified or the context requires, the term WNS refers to
WNS (Holdings) Limited, a public company incorporated under the laws of Jersey, Channel Islands,
and the terms our company, we, our and us refer to WNS (Holdings) Limited and its
subsidiaries.
In this
annual report, references to Commission are to the United
States Securities and Exchange Commission.
We also refer in various places within this annual report to revenue less repair payments, which
is a non-GAAP measure that is calculated as revenue less payments to automobile repair centers and
more fully explained in Item 5. Operating and Financial Review and Prospects. The presentation of
this non-GAAP information is not meant to be considered in isolation or as a substitute for our
financial results prepared in accordance with US GAAP.
We also refer to information regarding the business process outsourcing, or BPO, industry, our
company and our competitors from market research reports, analyst reports and other publicly
available sources. Although we believe that this information is reliable, we have not independently
verified the accuracy and completeness of the information. We caution you not to place undue
reliance on this data.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that are based on our current
expectations, assumptions, estimates and projections about our company and our industry. The
forward-looking statements are subject to various risks and uncertainties. Generally, these
forward-looking statements can be identified by the use of forward-looking terminology such as
anticipate, believe, estimate, expect, intend, will, project, seek, should and
similar expressions. Those statements include, among other things, the discussions of our business
strategy and expectations concerning our market position, future operations, margins,
profitability, liquidity, capital resources and the timing and
impact of our proposed adoption of IFRS, as issued by the IASB. We caution you that reliance on any forward-looking
statement involves risks and uncertainties, and that although we believe that the assumptions on
which our forward-looking statements are based are reasonable, any of those assumptions could prove
to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could
be materially incorrect. These risks and uncertainties include but are not limited to:
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worldwide economic and business conditions; |
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political or economic instability in the jurisdictions where we have
operations; |
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regulatory, legislative and judicial developments; |
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our ability to attract and retain clients; |
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technological innovation; |
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telecommunications or technology disruptions; |
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future regulatory actions and conditions in our operating areas; |
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our dependence on a limited number of clients in a limited number of industries; |
Page 2
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our ability to expand our business or effectively manage growth; |
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our ability to hire and retain enough sufficiently trained
employees to support our operations; |
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negative public reaction in the US or the UK to offshore outsourcing; |
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increasing competition in the BPO industry; |
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our ability to successfully grow our revenue, expand our service
offerings and market share and achieve accretive benefits from our
acquisition of Aviva Global Services Singapore Pte. Ltd., or Aviva
Global (which we have renamed as WNS Customer Solutions (Singapore)
Private Limited, or WNS Global Singapore following our acquisition)
and our master services agreement with Aviva Global Services
(Management Services) Private Ltd., or AVIVA MS, as described below; |
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our ability to successfully consummate strategic acquisitions; and |
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volatility of our ADS price. |
These and other factors are more fully discussed in Item 3. Key Information D. Risk Factors,
Item 5. Operating and Financial Review and Prospects and elsewhere in this annual report. In
light of these and other uncertainties, you should not conclude that we will necessarily achieve
any plans, objectives or projected financial results referred to in any of the forward-looking
statements. Except as required by law, we do not undertake to release revisions of any of these
forward-looking statements to reflect future events or circumstances.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. Selected Financial Data
The following selected financial data should be read in conjunction with Item 5. Operating and
Financial Review and Prospects, and our consolidated financial statements included elsewhere in
this annual report.
Last year we concluded, based on our consultation with our Audit Committee, that corrections to our
prior accounting treatment for fees earned from garages, and revenue and costs on completed but
unbilled repairs, are required in our Auto Claims BPO segment for the years ended March 31, 2009,
2008, 2007 and 2006 and the selected quarterly financial information for each of the first, second
and third quarters for the year ended March 31, 2010 and each of the quarters of the year ended
March 31, 2009. Accordingly, we restated our previously issued financial statements. The restated
financial information is available in our annual report for the year ended March 31, 2010 and is
also included in this annual report. The last years annual report contains the details of the
accounting treatment and the adjustments made as a result of the restatement.
Page 3
The following consolidated balance sheet data as at March 31, 2011 and March 31, 2010 and
consolidated statement of income data for fiscal 2011, 2010 and 2009
are derived from our audited consolidated financial statements included elsewhere in this annual report. The selected consolidated statement
of income data presented below for fiscal 2008 and 2007 and the selected consolidated balance sheet
data as of March 31, 2009, 2008 and 2007 have been derived from our consolidated financial
statements which are not included in this annual report.
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For the year ended March 31, |
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2011 |
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2010 |
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2009 |
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2008 |
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2007 |
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(US dollars in millions, except share and per share data) |
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Consolidated Statement of
Income Data: |
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Revenue |
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$ |
616.3 |
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$ |
582.5 |
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$ |
520.9 |
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$ |
438.0 |
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$ |
345.4 |
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Cost of revenue(1) |
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491.8 |
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439.3 |
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391.8 |
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341.5 |
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264.4 |
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Gross profit |
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124.4 |
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143.2 |
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129.1 |
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96.5 |
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81.0 |
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Operating expenses: |
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Selling, general and
administrative
expenses(1) |
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80.5 |
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86.2 |
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75.5 |
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72.7 |
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52.5 |
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Amortization of intangible
assets |
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31.8 |
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32.4 |
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24.9 |
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2.9 |
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1.9 |
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Impairment of goodwill,
intangibles and other assets(2) |
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15.5 |
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Operating income |
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12.1 |
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24.6 |
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28.7 |
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5.4 |
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26.6 |
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Other (income) expense, net |
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(6.1 |
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7.1 |
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5.6 |
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(9.2 |
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(2.5 |
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Interest expense |
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8.0 |
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13.8 |
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11.8 |
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0.1 |
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Income before income taxes |
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10.1 |
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3.7 |
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11.3 |
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14.6 |
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29.0 |
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Provision for income taxes |
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1.0 |
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1.0 |
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3.4 |
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5.2 |
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2.5 |
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Net income |
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9.1 |
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2.7 |
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7.9 |
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9.4 |
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26.5 |
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Less: Net loss attributable
to redeemable noncontrolling
interest |
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(0.7 |
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(1.0 |
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(0.3 |
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Net income attributable to
WNS (Holdings) Limited
shareholders |
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$ |
9.8 |
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$ |
3.7 |
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$ |
8.2 |
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$ |
9.4 |
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$ |
26.5 |
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Earnings per share of
ordinary share |
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Basic |
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$ |
0.21 |
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$ |
0.09 |
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$ |
0.19 |
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$ |
0.22 |
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$ |
0.69 |
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Diluted |
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$ |
0.21 |
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$ |
0.08 |
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$ |
0.19 |
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$ |
0.22 |
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$ |
0.64 |
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Basic weighted average ordinary
shares outstanding |
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44,260,713 |
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43,093,316 |
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42,520,404 |
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42,070,206 |
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38,608,188 |
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Diluted weighted average
ordinary shares outstanding |
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45,020,833 |
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44,174,128 |
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43,108,599 |
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42,945,028 |
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41,120,497 |
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Page 4
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As at March 31, |
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2011 |
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2010 |
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2009 |
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2008 |
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2007 |
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(US dollars in millions) |
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Consolidated Balance Sheet Data: |
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Assets |
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Cash and cash equivalents |
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$ |
27.1 |
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$ |
32.3 |
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$ |
38.9 |
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$ |
102.7 |
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$ |
112.3 |
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Bank deposits and marketable securities |
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0.0 |
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0.0 |
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8.9 |
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8.1 |
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12.0 |
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Accounts receivable including unbilled
revenue, net |
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109.4 |
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85.7 |
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71.2 |
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58.6 |
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52.4 |
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Other current assets(3) |
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48.3 |
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58.9 |
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54.4 |
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23.4 |
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18.5 |
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Total current assets |
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184.8 |
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176.9 |
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173.4 |
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192.8 |
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195.2 |
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Goodwill and intangible assets, net |
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250.6 |
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278.7 |
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299.1 |
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96.9 |
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44.4 |
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Property and equipment, net |
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48.6 |
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51.7 |
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56.0 |
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50.8 |
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41.8 |
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Deposits and deferred tax assets |
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41.1 |
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32.3 |
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21.9 |
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15.4 |
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6.2 |
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Other assets and investments |
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3.3 |
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10.3 |
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11.4 |
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1.3 |
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Total assets |
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528.4 |
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|
549.9 |
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561.8 |
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357.2 |
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287.6 |
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Liabilities, redeemable noncontrolling
interest and equity |
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Current portion of long term debt |
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50.0 |
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40.0 |
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45.0 |
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Accrual for earn-out payment |
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33.7 |
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Other current liabilities(4) |
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144.7 |
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133.9 |
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132.5 |
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88.8 |
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75.1 |
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Total current liabilities |
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194.7 |
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173.9 |
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|
|
177.5 |
|
|
|
122.5 |
|
|
|
75.1 |
|
Long term debt |
|
|
43.1 |
|
|
|
95.0 |
|
|
|
155.0 |
|
|
|
|
|
|
|
|
|
Other non-current liabilities(5) |
|
|
19.4 |
|
|
|
27.1 |
|
|
|
41.2 |
|
|
|
7.5 |
|
|
|
6.9 |
|
Redeemable noncontrolling interest |
|
|
|
|
|
|
0.3 |
|
|
|
0.0 |
|
|
|
|
|
|
|
|
|
Total WNS (Holdings) Limited shareholders
equity |
|
|
271.2 |
|
|
|
253.6 |
|
|
|
188.1 |
|
|
|
227.2 |
|
|
|
205.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities, redeemable
noncontrolling interest and equity |
|
$ |
528.4 |
|
|
$ |
549.9 |
|
|
$ |
561.8 |
|
|
$ |
357.2 |
|
|
$ |
287.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 5
The following tables set forth for the periods indicated selected consolidated financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended March 31, |
|
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
|
(US dollars in millions, except percentages and employee data) |
Other Consolidated
Financial Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
616.3 |
|
|
$ |
582.5 |
|
|
$ |
520.9 |
|
|
$ |
438.0 |
|
|
$ |
345.4 |
|
Gross profit as a
percentage of revenue |
|
|
20.2 |
% |
|
|
24.6 |
% |
|
|
24.8 |
% |
|
|
22.0 |
% |
|
|
23.5 |
% |
Operating income as a
percentage of revenue |
|
|
2.0 |
% |
|
|
4.2 |
% |
|
|
5.5 |
% |
|
|
1.2 |
% |
|
|
7.7 |
% |
Other Unaudited
Consolidated Financial and
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue less repair
payments(6) |
|
$ |
369.4 |
|
|
$ |
390.5 |
|
|
$ |
385.0 |
|
|
$ |
290.6 |
|
|
$ |
219.6 |
|
Gross profit as a
percentage of revenue less
repair payments |
|
|
33.7 |
% |
|
|
36.7 |
% |
|
|
33.5 |
% |
|
|
33.2 |
% |
|
|
36.9 |
% |
Operating income as a
percentage of revenue less
repair payments |
|
|
3.3 |
% |
|
|
6.3 |
% |
|
|
7.4 |
% |
|
|
1.9 |
% |
|
|
12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of employees (at
period end) |
|
|
21,523 |
|
|
|
21,958 |
|
|
|
21,356 |
|
|
|
18,104 |
|
|
|
15,084 |
|
|
|
|
Notes: |
|
(1) |
|
Includes the following share-based compensation amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
(US dollars in millions) |
|
Cost of revenue |
|
$ |
0.9 |
|
|
$ |
3.7 |
|
|
$ |
3.6 |
|
|
$ |
2.4 |
|
|
$ |
1.0 |
|
Selling, general and
administrative expenses |
|
|
3.1 |
|
|
|
11.4 |
|
|
|
9.8 |
|
|
|
4.4 |
|
|
|
2.7 |
|
|
|
|
(2) |
|
In fiscal 2008, we recorded an impairment charge of $9.1 million
on goodwill and $6.4 million on intangible assets acquired in the
purchase of Trinity Partners Inc., or Trinity Partners. |
|
(3) |
|
Consists of funds held for clients, employee receivables, prepaid
expenses, prepaid income taxes, deferred tax assets and other
current assets. |
|
(4) |
|
Consists of obligations under accounts payable, short term
borrowings, accrued employee cost, deferred revenue, income taxes
payable, deferred tax liabilities and other current liabilities. |
|
(5) |
|
Consists of non-current portion of derivatives, capital leases,
deferred revenue, deferred tax liabilities, other liabilities and
accrued pension liability. |
|
(6) |
|
Revenue less repair payments is a non-GAAP measure. See the
explanation below, as well as Item 5. Operating and Financial
Review and Prospects Overview and notes to our consolidated
financial statements included elsewhere in this annual report.
The following table reconciles our revenue (a GAAP measure) to
revenue less repair payments (a non-GAAP measure): |
Page 6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
(US dollars in millions) |
|
Revenue |
|
$ |
616.3 |
|
|
$ |
582.5 |
|
|
$ |
520.9 |
|
|
$ |
438.0 |
|
|
$ |
345.4 |
|
Less: Payments to repair centers |
|
|
246.9 |
|
|
|
192.0 |
|
|
|
135.9 |
|
|
|
147.4 |
|
|
|
125.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue less repair payments |
|
$ |
369.4 |
|
|
$ |
390.5 |
|
|
$ |
385.0 |
|
|
$ |
290.6 |
|
|
$ |
219.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We have two reportable segments for financial statement reporting purposes WNS Global BPO
and WNS Auto Claims BPO. In our WNS Auto Claims BPO segment, we provide both fault and
non-fault repairs. For fault repairs, we provide claims handling and accident management
services, where we arrange for automobile repairs through a network of third party repair centers.
In our accident management services, we act as the principal in our dealings with the third party
repair centers and our clients. The amounts we invoice to our clients for payments made by us to
third party repair centers is reported as revenue. Since we wholly subcontract the repairs to the
repair centers, we evaluate our financial performance based on revenue less repair payments to
third party repair centers which is a non-GAAP measure. We believe that revenue less repair
payments for fault repairs reflects more accurately the value addition of the business process
outsourcing services that we directly provide to our clients. For non-fault repairs, revenue
including repair payments is used as a primary measure to allocate resources and measure operating
performance. As we provide a consolidated suite of accident management services including credit
hire and credit repair for our non-fault repairs business, we believe that measurement of that
line of business has to be on a basis that includes repair payments in revenue.
Revenue less repair payments is a non-GAAP measure which is calculated as revenue less payments to
repair centers. We believe that the presentation of this non-GAAP measure in this annual report
provides useful information for investors regarding the financial performance of our business and
our two reportable segments. See Item 5. Operating and Financial Review and Prospects Results
by Reportable Segment. The presentation of this non-GAAP information is not meant to be considered
in isolation or as a substitute for our financial results prepared in accordance with US GAAP. Our
revenue less repair payments may not be comparable to similarly titled measures reported by other
companies due to potential differences in the method of calculation.
B. Capitalization and Indebtedness
Not
Applicable.
C. Reason for the Offer and the Use of Proceeds
Not
Applicable.
D. Risk Factors
This annual report contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in these forward-looking statements
as a result of a number of factors, including those described in the following risk factors and
elsewhere in this annual report. If any of the following risks actually occur, our business,
financial condition and results of operations could suffer and the trading price of our ADSs could
decline.
Risks Related to Our Business
The global economic conditions have been challenging and have had, and continue to have, an adverse
effect on the financial markets and the economy in general, which has had, and may continue to
have, a material adverse effect on our business, our financial performance and the prices of our
equity shares and ADSs.
In Asia, Europe and the United States, market and economic conditions have been challenging with
tighter credit conditions and slower growth since fiscal 2009. Since fiscal 2009 and continuing
into fiscal 2012, continued concerns about the systemic impact of inflation, energy costs,
geopolitical issues, and the availability and cost of credit have contributed to increased market
volatility and diminished expectations for the economy globally. These conditions, combined with
volatile oil prices, and declining business and consumer confidence, have, since fiscal 2009 and
continuing into fiscal 2012, contributed to extreme volatility.
Page 7
These economic conditions may affect our business in a number of ways. The general level of
economic activity, such as decreases in business and consumer spending, could result in a decrease
in demand for our services, thus reducing our revenue. The cost and availability of credit has been
and may continue to be adversely affected by illiquid credit markets and wider credit spreads.
Continued turbulence in the US and international markets and economies may adversely affect our
liquidity and financial condition, and the liquidity and financial condition of our customers. If
these market conditions continue, they may limit our ability to access financing or increase our
cost of financing to meet liquidity needs, and affect the ability of our customers to use credit to
purchase our services or to make timely payments to us, resulting in adverse effects on our
financial condition and results of operations. Furthermore, a weakening of the rate of exchange for
the US dollar or the pound sterling (in which our revenue is principally denominated) against the
Indian rupee (in which a significant portion of our costs are denominated) also adversely affects
our results. Fluctuations between the pound sterling or the Indian rupee and the US dollar also
expose us to translation risk when transactions denominated in pound sterling or Indian rupees are
translated to US dollars, our reporting currency. For example, the average pound sterling/US dollar
exchange rate for fiscal 2011, 2010 and 2009 depreciated 2.6%, 7.2% and 14.3%, respectively, as
compared to the average exchange rate for fiscal 2010, 2009 and 2008, respectively, which adversely
impacted our results of operations. Uncertainty about current global economic conditions could also
continue to increase the volatility of our share price. We cannot predict the timing or duration of
the economic slowdown or the timing or strength of a subsequent economic recovery generally or in
our targeted industries, including the travel and insurance industry. If macroeconomic conditions
worsens or the current global economic condition continues for a prolonged period of time, we are
not able to predict the impact such worsening conditions will have on our targeted industries in
general, and our results of operations specifically.
A few major clients account for a significant portion of our revenue and any loss of business from
these clients could reduce our revenue and significantly harm our business.
We have derived and believe that we will continue to derive in the near term a significant portion
of our revenue from a limited number of large clients. In fiscal 2011 and 2010, our five largest
clients accounted for 54.3% and 53.0% of our revenue and 41.1% and 45.1% of our revenue less repair
payments, respectively. In fiscal 2011, our three largest clients individually accounted for 16.4%,
13.2% and 12.2%, respectively, of our revenue as compared to 15.5%, 13.4% and 12.6%, respectively,
in fiscal 2010. In fiscal 2011, our largest client, AVIVA, individually accounted for 20.4% of our
revenue less repair payments compared to 23.1% in fiscal 2010.
First Magnus Financial Corporation, or FMFC, a US mortgage lender, was one of our major clients
from November 2005 to August 2007. FMFC was a major client of Trinity Partners which we acquired in
November 2005 from the First Magnus Group. In August 2007, FMFC filed a voluntary petition for
relief under Chapter 11 of the US Bankruptcy Code. In fiscal 2007, FMFC accounted for 4.3% of our
revenue and 6.8% of our revenue less repair payments. The loss of revenue from FMFC materially
reduced our revenue in fiscal 2008.
Our prior contracts with another major client, Aviva International Holdings Limited, or AVIVA,
provided Aviva Global, which was AVIVAs business process offshoring subsidiary, options to require
us to transfer the relevant projects and operations of our facilities at Sri Lanka and Pune, India
to Aviva Global. On January 1, 2007, Aviva Global exercised its call option requiring us to
transfer the Sri Lanka facility to Aviva Global effective July 2, 2007. Effective July 2, 2007, we
transferred the Sri Lanka facility to Aviva Global and we lost the revenue generated by the Sri
Lanka facility. For the period from April 1, 2007 through July 2, 2007, the Sri Lanka facility
contributed $2.0 million of revenue and in fiscal 2007, it accounted for 1.9% of our revenue and
3.0% of our revenue less repair payments. We may, in the future, enter into contracts with other
clients with similar call options that may result in the loss of revenue that may have a material
impact on our business, results of operations, financial condition and cash flows, particularly
during the quarter in which the option takes effect.
We have, through our acquisition of Aviva Global in July 2008, resumed control of the Sri Lanka
facility and we have continued to retain ownership of the Pune facility. We expect these facilities
to continue to generate revenue for us under the AVIVA master
services agreement (as defined below). Further, through
our acquisition of Aviva Global, we also added three facilities in Bangalore, Chennai and Pune. We
expect revenue from AVIVA under the AVIVA master services agreement to account for a significant
portion of our revenue. We therefore expect our dependence on AVIVA to continue for the foreseeable
future. The AVIVA master services agreement provides for a committed
amount of volume. However,
notwithstanding the minimum volume commitment, there are also terminations at will provisions
which permit AVIVA to terminate the agreement without cause with 180 days notice upon payment of a
termination fee. These termination provisions dilute the impact of
the minimum volume commitment.
In addition, the volume of work performed for specific clients is likely to vary from year to year,
particularly since we may not be the exclusive outside service provider for our clients. Thus, a
major client in one year may not provide the same level of revenue in any subsequent year. The loss
of some or all of the business of any large client could have a material adverse effect on our
business, results of operations, financial condition and cash flows. A number of factors other than
our performance could cause the loss of or reduction in business or revenue from a client, and
these factors are not predictable.
Page 8
For example, a client may demand price reductions, change its outsourcing strategy or move work
in-house. A client may also be acquired by a company with a different outsourcing strategy that
intends to switch to another business process outsourcing service provider or return work in-house.
Our revenue is highly dependent on clients concentrated in a few industries, as well as clients
located primarily in Europe and the United States. Economic slowdowns or factors that affect these
industries or the economic environment in Europe or the United States could reduce our revenue and
seriously harm our business.
A substantial portion of our clients are concentrated in the banking, financial services and
insurance, or BFSI, industry, and the travel and leisure industry. In fiscal 2011 and 2010, 66.5%
and 65.4% of our revenue, respectively, and 44.2% and 48.4% of our revenue less repair payments,
respectively, were derived from clients in the BFSI industry. During the same periods, clients in
the travel and leisure industry contributed 13.8% and 16.3% of our revenue, respectively, and 23.0%
and 24.3% of our revenue less repair payments, respectively. Our business and growth largely depend
on continued demand for our services from clients in these industries and other industries that we
may target in the future, as well as on trends in these industries to outsource business processes.
Since the second half of fiscal 2009, there has been a significant slowdown in the growth of the
global economy accompanied by a significant reduction in consumer and business spending worldwide.
Certain of our targeted industries are especially vulnerable to the crisis in the financial and
credit markets or to the economic downturn. A downturn in any of our targeted industries,
particularly the BFSI or travel and leisure industries, a slowdown or reversal of the trend to
outsource business processes in any of these industries or the introduction of regulation which
restricts or discourages companies from outsourcing could result in a decrease in the demand for
our services and adversely affect our results of operations. For example, as a result of the
mortgage market crisis, in August 2007, FMFC, a US mortgage services client, filed a voluntary
petition for relief under Chapter 11 of the US Bankruptcy Code. FMFC was a major client of Trinity
Partners which we acquired in November 2005 from the First Magnus Group and became one of our major
clients. In fiscal 2008 and 2007, FMFC accounted for 1.0% and 4.3% of our revenue, respectively,
and 1.4% and 6.8% of our revenue less repair payments, respectively. The downturn in the mortgage
market could result in a further decrease in the demand for our services and adversely affect our
results of our operations.
Further, since the second half of fiscal 2009, the downturn in worldwide economic and business
conditions has resulted in a few of our clients reducing or postponing their outsourced business
requirements, which have in turn decreased the demand for our services and adversely affected our
results of operations. In particular, our revenue is highly dependent on the economic environment
in Europe and the United States, which continues to be weak. In fiscal 2011 and 2010, 76.8% and
74.9% of our revenue, respectively, and 61.3% and 62.6% of our revenue less repair payments,
respectively, were derived from clients located in Europe. During the same periods, 22.2% and 24.5%
of our revenue, respectively, and 37.0% and 36.5% of our revenue less repair payments,
respectively, were derived from clients located in North America (primarily the United States). Any
further weakening of the European or United States economy will likely have a further adverse
impact on our revenue.
Other developments may also lead to a decline in the demand for our services in these industries.
For example, the crisis in the financial and credit markets in the United States has led to a
significant change in the financial services industry in the United States in recent years, with
the United States federal government taking over or providing financial support to leading
financial institutions and with leading investment banks going bankrupt or being forced to sell
themselves in distressed circumstances. Significant changes in the financial services industry or
any of the other industries on which we focus, or a consolidation in any of these industries or
acquisitions, particularly involving our clients, may decrease the potential number of buyers of
our services. Any significant reduction in or the elimination of the use of the services we provide
within any of these industries would result in reduced revenue and harm our business. Our clients
may experience rapid changes in their prospects, substantial price competition and pressure on
their profitability. Although such pressures can encourage outsourcing as a cost reduction measure,
they may also result in increasing pressure on us from clients in these key industries to lower our
prices which could negatively affect our business, results of operations, financial condition and
cash flows.
We may fail to attract and retain enough sufficiently trained employees to support our operations,
as competition for highly skilled personnel is significant and we experience significant employee
attrition. These factors could have a material adverse effect on our business, results of
operations, financial condition and cash flows.
The business process outsourcing industry relies on large numbers of skilled employees, and our
success depends to a significant extent on our ability to attract, hire, train and retain qualified
employees. The business process outsourcing industry, including our company, experiences high
employee attrition. During fiscal 2011, 2010 and 2009, the attrition rate for our employees who
have completed six months of employment with us was 43%, 32% and 31%, respectively. We cannot
assure you that our attrition rate will not continue to increase. There is significant competition
in the jurisdictions wherever we have operation centers, including India, the Philippines and Sri
Lanka, for professionals with the skills necessary to perform the services we offer to our
clients. Increased competition for these professionals, in the business process outsourcing
industry or otherwise, could have an adverse effect on us. A significant increase in the attrition
rate among employees with specialized skills could decrease our operating efficiency and
productivity and could lead to a decline in demand for our services.
In addition, our ability to maintain and renew existing engagements and obtain new businesses will
depend largely on our ability to attract, train and retain personnel with skills that enable us to
keep pace with growing demands for outsourcing, evolving industry standards and changing client
preferences. Our failure either to attract, train and retain personnel with the qualifications
necessary to fulfill the needs of our existing and future clients or to assimilate new employees
successfully could have a material adverse effect on our business, results of operations, financial
condition and cash flows.
Page 9
If we fail to maintain an effective system of internal control over financial reporting, we may not
be able to accurately report our financial results or prevent or detect fraud. As a result, current
and potential investors could lose confidence in our financial reporting, which could harm our
business and have an adverse effect on our stock price.
Effective internal control over financial reporting is necessary for us to provide reliable
financial reports. The effective internal controls together with adequate disclosure controls and
procedures are designed to prevent or detect fraud. Deficiencies in our internal controls may
adversely affect our managements ability to record, process, summarize, and report financial data
on a timely basis. As a public company, we are required by Section 404 of the Sarbanes-Oxley Act of
2002 to include a report of managements assessment on our internal control over financial
reporting and an auditors attestation report on our internal control over financial reporting in
our annual report on Form 20-F.
Based on its evaluation, management had concluded that as at March 31, 2010, our companys
disclosure controls and procedures and internal control over financial reporting were not effective
due to a material weakness identified in the design and operating effectiveness of our controls
over the recognition and accrual of repair payments to garages and the related fees in our Auto
Claims BPO segment. In order to remediate the identified material weakness, we have in fiscal 2011
augmented our existing US GAAP expertise and strengthened our monitoring controls and documentation
for the revenue recognition process in our Auto Claims BPO segment. Although management concluded
that our companys disclosure controls and procedures and internal control over financial reporting
were effective as at March 31, 2011, it is possible that in the future, material weaknesses could
be identified in our internal controls over financial reporting and we could be required to further
implement remedial measures. If we fail to maintain effective disclosure controls and procedures or
internal control over financial reporting, we could lose investor confidence in the accuracy and
completeness of our financial reports, which could have a material adverse effect on our stock
price.
We may be unable to effectively manage our rapid growth and maintain effective internal controls,
which could have a material adverse effect on our operations, results of operations and financial
condition.
Since we were founded in April 1996, and especially since Warburg Pincus & Co., or Warburg Pincus,
acquired a controlling stake in our company in May 2002, we have experienced rapid growth and
significantly expanded our operations. Our revenue has grown at a compound annual growth rate of
15.6% to $616.3 million in fiscal 2011 from $345.4 million in fiscal 2007. Our revenue less repair
payments has grown at a compound annual growth rate of 13.9% to $369.4 million in fiscal 2011 from
$219.6 million in fiscal 2007. Our employees have increased to 21,523 as at March 31, 2011 from
15,084 as at March 31, 2007. In January 2008, we established a new delivery center in Romania,
which we expanded in fiscal year 2011. Our majority owned subsidiary, WNS Philippines Inc.,
established a delivery center in the Philippines in April 2008, which it expanded in fiscal 2010.
Additionally, in fiscal 2010, we established a new delivery center in Costa Rica and streamlined
our operations by consolidating our production capacities in various delivery centers in Bangalore,
Mumbai and Pune. We now have delivery centers in six locations in India, the Philippines, Sri
Lanka, the UK, Romania and Costa Rica. In fiscal 2012, we intend to establish additional delivery
centers, as well as continue to streamline our operations by further consolidating production
capacities in our delivery centers. In February 2011, we received in-principal approval for the allotment of a piece of land on lease
for a term of 99 years, measuring 5 acres in Tiruchirapalli Navalpattu, special economic zone, or
SEZ, in the state of Tamil Nadu, India from Electronics Corporation of Tamil Nadu Limited (ELCOT)
for setting up delivery centers in future.
We have also completed numerous acquisitions. For example, in July 2008, we entered into a
transaction with AVIVA consisting of (1) a share sale and purchase agreement pursuant to which we
acquired from AVIVA all the shares of Aviva Global and (2) a master services agreement with AVIVA
MS pursuant to which we
are providing BPO services to AVIVAs UK business and
AVIVAs Irish subsidiary, Hibernian Aviva Direct Limited, and
certain of its affiliates. Aviva Global was the business process offshoring subsidiary of
AVIVA. Through our acquisition of Aviva Global , we also added three facilities in Bangalore,
Chennai and Sri Lanka in July 2008, and one facility in Pune in August 2008.
This rapid growth places significant demands on our management and operational resources. In order
to manage growth effectively, we must implement and improve operational systems, procedures and
internal controls on a timely basis. If we fail to implement these systems, procedures and controls
on a timely basis, we may not be able to service our clients needs, hire and retain new employees,
pursue new business, complete future acquisitions or operate our business effectively. Failure to
effectively transfer new client business to our delivery centers, properly budget transfer costs or
accurately estimate operational costs associated with new contracts could result in delays in
executing client contracts, trigger service level penalties or cause our profit margins not to meet our expectations or our
historical profit margins. As a result of any of these problems associated with expansion, our
business, results of operations, financial condition and cash flows could be materially and
adversely affected.
Page 10
We may not be successful in achieving the expected benefits from our transaction with AVIVA in July
2008, which could have a material adverse effect on our business, results of operations, financial
condition and cash flows. Furthermore, the term loan that we have incurred to fund the transaction
may put a strain on our financial position.
In July 2008, we entered into a transaction with AVIVA consisting of (1) a share sale and purchase
agreement pursuant to which we acquired all the shares of Aviva Global and (2) the AVIVA master
services agreement pursuant to which we are providing BPO services to
AVIVAs UK business and AVIVAs Irish subsidiary, Hibernian
Aviva Direct Limited, and certain of its affiliates. We completed our acquisition of Aviva Global in July 2008. Aviva Global was the
business process offshoring subsidiary of AVIVA with facilities in Bangalore, India, and Colombo,
Sri Lanka. In addition, through our acquisition of Aviva Global, we also acquired three facilities
in Chennai, Bangalore and Sri Lanka in July 2008, and one facility in Pune in August 2008. The
total consideration (including legal and professional fees) for this transaction with AVIVA
amounted to approximately $249.0 million. We entered into a $200 million term loan facility with
ICICI Bank UK Plc, or the 2008 Term Loan, as agent, to fund, together with cash on hand, the
consideration for the transaction. In July 2010, we refinanced the outstanding $115 million amount
under this facility with cash on hand and proceeds from a new term loan facility for $94 million,
or the 2010 Term Loan, pursuant to a facility agreement dated July 2, 2010 with The Hongkong and
Shanghai Banking Corporation Limited, Hong Kong, DBS Bank Limited, Singapore and BNP Paribas,
Singapore. See Part I Item 5. Operating and Financial Review and Prospects Liquidity and
Capital Resources. We cannot assure you that we will be able to grow our revenue, expand our
service offerings and market share, or achieve the accretive benefits that we expected from our
acquisition of Aviva Global and the AVIVA master services agreement.
Furthermore, the 2010 Term Loan may put a strain on our financial position. For example:
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it could increase our vulnerability to general adverse economic and
industry conditions; |
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it could require us to dedicate a substantial portion of our cash flow
from operations to payments on the 2010 Term Loan, thereby reducing
the availability of our cash flow to fund capital expenditure, working
capital and other general corporate purposes; |
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it requires us to seek lenders consent prior to paying dividends on
our ordinary shares; |
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it limits our ability to incur additional borrowings or raise
additional financing through equity or debt instruments; and |
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it imposes certain financial covenants on us which we may not be able
to meet and this may cause the lenders to accelerate the repayment of
the balance loan outstanding. |
The international nature of our business exposes us to several risks, such as significant currency
fluctuations and unexpected changes in the regulatory requirements of multiple jurisdictions.
We have operations in Costa Rica, India, the Philippines, Romania, Sri Lanka, the UK, the US, and
we service clients across Asia, Europe, and North America. Our corporate structure also spans
multiple jurisdictions, with our parent holding company incorporated in Jersey, Channel Islands,
and intermediate and operating subsidiaries incorporated in Australia, China, Costa Rica, India,
Mauritius, the Netherlands, the Philippines, Romania, Singapore, Sri Lanka, UAE, the UK and the US.
As a result, we are exposed to risks typically associated with conducting business internationally,
many of which are beyond our control. These risks include:
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significant currency fluctuations between the US dollar and the pound
sterling (in which our revenue is principally denominated) and the
Indian rupee (in which a significant portion of our costs are
denominated); |
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legal uncertainty owing to the overlap of different legal regimes, and
problems in asserting contractual or other rights across international
borders; |
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potentially adverse tax consequences, such as scrutiny of transfer
pricing arrangements by authorities in the countries in which we
operate; |
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potential tariffs and other trade barriers; |
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unexpected changes in regulatory requirements; |
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the burden and expense of complying with the laws and regulations of
various jurisdictions; and |
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terrorist attacks and other acts of violence or war. |
The occurrence of any of these events could have a material adverse effect on our results of
operations and financial condition.
Currency fluctuations among the Indian rupee, the pound sterling and the US dollar could have a
material adverse effect on our results of operations.
Although substantially all of our revenue is denominated in pound sterling or US dollars, a
significant portion of our expenses (other than payments to repair centers, which are primarily
denominated in pound sterling) are incurred and paid in Indian rupees. We report our financial
results in US dollars and our results of operations would be adversely affected if the Indian rupee
appreciates against the US dollar or the pound sterling depreciates against the US dollar. The
exchange rates between the Indian rupee and the US dollar and between the pound sterling and the US
dollar have changed substantially in recent years and may fluctuate substantially in the future.
The average Indian rupee/US dollar exchange rate was approximately
45.57 per $1.00 in fiscal 2011,
which represented an appreciation of the Indian rupee of 4.0% as compared with the average exchange
rate of approximately
47.46 per $1.00 in fiscal 2010, which in turn represented a depreciation of
the Indian rupee of 3.0% as compared with the average exchange rate of approximately
46.10 per
$1.00 in fiscal 2009. The average pound sterling/US dollar exchange rate was approximately £0.64
per $1.00 in fiscal 2011, which represented a depreciation of the pound sterling of 2.6% as
compared with the average exchange rate of approximately £0.63 per $1.00 in fiscal 2010, which in
turn represented a depreciation of the pound sterling of 7.2% as compared with the average exchange
rate of approximately £0.58 per $1.00 in fiscal 2009.
Our results of operations may be adversely affected if the Indian rupee appreciates significantly
against the pound sterling or the US dollar or if the pound sterling depreciates against the US
dollar. We hedge a portion of our foreign currency exposures using options and forward contracts.
We cannot assure you that our hedging strategy will be successful or will mitigate our exposure to
currency risk.
Our business may not develop in ways that we currently anticipate due to negative public reaction
to offshore outsourcing, proposed legislation or otherwise.
We have based our strategy of future growth on certain assumptions regarding our industry, services
and future demand in the market for such services. However, the trend to outsource business
processes may not continue and could reverse. Offshore outsourcing is a politically sensitive topic
in the UK, the US and elsewhere. For example, many organizations and public figures in the UK and
the US have publicly expressed concern about a perceived association between offshore outsourcing
providers and the loss of jobs in their home countries.
Such concerns have led to proposed measures in the United States, including in connection with the
Troubled Asset Relief Program, that are aimed at limiting or restricting outsourcing. There is also
legislation that has been enacted or is pending at the State level in the United States, with
regard to limiting outsourcing. The measures that have been enacted to date are generally directed
at restricting the ability of government agencies to outsource work to offshore business service
providers. These measures have not had a significant effect on our business because governmental
agencies are not a focus of our operations. However, it is possible that legislation could be
adopted that would restrict US private sector companies that have federal or state governmental
contracts from outsourcing their services to offshore service providers or that could have an
adverse impact on the economics of outsourcing for private companies in the US. Such legislation
could have an adverse impact on our business with US clients.
Such concerns have also led the United Kingdom and other European Union, or EU, jurisdictions to
enact regulations which allow employees who are dismissed as a result of transfer of services,
which may include outsourcing to non-UK/EU companies, to seek compensation either from the company
from which they were dismissed or from the company to which the work was transferred. This could
discourage EU companies from outsourcing work offshore and/or could result in increased operating
costs for us.
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In addition, there has been publicity about the negative experiences, such as theft and
misappropriation of sensitive client data, of various companies that use offshore outsourcing,
particularly in India. Current or prospective clients may elect to perform such services themselves
or may be discouraged from transferring these services from onshore to offshore providers to avoid
negative perceptions that may be associated with using an offshore provider. Any slowdown or
reversal of existing industry trends towards offshore outsourcing would seriously harm our ability
to compete effectively with competitors that operate out of facilities located in the UK or the US.
Our senior management team and other key team members in our business units are critical to our
continued success and the loss of such personnel could harm our business.
Our future success substantially depends on the performance of the members of our senior management
team and other key team members in each of our business units. These personnel possess technical
and business capabilities including domain expertise that are difficult to replace. There is
intense competition for experienced senior management and personnel with technical and industry
expertise in the business process outsourcing industry, and we may not be able to retain our key
personnel. Although we have entered into employment contracts with our executive officers, certain
terms of those agreements may not be enforceable and in any event these agreements do not ensure
the continued service of these executive officers. In the event of a loss of any key personnel,
there is no assurance that we will be able to find suitable replacements for our key personnel
within a reasonable time. The loss of key members of our senior management or other key team
members, particularly to competitors, could have a material adverse effect on our business, results
of operations, financial condition and cash flows. A loss of several members of our senior
management at the same time or within a short period may lead to a disruption in the business of
our company, which could materially adversely affect our performance.
Wage increases may prevent us from sustaining our competitive advantage and may reduce our profit
margin.
Salaries and related benefits of our operations staff and other employees in India are among our
most significant costs. Wage costs in India have historically been significantly lower than wage
costs in the US and Europe for comparably skilled professionals, which has been one of our
competitive advantages. However, rapid economic growth in India, increased demand for business
process outsourcing to India, and increased competition for skilled employees in India may reduce
this competitive advantage. In addition, if the US dollar or the pound sterling declines in value
against the Indian rupee, wages in the US or the UK will further decrease relative to wages in
India, which may further reduce our competitive advantage. We may need to increase our levels of
employee compensation more rapidly than in the past to remain competitive in attracting the
quantity and quality of employees that our business requires. Wage increases may reduce our profit
margins and have a material adverse effect on our financial condition and cash flows.
Further, following our acquisitions of Aviva Global, Business Application Associates Limited, or
BizAps, and Chang Limited, our operations in the UK have expanded and our wage costs for employees
located in the UK now represent a larger proportion of our total wage costs. Wage increases in the
UK may therefore also reduce our profit margins and have a material adverse effect on our financial
condition and cash flows.
Our operating results may differ from period to period, which may make it difficult for us to
prepare accurate internal financial forecasts and respond in a timely manner to offset such period
to period fluctuations.
Our operating results may differ significantly from period to period due to factors such as client
losses, variations in the volume of business from clients resulting from changes in our clients
operations, the business decisions of our clients regarding the use of our services, delays or
difficulties in expanding our operational facilities and infrastructure, changes to our pricing
structure or that of our competitors, inaccurate estimates of resources and time required to
complete ongoing projects, currency fluctuation and seasonal changes in the operations of our
clients. For example, our clients in the travel and leisure industry experience seasonal changes in
their operations in connection with the year-end holiday season, as well as episodic factors such
as adverse weather conditions. Transaction volumes can be impacted by market conditions affecting
the travel and insurance industries, including natural disasters, outbreak of infectious diseases
or other serious public health concerns in Asia or elsewhere (such as the outbreak of the Influenza
A (H1N1) virus in various parts of the world) and terrorist attacks. In addition, our contracts do
not generally commit our clients to providing us with a specific volume of business.
In addition, the long sales cycle for our services, which typically ranges from three to 12 months,
and the internal budget and approval processes of our prospective clients make it difficult to
predict the timing of new client engagements. Revenue is recognized upon actual provision of
services and when the criteria for recognition are achieved. Accordingly, the financial benefit of
gaining a new client may be delayed due to delays in the implementation of our services. These
factors may make it difficult for us to prepare accurate internal financial forecasts or replace
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anticipated revenue that we do not receive as a result of those delays. Due to the above factors,
it is possible that in some future quarters our operating results may be significantly below the
expectations of the public market, analysts and investors.
Employee strikes and other labor-related disruptions may adversely affect our operations.
Our business depends on a large number of employees executing client operations. Strikes or labor
disputes with our employees at our delivery centers may adversely affect our ability to conduct
business. Our employees are not unionized, although they may in the future form unions. We cannot
assure you that there will not be any strike, lock out or material labor dispute in the future.
Work interruptions or stoppages could have a material adverse effect on our business, results of
operations, financial condition and cash flows.
Failure to adhere to the regulations that govern our business could result in us being unable to
effectively perform our services. Failure to adhere to regulations that govern our clients
businesses could result in breaches of contract with our clients.
Our clients business operations are subject to certain rules and regulations such as the
Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act and Health
Information Technology for Economic and Clinical Health Act in the US and the Financial Services
Act in the UK. Our clients may contractually require that we perform our services in a manner that
would enable them to comply with such rules and regulations. Failure to perform our services in
such a manner could result in breaches of contract with our clients and, in some limited
circumstances, civil fines and criminal penalties for us. In addition, we are required under
various Indian laws to obtain and maintain permits and licenses for the conduct of our business. If
we fail to comply with any applicable rules or regulations, or if we do not maintain our licenses
or other qualifications to provide our services, we may not be able to provide services to existing
clients or be able to attract new clients and could lose revenue, which could have a material
adverse effect on our business.
Our clients may terminate contracts before completion or choose not to renew contracts which could
adversely affect our business and reduce our revenue.
The terms of our client contracts typically range from three to eight years. Many of our client
contracts can be terminated by our clients with or without cause, with three to six months notice
and, in most cases, without penalty. The termination of a substantial percentage of these contracts
could adversely affect our business and reduce our revenue. Contracts that will expire on or before
March 31, 2012 (including work orders/statement of works that will expire on or before March 31,
2012 although the related master services agreement has been renewed) represent approximately 11%
of our revenue and 18% of our revenue less repair payments from our clients in fiscal 2011. Failure
to meet contractual requirements could result in cancellation or non-renewal of a contract. Some of
our contracts may be terminated by the client if certain of our key personnel working on the client
project leave our employment and we are unable to find suitable replacements. In addition, a
contract termination or significant reduction in work assigned to us by a major client could cause
us to experience a higher than expected number of unassigned employees, which would increase our
cost of revenue as a percentage of revenue until we are able to reduce or reallocate our headcount.
We may not be able to replace any client that elects to terminate or not renew its contract with
us, which would adversely affect our business and revenue.
Some of our client contracts contain provisions which, if triggered, could result in lower future
revenue and have an adverse effect on our business.
In many of our client contracts, we agree to include certain provisions which provide for downward
revision of our prices under certain circumstances. For example, certain contracts allow a client
in certain limited circumstances to request a benchmark study comparing our pricing and performance
with that of an agreed list of other service providers for comparable services. Based on the
results of the study and depending on the reasons for any unfavorable variance, we may be required
to make improvements in the service we provide or to reduce the pricing for services to be
performed under the remaining term of the contract. Some of our contracts also provide that, during
the term of the contract and for a certain period thereafter ranging from six to twelve months, we
may not provide similar services to certain or any of their competitors using the same personnel.
These restrictions may hamper our ability to compete for and provide services to other clients in
the same industry, which may result in lower future revenue and profitability.
Some of our contracts specify that if a change in control of our company occurs during the term of
the contract, the client has the right to terminate the contract. These provisions may result in
our contracts being terminated if there is such a change in control, resulting in a potential loss
of revenue. Some of our client contracts also contain provisions
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that would require us to pay penalties to our clients if we do not meet pre-agreed service level
requirements. Failure to meet these requirements could result in the payment of significant
penalties by us to our clients which in turn could have an adverse effect on our business, results
of operations, financial condition and cash flows.
We enter into long-term contracts with our clients, and our failure to estimate the resources and
time required for our contracts may negatively affect our profitability.
The terms of our client contracts typically range from three to eight years. In many of our
contracts, we commit to long-term pricing with our clients and therefore bear the risk of cost
overruns, completion delays and wage inflation in connection with these contracts. If we fail to
estimate accurately the resources and time required for a contract, future wage inflation rates or
currency exchange rates, or if we fail to complete our contractual obligations within the
contracted timeframe, our revenue and profitability may be negatively affected. Some of our client
contracts do not allow us to terminate the contracts except in the case of non-payment by our
client. If any contract turns out to be economically non-viable for us, we may still be liable to
continue to provide services under the contract.
Our profitability will suffer if we are not able to maintain our pricing and asset utilization
levels and control our costs.
Our profit margin, and therefore our profitability, is largely a function of our asset utilization
and the rates we are able to recover for our services. An important component of our asset
utilization is our seat utilization rate which is the average number of work shifts per day, out of
a maximum of three, for which we are able to utilize our work stations, or seats. If we are not
able to maintain the pricing for our services or an appropriate seat utilization rate, without
corresponding cost reductions, our profitability will suffer. The rates we are able to recover for
our services are affected by a number of factors, including our clients perceptions of our ability
to add value through our services, competition, introduction of new services or products by us or
our competitors, our ability to accurately estimate, attain and sustain engagement revenue, margins
and cash flows over increasingly longer contract periods and general economic and political
conditions.
Our profitability is also a function of our ability to control our costs and improve our
efficiency. As we increase the number of our employees and execute our strategies for growth, we
may not be able to manage the significantly larger and more geographically diverse workforce that
may result, which could adversely affect our ability to control our costs or improve our
efficiency.
We have incurred losses in the past. We may not be profitable in the future and may not be able to
secure additional business.
We incurred losses in each of the three fiscal years from fiscal 2003 through fiscal 2005. We
expect our selling, general and administrative expenses to increase in future periods. If our
revenue does not grow at a faster rate than these expected increases in our expenses, or if our
operating expenses are higher than we anticipate, we may not be profitable and we may incur losses.
If we cause disruptions to our clients businesses, provide inadequate service or are in breach of
our representations or obligations, our clients may have claims for substantial damages against us.
Our insurance coverage may be inadequate to cover these claims and, as a result, our profits may be
substantially reduced.
Most of our contracts with clients contain service level and performance requirements, including
requirements relating to the quality of our services and the timing and quality of responses to the
clients customer inquiries. In some cases, the quality of services that we provide is measured by
quality assurance ratings and surveys which are based in part on the results of direct monitoring
by our clients of interactions between our employees and our clients customers. Failure to
consistently meet service requirements of a client or errors made by our associates in the course
of delivering services to our clients could disrupt the clients business and result in a reduction
in revenue or a claim for substantial damages against us. For example, some of our agreements
stipulate standards of service that, if not met by us, will result in lower payment to us. In
addition, in connection with acquiring new business from a client or entering into client
contracts, our employees may make various representations, including representations relating to
the quality of our services, abilities of our associates and our project management techniques. A
failure or inability to meet a contractual requirement or our representations could seriously
damage our reputation and affect our ability to attract new business or result in a claim for
substantial damages against us.
Our dependence on our offshore delivery centers requires us to maintain active data and voice
communications between our main delivery centers in India, Costa Rica, the Philippines, Romania,
Sri Lanka and the UK, our international technology hubs in the US and the UK and our clients
offices. Although we maintain redundant facilities and communications links, disruptions could
result from, among other things, technical and electricity breakdowns, computer glitches and
viruses
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and adverse weather conditions. Any significant failure of our equipment or systems, or any major
disruption to basic infrastructure like power and telecommunications in the locations in which we
operate, could impede our ability to provide services to our clients, have a negative impact on our
reputation, cause us to lose clients, reduce our revenue and harm our business.
Under our contracts with our clients, our liability for breach of our obligations is generally
limited to actual damages suffered by the client and capped at a portion of the fees paid or
payable to us under the relevant contract. Although our contracts contain limitations on liability,
such limitations may be unenforceable or otherwise may not protect us from liability for damages.
In addition, certain liabilities, such as claims of third parties for which we may be required to
indemnify our clients, are generally not limited under those agreements. Although we have
professional indemnity insurance coverage, the coverage may not continue to be available on
reasonable terms or in sufficient amounts to cover one or more large claims, and our insurers may
disclaim coverage as to any future claims. The successful assertion of one or more large claims
against us that exceed available insurance coverage, or changes in our insurance policies
(including premium increases or the imposition of large deductible or co-insurance requirements),
could have a material adverse effect on our business, reputation, results of operations, financial
condition and cash flows.
We are liable to our clients for damages caused by unauthorized disclosure of sensitive and
confidential information, whether through a breach of our computer systems, through our employees
or otherwise.
We are typically required to manage, utilize and store sensitive or confidential client data in
connection with the services we provide. Under the terms of our client contracts, we are required
to keep such information strictly confidential. Our client contracts do not include any limitation
on our liability to them with respect to breaches of our obligation to maintain confidentiality on
the information we receive from them. We seek to implement measures to protect sensitive and
confidential client data and have not experienced any material breach of confidentiality to date.
However, if any person, including any of our employees, penetrates our network security or
otherwise mismanages or misappropriates sensitive or confidential client data, we could be subject
to significant liability and lawsuits from our clients or their customers for breaching contractual
confidentiality provisions or privacy laws. Although we have insurance coverage for mismanagement
or misappropriation of such information by our employees, that coverage may not continue to be
available on reasonable terms or in sufficient amounts to cover one or more large claims against us
and our insurers may disclaim coverage as to any future claims. Penetration of the network security
of our data centers could have a negative impact on our reputation which would harm our business.
We may not succeed in identifying suitable acquisition targets or integrating any acquired business
into our operations, which could have a material adverse effect on our business, results of
operations, financial condition and cash flows.
Our growth strategy involves gaining new clients and expanding our service offerings, both
organically and through strategic acquisitions. Historically, we have expanded some of our service
offerings and gained new clients through strategic acquisitions. For example, we acquired Aviva
Global in July 2008, BizAps in June 2008, Chang Limited in April 2008, and Flovate Technologies
Limited, or Flovate (which we subsequently renamed as WNS Workflow Technologies Limited), in June
2007. In March 2008, we entered into a joint venture with Advanced Contact Solutions, Inc., or ACS,
a provider in BPO services and customer care in the Philippines, to form WNS Philippines Inc. It is
possible that in the future we may not succeed in identifying suitable acquisition targets
available for sale or investments on reasonable terms, have access to the capital required to
finance potential acquisitions or investments, or be able to consummate any acquisition or
investments. The inability to identify suitable acquisition targets or investments or the inability
to complete such transactions may affect our competitiveness and our growth prospects. In addition,
our management may not be able to successfully integrate any acquired business into our operations
or benefit from any joint ventures that we enter into, and any acquisition we do complete or any
joint venture we do enter into may not result in long-term benefits to us. For example, if we
acquire a company, we could experience difficulties in assimilating that companys personnel,
operations, technology and software, or the key personnel of the acquired company may decide not to
work for us. The lack of profitability of any of our acquisitions or joint ventures could have a
material adverse effect on our operating results. Future acquisitions or joint ventures may also
result in the incurrence of indebtedness or the issuance of additional equity securities and may
present difficulties in financing the acquisition on attractive terms. Further, we may receive
claims or demands by the sellers of the entities acquired by us on the indemnities that we have
provided to them for losses or damages arising from any breach of contract by us. Conversely, while
we may be able to claim against the sellers on their indemnities to us for breach of contract or
breach of the representations and warranties given by the sellers in respect of the entities
acquired by us,
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there can be no assurance that our claims will succeed, or if they do, that we will be able to
successfully enforce our claims against the sellers at a reasonable cost. Acquisitions and joint
ventures also typically involve a number of other risks, including diversion of managements
attention, legal liabilities and the need to amortize acquired intangible assets, any of which
could have a material adverse effect on our business, results of operations, financial condition
and cash flows.
We recorded an impairment charge of $15.5 million to our earnings in fiscal 2008 and may be
required to record a significant charge to earnings in the future when we review our goodwill,
intangible or other assets for potential impairment.
As at March 31, 2011, we had goodwill and intangible assets of approximately $94.0 million and
$156.6 million, respectively, which primarily resulted from the purchases of Aviva Global, BizAps,
Chang Limited, Flovate, Marketics Technologies (India) Private Limited, or Marketics, Town &
Country Assistance Limited (which we subsequently rebranded as WNS Assistance) and WNS Global
Services Private Limited, or WNS Global. Of the $156.6 million of intangible assets as at March 31,
2011, $151.2 million pertain to our purchase of Aviva Global. Under US GAAP, we are required to
review our goodwill, intangibles or other assets for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. In addition, goodwill, intangible
or other assets with indefinite lives are required to be tested for impairment at least annually.
We performed an impairment review and recorded an impairment charge of $15.5 million to our
earnings in fiscal 2008 relating to Trinity Partners. If, for example, the insurance industry
experiences a significant decline in business and we determine that we will not be able to achieve
the cash flows that we had expected from our acquisition of Aviva Global, we may have to record an
impairment of all or a portion of the $151.2 million of intangible assets relating to our purchase
of Aviva Global. Although our impairment review of goodwill and intangible assets in fiscal 2011,
2010 and 2009 did not indicate any impairment, we may be required in the future to record a
significant charge to earnings in our financial statements during the period in which any
impairment of our goodwill or other intangible assets is determined. Such charges may have a
significant adverse impact on our results of operations.
Our facilities are at risk of damage by natural disasters.
Our operational facilities and communication hubs may be damaged in natural disasters such as
earthquakes, floods, heavy rains, tsunamis and cyclones. For example, during floods caused by
typhoons in Manila, Philippines in September 2009, our delivery center was rendered inaccessible and
our associates were not able to commute to the delivery center for a few days, thereby adversely
impacting our provision of services to our clients. During the floods in Mumbai in July 2005, our
operations were adversely affected as a result of the disruption of the citys public utility and
transport services making it difficult for our associates to commute to our office. Such natural
disasters may also lead to disruption to information systems and telephone service for sustained
periods. Damage or destruction that interrupts our provision of outsourcing services could damage
our relationships with our clients and may cause us to incur substantial additional expenses to
repair or replace damaged equipment or facilities. We may also be liable to our clients for
disruption in service resulting from such damage or destruction. While we currently have property
damage insurance and business interruption insurance, our insurance coverage may not be sufficient.
Furthermore, we may be unable to secure such insurance coverage at premiums acceptable to us in the
future or secure such insurance coverage at all. Prolonged disruption of our services as a result
of natural disasters would also entitle our clients to terminate their contracts with us.
Our largest shareholder, Warburg Pincus, is able to significantly influence our corporate actions,
and may also enter into transactions that may result in a change in control of our company.
Warburg Pincus beneficially owns approximately 48.1% of our shares. As a result of its ownership
position, Warburg Pincus has the ability to significantly influence matters requiring shareholder
and board approval including, without limitation, the election of directors, significant corporate
transactions such as amalgamations and consolidations, changes in control of our company and sales
of all or substantially all of our assets. Actions that are supported by Warburg Pincus are very
likely to be taken and the interests of Warburg Pincus may differ from the interests of other
shareholders of our company.
A change in control or potential change in control transaction may consume management time and
company resources and may have a material adverse impact on our business.
In July 2009, our Board of Directors received unsolicited offers from a few financial institutions
and strategic investors to buy a majority or all of the ordinary shares of our company. While such
offers or proposed sale may not result in the consummation of a change in control transaction,
consideration and evaluation of such offers may consume management time and company resources and
distract managements attention. Warburg Pincus, our 48.1% shareholder, may also seek to sell all
or a substantial portion of its shareholding in our company, which may result in a change in
control in our company. A potential change in control may cause uncertainty among our employees,
our creditors and other stakeholders, and may thereby have a material adverse impact on our
business. If a change in control transaction is consummated, many of our client contracts may
entitle those clients to terminate the client contract with our company. Any of the foregoing
events could have a material adverse effect on our business, results of operations, financial
condition and cash flows, as well as cause our ADS price to fall.
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We have certain anti-takeover provisions in our Articles of Association that may discourage a
change in control.
Our Articles of Association contain anti-takeover provisions that could make it more difficult for
a third party to acquire us without the consent of our Board of Directors. These provisions
include:
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a classified Board of Directors with staggered three-year terms; and |
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the ability of our Board of Directors to determine the rights,
preferences and privileges of our preferred shares and to issue the
preferred shares without shareholder approval, which could be
exercised by our Board of Directors to increase the number of
outstanding shares and prevent or delay a takeover attempt. |
These provisions could make it more difficult for a third party to acquire us, even if the third
partys offer may be considered beneficial by many shareholders. As a result, shareholders may be
limited in their ability to obtain a premium for their shares.
It may be difficult for you to effect service of process and enforce legal judgments against us or
our affiliates.
We are incorporated in Jersey, Channel Islands, and our primary operating subsidiary, WNS Global,
is incorporated in India. A majority of our directors and senior executives are not residents of
the US and virtually all of our assets and the assets of those persons are located outside the US.
As a result, it may not be possible for you to effect service of process within the US upon those
persons or us. In addition, you may be unable to enforce judgments obtained in courts of the US
against those persons outside the jurisdiction of their residence, including judgments predicated
solely upon the securities laws of the US.
We face competition from onshore and offshore business process outsourcing companies and from
information technology companies that also offer business process outsourcing services. Our clients
may also choose to run their business processes themselves, either in their home countries or
through captive units located offshore.
The market for outsourcing services is very competitive and we expect competition to intensify and
increase from a number of sources. We believe that the principal competitive factors in our markets
are price, service quality, sales and marketing skills, and industry expertise. We face significant
competition from our clients own in-house groups including, in some cases, in-house departments
operating offshore or captive units. Clients who currently outsource a significant proportion of
their business processes or information technology services to vendors in India may, for various
reasons, including diversifying geographic risk, seek to reduce their dependence on any one
country. We also face competition from onshore and offshore business process outsourcing and
information technology services companies. In addition, the trend toward offshore outsourcing,
international expansion by foreign and domestic competitors and continuing technological changes
will result in new and different competitors entering our markets. These competitors may include
entrants from the communications, software and data networking industries or entrants in geographic
locations with lower costs than those in which we operate.
Some of these existing and future competitors have greater financial, human and other resources,
longer operating histories, greater technological expertise, more recognizable brand names and more
established relationships in the industries that we currently serve or may serve in the future. In
addition, some of our competitors may enter into strategic or commercial relationships among
themselves or with larger, more established companies in order to increase their ability to address
client needs, or enter into similar arrangements with potential clients. Increased competition, our
inability to compete successfully against competitors, pricing pressures or loss of market share
could result in reduced operating margins which could harm our business, results of operations,
financial condition and cash flows.
We are incorporated in Jersey, Channel Islands and are subject to Jersey rules and regulations. If
the tax benefits enjoyed by our company are withdrawn or changed, we may be liable for higher tax,
thereby reducing our profitability.
As a company incorporated in Jersey, Channel Islands, we enjoy tax benefits that result in us not
having to pay taxes in Jersey. In late 2009 it was reported that concerns had been raised by some
members of the European Union's Economic and Financial Affairs
Council, or ECOFIN, Code of Conduct group that the current tax regime for companies in Jersey,
known as zero-ten, could be interpreted as being outside the spirit of the EU Code of Conduct for
Business Taxation. In the light of this, the Treasury and Resources Minister of the States of
Jersey announced a review of business taxation in Jersey in his budget speech on December 8, 2009.
In a review undertaken on January 31, 2011 by the EU Councils High Level Working Party on Tax
issues, or HLWP, it was concluded that the personal tax provisions known as the deemed
distribution and attribution rules were in fact a business tax measure, and were therefore
within the scope of the Code of Conduct for Business Taxation. On February 15, 2011, and in the
light of the HLWPs conclusions, the States of Jersey announced that Jerseys business taxation
regime known as zero-ten will remain in place but that,
as part of its good neighbor policy,
Jersey will abolish the deemed dividend and attribution rules with effect from January 1, 2012.
Accordingly, it is not anticipated that the way in which either we or our shareholders not resident
in Jersey are taxed in Jersey will change (although the ECOFIN Code of Conduct group still has
to meet in May 2011 formally to consider the HLWPs conclusions and Jerseys proposals to abolish
the deemed dividend and attribution rules). We cannot assure you that
following the meeting by the ECOFIN Code of Conduct group or
otherwise in the future, the
current taxation regime applicable in Jersey will not be amended and render us liable for taxation.
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Risks Related to Key Delivery Locations
A substantial portion of our assets and operations are located in India and we are subject to
regulatory, economic, social and political uncertainties in India.
Our primary operating subsidiary, WNS Global, is incorporated in India, and a substantial portion
of our assets and employees are located in India. We intend to continue to develop and expand our
facilities in India. The Government of India, however, has exercised and continues to exercise
significant influence over many aspects of the Indian economy. The Government of India has provided
significant tax incentives and relaxed certain regulatory restrictions in order to encourage
foreign investment in specified sectors of the economy, including the business process outsourcing
industry. Those programs that have benefited us include tax holidays, liberalized import and export
duties and preferential rules on foreign investment and repatriation. We cannot assure you that
such liberalization policies will continue. Various factors, including a collapse of the present
coalition government due to the withdrawal of support of coalition members or the formation of a
new unstable government with limited support, could trigger significant changes in Indias economic
liberalization and deregulation policies and disrupt business and economic conditions in India
generally and our business in particular. The Government of India may decide to introduce the
reservation policy. According to this policy, all companies operating in the private sector in
India, including our subsidiaries in India, would be required to reserve a certain percentage of
jobs for the economically underprivileged population in the relevant state where such companies are
incorporated. If this policy is introduced, our ability to hire employees of our choice may be
restricted. Our financial performance and the market price of our ADSs may be adversely affected by
changes in inflation, exchange rates and controls, interest rates, Government of India policies
(including taxation policies), social stability or other political, economic or diplomatic
developments affecting India in the future.
India has witnessed communal clashes in the past. Although such clashes in India have, in the
recent past, been sporadic and have been contained within reasonably short periods of time, any
such civil disturbance in the future could result in disruptions in transportation or communication
networks, as well as have adverse implications for general economic conditions in India. Such
events could have a material adverse effect on our business, on the value of our ADSs and on your
investment in our ADSs.
If the tax benefits and other incentives that we currently enjoy are reduced or withdrawn or not
available for any other reason, our financial condition could be negatively affected.
Under the tax laws in India, except for three delivery centers located in Mumbai, Nashik and Pune,
all our delivery centers in India benefit from a holiday from Indian corporate income taxes. As a
result, our service operations, including any businesses we acquire, have been subject to
relatively low Indian income tax liabilities. We incurred minimal income tax expense on our Indian
operations in fiscal 2011 as a result of the tax holiday, compared to approximately $13.6 million
that we would have incurred if the tax holiday had not been available for the period.
The Indian Finance Act, 2000 phases out the tax holiday for companies registered as an exporter of
business process outsourcing services with the STPI, over a ten-year period from fiscal 2000
through fiscal 2009. In May 2008, the Government of India passed the Indian Finance Act, 2008,
which extended the tax holiday period by an additional year through fiscal 2010. In August 2009,
the Government of India passed the Indian Finance (No. 2) Act, 2009, which further extended the
STPI tax holiday period by an additional year through fiscal 2011. Because of the extension of the
STPI tax holiday through fiscal 2011, we recorded in fiscal 2010 a net deferred tax credit of $0.5
million on account of a reversal of deferred tax liability on intangibles, partially offset by a
reversal of deferred tax assets on lease rentals. The tax holiday enjoyed by our delivery centers
located in Bangalore, Chennai, Gurgaon, Mumbai, Nashik and Pune expired on April 1, 2011 except for
the tax holiday enjoyed by three of our delivery centers located in Mumbai, Nashik and Pune which
expired on April 1, 2007, April 1, 2008 and April 1, 2009, respectively. Our subsidiaries in Costa
Rica, Sri Lanka and our joint venture company in the Philippines also benefit from similar tax
exemptions. We incurred minimal income tax expense on our Sri Lanka operations in fiscal 2011 as a
result of the tax holiday, compared to approximately $0.5 million that we would have incurred if
the tax holiday had not been available for the period. When our tax holiday expires or terminates,
or if the applicable government withdraws or reduces the benefits of a tax holiday that we enjoy,
our tax expense will materially increase and this increase will have a material impact on our
results of operations. In the absence of a tax holiday in India, income derived from our operations
in India has become subject to the annual tax rate of 32.45% effective April 1, 2011.
In 2005, the Government of India implemented the Special Economic Zones Act, 2005, or the SEZ
Page 19
legislation, with the effect that taxable income of new operations established in designated
special economic zones, or SEZs, may be eligible for a 15-year tax holiday scheme consisting of a
complete tax holiday for the initial five years and a partial tax holiday for the subsequent ten
years, subject to the satisfaction of certain capital investment conditions. Our delivery center in
Gurgaon benefits from this tax holiday which will expire in fiscal 2022. The SEZ legislation has
been criticized on economic grounds by the International Monetary Fund and the SEZ legislation may
be challenged by certain non-governmental organizations. It is possible that, as a result of such
political pressures, the procedure for obtaining the benefits under the SEZ legislation may become
more onerous, the types of land eligible for SEZ status may be further restricted or the SEZ
legislation may be amended or repealed. Moreover, there is continuing uncertainty as to the
governmental and regulatory approvals required to establish operations in the SEZs or to qualify
for the tax benefit. This uncertainty may delay our establishment of operations in the SEZs.
The applicable tax authorities may also disallow deductions or tax holiday benefits claimed by us
and assess additional taxable income on us in connection with their review of our tax returns.
We are subject to transfer pricing and other tax related regulations and any determination that we
have failed to comply with them could materially adversely affect our profitability.
Transfer pricing regulations to which we are subject require that any international transaction
among WNS and its subsidiaries, or the WNS group enterprises, be on arms-length terms. We believe
that the international transactions among the WNS group enterprises are on arms-length terms. If,
however, the applicable tax authorities determine the transactions among the WNS group enterprises
do not meet arms length criteria, we may incur increased tax liability, including accrued interest
and penalties. This would cause our tax expense to increase, possibly materially, thereby reducing
our profitability and cash flows.
We may be required to pay additional taxes in connection with audits by the Indian tax authorities.
From time to time, we receive orders of assessment from the Indian tax authorities assessing
additional taxable income on us and/or our subsidiaries in connection with their review of our tax
returns. We currently have a few orders of assessment outstanding that we believe could be material
to our company given the magnitude of the claim. For example, in January 2009, we received an order
of assessment from the Indian tax authorities that assessed additional taxable income for fiscal
2005 on WNS Global, our wholly-owned Indian subsidiary, that could give rise to an estimated
728.1
million ($16.3 million based on the exchange rate on March 31, 2011) in additional taxes, including
interest of
225.9 million ($5.1 million based on the exchange rate on March 31, 2011). The
assessment order alleges that the transfer price we applied to international transactions between
WNS Global, one of our Indian subsidiaries, and our other wholly owned subsidiaries was not
appropriate, disallows certain expenses claimed as tax deductible by WNS Global and disallows a tax
holiday benefit claimed by us. We disputed the said order of assessment before first level Indian
appellate authorities. In November 2010, we received the order from first level Indian appellate
authorities for fiscal 2005 deciding the issues in our favor. However, the order may be contested
before higher appellate authorities by the Indian tax authorities.
In November 2009, we received a draft order of assessment for fiscal 2006 from the Indian tax
authorities (incorporating a transfer pricing order that we had received in October 2009). We had
disputed the draft assessment order and have filed an appeal before the Dispute Resolution Panel,
or DRP, a panel set up by the Government of India as alternate first level appellate authorities.
In September 2010, we received the DRP order, as well as the order of assessment giving effect to
the DRP order, that assessed additional taxable income for fiscal 2006 on WNS Global that could give
rise to an estimated
457.3 million ($10.2 million based on the exchange rate on March 31, 2011) in
additional taxes, including interest of
160.4 million ($3.6 million based on the exchange rate on
March 31, 2011). The assessment order involves issues similar to that alleged in the order for
fiscal 2005. Further, in September 2010, we also received the DRP orders, as well as the orders of
assessment giving effect to the DRP orders, relating to certain of our other subsidiaries assessed
for tax in India, that assessed additional taxable income for fiscal 2006 that could give rise to
an estimated
273.2 million ($6.1 million based on the exchange rate on March 31, 2011) in
additional taxes, including interest of
95.4 million ($2.1 million based on the exchange rate on
March 31, 2011). The DRP orders as well as assessment orders allege that the transfer price we
applied to international transactions with our related parties were not appropriate and taxed
certain receipts claimed by us as not taxable. We have disputed these orders before higher appellate
tax authorities.
In February 2011, we received the order of assessment for fiscal 2007 from the Indian tax
authorities (incorporating a transfer pricing order that we had received in November 2010) that
assessed additional taxable income on WNS Global that could give rise to an estimated
854.4
million ($19.1 million based on the exchange rate on March 31, 2011) in additional taxes, including
interest of
277.3 million ($6.2 million based on the exchange rate on March 31, 2011). Further, in
February 2011, we also received the orders of assessment, relating to certain of our other
subsidiaries assessed for tax in India, that assessed additional taxable income for fiscal 2007
that could give rise to an estimated
462.7 million ($10.4 million based on the exchange rate on
March 31, 2011) in additional taxes, including interest of
145.6 million ($3.3 million based on
the exchange rate on March 31, 2011). The orders of assessment involve issues similar to that
alleged in the orders for fiscal 2005 and 2006. We have disputed the
said orders of assessment before first level Indian appellate authorities.
Based on
certain favourable decision from appellate authorities in previous
years, certain legal opinions from counsel and after consultation with our Indian tax advisors, we believe
that the chances of the aforementioned assessments, upon challenge, being sustained at the higher
appellate authorities are remote and we intend to vigorously dispute the assessments and orders. We
have deposited a small portion of the disputed amount with the tax authorities and may be required
to deposit the remaining portion of the disputed amount pending final resolution of the respective
matters.
In March 2009, we received from the Indian service tax authority an assessment order demanding
payment of
346.2 million ($7.7 million based on the exchange rate on March 31, 2011) of service
tax and related interest and penalty for the period from March 1, 2003 to January 31, 2005. The assessment order alleges
that service tax is payable in India on BPO services provided by WNS Global to clients. After
consultation with our Indian tax advisors, we believe the chances that the assessment would be
upheld against us are remote. In April 2009, we filed an appeal to the appellate tribunal against
the assessment order and the appeal is currently pending. We intend to continue to vigorously
dispute the assessment.
No assurance can be given, however, that we will prevail in our tax disputes. If we do not prevail,
payment of additional taxes, interest and penalties may adversely affect our results of operations,
financial condition and cash flows.
There can also be no assurance that we will not receive similar or additional orders of assessment
in the future. See Part I Item 5. Operating and Financial Review and Prospects Tax
Assessment Orders for more details on these assessments.
Terrorist attacks and other acts of violence involving India or its neighboring countries could
adversely affect our operations, resulting in a loss of client confidence and materially adversely
affecting our business, results of operations, financial condition and cash flows.
Terrorist attacks and other acts of violence or war involving India or its neighboring countries
may adversely affect worldwide financial markets and could potentially lead to economic recession,
which could adversely affect our business, results of operations, financial condition and cash
flows. South Asia has, from time to time, experienced instances of civil unrest and hostilities
among neighboring countries, including India and Pakistan. In previous years, military
confrontations between India and Pakistan have occurred in the region of Kashmir and along the
India/Pakistan border. There have also been incidents in and near India such as the bombings of the
Taj Mahal Hotel and Oberoi
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Hotel in Mumbai in 2008, a terrorist attack on the Indian Parliament, troop mobilizations along the
India/Pakistan border and an aggravated geopolitical situation in the region. Such military
activity or terrorist attacks in the future could influence the Indian economy by disrupting
communications and making travel more difficult. Resulting political tensions could create a
greater perception that investments in Indian companies involve a high degree of risk. Such
political tensions could similarly create a perception that there is a risk of disruption of
services provided by India-based companies, which could have a material adverse effect on the
market for our services. Furthermore, if India were to become engaged in armed hostilities,
particularly hostilities that were protracted or involved the threat or use of nuclear weapons, we
might not be able to continue our operations.
Restrictions on entry visas may affect our ability to compete for and provide services to clients
in the US and the UK, which could have a material adverse effect on future revenue.
The vast majority of our employees are Indian nationals. The ability of some of our executives to
work with and meet our European and North American clients and our clients from other countries
depends on the ability of our senior managers and employees to obtain the necessary visas and entry
permits. In response to previous terrorist attacks and global unrest, US and European immigration
authorities have increased the level of scrutiny in granting visas. Immigration laws in those
countries may also require us to meet certain other legal requirements as a condition to obtaining
or maintaining entry visas. These restrictions have significantly lengthened the time requirements
to obtain visas for our personnel, which has in the past resulted, and may continue to result, in
delays in the ability of our personnel to meet with our clients. In addition, immigration laws are
subject to legislative change and varying standards of application and enforcement due to political
forces, economic conditions or other events, including terrorist attacks. We cannot predict the
political or economic events that could affect immigration laws, or any restrictive impact those
events could have on obtaining or monitoring entry visas for our personnel. If we are unable to
obtain the necessary visas for personnel who need to visit our clients sites or, if such visas are
delayed, we may not be able to provide services to our clients or to continue to provide services
on a timely basis, which could have a material adverse effect on our business, results of
operations, financial condition and cash flows.
If more stringent labor laws become applicable to us, our profitability may be adversely affected.
India has stringent labor legislation that protects the interests of workers, including legislation
that sets forth detailed procedures for dispute resolution and employee removal and legislation
that imposes financial obligations on employers upon retrenchment. Though we are exempt from a
number of these labor laws at present, there can be no assurance that such laws will not become
applicable to the business process outsourcing industry in India in the future. In addition, our
employees may in the future form unions. If these labor laws become applicable to our workers or if
our employees unionize, it may become difficult for us to maintain flexible human resource
policies, discharge employees or downsize, and our profitability may be adversely affected.
Risks Related to our ADSs
Substantial future sales of our shares or ADSs in the public market could cause our ADS price to fall.
Sales by us or our shareholders of a substantial number of our ADSs in the public market, or the
perception that these sales could occur, could cause the market price of our ADSs to decline. These
sales, or the perception that these sales could occur, also might make it more difficult for us to
sell securities in the future at a time or at a price that we deem appropriate or pay for
acquisitions using our equity securities. As at March 31, 2011, we had 44,443,726 ordinary
shares outstanding, including 22,454,319 shares represented by 22,454,319 ADSs. In addition, as at
March 31, 2011, there were options and restricted share units, or RSUs, outstanding under our 2002
Stock Incentive Plan and our Amended and Restated 2006 Incentive Award Plan to purchase a total of
2,638,634 ordinary shares or ADSs. All ADSs are freely transferable, except that ADSs owned by our
affiliates, including Warburg Pincus, may only be sold in the US if they are registered or qualify
for an exemption from registration, including pursuant to Rule 144 under the Securities Act of
1933, as amended, or the Securities Act. The remaining ordinary shares outstanding may be sold in
the United States if they are registered or qualify for an exemption from registration, including
pursuant to Rule 144 under the Securities Act.
The market price for our ADSs may be volatile.
The market price for our ADSs is likely to be highly volatile and subject to wide fluctuations in
response to factors including the following:
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announcements of technological developments; |
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regulatory developments in our target markets affecting us, our
clients or our competitors; |
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actual or anticipated fluctuations in our three monthly operating
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changes in financial estimates by securities research analysts; |
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changes in the economic performance or market valuations of other
companies engaged in business process outsourcing; |
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addition or loss of executive officers or key employees; |
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sales or expected sales of additional shares or ADSs; |
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loss of one or more significant clients; and |
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a change in control, or possible change of control, of our company. |
In addition, securities markets generally and from time to time experience significant price and
volume fluctuations that are not related to the operating performance of particular companies.
These market fluctuations may also have a material adverse effect on the market price of our ADSs.
Holders of ADSs may be restricted in their ability to exercise voting rights.
At our request, the depositary of the ADSs will mail to you any notice of shareholders meeting
received from us together with information explaining how to instruct the depositary to exercise
the voting rights of the ordinary shares represented by ADSs. If the depositary timely receives
voting instructions from you, it will endeavor to vote the ordinary shares represented by your ADSs
in accordance with such voting instructions. However, the ability of the depositary to carry out
voting instructions may be limited by practical and legal limitations and the terms of the ordinary
shares on deposit. We cannot assure you that you will receive voting materials in time to enable
you to return voting instructions to the depositary in a timely manner. Ordinary shares for which
no voting instructions have been received will not be voted.
As a foreign private issuer, we are not subject to the proxy rules of the Commission, which
regulate the form and content of solicitations by US-based issuers of proxies from their
shareholders. The form of notice and proxy statement that we have been using does not include all
of the information that would be provided under the Commissions proxy rules.
We may be classified as a passive foreign investment company which could result in adverse United
States federal income tax consequences to US Holders.
We believe we are not a passive foreign investment company, or PFIC, for United States federal
income tax purposes for the year ended March 31, 2011. However, we must make a separate
determination each year as to whether we are a PFIC after the close of each taxable year. A non-US
corporation will be considered a PFIC for any taxable year if either (i) at least 75% of its gross
income is passive income or (ii) at least 50% of the value of its assets (based on an average of
the quarterly values of the assets during a taxable year) is attributable to assets that produce or
are held for the production of passive income. As noted in our annual report for our taxable year
ended March 31, 2007, our PFIC status in respect of our taxable year ended March 31, 2007 was
uncertain. If we were treated as a PFIC for any year during which you held ADSs or ordinary shares,
we will continue to be treated as a PFIC for all succeeding years during which you hold ADSs or
ordinary shares, absent a special election.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of our Company
WNS (Holdings) Limited was incorporated as a private liability company on February 18, 2002 under
the laws of Jersey, Channel Islands, and maintains a registered office in Jersey at Queensway
House, Hilgrove Street, St Helier, Jersey JE1 1ES, which we changed from the earlier office located
at 12 Castle Street, St. Helier, Jersey, JE2 3RT, Channel Islands effective February 8, 2011. We
converted from a private limited company to a public limited company on January 4, 2006 when we
acquired more than 30 shareholders as calculated in accordance with Article 17A of the Companies
(Jersey) Law, 1991, or the 1991 Law. We gave notice of this to the Jersey Financial Services
Commission in accordance with Article 17(3) of the 1991 Law on January 12, 2006. Our principal
executive office is located at Gate 4, Godrej & Boyce Complex, Pirojshanagar, Vikhroli(W), Mumbai
400 079, India, and the telephone number for this office is (91-22)
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4095-2100. Our website address is www.wns.com. Information contained on our website does not
constitute part of this annual report. Our agent for service in the US is our subsidiary, WNS North
America Inc., 420 Lexington Avenue, Suite 2515, New York, New York 10170.
We began operations as an in-house unit of British Airways in 1996 and started focusing on
providing business process outsourcing, or BPO, services to third parties in fiscal 2003. Warburg
Pincus acquired a controlling stake in our company from British Airways in May 2002 and inducted a
new senior management team. In fiscal 2003, we acquired Town & Country Assistance Limited (which we
subsequently rebranded as WNS Assistance and which constitutes WNS Auto Claims BPO, our reportable
segment for financial statement purposes), a UK-based automobile claims handling company, thereby
extending our service portfolio beyond the travel industry to include insurance-based automobile
claims processing. In fiscal 2004, we acquired the health claims management business of Greensnow
Inc. In fiscal 2006, we acquired Trinity Partners (which we merged into our subsidiary, WNS North
America Inc.), a provider of BPO services to financial institutions, focusing on mortgage banking.
In August 2006, we acquired from PRG Airlines Services Limited, or PRG Airlines, its fare audit
services business. In September 2006, we acquired from GHS Holdings LLC, or GHS, its financial
accounting business. In May 2007, we acquired Marketics, a provider of offshore analytics services.
In June 2007, we acquired Flovate, a company engaged in the development and maintenance of software
products and solutions, which we subsequently renamed as WNS Workflow Technologies Limited. In
April 2008, we acquired Chang Limited, an auto insurance claims processing services provider in the
UK, through its wholly-owned subsidiary, Accidents Happen Assistance Limited, or AHA (formerly
known as Call 24-7 Limited, or Call 24-7). In June 2008, we acquired BizAps, a provider of Systems
Applications and Products, or SAP©, solutions to optimize the enterprise
resource planning functionality for our finance and accounting processes. In July 2008, we entered
into a transaction with AVIVA consisting of (1) a share sale and purchase agreement pursuant to
which we acquired from AVIVA all the shares of Aviva Global and (2) the AVIVA master services
agreement (as varied by the variation agreement entered into in March
2009), or the AVIVA master services agreement, pursuant to which we
are providing BPO services to AVIVAs UK business and
AVIVAs Irish subsidiary, Hibernian Aviva Direct Limited, and
certain of its affiliates. Aviva Global was the business process offshoring subsidiary
of AVIVA. See Item 5. Operating and Financial Review and Prospects Revenue Our Contracts
for more details on this transaction.
In fiscal 2010, we restructured our organizational structure in order to streamline our
administrative operations, achieve operational and financial synergies, and reduce the costs and
expenses relating to regulatory compliance. This restructuring involved the merger of the following
seven Indian subsidiaries of WNS Global into WNS Global through a Scheme of Amalgamation approved
by an order of the Bombay High Court passed in August 2009 pursuant to the Indian Companies Act,
1956: Customer Operational Services (Chennai) Private Limited, Marketics, Noida Customer Operations
Private Limited, NTrance Customer Services Private Limited, WNS Customer Solutions Private Limited,
WNS Customer Solutions Shared Services Private Limited and WNS Workflow Technologies (India)
Private Limited. In another restructuring exercise, three of our subsidiaries, First Offshoring
Technologies Private Limited, Hi-Tech Offshoring Services Private Limited and Servicesource
Offshore Technologies Private Limited, were merged into WNS Global through a Scheme of Amalgamation
approved by an order of the Bombay High Court passed in March 2010 pursuant to the Indian Companies
Act, 1956. In fiscal 2011, we have embarked on restructuring and
rationalizing our UK and US group companies,
wherein two of our UK-based non-operating subsidiaries, Chang Limited and Town & Country Assistance
Limited, have applied for voluntary dissolution pursuant to section
1003 of the Companies Act 2006, UK. Notices for striking off were
published in the London Gazette on February 1, 2011 and
effective 90 days from the date of publication, the said
entities will be struck off from the UK companies register if the UK
Companies House does not receive any objection for the proposed
striking off. We are also in the process
of the voluntary dissolution of Business Applications Associates
Limited. In the US, one of our
subsidiaries WNS Customer Solutions North America, Inc. has filed an application with the Secretary of
State of the State of Delaware for a merger with and into WNS North America, Inc. and the certificate
of merger from the Secretary of State of the State of Delaware is pending. As a result of the various restructuring activities undertaken in fiscal 2010 and fiscal
2011, our organizational structure has been simplified, and now comprises 26 companies in 14
countries. Of these 26 companies, WNS Cares Foundation, which is a wholly-owned subsidiary of WNS
Global, is a not-for-profit organization registered under
Section 25 of the Companies Act, 1956, India formed for the
purpose of promoting corporate social responsibilities and not considered for the purpose of preparing our
consolidated financial statements.
We are headquartered in Mumbai, India, and we have client service offices in New York (US), New
South Wales (Australia), London (UK), and Singapore and delivery centers in San Jose (Costa Rica),
Bangalore, Chennai, Gurgaon, Mumbai, Nashik and Pune (India), Manila (the Philippines), Bucharest
(Romania), Colombo (Sri Lanka) and Ipswich and Manchester (the UK). We completed our initial public
offering in July 2006 and our ADSs are listed on the New York Stock Exchange, or the NYSE, under
the symbol WNS.
Our capital expenditure in fiscal 2011, 2010, and 2009 amounted to $15.3 million, $13.3 million,
and $22.7 million, respectively. Our principal capital expenditure were incurred for the purposes
of setting up new delivery centers or expanding existing delivery centers and setting up related
technology to enable offshore execution and management of clients business processes. We expect
our capital expenditure needs in fiscal 2012 to be approximately $20.0 million, a significant
amount of which we expect to spend on building new facilities as well as continuing to streamline
our operations by further consolidating production capacities in our delivery centers. As at March
31, 2011, we had commitments for capital expenditures of $8.2 million relating to the purchase of
property and equipment for our delivery centers. We expect to meet these estimated capital
expenditure from cash generated from operating activities and existing cash and
Page 23
cash equivalents. See Item 5. Operating and Financial Review and Prospects Liquidity and
Capital Resources for more information.
B. Business Overview
We are a leading provider of offshore business process outsourcing, or BPO, services. We provide
comprehensive data, voice and analytical services that are underpinned by our expertise in our
target industry sectors. We transfer the business processes of our clients which are typically
companies headquartered in Asia Pacific, Europe, Middle East and North America regions to our
delivery centers located in Costa Rica, India, the Philippines, Romania, Sri Lanka and the UK. We
provide high quality execution of client processes, monitor these processes against multiple
performance metrics, and seek to improve them on an ongoing basis.
According to the National Association of Software and Service Companies, or NASSCOM, an industry
association in India, we are among the top three India-based offshore business process outsourcing
companies based on export revenue for fiscal 2010. As at March 31, 2011, we had 21,523 employees
executing approximately 600 distinct business processes for 220 clients. Our largest clients in
fiscal 2011 in terms of revenue contribution included AVIVA, Biomet Inc., British Airways,
Centrica plc, FedEx, Marsh & McLennan Companies Inc., or MMC, Société Internationale de
Télécommunications Aéronautiques, or SITA, T-Mobile, Travelocity.com LP, or Travelocity,
United Airlines and Virgin Atlantic Airways Ltd. See Clients.
We design, implement and operate comprehensive business processes for our clients, involving one or
more data, voice and analytical components. Our services include industry-specific processes that
are tailored to address our clients business and industry
practices, particularly in the insurance, travel and leisure, banking
and financial services industries as well as businesses in the
consulting and professional services, healthcare, utilities, shipping
and logistics, and manufacturing, retail, consumer products and
telecom industries. In addition, we deliver
shared services applicable across multiple industries, in areas such as finance and accounting, and
research and analytics services (formerly referred to as knowledge services). In May 2009, we
reorganized our industry-specific capabilities to form a new core functional service capability
called business transformation services, which we have renamed as global transformation practice. These services seek to help our clients identify business
and process optimization opportunities through technology-enabled solutions, process design and
improvements, including the Six Sigma principles, and other techniques and leveraging program
management to achieve cost savings.
We generate revenue primarily from providing business process outsourcing services. A portion of
our revenue includes payments which we make to automobile repair centers. We evaluate our business
performance based on revenue net of these payments in the case of fault repairs, since we believe
that revenue less repair payments reflects more accurately the value of the business process
outsourcing services we directly provide to our clients. See Item 5. Operating and Financial
Review and Prospects Results by Reportable Segment. In fiscal 2011, our revenue was $616.3
million, our revenue less repair payments was $369.4 million and our net income attributable to WNS
shareholders was $9.8 million.
Between fiscal 2007 and fiscal 2011, our revenue grew at a compound annual growth rate of 15.6% and
our revenue less repair payments grew at a compound annual growth rate of 13.9%. We believe we have
achieved rapid growth and industry leadership through our understanding of the industries in which
our clients operate, our focus on operational excellence, and our senior management team with
significant experience in the global outsourcing industry. Our revenue is characterized by client,
industry, geographic and service diversity, which we believe offers us a sustainable business
model.
Industry Overview
Companies globally are outsourcing a growing proportion of their business processes to streamline
their organizations, reduce costs, create flexibility, and improve their processes to increase
shareholder returns. More significantly, many of these companies are outsourcing to offshore
locations such as India to access a high quality and cost-effective workforce. We are a pioneer in
the offshore business process outsourcing industry and continue to be well positioned to benefit
from the combination of the outsourcing and offshoring trends.
While a limited number of global corporations such as General Electric Company, British Airways
(through our subsidiary, WNS Global) and American Express Company established in-house business
process outsourcing facilities in India in the mid-1990s, offshore business process outsourcing
growth only accelerated significantly from 2000
Page 24
onwards with the emergence of third party providers. This has been followed by a shift in focus
from largely call center related outsourcing in areas such as telemarketing and client services to
a wider range of more complex business processes such as finance and accounting, insurance claims
administration and market research analysis.
The global business process outsourcing industry is large and growing rapidly. According to the
2011 Strategic Review published by NASSCOM in February 2011, or the NASSCOM 2011 Strategic Review,
the Indian BPO export market was estimated at $12.4 billion in
the year ended March 31, 2010 and
was estimated to grow to $14.1 billion in the year ended
March 31, 2011. In addition, direct employment within the BPO
industry is also projected to grow.
The
following charts set forth the relative growth rate and size of direct employment within
the information technology, or IT, and BPO industry in India, the
estimated growth rate of the Indian BPO export market and the estimated
growth rate of the Indian BPO knowledge services export market and
Indian BPO finance and accounting, or F&A, services export
market in the years indicated below:
|
|
|
Source: NASSCOM Strategic Review, February 2011
|
|
|
Note: Years ending March 31
|
|
|
We believe that India is widely considered to be the most attractive destination for offshore
IT-BPO. According to third-party industry experts such as NASSCOM,
of the addressable offshore IT-BPO market, India is the leading geography for providing BPO
services, followed by Canada, the Philippines, and Central and
Eastern Europe. The key factors for
Indias predominance include its large, growing and highly educated English-speaking workforce
coupled with a business and regulatory environment that is conducive to the growth of the business
process outsourcing industry.
Offshore business process outsourcing is typically a long-term strategic commitment for companies.
The processes that companies outsource are frequently complex and integrated with their core
operations. These processes require a high degree of customization and, often, a multi-stage
offshore transfer program. Clients would therefore incur high switching costs to transfer these
processes back to their home locations or to other business process outsourcing
Page 25
providers. As a result, once an offshore business process outsourcing provider gains the confidence
of a client, the resulting business relationship is usually characterized by multi-year contracts
with predictable annual revenue.
Given the long-term, strategic nature of these engagements, companies undertake a rigorous process
in evaluating their business process outsourcing provider. Based on our experience, a client
typically seeks several key attributes in a business process outsourcing provider, including:
|
|
established reputation and industry leadership; |
|
|
|
demonstrated ability to execute a diverse range of mission-critical
and often complex business processes; |
|
|
|
capability to scale employees and infrastructure without a diminution
in quality of service; and |
|
|
|
ability to innovate, add new operational expertise and drive down
costs. |
As the offshore business process outsourcing industry evolves further, we believe that scale,
reputation and leadership will increasingly become more important factors in this selection
process.
Competitive
Strengths
We believe that we have the following seven competitive strengths necessary to maintain and enhance
our position as a leading provider of offshore business process outsourcing services:
Offshore business process outsourcing market leadership
Our value proposition of Extending your Enterprise has found significant resonance in the
marketplace with WNS receiving numerous recognitions in the BPO industry, including the following:
BPO Leadership:
|
|
Named Best New Outsourced Services Delivery (2010) by Shared Services & Outsourcing Network (SSON); |
|
|
|
Named Best New BPO Locator Of The Year (2010) by Business Process Association of Philippines (BPAP); |
|
|
|
Industry-specific multi-year winner International Association of Outsourcing Professionals (IAOP) 2010 Global Outsourcing 100; |
|
|
|
Recipient of the Special Award at the NASSCOM Corporate Awards for
Excellence in Gender Inclusivity 2010 in the Best BPO Company
category; |
|
|
|
Recipient of the Dian Masalanta Award of the year (2010) for being the
dynamic new partner of the National Voluntary Blood Services Program
(Govt. of the Philippines); |
|
|
|
WNS ranked among Top 3 BPO companies in India by NASSCOM for six consecutive years; |
|
|
|
Recipient of Best New Outsourced Services Award by SSON (2009); and |
|
|
|
Recipient of the Silver Plate Award for Community Service by HelpAge India (2007). |
Page 26
Domain Leadership:
|
|
Best 20 Leaders by Industry focus: Retail & Consumer Goods IAOP 2010 Global Outsourcing 100; |
|
|
|
Best 20 Leaders by Industry focus: Financial Services (Insurance) IAOP 2010 Global Outsourcing 100; |
|
|
|
Best 20 Leaders by Industry focus: Leaders Customer Relationship Management IAOP 2010 Global Outsourcing 100; |
|
|
|
Recognized as top five FAO Market Star Performer (2009) by Everest; |
|
|
|
Best 10 companies by Industry focus: Utilities IAOP 2009 Global Outsourcing 100; |
|
|
|
Best 5 companies by Industry focus: Air Transportation IAOP 2009 Global Outsourcing 100; |
|
|
|
Best Performing FAO Provider by Global Services 100 (2008); |
|
|
|
WNS awarded Partners in Innovation Challenge for Baggage Claim Process from KLM Dutch Royal Airlines (2008); |
|
|
|
Ranked No.1 insurance outsourcer by Global Outsourcing 100 (2007); and |
|
|
|
WNS Assistance Voted Best Accident Management Company by the Auto Body
Professionals Club (2007). |
Quality and Technology Leadership:
|
|
Recipient of the Golden Peacock National Quality awards (2011); |
|
|
|
Recipient of the IDG Media CIO 100 Special Category Award in
recognition of WNSs Infosec architecture and implementations (2010); |
|
|
|
Recipient of the NetApp Enterprise Innovation Award (2010); |
|
|
|
Recipient of the Maharashtra State IT Award (2010); |
|
|
|
Recipient of the Best Project Achievement in Green Six Sigma Award at WCBF, USA (2009); |
|
|
|
Recipient of Golden Peacock Eco-Innovation Award for Green Lean Sigma
Program awarded by The World Environment Foundation in association
with the Institute of Directors (2009); |
|
|
|
Recipient of the CIO 100 Award for Innovative Storage Solutions (2008); |
|
|
|
Recipient of the Asia-Pacific Six Sigma Excellence award for Best Lean Six Sigma project (2007); |
|
|
|
Recipient of The Global Six Sigma Award for Best Achievement of Six
Sigma in Outsourcing (2007); and |
|
|
|
Recipient of Golden Peacock innovation award by Institute of Directors (2007). |
We have closely followed industry trends in order to target services with high potential. For
example, since our emergence as a third party business process outsourcing provider, we have
aggressively invested in finance and accounting, and research and analytics services. As demand has
ramped up in the industrials and infrastructure sector, in
Page 27
April 2008, we set up a team to focus on the industrial and infrastructure industry sectors. We
have also focused our service portfolio on more complex processes, avoiding the delivery of
services that are less integral to our clients operations, such as telemarketing and technical
helpdesks, which characterized the offshore business process outsourcing industry in its early
days. In May 2009, we reorganized our industry-specific capabilities to form a new core functional
service capability called business transformation services, which we
have
renamed as global transformation practice. As at April 1, 2011,
we have reorganized
our company into the following vertical business units to provide
more specialized focus on each of these industries and more
effectively manage our sales and marketing process: insurance, travel and leisure, banking and
financial services, consulting and professional services, healthcare, utilities, shipping and
logistics, and manufacturing, retail, consumer products, telecom and diversified businesses. Our
services seek to help our clients identify business and process optimization opportunities through
technology-enabled solutions, process design and improvements, including the Six Sigma principles,
and other techniques and leveraging program management to achieve cost savings.
We believe our early differentiation from other players and the length of our working relationship
with many industry-leading clients has significantly contributed to our reputation as a proven
provider of offshore business process outsourcing services. We believe that this reputation is a
key differentiator in our attracting and winning clients.
Deep industry expertise
We have established deep expertise in the industries we target as a result of our legacy, client
relationships, acquisitions and the hiring of management with specific industry knowledge. Our
industry-focused strategy allows us to retain and enhance expertise thereby enabling us to:
|
|
offer a suite of services that deliver a comprehensive
industry-focused business process outsourcing program; |
|
|
|
leverage our existing capabilities to win additional clients and
identify new industry-specific service offerings; |
|
|
|
cultivate client relationships that may involve few processes upon
initial engagement to develop deeper engagements ultimately involving
a number of integrated processes; |
|
|
|
provide proprietary technology platforms for use in niche areas in
specific sectors such as auto insurance and travel; |
|
|
|
recruit and retain talented employees by offering them
industry-focused career paths; and |
|
|
|
achieve market leadership in several of the industries we target. |
Experience in transferring processes offshore and running them efficiently
Many of the business processes that are outsourced by clients to us are mission-critical and core
to their operations, requiring substantial program management expertise. We have developed a
sophisticated program management methodology intended to ensure smooth transfer of business
processes from our clients facilities to our delivery centers. For example, our highly experienced
program management team has transferred approximately 600 distinct business processes for 220
clients.
We focus on delivering our client processes effectively on an ongoing basis. We have also invested
in a quality assurance team that satisfies the International Standard Organization, or ISO,
9001:2000 standards for quality management systems, and applies Six Sigma, a statistical
methodology for improving consistent quality across processes, and other process re-engineering
methodologies to further improve our process delivery. The composition of our revenue enables us to
continuously optimize the efficiency of our operations.
Diversified client base across multiple industries and geographic locations
We serve a large, diversified client base of 220 clients across Asia, Europe, Middle East and North
America, including clients who are market leaders within their respective industries. We have
clients across the multiple sectors of the insurance, travel and leisure, banking and financial
services industries as well as other industries such as consulting and
professional services, healthcare, utilities, shipping and logistics,
and manufacturing, retail, consumer products and telecom. To date, many of our clients have transferred a limited number of their business
processes offshore. We believe, therefore, that we have a significant opportunity to increase the
revenue we generate from these clients in the future as they decide to expand their commitment to
offshore business process outsourcing. See Clients.
Page 28
Extensive investment in human capital development
Our extensive recruiting process helps us screen candidates on multiple parameters and to
appropriately match employees to the most suitable positions. We have established the WNS Learning
Academy which provides ongoing training to our employees for the purpose of continuously improving
their leadership and professional skills. We seek to promote our team leaders and operations
managers from within, thereby offering internal advancement opportunities and clear long-term
career paths.
Ability to manage the rapid growth of our organization
We have invested significant management effort toward ensuring that our organization is positioned
to continuously scale to meet the robust demand for offshore business process outsourcing services.
We are capable of evaluating over 15,000 potential employees and recruiting, hiring and training
over 1,000 employees each month, enabling us to rapidly expand and support our clients. We have
also established a highly scalable operational infrastructure in multiple locations supported by a
world-class information technology and communications network infrastructure.
Experienced management team
We benefit from the effective leadership of a global management team with diverse backgrounds
including extensive experience in outsourcing. Members of our senior management team have an
average of over 20 years of experience in diverse industries, including in the outsourcing sector,
and in the course of their respective careers have gathered experience in successfully integrating
acquisitions, developing long-standing client relationships, launching practices in new
geographies, and developing new service offerings.
Business Strategy
Our objective is to strengthen our position as a leading global business process outsourcing
provider. To achieve this, we will seek to expand our client base and further develop our industry
expertise, enhance our brand to attract new clients, develop organically new business services and
industry-focused operating units and make selective acquisitions. The key elements of our strategy
are described below.
Drive rapid growth through penetration of our existing client base
We have a large and diverse existing client base that includes many leading global corporations,
most of whom have transferred only a limited number of their business processes offshore. We
leverage our expertise in providing comprehensive process solutions by identifying additional
processes that can be transferred offshore, cross-selling new services, adding technology-based
offerings, and expanding and deepening our existing relationships. We have account managers tasked
with maintaining a thorough understanding of our clients outsourcing roadmaps as well as
identifying and advocating new offshoring opportunities. As a result of this strategy, we have a
strong track record of extending the scope of our client relationships over time.
Enhance awareness of the WNS brand name
Our reputation for operational excellence among our clients has been instrumental in attracting and
retaining new clients as well as talented and qualified employees. We believe we have benefited
from strong word-of-mouth brand equity in the past to scale our business. However, as the size and
the complexity of the offshore business process outsourcing market grows, we are actively
increasing our efforts to enhance awareness of the WNS brand in our target markets and among
potential employees. To accomplish this, we have a dedicated global marketing team comprised of
experienced industry talent. We are also focusing on developing channels to increase market
awareness of the WNS brand, including through internet marketing techniques, exposure in industry
publications, participation in industry events and conferences, and thought leadership initiatives
in the form of publication of articles and white papers, webinars and podcasts. In addition, we are
aggressively targeting BPO industry analysts, general management consulting firms, and boutique
outsourcing firms, who are usually retained by prospective clients to provide strategic advice, act
as intermediaries in the sourcing processes, develop scope specifications and aid in the partner
selection process.
Reinforce leadership in existing industries and penetrate new industry sectors
We have a highly successful industry-focused operating model through which we have established a
leading offshore business process outsourcing practice in various industries and business sectors.
We intend to leverage our in-depth
Page 29
knowledge
of the insurance, travel and leisure, banking and financial services, consulting
and professional services, healthcare, utilities, shipping and
logistics, and manufacturing, retail, consumer products and telecom industries to penetrate additional client
opportunities within these industries. For example, we have leveraged
the experience, capabilities and reputation gained through our
relationship with AVIVA to penetrate the multi-line insurance and other segments of the insurance industry. Our success in
penetrating the market for finance and accounting services across industries drives us to invest in
talent and technology platforms with the goal of scaling our business in order to acquire
industry-specific expertise.
Broaden industry expertise and enhance growth through selective acquisitions
Our acquisition strategy is focused on adding new capabilities and industry expertise. Our
acquisition track record demonstrates our ability to integrate, manage and develop the specific
capabilities we acquire. Our intention is to continue to pursue targeted acquisitions in the future
and to rely on our integration capabilities to expand the growth of our business.
Business Process Outsourcing Service Offerings
We offer our services to clients through industry-focused business units. Prior to April 1, 2011,
we organized our company to serve clients categorized into the following four vertical business
units:
|
|
|
First, we serve clients in the travel and leisure industry, including airlines, travel
intermediaries and other related service providers, for whom we perform services such as
customer service and revenue accounting. |
|
|
|
|
Second, we serve clients in the BFSI industry for whom we perform services such as
insurance claims management, account set-up and other related services, and asset
management support. |
|
|
|
|
Third, we serve clients in the industrial and infrastructure industry, including
manufacturing, logistics, telecommunications and utilities. |
|
|
|
|
Fourth, we serve clients in several other industries, including consumer products,
retail, professional services, pharmaceutical, and media and entertainment, which we refer
to as emerging businesses. |
In
addition to industry-specific services, we offer a range of services
across multiple industries (which we refer to as our horizontal units),
in the areas of finance and accounting services and market, business and financial research and
analytical services, which we collectively refer to as finance and accounting services, and
research and analytics services (formerly referred to as knowledge services), respectively.
Further, in May 2009, we reorganized our industry-specific capabilities to form a new core
functional service capability called business transformation
services, which we have renamed as global transformation practice.
Detailed descriptions of the services we have been providing to our clients in these four business
units are set forth below.
As at April 1, 2011, we have reorganized our company into the following vertical business units to
provide more specialized focus on each of these industries and more effectively manage our sales
and marketing process:
|
|
|
Insurance; |
|
|
|
|
Travel and leisure; |
|
|
|
|
Banking and financial services; |
|
|
|
|
Consulting and professional services; |
|
|
|
|
Healthcare; |
|
|
|
|
Utilities; |
|
|
|
|
Shipping and logistics; and |
|
|
|
|
Manufacturing, retail, consumer products, telecom and diversified businesses. |
In
addition, we have expanded our horizontal units to focus on the following additional areas: customer care, legal services,
procurement and technology services. We are in the process of developing our scope of services to be offered in these areas.
Our services seek to help our clients identify business and process optimization opportunities
through technology-enabled solutions, process design and improvements, including the Six Sigma
principles, and other techniques and leveraging program management to achieve cost savings.
For
comparison purposes, the following tables set forth the contribution to revenue and revenue less repair payments in
fiscal 2011 by each business unit under the prior vertical business unit structure and the new
vertical business unit structure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As percentage of |
|
|
|
|
|
|
|
As percentage |
|
|
Revenue less |
|
|
revenue less |
|
Prior vertical structure |
|
Revenue |
|
|
of revenue |
|
|
repair payments |
|
|
repair payments |
|
|
|
(US dollars in millions) |
|
Travel and leisure |
|
$ |
85.0 |
|
|
|
13.8 |
% |
|
$ |
85.0 |
|
|
|
23.0 |
% |
BFSI |
|
|
410.0 |
|
|
|
66.5 |
% |
|
|
163.1 |
|
|
|
44.2 |
% |
Industrial and infrastructure |
|
|
55.9 |
|
|
|
9.1 |
% |
|
|
55.9 |
|
|
|
15.1 |
% |
Emerging businesses |
|
|
65.4 |
|
|
|
10.6 |
% |
|
|
65.4 |
|
|
|
17.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
616.3 |
|
|
|
100.0 |
% |
|
$ |
369.4 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As percentage of |
|
|
|
|
|
|
|
As percentage |
|
|
Revenue less |
|
|
revenue less |
|
New vertical structure |
|
Revenue |
|
|
of revenue |
|
|
repair payments |
|
|
repair payments |
|
|
|
(US dollars in millions) |
|
Insurance |
|
$ |
370.1 |
|
|
|
60.1 |
% |
|
$ |
123.2 |
|
|
|
33.4 |
% |
Travel and leisure |
|
|
83.9 |
|
|
|
13.6 |
% |
|
|
83.9 |
|
|
|
22.7 |
% |
Banking and financial services |
|
|
26.4 |
|
|
|
4.3 |
% |
|
|
26.4 |
|
|
|
7.1 |
% |
Consulting & professional services |
|
|
26.3 |
|
|
|
4.3 |
% |
|
|
26.3 |
|
|
|
7.1 |
% |
Healthcare |
|
|
25.7 |
|
|
|
4.2 |
% |
|
|
25.7 |
|
|
|
7.0 |
% |
Utilities |
|
|
19.5 |
|
|
|
3.2 |
% |
|
|
19.5 |
|
|
|
5.3 |
% |
Shipping and logistics |
|
|
9.8 |
|
|
|
1.6 |
% |
|
|
9.8 |
|
|
|
2.6 |
% |
Manufacturing, retail, consumer products, telecom and diversified
businesses |
|
|
54.6 |
|
|
|
8.9 |
% |
|
|
54.6 |
|
|
|
14.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
616.3 |
|
|
|
100.0 |
% |
|
$ |
369.4 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 30
Our new
structure is depicted in the chart below:
Page 31
To achieve in-depth understanding of our clients industries and provide industry-specific
services, we manage and conduct our sales processes in our two key markets Europe and North
America. In addition, we have a team focused on serving the Asia Pacific market. Our sales teams
are led by senior professionals who focus on target industries or processes. Each business unit is
staffed by a dedicated team of managers and employees engaged in providing business process
outsourcing client solutions. In addition, each business unit draws upon common support services
from our information technology, human resource, training, corporate communications, corporate
finance, risk management and legal departments, which we refer to as our corporate-enabling units.
Travel and Leisure Services
We believe that we currently have one of the largest and most diverse service offerings among
offshore business process outsourcing service providers in the travel and leisure services domain.
Our service portfolio includes processes that support air, car, hotel, marine and packaged travel
and leisure services offered by our clients. The key travel and leisure industry sectors we serve
include:
|
|
airlines, hotels, and car rental companies; |
|
|
|
travel intermediaries; and |
|
|
|
others, such as global distribution systems and network providers. |
We served a diverse client base in this business unit that included British Airways, SITA,
Travelocity, United Airlines and Virgin Atlantic Airways Ltd in fiscal 2011. In fiscal 2011, we
served more than 31 airlines, hotels and travel intermediaries. As at March 31, 2011, we had 5,398
employees in this business unit, several hundred of whom have International Air Transport
Association, or IATA, or other travel industry related certifications. In fiscal 2011 and 2010,
this business unit represented 13.8% and 16.3% of our revenue, and 23.0% and 24.3% of our revenue
less repair payments, respectively.
The following graphic illustrates the key areas of services provided to clients in this business
unit:
Page 32
Case Study
Our
client, a leading Internet-based travel and leisure retailer, was transforming itself
from a provider of holiday information to an enabler, helping customers to visualize and realize
their dream holidays.
Our clients challenge was to manage its sales operations more efficiently in a growth environment
in order to increase revenues. Although it was collaborating with two onshore contact center
partners to deliver its customer care services, the client wanted to improve the productivity of
these processes. The goal was to achieve higher sales while reducing the cost of
customer care. They decided to transfer the contact center processes from these two onshore
providers to us.
The engagement with this client began with a pilot project focused on managing the contact center
for Europe-centric airlines business. Given the success of the pilot project, our team was given
the contract to manage over 25 lines of business across the clients four business verticals i.e.,
airlines, hotels, dynamic packages and lifestyle experiences.
We
developed a solution with the following features:
|
|
Flexible pricing model The partnership commenced with a full time
employee (FTE) pricing model and gradually moved to a unit transaction
pricing (UTP) model. This allows for greater flexibility for the
client as its business volumes fluctuate. For example, volumes can
surge significantly during the holiday season. This requires
meticulous planning between both the client and our team to manage
fluctuating volumes; |
|
|
|
Delivering continuous improvement We implemented Six Sigma and
Kaizen principles to boost the productivity of our employees
providing services to the clients. Our team identifies
opportunities to embed process efficiencies in order to focus on
up-sell and cross-sell of products; and |
|
|
|
Deploying high quality talent Our team developed sales training
modules to create a compelling, relevant and customized training
program. This includes an intensive 13 week online training program. |
Our team has helped this client significantly reduce its operational costs by delivering process
efficiencies while handling larger volumes of customer inquiries and increasing sales.
BFSI Services
We were
ranked as one of the Best 20 Leaders by Industry focus: Financial
Services (Insurance) by IAOP in The Global Outsourcing 100 list for
2010. We also have expertise in
the retail and mortgage banking, and asset management sectors.
The key BFSI industry sectors we serve include:
|
|
integrated financial services companies; |
|
|
|
life, annuity, and property and casualty insurers; |
|
|
|
insurance brokers and loss assessors; |
|
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self-insured auto fleet owners; |
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commercial and retail banks; |
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mortgage banks and loan servicers; |
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asset managers and financial advisory service providers; and |
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healthcare payers, providers and device manufacturers. |
We served a diverse client base in this business unit that included AVIVA, Biomet Inc. and MMC in
fiscal 2011. We also serve a large US-based financial advisory provider, a top ten UK auto insurer,
a large insurance loss adjuster, several self-insured fleet owners and several mortgage-related
companies. As at March 31, 2011, we had 7,224 employees working in this business unit. In fiscal
2011 and 2010, revenue from this business unit represented 66.5% and 65.4% of our revenue, and
revenue less repair payments from this business unit represented 44.2% and 48.4% of our revenue
less repair payments, respectively.
In April 2008, we acquired Chang Limited, an auto insurance claims processing services provider in
the UK through its wholly-owned subsidiary, Call 24-7, which we have renamed as AHA. AHA provides
comprehensive end-to-end solutions to the UK insurance industry by leveraging cost efficient claims
processing, technology, and engineering and collision repair expertise to deliver quality service
to its insurer clients through the accident management process. AHA offers a comprehensive suite of
back-office insurance claims services, including first notification of loss, third party claims
handling, replacement vehicle provisioning and repair management through a national network of
approved body shops.
The following graphic illustrates the key areas of services provided to clients in this business
unit:
Banking and Financial Services Offerings
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Insurance Services Offerings
Our BFSI business unit included our auto claims business, consisting of WNS Assistance and AHA,
which is comprised of our WNS Auto Claims BPO segment. We offer a blended onshore-offshore delivery
model that enables us to handle the entire automobile insurance claims cycle. We offer
comprehensive accident management services to our clients where we arrange for repair of
automobiles through a network of repair centers. We also offer claims management services where we
process accident insurance claims for our clients. For most of our clients in our auto claims
business, our employees receive telephone calls reporting automobile accidents, generate electronic
insurance claim forms and arrange for automobile repairs in cases of automobile damage. We also
provide third party claims handling services including the administration and settlement of
property and bodily injury claims while providing repair management and rehabilitation services to
our insured and self-insured fleet clients and the end-customers of our insurance company clients.
Our service for uninsured losses focuses on recovering repair costs and legal expenses directly
from negligent third parties. See Item 5. Operating and Financial Review and Prospects Results
by Reportable Segment.
Case Study
Our client, a Fortune 500 risk advisory company, needed to consolidate its fixed asset, accounts
payable, travel and expense, accounts receivables, general ledger, management reporting, fiduciary
reporting and management supply processes. The back office had to be designed to support a full
range of complex insurance recording, reporting and management processes. The client turned to us
to design and implement the operation.
We deliver services to the client across over 40 locations, including Australia, Canada, Eastern
Europe, South Africa, the UK and the US, supporting more than 35 operating companies with
dissimilar business environments and cultures. The scope of the project included:
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Managing more than 25 disparate F&A systems; and |
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Consolidating fragmented and standalone processes with
minimal IT support. |
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We developed and implemented detailed solution design workshops across the various regions to
capture existing processes and system knowledge. The team then designed a Center of Excellence
model for all in-scope processes to ensure standardization across regions and implemented
enterprise-wide document management and workflow solutions. Process improvement and automation
initiatives were also identified to provide the client with early stage benefits of outsourcing.
Key benefits of our solution included the creation of a shared services center leading to
rationalization and optimization of processes.
In light
of the foregoing, the client awarded us the contract of consolidation
of its F&A processes
across nine countries in the Latin America Caribbean region and
administration of its North America consumer
finance processes in 2010.
Industrial and Infrastructure Services
Our industrial and infrastructure services business unit focused specifically on the needs of the
manufacturing, logistics, telecommunications and utilities industries.
We served a diverse client base that included Centrica plc, FedEx and T-Mobile in fiscal 2011. As
at March 31, 2011, we had 1,756 employees working in this business unit. In fiscal 2011 and 2010,
revenue from this business unit represented 9.1% and 7.6% of our revenue, and 15.1% and 11.4% of
our revenue less repair payments, respectively.
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The following graphic illustrates the key areas of services provided to clients in this business
unit:
Case Study.
Our client, a leading gas and electricity provider in North America and the United Kingdom, wanted
to significantly increase its customer service while reducing cost of operations. In the course of
its transformation to a more consumer-centric company, the client chose to outsource its processes
to us.
WNS associates manage customer care processes for this client, interacting directly with consumers
through all channels of communication, including email, white mail and outbound calling. We also
deliver back office exceptions billing, a crucial financial back office process, which enables the
client to identify and bill customers accurately by plugging potential revenue leakages. Our
solution achieved the following:
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Supported the clients implementation of its first SAP© platform by
acting as subject matter experts. SAP© is a leading provider of
business management software; |
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Responded to a rapid increase in customer interaction volumes; |
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Scaled our team from 26 to over 1,500 associates in that time period
and revamped training materials; |
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Implemented projects utilizing Six Sigma and LEAN methodologies at
transition, laying the foundation for continuous program improvement,
resulting in higher quality transition by embedding Black Belts, which
refers to in-house coaches on Six Sigma, to design quality model; |
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Reduced the time for a team member to reach optimum productivity, and
increased productivity; |
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Improved debt recovery; and |
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Reduced backlog by collaboratively working with the client. |
Emerging Businesses
Prior to April 2008, our emerging businesses unit addressed the needs of the manufacturing,
logistics, telecommunications, utilities, consumer products, retail, professional services,
pharmaceutical, and media and entertainment industries. In April 2008, we created a new industrial
and infrastructure services business unit to focus specifically on the needs of the manufacturing,
logistics, telecommunications and utilities industries. We believe several industries are at an
accelerating stage of offshore business process outsourcing adoption, and therefore present
significant opportunities for growth. These industries include consumer products, retail,
professional services, pharmaceutical and, media and entertainment industries. Under our new
vertical business unit structure that became effective as at April 1, 2011, we created separate
business units to focus specifically on the needs of the consulting
and professional services, healthcare, utilities, shipping and
logistics, and manufacturing, retail, consumer products and telecom
industries.
As at March 31, 2011, we had 5,945 employees in this business unit. In fiscal 2011 and 2010, this
business unit represented 10.6% and 10.7% of our revenue, and 17.7% and 15.9% of our revenue less
repair payments, respectively.
Our strategy for our emerging businesses was to nurture and develop emerging industry-specific
capabilities up to a point of critical mass from which new industry-focused operating units may
emerge. We utilized three core functional service capabilities to penetrate our emerging
businesses. These capabilities are broadly classified as:
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finance and accounting services focused on finance and accounting
services; |
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research and analytics services focused on market, business and,
financial research and analytical services; and |
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global transformation practice focused on business and process optimization services. |
Case Study
In our emerging businesses unit, we worked with a leading medical device manufacturer. This
company turned to us for support in collections and follow up, bill preparation and submission,
order processing and fulfillment operations and payment processing. The client was faced with the
challenge of large and small order size portfolios, a highly complex US healthcare environment and
long learning curves. They also operated in an environment with highly tenured resources, a diverse
customer base, complex compliance requirements and a highly price and service sensitive market.
The client engaged us to provide an onshore/offshore solution for managing the entire value stream
(order to cash). We took ownership of SLAs for the client along with offshore
delivery and moved the client to an outcome-based solution with targeted savings and year-over-year
improvements in recoveries. Our team of dedicated analytics professionals helped drive up
predictability of recoveries and helped channel efforts to improve collections.
The scope of the project for this client included the following:
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Ramped our team to 150 associates within the first six months; |
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Provided cost savings through outcome-based risk-reward commercial construct; |
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Full support to the company sales force across states; |
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Taken complete ownership of collections performance; and |
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Supporting patient queries on supplies and billings. |
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We improved the efficiency of our clients collection, order processing, fulfillment and account
management, while delivering consistent service levels and cost savings.
Finance and Accounting Services
In our finance and accounting services area, we offer critical finance and accounting services to
our clients.
In June 2008, we acquired BizAps, a provider of SAP© solutions, to optimize the
enterprise resource planning functionality for our finance and accounting processes. The
acquisition of BizAps has enabled us to further assist our global customers in improving their
shared services finance and accounting functions, including core processes such as procure-to-pay
and order-to-cash. Based in the UK and the US, BizAps offers SAP© optimization services and SAP©
certified solutions designed to simplify SAP© roll-out and enhance functionality for internal and
outsourced shared services centers.
The following graphic illustrates the key finance and accounting services we provide:
Case Study
We work
with a large electronics, media and entertainment conglomerate, providing it F&A services.
This client has business interests in over 100 countries and is fully committed to strong corporate
governance. The company aimed to set up a separate treasury services arm to act as an internal
banking system for the group, providing various services for its affiliate companies including a
foreign exchange hedging service, re-invoicing, funding and financial advising, and reporting.
The groups business was growing and, as a result, the treasury services team was faced with a
significant increase in volume of work. Increasing the team delivering treasury services in four
major cities while seeking to reduce operational costs compounded the challenge of scale. The
client decided to outsource some of its treasury operations to us to enhance its treasury services
capabilities, and reduce operational costs while maintaining a high standard in regulatory compliance.
Page 39
Our team currently provides business-critical services in major functional areas of treasury
operations, including foreign exchange hedging, inter-company loans and deposits, cashless
settlement, centralized cash pooling system, automatic sweeping service and proxy payment. The
scope of services also include supporting the clients ancillary processes such as re-invoicing,
business / financial planning, and access management for a range of treasury systems. We also
provide support in the following ways:
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Carrying out the daily update of current cash and future
cash flows resulting from both accounts receivable and
accounts payable positions. This effort spans across more
than 150 client affiliate companies. The information
processed by the team is used by the clients front office
team to have a clear line of sight into present funds and
future positions, which is vital to execute various deals
in the market; |
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Performing various back office functions which constitute
the core of any treasury function. These include deal
confirmations, foreign exchange netting, bank and
inter-company settlements, bank reconciliation and managing
accounts payable processes for the client; |
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The daily monitoring of foreign exchange hedging activity
including the deal reconciliation and user identity
administration of the treasury system; |
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Delivering accounting services in an SAP© environment,
including processes such as the monthly book closing for
treasury entities, management accounting and reporting,
accounting bank reconciliation, trade accounts
reconciliation, centralized cash pooling system clearing
and the preparation of budgets; and |
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Providing fair market value reporting based on Accounting
Standards Codification, or ASC 815 Derivatives and
Hedging, hedging position reports, monitoring and
reporting outstanding borrowing and lending positions,
daily cash position updates and the reporting and
reconciliation of dividends from money market funds. |
As a result of the teams hard work and dedication, WNS was able to reduce operational costs and
improve the clients compliance with the US Sarbanes-Oxley Act of 2002.
Research and Analytics Services
In the research and analytics services area, we offer market, business, and financial research and
analytical services such as business and financial research, market research, domain specific
analytical services, data services and business services to our clients who are typically
pharmaceutical companies, consulting firms, market research companies and investment banks. These
services range from low complexity data collection services to complex and high-end analytics which
require specialized skill sets. Our research and analytics services also include industry-specific
processes that are tailored to address our clients business and industry practices in the
pharmaceutical, retail, financial services and insurance, consumer products and other emerging
industries like travel, manufacturing, technology, media and telecommunications. Our analysts have
bachelors, masters or doctorate degrees in statistics, management, business administration, finance
and accountancy or economics, which enable us to support many of our clients simple to highly
complex research and analytics needs. We have institutionalized processes around staffing, internal
training, knowledge transfer, transition, team management and client communication that are unique
to high-end knowledge process outsourcing relationships.
In May 2007, we acquired Marketics, a provider of offshore analytics services. Over the last three
years, Marketics has developed a wide range of technology-enabled analytic services, primarily
targeting the sales and marketing organizations of consumer-centric companies. Marketics value
proposition is focused on enhancing business decision making through the use of complex analytics
such as predictive modeling to understand consumer behavior patterns and sales data analytics to
support inventory allocation.
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The following graphic illustrates the key research and analytics services we provide:
Case Study
A global beverage company sought to transform their way of conducting market research and
analytics. The client wanted to accomplish two key objectives: first, free up internal resources
from data gathering to focus them on the consumer and marketing functions; and second, obtain more
value from existing data.
The client started its engagement with us with a pilot team answering everyday business questions
on opportunities for brands, consumers, market, occasions, using proprietary survey research
protocols. The scope soon expanded to include consumer surveys, brand equity tracking surveys and
integrated marketing communications tracking, as well as the management of the supporting research
data. This information resides with research partners in 40 different countries, stemming from
reports that are run on a wide range of time frames. We became the custodian of the historical
tracker, supporting these 40 markets globally.
Our key value-added contributions include:
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Fast turnaround on key queries. We developed a blended onsite/offshore
delivery model which helped the client gain a better understanding of
strategic and business challenges with an overnight turnaround. |
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Thinking supplier partnership. We leveraged a resource mix of
modeling analysts, marketing domains and technology experts to support
the client on both strategic and tactical business questions,
including portfolio analysis, everyday business questions such as
market size estimation, shopper and consumer insights, identifying
consumer need gaps for new product development and implementing an
analytics center of excellence to support account growth. |
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Ongoing efficiency. We identified a pattern of client requests which
drove the automation and creation template reports, including a unique
monitoring report. This report is currently used in over 35 global
markets by the clients senior management team. |
Global Transformation Practice
In May 2009, we reorganized our industry-specific capabilities to form a new core functional
service capability called business transformation services, which we
have
renamed as global transformation practice. These services seek to help our clients
identify business and process optimization opportunities through technology-enabled solutions,
process redesigning and improvements using a variety of techniques, and leveraging technical and
management development programs to achieve cost savings. Because the economic climate is dynamic,
our clients seek cost savings beyond labor arbitrage and look for step changes in productivity and
the ability to manage variability. To more effectively address our clients needs, we have
restructured our existing capabilities in process and domain consulting, program management, and
quality and technology analytics into a comprehensive service. Our services include implementation
of best practices, technology-enabled solutions optimization and leading-edge analytics. We use
various processes, tools and methodologies to deliver our global transformation practice, including
the Six Sigma & Lean methodologies, engagement models tied to results, analytics-based business
insights, domain and process expertise, process re-engineering, best practices, and standardization
and automation.
The following graphic illustrates the key transformation services that we provide:
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Sales and Marketing
The offshore business process outsourcing services sales cycle can be time consuming and complex in
nature. The extended sales cycle generally includes initiating client contact, submitting requests
for information and proposals for client business, facilitating client visits to our operational
facilities, performing analysis including diagnostic studies and conducting pilot implementations
to confirm our delivery abilities. Due to the complex nature of our sales cycle, we have aligned
our sales teams to our vertical business units and staffed them with both hunting, or sales,
professionals, as well as farming, or client relationship, professionals. Our hunters and farmers
have specialized industry knowledge, which enables them to better relate to our prospective
clients. This industry-focus enables our hunters to better understand the prospective clients
business needs and offer appropriate domain-specific solutions.
Our sales and sales support professionals are based in the Australia, Dubai, Eastern Europe, India,
Singapore, the UK, and US. Our sales teams work closely with our sales support team in India, which
provides critical analytical support throughout the sales cycle. Another key
function delivered by our India team is providing leads on potential
business opportunities as well as providing support for telephone
sales. Our front-line
sales teams are responsible for identifying and initiating discussions with prospective clients,
and selling services in new areas to existing clients. We assign dedicated client partners and/or
account managers to our key clients. These managers work with their clients daily at the client
locations. They also are the conduit to our service delivery teams
addressing clients' needs. More
importantly, by leveraging their detailed understanding of the clients business and outsourcing
objectives gained through this close interaction, our account managers actively identify and target
additional processes that can be outsourced to us. Through this methodology, we have developed a
strong track record of increasing our sales to existing clients over time.
We have
significantly grown our client facing team from 43 members as at
March 31, 2010 to 55 members as at March 31, 2011, including hunters and farmers, during fiscal
2011. We are committed to additional expansion as the pipeline necessitates in fiscal 2012.
Clients
As at March 31, 2011, we had a diverse client base of 220 clients across a variety of industries
and process types, including companies that we believe are among the leading players in their
respective industries. We define significant clients as those who represent an ongoing business
commitment to us, which includes substantially all of our clients within our WNS Global BPO segment
and some of our clients within our WNS Auto Claims BPO segment. The other clients in our auto
claims business offer only occasional business to us because of the small size of their automobile
fleets and the consequent infrequent requirement of our auto claims services.
We believe the diversity in our client profile differentiates us from our competitors. See Item 5.
Operating and Financial Review and Prospects Revenue for additional information on our client
base.
In fiscal 2011, the following were among our top 25 clients (including their affiliates) by
revenue:
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AVIVA
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SITA |
Biomet Inc.
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T-Mobile |
British Airways
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Travelocity |
Centrica plc
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United Airlines |
FedEx
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Virgin Atlantic Airways Ltd |
MMC
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The table below sets forth the number of our clients by revenue less repair payments for the
periods indicated. We believe that the growth in the number of clients who generate more than $1
million of annual revenue less repair payments indicates our ability to extend the depth of our
relationships with existing clients over time.
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Year ended March 31, |
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2011 |
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2010 |
Below $1.0 million |
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163 |
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173 |
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$1.0 million to $5.0 million |
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39 |
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36 |
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$5.0 million to $10.0 million |
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12 |
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12 |
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More than $10.0 million |
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6 |
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7 |
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Competition
Competition in the business process outsourcing services industry is intense and growing steadily.
See Item 3. Key Information D. Risk Factors Risks Related to Our Business We face
competition from onshore and offshore business process outsourcing companies and from information
technology companies that also offer business process outsourcing services. Our clients may also
choose to run their business processes themselves, either in their home countries or through
captive units located offshore. We compete primarily with:
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focused business process outsourcing service companies based in
offshore locations (primarily India), such as Genpact Limited,
Firstsource Solutions Limited. and Exl Service Holdings, Inc.; |
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business process outsourcing divisions of numerous information
technology service companies located in India such as Infosys BPO
Limited (formerly Progeon Limited) owned by Infosys Technologies
Limited, or Infosys, Tata Consultancy Services Limited, or TCS, and
Wipro BPO, owned by Wipro Technologies Limited; and |
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global companies such as Accenture Limited., Affiliated Computer
Services Inc., Electronic Data Systems Corporation, a division of
Hewlett-Packard, and International Business Machines Corporation which
provide an array of products and services, including broad-based
information technology, software, consulting and business process
outsourcing services. |
However, while companies such as Infosys (through its business process outsourcing subsidiary,
Infosys BPO Limited) and TCS can offer clients integrated information technology and business
outsourcing services, we believe these companies focus on information technology as their core
business.
In addition, departments of certain companies may choose to perform their business processes
in-house, in some cases via an owned and operated facility in an offshore location such as India.
Their employees provide these services as part of their regular business operations.
Intellectual Property
We use a combination of our clients software systems, third-party software platforms and systems
and, in some cases, our own proprietary software and platforms to provide our services. Our
principal proprietary software includes our platform for passenger revenue accounting called JADE
and fare audit platform called VERIFARE, which we use in our travel and leisure business unit, and
an auto claims software platform called Claimsflo, which we use in WNS Assistance. In addition,
BizApss proprietary and licensed software are used to optimize clients functions and processes
like Procure to Pay and Order to Cash. Our proprietary and licensed software allows us to
market our services with an integrated solution that combines a technology platform with our core
business process outsourcing service offering. We customarily enter into licensing and
non-disclosure agreements with our clients with respect to the use of their software systems and
platforms. Our contracts usually provide that all intellectual property created for the use of our
clients will be assigned to them. Our employees are also required to sign confidentiality
agreements as a condition to their employment.
We have registered the trademark WNS and WNS-Extending Your Enterprise in EU, India, the
Philippines (in certain relevant categories) and the US.
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Technology
We have a dedicated team of technology experts who support clients at each stage of their
engagement with us. The team conducts diagnostic studies for prospective clients and designs and
executes technology solutions to enable offshore execution and management of the clients business
processes. The global IT infrastructure is managed by an internal IT infrastructure and operations
team, which seeks to ensure that our associates face minimal loss in time and efficiency in their
work processes. The team supports over 16,000 desktops across 13 locations world-wide and includes
specialists in the areas of wide-area-network, or WAN,
local-area-network,or LAN, telecommunications, servers,
desktop and information security.
Wide-area-network We have designed and built WNSnet, a high-capacity global multi-protocol
label switching network, connecting all of our delivery centers in India, Europe, Manila and
Sri Lanka to network points of presence, or PoP, in the US and UK. There are two PoP in the US -
one in Ashburn, Virginia and one in Los Angeles, California. In addition, there are two points of presence in the
UK- one in Telecity, London and the other in Telehouse, London.
Connectivity to our clients data
centers is generally extended from two PoP to provide redundancy. The
PoP are connected to our
delivery centers on multiple high capacity leased circuits contracted from multiple telecom service
providers and set up on diverse cable systems. This ensures that
outage at any PoP,
on any cable system or any service provider network will not impact end-to-end connectivity to
customers. WNSnet is managed 24/7 by our network operations center, or NOC, which is based in
Mumbai. A backup NOC has been set up in Pune as a contingency measure.
Contact
Center Technology Infrastructure We have installed the Avaya MultiVantage platform at all
our call centers for delivering voice processes. The Avaya platform permits secure access to define
and redefine the call flow, vectoring, agent skills, splits and other
call routing parameters as and when required.
Data
centers We also offer facilities for hosting client data if required. We have data centers at
Mumbai, Pune and Gurgaon in India with over 25,000 square feet of
floor space. WNS hosts servers
for over 125 clients in the data centers and also all servers required for our corporate
applications.
Technology
service management methodology We have designed our technology service management
methodology on the information technology infrastructure library framework. The
competency developed by serving various clients across verticals is
under continual upgrade and
includes processes for the following: service desk, incident management, problem tracking and
resolution, change control and management, configuration management
and release management.
Process and Quality Assurance and Risk Management
Our process and quality assurance compliance programs are critical to the success of our
operations. We have an independent quality assurance team to monitor, analyze, provide feedback on
and report process performance and compliance. Our company-wide quality management system, which
employs over 562 quality assurance analysts, focuses on managing our client processes effectively
on an ongoing basis. Our process delivery is managed by independent empowered teams and measured
regularly against pre-defined operational metrics. We also have over 731 employees in our quality
assurance team that satisfies the ISO 9001:2000 standards for quality management systems. We apply
the Six Sigma and LEAN methodologies which are statistical methodologies for improving consistent
quality across processes as well as quality management principles for improving the operation of
our clients processes and providing a consistent level of service quality to our clients. As at
March 31, 2011, more than 699 of our projects were completed according to the Six Sigma and LEAN
methodologies and currently 65 projects are ongoing. We were awarded the Golden Peacock National
Quality Award for the year 2011 for our excellence in delivering transformational and cutting-edge
outsourcing solutions. We also received the Golden Peacock Eco-Innovation Award for Green Lean
Sigma Program awarded by The World Environment Foundation in 2009 and for innovation in 2007. We
also apply other process re-engineering methodologies to further improve our process delivery and
undertake periodic audits of both our information systems policy and implemented controls.
Our Board of Directors is primarily responsible for overseeing our risk management processes. The
Board of Directors receives and reviews reports from the Head of Risk Management and Audit as
considered appropriate regarding our companys assessment of risks. The Board of Directors focuses
on the most significant risks facing our company and our companys general risk management
strategy, and also ensures that risks undertaken by our company are consistent with the Boards
appetite for risk.
Our risk management framework also focuses on two important elements: business continuity planning
and information security.
Our approach to business continuity planning involves implementation of an organization-wide
business continuity management framework which includes continual self-assessment, strategy
formulation, execution and review. Our business continuity strategy leverages our expanding network
of delivery centers for operational and technological risk mitigation in the event of a disaster.
To manage our business continuity planning program, we employ a dedicated team of experienced
professionals. A customized business continuity strategy is developed for key clients, depending on
their specific requirements. For mission-critical processes, operations are typically split across
multiple delivery centers in accordance with client-approved customized business continuity plans.
Our approach to information security involves implementation of an organization-wide information
security management system, which complies with the ISO 27001:2005 to manage organizational
information security risks. These measures seek to ensure that sensitive company information
remains secure. Currently, information security systems at 10 delivery centers are ISO 27001:2005
certified, and we expect to seek similar certifications in our newer delivery centers. In addition,
we comply with the Payment Card Industry (PCI) Data Security Standard which is a multifaceted
security standard aimed at helping companies proactively protect cardholder data and sensitive
authentication data.
In addition, our clients may be governed by regulations specific to their industries or in the
jurisdictions where they operate or where their customers are domiciled or in their home
jurisdictions which may require them to comply with
Page 45
certain process-specific requirements. As we serve a large number of clients globally and across
various industries, we rely on our clients to identify the process-specific compliance requirements
and the measures that must be implemented in order to comply with their regulatory obligations. We
assist our clients to maintain and enforce compliance in their business processes by implementing
control and monitoring procedures and providing training to our clients employees. The control and
monitoring procedures defined by this function are separate from and in addition to our periodic
internal audits.
Human Capital
As at March 31, 2011, we had 21,523 employees, of which 252 are based in Costa Rica, 18,731 are
based in India, 1,429 are based in the Philippines, 327 are based in Romania, 372 are based in Sri
Lanka, 354 are based in the UK and 58 are based in the US. Most of our associates hold university
degrees. As at March 31, 2010 and 2009, we had 21,958 and 21,356 employees, respectively. Our
employees are not unionized. We believe that our employee relations are good. We focus heavily on
recruiting, training and retaining our employees.
Recruiting and Retention
We believe that we have developed effective human resource strategies and a strong track record in
recruiting. As part of our recruiting strategy, we encourage candidates to view joining our
organization as choosing a long-term career in the field of travel, BFSI or another specific
industry or service area. We use a combination of recruitment from college campuses and
professional institutes, via recruitment agencies, job portals, advertisements and walk-in
applications. In addition, a significant number of our applicants are referrals by existing
employees. We currently recruit an average of 920 employees per month.
During fiscal 2011, 2010 and 2009, the attrition rate for our employees who have completed six
months of employment with us was 43%, 32% and 31%, respectively.
Training and Development
We devote significant resources to the training and development of our associates. Our training
typically covers modules in leadership and client processes, including the functional aspects of
client processes such as quality and transfer. Training for new associates may also include
behavioral and process training as well as culture, voice and accent training, as required by our
clients.
We have established the WNS Learning Academy where we offer specialized skills development, such as
leadership and management development, and behavioral programs as well as pre-process training that
includes voice and accent and customer service training, for new associates. The WNS Learning
Academy is staffed with over 55 full-time trainers and content designers. We customize our training
programs according to the nature of the clients business, the country in which the client operates
and the services the client requires. Further, the WNS Learning Academy has an in-house e-learning
unit which creates computer or web-based learning modules to support ongoing learning and
development.
Our significant effort on the learning and development of our supervisory, management and
leadership team is visible through focused learning initiatives targeted at employees with specific
job roles and based upon current and future business competency requirements. Since 2008, we have
implemented a structured five-day leadership program with a 60-90 day action learning project
focused on professional and leadership skills and process improvement for over 2,000 team leaders
and managers.
Since the launch of the Harvard Leadership and Management series programs, over 304 members of our
employees ranking Associate Vice President and above have enrolled to these programs. In addition
to this, we offer higher education opportunities through tie-ups with leading institutions such as
the Indian Institute of Management and the Symbiosis Institute of Business Management.
In 2010 our focus was bringing higher education to our employees and we launched a higher education
fair where we invited top education institutes to our open house to offer our employees an
opportunity to select a program of their choice at a fee exclusive to us. We offered this across
our India locations. The fourth batch of WNS leaders graduated from the co-branded WNS Harvard
Program and the third batch of MBAs graduated from Symbiosis Business school this year. Over
14,000 employees have been trained on various behavioural and functional programs.
Page 46
In fiscal 2011, the WNS Learning Academy launched LA TV, a Blackberry based corporate training
(BB-Training) tool. It is an innovative medium to bring learning to our time-pressed and constantly
on-the-go leaders. We have expanded our global footprint and all the
training programs are made available across locations. To be able to do this, master trainers
travel and conduct Train the Trainer programs. We have even deployed one of our facilitators to
Sri Lanka for a year to build the learning capability at Colombo. Learning and development (or
L&D) proactively works on diversity, cross-cultural sensitization, and understanding how the
business works in different geographies. The in-house content team is quick to customize programs
to the cultural, geographic and company nuances, which is a key benefit for our organization.
In fiscal 2012, our focus will be to engage in strategic tie-ups and alliances with top-of-the line
external partners to facilitate learning quality and brand and develop our senior leadership
pipeline. The L&D framework will address developmental and functional need at the junior management
level, leadership and sales focus at the middle management level and business and strategic
development at the senior leadership level.
Regulations
Due to the industry and geographic diversity of our operations and services, our operations are
subject to a variety of rules and regulations, and several federal and state agencies in Europe,
India, Sri Lanka, the Philippines and the US that regulate various aspects of our business. See
Item 3. Key Information D. Risk Factors Risks Related to our Business Failure to adhere
to the regulations that govern our business could result in us being unable to effectively perform
our services. Failure to adhere to regulations that govern our clients businesses could result in
breaches of contract with our clients.
Regulation of our industry by the Indian government affects our business in several ways. We
benefit from certain tax incentives promulgated by the Indian government, including a tax holiday
from Indian corporate income taxes for the operation of most of our Indian facilities. The tax
holiday enjoyed by our delivery centers located in Bangalore, Chennai, Gurgaon, Mumbai, Nashik and
Pune expired on April 1, 2011, except for the tax holiday enjoyed by three of our delivery centers
located in Mumbai, Nashik and Pune which expired on April 1, 2007, April 1, 2008 and April 1, 2009,
respectively. As a result of these incentives, our operations have been subject to lower Indian tax
liabilities. In May 2007, the Indian Finance Act, 2007 was adopted, with the effect of subjecting
Indian companies that benefit from a holiday from Indian corporate income taxes to the minimum
alternate tax, or MAT. MAT was applied at the rate of 11.33% in the case of profits exceeding
10
million ($0.2 million based on the exchange rate on March 31, 2011) and 10.3% in the case of
profits not exceeding
10 million from
fiscal 2007 to fiscal 2009 and was increased to the rate of 16.99% in
the case of profits exceeding
10 million and 15.45% in the case of
profits not exceeding
10 million in
fiscal 2010. MAT has been further increased to (1) 19.93% in the case of profits exceeding
10
million and 18.54% in the case of
profits not exceeding
10 million in
fiscal 2011, and (2) 20.01% in the case of profits exceeding
10 million and 19.06% in the case of profits not exceeding
10 million in fiscal 2012. The Government of India has
pursuant to the Indian Finance Act, 2011 levied MAT on the profits
earned by the SEZ units. As a result of the adoption of the Indian
Finance Act, 2007, we became subject to MAT and have been required to pay additional taxes since fiscal 2008. To the
extent MAT paid exceeds the actual tax payable on the taxable income; we would be able to set off
such MAT credits against tax payable in the succeeding ten years, subject to the satisfaction of
certain conditions. In addition to this tax holiday, our Indian subsidiaries are also entitled to
certain benefits under relevant state legislation/regulations. These benefits include preferential
allotment of land in industrial areas developed by the state agencies, incentives for captive power
generation, rebates and waivers in relation to payments for transfer of property and registration
(including for purchase or lease of premises) and commercial usage of electricity.
Our Sri Lankan subsidiary, our joint venture company in the Philippines and our subsidiary in Costa
Rica also benefit from certain tax exemptions.
See Item 5. Operating and Financial Review and Prospects Critical Accounting Policies Income
Taxes and note 3 to our consolidated financial statements included elsewhere in this annual report
for more details regarding foreign currency translations.
Enforcement of Civil Liabilities
We are incorporated in Jersey, Channel Islands. Most of our directors and executive officers reside
outside of the US. Substantially all of the assets of these persons and substantially all of our
assets are located outside the US. As a result, it may not be possible for investors to effect
service of process on these persons or us within the US, or to enforce against these persons or us,
either inside or outside the US, a judgment obtained in a US court predicated upon the civil
liability provisions of the federal securities or other laws of the US or any state thereof. A
judgment of a US court is not directly enforceable in Jersey, but constitutes a cause of action
which will be enforced by Jersey courts provided that:
|
|
the court which pronounced the judgment has jurisdiction to entertain
the case according to the principles recognized by Jersey law with
reference to the jurisdiction of the US courts; |
|
|
|
the judgment is given on the merits and is final and conclusive it
cannot be altered by the courts which pronounced it; |
Page 47
|
|
there is payable pursuant to the judgment a sum of money, not being a
sum payable in respect of tax or other charges of a like nature or in
respect of a fine or other penalty; |
|
|
|
the courts of the US have jurisdiction in the circumstances of the
case; |
|
|
|
the judgment can be enforced by execution in the jurisdiction in which
the judgment is given; |
|
|
|
the person against whom the judgment is given does not benefit from
immunity under the principles of public international law; |
|
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|
there is no earlier judgment in another court between the same parties
on the same issues as are dealt with in the judgment to be enforced; |
|
|
|
the judgment was not obtained by fraud, duress and was not based on a
clear mistake of fact; and |
|
|
|
the recognition and enforcement of the judgment is not contrary to
public policy in Jersey, including observance of the principles of
natural justice which require that documents in the US proceeding were
properly served on the defendant and that the defendant was given the
right to be heard and represented by counsel in a free and fair trial
before an impartial tribunal. |
It is the policy of Jersey courts to award compensation for the loss or damage actually sustained
by the person to whom the compensation is awarded. Although the award of punitive damages is
generally unknown to the Jersey legal system, there is no prohibition on them either by statute or
by customary law. Whether a judgment is contrary to public policy depends on the facts of each
case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy.
Moreover, if a US court gives a judgment for multiple damages against a qualifying defendant, the
Protection of Trading Interests Act 1980, an Act of the UK extended to Jersey by the Protection of
Trading Interests Act 1980 (Jersey) Order 1983, or the Order, provides that such judgement would
not be enforceable in Jersey and the amount which may be payable by such defendant may be limited.
The Order provides, among others, that such qualifying defendant may be able to recover such amount
paid by it as represents the excess of such multiple damages over the sum assessed as compensation
by the court that gave the judgment. A qualifying defendant for these purposes is a citizen of
the UK and Colonies, a body corporate incorporated in the UK, Jersey or other territory for whose
international relations the United Kingdom is responsible or a person carrying on business in
Jersey.
Jersey courts cannot enter into the merits of the foreign judgment and cannot act as a court of
appeal or review over the foreign courts. It is doubtful whether an original action based on US
federal securities laws can be brought before Jersey courts. A plaintiff who is not resident in
Jersey may be required to provide security for costs in the event of proceedings being initiated in
Jersey.
There is uncertainty as to whether the courts of India would, and Mourant Ozannes, our counsel as
to Jersey law, have advised us that there is uncertainty as to whether the courts of Jersey would:
|
|
recognize or enforce judgments of US courts obtained against us or our
directors or officers predicated upon the civil liability provisions
of the securities laws of the US or any state in the US; or |
|
|
|
entertain original actions brought in each respective jurisdiction
against us or our directors or officers predicated upon the federal
securities laws of the US or any state in the US. |
Section 44A of the Code of Civil Procedure, 1908 (India), or the Civil Code, as amended, provides
that where a foreign judgment has been rendered by a superior court in any country or territory
outside India which the Indian government has by notification declared to be a reciprocating
territory, such foreign judgment may be enforced in India by proceedings in execution as if the
judgment had been rendered by the relevant superior court in India. Section 44A of the Civil Code
is applicable only to monetary decrees not being in the nature of amounts payable in respect of
taxes or other charges of a similar nature or in respect of fines or other penalties and does not
include arbitration awards. The US has not been declared by the Indian government to be a
reciprocating territory for the purposes of Section 44A of the Civil Code.
A judgment
of a foreign court, which is not a court in a reciprocating territory, may be enforced in
India only by a suit upon the judgment, subject to Section 13 of the Civil Code and not by
proceedings in execution and such judgment of a foreign court is
considered as evidence.
This section, which is the statutory basis for the recognition of foreign judgments, states that a
foreign judgment is conclusive evidence as to any matter directly adjudicated upon except:
Page 48
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|
where the judgment has not been pronounced by a court of competent
jurisdiction; |
|
|
|
where the judgment has not been given on the merits of the case; |
|
|
|
where the judgment appears on the face of the proceedings to be
founded on an incorrect view of international law or a refusal to
recognize the law of India in cases where such law is applicable; |
|
|
|
where the proceedings in which the judgment was obtained were opposed
to natural justice; |
|
|
|
where the judgment has been obtained by fraud; or |
|
|
|
where the judgment sustains a claim founded on a breach of any law in
force in India. |
The suit must be brought in India within three years from the date of the judgment in the same
manner as any other suit filed to enforce a civil liability in India. Generally, there are
considerable delays in the disposal of suits by Indian courts. It is unlikely that a court in India
would award damages on the same basis as a foreign court if an action is brought in India.
Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the
amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to
enforce a foreign judgment in India is required to obtain prior approval from the Reserve Bank of
India under the Indian Foreign Exchange Management Act, 1999, to repatriate any amount recovered
pursuant to such execution. Any judgment in a foreign currency would be converted into Indian
rupees on the date of judgment and not on the date of payment.
C. Organizational Structure
The following diagram illustrates our companys organizational structure and the place of
organization of each of our subsidiaries as of the date hereof. Unless otherwise indicated, each of
our subsidiary is 100% owned, directly or indirectly, by WNS (Holdings) Limited.
Page 49
Notes:
(1) |
|
WNS (Holdings) Limited made 99.99% capital contribution in WNS Global Services Netherlands
Cooperative U.A. (the Co-op). The remaining 0.01% capital contribution in the Co-op was made by
WNS North America, Inc., to satisfy the regulatory requirement to have a minimum of two members. |
|
(2) |
|
All the shares except one share of WNS Business Consulting Services Private Limited (formerly
known as WNS Mortgage Services Private Limited) are held by WNS North America, Inc. The remaining
one share is held by a nominee shareholder on behalf of WNS North America Inc. to satisfy the
regulatory requirement to have a minimum of two shareholders. |
|
(3) |
|
WNS Philippines Inc is a joint venture company set up between the Co-Op and Advanced Contact
Solutions, Inc., or ACS. ACS has assigned its rights and obligations under the joint venture
agreement in favor of its holding company Paxys Inc, Philippines. The Co-op has a 65% ownership
interest in WNS Philippines Inc. |
|
(4) |
|
Formerly subsidiary of Chang Limited. The shares are now held by WNS Global Services (UK) Limited. |
|
(5) |
|
Formerly subsidiary of Business Applications Associates Limited. The shares are now held by WNS
Customer Solutions (Singapore) Private Limited. |
|
(6) |
|
Formerly subsidiary of WNS Global Services Private Limited. The shares are now held by
WNS (Holdings) Limited. WNS Customer Solutions North America, Inc. has filed an application with the
Secretary of State of the State of Delaware for a merger with and
into WNS North America Inc. and the certificate of merger from the
Secretary of State of the State of Delaware is pending. |
|
(7) |
|
Pursuant to Section 1003 of the Companies Act 2006, UK, Chang Limited and Town & Country Assistance Limited have applied for voluntary
dissolution. Notices for striking off were published in the London Gazette on February 1, 2011
and effective 90 days from the date of publication, the said
entities will be struck-off from the UK companies register if the
UK Companies House does not receive any objection for the proposed striking off. |
|
(8) |
|
WNS Cares Foundation is a not-for-profit organization registered under Section 25 of the
Companies Act, 1956, India formed for the purpose of promoting corporate social responsibilities
and not considered for the purpose of preparing our consolidated financial statements. |
|
(9) |
|
Business Applications Associates Limited is in the process of
voluntary dissolution. |
D. Property, Plant and Equipment
As at March 31, 2011, we have an installed capacity of 16,278 workstations (excluding Sofotel premises(6)), or seats, that can
operate on an uninterrupted 24/7 basis and can be staffed on a three-shift per day basis. The
majority of our properties are leased by us, as described in the table below, and most of our
leases are renewable at our option. The following table describes each of our delivery centers and
sales offices, including centers under construction, and sets forth our lease expiration dates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Space |
|
Total Number of |
|
|
|
|
Location |
|
(square feet) |
|
Workstations/Seats |
|
Lease Expiration |
|
Extendable Until(1) |
India: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mumbai |
|
|
362,391 |
|
|
|
2,790 |
|
|
|
|
|
|
|
|
|
Godrej Plant 10(2) |
|
|
|
|
|
|
|
|
|
Tenancy-at-will |
|
|
N/A |
|
Godrej Plant 11 (old)(2) |
|
|
|
|
|
|
|
|
|
Tenancy-at-will |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Tenancy-at-will |
|
|
N/A |
|
Godrej Plant 11 |
|
|
|
|
|
|
|
|
|
October 23, 2011 |
|
July 23, 2014 |
Godrej Plant 5 |
|
|
|
|
|
|
|
|
|
November 30, 2012 |
|
August 31, 2015 |
Raheja (SEZ) Airoli(3) |
|
|
|
|
|
|
|
|
|
May 31, 2019 |
|
|
N/A |
|
Gurgaon |
|
|
195,733 |
|
|
|
2,119 |
|
|
|
|
|
|
|
|
|
Infinity Towers A & B |
|
|
|
|
|
|
|
|
|
April 30, 2014 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
May 31, 2014 |
|
|
N/A |
|
Infinity Tower C |
|
|
|
|
|
|
|
|
|
March 31, 2015 |
|
|
N/A |
|
DLF (SEZ) 6(4) |
|
|
|
|
|
|
|
|
|
September 15, 2012 |
|
September 15, 2017 |
Page 50
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
Total Space |
|
Total Number of |
|
|
|
|
Location |
|
(square feet) |
|
Workstations/Seats |
|
Lease Expiration |
|
Extendable Until(1) |
Pune |
|
|
441,564 |
|
|
|
5,017 |
|
|
|
|
|
|
|
|
|
Magarpatta(5) |
|
|
|
|
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
Weikfield(6) |
|
|
|
|
|
|
|
|
|
February 14, 2014 |
|
February 14, 2018 |
|
|
|
|
|
|
|
|
|
|
April 30, 2014 |
|
April 30, 2018 |
|
|
|
|
|
|
|
|
|
|
June 14, 2014 |
|
June 14, 2018 |
Nashik |
|
|
88,356 |
|
|
|
987 |
|
|
|
|
|
|
|
|
|
Shreeniketan |
|
|
|
|
|
|
|
|
|
June 30, 2013 |
|
|
N/A |
|
Vascon |
|
|
|
|
|
|
|
|
|
October 14, 2013 |
|
October 14, 2017 |
Bangalore |
|
|
191,890 |
|
|
|
2,004 |
|
|
|
|
|
|
|
|
|
RMZ Continental |
|
|
|
|
|
|
|
|
|
June 14, 2015 |
|
June 14, 2025 |
|
|
|
|
|
|
|
|
|
|
October 31, 2015 |
|
October 31, 2025 |
|
|
|
|
|
|
|
|
|
|
June 14, 2015 |
|
June 14, 2025 |
Chennai |
|
|
133,240 |
|
|
|
818 |
|
|
|
|
|
|
|
|
|
RMZ Millenia |
|
|
|
|
|
|
|
|
|
March 31, 2012 |
|
August 31, 2048 |
DLF SEZ |
|
|
|
|
|
|
|
|
|
March 31, 2016 |
|
|
N/A |
|
Sri Lanka: |
|
|
33,124 |
|
|
|
401 |
|
|
|
|
|
|
|
|
|
Colombo (HNB) |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
N/A |
|
UK: |
|
|
30,549 |
|
|
|
452 |
|
|
|
|
|
|
|
|
|
Ipswich |
|
|
|
|
|
|
|
|
|
August 26, 2012 |
|
|
N/A |
|
Cheadle(7) |
|
|
|
|
|
|
|
|
|
July 25, 2020 |
|
|
N/A |
|
Piccadilly(8) |
|
|
|
|
|
|
|
|
|
February 1, 2017 |
|
|
N/A |
|
Chiswick High Road(9) |
|
|
|
|
|
|
|
|
|
December 31, 2011 |
|
|
N/A |
|
Hayes(10) |
|
|
|
|
|
|
|
|
|
February 28, 2021 |
|
|
N/A |
|
US: |
|
|
3,706 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
New York |
|
|
|
|
|
|
|
|
|
May 31, 2011 |
|
|
N/A |
|
Houston |
|
|
|
|
|
|
|
|
|
May 31, 2011 |
|
|
N/A |
|
Romania: |
|
|
26,748 |
|
|
|
300 |
|
|
|
|
|
|
|
|
|
Bucharest(11) |
|
|
|
|
|
|
|
|
|
December 31, 2012 |
|
|
N/A |
|
The Philippines: |
|
|
74,807 |
|
|
|
1,161 |
|
|
|
|
|
|
|
|
|
Eastwood(12) |
|
|
|
|
|
|
|
|
|
November 30, 2015 |
|
August 31, 2018 |
|
|
|
|
|
|
|
|
|
|
June 30, 2016 |
|
June 30, 2019 |
Costa Rica |
|
|
11,528 |
|
|
|
211 |
|
|
|
|
|
|
|
|
|
Forum San Jose (old) |
|
|
|
|
|
|
|
|
|
January 31, 2016 |
|
|
N/A |
|
Forum San Jose (new)(13) |
|
|
|
|
|
|
|
|
|
April 30, 2016 |
|
|
N/A |
|
Notes:
N/A means not applicable.
|
|
|
(1) |
|
Reflects the expiration date if each of our applicable extension options are exercised. |
|
(2) |
|
The lease agreements for Godrej Plant 10 and Godrej Plant 11(old) expired on February 15, 2011 and
May 31, 2010/January 31, 2011, respectively. We have been in negotiations with the landlord to
enter into a new lease agreement for Godrej Plant 10 and Godrej Plant 11(old) and expect to enter
into the new lease agreement by end of June 2011. |
Page 51
(3) |
|
We expect to complete the interior fit out works by the first quarter of fiscal 2012. |
|
(4) |
|
We surrendered an unutilized space of 97,318 square feet. |
|
(5) |
|
We own these premises. |
|
(6) |
|
The operations at our prior Sofotel delivery center were transferred to our existing facility at
Weikfield and we surrendered the Sofotel premises to the landlord. We completed the interior fit out
works in the balance three floors of Weikfield premises in March 2011. |
|
(7) |
|
The operations at our prior Marple delivery center were transferred to our new facility at Cheadle and we
surrendered the Marple premises to the landlord. |
|
(8) |
|
This is a new client facing facility. |
|
(9) |
|
We have sent the landlord a notice to terminate the lease and the premises will be vacated on April 30, 2011. |
|
(10) |
|
We have commenced the interior fit out works and expect to move into this office premises in April 2011. |
|
(11) |
|
No option to renew unless mutually agreed by the parties in writing. |
|
(12) |
|
The operations at our prior Superstore delivery center were transferred to our existing facility at
Eastwood and we surrendered the Superstore premises to the landlord. |
|
(13) |
|
We expect to complete the interior fit out works by the first quarter of fiscal 2012. |
Our delivery centers are equipped with fiber optic connectivity and have backups to their power
supply designed to achieve uninterrupted operations.
In fiscal 2012, we intend to establish additional delivery centers, as well as continue to
streamline our operations by further consolidating production capacities in our delivery centers.
ITEM 4 A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion on the financial condition and results of operations of our company should
be read in conjunction with our consolidated financial statements and the related notes included
elsewhere in this annual report. Some of the statements in the following discussion contain
forward-looking statements that involve risks and uncertainties. See Special Note Regarding
Forward-Looking Statements. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of a number of factors, including, but not limited to,
those described below and elsewhere in this annual report, particularly in the risk factors
described in Item 3 . Key Information D. Risk Factors.
Page 52
Overview
We are a leading provider of offshore business process outsourcing, or BPO, services. We provide
comprehensive data, voice and analytical
services to our clients, which are typically companies located in Asia Pacific, Europe and North
America regions. As at March 31, 2011, we had 21,523 employees across all our delivery centers.
According to NASSCOM, we have been among the top three India-based offshore business process
outsourcing companies based on export revenue since 2004.
Although we typically enter into long-term contractual arrangements with our clients, these
contracts can usually be terminated with or without cause by our clients and often with short
notice periods. Nevertheless, our client relationships tend to be long-term in nature given the
scale and complexity of the services we provide coupled with risks and costs associated with
switching processes in-house or to other service providers. We structure each contract to meet our
clients specific business requirements and our target rate of return over the life of the
contract. In addition, since the sales cycle for offshore business process outsourcing is long and
complex, it is often difficult to predict the timing of new client engagements. As a result, we may
experience fluctuations in growth rates and profitability from quarter to quarter, depending on the
timing and nature of new contracts. Our focus, however, is on deepening our client relationships
and maximizing shareholder value over the life of a clients relationship with us.
Our revenue is generated primarily from providing business process outsourcing services. We have
two reportable segments for financial statement reporting purposes WNS Global BPO and WNS Auto
Claims BPO. In our WNS Auto Claims BPO segment, we provide both fault and non-fault repairs.
For fault repairs, we provide claims handling and accident management services, where we arrange
for automobile repairs through a network of third party repair centers. In our accident management
services, we act as the principal in our dealings with the third party repair centers and our
clients. The amounts we invoice to our clients for payments made by us to third party repair
centers is reported as revenue. Since we wholly subcontract the repairs to the repair centers, we
evaluate our financial performance based on revenue less repair payments to third party repair
centers which is a non-GAAP measure. We believe that revenue less repair payments for fault
repairs reflects more accurately the value addition of the business process outsourcing services
that we directly provide to our clients. For non-fault repairs, revenue including repair payments
is used as a primary measure to allocate resources and measure operating performance. As we provide
a consolidated suite of accident management services including credit hire and credit repair for
our non-fault repairs business, we believe that measurement of that line of business has to be on
a basis that includes repair payments in revenue. Revenue less repair payments is a non-GAAP
measure which is calculated as revenue less payments to repair centers. The presentation of this
non-GAAP information is not meant to be considered in isolation or as a substitute for our
financial results prepared in accordance with US GAAP. Our revenue less repair payments may not be
comparable to similarly titled measures reported by other companies due to potential differences in
the method of calculation.
Between fiscal 2007 and fiscal 2011, our revenue grew from $345.4 million to $616.3 million,
representing a compound annual growth rate of 15.6%, and our revenue less repair payments grew
from $219.6 million to $369.4 million, representing a compound annual growth rate of 13.9%. During
this period we grew both organically and through acquisitions.
The following table reconciles our revenue (a GAAP measure) to revenue less repair payments (a
non-GAAP measure) for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
|
(US dollars in millions) |
|
Revenue |
|
$ |
616.3 |
|
|
$ |
582.5 |
|
|
$ |
520.9 |
|
Less: Payments to repair centers |
|
|
246.9 |
|
|
|
192.0 |
|
|
|
135.9 |
|
|
|
|
|
|
|
|
|
|
|
Revenue less repair payments |
|
$ |
369.4 |
|
|
$ |
390.5 |
|
|
$ |
385.0 |
|
|
|
|
|
|
|
|
|
|
|
Global Economic Conditions
In Asia,
Europe and the United States, market and economic conditions have been challenging with
tighter credit conditions and slower growth since fiscal 2009. Since fiscal 2009 and continuing
into fiscal 2012, continued concerns about the systemic impact of inflation, energy costs,
geopolitical issues, and the availability and cost of credit have contributed to increased market
volatility and diminished expectations for the economy globally. These conditions, combined with
volatile oil prices, and declining business and consumer confidence, have, since fiscal 2009 and
continuing into fiscal 2012, contributed to extreme volatility.
Page 53
These economic conditions may affect our business in a number of ways. The general level of
economic activity, such as decreases in business and consumer spending, could result in a decrease
in demand for our services, thus reducing our revenue. The cost and availability of credit has been
and may continue to be adversely affected by illiquid credit markets and wider credit spreads.
Continued turbulence in the US and international markets and economies may adversely affect our
liquidity and financial condition, and the liquidity and financial condition of our customers. If
these market conditions continue, they may limit our ability to access financing or increase our
cost of financing to meet liquidity needs, and affect the ability of our customers to use credit to
purchase our services or to make timely payments to us, resulting in adverse effects on our
financial condition and results of operations. Furthermore, a weakening of the rate of exchange for
the US dollar or the pound sterling (in which our revenue is principally denominated) against the
Indian rupee (in which a significant portion of our costs are denominated) also adversely affects
our results. Fluctuations between the pound sterling or the Indian rupee and the US dollar also
expose us to translation risk when transactions denominated in pound sterling or Indian rupees are
translated to US dollars, our reporting currency. For example, the average pound sterling/US dollar
exchange rate for fiscal 2011, 2010 and 2009 depreciated 2.6%, 7.2% and 14.3% as compared to the
average exchange rate for fiscal 2010, 2009 and 2008 respectively, which adversely impacted our
results of operations. Uncertainty about current global economic conditions could also continue to
increase the volatility of our share price. We cannot predict the timing or duration of the
economic slowdown or the timing or strength of a subsequent economic recovery generally or in our
targeted industries, including the travel and leisure, and insurance industries. If macroeconomic
conditions worsens or the current global economic condition continues for a prolonged period of
time, we are not able to predict the impact such worsening conditions will have on our targeted
industries in general, and our results of operations specifically.
Change from US GAAP to IFRS
Beginning with the fiscal year ending March 31, 2012, we intend to report our financial results
under IFRS, as issued by the IASB. We do not expect the adoption of IFRS as issued by the IASB to
have a material impact on our results of operations, financial position and cash flows.
Restatement of our Consolidated Financial Statements
Last year we concluded, based on our consultation with our Audit Committee, that corrections to our
prior accounting treatment for fees earned from garages, and revenue and costs on completed but
unbilled repairs, are required in our Auto Claims BPO segment for the years ended March 31, 2009,
2008, 2007 and 2006 and the selected quarterly financial information for each of the first, second
and third quarters for the year ended March 31, 2010 and each of the quarters of the year ended
March 31, 2009. Accordingly, we restated our previously issued financial statements. The restated
financial information is available in our annual report for the year ended March 31, 2010 and is
also included in this annual report. The last years annual report contains the details of the
accounting treatment and the adjustments made as a result of the restatement.
Our History and Milestones
We began operations as an in-house unit of British Airways in 1996, and became a focused
third-party business process outsourcing service provider in fiscal 2003. The following are the key
milestones in our operating history since Warburg Pincus acquired a controlling stake in our
company from British Airways in May 2002 and inducted a new senior management team:
|
|
In fiscal 2003, we acquired Town & Country Assistance Limited (which we subsequently rebranded as WNS Assistance and
which is part of WNS Auto Claims BPO, our reportable segment for financial statement purposes), a UK-based automobile
claims handling company, thereby extending our service portfolio beyond the travel and leisure industry to include
insurance-based automobile claims processing. |
|
|
|
In fiscal 2003, we invested in capabilities to begin providing enterprise services, and research and analytics services
to address the requirements of emerging industry segments in the offshore outsourcing context. |
|
|
|
In fiscal 2003 and 2004, we invested in our infrastructure to expand our service portfolio from data-oriented processing
to include complex voice and blended data/voice service capabilities, and commenced offering comprehensive processes in
the travel and leisure, and banking, financial services and insurance, or BFSI, industries. |
|
|
|
In fiscal 2004, we acquired the health claims management business of Greensnow Inc. |
|
|
|
In fiscal 2005, we opened facilities in Gurgaon, India, and Colombo, Sri Lanka, thereby expanding our operating
footprints across India, Sri Lanka and the UK. |
|
|
|
In fiscal 2006, we acquired Trinity Partners (which we subsequently merged into our subsidiary, WNS North America Inc.),
a provider of business process outsourcing services to financial institutions, focusing on mortgage banking. |
|
|
|
In fiscal 2007, we expanded our facilities in Gurgaon, Mumbai and Pune. |
|
|
|
In fiscal 2007, we acquired the fare audit services business of PRG Airlines and the financial accounting business of GHS. |
|
|
|
In May 2007, we acquired Marketics, a provider of offshore analytics services. |
|
|
|
In June 2007, we acquired Flovate, a company engaged in the development and maintenance of software products and
solutions, which we subsequently renamed as WNS Workflow Technologies Limited. |
|
|
|
In July 2007, we completed the transfer of our delivery center in Sri Lanka to Aviva Global. |
Page 54
|
|
In January 2008, we launched a 133-seat facility in Bucharest, Romania. |
|
|
|
In April 2008, we opened a facility in Manila, the Philippines. |
|
|
|
In April 2008, we acquired Chang Limited, an auto insurance claims processing services provider
in the UK through its wholly-owned subsidiary, Call 24-7. |
|
|
|
In June 2008, we acquired BizAps, a provider of
SAP© solutions to optimize the enterprise resource
planning functionality for our finance and accounting processes. |
|
|
|
In July 2008, we entered into the transaction with AVIVA consisting of (1) a share sale and
purchase agreement pursuant to which we acquired from AVIVA all the shares of Aviva Global and
(2) the AVIVA master services agreement pursuant to which we are providing BPO services to AVIVAs UK business and AVIVAs
Irish subsidiary, Hibernian Aviva Direct Limited, and certain of its affiliates. |
|
|
|
In November 2009, we opened a facility in San Jose, Costa Rica. |
|
|
|
In January 2010, we moved from our existing facility to
a new and expanded facility in Manila, the Philippines. |
|
|
|
In October 2010, we moved from our existing facility in Marple to Manchester, UK and expanded our
facility in Manila, the Philippines. |
|
|
|
In November 2010, we expanded our sales office in London, UK. |
|
|
|
In March 2011, we expanded our facility in Bucharest, Romania. |
As a result of these acquisitions and other corporate developments, our financial results in
corresponding periods may not be directly comparable.
Revenue
We generate revenue by providing business process outsourcing services to our clients. In fiscal
2011, our revenue was $616.3 million as compared to $582.5 million in fiscal 2010, representing an
increase of 5.8%. In fiscal 2011, our revenue less repair payments was $369.4 million as compared
to $390.5 million in fiscal 2010, representing a decrease of 5.4%.
We have a large client base diversified across industries and geographies. Our client base grew
from 14 clients in May 2002 to 220 clients as at March 31, 2011 (for our definition of significant
clients, see Item 4. Information on the Company B. Business Overview Clients).
Our revenue is characterized by client, industry and geographic diversity, as the analysis below
indicates.
Revenue by Top Clients
Since the time of the Warburg Pincus investment in our company, we have increased our client base
and significantly reduced our client concentration. Prior to this investment, our largest client
contributed over 90% of our revenue. In comparison, during fiscal 2011, our largest client
contributed 16.4% of our revenue and 20.4% of our revenue less repair payments.
The following table sets forth the percentage of revenue and revenue less repair payments that we
derived from our largest clients for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
Revenue Less Repair Payments |
|
|
Year ended March 31, |
|
Year ended March 31, |
|
|
2011 |
|
2010 |
|
2009 |
|
2011 |
|
2010 |
|
2009 |
Top five clients |
|
|
54.3 |
% |
|
|
53.0 |
% |
|
|
53.4 |
% |
|
|
41.1 |
% |
|
|
45.1 |
% |
|
|
46.3 |
% |
Top ten clients |
|
|
65.8 |
% |
|
|
64.8 |
% |
|
|
67.3 |
% |
|
|
53.4 |
% |
|
|
58.2 |
% |
|
|
60.7 |
% |
Top twenty clients |
|
|
77.8 |
% |
|
|
76.5 |
% |
|
|
77.9 |
% |
|
|
70.2 |
% |
|
|
73.5 |
% |
|
|
74.2 |
% |
Page 55
In fiscal 2011, our three largest clients individually accounted for 16.4%, 13.2% and 12.2%,
respectively, of our revenue as compared to 15.5%, 13.4% and 12.6% respectively, in fiscal 2010.
Revenue by Industry
For financial statement reporting purposes, we aggregate several of our operating segments, except
for WNS Auto Claims BPO (which we market under the WNS Assistance brand) as it does not meet the
aggregation criteria under US GAAP. See Results by Reportable Segment.
In May 2002, when Warburg Pincus acquired a majority stake in our business, we were primarily
providing business process outsourcing services to airlines. Since then we have expanded our
service portfolio across the travel and leisure industry and have also established significant
operations in BFSI and other industries.
To achieve in-depth domain expertise and provide industry-specific services to our clients, we
organize our business delivery along industry-focused business units. These business units seek to
leverage our domain expertise to deliver industry-specific services to our clients. Prior to April
1, 2011, our industry-focused business units were:
|
|
travel and leisure; |
|
|
|
BFSI (which includes our WNS Auto Claims BPO segment); |
|
|
|
emerging businesses (which serves the consumer products, retail, professional services, pharmaceutical, and media and
entertainment industries using core service capabilities provided by our finance and accounting services, and research and
analytics services capabilities); and |
|
|
|
industrial and infrastructure which was spun off from emerging businesses to become a separate business unit in April 2008. |
Our revenue and revenue less repair payments are diversified along these business units in the
proportions and for the periods set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
Revenue Less Repair Payments |
|
|
Year ended March 31, |
|
Year ended March 31, |
Business Units |
|
2011 |
|
2010 |
|
2009 |
|
2011 |
|
2010 |
|
2009 |
Travel and
leisure |
|
|
13.8 |
% |
|
|
16.3 |
% |
|
|
19.6 |
% |
|
|
23.0 |
% |
|
|
24.3 |
% |
|
|
26.5 |
% |
BFSI |
|
|
66.5 |
% |
|
|
65.4 |
% |
|
|
62.6 |
% |
|
|
44.2 |
% |
|
|
48.4 |
% |
|
|
49.5 |
% |
Industrial and
infrastructure |
|
|
9.1 |
% |
|
|
7.6 |
% |
|
|
6.9 |
% |
|
|
15.1 |
% |
|
|
11.4 |
% |
|
|
9.3 |
% |
Emerging
businesses |
|
|
10.6 |
% |
|
|
10.7 |
% |
|
|
10.9 |
% |
|
|
17.7 |
% |
|
|
15.9 |
% |
|
|
14.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at April 1, 2011, we have reorganized our company into the following vertical
business units to provide more specialized focus on each of these industries: insurance, travel and
leisure, banking and financial services, consulting and professional services, healthcare,
utilities, shipping and logistics, and manufacturing, retail, consumer products, telecom and
diversified businesses.
For
comparison purposes, the following tables set forth the contribution
to revenue and revenue less repair payments in fiscal 2011 by each
business unit under one prior vertical business unit structure and
one new vertical business unit structure. See
Item 4. Information on the Company Business Process Outsourcing Service Offerings section for detailed information on this
new structure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As percentage of |
|
|
|
|
|
|
|
As percentage of |
|
|
Revenue less |
|
|
revenue less |
|
Prior vertical structure |
|
Revenue |
|
|
revenue |
|
|
repair payments |
|
|
repair payments |
|
|
|
(US dollars in millions) |
|
Travel and leisure |
|
$ |
85.0 |
|
|
|
13.8 |
% |
|
$ |
85.0 |
|
|
|
23.0 |
% |
BFSI |
|
|
410.0 |
|
|
|
66.5 |
% |
|
|
163.1 |
|
|
|
44.2 |
% |
Industrial and infrastructure |
|
|
55.9 |
|
|
|
9.1 |
% |
|
|
55.9 |
|
|
|
15.1 |
% |
Emerging businesses |
|
|
65.4 |
|
|
|
10.6 |
% |
|
|
65.4 |
|
|
|
17.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
616.3 |
|
|
|
100.0 |
% |
|
$ |
369.4 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As percentage of |
|
|
|
|
|
|
|
As percentage |
|
|
Revenue less |
|
|
revenue less |
|
New vertical structure |
|
Revenue |
|
|
of revenue |
|
|
repair payments |
|
|
repair payments |
|
|
|
(US dollars in millions) |
|
Insurance |
|
$ |
370.1 |
|
|
|
60.1 |
% |
|
$ |
123.2 |
|
|
|
33.4 |
% |
Travel and leisure |
|
|
83.9 |
|
|
|
13.6 |
% |
|
|
83.9 |
|
|
|
22.7 |
% |
Banking and financial services |
|
|
26.4 |
|
|
|
4.3 |
% |
|
|
26.4 |
|
|
|
7.1 |
% |
Consulting & professional services |
|
|
26.3 |
|
|
|
4.3 |
% |
|
|
26.3 |
|
|
|
7.1 |
% |
Healthcare |
|
|
25.7 |
|
|
|
4.2 |
% |
|
|
25.7 |
|
|
|
7.0 |
% |
Utilities |
|
|
19.5 |
|
|
|
3.2 |
% |
|
|
19.5 |
|
|
|
5.3 |
% |
Shipping and logistics |
|
|
9.8 |
|
|
|
1.6 |
% |
|
|
9.8 |
|
|
|
2.6 |
% |
Manufacturing, retail, consumer products, telecom and diversified
businesses |
|
|
54.6 |
|
|
|
8.9 |
% |
|
|
54.6 |
|
|
|
14.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
616.3 |
|
|
|
100.0 |
% |
|
$ |
369.4 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain services that we provide our clients are subject to the seasonality of our clients
business. Accordingly, we see an increase in transaction related services within the travel and
leisure industry during holiday seasons, such as during the US summer holidays (our fiscal second
quarter) and calendar year end holidays (our fiscal third quarter); an increase in business in the
insurance industry during the beginning and end of the fiscal year (our fiscal first and last
quarters) and during the US peak winter season (our fiscal third quarter); and an increase in
business in the consumer product-industry during the US festive season towards the end of the
calendar year when new product launches and campaigns typically happen (our fiscal third quarter).
Revenue by Geography
The majority of our clients are located in Europe (primarily the UK) and North America (primarily
the US). The share of our revenue from the UK increased to 60.9% in fiscal 2011 from 58.2% in
fiscal 2010 due primarily to an increase in
Page 56
business from existing clients in our auto claims business. The share of our revenue less repair
payments from the UK decreased to 54.0% in fiscal 2011 from 55.2% in fiscal 2010 primarily due to
the adverse exchange rate movement of pound sterling to US dollar by an average of 2.6% in fiscal
2011 as compared to fiscal 2010. Since the time of the Warburg Pincus investment in our company in
fiscal 2003, we have invested in establishing a sales and marketing presence in North America,
which has resulted in our revenue less repair payments coming from North America representing a
significant portion of our revenue less repair payments.
The following table sets forth the composition of our revenue and revenue less repair payments
based on the location of our clients in our key geographies for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
Revenue Less Repair Payments |
|
|
Year ended March 31, |
|
Year ended March 31, |
|
|
2011 |
|
2010 |
|
2009 |
|
2011 |
|
2010 |
|
2009 |
UK |
|
|
60.9 |
% |
|
|
58.2 |
% |
|
|
55.9 |
% |
|
|
54.0 |
% |
|
|
55.2 |
% |
|
|
58.2 |
% |
Europe (excluding the UK) |
|
|
15.9 |
% |
|
|
16.7 |
% |
|
|
18.8 |
% |
|
|
7.2 |
% |
|
|
7.4 |
% |
|
|
7.5 |
% |
North America (primarily the US) |
|
|
22.2 |
% |
|
|
24.5 |
% |
|
|
25.0 |
% |
|
|
37.0 |
% |
|
|
36.5 |
% |
|
|
33.9 |
% |
Rest of World |
|
|
1.0 |
% |
|
|
0.6 |
% |
|
|
0.3 |
% |
|
|
1.8 |
% |
|
|
0.9 |
% |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our Contracts
We provide our services under contracts with our clients, the majority of which have terms ranging
between three and eight years, with some being rolling contracts with no end dates. Typically,
these contracts can be terminated by our clients with or without cause and with notice periods
ranging from three to six months. However, we tend to have long-term relationships with our clients
given the complex and comprehensive nature of the business processes executed by us, coupled with
the switching costs and risks associated with relocating these processes in-house or to other
service providers.
Each client contract has different terms and conditions based on the scope of services to be
delivered and the requirements of that client. Occasionally, we may incur significant costs on
certain contracts in the early stages of implementation, with the expectation that these costs will
be recouped over the life of the contract to achieve our targeted returns. Each client contract has
corresponding service level agreements that define certain operational metrics based on which our
performance is measured. Some of our contracts specify penalties or damages payable by us in the
event of failure to meet certain key service level standards within an agreed upon time frame.
When we are engaged by a client, we typically transfer that clients processes to our delivery
centers over a two to six month period. This transfer process is subject to a number of potential
delays. Therefore, we may not recognize significant revenue until several months after commencing a
client engagement.
In the WNS Global BPO segment, we charge for our services primarily based on three pricing models
per full-time-equivalent; per transaction; or cost-plus as follows:
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per full-time-equivalent arrangements typically involve billings based on the number of full-time
employees (or equivalent) deployed on the execution of the business process outsourced; |
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per transaction arrangements typically involve billings based on the number of transactions
processed (such as the number of e-mail responses, or airline coupons or insurance claims
processed); and |
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cost-plus arrangements typically involve billing the
contractually agreed direct and indirect costs and a fee based on the
number of employees deployed under the arrangement. |
Apart from the above-mentioned three primary pricing methods, a small portion of our revenue is
comprised of reimbursements of out-of-pocket expenses incurred by us in providing services to our
clients.
Our prior contracts with a major client, AVIVA, granted Aviva Global the option to require us to
transfer our facilities at Sri Lanka and Pune to Aviva Global. The Sri Lanka facility was
transferred at book value and did not result in a material gain or loss, although we lost the
revenue generated by the facility upon our transfer of the facility to Aviva Global. With the
transaction that we entered into with AVIVA in July 2008 described below, we have, through the
acquisition of Aviva Global, resumed control of the Sri Lanka facility and we have continued to
retain ownership of the Pune facility and we expect these facilities to continue to generate
revenue for us under the AVIVA master services agreement described below. However we may in the
future enter into contracts with other clients with similar call options that may result in the
loss of revenue that may have a material impact on our business, results of operations, financial
condition and cash flows, particularly during the quarter in which the option takes effect.
Page 57
In July 2008, we entered into a transaction with AVIVA consisting of a share sale and purchase
agreement with AVIVA and a master services agreement with AVIVA MS. Pursuant to the share sale and
purchase agreement with AVIVA, we acquired all the shares of Aviva Global in July 2008.
Pursuant to the master services agreement with AVIVA MS, or the AVIVA master services agreement, we
provide BPO services to AVIVAs UK and Canadian businesses for a term of eight years
and four months. Under the terms of the agreement, we have agreed to provide a comprehensive
spectrum of life and general insurance processing functions to AVIVA, including policy
administration and settlement, along with finance and accounting, customer care and other support
services. In addition, we have the exclusive right to provide certain services such as finance and
accounting, insurance back-office, customer interaction and analytics services to AVIVAs UK and Canadian businesses for the first five years, subject to the rights and obligations of the AVIVA
group under their existing contracts with other providers. In March 2009, we entered into a
variation deed to the AVIVA master services agreement pursuant to which we commenced provision of
services to AVIVAs Irish subsidiary, Hibernian Aviva Direct Limited, and certain of its
affiliates. AVIVAs Canadian business has ceased to
require our BPO services and we are currently providing BPO services
to AVIVAs UK business and AVIVAs Irish subsidiary,
Hibernian Aviva Direct Limited, and certain of its affiliates.
Our clients customarily provide one to three month rolling forecasts of their service requirements.
Our contracts with our clients do not generally provide for a committed minimum volume of business
or committed amounts of revenue, except for our contract with one of our top five clients based on
revenue less repair payments in fiscal 2010, and the AVIVA master services agreement that we
entered into in July 2008 as described above. AVIVA MS has agreed to provide a minimum volume of
business, or minimum volume commitment, to us during the term of the contract. The minimum volume
commitment is calculated as 3,000 billable full-time employees, where one billable full time
employee is the equivalent of a production employee engaged by us to perform our obligations under
the contract for one working day of at least nine hours for 250 days a year. In August 2009, we
entered into a variation agreement to the AVIVA master services agreement pursuant to which AVIVA MS
agreed to increase the minimum volume commitment from the current 3,000 billable full time
employees to 3,300 billable full time employees for a period of 17 months from March 1, 2010 to
July 31, 2011 and to 3,250 billable full time employees for a period of six months from August 1,
2011 to January 31, 2012. The minimum volume commitment will revert to 3,000 billable full time
employees after January 31, 2012 for the remaining term of the AVIVA master services agreement. In
the event the mean average monthly volume of business in any rolling three-month period does not
reach the minimum volume commitment, AVIVA MS has agreed to pay us a minimum commitment fee as
liquidated damages. Notwithstanding the minimum volume commitment, there are termination at will
provisions which permit AVIVA MS to terminate the AVIVA master services agreement without cause at
any time after the expiry of 24 months from October 9, 2008, except in the case of the Chennai
facility which was transferred to WNS Global Singapore in July 2008, at any time after expiry of 24
months from September 19, 2008, and in the case of the Pune facility which was transferred to WNS
Global Singapore in August 2008, at any time after expiry of 24 months from October 10, 2008, in
each case, with six months notice upon payment of a termination fee. The annual minimum volume
commitment under this contract was met in fiscal 2011.
Under the terms of our agreement with one of
our top five clients, the annual forecasted revenue to be provided to us for calendar year 2010
amounts to $41.1 million. In the event actual revenue provided to us in any year is less than 75%
of the annual forecasted revenue for that year, or the annual minimum revenue commitment, the
client has agreed to pay us 65% of the difference between the annual minimum revenue commitment and
the actual revenue provided for that year after certain deductions. However, notwithstanding these
minimum revenue commitments, there are also termination at will provisions which permit the client
to terminate the individual statements of work without cause with 180 days notice upon payment of
a termination fee. These termination provisions dilute the impact of
the annual minimum revenue
commitment. Our earlier agreement with this client was due to expire in December 2010. We
re-negotiated this agreement and entered into a new agreement with the client on December 31, 2009.
The new agreement replaced our earlier agreement and became effective on April 1, 2010 and expires
in December 2015. Under the terms of the renewed agreement, the client has not committed to provide
us any minimum volume of business, however, we will be the exclusive provider of certain key
services from delivery locations outside of the US, including customer service and ticketing
support for the client. Under the earlier agreement with this client, we were entitled to charge
premium pricing because we had absorbed the initial transition cost in 2004. That premium pricing
is no longer available in the new contract with this client. The early termination of the old
agreement entitled us to a payment by the client of a termination fee of $5.4 million which was
received on April 1, 2010. As the termination fee was related to a renewal of our agreement with
the client, we have determined that the recognition of the termination fee as revenue will be
deferred over the term of the new agreement (i.e., over the period from April 1, 2010 to December
31, 2015).
Page 58
FMFC, a US mortgage lender, was one of our major clients from November 2005 to August 2007. FMFC
was a major client of Trinity Partners which we acquired in November 2005 from the First Magnus
Group. In August 2007, FMFC filed a voluntary petition for relief under Chapter 11 of the US
Bankruptcy Code. For fiscal 2007, FMFC accounted for 4.3% and 6.8% of our revenue and revenue less
repair payments, respectively. Contractually, FMFC was obligated to provide us with annual minimum
revenue, or pay the shortfall, through fiscal 2011. We have filed claims in FMFCs Chapter 11 case
both for the payment of unpaid invoices for services rendered to FMFC before FMFC filed for Chapter
11 bankruptcy, for our entitlement under FMFCs annual minimum revenue commitment, and for
administrative expenses. The amount of outstanding claims filed totaled $15.6 million. In a
judgment passed by the bankruptcy court in 2009, the claim filed by WNS amounting to $11.7 million
on account of loss of profit from the remainder of the minimum revenue commitment has been denied.
We filed an appeal against this order in the bankruptcy appellate court, Tucson, Arizona. On August
31, 2010, the appellate court passed judgment in our favor thereby reversing the orders passed by
the bankruptcy court and remanded the matter back to the bankruptcy court. In the same
matter, the liquidating trustee, appointed by the bankruptcy court, has filed a petition against us
claiming a refund of payments made by FMFC to us during the 90 days period immediately prior to its
filing of the bankruptcy petition. FMFC paid a sum of $4 million during the period from May 22,
2007 through August 21, 2007. All these payments were made in the ordinary course of business and
were against the undisputed invoices of the services provided by us to FMFC during the relevant
period. On August 31, 2010, we entered into a settlement agreement with the liquidating trustee
pursuant to which the liquidating trustee agreed to allow our claims to the extent of $11.8 million
and dismissal of the liquidating trustees claim of $4 million for payments made by FMFC to us and
we agreed to make a settlement payment of $50,000 to the liquidating trustee. On October 3, 2010,
the bankruptcy court approved the settlement agreement and on October 13, 2010 we made the
settlement payment of $50,000 to the liquidating trustee. At this stage we cannot confirm the amount
which we can realize from the allowed claims. In fiscal 2008, we had provided an allowance for
doubtful accounts for the entire amount of accounts receivable from FMFC.
In our WNS Auto Claims BPO segment, we earn revenue from claims handling and accident management
services. For claims handling, we charge on a per claim basis or a fixed fee per vehicle over a
contract period. For automobile accident management services, where we arrange for the repairs
through a network of repair centers that we have established, we invoice the client for the amount
of the repair. When we direct a vehicle to a specific repair center, we receive a referral fee from
that repair center. We also provide consolidated suite of services towards accident management
including credit hire and credit repair for non-fault repairs business. Overall, we believe that
we have established a sustainable business model which offers revenue visibility over a substantial
portion of our business. We have done so by:
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developing a broad client base which has resulted in limited reliance on any particular client; |
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seeking to balance our revenue base by targeting industries that offer significant offshore outsourcing potential; |
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addressing the largest markets for offshore business process outsourcing services, which provide geographic
diversity across our client base; and |
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focusing our service mix on diverse data, voice and analytical processes, resulting in enhanced client retention. |
Expenses
The majority of our expenses are comprised of cost of revenue and operating expenses. The key
components of our cost of revenue are payments to repair centers, employee costs and
infrastructure-related costs. Our operating expenses include selling, general and administrative,
or SG&A, expenses and amortization of intangible assets. Our non-operating expenses include
interest expenses, other income and other expenses.
Cost of Revenue
Our WNS Auto Claims BPO segment includes automobile accident management services, where we arrange
for repairs through a network of repair centers. The payments to repair centers represent the
largest component of cost of revenue. The value of these payments in any given period is primarily
driven by the volume of accidents and the amount of the repair costs related to such accidents.
Page 59
Employee costs are also a significant component of cost of revenue. In addition to employee
salaries, employee costs include costs related to recruitment, training and retention.
Historically, our employee costs have increased primarily due to increases in number of employees
to support our growth and, to a lesser extent, to recruit, train and retain employees. Salary
levels in India and our ability to efficiently manage and retain our employees significantly
influence our cost of revenue. See Item 4. Information on the Company B. Business Overview
Human Capital. We expect our employee costs to increase as we expect to increase our headcount to
service additional business and as wages continue to increase in India. See Item. 3. Key
Information. D. Risk Factors Risks Related to Our Business Wage increases in India may
prevent us from sustaining our competitive advantage and may reduce our profit margin. We seek to
mitigate these cost increases through improvements in employee productivity, employee retention and
asset utilization. Our infrastructure costs are comprised of depreciation, lease rentals,
facilities management and telecommunication network cost. Most of our leases for our facilities are
long-term agreements and have escalation clauses which provide for increases in rent at periodic
intervals commencing between three and five years from the start of the lease. Most of these
agreements have clauses that cap escalation of lease rentals.
We create capacity in our operational infrastructure ahead of anticipated demand as it takes six to
nine months to build up a new site. Hence, our cost of revenue as a percentage of revenue may be
higher during periods in which we carry such additional capacity.
Once we are engaged by a client in a new contract, we normally have a transition period to transfer
the clients processes to our delivery centers and accordingly incur costs related to such
transfer. Therefore, our cost of revenue in relation to our revenue may be higher until the
transfer phase is completed, which may last for two to six months.
SG&A Expenses
Our SG&A expenses are primarily comprised of corporate employee costs for sales and marketing,
general and administrative and other support personnel, travel expenses, legal and professional
fees, share-based compensation expense, brand building expenses, and other general expenses not
related to cost of revenue.
SG&A expenses as a proportion of revenue were 13.1% in fiscal 2011 as compared with 14.8% for
fiscal 2010. SG&A expenses as a proportion of revenue less repair payments were 21.8% in fiscal
2011 as compared with 22.1% for fiscal 2010. We expect SG&A expenses to increase but at a lower
rate than the increase in our revenue less repair payments.
We expect our corporate employee costs for general and administrative and other support personnel
to increase in fiscal 2012 but at a lower rate than the increase in our revenue less repair
payments.
We expect the employee costs associated with sales and marketing and related travel costs to
increase in fiscal 2012. See Item 4. Information on the Company B. Business Overview
Business Strategy Enhance awareness of the WNS brand name. Our sales team is compensated based
on achievement of business targets set at the beginning of each fiscal year. Accordingly, we expect
this variable component of the sales team costs to increase in line with overall business growth.
Amortization of Intangible Assets
Amortization of intangible assets is associated with our acquisitions of PRG Airlines fare audit
services business in August 2006, GHS financial accounting business in September 2006, Marketics
in May 2007, Flovate in June 2007, Call 24-7 in April 2008, BizAps in June 2008 and Aviva Global
in July 2008.
Other (income) expense, net
Other (income) expense, net is primarily comprised of interest income and foreign exchange gains or
losses.
Interest Expense
Interest expense primarily relates to interest charges payable on our secured 2010 Term Loan
facility taken to refinance our 2008 Term Loan which was incurred to finance our transaction with
AVIVA and interest charges arising from our short-term borrowings and line of credit.
Operating Data
Our profit margin is largely a function of our asset utilization and the rates we are able to
recover for our services. One of the most significant components of our asset utilization is our
seat utilization rate which is the average number of work shifts per day, out of a maximum of
three, for which we are able to utilize our work stations. Generally, an
Page 60
improvement in the seat utilization rate will improve our profitability unless there are other
factors which increase our costs such as an increase in lease rentals, large ramp-ups to build new
seats, and increases in costs related to repairs and renovations to our existing or used seats. In
addition, an increase in seat utilization rate as a result of an increase in the volume of work
will generally result in a lower cost per seat and a higher profit margin as the total fixed costs
of our built up seats remain the same while each seat is generating more revenue.
The following table presents certain operating data as of the dates indicated:
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As at March 31, |
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2011 |
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2010 |
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2009 |
Total headcount |
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21,523 |
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21,958 |
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21,356 |
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Built up seats(1) |
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16,278 |
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15,836 |
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15,485 |
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Used seats(1) |
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13,256 |
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13,659 |
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12,456 |
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Seat utilization rate(2) |
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1.4 |
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1.4 |
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1.4 |
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Notes:
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(1) |
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Built up seats refer to the total number of production seats
(excluding support functions like Finance, Human Resource and
Administration) that are set up in any premises. Used seats refer
to the number of built up seats that are being used by employees.
The remainder would be termed vacant seats. The vacant seats
would get converted into used seats when we acquire a new client
or increase headcount. |
(2) |
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The seat utilization rate is calculated by dividing the
average total headcount by the average number of built up seats to show
the rate at which we are able to utilize our built up seats. Average
total headcount and average number of built up seats are calculated
by dividing the aggregate of the total headcount or number of built
up seats, as the case may be, as at the beginning and end of the
fiscal year by two. |
Foreign Exchange
Exchange Rates
Although a substantial portion of our revenue and revenue less repair payments is denominated in
pound sterling (73.1% and 55.1%, respectively, in fiscal 2011, 71.9% and 58.1%, respectively, in
fiscal 2010, and 71.4% and 61.4%, respectively, in fiscal 2009) and US dollars (23.5% and 39.2%,
respectively, in fiscal 2011, 24.9% and 37.1%, respectively, in fiscal 2010, and 25.5% and 34.4%,
respectively, in fiscal 2009), most of our expenses (net of payments to repair centers) (56.4% in
fiscal 2011, 58.5% in fiscal 2010 and 61.6% in fiscal 2009) are incurred and paid in Indian rupees.
The exchange rates between the Indian rupee and the US dollar and between the pound sterling and
the US dollar have changed substantially in recent years and may fluctuate substantially in the
future. The average Indian rupee/US dollar exchange rate was approximately
45.57 per $1.00 in
fiscal 2011, which represented an appreciation of the Indian rupee of 4.0% as compared with the
average exchange rate of approximately
47.46 per $1.00 in fiscal 2010, which in turn represented a
depreciation of the Indian rupee of 3.0% as compared with the average exchange rate of
approximately
46.10 per $1.00 in fiscal 2009. The average pound sterling/US dollar exchange rate
was approximately £0.64 per $1.00 in fiscal 2011, which represented a depreciation of the pound
sterling of 2.6% as compared with the average exchange rate of approximately £0.63 per $1.00 in
fiscal 2010, which in turn represented a depreciation of the pound sterling of 7.2% as compared
with the average exchange rate of approximately £0.58 per $1.00 in fiscal 2009. We report our
financial results in US dollars and our results of operations may be adversely affected if the
pound sterling depreciates against the US dollar or the Indian rupee appreciates against the US
dollar. See Item 11. Quantitative and Qualitative Disclosures About Market Risk B. Risk
Management Procedures Components of Market Risk Exchange Rate Risk.
We have subsidiaries in several countries and hence, the functional currencies of these entities
differ from our reporting currency, the US dollar. The financial statements of these entities are
translated to the reporting currency as at the balance sheet date. Adjustments resulting from the
translation of these financial statements from functional currency to reporting currency are
accumulated and reported as other comprehensive income (loss), which is a separate component of
equity. Foreign currency transaction gains and losses are recorded as other income or expense.
Page 61
Currency Regulation
Our Indian subsidiaries are registered as exporters of business process outsourcing services with
STPI or SEZ. According to the prevailing foreign exchange regulations in India, an exporter of
business process outsourcing services registered with STPI or SEZ is required to receive its export
proceeds in India within a period of 12 months from the date of such exports in order to avail
itself of the tax and other benefits. In the event that such a registered exporter has received any
advance against exports in foreign exchange from its overseas customers, it is required to render
the requisite services so that such advances are earned within a period of 12 months from the date
of such receipt. If such a registered exporter does not meet these conditions, it will be required
to obtain permission from the Reserve Bank of India to receive and realize such foreign currency
earnings.
A majority of the payments we receive from our clients are denominated in pound sterling, US
dollars and Euros. For most of our clients, our subsidiaries in
Mauritius, the Netherlands, the UK and
the US enter into contractual agreements directly with our clients for the provision of business
process outsourcing services by our Indian subsidiaries, which hold the foreign currency receipts
in an export earners foreign currency account. All foreign exchange requirements, such as for the
import of capital goods, expenses incurred during overseas travel by employees and discharge of
foreign exchange expenses or liabilities, can be met using the foreign currency in the export
earners foreign currency account in India. As and when funds are required by us, the funds in the
export earners foreign currency account may be transferred to an ordinary rupee-denominated
account in India.
There are currently no Jersey, UK or US foreign exchange control restrictions on the payment of
dividends on our ordinary shares or on the conduct of our operations.
Income Taxes
We operate in multiple tax jurisdictions including Australia, China, Costa Rica, India, Mauritius,
the Netherlands, Romania, the Philippines, Singapore, Sri Lanka, United Arab Emirates, the UK and
the US. As a result, our effective tax rate will change from year to year based on recurring
factors such as the geographical mix of income before taxes, state and local taxes, the ratio of
permanent items to pre-tax book income and the implementation of various global tax strategies, as
well as non-recurring events.
Our Indian operations are eligible to claim income tax exemption with respect to profits earned
from export revenue by various delivery centers registered with STPI. This benefit used to be
available from the date of commencement of operations to March 31, 2009, subject to a maximum of
ten years. In May 2008, the Government of India passed the Indian Finance Act, 2008, which extended
the tax holiday period by an additional year through fiscal 2010. In August 2009, the Government of
India passed the Indian Finance (No. 2) Act, 2009, which further extended the STPI tax holiday
period by an additional year through fiscal 2011. We had 13 such delivery centers in fiscal 2011,
13 such delivery centers in fiscal 2010 and 14 such delivery centers in fiscal 2009. While the tax
benefits enjoyed by three of our delivery centers located in Mumbai, Nashik and Pune expired on
April 1, 2007, 2008 and 2009, respectively, the tax benefits of our remaining delivery centers
expired on April 1, 2011. Upon expiry of the tax holiday, profits of STPI units will be taxable at
the rate of 32.45%.
One of our Sri Lankan subsidiaries is also eligible to claim income tax exemption with respect to
profits earned from export revenue by our delivery center registered with the Board of Investment,
Sri Lanka. This tax holiday is available for five years from the year of assessment in which the
subsidiary commences to make profits or any year of assessment not later than two years from the
date of commencement of operations, whichever is the earlier. The tax holiday for this Sri Lankan
subsidiary expired on April 1, 2011. However, recently the Government of Sri Lanka has under the
Sri Lankan Inland Revenue Act, exempted the profit earned from export revenue from tax. This will
enable our Sri Lankan subsidiary to continue to claim tax exemption
under the Sri Lankan Inland Revenue
Act following the expiry of the tax holiday. The tax holiday for another Sri Lankan subsidiary
expired on March 31, 2009.
Our joint
venture company in the Philippines, WNS Philippines Inc., and its wholly-owned
subsidiary, WNS Global Services Philippines, Inc., are also eligible to claim income tax exemption
with respect to profits earned from export revenue by our delivery centers registered with the
Board of Investment and the Philippines Economic Zone Authority. This tax holiday is available for
four years from the date of grant of the tax exemption. Upon expiry of the tax holiday in fiscal
2013, income generated by WNS Philippines Inc. and WNS Global
Services Philippines, Inc. will be
taxed at the then prevailing annual tax rate which is currently 30%.
Our subsidiary in Costa Rica is also eligible for 100% income tax exemption for an initial eight
years and 50% for the four years thereafter, starting from the date of commencement of the
operation on November 16, 2009.
Page 62
In May 2007, the Indian Finance Act, 2007 was adopted, with the effect of subjecting Indian
companies that benefit from a holiday from Indian corporate income taxes to the minimum alternate
tax, or MAT. MAT was applied at the rate of 11.33% in the case of profits exceeding
10 million
($0.2 million based on the exchange rate on March 31, 2011) and 10.3% in the case of profits not
exceeding
10 million from fiscal 2007
to fiscal 2009 and was increased to the rate of 16.99% in the case of
profits exceeding
10 million and 15.45% in the case of profits not
exceeding
10 million in fiscal 2010.
MAT has been further increased to (1) 19.93% in the case of profits exceeding
10 million and 18.54% in the case of profits not
exceeding
10 million in fiscal 2011,
and (2) to 20.01% in the case of profits exceeding
10 million and 19.06% in the case of profits not exceeding
10 million in fiscal 2012. As a result of the adoption of Indian
Finance Act, 2007, we became subject to MAT and have been required to pay additional taxes since
fiscal 2008. To the extent MAT paid exceeds the actual tax payable on our taxable income, we would
be able to set off such MAT credits against tax payable in the succeeding ten years, subject to the
satisfaction of certain conditions. We expect to be able to set off our MAT payments against our
increased tax liability based on taxable income following the expiry of our tax holiday on STPI effective
fiscal 2012.
As a result of the foregoing, the additional income tax expense we would otherwise have had to
incur at the statutory rates in India and Sri Lanka, if the tax exemption was not available, would
have been approximately $14.1 million for fiscal 2011, $15.6 million for fiscal 2010 and $16.1
million for fiscal 2009. Following the expiry of our tax holiday effective April 1, 2012, our tax
expense will materially increase. Our Indian operations had incurred tax losses from some of its
STPI units which have not been set off against the other taxable income, therefore tax losses are
being carried forward to subsequent years. We have not recognized a deferred tax asset on such
carried forward losses as there is uncertainty regarding the availability of such operating losses
to be set off against taxable income in subsequent years.
In addition, in May 2007, the Government of India implemented a fringe benefit tax on the allotment
of shares pursuant to the exercise or vesting, on or after April 1, 2007, of options and RSUs
granted to employees. The fringe benefit tax was payable by the employer at the rate of 33.99% on
the difference between the fair market value of the options and RSUs on the date of vesting of the
options and RSUs and the exercise price of the options and the purchase price (if any) for the
RSUs, as applicable. In October 2007, the Government of India published its guidelines on how the
fair market value of the options and RSUs should be determined. The legislation permitted the
employer to recover the fringe benefit tax from the employees. Accordingly, the terms of our award
agreements with applicable employees in India under our 2002 Stock Incentive Plan and our Amended
and Restated 2006 Incentive Award Plan (as described in Item 6. Directors, Senior Management and
Employees B. Compensation Employee Benefit Plans) allow us to recover the fringe benefit tax
from all our employees in India except those expatriate employees who are resident in India. In
August 2009, the Government of India passed the Indian Finance (No. 2) Act, 2009 which abolished
the levy of fringe benefit tax on certain expenses incurred by an employer and share-based
compensation provided to employees, by an employer. However, it also provides that share-based
compensation paid and other fringe benefits or amenities provided to employees would be taxable in
the hands of the employees as salary benefit and an employer would be required to withhold taxes
payable thereon.
In 2005, the Government of India implemented the Special Economic Zone, or SEZ, legislation with
the effect that taxable income of new operations established in designated SEZs may be eligible for
tax exemption equal to (i) 100% of their profits or gains derived from export income for the first
five years from the commencement of operations; (ii) 50% of those profits or gains derived from
export income for the next five years; and (iii) 50% of those profits or gains derived from export
income for a further five years, subject to satisfying certain capital investment requirements. Our
delivery center in Gurgaon set up in fiscal 2008 benefits from this tax holiday equal to 100%
exemption until fiscal 2012 and 50% from fiscal 2013 until fiscal 2022. The Government of India has
pursuant to the Indian Finance Act, 2011 levied MAT on profits earned by SEZ units at the rate
20.01%.
We may establish one or more new operations centers in designated SEZs that would be eligible for
the benefits of the SEZ legislation, subject to the receipt of requisite governmental and
regulatory approvals. The Ministry of Finance in India has, however, expressed concern about the
potential loss of tax revenues as a result of the exemptions under the SEZ legislation. The SEZ
legislation has been criticized on economic grounds by the International Monetary Fund and may be
challenged in courts by certain non-governmental organizations. It is possible that, as a result of
such political pressures, the procedure for obtaining the benefits of the SEZ legislation may
become more onerous, the types of land eligible for SEZ status may be further restricted or the SEZ
legislation may be amended or repealed. Moreover, there is continuing uncertainty as to the
governmental and regulatory approvals required to establish operations in the SEZs or to qualify
for the tax benefit. This uncertainty may delay the establishment of additional operations in the
SEZs.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based on our
consolidated financial statements included elsewhere in this annual report which have been prepared
in accordance with US GAAP. Note 2 to our consolidated financial statements included elsewhere in
this annual report describes our significant accounting policies and is an essential part of our
consolidated financial statements.
Page 63
We believe the following to be critical accounting policies. By critical accounting policies, we
mean policies that are both important to the portrayal of our financial condition and financial
results and require critical management judgments and estimates. Although we believe that our
judgments and estimates are appropriate, actual future results may differ from our estimates.
Revenue Recognition
We generate revenue by providing BPO services to our clients, which primarily include providing
back-office administration, data management, contact center management and automobile claims
handling services. We recognize revenue when we have persuasive evidence of an arrangement,
services have been rendered, the fee is determinable and collectibility is reasonably assured. We
conclude that we have persuasive evidence of an arrangement when we enter into an agreement with
our clients with terms and conditions that describe the service and the related payments and are
legally enforceable. We consider revenue to be determinable when the services have been provided in
accordance with the agreement. When the terms of the agreement specify service level parameters
that must be met, we monitor such service level parameters and determine if there are any service
credits or penalties that we need to account for. Revenue is recognized net of any service credits
that are due to a client. Generally, our revenue is from large companies, where we do not believe
we have a significant credit risk.
In limited instances we have entered into minimum commitment arrangements, wherein the service
contracts either provide for a minimum revenue commitment on an annual basis or a cumulative basis
over multiple years, stated in terms of annual minimum amounts. In such minimum commitment
arrangements where a minimum commitment is specific to an annual period, any revenue shortfall is
invoiced and recognized at the end of this period. However, when the shortfall in a particular year
can be offset with revenue received in excess of minimum commitments in subsequent years, we
recognize deferred revenue for the shortfall which has been invoiced and received. To the extent we
have sufficient experience to conclude that the shortfall will not be satisfied by excess revenue
in a subsequent period, the deferred revenue will be recognized as revenue in that period. In order
to determine whether we have sufficient experience, we consider several factors which include (i)
the historical volume of business done with a client as compared with initial projections of volume
as agreed to by the client and us; (ii) the length of time for which we have such historical
experience; (iii) future volume expected based on projections received from the client; and (iv)
our internal expectations of the ongoing volume with the client. Otherwise the deferred revenue
will remain until such time we can conclude that we will not receive revenue in excess of the
minimum commitment. For certain agreements, we have retroactive discounts related to meeting agreed
volumes. In such situations, we record revenue at the discounted rate, although we initially bill
at the higher rate, unless we can determine that the agreed volumes will not be met, based on the
factors discussed above.
We invoice our clients depending on the terms of the arrangement, which include billing based on a
per employee, per transaction or cost-plus basis. Amounts billed or payments received, where all
the conditions for revenue recognition have not been met, are recorded as deferred revenue and are
recognized as revenue when all recognition criteria have been met. However, the costs related to
the performance of such work are recognized in the period the services are rendered. For certain of
our clients, we perform process transition activities and charge some of them for these activities
upon execution of the contract with such client. We defer the revenue and the cost attributable to
client process transition activities with respect to these clients where such activities do not
represent the culmination of a separate earning process. Such revenue and cost are subsequently
recognized ratably over the period in which the related BPO services are performed. The deferment
of cost is limited to the amount of the deferred revenue. Any cost in excess of the deferred
revenue is recognized during the period it was incurred.
Our revenue is net of value-added taxes and includes reimbursements of out-of-pocket expenses, with
the corresponding out-of-pocket expenses included in cost of revenue.
We provide automobile claims handling services, which include claims handling and administration,
or claims handling, and arranging for car hire and repairs with repair centers across the UK and
the related payment processing for such repairs, or accident management. With respect to claims
handling, we enter into contracts with our clients to process all their claims over the contract
period, where the fees are determined either on a per claim basis or is a fixed payment for the
contract period. Where our contracts are on a per claim basis, we invoice the client at the
inception of the claim process. We estimate the processing period for the claims and recognize
revenue over the estimated processing period. This processing period generally ranges between one
to two months. The processing time may be greater for new clients and the estimated service period
is adjusted accordingly. The processing period is estimated based on historical experience and
other relevant factors, if any. Where the fee is a fixed payment for the contract period, revenue
is recognized on a straight line basis over the period of the contract. In certain cases, where the
fee is contingent upon the successful recovery of a claim by the client, revenue is not recognized
until the contingency is resolved. Revenue in respect of car hire is recognized over the car hire
term.
In order to provide accident management services, we negotiate with and set up a network of repair
centers where vehicles involved in an accident can be repaired. We are the principal in these
transactions between the repair center and the client. The repair centers bill us for the
Page 64
negotiated costs of the repair and we invoice such costs to the client. We recognize the amounts
invoiced to the client as revenue as we have determined that we meet the criteria established by
ASC Subtopic 605-45, Reporting Revenue Gross as a Principal versus Net as an Agent. Factors
considered in determining that we are the principal in the transaction include whether (i) we
negotiate the labor rates with repair centers; (ii) we determine which repair center should be
used; (iii) we are responsible for timely and satisfactory completion of repairs; and (iv) we bear
the credit risk. If there are circumstances where the above criteria are not met and therefore the
company is not the principal in providing accident management services, amounts received from
customers are recognized and presented net of payment to repair centers in the consolidated
statement of income. Revenue from accident management services is recorded net of the repairer
referral fees passed on to customers.
Share-based Compensation
We provide share-based awards such as stock options and RSUs to our employees, directors and
executive officers through various equity compensation plans. We recognize the share based
compensation in accordance with ASC 718, Stock Compensation, or ASC 718. ASC 718 addresses the
accounting for share-based payment transactions in which an enterprise receives employee services
in exchange for equity instruments of the enterprise or liabilities that are based on the fair
value of the enterprises equity instruments or that may be settled by the issuance of such equity
instruments.
In accordance with the provisions of ASC 718, share-based compensation for all awards granted,
modified or settled on or after April 1, 2006, that we expect to vest, is recognized on a straight
line basis over the requisite service period, which is generally the vesting period of the award.
ASC 718 requires the use of a valuation model to calculate the fair value of share-based awards.
Based on our judgment, we have elected to use the Black-Scholes-Merton pricing model to determine
the fair value of share-based awards on the date of grant. RSUs are measured based on the fair
market value of the underlying shares on the date of grant.
We believe the Black-Scholes-Merton model to be the most appropriate model for determination of
fair value of the share-based awards. In determining the fair value of share-based awards using the
Black-Scholes-Merton option pricing model, we are required to make certain estimates of the key
assumptions that include expected term, expected volatility of our shares, dividend yield and risk
free interest rate. Estimating these key assumptions involves judgment regarding subjective future
expectations of market prices and trends. The assumptions for expected term and expected volatility
have the most significant effect on calculating the fair value of our stock options. We use the
historical volatility of our ADSs in order to estimate future share price trends. In order to
determine the estimated period of time that we expect employees to hold their share-based options,
we have used historical exercise pattern of employees. The aforementioned inputs entered into the
option valuation model that we use to determine the fair value of our stock awards are subjective
estimates and changes to these estimates will cause the fair value of our share-based awards and
related share-based compensation expense we record to vary.
We are required to estimate the share-based awards that we expect to vest and to reduce share-based
compensation expense for the effects of estimated forfeitures of awards over the expense
recognition period. Although we estimate forfeitures based on historical experience, actual
forfeitures in the future may differ. To the extent our actual forfeitures are different than our
estimates, we record a true-up for the difference in the period in which the awards vest, and such
true-ups could materially affect our operating results.
We record deferred tax assets for share-based awards that result in deductions on our income tax
returns, based on the amount of share-based compensation recognized and the statutory tax rate in
the jurisdiction in which we will receive a tax deduction. Because the deferred tax assets we
record are based upon the share-based compensation expenses in a particular jurisdiction, the
aforementioned inputs that affect the fair value of our stock awards also indirectly affect our
income tax expense. In addition, differences between the deferred tax assets recognized for
financial reporting purposes and the actual tax deduction reported on our income tax returns are
recorded in additional paid-in capital. If the tax deduction is less than the deferred tax asset,
such shortfalls reduce our pool of excess tax benefits. If the pool of excess tax benefits is
reduced to zero, then subsequent shortfalls would increase our income tax expense.
Page 65
Business Combinations
As a part of acquisition accounting, we allocate the purchase price of acquired companies to the
identified tangible and intangible assets based on the estimated fair values on the date of the
acquisition. The purchase price allocation process requires management to make significant
estimates and assumptions, especially at acquisition date with respect to intangible assets, income
taxes, contingent consideration and estimated restructuring liabilities. Although we believe the
assumptions and estimates we have made in the past have been reasonable and appropriate, they are
based in part on historical experience and information obtained from the management of the acquired
companies and are inherently uncertain. Examples of critical estimates in valuing certain of the
intangible assets we have acquired or may acquire in the future include but are not limited to
appropriate method of valuation, future cash flow projections, weighted average cost of capital,
discount rates, risk-free rates, market rate of return and risk premiums.
Unanticipated events and circumstances may occur which may affect the accuracy or validity of such
assumptions, estimates or actual results.
Impairment of Goodwill, Intangible Assets and Property and Equipment
The goodwill impairment test is a two-step process. The first step of the process consists of
estimating the fair value of each of our reporting units, based on a discounted cash flow model,
using revenue and profit forecasts and comparing those estimated fair values with the carrying
values which include the allocated goodwill.
We determine reporting units and estimate the goodwill to be allocated to each reporting unit under
ASC 350 IntangibleGoodwill and others The identification of the reporting units is based on the
economic characteristics and availability of discrete financial data with respect to the reporting
unit.
If the estimated fair value is less than the carrying value, a second step is performed to compute
the amount of the impairment by determining the implied fair value of goodwill. The determination
of a reporting units implied fair value of goodwill requires the allocation of the estimated fair
value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated
fair value representing the implied fair value of goodwill is then compared to its corresponding
carrying value. If the carrying value exceeds the implied fair value of goodwill, the difference is
recognized as an impairment charge.
Fair value of a reporting unit is determined using the income approach which involves the use of
significant estimates and assumptions. These estimates and assumptions include revenue growth rate,
and operating margins used to calculate projected future cash flows, weighted average cost of
capital, discount rates, risk-free rates, market rate of return, risk premiums, future economic and
market conditions, and determination of appropriate market comparables. We base our fair value
estimates on assumptions we believe to be reasonable but that are unpredictable and inherently
uncertain. Actual future results may differ from those estimates. In addition, we make certain
judgments and assumptions in allocating shared assets and liabilities to determine the carrying
values for each of our reporting units. Our most recent annual goodwill impairment analysis, which
was performed during the fourth quarter of fiscal 2011, did not result in an impairment charge.
We amortize intangible assets with definite lives and purchased property and equipment over the
estimated useful lives and review them for impairment, if indicators of impairment arise. We
estimate the useful lives of intangible assets and purchase property and equipment after
consideration of historical results and anticipated results based on our current plans.
We perform impairment reviews of intangible assets and property and equipment when events or
circumstances indicate that the value of the assets may be impaired. Indicators of impairment
include operating or cash flow losses, significant decreases in market value or changes in the
physical condition of the property and equipment. When indicators of impairment are present, the
evaluation of impairment is based upon a comparison of the carrying amount of the intangible asset
or property and equipment to the estimated future undiscounted net cash flows expected to be
generated by the asset. If estimated future undiscounted cash flows are less than the carrying
amount of the asset, the asset is considered impaired. The impairment expense is determined by
comparing the estimated fair value of the intangible asset or property and equipment to its
carrying value, with any shortfall from fair value recognized as an expense in the current period.
The estimate of undiscounted cash flows and the fair value of assets require several assumptions
and estimates like the weighted average cost of capital, discount rates, risk-free rates, market
rate of return and risk premiums and can be affected by a variety of factors, including external
factors such as industry and economic trends, and internal factors such as changes in our business
strategy and our internal forecasts. Although we believe the historical assumptions and estimates
we have made are reasonable and appropriate, different assumptions and estimates could materially
impact our reported financial results.
Page 66
We cannot predict the occurrence of future events that might adversely affect the reported value of
goodwill, intangible assets or property and equipment. Such events include, but are not limited to,
strategic decisions made in response to economic and competitive conditions, the impact of the
environment on our customer base, and material negative change in relationship with significant
customers.
Income Taxes
We apply the asset and liability method of accounting for income taxes as described in ASC 740,
Income Taxes, or ASC 740. Under this method, deferred tax assets and liabilities are recognized
for future tax consequences attributable to differences between the financial statements carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carry-forwards. Deferred tax assets and liabilities are measured using tax rates
expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely
than not to be realized. In order for us to realize our deferred tax assets, we must be able to
generate sufficient taxable income in those jurisdictions where the deferred tax assets are
located. We consider future growth, forecasted earnings, future taxable income, the mix of earnings
in the jurisdictions in which we operate, and prudent and feasible tax planning strategies in
determining the need for a valuation allowance. In the event we were to determine that we would not
be able to realize all or part of our net deferred tax assets in the future, an adjustment to the
deferred tax assets would be charged to earnings in the period in which we make such a
determination. Likewise, if we later determine that it is more likely than not that the net
deferred tax assets would be realized, we would reverse the applicable portion of the previously
provided valuation allowance.
We calculate our current and deferred tax provision based on estimates and assumptions that could
differ from the actual results reflected in income tax returns filed during the subsequent year.
Adjustments based on filed returns are generally recorded in the period when the tax returns are
filed and the global tax implications are known, which can materially impact our effective tax
rate.
Significant judgment is required in determining our worldwide income tax provision. In the ordinary
course of a global business, there are many transactions and calculations where the ultimate tax
outcome is uncertain. Some of these uncertainties arise as a consequence of revenue sharing and
cost reimbursement arrangements among related entities, eligibility of our operations for the tax
holidays, segregation of foreign and domestic earnings and expenses to avoid double taxation and
carry forward of losses for set off against future taxable income. Although we believe that our
estimates are reasonable, the final tax outcome of these matters could be different from that which
is reflected in our historical income tax provisions and accruals. Such differences could have a
material effect on our income tax provision and net income in the period in which such
determination is made.
The amount of income tax we pay is subject to ongoing audits by income tax authorities, which often
result in adjustments to our taxable profits. Our estimate of the potential outcome for any
uncertain tax issue is highly judgmental. We believe we have adequately provided for any reasonably
foreseeable outcome related to these matters. However, our future results may include favorable or
unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or
resolved, tax examinations are closed or when statutes of limitation on potential assessments
expire. Additionally, the jurisdictions in which our earnings or deductions are realized may differ
from our current estimates. As a result, our effective tax rate may fluctuate significantly on a
quarterly basis.
As part of our accounting for business combinations, some of the purchase price is allocated to
goodwill and intangible assets. Impairment charges associated with goodwill are generally not tax
deductible and will result in an increased effective income tax rate in the quarter any impairment
is recorded. Amortization expenses associated with acquired intangible assets are generally not tax
deductible pursuant to our existing tax structure; however, deferred taxes have been recorded for
non-deductible amortization expenses as a part of the purchase price allocation process. We have
taken into account the allocation of these identified intangibles among different taxing
jurisdictions, including those with nominal or zero percent tax rates, in establishing the related
deferred tax liabilities. Income tax contingencies existing as of the acquisition dates of the
acquired companies are evaluated quarterly and any adjustments are recorded as adjustments to
goodwill.
Further ASC 740-10 requires us to recognize a provision for uncertainty in income taxes based on
minimum recognition threshold. We apply a two-step approach for recognizing and measuring uncertain
tax positions. The first step is to evaluate the tax position for recognition by determining, based
on the technical merits, that the position will be more likely than not sustained upon examination.
The second step is to measure the tax benefit as the largest amount of the tax benefit that is
greater than 50% likely of being realized upon settlement. We include interest and/or penalties
related to unrecognized tax benefits within our provision for income tax expense.
Evaluation of tax positions and recognition of provisions, under the provisions of ASC 740,
involves interpretation of tax laws, estimates of probabilities of tax positions being sustained
and the amounts of payments to be
Page 67
made under various scenarios. Although we believe we have adequately reserved for our
uncertain tax positions, no assurance can be given with respect to the final outcome of these
matters. To the extent that the final outcome of these matters is different than the amounts
recorded, such differences will impact our provision for income taxes in the period in which such a
determination is made.
Derivative Financial Instruments
The primary risks managed by using derivative instruments are foreign currency exchange risk and
interest rate risk. Forward and option contracts on various foreign currencies are entered into to
manage the foreign currency exchange rate risk on forecasted revenue denominated in foreign
currencies and monetary assets and liabilities held in non-functional currencies. Interest rate
swaps are entered into to manage interest rate risk associated with our floating rate borrowings.
Our primary exchange rate exposure is with the US dollars, pound sterling and the Indian rupee. For
derivative instruments which qualify for cash flow hedge accounting, we record the effective
portion of gain or loss from changes in the fair value of the derivative instruments in accumulated
other comprehensive income (loss), which is reclassified into earnings in the same period during
which the hedged item affects earnings. Derivative instruments qualify for hedge accounting when
the instrument is designated as a hedge; the hedged item is specifically identifiable and exposes
us to risk; and it is expected that a change in fair value of the derivative instrument and an
opposite change in the fair value of the hedged item will have a high degree of correlation.
Determining the high degree of correlation between the change in fair value of the hedged item and
the derivative instruments involves significant judgment including the probability of the
occurrence of the forecasted transaction. When it is probable that a forecasted transaction will
not occur, we discontinue the hedge accounting and recognize immediately in the consolidated
statement of income, the gains and losses attributable to such derivative instrument that were
accumulated in other comprehensive income (loss). Although we believe that our estimates of the
forecasted transactions are reasonable and based on historical experience, the final occurrence of
such transactions could be different as a result of external factors such as industry and economic
trends, and internal factors such as changes in our business strategy and our internal forecasts,
which will have a material effect on our earnings.
Fair value measurements
ASC 820-10, Fair Value Measurements and Disclosures defines fair value as the price that would be
paid upon sale of an asset or upon transfer of a liability in an orderly transaction between market
participants at the measurement date and in the principal or most advantageous market for that
asset or liability. The fair value should be calculated based on assumptions that market
participant would use in pricing the asset or liability, not on assumptions specific to us. In
addition, the fair value of assets and liabilities should include consideration of non-performance
risk including credit risk.
ASC 820-10 also discusses valuation techniques, such as the market approach (comparable market
prices), the income approach (present value of future income or cash flow), and the cost approach
(cost to replace the service capacity of an asset or replacement cost). The statement utilizes a
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value
into three broad levels. The following is a brief description of those three levels:
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Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
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Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or
indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for
identical or similar assets or liabilities in markets that are not active. |
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Level 3: Unobservable inputs that reflect the reporting entitys own assumptions. |
Where applicable, we use quoted prices in active markets for identical assets or liabilities to
determine fair value. This pricing methodology applies to our Level 1 assets, which consists of
cash equivalents and marketable securities. If quoted market prices in active markets for identical
assets or liabilities are not available to determine fair value, then we use quoted market prices
for similar assets and liabilities or inputs other than the quoted prices that are observable,
either directly or indirectly. This pricing methodology applies to our Level 2 items, which consist
of our interest rate swaps and foreign currency derivative instruments. The estimate of fair value
of interest rate swaps and foreign currency derivative instruments require several assumptions and
estimates like the future interest rates and discounting factor and can be affected by a variety of
factors, including volatility and forward rates. Although we believe the assumptions and estimates
we have made are reasonable and appropriate, different assumptions and estimates could materially
impact our reported financial position.
Page 68
Results of Operations
The following table sets forth certain financial information as a percentage of revenue and revenue
less repair payments:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Revenue |
|
Revenue Less Repair Payments |
|
|
Year ended March 31, |
|
Year ended March 31, |
|
|
2011 |
|
2010 |
|
2009 |
|
2011 |
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Unaudited |
Cost of revenue |
|
|
79.8 |
% |
|
|
75.4 |
% |
|
|
75.2 |
% |
|
|
66.3 |
% |
|
|
63.3 |
% |
|
|
66.5 |
% |
Gross profit |
|
|
20.2 |
% |
|
|
24.6 |
% |
|
|
24.8 |
% |
|
|
33.7 |
% |
|
|
36.7 |
% |
|
|
33.5 |
% |
Operating expenses: |
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
SG&A |
|
|
13.1 |
% |
|
|
14.8 |
% |
|
|
14.5 |
% |
|
|
21.8 |
% |
|
|
22.1 |
% |
|
|
19.6 |
% |
Amortization of intangibles assets |
|
|
5.2 |
% |
|
|
5.6 |
% |
|
|
4.8 |
% |
|
|
8.6 |
% |
|
|
8.3 |
% |
|
|
6.5 |
% |
Operating income |
|
|
2.0 |
% |
|
|
4.2 |
% |
|
|
5.5 |
% |
|
|
3.3 |
% |
|
|
6.3 |
% |
|
|
7.4 |
% |
Other (income) expense, net |
|
|
(1.0 |
)% |
|
|
1.2 |
% |
|
|
1.1 |
% |
|
|
(1.7 |
)% |
|
|
1.8 |
% |
|
|
1.5 |
% |
Interest expense |
|
|
1.3 |
% |
|
|
2.4 |
% |
|
|
2.3 |
% |
|
|
2.2 |
% |
|
|
3.5 |
% |
|
|
3.1 |
% |
Provision for income taxes |
|
|
0.2 |
% |
|
|
0.2 |
% |
|
|
0.6 |
% |
|
|
0.3 |
% |
|
|
0.3 |
% |
|
|
0.9 |
% |
Net income |
|
|
1.5 |
% |
|
|
0.5 |
% |
|
|
1.5 |
% |
|
|
2.5 |
% |
|
|
0.7 |
% |
|
|
2.1 |
% |
Net loss attributable to redeemable
noncontrolling interest |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
|
0.3 |
% |
|
|
0.1 |
% |
Net income attributable to WNS shareholders |
|
|
1.6 |
% |
|
|
0.6 |
% |
|
|
1.6 |
% |
|
|
2.7 |
% |
|
|
1.0 |
% |
|
|
2.1 |
% |
The following table reconciles revenue (a GAAP measure) to revenue less repair payments (a
non-GAAP measure) across our business:
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|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
2011 |
|
2010 |
|
2009 |
Revenue |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Less: Payments to repair centers |
|
|
40.1 |
% |
|
|
33.0 |
% |
|
|
26.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue less repair payments |
|
|
59.9 |
% |
|
|
67.0 |
% |
|
|
73.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2011 Compared to Fiscal 2010
Revenue. Revenue in fiscal 2011 was $616.3 million, an increase of $33.8 million, or 5.8%, over our
revenue of $582.5 million in fiscal 2010. This increase in revenue of $33.8 million was primarily
attributable to an increase in revenue from existing clients of $27.8 million and, to a lesser
extent, revenue from new clients of $6.0 million. The increase in revenue from existing clients was
primarily attributable to increased business from existing clients in our auto claims business. The
increase in revenue from existing clients was also on account of an expansion of the number of
processes that we executed for these clients and an increase in volumes for the existing processes,
partially offset by the adverse exchange rate movement of pound sterling to US dollar by an average
of 2.6% in fiscal 2011 as compared to fiscal 2010. Revenue from the UK, and North America
(primarily the US) accounted for $375.0 million and $136.8 million, respectively, of our revenue
for fiscal 2011, representing an increase of 10.6% and a decrease of 4.2%, respectively, from
fiscal 2010. The increase in revenue from the UK was primarily attributable to increased business
from existing clients of our auto claims business. The decrease in revenue from North America was
primarily attributable to the lower revenue from our travel business unit on account of the loss of
premium pricing with one key client under its renewed contract with us. Revenue from Europe
(excluding the UK) accounted for $98.1 million of our revenue for fiscal 2011, representing an
increase of 0.8% from fiscal 2010 primarily on account of an increase in the volume of business
from existing clients.
Revenue Less Repair Payments. Revenue less repair payments in fiscal 2011 was $369.4 million, a
decrease of $21.1 million, or 5.4%, over our revenue less repair payments of $390.5 million in
fiscal 2010. This decrease in revenue less repair payments of $21.1 million was primarily
attributable to a decrease in revenue less repair payments from existing clients of $25.5 million,
partially offset by an increase in revenue less repair payments from new clients of $4.4 million.
The decrease in revenue less repair payments from existing clients was on account of lower volumes
from existing customers in our WNS Auto Claims BPO segment, lower volumes from travel and BFSI business
units in the WNS Global BPO segment, adverse exchange rate movement of pound sterling to US dollar
by an average of 2.6% in fiscal 2011 as compared to fiscal 2010 and the loss of premium pricing
with one key client in our travel business unit under its renewed contract with us. This decrease
was partially offset by improved pricing with a large insurance client and ramp up of business with
other existing clients. Contract prices across the various types of processes
Page 69
remained substantially stable over this period except for the renewal of the prior contract with
one key client in the travel business unit where the renewed contract does not provide for the
premium pricing rate we had under the prior contract. Revenue less repair payments from UK, Europe
(excluding the UK) and North America (primarily the US) accounted for $199.6 million, $26.7 million
and $136.8 million, respectively, of our revenue less repair payments in fiscal 2011, representing
a decrease of 7.4%, 7.9% and 4.2% respectively, from fiscal 2010. The decrease in North America
(primarily the US) is due primarily to lower revenue from our travel business unit on account of
the loss of premium pricing with one key client under its renewed contract with us. The decrease in
revenue less repair payments from UK was primarily on account of lower volumes from the existing
clients and also on account of the adverse exchange rate movement of pound sterling to US dollar by
an average of 2.6% in fiscal 2011 as compared to fiscal 2010. The decrease in revenue less repair
payments from Europe (excluding the UK) was on account of lower volumes from the existing clients.
We realized an increase in revenue less repair payments most significantly in our industrial and
infrastructure business unit, and to a lesser extent, in our emerging businesses unit. During the
same period we experienced a decrease in revenue less repair payments in our travel and leisure
business unit and in our BFSI unit.
Cost of Revenue. Cost of revenue in fiscal 2011 was 79.8% of revenue as compared to 75.4% of
revenue in fiscal 2010. Cost of revenue in fiscal 2011 was $491.8 million, an increase of $52.6
million, or 12.0%, over our cost of revenue of $439.2 million in fiscal 2010. Cost of revenue
excluding payments made to repair centers for our fault repair services decreased by $2.3 million
for fiscal 2011 as compared to fiscal 2010. Payments made to repair centers increased by $54.9
million to $246.9 million in fiscal 2011 from $192.0 million in fiscal 2010 mainly due to an
increase in the repair costs associated with payments made to repair centers for the clients of our
auto claims business. Infrastructure costs decreased by $12.0 million mainly on account of lower
sub-contracting cost. In addition, depreciation cost decreased by $1.5 million. These decreases
were partially offset by an increase in operating employee compensation by $9.7 million due to an
increase in headcount and wages and also on account of the adverse exchange rate movement of the
Indian rupee to US dollar by an average of 4.0% in fiscal 2011 as compared to fiscal 2010.
Share-based compensation cost included in operating employee compensation decreased by $2.8 million
in fiscal 2011 as compared to fiscal 2010. Travel cost increased by $1.4 million in fiscal 2011 as
compared to fiscal 2010.
Gross Profit. Gross profit in fiscal 2011 was $124.4 million, or 20.2% of revenue, as compared to
$143.2 million, or 24.6% of revenue, in fiscal 2010. Gross profit as a percentage of revenue less
repair payments was 33.7% in fiscal 2011 compared to 36.7% in fiscal 2010. Gross profit as a
percentage of revenue less repair payments decreased by approximately 3.0% in fiscal 2011 as
compared to fiscal 2010 primarily on account of a decrease in revenue less repair payments by $21.1
million as discussed above.
SG&A Expenses. SG&A expenses in fiscal 2011 were $80.5 million, a decrease of 6.6% over our SG&A
expenses of $86.2 million in fiscal 2010. This decrease was primarily on account of (i) a decrease
in non-operating employee compensation cost by $7.8 million due
to a decrease in share-based
compensation costs by $8.3 million, mainly on account of lower new grants and forfeiture of grants
for employees who have left our company, partially offset by an increase in wage cost of $0.5 million
due to increased investment in sales and marketing, specifically in sales force, (ii) a decrease in
facilities costs by $0.7 million due to a surrender of one unused facility in Gurgaon, and part of
one bare shell facility in Mumbai, (iii) a decrease in fringe benefit tax on other expense of $0.5
million and (iv) a decrease in provision for doubtful debts of $0.2 million, partially offset by
(i) an increase in other administration related expenses such as communication costs and marketing
costs by $1.5 million, (ii) an increase in professional fees by $1.1 million, (iii) an increase in
other employee related costs such as recruitment and training costs by $0.9 million and (iv) an
increase in travel expenses by $0.1 million. SG&A expenses as a percentage of revenue was 13.1% in
fiscal 2011 as compared to 14.8% in fiscal 2010. SG&A expenses as a percentage of revenue less
repair payments was 21.8% in fiscal 2011 as compared to 22.1% in fiscal 2010.
Amortization of Intangible Assets. Amortization of intangible assets was $31.8 million in fiscal
2011, a decrease of $0.6 million over $32.4 million in fiscal 2010. The decrease was primarily due
to the complete amortization of software intangible assets acquired in connection with the
acquisition of Flovate in June 2007.
Operating Income. Income from operations in fiscal 2011 was $12.1 million compared to $24.6 million
in fiscal 2010, due to the reasons discussed above. Income from operations as a percentage of
revenue was 2.0% in fiscal 2011 as compared to 4.2% in fiscal 2010. Income from operations as a
percentage of revenue less repair payments was 3.3% in fiscal 2011 as compared to 6.3% in fiscal
2010.
Other (Income) Expenses, Net. Other income, net in fiscal 2011 was $6.1 million as compared to
other expenses, net of $7.1 million in fiscal 2010, representing an increase of $13.2 million,
primarily on account of foreign exchange gain of $8.7 million in fiscal 2011 as compared to a
foreign exchange loss of $8.7 million in fiscal 2010 partially offset by other expense of $2.6
million in fiscal 2011 as compared to other income of $1.7 million in fiscal 2010.
Interest Expenses. Interest expenses in fiscal 2011 was $8.0 as compared to $13.8 million in fiscal
2010. The decrease in interest expense was primarily due to a partial repayment of the 2008 Term
Loan taken for the AVIVA transaction and also on account of a refinancing of the 2008 Term Loan
completed in July 2010 at a lower interest rate.
Page 70
Provision for Income Taxes. Provision for income taxes in fiscal 2011 was $1.1 million, an increase
of 5.3% over our provision for income taxes of $1.0 million in fiscal 2010. This increase is
primarily on account of higher taxable profits, partially offset by higher deferred tax credit in
fiscal 2011 as compared to fiscal 2010. Tax as a percentage of net income before tax was 10.4% in
fiscal 2011 as compared to 27.1% in fiscal 2010. This decrease is primarily on account of higher
deferred tax credit in fiscal 2011.
Net Income . Net income in fiscal 2011 was $9.1 million as compared to $2.7 million in fiscal 2010.
Net income as a percentage of revenue was 1.5% in fiscal 2011 as compared to 0.5% in fiscal 2010.
Net income as a percentage of revenue less repair payments was 2.5% in fiscal 2011 as compared to
0.7% in fiscal 2010.
Net loss attributable to redeemable noncontrolling interest. Net loss attributable to redeemable
noncontrolling interest in fiscal 2011 was $0.7 million as compared to $1.0 million in fiscal 2010.
This was primarily on account of losses in our joint venture in the Philippines.
Net Income attributable to WNS Shareholders. Net income attributable to WNS shareholders in fiscal
2011 was $9.8 million as compared to $3.7 million in fiscal 2010. Net income attributable to WNS
shareholders as a percentage of revenue was 1.6% in fiscal 2011 as compared to 0.6% in fiscal 2010.
Net income attributable to WNS shareholders as percentage of revenue less repair payments was 2.7%
in fiscal 2011 as compared to 1.0% in fiscal 2010.
Fiscal 2010 Compared to Fiscal 2009
Revenue. Revenue in fiscal 2010 was $582.5 million, an increase of $61.6 million, or 11.8%, over
our revenue of $520.9 million in fiscal 2009. This increase in revenue of $61.6 million was
primarily attributable to an increase in revenue from existing clients of $38.8 million and, to a
lesser extent, revenue from new clients of $22.8 million. The increase in revenue from existing
clients was primarily attributable to increased business from existing clients of WNS Assistance,
our auto claims business. The increase in revenue from existing clients was also on account of an
expansion of the number of processes that we executed for these clients and an increase in volumes
for the existing processes, partially offset by the adverse exchange rate movement of pound
sterling to US dollar by an average of 7.2% in fiscal 2010 as compared to fiscal 2009. Revenue from
the UK, and North America (primarily the US) accounted for $339.2 million and $142.7 million,
respectively, of our revenue for fiscal 2010, representing an increase of 16.5% and 9.4%,
respectively, from fiscal 2009. The increase in revenue from the UK was primarily attributable to
increased business from existing clients of our auto claims business and on account of revenue
contribution resulting from the AVIVA transaction for the full twelve month period in fiscal 2010
as opposed to the partial nine month period in fiscal 2009. Revenue from Europe (excluding the UK)
accounted for $97.3 million of our revenue for fiscal 2010, representing a decrease of 0.4% from
fiscal 2009 primarily on account of a decrease in the volume of business from existing clients.
Revenue Less Repair Payments. Revenue less repair payments in fiscal 2010 was $390.5 million, an
increase of $5.5 million, or 1.4%, over our revenue less repair payments of $385.0 million in
fiscal 2009. This increase in revenue less repair payments of $5.5 million was primarily
attributable to an increase in revenue less repair payments from new clients of $13.0 million,
partially offset by a decrease in revenue less repair payments from existing clients of $7.5
million. The decrease in revenue less repair payments from existing clients was attributable to the
adverse exchange rate movement of pound sterling to US dollar by an average of 7.2% in fiscal 2010
as compared to fiscal 2009, partially offset by higher revenue less repair payments on account of
revenue contribution resulting from the AVIVA transaction for the full twelve month period in
fiscal 2010 as opposed to the partial nine month period in fiscal 2009. Contract prices across the
various types of processes
Page 71
remained substantially stable over this period. Revenue less repair payments from UK, Europe
(excluding the UK) and North America (primarily the US) accounted for $215.6 million, $29.0 million
and $142.7 million, respectively, of our revenue less repair payments in fiscal 2010, representing
a decrease of 3.8%, an increase of 0.3% and an increase of 9.4% respectively, from fiscal 2009. The
increase in North America (primarily the US) is due primarily to an increase in business from new
clients. The decrease in revenue less repair payments from UK was primarily on account of the
adverse exchange rate movement of pound sterling to US dollar by an average of 7.2% in fiscal 2010
as compared to fiscal 2009. We realized an increase in revenue less repair payments most
significantly in our industrial and infrastructure business unit, and to a lesser extent, in our
emerging businesses unit. During the same period we experienced a decrease in revenue less repair
payments in our travel and leisure business unit and in our BFSI unit.
Cost of Revenue. Cost of revenue in fiscal 2010 was 75.4% of revenue as compared to 75.2% of
revenue in fiscal 2009. Cost of revenue in fiscal 2010 was $439.2 million, an increase of $47.4
million, or 12.1%, over our cost of revenue of $391.8 million in fiscal 2009. Cost of revenue
excluding payments made to repair centers for our fault repair services decreased by $8.6 million
for fiscal 2010 as compared to fiscal 2009. Payments made to repair centers increased by $56.0
million to $192.0 million in fiscal 2010 from $135.9 million in fiscal 2009 mainly due to an
increase in the repair costs associated with payments made to repair centers for the clients of our
auto claims business. Infrastructure costs decreased by $11.4 million mainly on account of lower
sub-contracting cost. In addition, depreciation cost decreased by $0.5 million and travel costs
decreased by $0.6 million. These decreases were partially offset by an increase in operating
employee compensation by $4.0 million due to an increase in headcount and wages. Share-based
compensation cost included in operating employee compensation increased by $0.1 million in fiscal
2010 as compared to fiscal 2009.
Gross Profit. Gross profit in fiscal 2010 was $143.2 million, or 24.6% of revenue, as compared to
$129.1 million, or 24.8% of revenue, in fiscal 2009. Gross profit as a percentage of revenue less
repair payments was 36.7% in fiscal 2010 compared to 33.5% in fiscal 2009. Gross profit as a
percentage of revenue less repair payments increased by approximately 3.2% in fiscal 2010 as
compared to fiscal 2009 primarily on account of a decrease in cost of revenue excluding payments
made to repair centers by $8.6 million as discussed above.
SG&A Expenses. SG&A expenses in fiscal 2010 were $86.2 million, an increase of 14.2% over our SG&A
expenses of $75.5 million in fiscal 2009. This increase was primarily on account of (i) an increase
in non-operating employee compensation cost by $11.0 million including an increase in share-based
compensation costs by $1.6 million, mainly due to an increase in wages and severance cost of $2.1
million associated with the departure of a few members of our senior management team in fiscal
2010, (ii) an increase in facilities costs by $1.1 million, (iii) an increase in other
administration related expenses such as communication costs and marketing costs by $0.6 million,
(iv) an increase in other employee related costs such as recruitment and training costs by $0.5
million and (v) an increase in the provision for bad debts by $0.1 million. These increases were
partially offset by (i) a decrease in other taxes by $1.1 million on account of dividend tax on an
upstream distribution of dividend from an Indian subsidiary to its holding company, (ii) a decrease
in professional fees by $1.0 million, (iii) a decrease in travel expenses by $0.3 million and (iv)
a decrease in fringe benefit tax payable by $0.2 million. The decreases in respect of items (ii)
and (iii) were primarily on account of cost control measures implemented by us in fiscal 2010. SG&A
expenses as a percentage of revenue was 14.8% in fiscal 2010 as compared to 14.5% in fiscal 2009.
SG&A expenses as a percentage of revenue less repair payments was 22.1% in fiscal 2010 as compared
to 19.6% in fiscal 2009.
Amortization of Intangible Assets. Amortization of intangible assets was $32.4 million in fiscal
2010, an increase of $7.5 million over $24.9 million in fiscal 2009. The increase was primarily on
account of amortization of intangible assets acquired through our acquisition of Aviva Global
(which we refer to as WNS Global Singapore following our acquisition in July 2008) as fiscal 2010
has the amortization cost for the full twelve month period as opposed to the partial nine month
period in fiscal 2009.
Operating Income. Income from operations in fiscal 2010 was $24.6 million compared to $28.7 million
in fiscal 2009, due to the reasons discussed above. Income from operations as a percentage of
revenue was 4.2% in fiscal 2010 as compared to 5.5% in fiscal 2009. Income from operations as a
percentage of revenue less repair payments was 6.3% in fiscal 2010 as compared to 7.4% in fiscal
2009.
Other (Income) Expenses, Net. Other expenses, net in fiscal 2010 was $7.0 million as compared to
other expenses, net of $5.6 million in fiscal 2009, representing an increase of $1.4 million,
primarily on account of (i) a decrease in other income by $1.0 million to $1.7 million in fiscal
2010 as compared to $2.7 million in fiscal 2009 and (ii) an increase in foreign exchange loss of
$0.4 million to $8.7 million in fiscal 2010 as compared to $8.3 million in fiscal 2009.
Interest Expenses. Interest expenses in fiscal 2010 was $13.8 million primarily due to interest for
the full 12-month period paid on the 2008 Term Loan taken to fund the AVIVA transaction as compared
to $11.8 million interest for the partial nine-month period paid on the loan in fiscal 2009.
Page 72
Provision for Income Taxes. Provision for income taxes in fiscal 2010 was $1.0 million, a decrease
of 70.1% over our provision for income taxes of $3.3 million in fiscal 2009. This decrease is
primarily on account of lower taxable income in fiscal 2010 as compared to fiscal 2009. Tax as a
percentage of net income before tax was 27.1% in fiscal 2010 as compared to 29.7% in fiscal 2009.
Net Income . Net income in fiscal 2010 was $2.7 million as compared to $7.9 million in fiscal 2009.
Net income as a percentage of revenue was 0.5% in fiscal 2010 as compared to 1.5% in fiscal 2009.
Net income as a percentage of revenue less repair payments was 0.7% in fiscal 2010 as compared to
2.1% in fiscal 2009.
Net loss attributable to redeemable noncontrolling interest. Net loss attributable to redeemable
noncontrolling interest in fiscal 2010 was $1.0 million as compared to $0.3 million in fiscal 2009.
This was primarily on account of losses in our joint venture in the Philippines.
Net Income attributable to WNS Shareholders. Net income attributable to WNS shareholders in fiscal
2010 was $3.7 million as compared to $8.2 million in fiscal 2009. Net income attributable to WNS
shareholders as a percentage of revenue was 0.6% in fiscal 2010 as compared to 1.6% in fiscal 2009.
Net income attributable to WNS shareholders as percentage of revenue less repair payments was 1.0%
in fiscal 2010 as compared to 2.1% in fiscal 2009.
Results by Reportable Segment
For purposes of evaluating operating performance and allocating resources, we have organized our
company by operating segments. See note 15 to our consolidated financial statements included
elsewhere in this annual report. For financial statement reporting purposes, we aggregate the
segments that meet the criteria for aggregation as set forth in ASC 280 on Segmental Reporting.
We have separately reported our Auto Claims BPO segment, as it does not meet the aggregation criteria
under ASC 280. Accordingly, pursuant to ASC 280, we have two reportable segments: WNS Global BPO
and WNS Auto Claims BPO.
WNS Global BPO is primarily delivered out of our offshore delivery centers in Costa Rica, India,
the Philippines, Romania and Sri Lanka. This segment includes all of our business activities with
the exception of WNS Auto Claims BPO. WNS Auto Claims BPO is our automobile claims management
business which is primarily based in the UK and is part of our BFSI business unit. See Item 4.
Information on the Company B. Business Overview Business Process Outsourcing Service
Offerings. We report WNS Auto Claims BPO as a separate segment for financial statement reporting
purposes since a substantial part of our reported revenue in this business consists of amounts
invoiced to our clients for payments made by us to automobile repair centers, resulting in lower
long-term gross margins when measured on the basis of revenue, relative to the WNS Global BPO
segment.
Our revenue is generated primarily from providing business process outsourcing services. In our WNS
Auto Claims BPO segment, we provide both fault and non-fault repairs. For fault repairs, we
provide claims handling and accident management services, where we arrange for automobile repairs
through a network of third party repair centers. In our accident management services, we act as the
principal in our dealings with the third party repair centers and our clients. The amounts we
invoice to our clients for payments made by us to third party repair centers is reported as
revenue. Since we wholly subcontract the repairs to the repair centers, we evaluate our financial
performance based on revenue less repair payments to third party repair centers which is a non-GAAP
measure. We believe that revenue less repair payments for fault repairs reflects more accurately
the value addition of the business process outsourcing services that we directly provide to our
clients, For non-fault repairs, revenue including repair payments is used as a primary measure to
allocate resources and measure operating performance. As we provide a consolidated suite of
accident management services including credit hire and credit repair for our non-fault repairs
business, we believe that measurement of that line of business has to be on a basis that includes
repair payments in revenue. Revenue less repair payments is a non-GAAP measure which is calculated
as revenue less payments to repair centers. The presentation of this non-GAAP information is not
meant to be considered in isolation or as a substitute for our financial results prepared in
accordance with US GAAP. Our revenue less repair payments may not be comparable to similarly titled
measures reported by other companies due to potential differences in the method of calculation.
Our management allocates resources based on segment revenue less repair payments and measures
segment performance based on revenue less repair payments and to a lesser extent on segment
operating income. The accounting policies of our reportable segments are the same as those of our
company. See Critical Accounting Policies. We may in the future change our reportable segments
based on how our business evolves.
The following table shows revenue and revenue less repair payments for our two reportable segments
for the periods indicated.
Page 73
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Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
|
WNS Global |
|
|
WNS Auto |
|
|
WNS Global |
|
|
WNS Auto |
|
|
WNS Global |
|
|
WNS Auto |
|
|
|
BPO |
|
|
Claims BPO |
|
|
BPO |
|
|
Claims BPO |
|
|
BPO |
|
|
Claims BPO |
|
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|
(US dollars in millions) |
|
Segment revenue(1) |
|
$ |
332.6 |
|
|
$ |
284.4 |
|
|
$ |
341.5 |
|
|
$ |
242.1 |
|
|
$ |
322.9 |
|
|
$ |
198.7 |
|
Less: Payments to repair centers |
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|
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|
246.8 |
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|
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191.9 |
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135.9 |
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Revenue less repair
payments(1) |
|
|
332.6 |
|
|
|
37.6 |
|
|
|
341.5 |
|
|
|
50.1 |
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|
|
322.9 |
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|
62.9 |
|
Cost of revenue(2) |
|
|
222.0 |
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22.9 |
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210.4 |
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34.3 |
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213.1 |
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39.9 |
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Other costs(3) |
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71.7 |
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5.7 |
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68.6 |
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5.8 |
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58.9 |
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6.4 |
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Segment operating income |
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38.9 |
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9.0 |
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62.5 |
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|
10.0 |
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50.9 |
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16.5 |
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Other (income) expense, net |
|
|
(5.8 |
) |
|
|
(0.3 |
) |
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9.1 |
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(2.1 |
) |
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6.1 |
|
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(0.5 |
) |
Interest expense |
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8.0 |
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0.0 |
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13.8 |
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0.1 |
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11.2 |
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0.6 |
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Segment income before income
taxes |
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36.7 |
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9.3 |
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39.7 |
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12.0 |
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33.6 |
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16.4 |
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Benefit (provision) for income taxes |
|
|
0.5 |
|
|
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(1.6 |
) |
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|
1.9 |
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(2.9 |
) |
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0.3 |
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(3.6 |
) |
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Segment income |
|
$ |
37.2 |
|
|
$ |
7.7 |
|
|
$ |
41.5 |
|
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$ |
9.2 |
|
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$ |
33.9 |
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$ |
12.8 |
|
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Notes: |
|
(1) |
|
Segment revenue and revenue less repair payments include
inter-segment revenue of $0.8 million for fiscal 2011, $1.1
million for fiscal 2010 and $0.7 million for fiscal 2009. |
|
(2) |
|
Cost of revenue includes inter-segment expenses of $0.8 million
for fiscal 2011, $1.1 million for fiscal 2010 and $0.7 million
for fiscal 2009, and excludes stock-based compensation expenses
of $0.9 million for fiscal 2011, $3.7 million for fiscal 2010 and
$3.6 million for fiscal 2009, which are not allocable between our
segments. |
|
(3) |
|
Excludes stock-based compensation expenses (including related
fringe benefit tax) of $3.1 million for fiscal 2011, $11.9
million for fiscal 2010 and $10.2 million for fiscal 2009, which
are not allocable between our segments. SG&A expenses comprise
other costs and stock-based compensation expenses. |
In fiscal 2011, WNS Global BPO accounted for 54.0% of our revenue and 90.1% of our revenue less
repair payments, as compared to 58.6% of our revenue and 87.4% of our revenue less repair payments
in fiscal 2010.
WNS Global BPO
Segment Revenue. Revenue in the WNS Global BPO segment decreased by 2.6% to $332.6 million in
fiscal 2011 from $341.5 million in fiscal 2010. This decrease was primarily driven by the adverse
exchange rate movement of pound sterling to US dollar by an average of 2.6% in fiscal 2011 as
compared to fiscal 2010, the loss of premium pricing with one key client in our travel business
unit under its renewed contract with us and on account of lower volumes from other existing
customers.
Revenue in the WNS Global BPO segment increased by 5.7% to $341.5 million in fiscal 2010 from
$322.9 million in fiscal 2009. This increase was primarily driven by an increase in the volume of
transactions executed for new clients, which contributed $10.8 million of the increase, and an
expansion of the number of processes executed for existing clients and on account of revenue
contribution from WNS Global Singapore (formerly AVIVA Global) for the full twelve month period in fiscal 2010 as opposed to the partial
nine month period in fiscal 2009, which contributed $7.8 million of the increase.
Page 74
Contract prices across the various types of processes remained substantially stable over these
periods except for the renewal of the prior contract with one key client in the travel business
unit where the renewed contract does not provide for the premium pricing rate we had under the
prior contract.
Segment Operating Income. Segment operating income in the WNS Global BPO segment decreased by 37.8%
to $38.9 million in fiscal 2011 from $62.5 million in fiscal 2010. The decrease was primarily
attributable to the decrease in segment revenue, higher cost of revenue and higher SG&A expenses.
The key components of our cost of revenue are employee costs (which comprise employee salaries and
costs related to recruitment, training and retention), infrastructure-related costs (which comprise
depreciation charges, lease rentals, facilities management costs and telecommunication network
costs), and travel related costs. Employee related costs represent the largest component of our
cost of revenue for the WNS Global BPO segment. Our cost of revenue increased by $11.6 million to
$222.0 million in fiscal 2011 from $210.4 million in fiscal 2010, primarily on account of an
increase in employee costs and wages by $12.8 million due to an increase in headcount and wages and
an increase in travel cost by $1.5 million, partially offset by a decrease in depreciation costs by
$1.7 million and a decrease in infrastructure costs by $1.0 million.
The key components of our other costs are employee costs for sales and marketing, general and
administrative and other support personnel, travel expenses, legal and professional fees, brand
building expenses, and other general expenses not related to cost of revenue. Our other costs
increased by $3.2 million to $71.7 million in fiscal 2011 from $68.6 million in fiscal 2010. The
increase in other costs was primarily on account of (i) an increase in other administration costs
by $1.5 million, (ii) an increase in professional fees by $1.2 million, (iii) an increase in other
employee related costs such as recruitment and training cost by $0.9 million, (iv) an increase in
non-operating employee compensation by $0.5 million, and (v) an increase in travel expenses by $0.1
million. These increases were partially offset by (i) a decrease in facilities costs by $0.8
million, (ii) a decrease in bad debt by $0.1 million, and (iii) a decrease in other tax expense by
$0.1 million. Segment operating margin for fiscal 2011 decreased by 6.6% to 11.7% of revenue as
compared to fiscal 2010.
Segment operating income in the WNS Global BPO segment increased by 22.8% to $62.5 million in
fiscal 2010 from $50.9 million in fiscal 2009. The increase was primarily attributable to an
increase in segment revenue.
Our cost of revenue decreased by $2.7 million to $210.4 million in fiscal 2010 from $213.1 million
in fiscal 2009, primarily on account of a decrease in infrastructure costs by $7.3 million, a
decrease in depreciation costs by $0.8 million and a decrease in travel cost by $0.6 million,
partially offset by an increase in employee costs and wages by $6.0 million due to an increase in
headcount and wages.
Our other costs increased by $9.7 million to $68.6 million in fiscal 2010 from $58.9 million in
fiscal 2009. The increase in other costs was primarily on account of (i) an increase in
non-operating employee compensation by $10.0 million, (ii) an increase in facilities costs by $1.2
million, (iii) an increase in other administration costs by $0.7 million and (iv) an increase in
other employee related costs such as recruitment and training cost by $0.5 million. These increases
were partially offset by (i) a decrease in professional fees by $1.1 million, (ii) a decrease in
the fringe benefit tax by $1.0 million, (iii) a decrease in other tax expense by $0.3 million and
(iv) a decrease in travel expenses by $0.3 million. Segment operating margin for fiscal 2010
increased by 2.5% to 18.3% of revenue as compared to fiscal 2009.
Segment Income. Segment net income in the WNS Global BPO segment decreased by 10.4% to $37.2
million in fiscal 2011 from $41.5 million in fiscal 2010. The decrease was primarily attributable
to a decrease in segment operating income.
The key components of our other income / (expense), net were interest income, other income and
foreign exchange gains or losses. The other income / (expense), net in fiscal 2011 was an income of
$5.8 million compared to an expense of $9.1 million in fiscal 2010, an increase of $14.9 million.
This increase was mainly due to higher foreign exchange gain of $8.6 million in fiscal 2011 as
compared to foreign exchange loss of $8.8 million in fiscal 2010, partially offset by higher other
expenses of $2.8 million in fiscal 2011 as compared to $0.3 million in fiscal 2010.
The interest expense for fiscal 2011 was $8.0 million as compared to $13.8 million in fiscal 2010.
The decrease in interest expense was primarily due to a partial repayment of the 2008 Term Loan
taken for the AVIVA transaction and also on account of a refinancing of the 2008 Term Loan
completed in July 2010 at a lower interest rate.
Income tax in fiscal 2011 was a benefit of $0.5 million as compared to a benefit of $1.9 million in
fiscal 2010. The income tax benefit in fiscal 2011 was lower on account of higher profits.
Page 75
Segment net income in the WNS Global BPO segment increased by 22.4% to $41.5 million in fiscal 2010
from $33.9 million in fiscal 2009. The increase was primarily attributable to an increase in
segment operating income.
The other (income) expense, net in fiscal 2010 was an expense of $9.1 million compared to an
expense of $6.1 million in fiscal 2009, an increase of $3.0 million. This increase was mainly due
to higher foreign exchange losses of $0.7 million and higher other expenses of $2.3 million in
fiscal 2010 as compared to fiscal 2009. The other expense in fiscal 2010 was higher mainly on
account of a $1.0 million charge related to unwinding of interest rate swap contract resulting from
the $15 million partial pre-payment of the 2008 Term Loan and lower interest income of $1.3
million.
The interest expense for fiscal 2010 was $13.8 million as compared to $11.2 million in fiscal 2009,
primarily due to interest for the full 12 month period on the 2008 Term Loan as compared to
interest paid for the partial nine month period in fiscal 2009.
Income tax in fiscal 2010 was a benefit of $1.9 million as compared to a benefit of $0.3 million in
fiscal 2009. The income tax benefit in fiscal 2009 was lower on account of a $1.1 million dividend
tax expense on an upstream distribution of dividend from an Indian subsidiary to its holding
company.
WNS Auto Claims BPO
Segment Revenue. Revenue in the WNS Auto Claims BPO segment increased by 17.5% to $284.4 million in
fiscal 2011 from $242.1 million in fiscal 2010. This increase of $42.4 million was primarily on
account of an increase in revenue from existing clients of $40.5 million and revenue from new
clients of $1.8 million. Payments made to repair centers in fiscal 2011 were $246.9 million, an
increase of 28.6% from $191.9 million in fiscal 2010. The increase in revenue from existing clients
and the increase in payments made to repair centers were primarily due to an increase in the repair
costs associated with payments made to repair centers for the clients of our auto claims business.
Revenue less repair payments in this segment decreased by 25.0% to $37.6 million in fiscal 2011
from $50.1 million in fiscal 2010 primarily due to lower volume of business from existing clients
and, to a lesser extent, due to the adverse exchange rate movement of pound sterling to US dollar
by an average of 2.6% in fiscal 2011 as compared to fiscal 2010.
Revenue in the WNS Auto Claims BPO segment increased by 21.8% to $242.1 million in fiscal 2010 from
$198.7 million in fiscal 2009. This increase of $43.3 million was primarily on account of an
increase in revenue from existing clients of $31.3 million and revenue from new clients of $12.0
million. Payments made to repair centers in fiscal 2010 were $191.9 million, an increase of 41.3%
from $135.9 million in fiscal 2009. The increase in revenue from existing clients and the increase
in payments made to repair centers were primarily due to an increase in the repair costs
associated with payments made to repair centers for the clients of our auto claims business.
Revenue less repair payments in this segment decreased by 20.3% to $50.1 million in fiscal 2010
from $62.9 million in fiscal 2009 primarily due to a change in mix between revenue less repair
payments and revenue and, to a lesser extent, to an adverse foreign exchange rate movement of the
pound sterling to US dollar by an average of 7.2% in fiscal 2010 as compared to fiscal 2009.
Segment Operating Income. Segment operating income decreased by 10.6% to $9.0 million in fiscal
2011 from $10.0 million in fiscal 2010. The decrease of $1.0 million was primarily on account of an
increase in cost of revenue and a decrease in other costs. Our cost of revenue increased by $43.5
million to $269.7 million in fiscal 2011 from $226.2 million in fiscal 2010. The increase in cost
of revenue was primarily on account of an increase in payments to repair centers by $54.9 million
to $246.9 million in fiscal 2011 from $191.9 million in fiscal 2010, partially offset by a decrease
in cost of revenue excluding payments made to repair centers by $11.4 million to $22.9 million in
fiscal 2011 from $34.3 million in fiscal 2010. The decrease in cost of revenue excluding payments
made to repair centers was primarily on account of a decrease in infrastructure related costs by
$11.0 million, a decrease in our employee costs by $0.6 million and a decrease in travel cost by
$0.1 million, partially offset by an increase in depreciation cost by $0.3 million. Our other costs
decreased by $0.1 million to $5.7 million in fiscal 2011 from $5.8 million in fiscal 2010 due to a
decrease in professional fee by $0.1 million, a decrease in bad debt costs by $0.1 million which
was partially offset by an increase in recruitment and training costs by $0.1 million. Our travel
costs remained stable during this period. Segment operating margin for fiscal 2011 decreased by
0.9% to 3.2% of revenue as compared to 4.1% in fiscal 2010. Segment operating income as a
percentage of revenue less repair was 23.9% in fiscal 2011 as compared to 20.0% in fiscal 2010.
Segment operating income decreased by 39.3% to $10.0 million in fiscal 2010 from $16.5 million in
fiscal 2009. The decrease of $6.5 million was primarily on account of an increase in cost of
revenue partially offset by a decrease in other costs. Our cost of revenue increased by $50.4
million to $226.2 million in fiscal 2010 from $175.8 million in fiscal 2009. The increase in cost
of revenue was primarily on account of an increase in payments to repair centers by $56.0 million
to $191.9 million in fiscal 2010 from $135.9 million in fiscal 2009, partially offset by a decrease
in cost of revenue excluding payments made to repair centers by $5.6 million to $34.3 million in
fiscal 2010 from $39.9 million in fiscal 2009. The decrease in cost of revenue excluding payments
made to repair centers was primarily on account of a decrease in infrastructure related costs by
$4.1 million, a decrease in our employee costs by $1.8 million, partially offset by an increase in
depreciation cost by $0.2 million. Our other costs decreased by $0.6 million to $5.8 million in
fiscal 2010 from $6.4 million in fiscal 2009 due to a decrease in employee costs by $0.7 million,
which was partially offset by an increase in bad debt costs by $0.1 million.
Page 76
Our travel costs remained stable during this period. Segment operating margin for fiscal 2010
decreased by 4.2% to 4.1% of revenue as compared to 8.3% in fiscal 2009. Segment operating income
as a percentage of revenue less repair was 20.0% in fiscal 2010 as compared to 26.3% in fiscal
2009.
Segment Net Income. Segment net income in the WNS Auto Claims BPO segment decreased by 15.9% to
$7.7 million in fiscal 2011 from $9.2 million in fiscal 2010. The decrease was primarily
attributable to a decrease in segment operating income.
The key components of our other income / (expense), net were interest and other income and foreign
exchange gains or losses. The other income / (expense), net for fiscal 2011 was an income of $0.3
million compared to an income of $2.1 million in fiscal 2010, representing an decrease of $1.7
million. This decrease was mainly due to lower other income in fiscal 2011 as compared to fiscal
2010. The other income in fiscal 2010 was higher primarily on account of collection of written off
debt.
The interest expense in fiscal 2011 was $0.0 million as compared to interest expense of $0.1
million in fiscal 2010.
Income tax in fiscal 2011 was a charge of $1.6 million as compared to a charge of $2.9 million in
fiscal 2010. The income tax in fiscal 2011 was lower on account of lower profit before tax.
Segment net income in the WNS Auto Claims BPO segment decreased by 28.1% to $9.2 million in fiscal
2010 from $12.8 million in fiscal 2009. The decrease was primarily attributable to a decrease in
segment operating income.
The other income / (expense), net for fiscal 2010 was an income of $2.1 million compared to an
income of $0.5 million in fiscal 2009, representing an increase of $1.6 million. This increase was
mainly due to a higher foreign exchange gain of $0.2 million and higher other income of $1.4
million in fiscal 2010 as compared to fiscal 2009. The other income in fiscal 2010 was higher
primarily on account of collection of written off debt.
The interest expense in fiscal 2010 was $0.1 million as compared to interest expense of $0.6
million in fiscal 2009, a decrease of $0.5 million. This decrease in interest expense was mainly
due to short term credit facilities availed by us in fiscal 2009, which was repaid in fiscal 2010.
Income tax in fiscal 2010 was a charge of $2.9 million as compared to a charge of $3.6 million in
fiscal 2009. The income tax in fiscal 2010 was lower on account of lower profit before tax.
Quarterly Results
The following table presents unaudited quarterly financial information for each of our last eight
fiscal quarters on a historical basis. We believe the quarterly information contains all
adjustments necessary to fairly present this information. As a business process outsourcing
services provider, we anticipate and respond to demand from our clients. Accordingly, we have
limited control over the timing and circumstances under which our services are provided. Typically,
we show a decrease in our first-quarter margins as a result of salary increases. For these and
other reasons, we can experience variability in our operating results from quarter to quarter. The
operating results for any quarter are not necessarily indicative of the results for any future
period.
Page 77
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2011 |
|
Fiscal 2010 |
|
|
Three months ended |
|
Three months ended |
|
|
March |
|
December |
|
September |
|
June |
|
March |
|
December |
|
September |
|
June |
|
|
2011 |
|
2010 |
|
2010 |
|
2010 |
|
2010 |
|
2009 |
|
2009 |
|
2009 |
|
|
(Unaudited, US dollars in millions) |
Revenue |
|
$ |
159.5 |
|
|
$ |
152.7 |
|
|
$ |
154.2 |
|
|
$ |
150.0 |
|
|
$ |
157.6 |
|
|
$ |
145.8 |
|
|
$ |
146.0 |
|
|
$ |
133.1 |
|
Cost of revenue |
|
|
126.1 |
|
|
|
121.5 |
|
|
|
121.0 |
|
|
|
123.2 |
|
|
|
123.5 |
|
|
|
110.7 |
|
|
|
109.1 |
|
|
|
95.9 |
|
Gross Profit |
|
|
33.4 |
|
|
|
31.1 |
|
|
|
33.2 |
|
|
|
26.7 |
|
|
|
34.1 |
|
|
|
35.1 |
|
|
|
36.9 |
|
|
|
37.1 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SGA expenses |
|
|
21.1 |
|
|
|
20.2 |
|
|
|
19.7 |
|
|
|
19.6 |
|
|
|
22.8 |
|
|
|
20.6 |
|
|
|
22.1 |
|
|
|
20.8 |
|
Amoritsation of
Intangible Assets |
|
|
8.0 |
|
|
|
8.0 |
|
|
|
7.9 |
|
|
|
8.0 |
|
|
|
8.1 |
|
|
|
8.1 |
|
|
|
8.1 |
|
|
|
8.2 |
|
Impairment of
goodwill,
intangibles and
other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
4.3 |
|
|
|
3.0 |
|
|
|
5.6 |
|
|
|
(0.8 |
) |
|
|
3.2 |
|
|
|
6.4 |
|
|
|
6.7 |
|
|
|
8.2 |
|
Other (income)
expense, net |
|
|
(1.4 |
) |
|
|
(5.1 |
) |
|
|
(1.9 |
) |
|
|
2.3 |
|
|
|
(0.8 |
) |
|
|
2.9 |
|
|
|
2.1 |
|
|
|
2.8 |
|
Interest expense |
|
|
1.6 |
|
|
|
1.8 |
|
|
|
1.9 |
|
|
|
2.7 |
|
|
|
2.8 |
|
|
|
3.5 |
|
|
|
3.4 |
|
|
|
4.1 |
|
(Benefit) provision
for income taxes |
|
|
(0.7 |
) |
|
|
0.5 |
|
|
|
0.8 |
|
|
|
0.5 |
|
|
|
0.4 |
|
|
|
0.0 |
|
|
|
0.2 |
|
|
|
0.3 |
|
Net income (loss) |
|
|
4.9 |
|
|
|
5.7 |
|
|
|
4.8 |
|
|
|
(6.3 |
) |
|
|
0.8 |
|
|
|
(0.1 |
) |
|
|
1.0 |
|
|
|
0.9 |
|
Net loss attributable
to non-controlling
interest |
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.4 |
|
|
|
0.4 |
|
|
|
0.1 |
|
Net loss attributable
to WNS (Holdings) Ltd
Shareholders |
|
$ |
5.2 |
|
|
$ |
5.8 |
|
|
$ |
4.9 |
|
|
$ |
(6.0 |
) |
|
$ |
1.0 |
|
|
$ |
0.3 |
|
|
$ |
1.4 |
|
|
$ |
1.0 |
|
The following table sets forth for the periods indicated selected consolidated financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2011 |
|
Fiscal 2010 |
|
|
Three months ended |
|
Three months ended |
|
|
March |
|
December |
|
September |
|
June |
|
March |
|
December |
|
September |
|
June |
|
|
2011 |
|
2010 |
|
2010 |
|
2010 |
|
2010 |
|
2009 |
|
2009 |
|
2009 |
|
|
(Unaudited) |
Gross profit as a
percentage of
revenue |
|
|
20.9 |
% |
|
|
20.4 |
% |
|
|
21.5 |
% |
|
|
17.8 |
% |
|
|
21.6 |
% |
|
|
24.1 |
% |
|
|
25.3 |
% |
|
|
27.9 |
% |
Operating income
(loss) as a
percentage of
revenue |
|
|
2.7 |
% |
|
|
2.0 |
% |
|
|
3.6 |
% |
|
|
(0.5) |
% |
|
|
2.1 |
% |
|
|
4.4 |
% |
|
|
4.6 |
% |
|
|
6.1 |
% |
Gross profit as a
percentage of
revenue less repair
payments |
|
|
35.4 |
% |
|
|
33.6 |
% |
|
|
35.6 |
% |
|
|
29.9 |
% |
|
|
35.2 |
% |
|
|
36.5 |
% |
|
|
37.0 |
% |
|
|
37.9 |
% |
Operating income
(loss) as a
percentage of
revenue less repair
payments |
|
|
4.6 |
% |
|
|
3.2 |
% |
|
|
6.0 |
% |
|
|
(0.9) |
% |
|
|
3.3 |
% |
|
|
6.7 |
% |
|
|
6.7 |
% |
|
|
8.4 |
% |
Page 78
The following table reconciles our revenue (a GAAP measure) to revenue less repair payments (a
non-GAAP measure):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2011 |
|
|
Fiscal 2010 |
|
|
|
Three months ended |
|
|
Three months ended |
|
|
|
March |
|
|
December |
|
|
September |
|
|
June |
|
|
March |
|
|
December |
|
|
September |
|
|
June |
|
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2009 |
|
|
2009 |
|
|
|
(Unaudited, US dollars in millions) |
|
Revenue |
|
$ |
159.5 |
|
|
$ |
152.7 |
|
|
$ |
154.2 |
|
|
$ |
150.0 |
|
|
$ |
157.6 |
|
|
$ |
145.8 |
|
|
$ |
146.0 |
|
|
$ |
133.1 |
|
Less: Payments to
repair centers |
|
|
65.2 |
|
|
|
60.0 |
|
|
|
61.1 |
|
|
|
60.7 |
|
|
|
60.9 |
|
|
|
49.5 |
|
|
|
46.3 |
|
|
|
35.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue less repair
payments |
|
$ |
94.3 |
|
|
$ |
92.7 |
|
|
$ |
93.1 |
|
|
$ |
89.3 |
|
|
$ |
96.7 |
|
|
$ |
96.3 |
|
|
$ |
99.7 |
|
|
$ |
97.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual Obligations
Our principal commitments consist of expected principal cash payments relating to our long term
debt, obligations under operating leases for office space, which represent minimum lease payments
for office space, and purchase obligations for property and equipment. The following table sets out
our total future contractual obligations as at March 31, 2011 on a consolidated basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due By Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More |
|
|
|
|
|
|
|
Less than |
|
|
|
|
|
|
|
|
|
|
than 5 |
|
|
|
Total |
|
|
1 year |
|
|
1-3 years |
|
|
3-5 years |
|
|
years |
|
|
|
(US dollars in thousands) |
|
2010 Term Loan |
|
$ |
93,095 |
|
|
$ |
50,000 |
|
|
$ |
43,095 |
|
|
$ |
|
|
|
$ |
|
|
Operating leases |
|
|
77,959 |
|
|
|
12,770 |
|
|
|
27,358 |
|
|
|
18,069 |
|
|
|
19,762 |
|
Purchase obligations |
|
|
8,238 |
|
|
|
8,134 |
|
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
179,292 |
|
|
$ |
70,904 |
|
|
$ |
70,557 |
|
|
$ |
18,069 |
|
|
$ |
19,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uncertain income tax liabilities totaling $5.5 million are excluded from the table because we
cannot make a reasonable estimate of the period of cash settlement with the relevant taxing
authority.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements or obligations.
Tax Assessment Orders
Transfer pricing regulations which we are subject to require that any international transaction
among WNS and its subsidiaries, or the WNS group enterprises, be on arms-length terms. We believe
that the international transactions among the WNS group enterprises are on arms-length terms. If,
however, the applicable tax authorities determine the transactions among the WNS group enterprises
do not meet arms length criteria, we may incur increased tax liability, including accrued interest
and penalties. This would cause our tax expense to increase, possibly materially, thereby reducing
our profitability and cash flows. The applicable tax authorities may also disallow deductions or
tax holiday benefits claimed by us and assess additional taxable income on us in connection with
their review of our tax returns.
From time to time, we receive orders of assessment from the Indian tax authorities assessing
additional taxable income on us and/or our subsidiaries in connection with their review of our tax
returns. We currently have a few orders of assessment outstanding and are vigorously disputing
those assessments. We have described below assessment orders that we believe could be material to
our company given the magnitude of the claim. In case of disputes, the Indian tax authorities may
require us to deposit with them all or a portion of the disputed amount pending resolution of the
matter on appeal. Any amount paid by us as deposits will be refunded to us with interest if we
succeed in our appeals.
Page 79
In January 2009, we received an order of assessment from the Indian tax authorities that assessed
additional taxable income for fiscal 2005 on WNS Global, our wholly-owned Indian subsidiary, that
could give rise to an estimated
728.1 million ($16.3 million based on the exchange rate on
March 31, 2011) in additional taxes, including interest of
225.9 million ($5.1 million based
on the exchange rate on March 31, 2011). The assessment order alleges that the transfer price we
applied to international transactions between WNS Global and our other wholly-owned subsidiaries
was not appropriate, disallows certain expenses claimed as tax deductible by WNS Global and
disallows a tax holiday benefit claimed by us. In March 2009, we deposited
10.0 million ($0.2
million based on the exchange rate on March 31, 2011) with the Indian tax authorities pending
resolution of the dispute. The first level Indian appellate authorities have ruled in our favor in
our dispute against an assessment order assessing additional taxable income for fiscal 2004 on WNS
Global based on similar allegations on transfer pricing and tax deductibility of similar expenses
and overturned the assessment. The Indian tax authorities contested the first level Indian
appellate authorities ruling before the second level appellate
authorities and resolution of the dispute is pending. We disputed the
order of assessment for fiscal 2005 before the first level
Indian appellate authorities. In November 2010, we received the
order from the first level Indian
appellate authorities in respect of the assessment order for fiscal 2005 deciding the issues in our
favor. However, the order may be contested before higher appellate authorities by the Indian tax
authorities.
On November 30, 2009, we received a draft order of assessment for fiscal 2006 from the Indian tax
authorities (incorporating the transfer pricing order that we had received on October 31, 2009). We
had disputed the draft order of assessment before Dispute Resolution
Panel, or DRP, a panel set up by
the Government of India as alternate first level appellate
authorities. In September 2010, we have
received the DRP order as well as the order of assessment giving
effect to the DRP order that assessed
additional taxable income on WNS Global that could give rise to an estimated
457.3 million
($10.2 million based on the exchange rate on March 31, 2011) in additional taxes, including
interest of
160.4 million ($3.6 million based on the exchange rate on March 31, 2011). The
assessment order involves issues similar to that alleged in the order for fiscal 2005. Further, in
September 2010, we have also received the DRP order as well as the orders of assessment giving
effect to DRP orders, relating to certain of our other Indian subsidiaries assessed for tax in
India, that assessed additional taxable income for fiscal 2006 that could give rise to an estimated
273.2 million ($6.1 million based on the exchange rate on March 31, 2011) in additional taxes,
including interest of
95.4 million ($2.1 million based on the exchange rate on March 31,
2011). The DRP orders as well as assessment orders alleges that the transfer price we applied to
international transactions with our related parties were not appropriate and taxed certain receipts
claimed by us as not taxable. In March 2011, we deposited
8.0 million ($0.2 million based on the
exchange rate on March 31, 2011) with the Indian tax authorities pending resolution of the dispute.
We have disputed these orders before higher appellate tax authorities.
In February 2011, we received the order of assessment for fiscal 2007 from the Indian tax
authorities (incorporating a transfer pricing order that we had received in November 2010) that
assessed additional taxable income on WNS Global that could give rise to an estimated
854.4
million ($19.1 million based on the exchange rate on March 31, 2011) in additional taxes, including
interest of
277.3 million ($6.2 million based on the exchange rate on March 31, 2011). In
March 2011, we deposited
30.0 million
($0.7 million based on the exchange rate on March 31, 2011) with the Indian tax authorities pending
resolution of the dispute. Further, in February 2011, we also received the orders of assessment,
relating to certain of our other subsidiaries assessed for tax in India, that assessed additional
taxable income for fiscal 2007 that could give rise to an estimated
462.7 million ($10.4
million based on the exchange rate on March 31, 2011) in additional taxes, including interest of
145.6 million ($3.3 million based on the exchange rate on March 31, 2011). In March 2011, we
separately deposited
40.5 million ($0.9 million based on the exchange rate on March 31, 2011) with the
Indian tax authorities pending resolution of the dispute. The orders of assessment involve issues
similar to that alleged in the orders for fiscal 2005 and 2006. We have disputed the said orders
of assessment before first level Indian appellate authorities.
Based on
certain favorable decision from appellate authorities in previous
years, certain legal opinions
from counsel and after consultation with our Indian tax advisors, we believe
that the chances of the aforementioned assessments, upon challenge, being sustained at the higher
appellate authorities are remote and we intend to vigorously dispute the assessments and orders. We
have deposited a small portion of the disputed amount with the tax authorities and may be required
to deposit remaining portion of the disputed amount with the tax authorities pending final
resolution of the respective matters.
In March 2009, we received from the Indian service tax authority an assessment order demanding
payment of
346.2 million ($7.7 million based on the exchange rate on March 31, 2011) of
service tax and related interest and penalty for the period from March 1, 2003 to January 31, 2005.
The assessment order alleges that service tax is payable in India on BPO services provided by WNS
Global to clients. After consultation with our Indian tax advisors, we believe the chances that the
assessment would be upheld against us are remote. In April 2009, we filed an appeal to the
appellate tribunal against the assessment order and the appeal is currently pending. We intend to
continue to vigorously dispute the assessment.
No assurance can be given, however, that we will prevail in our tax disputes. If we do not prevail,
payment of additional taxes, interest and penalties may adversely affect our results of operations,
financial condition and cash flows. There can also be no assurance that we will not receive similar
or additional orders of assessment in the future.
Liquidity and Capital Resources
Our capital requirements are principally for debt repayment, the establishment of operations
facilities to support our growth and for acquisitions. Our sources of liquidity include cash flow
from operations, supplemented by equity and debt financing and bank credit lines as required. In
July 2008, we obtained the 2008 Term Loan to fund, together with existing cash and cash
equivalents, the AVIVA transaction described above.
Page 80
In fiscal 2011 and 2010, our net income attributable to WNS shareholders was $9.8 million and $3.7
million, respectively. By implementing our growth strategy (see Item 4. Information on the Company
B. Business Overview Business Strategy), we intend to generate higher revenue in the future
in an effort to maintain our profitable position.
As at March 31, 2011, we had cash and cash equivalents of $27.1 million. We typically seek to
invest our available cash on hand in bank deposits and money market instruments.
As at March 31, 2011, our Indian subsidiary, WNS Global had an unsecured line of credit of
470
million ($10.5 million based on the exchange rate on March 31, 2011) from The Hongkong and Shanghai Corporation Limited and $5.0 million from
BNP Paribas, interest on which would be determined on the date of the borrowing. As at March 31,
2011,
14.2 million
($0.3 million based on the exchange rate on March 31, 2011) was utilized for obtaining bank guarantees and
11.0
million ($0.2 million based on the exchange rate on March 31, 2011) was utilized for obtaining letters of credit from the line of credit
available with The Hongkong and Shanghai Corporation Limited and $5.0 million of short term debt
was incurred for working capital requirements from the line of credit available with BNP Paribas.
In April 2008, we completed the acquisition of Chang Limited. The consideration for the acquisition
was an initial payment of $16.7 million and a contingent earn-out consideration of up to $3.2
million to be calculated based on the performance and results of operations of Chang Limited for
its fiscal year ended March 31, 2009 payable in April 2009. We paid the initial $16.7 million
payment from cash generated from operating activities and existing cash and cash equivalents. In
October 2008, the sellers and we have agreed that no earn-out consideration is payable. In
addition, the sellers refunded to us $1.1 million from the initial payment of $16.0 million as
certain agreed performance parameters as set forth under the acquisition agreement were not met.
In June 2008, we completed the acquisition of BizAps. The consideration for the acquisition is an
initial payment of $9.7 million and a contingent earn-out consideration of up to $9.0 million to be
calculated based on the performance and results of operations of BizAps for its fiscal years ending
June 30, 2009 and 2010 payable in July 2010. We paid the initial $9.7 million payment from cash
generated from operating activities and existing cash and cash equivalents. Consequent to the
satisfaction of certain performance obligations for the 12-month period ended June 30, 2009, we
have paid an earn-out consideration of $1.1 million from our existing cash and cash equivalents.
Such amount is recorded as an addition to goodwill. On June 6, 2010, we entered into an amendment
to the acquisition agreement with the sellers, pursuant to which we settled the earn-out
consideration for performance obligations for the period ended June 30, 2010 at $0.4 million
which we paid in August 2010. Such amount is recorded as an addition to goodwill.
In July 2008, we entered into the AVIVA transaction. For more information on the AVIVA transaction,
see Revenue Our Contracts above. The purchase price paid to AVIVA for the AVIVA
transaction was approximately $240.8 million. Legal and professional fees pertaining to this
transaction aggregating to approximately $8.2 million is also considered as part of the acquisition
cost. Accordingly, the total consideration for the AVIVA transaction was approximately $249.0
million. On July 10, 2008, we obtained the 2008 Term Loan to fund, together with existing cash and
cash equivalents, the AVIVA transaction. The facility agreement was amended on April 6, 2009. For
more information, see Outstanding Loans below.
As part of the AVIVA transaction in July 2008, we became a party to three agreements pursuant to
which we were granted options to purchase, in three phases, the property located at Magarpatta,
Pune, which we previously leased from the Magarpatta Town Development. We completed the purchase of
the property under the first phase in December 2008 at a total cost of approximately $3.3 million
and under the second and third phases in March 2009 at a total cost of approximately $2.1 million.
The acquisition of the property has not resulted in additional space being made available.
In
August 2009, we agreed to pay AVIVA approximately
£3.2 million ($5.8 million based on the exchange rate
on July 11, 2008) in full and final
settlement towards certain liabilities of Aviva Global that existed as of the date of its
acquisition and the net asset value settlement for Customer Operational Solutions (Chennai) Private
Limited, Noida Customer Operation Private Limited and NTrance Global Services Private Limited
arising out of the sale and purchase agreements relating to the acquisitions of these entities by
WNS Global Singapore. The payment of this liability is being made in 18 equal monthly installments
since December 2009.
Our business strategy requires us to continuously expand our delivery capabilities. We expect to
incur capital expenditure on setting up new delivery centers or expanding existing delivery centers
and setting up related technology to enable offshore execution and management of clients business
processes.
Page 81
We expect our capital expenditures needs in fiscal 2012 to be approximately $20.0 million. As at
March 31, 2011, we had commitments for capital expenditures of $8.2 million relating to the
purchase of property and equipment for our delivery centers. We believe that our anticipated cash
generated from operating activities and, cash and cash equivalents in hand will be sufficient to
meet out estimated capital expenditures for fiscal 2012. However, under the current volatile market
conditions as discussed under Global Economic Conditions above, there can be no assurance that
our business activity would be maintained at the expected level to generate the anticipated cash
flows from operations. If the current market conditions persist or further deteriorate, we may
experience a decrease in demand for our services, resulting in our cash flows from operations being
lower than anticipated. If our cash flows from operations is lower than anticipated, including as a
result of the ongoing downturn in the market conditions or otherwise, we may need to obtain
additional financing to pursue certain of our expansion plans. Further, we may in the future
consider making acquisitions which we expect to be able to finance partly or fully from cash
generated from operating activities. If we have significant growth through acquisitions or require
additional operating facilities beyond those currently planned to service new client contracts, we
may also need to obtain additional financing. If current market conditions continue to persist or
deteriorate further, we may not be able to obtain additional financing or any such additional
financing may be available to us on unfavorable terms. An inability to pursue additional
opportunities will have a material adverse effect on our ability to maintain our desired level of
revenue growth in future periods.
Outstanding Loans
In July 2008, we obtained the $200 million 2008 Term Loan facility to fund, together with existing
cash and cash equivalents, the AVIVA transaction. Interest on the term loan was payable on a
quarterly basis. Interest on the term loan was initially agreed at a rate equivalent to the
three-month US dollar LIBOR plus 3% per annum. Effective January 10, 2009, the interest rate was
increased by 0.5% per annum. In connection with the term loan, we entered into interest rate swap
with banks covering the outstanding amount under the facility to swap the variable portion of the
interest based on US dollar LIBOR to a fixed average rate. The outstanding balance of the term loan
following prepayments and scheduled repayments made on the term loan as at July 12, 2010 was $115
million.
On July 12, 2010 the balance of $115 million was prepaid with cash on hand and proceeds from the 2010 Term Loan facility for $94 million obtained pursuant to a facility agreement dated July 2, 2010
between WNS (Mauritius) Limited and The Hongkong and Shanghai Banking Corporation Limited, Hong
Kong, DBS Bank Limited, Singapore and BNP Paribas, Singapore. This new term loan has been financed
equally by all the three lenders and bears interest at a rate equivalent to the three-month US
dollar LIBOR plus a margin of 2% per annum. This term loan is repayable in semi-annual installments
of $20 million on each of January 10, 2011 and July 11, 2011 and $30 million on January 10, 2012
with the final installment of $24 million payable on July 10, 2012. On January 10, 2011, we made a
scheduled repayment installment of $20 million and the amount
outstanding under the facility as at March 31, 2011 was
$74 million. The facility is secured by, among other things, guarantees and pledges of shares
provided by us and certain of our subsidiaries, charges over certain of our bank accounts and a fixed and floating charge over the assets of
one of our UK subsidiaries, or the 2010 Term Loan Charge, which ranks
pari passu with the UK Loan Charge (as
defined below). The facility
agreement contains certain restrictive covenants on our indebtedness, total borrowings to tangible
net worth ratio, total borrowings to EBITDA ratio and a minimum interest coverage ratio, each as
defined in the facility agreement.
WNS Global Services (UK) Limited, or WNS UK, entered into a facility agreement dated June 30, 2010
with HSBC Bank plc for a secured line of credit for the £19.8 million ($31.8 million based on the
exchange rate on March 31, 2011), consisting of a £9.9 million ($15.9 million based on the exchange
rate on March 31, 2011) two year term loan facility repayable on maturity and a £9.9 million ($15.9
million based on the exchange rate on March 31, 2011) working capital facility. The term loan bears
interest at Bank of England base rate plus a margin of 1.95% per annum and the working capital
facility bears interest at Bank of England base rate plus a margin of 2.45% per annum. The facility
is secured by, among other things, guarantees and pledge of shares provided by us and certain of
our subsidiaries, a charge over one of our bank accounts and a fixed and floating charge over the assets
of one of our UK subsidiaries, or the UK Loan Charge, which ranks
pari passu with the 2010 Term Loan Charge. The facility agreement contains certain
restrictive covenants on our indebtedness, total borrowings to tangible net worth ratio, total
borrowings to EBITDA ratio, a minimum interest coverage ratio and a minimum current ratio, each as
defined in the facility agreement. As at March 31, 2011, £9.9 million ($15.9 million based on the
exchange rate on March 31, 2011) was outstanding under the term loan facility and £5.5 million
($8.9 million based on the exchange rate on March 31, 2011) was utilized from the working capital
facility.
WNS Global Services Philippines Inc. has established a $3.2 million line of credit pursuant to a
facility agreement dated September 8, 2010 with The Hongkong and Shanghai Banking Corporation Limited.
This facility consists of a three year term loan facility at the three-month US dollar LIBOR plus a
margin of 3% per annum. This facility is secured by, among other things, a guarantee provided by us
and contains certain restrictive covenants on our indebtedness, total borrowings to tangible net
worth ratio, total borrowings to EBITDA ratio, a minimum interest coverage ratio, each as defined
in the facility agreement. As at March 31, 2011, the amount outstanding against the facility was
$3.2 million.
Cash Flows from Operating Activities
Cash flows provided by operating activities were $35.8 million for fiscal 2011 as compared to $54.3
million for fiscal 2010. The decrease in cash flows provided by operating activities for fiscal
2011 as compared to the fiscal 2010 was attributable to a decrease from changes in working capital
by $16.3 million and a decrease in net income as adjusted by non-cash related items by $2.2
million. Cash flows from working capital changes decreased by $16.3 million due to changes in
accounts receivable and other current liabilities in fiscal 2011 resulting in net cash outflow
aggregating to $49.4 million as compared to net cash outflow of $7.7 million in fiscal 2010. The
aforesaid decrease in
Page 82
cash flow from working capital changes was offset by an increase in cash
inflow by $25.4 million from changes in other current assets,
accounts payable and deferred revenue in fiscal 2011 resulting in net cash inflow of $26.1 million
as compared to net cash inflow of $0.7 million in fiscal 2010. The decrease in net income as
adjusted by non-cash related items of $2.2 million was primarily on account of (i) a decrease in
share-based compensation cost by $11.1 million due to higher forfeiture of the options and RSUs in
fiscal 2011 and a higher charge in fiscal 2010 on account of a large pool of RSUs being amortized
during the year and a modification of the options and RSUs on account of the abolishment of fringe
benefit tax in August 2009, (ii) a decrease in depreciation and amortization by $2.4 million
primarily due to a decrease in amortization charge of intangible assets acquired through our
acquisition of Flovate in June 2007, (iii) a decrease in amortization of rent rationalization
expense $1.0 million, which was partially offset by (i) an increase in net income by $6.4 million,
(ii) an increase in unrealized loss on derivatives by $4.6 million, (iii) an increase in excess tax
benefit by $1.3 million, (iv) an increase in amortization of deferred financing cost by $0.8 million
and (v) an increase in deferred tax credit by $0.8 million.
Cash flows provided by operating activities were $54.3 million for fiscal 2010 as compared to $62.9
million for fiscal 2009. The decrease in cash flows provided by operating activities for fiscal
2010 as compared to the fiscal 2009 was attributable to a decrease from changes in working capital
by $11.2 million, partially offset by an increase in net income as adjusted by non-cash related
items by $2.6 million. Cash flows from working capital changes decreased by $24.9 million due to
changes in accounts receivable, accounts payable, deferred revenue and other current liabilities in
fiscal 2010 resulting in net cash outflow aggregating to $12.6 million as compared to net cash
inflow of $12.3 million in fiscal 2009. The aforesaid decrease in cash flow from working capital
changes was offset by an increase in cash inflow by $13.7 million from changes in other current
assets in fiscal 2010 resulting in net cash inflow of $5.6 million as compared to net cash outflow
of $8.1 million in fiscal 2009. The increase in net income as adjusted by non-cash related items of
$2.6 million was primarily on account of (i) an increase in depreciation and amortization by $6.9
million primarily due to intangible assets acquired through our acquisition of Aviva Global in July
2008, (ii) an increase in share-based compensation cost by $1.7 million due to a reduction in the
exercise price of the options and RSUs that is considered to be a modification of the options and
RSUs on account of the abolishment of fringe benefit tax in August 2009, (iii) an increase in
allowance for doubtful debts by $0.8 million, (iv) an increase in amortization of rent
rationalization expense $0.7 million, (v) an increase in excess tax benefit by $0.4 million, and
(vi) an increase in amortization of deferred financing cost by $0.2 million, which was partially
offset by (i) a decrease in net income by $5.2 million, (ii) an increase in deferred tax credit by
$2.6 million, and (iii) a decrease in unrealized loss on derivative instruments by $0.3 million.
Cash Flows from Investing Activities
Cash flows used in investing activities were $15.4 million in fiscal 2011 as compared with $4.5
million in fiscal 2010. The increase in cash flows used in investing activities in fiscal 2011 from
fiscal 2010 was primarily on account of (i) a net inflow from maturity of bank deposits and
marketable securities of $9.5 million in fiscal 2010 as compared to nil in fiscal 2011, (ii)
capital expenditures incurred for leasehold improvements, purchase of computers, furniture,
fixtures and other office equipment associated with expanding the capacity of our delivery centers
in fiscal 2011 aggregating $15.3 million, which was higher by $2.0 million as compared to $13.3
million in fiscal 2010, and (iii) a net inflow of $0.3 million from sale proceeds of property,
plant and equipment in fiscal 2011, which was lower by $0.4 million as compared to $0.7 million in
fiscal 2010. This increase in cash flows used in investing activities was partially offset by a
payment made of $0.5 million towards earn-out consideration in fiscal 2011 as compared to $1.5
million in fiscal 2010.
Cash flows used in investing activities were $4.5 million in fiscal 2010 as compared with $315.6
million in fiscal 2009. The decrease in cash flows used in investing activities in fiscal 2010 from
fiscal 2009 was primarily on account of a higher acquisition cost of $290.9 million paid towards
the transaction with AVIVA and the acquisitions of Chang Limited and BizAps in fiscal 2009 as
compared to the payout of $1.1 million towards earn-out consideration of BizAps in fiscal 2010. The
capital expenditure incurred for leasehold improvements, purchase of computers, furniture, fixtures
and other office equipment associated with expanding the capacity of our delivery centers in fiscal
2010 was $13.3 million which was lower by $9.4 million as compared to $22.7 million in fiscal 2009.
There was a net inflow from maturity of bank deposits and marketable securities of $9.5 million as
compared to a net outflow of $2.3 million in fiscal 2009.
Page 83
Cash Flows from Financing Activities
Cash outflows from financing activities were $29.0 million in fiscal 2011 as compared to a cash
outflow of $62.2 million in fiscal 2010. Financing activities in fiscal 2011 were primarily on
account of (i) a loan repayment of $107.8 million on the
2008 Term Loan as compared to $65.0 million in
fiscal 2010, (ii) a long term debt taken for $14.9 million by WNS Global Services (UK) Limited, for
$46.8 million by WNS (Mauritius) Limited and for $3.2 million by WNS Global Services Philippines,
Inc., (iii) a short term loan of $8.6 million taken by WNS Global Services (UK) Limited and $5.0
million taken by WNS Global as compared to a short term loan of $0.7 million taken from related
parties and a repayment of $4.8 million by Accidents Happen Assistance Limited, one of our
subsidiaries, in fiscal 2010, and (iv) a debt issuance cost of $1.1 million as compared to $0.1
million in fiscal 2010.
Cash outflows from financing activities were $62.2 million in fiscal 2010 as compared to a cash
inflow of $199.2 million in fiscal 2009. Financing activities in fiscal 2010 consisted primarily of
a prepayment of $25.0 million and scheduled repayments of $40 million on the 2008 Term Loan, the
proceeds amounting to $198.8 million of which was received in fiscal 2009.
We believe that our cash flow from operating activities will be sufficient to meet our estimated
capital expenditures, working capital and other cash needs until at least March 31, 2012, the end
of fiscal 2012.
Page 84
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Executive Officers
Our Board of Directors consists of seven directors.
The following table sets forth the name, age (as at March 31, 2011) and position of each of our
directors and executive officers as of the date hereof.
|
|
|
|
|
Name |
|
Age |
|
Designation |
Directors |
|
|
|
|
Eric B. Herr(1)(2)(3) |
|
62 |
|
Non-Executive Chairman |
Keshav R. Murugesh |
|
47 |
|
Director and Group Chief Executive Officer |
Jeremy Young |
|
45 |
|
Director |
Deepak S. Parekh(2)(4) |
|
66 |
|
Director |
Richard O. Bernays(1)(3)(5) |
|
68 |
|
Director |
Anthony A. Greener(1)(2)(3) |
|
70 |
|
Director |
Albert Aboody(6) |
|
63 |
|
Director |
Executive Officers |
|
|
|
|
Keshav R. Murugesh |
|
47 |
|
Group Chief Executive Officer |
Alok Misra |
|
44 |
|
Group Chief Financial Officer |
Johnson J. Selvadurai |
|
52 |
|
Managing Director - Europe |
Michael Garber(7) |
|
54 |
|
Global Head Sales & Marketing |
Ronald Strout(7) |
|
64 |
|
Chief of Staff & Head Americas |
Swaminathan Rajamani(7) |
|
34 |
|
Chief People Officer |
|
|
|
Notes: |
|
(1) |
|
Member of our Nominating and Corporate Governance Committee. |
|
(2) |
|
Member of our Compensation Committee. |
|
(3) |
|
Member of our Audit Committee. |
|
(4) |
|
Chairman of our Nominating and Corporate Governance Committee. |
|
(5) |
|
Chairman of our Compensation Committee. |
|
(6) |
|
Appointed as a director and Chairman of our Audit Committee in place of Sir Anthony A. Greener with effect from June 28, 2010. |
|
(7) |
|
On March 10, 2011, Michael Garber Global Head Sales & Marketing, Ronald Strout Chief of Staff & Head Americas and
Swaminathan Rajamani Chief People Officer were each designated
as an executive officer of our company as a result of an increase in
their responsibilities to include policy-making functions. |
Page 85
On June 1, 2010, Mr. Parekh entered into a consulting arrangement with another party, whereupon he
ceased to qualify as independent under Rule 10A-3 of the Securities Exchange Act of 1934, as
amended, or the Exchange Act. Accordingly, Mr. Parekh stepped down from our Audit Committee
effective June 1, 2010. Further, our Board of Directors has decided not to consider Mr. Parekh as
an independent director under the NYSE listing standards effective June 1, 2010. Accordingly, our
Board of Directors decided that from June 1, 2010 to June 28, 2010 (when Mr. Albert Aboody was
appointed as a director as described below), it was not majority independent and effective June 1,
2010 our Nominating and Corporate Governance Committee and our Compensation Committee are no longer
fully independent. Effective June 1, 2010, we elected to follow our home country (Jersey, Channel
Islands) practice, which does not impose a board or committee independence requirement.
On June 28, 2010, our Board of Directors appointed Mr. Aboody as an independent director and
Chairman of our Audit Committee. Upon the appointment of Mr. Aboody as an additional independent
director and the chairman of our Audit Committee, our Board has become majority independent and the
Audit Committee consists of four independent directors.
Summarized below is relevant biographical information covering at least the past five years for
each of our directors and executive officers.
Directors
Eric B. Herr was appointed to our Board of Directors in July 2006. On December 17, 2009 Mr. Herr
was appointed as the Non-Executive Chairman of the Board. Mr. Herr is based in the United States.
He currently serves on the board of directors of Regulatory Data Corporation (since 2009) and New
Hampshire Charitable Foundation (Since 2010). He was a director of Taleo Corporation and Starcite
Private Limited until 2010 and of Workscape from 2005 to 2008. From 1992 to 1997, Mr. Herr served
first as Chief Financial Officer and then President and Chief Operating Officer of Autodesk, Inc.
Mr. Herr received a Master of Arts degree in Economics from Indiana University and a Bachelor of
Arts degree in Economics from Kenyon College. The business address for Mr. Herr is P.O. Box 719,
Bristol, NH 03222, USA.
Keshav R. Murugesh was appointed as our Group Chief Executive Officer and director in February
2010. Mr. Murugesh is based out of Mumbai. Prior to joining WNS, Mr. Murugesh was the Chief
Executive Officer of Syntel Inc, a Nasdaq -listed information technology company. He holds a
Bachelor of Commerce degree and is a Fellow of The Institute of Chartered Accountants of India. He
was a director of Syntel Limited and Syntel Global Private Limited. He is a frequent industry
speaker and serves as the Chairman of SIFE (Students in Free Enterprise) India, which is a global
organization involved in educational outreach projects in partnership with businesses across the
globe. The business address for Mr. Murugesh is Gate 4, Godrej & Boyce Complex, Pirojshanagar,
Vikhroli West, Mumbai 400 079, India.
Jeremy Young was appointed to our Board of Directors as a nominee of Warburg Pincus, the principal
shareholder of our Company, in May 2004. He is head of Warburg Pincus German office as well as
focuses on fund raising. Whilst at Warburg Pincus he has also been head of the firms European
investment activities in healthcare and business services. He held various positions at Baxter
Healthcare International, Booz, Allen & Hamilton International and Cellular
Transplant/Cytotherapeutics before he joined Warburg Pincus in 1992. He received a Master of Arts
degree in English from Cambridge University and a Master of Business Administration from Harvard
Business School. He is currently also a director of Warburg Pincus Roaming II S.A as well as a
trustee of The Hemophilia Society. The business address for Mr. Young is Warburg Pincus
International LLC, Almack House, 28 King Street, St. James, London SW1Y 6QW, England.
Deepak S. Parekh was appointed to our Board of Directors in July 2006. Mr. Parekh is based in
Mumbai, India. He currently serves as the Chairman (since 1993) of Housing Development Finance
Corporation Limited, a housing finance company in India which he joined in 1978. Mr. Parekh is the
non-executive Chairman (since 1994) of GlaxoSmithKline Pharmaceuticals Limited. Mr. Parekh is also a
director of several Indian public companies such as Siemens Limited (since 2003), HDFC Ergo General
Insurance Co. Limited (since 2002), Exide Industries Limited (since 2001), HDFC Standard Life
Insurance Co. Limited (since 2000), HDFC Asset Management Co. Limited (since 2000), The Indian
Hotels Co. Limited (since 2000), Castrol India Limited (since 1997), Infrastructure Development
Finance Co. Limited (since 1997), Hindustan Unilever Limited (since 1997), Borax Morarji Limited
(since 1997), Bharat Bijlee Limited (since 1995), Hindustan Oil Exploration Corporation Limited
(since 1994), Zodiac Clothing Company Limited (since 1994) and Mahindra & Mahindra Limited (since
1990). He is also director on the Board of Airport Authority of India (since 2009), Lafarge India
Private Limited (since 2005), GIC Special Investments Pte. Limited (since 2011) and D P World,
Dubai (since 2011). He was a director of Singapore Telecommunications Limited from 2004 to 2010. He
was appointed special director by the Government of India of Satyam Computer Services
Limited during 2009 to resolve the crisis at Satyam. Mr. Parekh received a Bachelor of Commerce
degree from the Bombay University and holds a Chartered Accountant degree from the Institute of
Chartered Accountants in England & Wales (ICAEW). The business address for Mr. Parekh is Housing
Development Finance Corporation Limited, Ramon House, H.T. Parekh Marg, 169 Backbay Reclamation,
Churchgate, Mumbai 400 020, India.
Page 86
Richard O. Bernays was appointed to our Board of Directors in November 2006 and is based in London.
Prior to his retirement in 2001, Mr. Bernays held various senior positions at Old Mutual, plc, a
London-based international financial services company, and most recently served as Chief Executive
Officer of Old Mutual International. Prior to that, he was with Jupiter Asset Management in 1996,
Hill Samuel Asset Management from 1991 to 1996, and Mercury Asset Management from 1971 to 1992. Mr.
Bernays currently serves on the Board of Directors of several public companies, including The NMR
Pension Trustee Limited (since 2009), The American Museum in Britain (since 2008), Beltone MENA
Equity Fund Limited (since 2007), Charter Pan European Trust plc (since 2004), Impax Environmental
Markets Trust plc (since 2002), Gartmore Global Trust plc (since 2001), Taikoo Developments Limited
(since 1997), The Throgmorton Trust (since 2002), MAF Trust (since 2005) and GFM Cossack Bond
Company Limited (since 1997). He was a director of Hermes Pension Management from 2005 to 2007,
Singer and Friendlander from 2003 to 2005 and Martin Curie Income and Growth Trust from 1997 to
2008. Mr. Bernays was a member of the Supervisory Board of the National Provident Life until 2010.
He received a Masters of Arts degree from Trinity College, Oxford University. The business address
of Mr. Bernays is E72 Montevetro, 100 Battersea Church Road,
London SW11 3YL.
Sir
Anthony A. Greener was appointed to our Board of Directors in June 2007. Sir Anthony is based in
London. He was the Deputy Chairman of British Telecom from 2001 to 2006 and the Chairman of the
Qualifications and Curriculum Authority from 2002 to 2008 and Diageo plc from 1997 to 2000. Prior
to that, Sir Anthony was the Chairman and Chief Executive of Guinness plc from 1992 to 1997 and the
Chief Executive Officer of Dunhill Holdings from 1974 to 1986. Sir Anthony is presently a director
of Nautor AB (since 2009), Williams-Sonoma Inc. (since 2007), Minton Trust (since 2007)
and United Church Schools (since 2005). He was a director of Robert Mondavi from 2000 to 2005. Sir
Anthony was honored with a knighthood in 1999 for his services to the beverage industry. Sir
Anthony is a Fellow Member of the Chartered Institute of Management Accountants, and Vice-President
of the Chartered Institute of Marketing. The business address of Sir Anthony is the Minton Trust,
26 Hamilton House, Vicarage Gate, London W8 4HL.
Albert Aboody was appointed to our Board of Directors in June 2010 and also serves as the chairman
of our Audit Committee. Mr. Aboody is based in the US. Prior to
his appointment as our director, he
was a partner with KPMG, US. In this role, he served on the Board of KPMG, India, including as
Deputy Chairman and as head of its audit department. He also
co-authored chapters on the Commissions
reporting requirements in the 2001-2008 annual editions of the Corporate Controllers Manual. Mr.
Aboody is a member of the American Institute of Certified Public Accountants. He was a
post-graduate research scholar at Cambridge University and received a Bachelor of Arts degree from
Princeton University. The business address of Mr. Aboody is 424
East 57th Street # 3D, New York, NY 10022.
Our Board believes that each of our companys directors is highly skilled, experienced and
qualified to serve as a member of the Board and its committees. Each of the directors, because of
their diverse business experience and background, contribute significantly in managing the affairs
of our company. The Board of Directors has not adopted any formal policy with respect to diversity,
however, our Board of Directors believes that it is important for its members to represent diverse
viewpoints and contribute in the Boards decision making process. Our Board evaluates candidates
for election to the Board; the Board seeks candidates with certain qualities that it believes are
important, including experience, integrity, an objective perspective, business acumen and
leadership skills. The continuing service by our directors promotes stability and continuity in the
boardroom and gives us the benefit of their familiarity and insights into our business.
Executive Officers
Keshav R. Murugesh is our Group Chief Executive Officer. Please see Directors above for Mr.
Murugeshs biographical information.
Alok Misra serves as our Group Chief Financial Officer. Mr. Misra is based in Mumbai, India and
joined WNS in February 2008. Mr. Misras responsibilities as Group Chief Financial Officer include
finance and accounting, procurement, facilities, legal and regulatory compliance and risk
management. Prior to joining WNS, Mr. Misra was group chief financial officer at MphasiS Limited (a
subsidiary of Electronic Data Systems, now a division of Hewlett-Packard) and financial controller
at ITC Limited. Mr. Misra is presently director of Value and Budget Housing Corporation (India)
Private Limited (since 2009). He is a Fellow of the Institute of Chartered Accountants in India.
Mr. Misra received an honors degree in commerce from Calcutta University. The business address for
Mr. Misra is Gate 4, Godrej & Boyce Complex, Pirojshanagar, Vikhroli West, Mumbai 400 079, India.
Johnson J. Selvadurai is Managing Director of European Operations. Prior to joining WNS, he was the
Chief Executive Officer of our enterprise services business unit until September 2007. Mr.
Selvadurai is a business process outsourcing industry specialist with over 20 years of experience
in offshore outsourcing. He pioneered such services in Sri Lanka and set up and managed many
processing centers in the Philippines, India, Pakistan and the UK. Mr. Selvadurai is a certified
electronic data management and processing trainer and is a member of the data processing institute.
Prior to joining WNS in 2002, Mr. Selvadurai was Asia Managing Director (Business Process
Outsourcing services) of Hays plc, a FTSE 100 B2B services company. Mr. Selvadurai is presently a
director in Business forms (Private) Limited, Sri Lanka (since 1984)
and Data Cap (Private)
Limited, India (since 2000). The business address for Mr. Selvadurai is Malta House, 36-38
Piccadilly, London, W1J 0DP, UK.
Page 87
Michael Garber is Global Head Sales & Marketing. He has rich experience with an accomplished
career spanning 32 years in IT enabled services, marketing, consulting and
general management, of which, over a decade has been in the outsourcing space leading global teams.
Prior to joining WNS, he held senior positions in several prominent outsourcing companies such
as President of the Americas for Birlasoft, Senior Vice President Business Development at
InSource (a Virtusa subsidiary) and Insurance Practice Lead at eFunds. He has also served as Vice
President and Business Unit Head of the Insurance Practice at Cognizant Technology Solutions. After
graduation from university, he spent 20 years with MassMutual Financial Group. He has a Bachelor of Arts degree in Mathematics from the Western New England College, Springfield
and an Associate of Arts degree in Marine Biology from the Roger Williams University, Bristol. He
has also completed Professional Management Practices Designation from MassMutual Financial Group
and the Executive Management Development Program from the University of Michigan. The business address for Mr. Garber
is 420 Lexington Avenue, Suite 2515, New York, NY 10170, US.
Ronald Strout is Chief of Staff & Head Americas. He has over 30 years of experience in the
financial services industry and consulting. He is well-known in the industry for transforming
businesses in large and small corporate environments. Prior to
joining WNS, he was the Executive
Vice President with a technology start-up. He has also held other senior positions such as the
Senior Vice President at State Street Corporation and Partner / Managing Director at Bearing Point
(formerly KPMG Consulting, Inc.). His vast professional experience also spans Security First
Savings and Loans, Global Solutions and Interactive Data Corp. He has
received a Bachelor of Science degree from the University of Maine. The business address of Mr. Strout
is 131 Castle Road, Nahant, Massachusetts 01908, US.
Swaminathan Rajamani is Chief People Officer. He leads WNSs Human Resources function, and is
responsible for the entire gamut of people-oriented processes. Prior
to joining WNS, he was with
CA Technologies, where he served as Vice President Human Resources and was the Country Head HR
for India. He has also served as Head of HR Operations at Syntel and thereafter, for a short while,
was its Global HR Head. Prior to Syntel, he had a long tenure at GE spanning multiple roles such
as Master Black Belt HR and Assistant Vice President and Head Operations for HR, Customer
Research and Operational Analytics, apart from other roles in mergers and acquisitions. He is a
certified Change Acceleration Coach and a keen practitioner of Six Sigma. Swaminathan has a Masters
in Social Work (MSW) from the University of Madras. The business address of Mr. Rajamani is Gate 4,
Godrej & Boyce Complex, Pirojshanagar, Vikhroli, (West) Mumbai 400 079, India.
B. Compensation
Compensation Discussion and Analysis
Compensation Objectives
Our compensation philosophy is to align employee compensation with our business objectives, so that
compensation is a strategic tool, rather than just an expense. The key focus of our compensation
philosophy is to align the incentives of our employees with our business objectives while
minimizing the risks from external market dynamics. We also use compensation to reinforce a high
performance work ethic and to attract, motivate and engage high performing individuals and teams in
our various verticals, horizontals, and enabling units.
Compensation is determined by keeping in mind our philosophy, internal parity, external equity and
market dynamics. Our compensation structures and policies differ by country or geography. These
policies are designed to pay compensation that we would pay to our employees based out of that
location and to comply with the local employment laws.
It is critical that we attract, motivate and retain highly talented individuals, at all levels of
the organization, who are committed to our core circle of values: client first, integrity, respect,
collaboration, learning and excellence. We believe that our compensation programs are integral to
achieving the goal of One WNS One Goal Outperform!
Page 88
The following objectives guide us in establishing and maintaining all of our compensation programs:
|
|
Pay for Performance: We design compensation to pay for performance in
order to provide for better compensation against higher performance
levels; conversely, where individual performance and/or our company
performance falls short of expectations, the programs should deliver
lower compensation. In periods of temporary downturns in our
performance, our programs continue to ensure that successful,
high-performing employees remain motivated and committed. |
|
|
|
External Market Dynamics; Linked with Shareholder Value: Our
equity-based compensation is awarded to employees with higher levels
of responsibility and greater influence on long-term results, thereby
making a significant portion of their total compensation dependent on
long-term share appreciation. |
|
|
|
Pay Differentiation: Based on Individual Performance and our
Performance. As employees progress in the hierarchy of our company,
they will be able to more directly affect the company results.
Therefore, an increasing proportion of their pay is linked to company
performance and shareholder value. |
|
|
|
Competitiveness Value of the Job in the Marketplace: In order to
attract and retain a highly skilled work force, we remain competitive
with the pay of other employers who compete with us for talent in the
relevant markets. |
Assessment Processes
We have established a number of processes to assist in ensuring that our compensation programs
operate in line with their objectives. Among those are:
|
|
Assessment of Company Performance: Financial performance measures are
used to determine a significant portion of the size of payouts under
our cash incentive bonus program. The financial performance measures,
adopted on improving both top-line revenues and bottom-line earnings,
are pre-established by our Compensation Committee annually at the
beginning of the fiscal year and are applied uniformly across the
company. When the pre-determined financial measures are achieved as
set forth in our annual plan, employees who are eligible for cash
incentive bonuses receive amounts that are at target. The cash
incentive bonus for each senior management who has responsibility for
a business unit is also tied to the financial performance of the
business unit headed by such senior managers. These measures reflect
targets that are intended to be aggressive but attainable. The
remainder of an individuals payout under our cash incentive bonus
program is determined by individual performance. Our senior management
refers to our business unit and enabling unit leaders. |
|
|
|
Assessment of Individual Performance: The evaluation of an
individuals performance determines a portion of the size of payouts
under our cash incentive bonus program and also influences any changes
in base salary. At the beginning of each fiscal year, our Compensation
Committee, along with our Group Chief Executive Officer, set the
respective performance objectives for the fiscal year for the
executive officers and senior management. The performance objectives
are initially proposed by our Group Chief Executive Officer and
modified by our Compensation Committee based on the performance
assessment conducted for the preceding fiscal year and also looking at
targets for the current fiscal year. Every evaluation metric is
supplemented with key performance indicators. At the end of the fiscal
year, our Group Chief Executive Officer discusses respective
achievement of the pre-established objectives as well as the senior
managements contribution to our companys performance and other
leadership accomplishments. This evaluation is shared with our
Compensation Committee and then with our executive officers and senior
management. After the discussion, our Compensation Committee, in
discussion with our Group Chief Executive Officer, assigns a
corresponding numerical performance rating that translates into
specific payouts under our cash incentive bonus program and also
influences any changes in base salary. |
Benchmarking and Use of Compensation Consultant
Our overall compensation targets have been set in close consultation with Hewitt Associates
India Private Limited, or Hewitt. The
companies selected by Hewitt for its survey for benchmarking our executive officers compensation
also included companies in similar industries and size that were recently listed in the US at that
time. The selected peer group of companies included Syntel, LLC and Convergys Corporation from the
data processing, outsourced services and telecommunication services industries, and Cognizant
Technology Solutions Corporation, Covansys Corp. and Kanbay, Inc. from the information technology
consulting industry and other information technology firms that compete with us for talent. In addition to input
from Hewitts survey, we also take into consideration our performance and industry indicators in drawing up
our compensation strategy.
Page 89
The list of companies against which we benchmarked the compensation of our executive officers and
senior management in fiscal year 2011 included the following companies:
|
|
Cognizant Technology Solutions; |
|
|
|
EXL Service Holdings; |
|
|
|
First Source solutions Limited; |
|
|
|
Genpact Limited; |
|
|
|
Infosys Technologies Limited; |
|
|
|
Syntel Inc.; |
|
|
|
Tata Consultancy Services Limited; and |
|
|
|
Wipro Limited. |
Our Compensation Committee will review and revise as appropriate from time to time the list of
companies with publicly available compensation information against whom we will benchmark our
compensation programs, to ensure that such list includes those companies that are most comparable
to us with regard to services provided and relevant geographic areas.
Our Compensation Committee uses the data primarily to ensure that our executive compensation
programs, including those for our executive officers and our senior management are competitive.
There is enough flexibility in the existing compensation programs to respond and adjust for the
evolving business environment. Accordingly, an individuals executive compensation elements could
be changed by our committee based on changes in job responsibilities of the executive.
For fiscal 2011, our Compensation Committee concluded that there would be no increase in the base
salaries (fixed compensation in the case of India based officers) for the executive officers and
senior management. Our committee however approved the grant of shares in the form of RSUs to the
executive officers and senior management.
Although many compensation decisions are made in the first quarter of the fiscal year, our
compensation planning process neither begins nor ends with any particular compensation committee
meeting. Compensation decisions are designed to promote our fundamental business objectives and
strategy. Our Compensation Committee periodically reviews related matters such as succession
planning, evaluation of management performance and consideration of the business environment and
considers such matters in making compensation decisions.
Components of Executive Compensation for Fiscal 2011
For fiscal 2011, the compensation of our executive officers and senior management consisted of the
following five primary components:
|
|
Base salary or, in the case of executive officers based in India,
fixed compensation; |
|
|
|
Cash bonus; |
|
|
|
Equity incentives of RSUs; |
|
|
|
Benefits and perquisites; and |
|
|
|
Severance benefits. |
The mix of compensation elements is designed to reward short-term results, motivate long-term
performance and encourage our employees to remain with us for longer terms. Base salaries and cash
incentive bonuses are designed to reward annual achievements and be commensurate with the
responsibilities, demonstrated leadership abilities, management experience and expertise.
Other elements of compensation focus on motivating and challenging each executive officer to
achieve sustained and longer-term results. Individuals are assessed on the achievement of
objectives and pre-established financial performance measures, in determining a significant portion
of the cash incentive bonuses for our executive officers and senior management.
The following is a discussion of our considerations in determining each of the compensation
components for our executive officers and senior management.
Base Salary
Base salary is a fixed element of our employees annual cash compensation, the payment of which is
not tied to our performance. We provide the opportunity for each of our executive officers and
senior management to earn a competitive annual base salary. We provide this opportunity to attract
and retain an appropriate caliber of talent for the position and to provide a base wage that is not
subject to our performance risk.
Page 90
Cash Bonus
Cash performance bonuses are awarded at the end of each fiscal year based upon the achievement of
individual and company performance targets. The cash performance bonuses payable are accrued every
month. Statutorily applicable taxes and contributions payable on these amounts are deducted before
payment. Our executive officers and senior management have a diverse set of measurable goals that
are designed to promote the interests of our five key constituencies: shareholders, customers,
creditors, society and employees. Our cash bonuses are also designed to build our organizational
capabilities and achieve other strategically important initiatives.
These goals reflect their key responsibilities during the year, which range from sales targets to
operational goals, and are typically listed as each individuals key performance indicators. The
key performance indicators are identified during the individuals annual performance review
process.
The key performance indicators include (and are not limited to) the following key financial
metrics:
|
|
Adjusted net income, or net income attributable to WNS shareholders
excluding amortization of intangible assets, share-based compensation,
gain/loss attributable to redeemable noncontrolling interest; |
|
|
|
Operating margins; |
|
|
|
Support cross sell and corporate initiatives; and |
|
|
|
People attrition rate. |
The aggregate amount of all cash bonuses paid for fiscal 2011 did not exceed the aggregate cash
incentive bonus pool approved by our Compensation Committee for the fiscal year. Under the plan,
bonus target amounts, expressed as a percentage of base salary, are established for participants at
the beginning of each fiscal year, unless employment agreements contain different terms. Funding of
possible bonus payouts for the fiscal year is determined by our financial results for the fiscal
year relative to the achievement of pre-determined target for adjusted net income. This may be
increased or decreased depending upon the executives individual performance against his or her
non-financial goals.
When our performance falls short of target, our aggregate funding of the annual cash bonus
incentive pool declines, with no funding of the bonus pool if we do
not achieve the floor of our business
target. At the end of the performance period, our Compensation Committee has
discretion to adjust an award payout from the amount yielded in a
manner that enables us to reward efforts and also take care of
critical talent and potential talent from a long-term outlook.
Our Compensation Committee considered the following when establishing the awards for fiscal 2011:
Bonus Targets: Bonus targets are based on job responsibilities and comparable market data.
Consistent with our executive compensation policy, individuals with greater job responsibilities
had a greater proportion of their total cash compensation tied to our performance through the bonus
plan. Bonuses were normally paid to our employees in April/May every year. Some employees are on a
half-yearly cycle and are paid in October/November and April/May.
Equity Incentives
We provide the opportunity for our executive officers and senior management to earn long-term
equity incentive awards. Long-term incentive awards provide employees with the incentive to stay
with the company for longer periods of time, which, in turn, provides us with greater stability
during our period of growth.
We review long-term equity incentives for our executive officers and senior management and
periodically and make grants to them at one or more pre-scheduled meetings of our Compensation
Committee in March or April.
Restricted Share Units (RSUs)
Awards of RSUs offer executive officers and senior management the opportunity to receive our
ordinary shares on the date that the restriction lapses and serve both to reward and retain such
executive officers and senior management.
In determining equity compensation, our Compensation Committee first determines the maximum equity
dilution that may result from equity awards and the maximum amount of equity-based compensation
expense that may be incurred for the fiscal year. Thereafter, based upon the recommendations of our
Group Chief Executive Officer and our Chief People Officer, we determine the proportion of RSUs to
be granted for each level of our executive officers and senior management. Finally, with the
approval of our Compensation Committee, we determine the total number of RSUs to be granted to each
level of our executive officers and senior management based on the fair market value
Page 91
of the award on the grant date. The grant of these awards is based upon an individuals performance
and typically occurs after the end of the fiscal year as a part of the annual performance appraisal
process. For fiscal 2011, most of the grants were made in August 2010 in respect of services
rendered in fiscal 2010.
During fiscal 2011, we introduced a new vesting schedule which is time based and also based on
the performance of our company. Consistent with our equity grants to our executive officers and
senior management, in the preceding fiscal year, we awarded 750,281 RSUs to executive officers and
senior management. The following table sets forth the vesting schedule of these grants.
|
|
|
|
|
Total RSUs |
|
|
|
Granted |
|
|
Vesting Schedule |
|
54,181 |
|
|
20% will vest on the first anniversary of the grant
date, another 20% will vest on the second anniversary
of the grant date and the balance will vest on the third anniversary of the grant date. |
|
696,100 |
|
|
60% of these
RSUs which is
time based will vest equally (20%) each on
the first, second and third anniversary of the grant
date, respectively, and 40% which is performance based
will vest on the third anniversary of the grant date
based on the achievement of the defined performance
target in the RSU letters issued to employees.
In addition the employee shall be eligible for an additional vesting of
10% of the RSUs granted to such employee, which would vest either on the third or fourth
anniversary of the grant date based on the over-performance criteria
stated in the relevant RSU letter. |
|
|
|
|
|
750,281 |
|
|
|
|
|
|
|
Benefits and Perquisites
The perquisites and benefits granted to our executive officers and senior management are designed
to comply with the tax regulations of the applicable country and therefore vary from country to
country in which we operate. To the extent consistent with the tax regulations of the applicable
country, the benefits include:
|
|
Medical insurance; |
|
|
|
Accident and life insurance; |
|
|
|
Retirement benefits as mandated by law (such as provident fund in
India, 401(k) in the US, pension in the UK); |
|
|
|
Telephone expenses reimbursement; |
|
|
|
Company provided car; |
|
|
|
Fuel and maintenance for car; |
|
|
|
Leased residential accommodation; and |
|
|
|
Relocation benefits (as individually negotiated in their employment
agreements). |
We review and adjust our benefits based upon the competitive practices in the local industry,
inflation rates, and tax regulations every fiscal year. Our underlying philosophy is to provide the
benefits that are ordinarily required by our employees for their well-being in their daily lives
and to negotiate group-level discounted rates so that all of our employees will be able to pay less
than what they would otherwise pay as individuals for the same level of benefits, to maximize the
overall value of their compensation package.
Severance Benefits
We are obligated to pay severance or other enhanced benefits to our executive officers upon
termination of their employment under the terms of their respective employment agreements that were
negotiated. A discussion of the severance and other enhanced benefits provided to our executive
officers currently employed by us is set forth below.
We have provided change in control severance protection for our executive officers and certain
other officers. Our Compensation Committee believes that such protection is intended to preserve
employee morale and productivity and encourage retention in the face of the disruptive impact of an
actual or rumored change in control. In addition, for executive officers, the program is intended
to align executive officers and shareholders interests by enabling executive officers to consider
corporate transactions that are in the best interests of our shareholders and other constituents
without undue concern over whether the transactions may jeopardize the executive officers own
employment.
Our executive officers globally, have enhanced levels of benefits based on their job level,
seniority and probable loss of employment after a change in control. Executive officers generally
are paid severance for a longer period:
|
|
Accelerated vesting of equity awards. All granted but unvested share
options and RSUs would immediately vest and become exercisable by our
executive officers subject to certain conditions set out in the
applicable equity incentive plans. |
Page 92
|
|
Severance and notice payment. Eligible terminated executive officers
receive severance and notice payments as reflected in their individual
employment agreements. |
|
|
|
Benefit continuation. Eligible terminated executive officers receive
basic employee benefits such as health and life insurance and other
perquisites as reflected in their individual employment agreements. |
Compensation of Directors and Executive Officers
The aggregate compensation (including contingent or deferred payment) paid or proposed to be paid
to each of our directors and
executive officers for services rendered in fiscal 2011 was $2.8
million, which comprised of $1.6
million paid towards salary, $1.0 million paid towards bonus
and $0.2 million paid towards social
security, medical and other benefits. The total compensation paid to our most highly compensated
executive officer in fiscal 2011 was $1.2 million (which comprised of $0.7 million paid towards
salary, $0.5 million paid towards bonus payments and $0.03 million paid towards social security,
medical and other benefits).
The following table sets forth the total compensation paid or proposed to be paid
to each of our executive directors and
executive officers for services rendered in fiscal 2011. The individual compensation of Messrs.
Keshav R. Murugesh, Alok Misra and Swaminathan Rajamani are disclosed in the statutory / annual
accounts of our subsidiary, WNS Global, filed with the Registrar of Companies in the state of India
where its registered office is located. We are voluntarily disclosing the individual compensation
of our other executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Base Salary |
|
|
Benefits |
|
|
Bonus |
|
|
Total |
|
Keshav R. Murugesh |
|
$ |
639,033 |
|
|
$ |
32,220 |
|
|
$ |
537,003 |
|
|
$ |
1,208,256 |
|
Alok Misra |
|
$ |
319,178 |
|
|
$ |
16,110 |
|
|
$ |
176,026 |
|
|
$ |
511,314 |
|
Johnson J. Selvadurai |
|
$ |
305,671 |
|
|
$ |
89,406 |
|
|
$ |
58,689 |
|
|
$ |
453,766 |
|
Steve Reynolds(1) |
|
$ |
313,246 |
|
|
$ |
11,572 |
|
|
$ |
209,843 |
|
|
$ |
534,661 |
|
Michael Garber(2) |
|
$ |
15,556 |
|
|
$ |
1,170 |
|
|
$ |
8,438 |
|
|
$ |
25,164 |
|
Ronald Strout(2) |
|
$ |
12,500 |
|
|
$ |
956 |
|
|
$ |
3,466 |
|
|
$ |
16,922 |
|
Swaminathan Rajamani(2) |
|
$ |
7,278 |
|
|
$ |
349 |
|
|
$ |
7,940 |
|
|
$ |
15,567 |
|
|
|
|
Notes: |
|
(1) |
|
On September 13, 2010 Steve Reynolds employment agreement
was terminated and he ceased to be Managing Director North
America. |
|
(2) |
|
On March 10, 2011, Michael Garber Global Head Sales &
Marketing, Ronald Strout Chief of Staff & Head Americas and
Swaminathan Rajamani Chief People Officer were each designated
as an executive officer of our company as a result of an increase in their responsibilities to include policy-making functions. The compensation for each of these executive officers disclosed in the table pertains to the
compensation paid to them for services rendered from March 10, 2011 (when they became designated as
executive officers of our company) to March 31, 2011. |
Compensation paid to Non-executive Directors
The aggregate compensation paid to our non-executive directors in fiscal 2011 was $343,850 which
comprised sitting fees.
Grant of RSUs to Directors
Our directors and executive officers were granted 252,981 RSUs under our amended 2006 Incentive
Award Plan in fiscal 2011.
Future grants of awards will continue to be determined by our Board of Directors or our
Compensation Committee under the Amended and Restated 2006 Incentive Award Plan.
Page 93
Employment Agreement of our Executive Director
We entered into an employment agreement with Mr. Keshav R. Murugesh in February 2010 to serve as
our Group Chief Executive Officer for a five-year term, which will renew automatically for three
additional successive terms of three years each, unless either we or Mr. Murugesh elects not to
renew the term. Under the agreement, Mr. Murugesh is entitled to receive compensation, health and
other benefits and perquisites commensurate with his position. In addition, pursuant to the
agreement, Mr. Murugesh was in February 2010 granted RSUs representing the right to receive an
aggregate of 40,000 ordinary shares that vested immediately and 260,000 ordinary shares that will
vest over a three-year period, subject to his continued employment with us through the vesting
dates. If Mr. Murugeshs employment is terminated by us without cause (as defined in the employment
agreement), he would be entitled to all accrued and unpaid salary, accrued and unused vacation and
any unreimbursed expenses. Mr. Murugesh would also be entitled to vested benefits and other amounts
due to him under our employee benefit plans.
If Mr. Murugeshs employment is terminated by us without cause or by Mr. Murugesh for good reason
(each as defined in the employment agreement) and Mr. Murugesh executes a general release and
waiver of claims against us, subject to his continued compliance with certain non-competition and
confidentiality obligations, Mr. Murugesh would be entitled to receive severance payments and
benefits from us as follows:
a. |
|
In the case where the termination occurs during the first year from
the effective date of the employment agreement, he would be eligible
to receive (i) his base salary for a period of 30 months from the
effective date of termination in monthly installment in arrears; and
(ii) the bonus for the period of 30 months on the basis of his target
bonus as set in the year in which the termination occurs, such bonus
shall be paid along with the payment of accrued obligations (as
defined in the employment agreement); |
|
b. |
|
In the case where the termination occurs during second year from the
effective date of the employment agreement, he would be eligible to
receive (i) his base salary for a period of 18 months from the
effective date of termination in monthly installment in arrears; and
(ii) the bonus for the period of 18 months on the basis of target
bonus as set in the year in which the termination occurs, such bonus
would be paid along with the payment of accrued obligations (as
defined in the employment agreement); |
|
c. |
|
In the case where the termination occurs during the years after the
second year from the effective date of the employment agreement, he
would be eligible to receive (i) his base salary for a period of 12
months from the effective date of termination in monthly installment
in arrears; and (ii) his target bonus for the year in which the
termination occurs, such bonus would be paid along with the payment of
accrued obligations (as defined in the employment agreement). |
If we experience a change in control while Mr. Murugesh is employed under the employment agreement,
all of the share options and RSUs granted to Mr. Murugesh under the employment agreement will vest
and the stock options would become exercisable on a fully accelerated basis.
Options and Restricted Share Units Granted
The following table sets forth information concerning RSUs granted to our directors and executive
officers in fiscal 2011. No options were granted in fiscal 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Position |
|
Employee Name |
|
Date of Grant |
|
Total RSUs Granted in Fiscal 2011 |
|
|
Expiration Date |
Director |
|
Albert Aboody |
|
15-Jul-10 |
|
|
9,031 |
|
|
14-Jul-20 |
|
|
|
|
28-Oct-10 |
|
|
7,030 |
|
|
27-Oct-20 |
|
|
Deepak S. Parekh |
|
28-Oct-10 |
|
|
7,030 |
|
|
27-Oct-20 |
|
|
Eric B. Herr |
|
28-Oct-10 |
|
|
7,030 |
|
|
27-Oct-20 |
|
|
Keshav R. Murugesh |
|
13-Aug-10 |
|
|
87,800 |
|
|
12-Aug-20 |
|
|
Richard O. Bernays |
|
28-Oct-10 |
|
|
7,030 |
|
|
27-Oct-20 |
|
|
Anthony A. Greener |
|
28-Oct-10 |
|
|
7,030 |
|
|
27-Oct-20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
131,981 |
|
|
|
|
|
|
|
|
|
|
Executive Officer |
|
Alok Misra |
|
13-Aug-10 |
|
|
33,000 |
|
|
12-Aug-20 |
|
|
Johnson J. Selvadurai |
|
13-Aug-10 |
|
|
22,000 |
|
|
12-Aug-20 |
|
|
Steve Reynolds(1) |
|
NA |
|
NA |
|
|
NA |
|
|
Michael Garber(2) |
|
1-Nov-10 |
|
|
22,000 |
|
|
31-Oct-20 |
|
|
Ronald Strout(2) |
|
23-Aug-10 |
|
|
22,000 |
|
|
22-Aug-20 |
|
|
Swaminathan Rajamani (2) |
|
29-Nov-10 |
|
|
22,000 |
|
|
28-Nov-20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
121,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand Total |
|
|
|
|
|
|
|
|
252,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 94
|
|
|
Notes: |
|
(1) |
|
On September 13, 2010, Steve Reynolds employment agreement
was terminated and he ceased to be Managing Director
North America. |
|
(2) |
|
On March 10, 2011, Michael Garber Global Head Sales &
Marketing, Ronald Strout Chief of Staff & Head Americas
and Swaminathan Rajamani Chief People Officer were each
designated as an executive officer of our company as a result of an increase in their responsibilities to include policy-making functions. |
Employee Benefit Plans
We maintain employee benefit plans in the form of certain statutory and incentive plans covering
substantially all of our employees. For fiscal 2011, the total amount accrued by us to provide for
pension, retirement or similar benefits was $8.8 million.
Provident Fund
In accordance with Indian, the Philippines and Sri Lankan laws, all of our employees in these
countries are entitled to receive benefits under the respective government provident fund, a
defined contribution plan to which both we and the employee contribute monthly at a pre-determined
rate (for India and Sri Lanka, currently 12% of the employees base salary and for the Philippines
peso 100/-per month for every employee). These contributions are made to the respective government
provident fund and we have no further obligation under this fund apart from our monthly
contributions. We contributed an aggregate of $5.7 million in each of fiscal 2011, 2010 and 2009 to
the government provident fund.
US Savings Plan
Eligible employees in the US participate in a savings plan, or the US Savings Plan, pursuant to
Section 401(k) of the United States Internal Revenue Code of 1986, as amended, or the Code. The US
Savings Plan allows our employees to defer a portion of their annual earnings on a pre-tax basis
through voluntary contributions there under. The US Savings Plan provides that we can make optional
contributions up to the maximum allowable limit under the Code.
UK Pension Scheme
Eligible employees in the UK contribute to a defined contribution pension scheme operated in the
UK. The assets of the scheme are held separately from ours in an independently administered fund.
The pension expense represents contributions payable to the fund by us.
Gratuity
In accordance with Indian, the Philippines and Sri Lankan laws, we provide for gratuity liability
pursuant to a defined benefit retirement plan covering all our employees in India, the Philippines
and Sri Lanka. Our gratuity plan provides for a lump sum payment to eligible employees on
retirement, death, incapacitation or on termination of employment (provided such employee has
worked for at least five years with our company) which is computed on the basis of employees
salary and length of service with us (subject to a maximum of approximately $22,375 per employee in
India). In India, we provide the gratuity benefit through determined contributions pursuant to a
non-participating annuity contract administered and managed by the Life Insurance Corporation of
India, or LIC, and AVIVA Life Insurance Company Private Limited. Under this plan, the obligation to
pay gratuity remains with us although LIC and AVIVA Life Insurance Company Private Limited
administer the plan. We contributed an aggregate of $0.7 million, $0.1 million and $0.1 million in
fiscal 2011, 2010 and 2009, respectively, to LIC and AVIVA Life Insurance Company Private Limited.
Page 95
Compensated Absence
Our liability for compensated absences is determined on an accrual basis for the entire unused
vacation balance standing to the credit of each employee as at year-end and were charged to income
in the year in which they accrue.
2002 Stock Incentive Plan
We adopted the 2002 Stock Incentive Plan on July 3, 2002 to help attract and retain the best
available personnel to serve us and our subsidiaries as officers, directors and employees. We
terminated the 2002 Stock Incentive Plan upon our adoption of our 2006 Incentive Award Plan
effective upon the pricing of our initial public offering as described below. Upon termination of
the 2002 Stock Incentive Plan, the shares that would otherwise have been available for the grant
under the 2002 Stock Incentive Plan were effectively rolled over into the 2006 Incentive Award Plan
which was amended and restated in 2009 and any awards outstanding remain in full force and effect
in accordance with the terms of the 2002 Stock Incentive Plan.
Administration. The 2002 Stock Incentive Plan is administered by our Board of Directors, which may
delegate its authority to a committee (in either case, the Administrator). The Administrator has
complete authority, subject to the terms of the 2002 Stock Incentive Plan and applicable law, to
make all determinations necessary or advisable for the administration of the 2002 Stock Incentive
Plan.
Eligibility. Under the 2002 Stock Incentive Plan, the Administrator was authorized to grant stock
options to our officers, directors and employees, and those of our subsidiaries, subject to the
terms and conditions of the 2002 Stock Incentive Plan.
Stock Options. Stock options vest and become exercisable as determined by the Administrator and set
forth in individual stock option agreements, but may not, in any event, be exercised later than ten
years after their grant dates. In addition, stock options may be exercised prior to vesting in some cases. Upon exercise, an optionee must tender the full exercise price of the stock
option in cash, check or other form acceptable to the Administrator, at which time the stock
options are generally subject to applicable income, employment and other withholding taxes. Stock
options may, in the sole discretion of the Administrator as set forth in applicable award
agreements, continue to be exercisable for a period following an optionees termination of service.
Shares issued in respect of exercised stock options may be subject to additional transfer
restrictions. Any grants of stock options under the 2002 Stock Incentive Plan to US participants
were in the form of non-qualified stock options. Optionees, other than optionees who are employees
of our subsidiaries in India, are entitled to exercise their stock options for shares or ADSs in
the company.
Corporate Transactions. If we engage in a merger or similar corporate transaction, except as may
otherwise be provided in an individual award agreement, outstanding stock options will be
terminated unless they are assumed by a successor corporation. In addition, the Administrator has
broad discretion to adjust the 2002 Stock Incentive Plan and any stock options thereunder to
account for any changes in our capitalization.
Amendment. Our Board of Directors may amend or suspend the 2002 Stock Incentive Plan at any time,
provided that any such amendment or suspension must not impact any holder of outstanding stock
options without such holders consent.
Transferability of Stock Options. Each stock option may be exercised during the optionees lifetime
only by the optionee. No stock option may be sold, pledged, assigned, hypothecated, transferred or
disposed of by an optionee other than by express permission of the Administrator (only in the case
of employees of non-Indian subsidiaries), by will or by the laws of descent and distribution.
Number of Shares Authorized; Outstanding Options. As of the date of termination of the 2002 Stock
Incentive Plan on July 25, 2006, the day immediately preceding the date of pricing of our initial
public offering, an aggregate of 6,082,042 of our ordinary shares had been authorized for grant
under the 2002 Stock Incentive Plan, of which options to purchase 2,116,266 ordinary shares were
issued and exercised and options to purchase 3,875,655 ordinary shares were issued and outstanding.
Of the options to purchase 3,875,655 ordinary shares, options to purchase 3,344,056 ordinary shares
have been exercised and options to purchase 199,872 ordinary shares remain outstanding as at March
31, 2011. Options granted under the 2002 Stock Incentive Plan that are forfeited, lapsed or
canceled, settled in cash, that expire or are repurchased by us at the original purchase price
would have been available for grant under the 2002 Stock Incentive Plan and would be effectively
rolled over into our 2006 Incentive Award Plan which was amended and restated in 2009.
Amended and Restated 2006 Incentive Award Plan
We adopted our 2006 Incentive Award Plan on June 1, 2006. The purpose of the 2006 Incentive Award
Plan is to promote the success and enhance the value of our company by linking the personal
interests of the directors, employees and consultants of our company and our subsidiaries to those
of our shareholders and by providing these individuals with an incentive for outstanding
performance. The 2006 Incentive Award Plan is further intended to provide us with the ability to
motivate, attract and retain the services of these individuals.
Page 96
On February 13, 2009, we adopted the Amended and Restated 2006 Incentive Award Plan. The Amended
and Restated 2006 Incentive Award Plan reflects, among other changes to our 2006 Incentive Award
Plan, an increase in the number of ordinary shares and ADSs available for grant under the Amended
and Restated 2006 Incentive Award Plan from that available under our 2006 Incentive Award Plan by
1,000,000 shares/ADSs. Our shareholders have previously authorized the issuance under our 2006
Incentive Award Plan of up to a total of 3,000,000 ordinary shares/ADSs, subject to specified
adjustments under our 2006 Incentive Award Plan. The increased number of ordinary shares/ADSs
available for grant under the Amended and Restated 2006 Incentive Award Plan is expected to meet
our anticipated needs over the next 12 to 18 months from April 1, 2009.
Shares Available for Awards. Subject to certain adjustments set forth in the Amended and Restated
2006 Incentive Award Plan, the maximum number of shares that may be issued or awarded under the
Amended and Restated 2006 Incentive Award Plan is equal to the sum of (x) 4,000,000 shares, (y) any
shares that remain available for issuance under the 2002 Stock Incentive Plan, and (z) any shares
subject to awards under the 2002 Stock Incentive Plan which terminate, expire or lapse for any
reason or are settled in cash on or after the effective date of our 2006 Incentive Award Plan. The
maximum number of shares which may be subject to awards granted to any one participant during any
calendar year is 500,000 shares and the maximum amount that may be paid to a participant in cash
during any calendar year with respect to cash-based awards is $10,000,000. To the extent that an
award terminates or is settled in cash, any shares subject to the award will again be available for
the grant. Any shares tendered or withheld to satisfy the grant or exercise price or tax
withholding obligation with respect to any award will not be available for subsequent grant. Except
as described below with respect to independent directors, no determination has been made as to the
types or amounts of awards that will be granted to specific individuals pursuant to the Amended and
Restated 2006 Incentive Award Plan.
Administration. The Amended and Restated 2006 Incentive Award Plan is administered by our Board of
Directors, which may delegate its authority to a committee. We anticipate that the Compensation
Committee of our Board of Directors will administer the Amended and Restated 2006 Incentive Award
Plan, except that our Board of Directors will administer the plan with respect to awards granted to
our independent directors. The plan administrator will determine eligibility, the types and sizes
of awards, the price and timing of awards and the acceleration or waiver of any vesting
restriction, provided that the plan administrator will not have the authority to accelerate vesting
or waive the forfeiture of any performance-based awards.
Eligibility. Our employees, consultants and directors and those of our subsidiaries are eligible to
be granted awards, except that only employees of our company and our qualifying corporate
subsidiaries are eligible to be granted options that are intended to qualify as incentive stock
options under Section 422 of the Code.
Awards
Options: The plan administrator may grant options on shares. The per share option exercise price of
all options granted pursuant to the Amended and Restated 2006 Incentive Award Plan will not be less
than 100% of the fair market value of a share on the date of grant. No incentive stock option may
be granted to a grantee who owns more than 10% of our outstanding shares unless the exercise price
is at least 110% of the fair market value of a share on the date of grant. To the extent that the
aggregate fair market value of the shares subject to an incentive stock option become exercisable
for the first time by any optionee during any calendar year exceeds $100,000, such excess will be
treated as a non-qualified option. The plan administrator will determine the methods of payment of
the exercise price of an option, which may include cash, shares or other property acceptable to the
plan administrator (and may involve a cashless exercise of the option). The plan administrator
shall designate in the award agreement evidencing each stock option grant whether such stock option
shall be exercisable for shares or ADSs. The award agreement may, in the sole discretion of the
plan administrator, permit the optionee to elect, at the time of exercise, whether to receive
shares or ADSs in respect of the exercised stock option or a portion thereof. The term of options
granted under the Amended and Restated 2006 Incentive Award Plan may not exceed ten years from the
date of grant. However, the term of an incentive stock option granted to a person who owns more
than 10% of our outstanding shares on the date of grant may not exceed five years. Under the
Amended and Restated 2006 Incentive Award Plan, the number of awards to be granted to our
independent directors will be determined by our Board of Directors or our Compensation Committee.
Restricted Shares. The plan administrator may grant shares subject to various restrictions,
including restrictions on transferability, limitations on the right to vote and/or limitations on
the right to receive dividends.
Share Appreciation Rights. The plan administrator may grant share appreciation rights representing
the right to receive payment of an amount equal to the excess of the fair market value of a share
on the date of exercise over the fair market value of a share on the date of grant. The term of
share appreciation rights granted may not exceed ten years from the
Page 97
date of grant. The plan administrator may elect to pay share appreciation rights in cash, in shares
or in a combination of cash and shares.
Performance Shares and Performance Shares Units. The plan administrator may grant awards of
performance shares denominated in a number of shares and/or awards of performance share units
denominated in unit equivalents of shares and/or units of value, including dollar value of shares.
These awards may be linked to performance criteria measured over performance periods as determined
by the plan administrator.
Share Payments. The plan administrator may grant share payments, including payments in the form of
shares or options or other rights to purchase shares. Share payments may be based upon specific
performance criteria determined by the plan administrator on the date such share payments are made
or on any date thereafter.
Deferred Shares. The plan administrator may grant awards of deferred shares linked to performance
criteria determined by the plan administrator. Shares underlying deferred share awards will not be
issued until the deferred share awards have vested, pursuant to a vesting schedule or upon the
satisfaction of any vesting conditions or performance criteria set by the plan administrator.
Recipients of deferred share awards generally will have no rights as shareholders with respect to
such deferred shares until the shares underlying the deferred share awards have been issued.
Restricted Share Units. The plan administrator may grant RSUs, subject to various vesting
conditions. On the maturity date, we will transfer to the participant one unrestricted, fully
transferable share for each vested RSU scheduled to be paid out on such date. The plan
administrator will specify the purchase price, if any, to be paid by the participant for such
shares. Generally, a participant will have to be employed by us on the date of payment of vested
RSUs to be eligible to receive the payment of shares issuable upon vesting of the RSUs.
Performance Bonus Awards. The plan administrator may grant a cash bonus payable upon the attainment
of performance goals based on performance criteria and measured over a performance period
determined appropriate by the plan administrator. Any such cash bonus paid to a covered employee
within the meaning of Section 162(m) of the Code may be a performance-based award as described
below.
Performance-Based Awards. The plan administrator may grant awards other than options and share
appreciation rights to employees who are or may be covered employees, as defined in Section
162(m) of the Code, that are intended to be performance-based awards within the meaning of Section
162(m) of the Code in order to preserve the deductibility of these awards for federal income tax
purposes. Participants are only entitled to receive payment for performance-based awards for any
given performance period to the extent that pre-established performance goals set by the plan
administrator for the period are satisfied. The plan administrator will determine the type of
performance-based awards to be granted, the performance period and the performance goals.
Generally, a participant will have to be employed by us on the date the performance-based award is
paid to be eligible for a performance-based award for any period.
Adjustments. In the event of certain changes in our capitalization, the plan administrator has
broad discretion to adjust awards, including without limitation, (i) the aggregate number and type
of shares that may be issued under the Amended and Restated 2006 Incentive Award Plan, (ii) the
terms and conditions of any outstanding awards, and (iii) the grant or exercise price per share for
any outstanding awards under such plan to account for such changes. The plan administrator also has
the authority to cash out, terminate or provide for the assumption or substitution of outstanding
awards in the event of a corporate transaction.
Change in Control. In the event of a change in control of our company in which outstanding awards
are not assumed by the successor, such awards will generally become fully exercisable and all
forfeiture restrictions on such awards will lapse. Upon, or in anticipation of, a change in
control, the plan administrator may cause any awards outstanding to terminate at a specific time in
the future and give each participant the right to exercise such awards during such period of time
as the plan administrator, in its sole discretion, determines.
Vesting of Full Value Awards. Full value awards (generally, any award other than an option or share
appreciation right) will vest over a period of at least three years (or, in the case of vesting
based upon attainment of certain performance goals, over a period of at least one year). However,
full value awards that result in the issuance of an aggregate of up to 5% to the total issuable
shares under the Amended and Restated 2006 Incentive Award Plan may be granted without any minimum
vesting periods. In addition, full value awards may vest on an accelerated basis in the event of a
participants death, disability, or retirement, or in the event of our change in control or other
special circumstances.
Non-transferability. Awards granted under the Amended and Restated 2006 Incentive Award Plan are
generally not transferable.
Page 98
Withholding. We have the right to withhold, deduct or require a participant to remit to us an
amount sufficient to satisfy federal, state, local or foreign taxes (including the participants
employment tax obligations) required by law to be withheld with respect to any tax concerning the
participant as a result of the Amended and Restated 2006 Incentive Award Plan.
Termination or Amendment. Unless terminated earlier, the Amended and Restated 2006 Incentive Award
Plan will remain in effect for a period of ten years from the effective date of the 2006 Incentive
Award Plan, after which no award may be granted under the Amended and Restated 2006 Incentive Award
Plan. With the approval of our Board of Directors, the plan administrator may terminate or amend
the Amended and Restated 2006 Incentive Award Plan at any time. However, shareholder approval will
be required for any amendment (i) to the extent required by applicable law, regulation or stock
exchange rule, (ii) to increase the number of shares available under the Amended and Restated 2006
Incentive Award Plan, (iii) to permit the grant of options or share appreciation rights with an
exercise price below fair market value on the date of grant, (iv) to extend the exercise period for
an option or share appreciation right beyond ten years from the date of grant, or (v) that results
in a material increase in benefits or a change in eligibility requirements. Any amendment or
termination must not materially adversely affect any participant without such participants
consent.
Outstanding Awards. As at March 31, 2011, options or RSUs to purchase an aggregate of 2,438,762
ordinary shares were outstanding, out of which options or RSUs to purchase 841,999 ordinary shares
were held by all our directors and executive officers as a group. The exercise prices of these
options range from $15.32 to $35.30 and the expiration dates of these options range from July 24,
2016 to February 1, 2021. The weighted average grant date fair value of RSUs granted during fiscal
2011, 2010 and 2009 were $9.09, $10.28 and $13.39 per ADS, respectively. There were no grants of
RSUs during fiscal 2006 and 2005. There is no purchase price for the RSUs.
C. Board Practices
Composition of the Board of Directors
Our Memorandum and Articles of Association provide that our Board of Directors consists of not less
than three directors, and such maximum number as our directors may determine from time to time. Our
Board of Directors currently consists of seven directors. Messrs. Herr, Bernays, Aboody and Sir
Anthony satisfy the independence requirements of the NYSE rules.
On June 1, 2010, Mr. Parekh entered into a consulting arrangement with another party, whereupon he
ceased to qualify as independent under Rule 10A-3 of the Exchange Act. Accordingly, Mr. Parekh
stepped down from our Audit Committee effective June 1, 2010. Further, our Board of Directors has
decided not to consider Mr. Parekh as an independent director under the NYSE listing standards
effective June 1, 2010. Accordingly, our Board of Directors decided that from June 1, 2010 to June
28, 2010 (when Mr. Aboody was appointed as a director as described below), it was not majority
independent and effective June 1, 2010, our Nominating and Corporate Governance Committee and our
Compensation Committee are no longer fully independent. Effective June 1, 2010, we elected to
follow our home country (Jersey, Channel Islands) practice, which does not impose a board or
committee independence requirement.
On June 28, 2010, our Board of Directors appointed Mr. Aboody as an independent director and
Chairman of our Audit Committee. Upon the appointment of Mr. Aboody as an additional independent
director and the chairman of our Audit Committee, our Board has become majority independent and the
Audit Committee consists of four independent directors.
All directors hold office until the expiry of their term of office, their resignation or removal
from office for gross negligence or criminal conduct by a resolution of our shareholders or until
they cease to be directors by virtue of any provision of law or they are disqualified by law from
being directors or they become bankrupt or make any arrangement or composition with their creditors
generally or they become of unsound mind. The term of office of the directors is divided into three
classes:
|
|
Class I, whose term will expire at the annual general meeting to be held in fiscal 2014; |
|
|
|
Class II, whose term will expire at the annual general meeting to be held in fiscal 2012;
and |
|
|
|
Class III, whose term will expire at the annual general meeting to be held in fiscal 2013. |
Our directors for fiscal 2011 are classified as follows:
|
|
Class I: Sir Anthony A. Greener and Mr. Richard O. Bernays; |
|
|
|
Class II : Mr. Keshav R. Murugesh and
Mr. Albert Aboody; and |
|
|
|
Class III: Mr. Jeremy Young, Mr. Eric B. Herr and Mr. Deepak S. Parekh. |
The appointments of Messrs. Murugesh and Aboody will expire at the next annual general meeting,
which we expect to hold in July 2011. We intend to seek shareholders approval for the re-election
of Messrs. Murugesh and Aboody at the next annual general meeting.
Page 99
At each annual general meeting after the initial classification or special meeting in lieu thereof,
the successors to directors whose terms will then expire serve from the time of election until the
third annual meeting following election or special meeting held in lieu thereof. Any additional
directorships resulting from an increase in the number of directors will be distributed among the
three classes so that, as nearly as possible, each class will consist of one-third of the
directors. This classification of the Board of Directors may have the effect of delaying or
preventing changes in control of management of our company.
Jeremy has been appointed as a director as a nominee of Warburg Pincus, the principal shareholder
of our company. There are no family relationships among any of our directors or executive officers.
The employment agreement governing the services of one of our directors provide for benefits upon
termination of employment as described above.
Our Board
of Directors held ten meetings in fiscal 2011.
Board Leadership Structure and Board Oversight of Risk
Different individuals currently serve in the roles of Chairman of the Board and Group Chief
Executive Officer of our company. Our Board believes that splitting the roles of Chairman of the
Board and Group Chief Executive Officer is currently the most appropriate leadership structure for
our company. This leadership structure will bring in greater efficiency as a result of vesting two
important leadership roles in separate individuals and increased independence for the Board of
Directors.
Boards Role in Risk Oversight
Our Board of Directors is primarily responsible for overseeing our risk management processes. The
Board of Directors receives and reviews periodic reports from the Head of Risk Management and Audit
as considered appropriate regarding our companys assessment of risks. The Board of Directors
focuses on the most significant risks facing our company and our companys general risk management
strategy, and also ensures that risks undertaken by our company are consistent with the Boards
appetite for risk. While the Board oversees our companys risk management, management is
responsible for day-to-day risk management processes. We believe this division of responsibilities
is the most effective approach for addressing the risks facing our company and that our Board
leadership structure supports this approach.
The Boards Audit Committee has special responsibilities with respect to financial risks, and
regularly reports to the full Board of Directors on these issues. Among other responsibilities, the
Audit Committee reviews the companys policies with respect to contingent liabilities and risks
that may be material to our company, our companys policies and procedures designed to promote
compliance with laws, regulations, and internal policies and procedures, and major legislative and
regulatory developments which could materially impact our company.
The Compensation Committee also plays a role in risk oversight as it relates to our companys
compensation policies and practices. Among other responsibilities, the Compensation Committee
designs and evaluates our companys executive compensation policies and practices so that our
companys compensation programs promote accountability among employees and the interests of
employees are properly aligned with the interests of our shareholders.
Committees of the Board
Our Board of Directors has three standing committees: an Audit Committee, a Compensation Committee
and a Nominating and Corporate Governance Committee.
Audit Committee
The Audit Committee comprises four directors: Messrs. Albert Aboody (Chairman), Eric B. Herr,
Richard O. Bernays and Sir Anthony A. Greener. Each of Messrs. Aboody, Herr, Bernays and Sir
Anthony A. Greener satisfies the independence requirements of Rule 10A-3 of the Exchange Act and
the NYSE listing standards. Effective June 1, 2010, Mr. Parekh entered into a consulting
arrangement with another party, whereupon he ceased to qualify as independent under Rule 10A-3 of
the Exchange Act. Accordingly, Mr. Parekh stepped down from our Audit Committee effective June 1,
2010. Effective June 28, 2010, Mr. Albert Aboody took over as the Chairman of the committee in
place of Sir Anthony A. Greener who then continued to be on the committee as a member. The
principal duties and responsibilities of our Audit Committee are as follows:
|
|
to serve as an independent and objective party to monitor our financial reporting process and internal control systems; |
|
|
|
to review and appraise the audit efforts of our independent accountants and exercise ultimate authority over the
relationship between us and our independent accountants; and |
|
|
|
to provide an open avenue of communication among the independent accountants, financial and senior management and the
Board of Directors. |
Page 100
The Audit Committee has the power to investigate any matter brought to its attention within the
scope of its duties. It also has the authority to retain counsel and advisors to fulfill its
responsibilities and duties. Messrs. Aboody and Herr serve
as our Audit Committee financial experts, within the
requirements of the rules promulgated by the Commission relating to listed-company audit
committees.
We have posted our Audit Committee charter on our website at www.wns.com. Information
contained in our website does not constitute a part of this annual report.
The Audit Committee held eight meetings in fiscal 2011.
Compensation Committee
The Compensation Committee comprises four directors: Messrs. Richard O. Bernays (Chairman), Eric B.
Herr, Deepak S. Parekh and Sir Anthony A. Greener. Each of Messrs. Bernays, Herr and Sir Anthony
satisfies the independence requirements of the NYSE listing standards. Effective June 1, 2010,
Mr. Parekh entered into a consulting arrangement with another party. Our Board of Directors decided
not to consider Mr. Parekh as an independent director under the NYSE listing standards from the
effectiveness of such arrangement. Accordingly, our Board of Directors has determined that
effective June 1, 2010, our Compensation Committee is no longer fully independent, whereupon we
decided to follow our home country (Jersey, Channel Islands) practice, which does not impose a
committee independent requirement. The scope of this committees duties includes determining the
compensation of our executive officers and other key management personnel. The Compensation
Committee also administers the 2002 Stock Incentive Plan and the Amended and Restated 2006
Incentive Award Plan, reviews performance appraisal criteria and sets standards for and decides on
all employee shares options allocations when delegated to do so by our Board of Directors.
We have posted our Compensation Committee charter on our website at www.wns.com.
Information contained in our website does not constitute a part of this annual report.
The Compensation Committee held six meetings in fiscal 2011.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee comprises four directors: Messrs. Deepak S.
Parekh (Chairman), Eric B. Herr, Richard O. Bernays and Sir Anthony A. Greener. Each of Messrs.
Herr and Bernays and Sir Anthony satisfies the independence requirements of the NYSE listing
standards. Effective June 1, 2010 Mr. Parekh entered into a consulting arrangement with another
party. Our Board of Directors decided not to consider Mr. Parekh as an independent director under
the NYSE listing standards from date of the effectiveness of such arrangement. Accordingly, our
Board of Directors has determined that effective June 1, 2010, our Nominating and Corporate
Governance Committee is no longer full independent, whereupon we decided to elect to follow our
home country (Jersey, Channel Islands) practice, which does not impose a committee independence
requirement. The principal duties and responsibilities of the nominating and governance committee
are as follows:
|
|
to assist the Board of Directors by identifying individuals
qualified to become board members and members of board committees,
to recommend to the Board of Directors nominees for the next annual
meeting of shareholders, and to recommend to the Board of Directors
nominees for each committee of the Board of Directors; |
|
|
|
to monitor our corporate governance structure; and |
|
|
|
to periodically review and recommend to the Board of Directors any
proposed changes to the corporate governance guidelines applicable
to us. |
We have posted our Nominating and Corporate Governance Committee charter on our website at
www.wns.com. Information contained in our website does not constitute a part of this annual
report.
The Nominating and Corporate Governance Committee uses its judgment to identify well qualified
individuals who are willing and able to serve on our Board of Directors. Pursuant to its charter,
the Nominating and Corporate Governance Committee may consider a variety of criteria in
recommending candidates for election to our board, including an individuals personal and
professional integrity, ethics and values; experience in corporate management, such as serving as
an officer or former officer of a publicly held company, and a general understanding of marketing,
finance and other elements relevant to the success of a publicly-traded company in todays business
environment; experience in our companys industry and with relevant social policy concerns;
experience as a board member of another publicly held company; academic expertise in an area of our
companys operations; and practical and mature business judgment, including ability to make
independent analytical inquiries.
While the Nominating and Corporate Governance Committee does not have a formal policy with respect
to the consideration of diversity in identifying director nominees, it nevertheless considers
director nominees with a diverse range of backgrounds, skills, national origins, values,
experiences, and occupations.
The Nominating and Corporate Governance Committee held five meetings in fiscal 2011.
Page 101
Executive Sessions
Our non-executive directors meet regularly in executive session without executive directors or
management present. The purpose of these executive sessions is to promote open and candid
discussion among the non-executive directors. Mr. Eric B. Herr has presided over all executive
sessions. Our non-executive directors held four executive sessions in fiscal 2011.
Shareholders and other interested parties may communicate directly with the presiding director or
with our non-executive directors as a group by writing to the following address: WNS (Holdings)
Limited, Attention: Non-Executive Directors, Gate 4, Godrej & Boyce Complex, Pirojshanagar,
Vikhroli (W), Mumbai 400 079, India.
D. Employees
For a description of our employees, see Item 4. Information on the Company Business Overview
Human Capital.
E. Share Ownership
The following table sets forth information with respect to the beneficial ownership of our ordinary
shares as at March 31, 2011 by each of our directors and all our directors and executive officers
as a group. As used in this table, beneficial ownership means the sole or shared power to vote or
direct the voting or to dispose of or direct the sale of any security. A person is deemed to be the
beneficial owner of securities that can be acquired within 60 days upon the exercise of any option,
warrant or right. Ordinary shares subject to options, warrants or rights that are currently
exercisable or exercisable within 60 days are deemed outstanding for computing the ownership
percentage of the person holding the options, warrants or rights, but are not deemed outstanding
for computing the ownership percentage of any other person. The amounts and percentages as at March
31, 2011 are based on an aggregate of 44,443,726 ordinary shares outstanding as of that date.
|
|
|
|
|
|
|
|
|
|
|
Number of Ordinary Shares |
|
|
Beneficially Owned |
Name |
|
Number |
|
Percent |
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keshav R. Murugesh(4) |
|
|
71,856 |
|
|
|
0.16 |
% |
Jeremy
Young(1)(3) |
|
|
21,366,644 |
|
|
|
48.08 |
% |
Eric B. Herr |
|
|
32,812 |
|
|
|
0.07 |
% |
Deepak S. Parekh |
|
|
25,812 |
|
|
|
0.06 |
% |
Richard O. Bernays |
|
|
25,812 |
|
|
|
0.06 |
% |
Anthony A. Greener |
|
|
24,049 |
|
|
|
0.05 |
% |
Albert Aboody |
|
|
|
|
|
|
|
|
Executive Officers |
|
|
|
|
|
|
|
|
Alok Misra |
|
|
82,552 |
|
|
|
0.19 |
% |
Johnson J. Selvadurai(2) |
|
|
318,004 |
|
|
|
0.72 |
% |
Michael Garber |
|
|
|
|
|
|
|
|
Ronald Strout |
|
|
|
|
|
|
|
|
Swaminathan Rajamani |
|
|
|
|
|
|
|
|
All our directors and executive officers as a group (twelve persons)(3) |
|
|
21,947,541 |
|
|
|
49.38 |
% |
|
|
|
Notes: |
|
(1) |
|
Jeremy Young is a director of our company and a Managing Director
and member of Warburg Pincus LLC. All shares indicated as owned
by Mr. Young was a result of his affiliation with the Warburg
Pincus entities. Mr. Young disclaims beneficial ownership of all
shares held by the Warburg Pincus entities. |
|
(2) |
|
Of the 318,004 shares beneficially owned by Johnson J.
Selvadurai, 251,666 shares are indirectly held via a trust which
is controlled by Mr. Selvadurai. |
|
(3) |
|
Includes the shares beneficially owned by Jeremy Young, nominee
director of Warburg Pincus, because of his affiliation with the
Warburg Pincus entities. Mr. Young disclaims beneficial ownership
of all shares held by the Warburg Pincus entities. |
|
(4) |
|
Of the 71,856 shares beneficially owned by Keshav R. Murugesh
19,856 shares are held jointly with his wife Shamini K. Murugesh
in the form of ADRs. |
Page 102
The following table sets forth information concerning options and RSUs held by our directors and
executive officers as at March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Summary |
|
RSU Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
|
|
|
|
|
|
shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
shares |
|
|
|
|
|
|
|
|
|
|
|
|
underlying |
|
|
|
|
|
|
|
|
|
|
|
|
|
underlying |
|
|
|
|
|
|
|
|
|
|
|
|
unexercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs |
|
|
|
|
Number of |
|
|
|
|
|
options |
|
|
|
|
|
|
|
|
|
Number of |
|
that will |
|
|
|
|
shares |
|
|
|
|
|
that will |
|
Number of |
|
|
|
|
|
shares |
|
vest in |
|
Number of |
|
|
underlying |
|
|
|
|
|
vest in |
|
shares |
|
|
|
|
|
underlying |
|
next 60 |
|
shares |
|
|
unexercised |
|
|
|
|
|
next 60 |
|
underlying |
|
|
|
|
|
RSUs held |
|
days |
|
underlying |
|
|
but |
|
|
|
|
|
days from |
|
options |
|
|
|
|
|
that have |
|
from |
|
RSUs held |
|
|
vested |
|
Exercise |
|
March 31, |
|
that have |
|
Exercise |
|
vested but |
|
March 31, |
|
that have |
Name |
|
options |
|
price |
|
2011 |
|
not vested |
|
price |
|
unexercised |
|
2011 |
|
not vested |
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keshav R. Murugesh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,000 |
|
|
|
|
|
|
|
295,800 |
|
Jeremy Young |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric B. Herr |
|
|
14,000 |
|
|
$ |
20.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,186 |
|
|
|
41,347 |
|
|
|
|
2,000 |
|
|
$ |
22.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepak S. Parekh |
|
|
14,000 |
|
|
$ |
20.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,186 |
|
|
|
13,347 |
|
|
|
|
2,000 |
|
|
$ |
22.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard O. Bernays |
|
|
14,000 |
|
|
$ |
28.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,186 |
|
|
|
13,347 |
|
|
|
|
2,000 |
|
|
$ |
22.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony A. Greener |
|
|
14,000 |
|
|
$ |
28.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,186 |
|
|
|
14,277 |
|
|
|
|
2,000 |
|
|
$ |
22.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert Aboody |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,061 |
|
Executive Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alok Misra |
|
|
13,260 |
|
|
$ |
15.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,861 |
|
|
|
19,431 |
|
|
|
67,621 |
|
Johnson J.
Selvadurai |
|
|
20,000 |
|
|
$ |
20.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,532 |
|
|
|
16,579 |
|
|
|
41,440 |
|
|
|
|
5,000 |
|
|
$ |
30.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,227 |
|
|
$ |
27.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald Strout |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
Michael Garber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
Swaminathan Rajamani |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
Page 103
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information regarding beneficial ownership of our ordinary shares as
at March 31, 2011 held by each person who is known to us to have 5.0% or more beneficial share
ownership based on an aggregate of 44,443,726 ordinary shares outstanding as of that date.
Beneficial ownership is determined in accordance with the rules of the Commission and includes
shares over which the indicated beneficial owner exercises voting and/or investment power or
receives the economic benefit of ownership of such securities. Ordinary shares subject to options
currently exercisable or exercisable within 60 days are deemed outstanding for the purposes of
computing the percentage ownership of the person holding the options but are not deemed outstanding
for the purposes of computing the percentage ownership of any other person.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
Percentage |
Name of Beneficial Owner |
|
Beneficially Owned |
|
Beneficially Owned(1) |
Warburg Pincus(2) |
|
|
21,366,644 |
|
|
|
48.08 |
% |
FMR LLC(3) |
|
|
6,354,465 |
|
|
|
14.30 |
% |
Columbia Wanger Asset Management, L.P. (4) |
|
|
5,979,000 |
|
|
|
13.45 |
% |
Nalanda India Fund Limited(5) |
|
|
5,211,410 |
|
|
|
11.73 |
% |
|
|
|
Notes: |
|
(1) |
|
Based on an aggregate of 44,443,726 ordinary shares outstanding as at March 31, 2011. |
|
(2) |
|
Information is based on a report on Schedule 13G jointly filed with the Commission on August 22, 2006 by Warburg Pincus
Private Equity VIII, L.P., or WP VIII, Warburg Pincus International Partners, L.P., or WPIP, Warburg Pincus Netherlands
International Partners I, CV, or WP Netherlands, Warburg, Pincus Partners, LLC, or WPP LLC, Warburg, Pincus & Co., or
Warburg Pincus, and Warburg Pincus LLC, or WP LLC. The sole general partner of each of WP VIII, WPIP and WP Netherlands is
WPP LLC. WPP LLC is managed by Warburg Pincus. WP LLC manages each of WP VIII, WPIP and WP Netherlands. Charles R. Kaye and
Joseph P. Landy are each Managing General Partners of Warburg Pincus and Co-President and Managing Members of WP LLC. Each
of Warburg Pincus, WPP LLC, WP LLC, Mr. Kaye and Mr. Landy disclaims beneficial ownership of the ordinary shares except to
the extent of any indirect pecuniary interest therein. |
|
(3) |
|
Information is based on a report on Amendment No. 5 to Schedule 13G jointly filed with the Commission on February 14, 2011
by FMR LLC, Edward C. Johnson 3d, Fidelity Management & Research Company and Fidelity Mid Cap Stock Fund. Edward C. Johnson
3d is the Chairman of FMR LLC. Fidelity Management & Research Company, a wholly owned subsidiary of FMR LLC, is the
investment adviser to Fidelity Mid Cap Stock Fund. |
|
(4) |
|
Information is based on a report on Amendment No. 3 to Schedule 13G jointly filed with the Commission on February 11, 2011
by Columbia Wanger Asset Management, L.P. and Columbia Acorn Trust. |
|
(5) |
|
Information is based on a report on Schedule 13G filed with the Commission on February 2, 2011 by Nalanda India Fund Limited. |
The following summarizes the significant changes in the percentage ownership held by our major
shareholders during the past three years:
|
|
FMR LLC reported its percentage ownership of our ordinary shares to be
10.264% in a report on Schedule 13G jointly filed with the Commission
on June 19, 2007, 14.999% in a report on Amendment No. 1 to Schedule
13G jointly filed with the Commission on February 14, 2008, 9.49% in a
report on Amendment No. 3 to Schedule 13G jointly filed with the
Commission on February 17, 2009, 12.641% in a report on Amendment No.
4 to Schedule 13G jointly filed with the Commission on February 16,
2010 and 15.00% (based on the then number of our ordinary shares
reported as outstanding at that time) in a report on Amendment No. 5
to Schedule 13G jointly filed with the Commission on February 14, 2011
. |
|
|
|
Columbia Wanger Asset Management, L.P. reported its percentage
ownership of our ordinary shares to be Columbia 8.16% in a report on
Schedule 13G filed with the Commission on February 5, 2009, 10.05% in
a report on Amendment No. 1 to Schedule 13G filed with the Commission
on March 9, 2009, 12.2% in a report on Amendment No. 2 to Schedule
13G filed with the Commission on February 10, 2010 and 13.4% (based on
the then number of our ordinary shares reported as outstanding at that
time) in a report on Amendment No. 3 to Schedule 13G filed with the
Commission on February 11, 2011. |
|
|
|
Nalanda India Fund Limited reported its percentage ownership of our
ordinary shares to be 5.25% in a report on Schedule 13G filed with the
Commission on March 20, 2008, 9.86% in a report on Amendment No. 1 to
Schedule 13G filed with the Commission on February 9, 2009, 12.3% in
reports on Schedule 13G filed with the Commission on February 10, 2009
and January 13, 2010 and 11.76% (based on the then number of our
ordinary shares reported as outstanding at that time) in reports on
Schedule 13G filed with the Commission on February 2, 2011. |
Page 104
|
|
Tiger Global Management, LLC reported that it owned 6.6% of our
ordinary shares in a report on Amendment No. 1 to Schedule 13G filed
with the Commission on February 12, 2009 and thereafter divested its
entire interest in a report on Amendment No. 2 to Schedule 13G filed
with the Commission on February 12, 2010. |
|
|
|
Lone Spruce, L.P., Lone Balsam, Lone Sequoia, Lone Pine Associates
LLC, Lone Pine Capital LLC (which we refer to collectively herein as
Lone Capital) and Stephen F. Mandel reported Lone Pine Associatess
ownership of 1.0%, Lone Pine Capitals ownership of 4.4% and Mr.
Mandels ownership of 5.4% of our ordinary shares in a report on
Schedule 13G jointly filed with the Commission on August 17, 2007 by
Lone Capital and Mr. Mandel. Lone Capital and Mr. Mandel thereafter in
a report on Amendment No. 1 to Schedule 13G jointly filed with the
Commission on February 14, 2008 reported that they ceased to own more
than 5% of our ordinary shares. Lone Pine Associates, the general
partner of Lone Spruce, Lone Sequoia and Lone Balsam, has the power to
direct the affairs of Lone Spruce, Lone Sequoia and Lone Balsam. Mr.
Mandel is the Managing Member of each of Lone Pine Associates and Lone
Pine Capital and in such capacity directs their operations. |
None of our major shareholders have different voting rights from our other shareholders.
As at March 31, 2011, 21,402,048 of our ordinary shares, representing 48.15% of our outstanding
ordinary shares, were held by a total of 24 holders of record with addresses in the US. As at the
same date, 22,454,319 of our ADSs (representing 22,454,319 ordinary shares), representing
50.52% of our outstanding ordinary shares, were held by one registered holder of record with
addresses in and outside of the US. Since certain of these ordinary shares and ADSs were held by
brokers or other nominees, the number of record holders in the US may not be representative of the
number of beneficial holders or where the beneficial holders are resident. All holders of our
ordinary shares are entitled to the same voting rights.
Related Party Transactions
(Amounts in thousands, unless otherwise indicated)
Since fiscal 2003, we have entered into agreements with certain investee companies of another of
our principal shareholders, Warburg Pincus, to provide business process outsourcing services. These
investee companies are companies in which Warburg Pincus has 10% or more beneficial share
ownership. In fiscal 2011, 2010 and 2009, these investee companies in the aggregate accounted for
$3.8 million, $2.6 million and $3.2 million, respectively, representing 0.6%, 0.5% and 0.6% of our
revenue, respectively, and 1.0%, 0.7% and 0.8% of our revenue less repair payments, respectively.
We have also entered into agreements with certain other investee companies of Warburg Pincus under
which we receive certain enterprise resource planning services from them. In fiscal 2011, 2010 and
2009, these investee companies in the aggregate accounted for $20, $nil and $109 in expenses,
respectively. We also purchase equipment from certain investee companies of Warburg Pincus. In
fiscal 2011, 2010 and 2009, we paid these investee companies in the aggregate $nil, $nil and $2,
respectively, for these equipment.
On January 1, 2005, we entered into an agreement with Datacap Software Private Limited, or Datacap,
pursuant to which Datacap granted us the license to use its
proprietary IT-enabled services software program.
Johnson J. Selvadurai, our Managing Director of European Operations, is a principal shareholder of
Datacap. In fiscal 2011, 2010 and 2009, we paid $1, $5 and $30, respectively, for the license under
the agreement. In fiscal 2011, 2010 and 2009, we paid Datacap $nil, $2 and $5 respectively, for
purchase of computers and software.
Page 105
On September 18, 2007, we entered into an agreement with Mahindra & Mahindra Limited for the hire
of transport services. Our director, Mr. Deepak S. Parekh, is an executive director of Mahindra &
Mahindra Limited. In fiscal 2009, we paid $4 for such transport services. No such services were
availed and accordingly, no payments were made in fiscal 2011 and 2010.
In March 2008, we entered into an agreement with Singapore Telecommunications Limited for the
provision of lease line services. Our director, Mr. Deepak S. Parekh, was an executive director of
Singapore Telecommunications Limited till July 2010. In fiscal 2011, 2010 and 2009 we paid $161,
$319 and $274 respectively, for such services.
In fiscal 2009, we obtained a short-term loan of
440 million ($10.04 million based on the spot
rate of
43.84 per $1.00 on the date of the loan) from HDFC Limited for working capital purposes.
Our director, Mr. Deepak S. Parekh, is the Chairman of HDFC Limited. Interest was payable at the
rate of 15.5% per annum. In fiscal 2009, an interest amount of $269 was paid to HDFC Limited. The
loan was repaid in September and November 2008.
In fiscal 2010, we paid $4 to The Indian Hotels Company Limited towards hiring of accommodation and
related services. Our director, Mr. Deepak S. Parekh, is a director of The Indian Hotels Company
Limited.
In the fiscal 2011, we paid $55 to SIFE India, a non-profit company where Mr. Keshav R. Murugesh,
our director holds directorship.
C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Please see Item 18. Financial Statements for a list of the financial statements filed as part of
this annual report.
Legal Proceedings
From time to time, we receive orders of assessment from the Indian tax authorities assessing
additional taxable income on us and/or our subsidiaries in connection with their review of our tax
returns. We currently have a few orders of assessment outstanding and are vigorously disputing
those assessments. We have described below assessment orders that we believe could be material to
our company given the magnitude of the claim. In case of disputes, the Indian tax authorities may
require us to deposit with them all or a portion of the disputed amount pending resolution of the
matter on appeal. Any amount paid by us as deposits will be refunded to us with interest if we
succeed in our appeals.
In January 2009, we received an order of assessment from the Indian tax authorities that assessed
additional taxable income for fiscal 2005 on WNS Global, our wholly-owned Indian subsidiary, that
could give rise to an estimated
728.1 million ($16.3 million based on the exchange rate on March
31, 2011) in additional taxes, including interest of
225.9 million ($5.1 million based on the
exchange rate on March 31, 2011). The assessment order alleges that the transfer price we applied
to international transactions between WNS Global and our other wholly-owned subsidiaries was not
appropriate, disallows certain expenses claimed as tax deductible by WNS Global and disallows a tax
holiday benefit claimed by us. In March 2009, we deposited
10.0 million ($0.2 million based on the
exchange rate on March 31, 2011) with the Indian tax authorities pending resolution of the dispute.
The first level Indian appellate authorities have ruled in our favor in our dispute against an
assessment order assessing additional taxable income for fiscal 2004 on WNS Global based on similar
allegations on transfer pricing and tax deductibility of similar expenses and overturned the
assessment. The Indian tax authorities contested the first level
Indian appellate authorities
ruling before the second level appellate authorities and resolution of the dispute is pending. We
disputed the order of assessment for fiscal 2005 before the first level
Indian appellate authorities.
In November 2010, we received the order from the first level Indian
appellate authorities in respect of
the assessment order for fiscal 2005 deciding the issues in our favor. However, the order may be
contested before higher appellate authorities by the Indian tax authorities.
On November 30, 2009, we received a draft order of assessment for fiscal 2006 from the Indian tax
authorities (incorporating the transfer pricing order that we had received on October 31, 2009). We
had disputed the draft order of assessment before the Dispute Resolution Panel, or DRP, a panel set
up by the Government of India as alternate first level
appellate authorities. In September
2010, we received the DRP order as well as the order of assessment giving effect to the DRP order that
assessed additional taxable income on WNS Global that could give rise to an estimated
457.3
million ($10.2 million based on the exchange rate on March 31, 2011) in additional taxes, including
interest of
160.4 million ($3.6 million based on the exchange rate on March 31, 2011). The
assessment order involves issues similar to that alleged in the order for fiscal 2005. Further, in
September 2010, we also received the DRP orders as well as the orders of assessment giving effect
to DRP orders, relating to certain of our other Indian subsidiaries assessed for tax in India, that
assessed additional taxable income for fiscal 2006 that could give rise to an estimated
273.2
million ($6.1 million based on the exchange rate on March 31, 2011) in additional taxes, including
interest of
95.4 million ($2.1 million based on the exchange rate on March 31, 2011). The DRP
orders as well as assessment orders alleges that the transfer price we applied to international
transactions with our related parties were not appropriate and taxed certain receipts claimed by us
as not taxable. In March 2011, we deposited
8.0 million ($0.2 million based on the exchange rate
on March 31, 2011) with the Indian tax authorities pending resolution of the dispute. We have
disputed these orders before higher appellate authorities.
Page 106
In February 2011, we received the order of assessment for fiscal 2007 from the Indian tax
authorities (incorporating a transfer pricing order that we had received in November 2010) that
assessed additional taxable income on WNS Global that could give rise to an estimated
854.4
million ($19.1 million based on the exchange rate on March 31, 2011) in additional taxes, including
interest of
277.3 million ($6.2 million based on the exchange rate on March 31, 2011). In March
2011, we deposited
30.0 million ($0.7 million based on the exchange rate on March 31, 2011) with
the Indian tax authorities pending resolution of the dispute. Further, in February 2011, we also
received the orders of assessment, relating to certain of our other subsidiaries assessed for tax
in India, that assessed additional taxable income for fiscal 2007 that could give rise to an
estimated
462.7 million ($10.4 million based on the exchange rate on March 31, 2011) in additional
taxes, including interest of
145.6 million ($3.3 million based on the exchange rate on March 31,
2011). In March 2011, we separately deposited
40.5 million ($0.9 million based on the exchange rate on March
31, 2011) with the Indian tax authorities pending resolution of the dispute. The orders of
assessment involve issues similar to that alleged in the orders for fiscal 2005 and 2006. We have
disputed these orders of assessment before first level Indian appellate authorities.
Based on
certain favorable decision from appellate authorities in previous
years, certain legal opinions
from counsel and after consultation with our Indian tax advisors, we believe
that the chances of the aforementioned assessments, upon challenge, being sustained at the higher
appellate authorities are remote and we intend to vigorously dispute the assessments and orders. We
have deposited a small portion of the disputed amount with the tax authorities and may be required
to deposit remaining portion of the disputed amount with the tax authorities pending final
resolution of the respective matters
In March 2009, we received from the Indian service tax authority an assessment order demanding
payment of
346.2 million ($7.7 million based on the exchange rate on March 31, 2011) of service
tax and related interest and penalty for the period from March 1, 2003 to January 31, 2005. The
assessment order alleges that service tax is payable in India on BPO services provided by WNS
Global in India to clients. After consultation with our Indian tax advisors, we believe the chances
that the assessment would be upheld against us are remote. In April 2009, we filed an appeal to the
appellate tribunal against the assessment order and the appeal is currently pending. We intend to
continue to vigorously dispute the assessment.
No assurance can be given, however, that we will prevail in our tax disputes. If we do not prevail,
payment of additional taxes, interest and penalties may adversely affect our results of operations,
financial condition and cash flows. There can also be no assurance that we will not receive similar
or additional orders of assessment in the future.
Except for the above, as of the date of this annual report, we are not a party to any other legal
proceedings that could reasonably be expected to materially harm our company.
Dividend Policy
Subject to the provisions of the 1991 Law and our Articles of Association, we may by ordinary
resolution declare annual dividends to be paid to our shareholders according to their respective
rights and interests in our distributable reserves. Any dividends we may declare must not exceed
the amount recommended by our Board of Directors. Our board may also declare and pay an interim
dividend or dividends, including a dividend payable at a fixed rate, if paying an interim dividend
or dividends appears to the Board to be justified by our distributable reserves. See Item 10.
Additional Information B. Memorandum and Articles of Association. We can only declare dividends
if our directors who are to authorize the distribution make a prior statement that, having made
full enquiry into our affairs and prospects, they have formed the opinion that:
|
|
immediately following the date on which the distribution is proposed
to be made, we will be able to discharge our liabilities as they fall
due; and |
|
|
|
having regard to our prospects and to the intentions of our directors
with respect to the management of our business and to the amount and
character of the financial resources that will in their view be
available to us, we will be able to continue to carry on business and
we will be able to discharge our liabilities as they fall due until
the expiry of the period of 12 months immediately following the date
on which the distribution is proposed to be made or until we are
dissolved under Article 150 of the 1991 Law, whichever first occurs. |
We have never declared or paid any dividends on our ordinary shares. Any future determination to
pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon
our results of operations and cash flows, our financial position and capital requirements, general
business conditions, legal, tax, regulatory and any contractual restrictions on the payment of
dividends and any other factors our Board of Directors deems relevant at the time.
Subject to the deposit agreement governing the issuance of our ADSs, holders of ADSs will be
entitled to receive dividends paid on the ordinary shares represented by such ADSs.
B. Significant Changes
There has been no significant subsequent events following the close of the last fiscal year up to
the date of this annual report that are known to us and require disclosure in this document for
which disclosure was not made in this annual report.
Page 107
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our ADSs evidenced by American Depositary Receipts, or ADRs, commenced trading on the NYSE, on July
26, 2006 at an initial offering price of $20.00 per ADS. The ADRs evidencing ADSs were issued by
our depositary, Deutsche Bank Trust Company Americas, pursuant to a deposit agreement. The number
of our outstanding ordinary shares (including the underlying shares for ADSs) as at March 31, 2011
was 44,443,726. As at March 31, 2011, there were 22,454,319 ADSs outstanding (representing
22,454,319 ordinary shares).
The high and low last reported sale prices per ADS since trading on July 26, 2006 are as shown
below:
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|
|
|
|
|
|
|
|
|
Price per ADS on NYSE |
|
|
High |
|
Low |
Fiscal year: |
|
|
|
|
|
|
|
|
2007(1) |
|
$ |
35.83 |
|
|
$ |
20.79 |
|
2008 |
|
$ |
29.85 |
|
|
$ |
12.81 |
|
2009 |
|
$ |
20.00 |
|
|
$ |
3.10 |
|
2010 |
|
$ |
17.25 |
|
|
$ |
5.10 |
|
2011 |
|
$ |
13.38 |
|
|
$ |
8.46 |
|
Fiscal Quarter: |
|
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
10.40 |
|
|
$ |
5.10 |
|
Second quarter |
|
$ |
16.50 |
|
|
$ |
8.39 |
|
Third quarter |
|
$ |
17.25 |
|
|
$ |
11.59 |
|
Fourth quarter |
|
$ |
15.95 |
|
|
$ |
10.12 |
|
2011 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
13.38 |
|
|
$ |
9.62 |
|
Second quarter |
|
$ |
13.35 |
|
|
$ |
8.46 |
|
Third quarter |
|
$ |
12.94 |
|
|
$ |
8.76 |
|
Fourth quarter |
|
$ |
11.98 |
|
|
$ |
9.70 |
|
Month: |
|
|
|
|
|
|
|
|
October 2010 |
|
$ |
10.90 |
|
|
$ |
8.76 |
|
November 2010 |
|
$ |
12.10 |
|
|
$ |
10.35 |
|
December 2010 |
|
$ |
12.94 |
|
|
$ |
11.29 |
|
January 2011 |
|
$ |
11.98 |
|
|
$ |
10.30 |
|
February 2011 |
|
$ |
11.36 |
|
|
$ |
9.70 |
|
March 2011 |
|
$ |
10.97 |
|
|
$ |
9.70 |
|
April 2011 (till April 17, 2011) |
|
$ |
10.61 |
|
|
$ |
9.61 |
|
|
|
|
Note: |
|
(1) |
|
From July 26, 2006 following the completion of our initial public
offering on the NYSE. |
B. Plan of Distribution
Not applicable.
C. Markets
Our ADSs are listed on the NYSE under the symbol WNS.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
Page 108
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
General
We were incorporated in Jersey, Channel Islands, as a private limited company (with registered
number 82262) on February 18, 2002 pursuant to the 1991 Law. We converted from a private limited
company to a public limited company on January 4, 2006 when we acquired more than 30 shareholders
as calculated in accordance with Article 17A of the 1991 Law. We gave notice of this to the Jersey
Financial Services Commission, or JFSC, in accordance with Article 17(3) of the 1991 Law on January
12, 2006.
Currently,
the address of our share registrar is Capita Secretaries Limited, or
Capita, at 12 Castle
Street, St. Helier, Jersey JE2 3RT, Channel Islands and our share register is maintained at the
premises of our share registrar Capita.
Effective May 1, 2011, our share registrar will change from Capita Secretaries Limited to
Computershare Investor Services (Jersey) Limited and the share register will then also be
maintained at the premises of Computershare at Queensway House, Hilgrove Street, St Helier, Jersey
JE1 1ES.
The address of our secretary is Computershare Company Secretarial Services (Jersey) Limited, or
Computershare, at Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES. Our registered
office is maintained at the premises of Computershare.
Our activities are regulated by our Memorandum and Articles of Association. We adopted an amended
and restated Memorandum and Articles of Association by special resolution of our shareholders
passed on May 22, 2006. This amended and restated Memorandum and Articles of Association came into
effect immediately prior to the completion of our initial public offering in July 2006. The
material provisions of our amended and restated Memorandum and Articles of Association are
described below. In addition to our Memorandum and Articles of Association, our activities are
regulated by (among other relevant legislation) the 1991 Law. Our Memorandum of Association states
our company name, that we are a public company, that we are a par value company, our authorized
share capital and that the liability of our shareholders is limited to the amount (if any) unpaid
on their shares. Below is a summary of some of the provisions of our Articles of Association. It is
not, nor does it purport to be, complete or to identify all of the rights and obligations of our
shareholders. The summary is qualified in its entirety by reference to our Memorandum and Articles
of Association. See Item 19. Exhibits Exhibit 1.1 and Item 19. Exhibits Exhibit 1.2.
The rights of shareholders described in this section are available only to persons who hold our
certificated shares. ADS holders do not hold our certificated shares and therefore are not directly
entitled to the rights conferred on our shareholders by our Articles of Association or the rights
conferred on shareholders of a Jersey company by the 1991 Law, including, without limitation: the
right to receive dividends and the right to attend and vote at shareholders meetings; the rights
described in Other Jersey Law Considerations Mandatory Purchases and Acquisitions and
Other Jersey Law Considerations Compromises and Arrangements, the right to apply to a Jersey
court for an order on the grounds that the affairs of a company are being conducted in a manner
which is unfairly prejudicial to the interests of its shareholders; and the right to apply to the
JFSC to have an inspector appointed to investigate the affairs of a company. ADS holders are
entitled to receive dividends and to exercise the right to vote only in accordance with the deposit
agreement.
Share Capital
As at March 31, 2011, the authorized share capital is £5,100,000 divided into 50,000,000 ordinary
shares of 10 pence each and 1,000,000 preferred shares of 10 pence each. We had 44,443,726 ordinary
shares outstanding as at March 31, 2011. There are no preferred shares outstanding as at March 31,
2011. Pursuant to Jersey law and our Memorandum and Articles of Association, our Board of Directors
by resolution may establish one or more classes of preferred shares having such number of shares,
designations, dividend rates, relative voting rights, liquidation rights and other relative
participation, optional or other special rights, qualifications, limitations or restrictions as may
be fixed by the board without any further shareholder approval. Such rights, preferences, powers
and limitations as may be established could also have the effect of discouraging an attempt to
obtain control of us. None of our shares have any redemption rights.
Capacity
Under the 1991 Law, the doctrine of ultra vires in its application to companies is abolished and
accordingly the capacity of a Jersey company is not limited by anything in its memorandum or
articles or by any act of its members.
Page 109
Changes in Capital or our Memorandum and Articles of Association
Subject to the 1991 Law and our Articles of Association, we may by special resolution at a general
meeting:
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increase our authorized or paid-up share capital; |
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consolidate and divide all or any part of our shares into shares of a
larger amount than is fixed by our Memorandum of Association; |
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sub-divide all or any part of our shares into shares of smaller amount
than is fixed by our Memorandum of Association; |
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convert any of our issued or unissued shares into shares of another
class; |
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convert all our issued par value shares into no par value shares and
vice versa; |
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convert any of our paid-up shares into stock, and reconvert any stock into any number
of paid-up shares of any denomination; |
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convert any of our issued limited shares into redeemable shares which can be redeemed; |
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cancel shares which, at the date of passing of the resolution, have
not been taken or agreed to be taken by any person, and diminish the
amount of the authorized share capital by the amount of the shares so
cancelled; |
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reduce our issued share capital; or |
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alter our Memorandum or Articles of Association. |
General Meetings of Shareholders
We may at any time convene general meetings of shareholders. We hold an annual general meeting for
each fiscal year. Under the 1991 Law, no more than 18 months may elapse between the date of one
annual general meeting and the next.
Our Articles of Association provide that annual general meetings and meetings calling for the
passing of a special resolution require 21 days notice of the place, day and time of the meeting
in writing to our shareholders. Any other general meeting requires no less than 14 days notice in
writing. Our directors may, at their discretion, and upon a request made in accordance with the
1991 Law by shareholders holding not less than one tenth of our total voting rights our directors
shall, convene a general meeting. Our business may be transacted at a general meeting only when a
quorum of shareholders is present. Two shareholders entitled to attend and to vote on the business
to be transacted (or a proxy for a shareholder or a duly authorized representative of a corporation
which is a shareholder) and holding shares conferring not less than one-third of the total voting
rights, constitute a quorum provided that if at any time all of our issued shares are held by one
shareholder, such quorum shall consist of the shareholder present in person or by proxy.
The annual general meetings deal with and dispose of all matters prescribed by our Articles of
Association and by the 1991 Law including:
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the consideration of our annual financial statements and report of
our directors and auditors; |
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the election of directors (if necessary); |
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the appointment of auditors and the fixing of their remuneration; |
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the sanction of dividends; and |
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the transaction of any other business of which notice has been given. |
Failure to hold an annual general meeting is an offence by our company and its directors under the
1991 Law and carries a potential fine of up to £5,000 for our company and each director.
Page 110
Voting Rights
Subject to any special terms as to voting on which any shares may have been issued or may from time
to time be held, at a general meeting, every shareholder who is present in person (including any
corporation present by its duly authorized representative) shall on a show of hands have one vote
and every shareholder present in person or by proxy shall on a poll have one vote for each share of
which he is a holder. In the case of joint holders only one of them may vote and in the absence of
election as to who is to vote, the vote of the senior who tenders a vote, whether in person or by
proxy, shall be accepted to the exclusion of the votes of the other joint holders.
A shareholder may appoint any person (whether or not a shareholder) to act as his proxy at any
meeting of shareholders (or of any class of shareholders) in respect of all or a particular number
of the shares held by him. A shareholder may appoint more than one person to act as his proxy and
each such person shall act as proxy for the shareholder for the number of shares specified in the
instrument appointing the person a proxy. If a shareholder appoints more than one person to act as
his proxy, each instrument appointing a proxy shall specify the number of shares held by the
shareholder for which the relevant person is appointed his proxy. Each duly appointed proxy has the
same rights as the shareholder by whom he was appointed to speak at a meeting and vote at a meeting
in respect of the number of shares held by the shareholder for which the relevant proxy is
appointed his proxy.
For the purpose of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof or in order to make a determination of shareholders for any
other proper purpose, our directors may fix in advance a date as the record date for any such
determination of shareholders.
Shareholder Resolutions
An ordinary resolution requires the affirmative vote of a simple majority (i.e., more than 50%) of
our shareholders entitled to vote in person (or by corporate representative in case of a corporate
entity) or by proxy at a general meeting.
A special resolution requires the affirmative vote of a majority of not less than two-thirds of our
shareholders entitled to vote in person (or by corporate representative in the case of a corporate
entity) or by proxy at a general meeting.
Our Articles of Association prohibit the passing of shareholder resolutions by written consent to
remove an auditor or to remove a director before the expiry of his term of office.
Dividends
Subject to the provisions of the 1991 Law and of the Articles of Association, we may, by ordinary
resolution, declare dividends to be paid to shareholders according to their respective rights and
interests in our distributable reserves. However, no dividend shall exceed the amount recommended
by our directors.
Subject to the provisions of the 1991 Law, we may declare and pay an interim dividend or dividends,
including a dividend payable at a fixed rate, if an interim dividend or dividends appears to us to
be justified by our distributable reserves.
Except as otherwise provided by the rights attached to any shares, all dividends shall be declared
and paid according to the amounts paid up (as to both par and any premium) otherwise than in
advance of calls, on the shares on which the dividend is paid. All dividends unclaimed for a period
of ten years after having been declared or become due for payment shall, if we so resolve, be
forfeited and shall cease to remain owing by us.
We may, with the authority of an ordinary resolution, direct that payment of any dividend declared
may be satisfied wholly or partly by the distribution of assets, and in particular of paid-up
shares or debentures of any other company, or in any one or more of those ways.
We may also with the prior authority of an ordinary resolution, and subject to such conditions as
we may determine, offer to holders of shares the right to elect to receive shares, credited as
fully paid, instead of the whole, or some part, to be determined by us, of any dividend specified
by the ordinary resolution.
For the purposes of determining shareholders entitled to receive a dividend or distribution, our
directors may fix a record date for any such determination of shareholders. A record date for any
dividend or distribution may be on or at any time before any date on which such dividend or
distribution is paid or made and on or at any time before or after any date on which such dividend
or distribution is declared.
Ownership Limitations
Our Articles of Association and the 1991 Law do not contain limits on the number of shares that a
shareholder may own.
Page 111
Transfer of Shares
Every shareholder may transfer all or any of his shares by instrument of transfer in writing in any
usual form or in any form approved by us. The instrument must be executed by or on behalf of the
transferor and, in the case of a transfer of a share which is not fully paid up, by or on behalf of
the transferee. The transferor is deemed to remain the holder until the transferees name is
entered in the register of shareholders.
We may, in our absolute discretion and without giving any reason, refuse to register any transfer
of a share or renunciation of a renounceable letter of allotment unless:
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it is in respect of a share which is fully paid-up; |
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it is in respect of only one class of shares; |
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it is in favor of a single transferee or not more than four joint
transferees; |
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it is duly stamped, if so required; and |
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it is delivered for registration to our registered office for the time
being or another place that we may from time to time determine
accompanied by the certificate for the shares to which it relates and
any other evidence as we may reasonably require to prove the right of
the transferor or person renouncing to make the transfer or
renunciation. |
Share Register
We maintain our register of members in Jersey. It is open to inspection during business hours by
shareholders without charge and by other persons upon payment of a fee not exceeding £5. Any person
may obtain a copy of our register of members upon payment of a fee not exceeding £0.50 per page and
providing a declaration under oath as required by the 1991 Law.
Variation of Rights
If at any time our share capital is divided into different classes of shares, the special rights
attached to any class, unless otherwise provided by the terms of issue of the shares of that class,
may be varied or abrogated with the consent in writing of the holders of the majority of the issued
shares of that class, or with the sanction of an ordinary resolution passed at a separate meeting
of the holders of shares of that class, but not otherwise. To every such separate meeting all the
provisions of our Articles of Association and of the 1991 Law relating to general meetings or to
the proceedings thereat shall apply, mutatis mutandis, except that the necessary quorum shall be
two persons holding or representing at least one-third in nominal amount of the issued shares of
that class but so that if at any adjourned meeting of such holders a quorum as above defined is not
present, those holders who are present in person shall be a quorum.
The special rights conferred upon the holders of any class of shares issued with preferred or other
special rights shall be deemed to be varied by the reduction of the capital paid up on such shares
and by the creation of further shares ranking in priority thereto, but shall not (unless otherwise
expressly provided by our Articles of Association or by the conditions of issue of such shares) be
deemed to be varied by the creation or issue of further shares ranking after or pari passu
therewith. The rights conferred on holders of ordinary shares shall be deemed not to be varied by
the creation, issue or redemption of any preferred or preference shares.
Capital Calls
We may, subject to the provisions of our Articles of Association and to any conditions of
allotment, from time to time make calls upon the members in respect of any monies unpaid on their
shares (whether on account of the nominal value of the shares or by way of premium) provided that
(except as otherwise fixed by the conditions of application or allotment) no call on any share
shall be payable within 14 days of the date appointed for payment of the last preceding call, and
each member shall (subject to being given at least 14 clear days notice specifying the time or
times and place of payment) pay us at the time or times and place so specified the amount called on
his shares.
If a member fails to pay any call or installment of a call on or before the day appointed for
payment thereof, we may serve a notice on him requiring payment of so much of the call or
installment as is unpaid, together with any interest (at a rate not exceeding 10% per annum to be
determined by us) which may have accrued and any expenses which may have been incurred by us by
reason of such non-payment. The notice shall name a further day (not earlier than fourteen
Page 112
days from the date of service thereof) on or before which and the place where the payment required
by the notice is to be made, and shall state that in the event of non-payment at or before the time
and at the place appointed, the shares on which the call was made will be liable to be forfeited.
Borrowing Powers
Our Articles of Association contain no restrictions on our power to borrow money or to mortgage or
charge all or any part of our undertaking, property and assets.
Issue of Shares and Preemptive Rights
Subject to the provisions of the 1991 Law and to any special rights attached to any shares, we may
allot or issue shares with those preferred, deferred or other special rights or restrictions
regarding dividends, voting, return of capital or other matters as our directors from time to time
determine. We may issue shares that are redeemable or are liable to be redeemed at our option or
the option of the holder in accordance with our Articles of Association. Subject to the provisions
of the 1991 Law, the unissued shares at the date of adoption of our Articles of Association and
shares created thereafter shall be at the disposal of our directors. We cannot issue shares at a
discount to par value. Securities, contracts, warrants or other instruments evidencing any
preferred shares, option rights, securities having conversion or option rights or obligations may
also be issued by the directors without the approval of the shareholders or entered into by us upon
a resolution of the directors to that effect on such terms, conditions and other provisions as are
fixed by the directors, including, without limitation, conditions that preclude or limit any person
owning or offering to acquire a specified number or percentage of shares in us in issue, other
shares, option rights, securities having conversion or option rights or obligations of us or the
transferee of such person from exercising, converting, transferring or receiving the shares, option
rights, securities having conversion or option rights or obligations.
There are no pre-emptive rights for the transfer of our shares either within the 1991 Law or our
Articles of Association.
Directors Powers
Our business shall be managed by the directors who may exercise all of the powers that we are not
by the 1991 Law or our Articles of Association required to exercise in a general meeting.
Accordingly, the directors may (among other things) borrow money, mortgage or charge all of our
property and assets (present and future) and issue securities.
Meetings of the Board of Directors
A director may, and the secretary on the requisition of a director shall, at any time, summon a
meeting of the directors by giving to each director and alternate director not less than 24 hours
notice of the meeting provided that any meeting may be convened at shorter notice and in such
manner as each director or his alternate director shall approve provided further that unless
otherwise resolved by the directors notices of directors meetings need not be in writing.
Subject to our Articles of Association, our Board of Directors may meet for the conducting of
business, adjourn and otherwise regulate its proceedings as it sees fit. The quorum necessary for
the transaction of business may be determined by the Board of Directors and unless otherwise
determined shall be three persons, each being a director or an alternate director of whom two shall
not be executive directors. Where more than three directors are present at a meeting, a majority of
them must not be executive directors in order for the quorum to be constituted at the meeting. A
duly convened meeting of the Board of Directors at which a quorum is present is necessary to
exercise all or any of the boards authorities, powers and discretions.
Our Board of Directors may from time to time appoint one or more of their number to be the holder
of any executive office on such terms and for such periods as they may determine. The appointment
of any director to any executive office shall be subject to termination if he ceases to be a
director. Our Board of Directors may entrust to and confer upon a director holding any executive
office any of the powers exercisable by the directors, upon such terms and conditions and with such
restrictions as they think fit, and either collaterally with or to the exclusion of their own
powers and may from time to time revoke, withdraw, alter or vary all or any of such powers.
Remuneration of Directors
Our directors shall be entitled to receive by way of fees for their services as directors any sum
that we may, by ordinary resolution in general meeting from time to time determine. That sum,
unless otherwise directed by the ordinary resolution by which it is voted, shall be divided among
the directors in the manner that they agree or, failing agreement, equally. The remuneration (if
any) of an alternate director shall be payable out of the remuneration payable to the director
appointing him as may be agreed between them.
Page 113
The directors shall be repaid their traveling and other expenses properly and necessarily expended
by them in attending meetings of the directors or members or otherwise on our affairs.
If any director shall be appointed agent or to perform extra services or to make any special
exertions, the directors may remunerate such director therefor either by a fixed sum or by
commission or participation in profits or otherwise or partly one way and partly in another as they
think fit, and such remuneration may be either in addition to or in substitution for his above
mentioned remuneration.
Directors Interests in Contracts
Subject to the provisions of the 1991 Law, a director may hold any other office or place of profit
under us (other than the office of auditor) in conjunction with his office of director and may act
in a professional capacity to us on such terms as to tenure of office, remuneration and otherwise
as we may determine and, provided that he has disclosed to us the nature and extent of any of his
interests which conflict or may conflict to a material extent with our interests at the first
meeting of the directors at which a transaction is considered or as soon as practical after that
meeting by notice in writing to the secretary or has otherwise previously disclosed that he is to
be regarded as interested in a transaction with a specific person, a director notwithstanding his
office (1) may be a party to, or otherwise interested in, any transaction or arrangement with us or
in which we are otherwise interested, (2) may be a director or other officer of, or employed by, or
a party to any transaction or arrangement with, or otherwise interested in, any body corporate
promoted by us or in which we are otherwise interested, and (3) shall not, by reason of his office,
be accountable to us for any benefit which he derives from any such office or employment or from
any such transaction or arrangement or from any interest in any such body corporate and no such
transaction or arrangement shall be liable to be avoided on the ground of any such interest or
benefit.
Restrictions on Directors Voting
A director, notwithstanding his interest, may be counted in the quorum present at any meeting at
which any contract or arrangement in which he is interested is considered and, subject as provided
above, he may vote in respect of any such contract or arrangement. A director, notwithstanding his
interest, may be counted in the quorum present at any meeting at which he is appointed to hold any
office or place of profit under us, or at which the terms of his appointment are arranged, but the
director may not vote on his own appointment or the terms thereof or any proposal to select that
director for re-election.
Number of Directors
Our board shall determine the maximum and minimum number of directors provided that the minimum
number of directors shall be not less than three.
Directors Appointment, Resignation, Disqualification and Removal
Our board is divided into three classes that are, as nearly as possible, of equal size. Each class
of directors (other than initially) is elected for a three-year term of office but the terms are
staggered so that the term of only one class of directors expires at each annual general meeting.
Any additional directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class will consist of
one-third of the directors. This classification of the Board of Directors may have the effect of
delaying or preventing changes in control of management of our company. Our Board of Directors
shall have power (unless they determine that any vacancy should be filled by us in general meeting)
at any time and from time to time to appoint any person to be a director, either to fill any
vacancy or as an addition to the existing directors. A vacancy for these purposes only will be
deemed to exist if a director dies, resigns, ceases or becomes prohibited or disqualified by law
from acting as a director, becomes bankrupt or enters into an arrangement or composition with his
creditors, becomes of unsound mind or is removed by us from office for gross negligence or criminal
conduct by ordinary resolution. A vacancy for these purposes will not be deemed to exist upon the
expiry of the term of office of a director. At any general meeting at which a director retires or
at which a directors period of office expires we shall elect, by ordinary resolution of the
general meeting, a director to fill the vacancy, unless our directors resolve to reduce the number
of directors in office. Where the number of persons validly proposed for election or re-election as
a director is greater than the number of directors to be elected, the persons receiving the most
votes (up to the number of directors to be elected) shall be elected as directors and an absolute
majority of the votes cast shall not be a pre-requisite to the election of such directors.
The directors shall hold office until they resign, they cease to be a director by virtue of a
provision of the 1991 Law, they become disqualified by law or the terms of our Articles of
Association from being a director, they become bankrupt or make any arrangement or composition with
their creditors generally or they become of unsound mind or they are removed from office by us for
gross negligence or criminal conduct by ordinary resolution in general meeting.
Page 114
A director is not required to hold any of our shares.
Capitalization of Profits and Reserves
Subject to our Articles of Association, we may, upon the recommendation of our directors, by
ordinary resolution resolve to capitalize any of our undistributed profits (including profits
standing to the credit of any reserve account), any sum standing to the credit of any reserve
account as a result of the sale or revaluation of an asset (other than goodwill) and any sum
standing to the credit of our share premium account or capital redemption reserve.
Any sum which is capitalized shall be appropriated among our shareholders in the proportion in
which such sum would have been divisible amongst them had the same been applied in paying dividends
and applied in (1) paying up the amount (if any) unpaid on the shares held by the shareholders, or
(2) issuing to shareholders, fully paid shares (issued either at par or a premium) or (subject to
our Articles of Association) our debentures.
Unclaimed Dividends
Any dividend which has remained unclaimed for a period of ten years from the date of declaration
thereof shall, if the directors so resolve, be forfeited and cease to remain owing by us and shall
thenceforth belong to us absolutely.
Indemnity, Limitation of Liability and Officers Liability Insurance
Insofar as the 1991 Law allows and, to the fullest extent permitted thereunder, we may indemnify
any person who was or is involved in any manner (including, without limitation, as a party or a
witness), or is threatened to be made so involved, in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or
investigative including, without limitation, any proceeding by or in the right of ours to procure a
judgment in our favor, but excluding any proceeding brought by such person against us or any
affiliate of ours by reason of the fact that he is or was an officer, secretary, servant, employee
or agent of ours, or is or was serving at our request as an officer, secretary, servant, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise against all
expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such proceeding. Such indemnification shall be a
contract right and shall include the right to receive payment in advance of any expenses incurred
by the indemnified person in connection with such proceeding, provided always that this right is
permitted by the 1991 Law.
Subject to the 1991 Law, we may enter into contracts with any officer, secretary, servant, employee
or agent of ours and may create a trust fund, grant a security interest, make a loan or other
advancement or use other means (including, without limitation, a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as provided in the indemnity
provisions in our Articles of Association.
Our directors are empowered to arrange for the purchase and maintenance in our name and at our
expense of insurance cover for the benefit of any current or former officer of ours, our secretary
and any current or former agent, servant or employee of ours against any liability which is
incurred by any such person by reason of the fact that he is or was an officer of ours, our
secretary or an agent, servant or employee of ours.
Subject to the 1991 Law, the right of indemnification, loan or advancement of expenses provided in
our Articles of Association is not exclusive of any other rights to which a person seeking
indemnification may otherwise be entitled, under any statute, memorandum or articles of
association, agreement, vote of shareholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while holding such office. The
provisions of our Articles of Association inure for the benefit of the heirs and legal
representatives of any person entitled to indemnity under our Articles of Association and are
applicable to proceedings commenced or continuing after the adoption of our Articles of Association
whether arising from acts or omissions occurring before or after such adoption.
If any provision or provisions of our Articles of Association relative to indemnity are held to be
invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and
enforceability of the remaining provisions thereof shall not in any way be affected or impaired;
and (ii) to the fullest extent possible, the provisions of our Articles of Association relative to
indemnity shall be construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
Nothing in our Articles of Association prohibits us from making loans to officers, our secretary,
servants, employees or agents to fund litigation expenses prior to such expenses being incurred.
Page 115
Distribution of Assets on a Winding-up
Subject to any particular rights or limitations attached to any shares, if we are wound up, our
assets available for distribution among our shareholders shall be applied first in repaying to our
shareholders the amount paid up (as to both par and any premium) on their shares respectively, and
if such assets shall be more than sufficient to repay to our shareholders the whole amount paid up
(as to both par and any premium) on their shares, the balance shall be distributed among our
shareholders in proportion to the amount which at the time of the commencement of the winding up
had been actually paid up (as to both par and any premium) on their shares respectively.
If we are wound up, we may, with the approval of a special resolution and any other sanction
required by the 1991 Law, divide the whole or any part of our assets among our shareholders in
specie and our liquidator or, where there is no liquidator, our directors, may, for that purpose,
value any assets and determine how the division shall be carried out as between our shareholders or
different classes of shareholders. Similarly, with the approval of a special resolution and subject
to any other sanction required by the 1991 Law, all or any of our assets may be vested in trustees
for the benefit of our shareholders.
Other Jersey Law Considerations
Purchase of Own Shares
The 1991 Law provides that we may, with the sanction of a special resolution, purchase any of our
shares which are fully paid, pursuant to a contract approved in advance by the shareholders. No
shareholder whose shares we propose to purchase is entitled to vote on the resolutions sanctioning
the purchase or approving the purchase contract.
We may fund the purchase of our own shares from any source provided that our directors are
satisfied that immediately after the date on which the purchase is made, we will be able to
discharge our liabilities as they fall due and that having regard to (i) our prospects and to the
intentions of our directors with respect to the management of our business and (ii) the amount and
character of the financial resources that will in their view be available to us, we will be able to
(a) continue to carry on our business and (b) discharge our liabilities as they fall due until the
expiry of the period of 12 months immediately following the date on which the purchase was made or
until we are dissolved, whichever occurs first.
We cannot purchase our shares if, as a result of such purchase, only redeemable shares would be in
issue. Any shares that we purchase (other than shares that are, immediately after being purchased,
held as treasury shares) are treated as cancelled upon purchase.
Mandatory Purchases and Acquisitions
The 1991 Law provides that where a person (which we refer to as the offeror) makes an offer to
acquire all of the shares (or all of the shares of any class of shares) (other than treasury shares
and any shares already held by the offeror and its associates at the date of the offer), if the
offeror has by virtue of acceptances of the offer acquired or contracted to acquire not less than
90% in nominal value of the shares (or class of shares) to which the offer relates, the offeror by
notice may compulsorily acquire the remaining shares. A holder of any such shares may apply to the
Jersey court for an order that the offeror not be entitled to purchase the holders shares or that
the offeror purchase the holders shares on terms different to those of the offer.
Where, prior to the expiry of the offer period, the offeror has by virtue of acceptances of the
offer acquired or contracted to acquire not less than 90% in nominal value of all of the shares of
the target company (other than treasury shares and any shares already held by the offeror and its
associates at the date of the offer), the holder of any shares (or class of shares) to which the
offer relates who has not accepted the offer may require the offeror to acquire those shares. In
such circumstances, each of the offeror and the holder of the shares are entitled to apply to the
Jersey court for an order that the offeror purchase the holders shares on terms different to those
of the offer.
Compromises and Arrangements
Where a compromise or arrangement is proposed between a company and its creditors, or a class of
them, or between the company and its shareholders, or a class of them, the Jersey court may on the
application of the company or a creditor or member of it or, in the case of a company being wound
up, of the liquidator, order a meeting of the creditors or class of creditors, or of the
shareholders of the company or class of shareholders (as the case may be), to be called in a manner
as the court directs.
If a majority in number representing 3/4ths in value of the creditors or class of creditors, or
3/4ths of the voting rights of shareholders or class of shareholders (as the case may be), present
and voting either in person or by proxy at the
Page 116
meeting agree to a compromise or arrangement, the compromise or arrangement, if sanctioned by the
court, is binding on all creditors or the class of creditors or on all the shareholders or class of
shareholders, and also on the company or, in the case of a company in the course of being wound up,
on the liquidator and contributories of the company.
No Pre-Emptive Rights
Neither our Articles of Association nor the 1991 Law confers any pre-emptive rights on our
shareholders.
No Mandatory Offer Requirements
In some countries, the trading and securities legislation contains mandatory offer requirements
when shareholders have reached certain share ownership thresholds. There are no mandatory offer
requirements under Jersey legislation. The Companies (Takeovers and Mergers Panel) (Jersey) Law
2009 empowers the Minister for Economic Development in Jersey, or the Minister, to appoint a Panel
on Takeovers and Mergers, or the Jersey Panel, as the body responsible for regulating takeovers and
mergers of companies incorporated in Jersey. The Minister has appointed the UK Panel on Takeovers
and Mergers, or the UK Panel, to carry out the functions of the Jersey Panel. The Jersey Panel will
be empowered to promulgate rules regulating takeovers and mergers of Jersey companies, or the
Jersey Code. The rules applicable to the regulation of takeovers and mergers promulgated by the UK
Panel as set out in The City Code on Takeovers and Mergers, or the UK Code, have been adopted as
the Jersey Code. Rule 9 of the UK Code contains rules relative to mandatory offers. However, the UK
Code only applies to (i) offers for Jersey companies if any of their securities are admitted to
trading on a regulated market in the United Kingdom or any stock exchange in the Channel Islands or
the Isle of Man and (ii) to public or certain private Jersey companies which are considered by the
Panel to have their place of central management and control in the United Kingdom, the Channel
Islands or the Isle of Man. As none of our securities are listed on a regulated market in the
United Kingdom or on any stock exchange in the Channel Islands or the Isle of Man and as we are not
centrally managed and controlled in the United Kingdom, the Channel Islands or the Isle of Man, it
is not anticipated that the Jersey Code will apply to us.
Non-Jersey Shareholders
There are no limitations imposed by Jersey law or by our Articles of Association on the rights of
non-Jersey shareholders to hold or vote on our ordinary shares or securities convertible into our
ordinary shares.
Rights of Minority Shareholders
Under Article 141 of the 1991 Law, a shareholder may apply to court for relief on the ground that
our affairs are being conducted or have been conducted in a manner which is unfairly prejudicial to
the interests of our shareholders generally or of some part of our shareholders (including at least
the shareholder making the application) or that an actual or proposed act or omission by us
(including an act or omission on our behalf) is or would be so prejudicial. What amounts to unfair
prejudice is not defined in the 1991 Law. There may also be common law personal actions available
to our shareholders.
Under Article 143 of the 1991 Law (which sets out the types of relief a court may grant in relation
to an action brought under Article 141 of the 1991 Law), the court may make an order regulating our
affairs, requiring us to refrain from doing or continuing to do an act complained of, authorizing
civil proceedings and providing for the purchase of shares by us or by any of our other
shareholders.
Jersey Law and our Memorandum and Articles of Association
The content of our Memorandum and Articles of Association reflect the requirements of the 1991 Law.
Jersey company law draws very heavily from company law in England and there are various
similarities between the 1991 Law and English company law. However, the 1991 Law is considerably
more limited in content than English company law and there are some notable differences between
English and Jersey company law. There are, for example, no provisions under Jersey law (as there
are under English law):
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controlling possible conflicts of interests between us and our
directors, such as loans by us or directors, and contracts between us
and our directors other than a duty on directors to disclose an
interest in any transaction to be entered into by us or any of our
subsidiaries which to a material extent conflicts with our interest; |
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specifically requiring particulars to be shown in our accounts of the
amount of loans to officers or directors emoluments and pensions,
although these would probably be required to be shown in our accounts
in conformity to the requirement that accounts must be prepared in
accordance with generally accepted accounting principles; |
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requiring us to file details of charges other than charges of Jersey
realty; or |
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as regards statutory preemption provisions in relation to further
issues of shares. |
Comparison of Shareholders Rights
We are incorporated under the laws of Jersey, Channel Islands. The following discussion summarizes
certain material differences between the rights of holders of our ordinary shares and the rights of
holders of the common stock of a typical corporation incorporated under the laws of the State of
Delaware which result from differences in governing documents and the laws of Jersey, Channel
Islands and Delaware. The rights of holders of our ADSs differ in certain respects from those of
holders of our ordinary shares.
This discussion does not purport to be a complete statement of the rights of holders of our
ordinary shares under applicable law in Jersey, Channel Islands and our Memorandum and Articles of
Association or the rights of holders of the common stock of a typical corporation under applicable
Delaware law and a typical certificate of incorporation and bylaws.
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Corporate Law Issue |
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Delaware Law |
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Jersey Law |
Special Meetings of Shareholders
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Shareholders of a
Delaware
corporation
generally do not
have the right to
call meetings of
shareholders unless
that right is
granted in the
certificate of
incorporation or
by-laws. However,
if a corporation
fails to hold its
annual meeting
within a period of
30 days after the
date designated for
the annual meeting,
or if no date has
been designated for
a period of 13
months after its
last annual
meeting, the
Delaware Court of
Chancery may order
a meeting to be
held upon the
application of a
shareholder.
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Under the 1991 Law,
directors shall,
notwithstanding
anything in a
Jersey companys
articles of
association, call a
general meeting on
a shareholders
requisition. A
shareholders
requisition is a
requisition of
shareholders
holding not less
than one-tenth of
the total voting
rights of the
shareholders of the
company who have
the right to vote
at the meeting
requisitioned.
Failure to call an
annual general
meeting in
accordance with the
requirements of the
1991 Law is a
criminal offense on
the part of a
Jersey company and
its directors. The
JFSC may, on the
application of any
officer, secretary
or shareholder
call, or direct the
calling of, an
annual general
meeting. |
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Corporate Law Issue |
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Delaware Law |
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Jersey Law |
Interested Director Transactions
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Interested director
transactions are
not voidable if (i)
the material facts
as to the
interested
directors
relationship or
interests are
disclosed or are
known to the Board
of Directors and
the board in good
faith authorizes
the transaction by
the affirmative
vote of a majority
of the
disinterested
directors, (ii) the
material facts are
disclosed or are
known to the
shareholders
entitled to vote on
such transaction
and the transaction
is specifically
approved in good
faith by vote of
the majority of
shares entitled to
vote on the matter
or (iii) the
transaction is fair
as to the
corporation as of
the time it is
authorized,
approved or
ratified by the
Board of Directors,
a committee or the
shareholders.
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A director of a
Jersey company who
has an interest in
a transaction
entered into or
proposed to be
entered into by the
company or by a
subsidiary which
conflicts or may
conflict with the
interests of the
company and of
which the director
is aware, must
disclose the
interest to the
company. Failure to
disclose an
interest entitles
the company or a
member to apply to
the court for an
order setting aside
the transaction
concerned and
directing that the
director account to
the company for any
profit. A
transaction is not
voidable and a
director is not
accountable
notwithstanding a
failure to disclose
if the transaction
is confirmed by
special resolution
and the nature and
extent of the
directors interest
in the transaction
are disclosed in
reasonable detail
in the notice
calling the meeting
at which the
resolution is
passed. Without
prejudice to its
power to order that
a director account
for any profit, a
court shall not set
aside a transaction
unless it is
satisfied that the
interests of third
parties who have
acted in good faith
thereunder would
not thereby be
unfairly prejudiced
and the transaction
was not reasonable
and fair in the
interests of the
company at the time
it was entered
into. |
Page 119
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Corporate Law Issue |
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Delaware Law |
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Jersey Law |
Cumulative Voting
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Delaware law does
not require that a
Delaware corporation
provide for
cumulative voting.
However, the
certificate of
incorporation of a
Delaware corporation
may provide that
shareholders of any
class or classes or
of any series may
vote cumulatively
either at all
elections or at
elections under
specified
circumstances.
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There are no
provisions in the
1991 Law relating to
cumulative voting. |
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Approval of Corporate
Matters by Written
Consent
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Unless otherwise
specified in a
Delaware
corporations
certificate of
incorporation,
action required or
permitted to be
taken by
shareholders at an
annual or special
meeting may be taken
by shareholders
without a meeting,
without notice and
without a vote, if
consents in writing
setting forth the
action, are signed
by shareholders with
not less than the
minimum number of
votes that would be
necessary to
authorize the action
at a meeting. All
consents must be
dated. No consent is
effective unless,
within 60 days of
the earliest dated
consent delivered to
the corporation,
written consents
signed by a
sufficient number of
holders to take
action are delivered
to the corporation.
|
|
Insofar as the
memorandum or
articles of a Jersey
company do not make
other provision in
that behalf,
anything which may
be done at a meeting
of the company
(other than remove
an auditor) or at a
meeting of any class
of its shareholders
may be done by a
resolution in
writing signed by or
on behalf of each
shareholder who, at
the date when the
resolution is deemed
to be passed, would
be entitled to vote
on the resolution if
it were proposed at
a meeting. A
resolution shall be
deemed to be passed
when the instrument,
or the last of
several instruments,
is last signed or on
such later date as
is specified in the
resolution. |
|
|
|
|
|
Business Combinations
|
|
With certain
exceptions, a
merger,
consolidation or
sale of all or
substantially all
the assets of a
Delaware corporation
must be approved by
the Board of
Directors and a
majority of the
outstanding shares
entitled to vote
thereon.
|
|
A sale or disposal
of all or
substantially all
the assets of a
Jersey company must
be approved by the
Board of Directors
and, only if the
Articles of
Association of the
company require, by
the shareholders in
general meeting. A
merger involving a
Jersey company must
be generally
documented in a
merger agreement
which must be
approved by special
resolution of that
company. |
Page 120
|
|
|
|
|
Corporate Law Issue |
|
Delaware Law |
|
Jersey Law |
Limitations on Directors Liability
|
|
A Delaware
corporation may
include in its
certificate of
incorporation
provisions limiting
the personal
liability of its
directors to the
corporation or its
shareholders for
monetary damages
for many types of
breach of fiduciary
duty. However,
these provisions
may not limit
liability for any
breach of the duty
of loyalty, acts or
omissions not in
good faith or that
involve intentional
misconduct or a
knowing violation
of law, the
authorization of
unlawful dividends,
or unlawful share
purchase or
redemption, or any
transaction from
which a director
derived an improper
personal benefit.
Moreover, these
provisions would
not be likely to
bar claims arising
under US federal
securities laws.
|
|
The 1991 Law does
not contain any
provisions
permitting Jersey
companies to limit
the liability of
directors for
breach of fiduciary
duty. Any
provision, whether
contained in the
articles of
association of, or
in a contract with,
a Jersey company or
otherwise, whereby
the company or any
of its subsidiaries
or any other
person, for some
benefit conferred
or detriment
suffered directly
or indirectly by
the company, agrees
to exempt any
person from, or
indemnify any
person against, any
liability which by
law would otherwise
attach to the
person by reason of
the fact that the
person is or was an
officer of the
company is void
(subject to what is
said below). |
|
|
|
|
|
Indemnification of Directors and
Officers
|
|
A Delaware
corporation may
indemnify a
director or officer
of the corporation
against expenses
(including
attorneys fees),
judgments, fines
and amounts paid in
settlement actually
and reasonably
incurred in defense
of an action, suit
or proceeding by
reason of his or
her position if (i)
the director or
officer acted in
good faith and in a
manner he or she
reasonably believed
to be in or not
opposed to the best
interests of the
corporation and
(ii) with respect
to any criminal
action or
proceeding, the
director or officer
had no reasonable
cause to believe
his or her conduct
was unlawful.
|
|
The prohibition
referred to above
does not apply to a
provision for
exempting a person
from or
indemnifying the
person against (a)
any liabilities
incurred in
defending any
proceedings
(whether civil or
criminal) (i) in
which judgment is
given in the
persons favor or
the person is
acquitted, (ii)
which are
discontinued
otherwise than for
some benefit
conferred by the
person or on the
persons behalf or
some detriment
suffered by the
person, or (iii)
which are settled
on terms which
include such
benefit or
detriment and, in
the opinion of a
majority of the
directors of the
company (excluding
any director who
conferred such
benefit or on whose
behalf such benefit
was conferred or
who suffered such
detriment), the
person was
substantially
successful on the
merits in the
persons resistance
to the proceedings,
(b) any liability
incurred otherwise
than to the company
if the person acted
in good faith with
a view to the best
interests of the
company, (c) any
liability incurred
in connection with
an application made
to the court for
relief from
liability for
negligence,
default, breach of
duty or breach of
trust under Article
212 of the 1991 Law
in which relief is
granted to the
person by the court
or (d) any
liability against
which the company
normally maintains
insurance for
persons other than
directors. |
Page 121
|
|
|
|
|
Corporate Law Issue |
|
Delaware Law |
|
Jersey Law |
Appraisal Rights
|
|
A shareholder of a
Delaware
corporation
participating in
certain major
corporate
transactions may,
under certain
circumstances, be
entitled to
appraisal rights
pursuant to which
the shareholder may
receive cash in the
amount of the fair
value of the shares
held by that
shareholder (as
determined by a
court) in lieu of
the consideration
the shareholder
would otherwise
receive in the
transaction.
|
|
The 1991 Law does
not confer upon
shareholders any
appraisal rights. |
|
|
|
|
|
Shareholder Suits
|
|
Class actions and
derivative actions
generally are
available to the
shareholders of a
Delaware
corporation for,
among other things,
breach of fiduciary
duty, corporate
waste and actions
not taken in
accordance with
applicable law. In
such actions, the
court has
discretion to
permit the winning
party to recover
attorneys fees
incurred in
connection with
such action.
|
|
Under Article 141
of the 1991 Law, a
shareholder may
apply to court for
relief on the
ground that a
companys affairs
are being conducted
or have been
conducted in a
manner which is
unfairly
prejudicial to the
interests of its
shareholders
generally or of
some part of its
shareholders
(including at least
the shareholder
making the
application) or
that an actual or
proposed act or
omission by the
company (including
an act or omission
on its behalf) is
or would be so
prejudicial. There
may also be common
law personal
actions available
to shareholders.
Under Article 143
of the 1991 Law
(which sets out the
types of relief a
court may grant in
relation to an
action brought
under Article 141
of the 1991 Law),
the court may make
an order regulating
the affairs of a
company, requiring
a company to
refrain from doing
or continuing to do
an act complained
of, authorizing
civil proceedings
and providing for
the purchase of
shares by a company
or by any of its
other shareholders. |
|
|
|
|
|
Inspection of Books and Records
|
|
All shareholders of
a Delaware
corporation have
the right, upon
written demand
under oath stating
the purpose
thereof, to inspect
or obtain copies of
the corporations
shares ledger and
its other books and
records for any
proper purpose.
|
|
The register of
shareholders and
books containing
the minutes of
general meetings or
of meetings of any
class of
shareholders of a
Jersey company must
during business
hours be open to
the inspection of a
shareholder of the
company without
charge. The
register of
directors and
secretaries must
during business
hours (subject to
such reasonable
restrictions as the
company may by its
articles or in
general meeting
impose, but so that
not less than two
hours in each
business day be
allowed for
inspection) be open
to the inspection
of a shareholder or
director of the
company without
charge. |
Page 122
|
|
|
|
|
Corporate Law Issue |
|
Delaware Law |
|
Jersey Law |
Amendments to Charter
|
|
Amendments to the
certificate of
incorporation of a
Delaware corporation
require the
affirmative vote of
the holders of a
majority of the
outstanding shares
entitled to vote
thereon or such
greater vote as is
provided for in the
certificate of
incorporation; a
provision in the
certificate of
incorporation
requiring the vote
of a greater number
or proportion of the
directors or of the
holders of any class
of shares than is
required by Delaware
corporate law may
not be amended,
altered or repealed
except by such
greater vote.
|
|
The memorandum and
articles of
association of a
Jersey company may
only be amended by
special resolution
(being a two-third
majority if the
articles of
association of the
company do not
specify a greater
majority) passed by
shareholders in
general meeting or
by written
resolution signed by
all the shareholders
entitled to vote. |
Transfer Agent and Registrar
The transfer agent and registrar for our ADSs is Deutsche Bank Trust Company Americas.
C. Material Contracts
The following is a summary of each contract that is or was material to us during the last two
years.
Share Sale and Purchase Agreement, dated July 11, 2008, relating to the sale and purchase of shares
in Aviva Global Services Singapore Pte. Ltd. between Aviva International Holdings Limited and
WNS Capital Investment Limited.
On July 11, 2008, our wholly-owned subsidiary, WNS Capital Investment Limited, entered into a share
sale and purchase agreement with AVIVA, pursuant to which WNS Capital Investment Limited acquired
all the shares of Aviva Global. This acquisition is part of a transaction with AVIVA that included
the AVIVA master services agreement described below. We completed our acquisition of Aviva Global
(which we refer to as WNS Global Singapore following our acquisition) concurrently with the
execution of this share sale and purchase agreement. Pursuant to the agreement, WNS Global
Singapore has exercised its option to require third party business process outsourcing, or BPO,
providers to transfer to it two facilities in Chennai and Pune, India operated by these third party
BPO providers under BOT contracts with WNS Global Singapore. The completion of the transfer of the
Chennai facility occurred in July 2008. Completion of the Pune facility occurred in August 2008.
The total consideration for the AVIVA transaction, including legal and profession fees, was
approximately $249.0 million. We obtained the $200 million 2008 Term Loan to fund, together with
existing cash and cash equivalents, the AVIVA transaction.
(1) Master Services Agreement, dated July 11, 2008, between Aviva Global Services (Management Services)
Private Ltd. and WNS Capital Investment Limited (AVIVA master
services agreement), (2) Variation
Agreement dated August 3, 2009, to the AVIVA master services
agreement and (3) Novation and Agreement of Amendment dated
March 24, 2011 among Aviva Global Services (Management Services)
Private Ltd., WNS Capital
Investment Limited and WNS Global Services Private Limited.
On July 11, 2008, WNS Capital Investment Limited entered into the AVIVA master services agreement
with Aviva Global Services (Management Services) Private Limited, or AVIVA MS, pursuant to which
AVIVA MS agrees to appoint us as service provider and prime contractor to supply certain BPO
services to the AVIVA group for a term of eight years and four months. Under the agreement, AVIVA
MS has agreed to provide a minimum volume of business, or minimum volume commitment, to us during
the term of the contract. The minimum volume commitment is calculated as 3,000 billable full-time
employees, where one billable full-time employee is the equivalent of a production employee engaged
by us to perform our obligations under the contract for one working day of at least nine hours for
250 days a year. In August 2009, we entered into a
variation agreement to the AVIVA master services
agreement pursuant to which AVIVA MS agreed to increase the minimum volume commitment from the
current 3,000 billable full time employees to 3,300 billable full time employees for a period of 17
months from March 1, 2010 to July 31, 2011 and to 3,250 billable full time employees for a period
of six months from August l, 2011 to January 31, 2012. The minimum volume commitment will revert to
3,000 billable full time employees after January 31, 2012 for the remaining term of the AVIVA
master services agreement. In the event the mean average monthly volume of business in any rolling
three-month period does not reach the minimum volume commitment, AVIVA MS has agreed to pay us a
minimum commitment fee as liquidated damages. The agreement may be terminated by AVIVA MS for a
variety of reasons, including a material breach of agreement by us, or at will at any time after
the expiry of 24 months from October 9, 2008, except in the case of the Chennai facility which was
transferred to WNS Global Singapore in July 2008, at any time after the expiry of 24 months from
September 19, 2008 and in the case of the Pune facility which was transferred to WNS Global
Singapore in August 2008, at any time after the expiry of
24 months after 60 days from the date of
completion of the transfer of the Pune facility, in each case, with six months notice upon
payment of a termination fee. We may also terminate the agreement for a variety of reasons,
including the failure by AVIVA MS to pay any invoiced amounts where such invoiced amounts are
overdue for a period of at least 30 business days or if it is otherwise in material breach of the
agreement.
Pursuant
to a novation and agreement of amendment dated March 24, 2011 among AVIVA MS, WNS Capital
Investment Limited and WNS Global, WNS Capital Investment Limiteds rights and obligations under
the AVIVA master services agreement have been novated to WNS Global effective March 31, 2011.
Page 123
Facility Agreement, dated July 2, 2010, by and among (1) WNS (Mauritius) Limited, as the Borrower,
(2) WNS (Holdings) Limited and its subsidiaries named as guarantors therein, or collectively the
Guarantors, (3) The Hongkong and Shanghai Banking Corporation Limited as Agent (4) The Hongkong
and Shanghai Banking Corporation Limited, DBS Bank Limited and BNP Paribas, as Arrangers, (5) the
Lenders named therein, (6) Morgan Walker Solicitors Limited, as Security Trustee, and (7) The Hongkong and Shanghai Banking Corporation Limited and HSBC Bank (Mauritius) Limited, as Account Banks.
On July 2, 2010, we entered into a facility agreement for a term loan of $94 million to refinance,
together with cash on hand, the balance of $115 million outstanding on the 2008 Term Loan. This
term loan bears interest equal to the three-month US dollar LIBOR plus a margin of 2% per annum.
The variable interest rate as at March 31, 2011 was 2.30%. As at March 31, 2011, our interest rate
swap agreement converted the floating rate loan to a weighted average effective fixed rate of
5.84%. This term loan is repayable in semi-annual installments of $20 million on each of January
10, 2011 and July 11, 2011 and $30 million on January 10, 2012 with the final installment of $24
million payable on July 10, 2012.
The facility is secured by, among other things, guarantees and pledges of shares provided by us and
certain of our subsidiaries, charges over certain of our bank accounts and a fixed and floating charge over the assets of one
of our UK subsidiaries, or the 2010 Term Loan Charge, which ranks pari passu with the UK Loan Charge. The facility agreement contains certain
restrictive covenants on our indebtedness, total borrowings to tangible net worth ratio, total
borrowings to EBITDA ratio and a minimum interest coverage ratio, each as defined under the facility
agreement. On January 10, 2011, we made a scheduled installment repayment of $20 million and the
amount outstanding under the facility as at March 31, 2011 was $74 million.
Page 124
Leave and Licence Agreement dated May 31, 2006 between Godrej & Boyce Manufacturing Company Limited
and WNS Global Services Private Limited with respect to Plant 11.
On May 31, 2006, WNS Global entered into an agreement with Godrej & Boyce Manufacturing Company
Ltd., or GBMC, pursuant to which GBMC granted a licence to WNS Global to occupy office premises
with an aggregate area of 69,611 square feet within the industrial building constructed by GBMC in
Vikhroli, India, known as Plant 11, for a term of 33 months commencing on April 24, 2006 and
renewable for a further term of 33 months at the option of WNS. The monthly licence fee payable is
663,354 ($14,843 based on the exchange rate on March 31, 2011). WNS Global extended the agreement
on February 21, 2009 for a term of 33 months commencing from January 24, 2009. The agreement will
expire on October 23, 2011.
Lease Deed dated January 25, 2006 between
DLF Cyber City and WNS Global Services Private Limited.
On January 25, 2006, WNS Global entered into a lease deed with DLF Cyber City for the leases
of two office spaces in Gurgaon, India, with an aggregate built up area of 51,244 square feet at a
monthly rental of
30 per square feet. The lease commenced on April 1, 2006 for a term of 54 months
from the commencement date with an option to renew for a further term of 54 months. WNS Global also
has agreed to be responsible for power, electricity and water charges. WNS Global is not entitled
to terminate the lease within the first 36 months of each of the leases. Thereafter, WNS Global may
terminate the leases by giving DLF Cyber City six months prior notice in writing. WNS Global
renewed the agreement on December 7, 2010 for a term of 54 months from October 1, 2010 at a monthly
rental of
34.50 per square feet. The agreement will expire on March 31, 2015.
Leave and Licence Agreements dated November 10, 2005 between Godrej & Boyce Manufacturing Company
Limited and WNS Global Services Private Limited with respect to Plant 10.
On November 10, 2005, WNS Global entered into three agreements with GBMC pursuant to which GBMC
granted a licence to WNS Global to occupy three office premises with an aggregate area of 84,429
square feet within the industrial building constructed by GBMC in Vikhroli, India, known as Plant
10. Each agreement is for a term of 33 months commencing on August 16, 2005 and ended on May 15,
2008. The agreements were subsequently extended until February 15, 2011. The monthly licence fees
payable under the three agreements are
804,290 ($17,996 based on the exchange rate on March 31,
2011). WNS Global and GBMC are currently in discussions to extend this lease for a further term of five years
and until a new agreement is signed, the existing lease is considered as a tenancy-at-will,
terminable by either party with a notice period of fifteen days provided for the purpose.
Lease Deed dated March 10, 2005 between DLF Cyber City and WNS Global Services Private Limited.
On March 10, 2005 WNS Global entered into a lease deed with DLF
Cyber City for the lease of two office spaces in Gurgaon with an aggregate area of 38,576 square feet and 52,419 square feet,
respectively, at a monthly rental of
30 per square feet. The said lease expired at the end of its term of 54 months.
WNS Global extended the lease for a further period of 54 months at a monthly rental of
34.50 per square feet. This
extension of the lease for the two office spaces with an aggregate area of 38,576 square feet and 52,419 square feet will
expire on April 30, 2014 and May 31, 2014, respectively.
Lease
Deed dated December 6, 2010 between DLF Assets Private Limited and WNS Global Services Private Limited.
On December 6, 2010, WNS Global executed a lease deed
for an aggregate area of 70,657 square feet
with DLF Assets Private Limited having a monthly rental of
2.8 million ($0.1 million based on
the exchange rate on March 31, 2011) for the first three years and a 15% escalation in the monthly
rentals from the beginning of the fourth year of the lease. The total lease term is five years with a lock-in
period of 36 months. The lease commencement date is April 1, 2011. After the lock-in period has expired, WNS Global can terminate the agreement by giving
three months prior notice in
writing. The said lease will expire on March 31, 2016.
Lease Deed dated January 28, 2011 between BCR Real Estate Fund and WNS BPO Services Costa
Rica, S.A.
On January 28, 2011, WNS BPO Services Costa Rica, S.A., or WNS Costa Rica, entered into a lease deed with BCR Real Estate Fund, or BCR, for the office premises
situated in San Jose, Costa Rica for a period of five years effective from May 1, 2011 for an
aggregate 2,339.64 square metres. The monthly rental is $37,434 and will be increased annually by
3% from the beginning of the third year of the lease. The said lease will expire on April 30, 2016.
Page 125
Employment Agreement dated February 1, 2010 between Keshav R. Murugesh and WNS Global Services
Private Limited.
Please see Item 6. Directors, Senior Management and Employees B. Compensation Employment
Agreement of our Executive Director.
D. Exchange Controls
There are currently no Jersey or United Kingdom foreign exchange control restrictions on the
payment of dividends on our ordinary shares or on the conduct of our operations. Jersey is in a
monetary union with the United Kingdom. There are currently no limitations under Jersey law or our
Articles of Association prohibiting persons who are not residents or nationals of United Kingdom
from freely holding, voting or transferring our ordinary shares in the same manner as United
Kingdom residents or nationals.
Exchange Rates
Substantially all of our revenue is denominated in pound sterling or US dollars and large part of
our expenses, other than payments to repair centers, are incurred and paid in Indian rupees. We
report our financial results in US dollars. The exchange rates among the Indian rupee, the pound
sterling and the US dollar have changed substantially in recent years and may fluctuate
substantially in the future. The results of our operations are affected as the Indian rupee and the
pound sterling appreciate or depreciate against the US dollar and, as a result, any such
appreciation or depreciation will likely affect the market price of our ADSs in the US.
Page 126
The following table sets forth, for the periods indicated, information concerning the exchange
rates between Indian rupees and US dollars based on the spot rate released by the Federal Reserve
Board:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year: |
|
Period End(1) |
|
Average(2) |
|
High |
|
Low |
2007 |
|
|
43.10 |
|
|
|
45.06 |
|
|
|
46.83 |
|
|
|
42.78 |
|
2008 |
|
|
40.02 |
|
|
|
40.13 |
|
|
|
43.05 |
|
|
|
38.48 |
|
2009 |
|
|
50.98 |
|
|
|
45.84 |
|
|
|
51.96 |
|
|
|
39.73 |
|
2010 |
|
|
44.95 |
|
|
|
47.39 |
|
|
|
50.48 |
|
|
|
44.94 |
|
2011 |
|
|
44.54 |
|
|
|
45.49 |
|
|
|
47.49 |
|
|
|
43.90 |
|
2012 (till April 17, 2011) |
|
|
44.26 |
|
|
|
44.27 |
|
|
|
44.46 |
|
|
|
44.05 |
|
|
|
|
Notes: |
|
(1) |
|
The spot rate at each period end and the average rate for each period may differ from
the exchange rates used in the preparation of financial statements included elsewhere
in this annual report. |
|
(2) |
|
Represents the average of the spot rate on the last day of each month during the period. |
The following table sets forth, for the periods indicated, information concerning the exchange
rates between Indian rupees and US dollars based on the spot rate released by the Federal Reserve
Board:
|
|
|
|
|
|
|
|
|
Month: |
|
High |
|
Low |
October 2010
|
|
|
44.55 |
|
|
|
44.05 |
|
November 2010
|
|
|
45.83 |
|
|
|
43.90 |
|
December 2010
|
|
|
45.54 |
|
|
|
44.70 |
|
January 2011
|
|
|
45.92 |
|
|
|
44.59 |
|
February 2011
|
|
|
45.66 |
|
|
|
45.06 |
|
March 2011
|
|
|
45.24 |
|
|
|
44.54 |
|
April 2011 (till April 17, 2011)
|
|
|
44.46 |
|
|
|
44.05 |
|
Page 127
The following table sets forth, for the periods indicated, information concerning the exchange
rates between the pound sterling and US dollars based on the spot rate released by the Federal
Reserve Board:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year: |
|
Period End(1) |
|
Average(2) |
|
High |
|
Low |
2007
|
|
£ |
0.51 |
|
|
£ |
0.52 |
|
|
£ |
0.58 |
|
|
£ |
0.50 |
|
2008
|
|
|
0.50 |
|
|
|
0.50 |
|
|
|
0.52 |
|
|
|
0.47 |
|
2009
|
|
|
0.70 |
|
|
|
0.58 |
|
|
|
0.73 |
|
|
|
0.50 |
|
2010
|
|
|
0.66 |
|
|
|
0.63 |
|
|
|
0.69 |
|
|
|
0.59 |
|
2011
|
|
|
0.62 |
|
|
|
0.64 |
|
|
|
0.70 |
|
|
|
0.61 |
|
2012 (till April 17, 2011)
|
|
|
0.61 |
|
|
|
0.61 |
|
|
|
0.62 |
|
|
|
0.61 |
|
|
|
|
Notes: |
|
(1) |
|
The spot rate at each period end and the average rate for each period may differ from the exchange rates used in the preparation of financial statements included elsewhere in
this annual report. |
|
(2) |
|
Represents the average of the spot rate on the last day of each month during the period. |
The following table sets forth, for the periods indicated, information concerning the exchange
rates between the pound sterling and US dollars based on the spot rate released by the Federal
Reserve Board:
|
|
|
|
|
|
|
|
|
Month: |
|
High |
|
Low |
October 2010 |
|
£ |
0.64 |
|
|
£ |
0.62 |
|
November 2010 |
|
|
0.64 |
|
|
|
0.61 |
|
December 2010 |
|
|
0.65 |
|
|
|
0.63 |
|
January 2011 |
|
|
0.65 |
|
|
|
0.62 |
|
February 2011 |
|
|
0.63 |
|
|
|
0.62 |
|
March 2011 |
|
|
0.63 |
|
|
|
0.61 |
|
April 2011 (till April 17, 2011) |
|
|
0.62 |
|
|
|
0.61 |
|
E. Taxation
Jersey Tax Consequences
General
The following summary of the anticipated tax treatment in Jersey in relation to the payments on the
ordinary shares is based on the taxation law in force at the date of this annual report, and does
not constitute legal or tax advice and investors should be aware that the relevant fiscal rules and
practice and their interpretation may change. We encourage you to consult your own professional
advisors on the implications of subscribing for, buying, holding, selling, redeeming or disposing
of ordinary shares (or ADSs) and the receipt of interest and distributions, whether or not on a
winding-up, with respect to the ordinary shares (or ADSs) under the laws of the jurisdictions in
which they may be taxed. Under the Income Tax (Jersey) Law 1961, as amended, or the Jersey Income
Tax Law: (i) we are regarded as tax resident in Jersey but, being neither a financial services
company nor a specified utility company under the Jersey Income Tax Law at the date hereof, we will
not be liable to pay Jersey income tax, (ii) we will continue to be able to pay dividends on our
ordinary shares without any withholding or deduction for or on account of Jersey tax, and (iii)
holders of our ordinary shares (other than Jersey residents) will not be subject to any Jersey tax
in respect of the holding, sale or other disposition of their ordinary shares.
Page 128
On May 6, 2008, Jersey introduced a 3% general sales tax on goods and services. We have the benefit
of exemption or end user relief from this charge as we have obtained international services entity
status (for which an annual administrative fee of £100 is payable).
Currently, there is no double tax treaty or similar convention between the US and Jersey.
As part of an agreement reached in connection with the EU Savings Tax Directive income in the form
of interest payments, and in line with steps taken by other relevant third countries, introduced
with effect from July 1, 2005 a retention tax system in respect of payments of interest, or other
similar income, made to an individual beneficial owner resident in an EU Member State by a paying
agent established in Jersey (the terms beneficial owner and paying agent are defined in the EU
Savings Tax Directive). The retention tax system applies for a transitional period prior to the
implementation of a system of automatic communication to EU Member States of information regarding
such payments. The transitional period will only end after all EU Member States apply automatic
exchange of information and EU Member States unanimously agree that the US has committed to
exchange of information upon request. During this transitional period, such an individual
beneficial owner resident in an EU Member State is entitled to request a paying agent not to retain
tax from such payments but instead to apply a system by which the details of such payments are
communicated to the tax authorities of the EU Member State in which the beneficial owner is
resident.
The retention tax system and disclosure arrangements are implemented by means of bilateral
agreements with each of the EU Member States, the Taxation (Agreements with European Union Member
States) (Jersey) Regulations 2005 and Guidance Notes issued by the Policy & Resources Committee of
the States of Jersey. Based on these provisions and the current practice of the Jersey tax
authorities, dividend distributions to shareholders and income realized by shareholders in a Jersey
company upon the sale, refund or redemption of shares do not constitute interest payments for the
purposes of the retention tax system and therefore neither a Jersey company nor any paying agent
appointed by it in Jersey is obliged to levy retention tax in Jersey under these provisions in
respect thereof. However, the retention tax system could apply in the event that an individual
resident in an EU Member State, otherwise receives an interest payment in respect of a debt claim
(if any) owed by a company to the individual.
Taxation of Dividends
Under existing Jersey law, provided that the ordinary shares and ADSs are not held by, or for the
account of, persons resident in Jersey for income tax purposes, payments in respect of the ordinary
shares and ADSs, whether by dividend or other distribution, will not be subject to any taxation in
Jersey and no withholding in respect of taxation will be required on those payments to any holder
of our ordinary shares or ADSs.
Holders of our ordinary shares or ADSs who are resident in Jersey for Jersey income tax purposes
suffer deduction of tax on payment of dividends by us at the standard rate of Jersey income tax for
the time being in force. Any individual investor who is resident in Jersey who, directly or
indirectly, owns more than 2% of our ordinary shares or ADSs may be subject to the deemed dividend
or full attribution provisions which seek to tax shareholders or ADS holders of securities on all
or a proportion of our profits in proportion to their shareholdings.
Taxation of Capital Gains and Estate and Gift Tax
Under current Jersey law, there are no death or estate duties, capital gains, gift, wealth,
inheritance or capital transfer taxes. No stamp duty is levied in Jersey on the issue or transfer
of ordinary shares or ADSs. In the event of the death of an individual sole shareholder, duty at
rates of up to 0.75% of the value of the ordinary shares or ADSs held may be payable on the
registration of Jersey probate or letters of administration which may be required in order to
transfer or otherwise deal with ordinary shares or ADSs held by the deceased individual sole
shareholder.
The European Unions evaluation of Jerseys business tax regime
In late
2009 it was reported that concerns had been raised by some members of
the ECOFIN Code of
Conduct group that the current tax regime for companies in Jersey, known as zero-ten, could be
interpreted as being outside the spirit of the EU Code of Conduct for Business Taxation. In light of this, the Treasury and Resources Minister of the States of Jersey announced a review of
business taxation in Jersey in his budget speech on December 8, 2009. In a review undertaken on
January 31, 2011 by the EU Councils High Level Working Party on Tax issues, or HLWP, it was
concluded that the personal tax provisions known as the deemed distribution and attribution
rules were in fact a business tax measure, and were therefore within the scope of the Code of
Conduct for Business Taxation. On February 15, 2011, and in the light of the HLWPs conclusions,
the States of Jersey announced that Jerseys business taxation regime known as zero-ten will
remain in place but that, as part of its good neighbor policy, Jersey will abolish the deemed
dividend and attribution rules with effect from January 1, 2012. Accordingly, it is not anticipated
that the way in which either we or our shareholders not resident in Jersey are taxed in Jersey will
change (although the ECOFIN Code of Conduct group still has to meet in May 2011 formally to
consider the HLWPs conclusions and Jerseys proposals to abolish the deemed dividend and
attribution rules).
Page 129
US Federal Income Taxation
The following discussion describes certain material US federal income tax consequences to US
Holders (defined below) under present law of an investment in the ADSs or ordinary shares. This
summary applies only to US Holders that hold the ADSs or ordinary shares as capital assets and that
have the US dollar as their functional currency. This discussion is based on the tax laws of the US
as in effect on the date of this annual report and on US Treasury regulations in effect or, in some
cases, proposed, as of the date of this annual report, as well as judicial and administrative
interpretations thereof available on or before such date. All of the foregoing authorities are
subject to change, which change could apply retroactively and could affect the tax consequences
described below.
The following discussion does not address the tax consequences to any particular investor or to
persons in special tax situations, such as:
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banks; |
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certain financial institutions; |
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insurance companies; |
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broker dealers; |
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traders that elect to mark-to-market; |
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tax-exempt entities; |
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persons liable for alternative minimum tax; |
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real estate investment trusts; |
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regulated investment companies; |
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US expatriates; |
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persons holding ADSs or ordinary shares as part of a straddle,
hedging, conversion or integrated transaction; |
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persons that actually or constructively own 10% or more of our voting
stock; or |
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persons holding ADSs or ordinary shares through partnerships or other
pass-through entities. |
In particular, it is noted that we are a controlled foreign corporation, or CFC, for US federal
income tax purposes, and therefore, if you are a US shareholder owning 10% or more of our voting
stock directly, indirectly and/or under the applicable attribution rules, the US federal income tax
consequences to you of owning our ADSs or ordinary shares may be significantly different than those
described below in several respects. If you own 10% or more of our voting stock directly,
indirectly and/or under the applicable attribution rules, you should consult your own tax advisors
regarding the US federal income tax consequences of your investment in our ADSs or ordinary shares.
US HOLDERS OF OUR ADSs OR ORDINARY SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE
APPLICATION OF THE US FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND
LOCAL AND NON-US TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ADSs OR
ORDINARY SHARES.
The discussion below of the US federal income tax consequences to US Holders will apply to you if
you are a beneficial owner of ADSs or ordinary shares and you are, for US federal income tax
purposes:
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a citizen or resident of the US; |
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a corporation (or other entity taxable as a corporation) organized
under the laws of the United States, any State thereof or the District
of Columbia; |
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an estate whose income is subject to US federal income taxation
regardless of its source; or |
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a trust that (1) is subject to the primary supervision of a court
within the United States and the control of one or more US persons for
all substantial decisions of the trust or (2) has a valid election in
effect under applicable US Treasury regulations to be treated as a US
person. |
If you are a partner in a partnership or other entity taxable as a partnership that holds ADSs or
ordinary shares, your tax treatment will depend on your status and the activities of the
partnership.
The discussion below assumes that the representations contained in the deposit agreement are true
and that the obligations in the deposit agreement and any related agreement will be complied with
in accordance with their terms. If you hold ADSs, you should be treated as the holder of the
underlying ordinary shares represented by those ADSs for US federal income tax purposes.
Page 130
Distributions
Subject to the passive foreign investment company rules discussed below, the gross amount of
distributions made by us with respect to the ADSs or ordinary shares (including the amount of any
taxes withheld therefrom) will be includable in your gross income in the year received (or deemed
received) as dividend income to the extent that such distributions are paid out of our current or
accumulated earnings and profits as determined under US federal income tax principles. We do not
intend to calculate our earnings and profits under US federal income tax principles. Therefore, a
US Holder should expect that a distribution will be treated as a dividend. No dividends received
deduction will be allowed for US federal income tax purposes with respect to dividends paid by us.
With respect to non-corporate US Holders, including individual US Holders, for taxable years
beginning before January 1, 2013, under current law dividends may be qualified dividend income
that is taxed at the lower applicable capital gains rate provided that (1) we are not a PFIC (as
discussed below) for either our taxable year in which the dividend is paid or the preceding taxable
year, (2) certain holding period requirements are met, and (3) the ADSs or ordinary shares, as
applicable, are readily tradable on an established securities market in the US. Under US Internal
Revenue Service, or IRS, authority, common shares, or ADSs representing such shares, are considered
to be readily tradable on an established securities market in the US if they are listed on the
NYSE, as our ADSs are. You should consult your own tax advisors regarding the availability of the
lower rate for dividends paid with respect to ADSs or ordinary shares, including the effects of any
change in law after the date of this annual report.
The amount of any distribution paid in pound sterling will be equal to the US dollar value of such
pound sterling on the date such distribution is received by the depositary, in the case of ADSs, or
by you, in the case of ordinary shares, regardless of whether the payment is in fact converted into
US dollars at that time. Gain or loss, if any, realized on the sale or other disposition of such
pound sterling will be US source ordinary income or loss, subject to certain exceptions and
limitations. The amount of any distribution of property other than cash will be the fair market
value of such property on the date of distribution.
Subject to certain exceptions, for foreign tax credit purposes, dividends distributed by us with
respect to ADSs or ordinary shares generally will constitute foreign source income. You are urged
to consult your tax advisors regarding the foreign tax credit limitation and source of income rules
with respect to distributions on the ADSs or ordinary shares.
Sale or Other Disposition of ADSs or Ordinary Shares
Subject to the PFIC rules discussed below, upon a sale or other taxable disposition of ADSs or
ordinary shares, you generally will recognize a capital gain or loss for US federal income tax
purposes in an amount equal to the difference between the US dollar value of the amount realized
and your tax basis in such ADSs or ordinary shares. If the consideration you receive for the ADSs
or ordinary shares is not paid in US dollars, the amount realized will be the US dollar value of
the payment received. Your initial tax basis in your ADSs or ordinary shares will equal the US
dollar value of the cost of such ADSs or ordinary shares, as applicable.
Subject to certain exceptions and limitations, capital gain or loss on a sale or other taxable
disposition of ADSs or ordinary shares generally will be US source gain or loss and treated as
long-term capital gain or loss, if your holding period in the ADSs or ordinary shares exceeds one
year. Subject to the passive foreign investment company rules discussed below and other
limitations, if you are a non-corporate US Holder, including an individual US Holder, any long-term
capital gain will be subject to US federal income tax at preferential rates. The deductibility of
capital losses is subject to significant limitations.
Passive Foreign Investment Company
A non-US corporation is considered a PFIC for any taxable year if either:
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at least 75% of its gross income is passive income, or |
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at least 50% of its assets (determined on the basis of a quarterly
average) is attributable to assets that produce or are held for the
production of passive income. |
We will be treated as owning our proportionate share of the assets and earning our proportionate
share of the income of any other corporation in which we own, directly or indirectly, 25% or more
(by value) of the stock.
Based on our current and anticipated operations and composition of our assets, we do not believe we
were a PFIC for our taxable year ended on March 31, 2011. However, as noted in our annual report
for our taxable year ended March 31, 2007, our PFIC status in respect of our taxable year ended
March 31, 2007 was uncertain. If we were treated as a PFIC
Page 131
for any year during which you held ADSs or ordinary shares, we will continue to be treated as a
PFIC for all succeeding years during which you hold ADS or ordinary shares, absent a special
election as discussed below.
If we are a PFIC for any taxable year during which you hold ADSs or ordinary shares, you will be
subject to special tax rules with respect to any excess distribution that you receive and any
gain you recognize from a sale or other disposition (including a pledge) of the ADSs or ordinary
shares, unless you make a mark-to-market or qualified electing fund, or QEF, election (if
available) as discussed below. Distributions you receive in a taxable year that are greater than
125% of the average annual distributions you received during the shorter of the three preceding
taxable years or your holding period for the ADSs or ordinary shares will be treated as an excess
distribution.
Under these special tax rules:
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the excess distribution or gain will be allocated ratably over your
holding period for the ADSs or ordinary shares, |
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the amount allocated to the current taxable year, and any taxable year
prior to the first taxable year in which we became a PFIC, will be
treated as ordinary income, and |
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the amount allocated to each other year will be subject to tax at the
highest tax rate in effect for that year and the interest charge
normally applicable to underpayments of tax will be imposed on the
resulting tax attributable to each such year. |
The tax liability for amounts allocated to years prior to the year of disposition or excess
distribution cannot be offset by any net operating losses for such years, and gains (but not
losses) realized on the sale of the ADSs or ordinary shares cannot be treated as capital, even if
you hold the ADSs or ordinary shares as capital assets.
In addition, if we are a PFIC, to the extent any of our subsidiaries are also PFICs, you may be
deemed to own shares in such subsidiaries that are directly or indirectly owned by us in that
proportion which the value of the shares you own so bears to the value of all of our shares, and
may be subject to the adverse tax consequences described above with respect to the shares of such
subsidiaries that you would be deemed to own.
If we are a PFIC, you may avoid taxation under the rules described above by making a QEF election
to include your share of our income on a current basis in any taxable year that we are a PFIC,
provided that we agree to furnish you annually with certain tax information. However, we do not
presently intend to prepare or provide such information.
Alternatively, if the ADSs are marketable stock (as defined below), you can avoid taxation under
the unfavorable PFIC rules described above in respect of the ADSs by making a mark-to-market
election in respect of the ADSs by the due date (determined with regard to extensions) for your tax
return in respect of your first taxable year during which we are treated as a PFIC. If you make a
mark-to-market election for the ADSs or ordinary shares, you will include in income in each of your
taxable years during which we are a PFIC an amount equal to the excess, if any, of the fair market
value of the ADSs or ordinary shares as of the close of your taxable year over your adjusted basis
in such ADSs or ordinary shares. You are allowed a deduction for the excess, if any, of the
adjusted basis of the ADSs or ordinary shares over their fair market value as of the close of the
taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains
on the ADSs or ordinary shares included in your income for prior taxable years. Amounts included in
your income under a mark-to-market election, as well as gain on the actual sale or other
disposition of the ADSs or ordinary shares, are treated as ordinary income. Ordinary loss treatment
also applies to the deductible portion of any mark-to-market loss on the ADSs or ordinary shares,
as well as to any loss realized on the actual sale or disposition of the ADSs or ordinary shares,
to the extent that the amount of such loss does not exceed the net mark-to-market gains previously
included for such ADSs or ordinary shares. Your basis in the ADSs or ordinary shares will be
adjusted to reflect any such income or loss amounts. Further, distributions would be taxed as
described above under Distributions, except that the preferential dividend rates with respect
to qualified dividend income would not apply. You will not be required to recognize
mark-to-market gain or loss in respect of your taxable years during which we were not at any time a
PFIC.
The mark-to-market election is available only for marketable stock, which is stock that is traded
in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified
exchange, including the NYSE, or other market, as defined in the applicable US Treasury
regulations. Our ADSs are listed on the NYSE and consequently, if you hold ADSs the mark-to-market
election would be available to you, provided that the ADSs are traded in sufficient quantities. US
Holders of ADSs or ordinary shares should consult their own tax advisors as to whether the ADSs or
ordinary shares would qualify for the mark-to-market election.
You also generally can make a deemed sale election in respect of any time we cease being a PFIC,
in which case you will be deemed to have sold, at fair market value, your ADSs or ordinary shares
(and shares of our PFIC subsidiaries, if
Page 132
any, that you are deemed to own) on the last day of our taxable year immediately prior to our
taxable year in respect of which we are not a PFIC. If you make this deemed sale election, you
generally would be subject to the unfavorable PFIC rules described above in respect of any gain
realized on such deemed sale, but as long as we are not a PFIC for future years, you would not be
subject to the PFIC rules for those future years.
If you hold ADSs or ordinary shares in any year in which we or any of our subsidiaries are a PFIC,
you would be required to file an annual information report with the U.S. Internal Revenue Service,
for each entity that is a PFIC, regarding distributions received on the ADSs or ordinary shares and
any gain realized on the disposition of the ADSs or ordinary shares. You should consult your own
tax advisors regarding the potential application of the PFIC rules to your ownership of ADSs or
ordinary shares and the elections discussed above.
US Information Reporting and Backup Withholding
Dividend payments with respect to ADSs or ordinary shares and proceeds from the sale, exchange or
redemption of ADSs or ordinary shares may be subject to information reporting to the IRS and
possible US backup withholding. Backup withholding will not apply, however, to a US Holder who
furnishes a correct taxpayer identification number and makes any other required certification or
who is otherwise exempt from backup withholding and establishes such exempt status. US Holders
should consult their tax advisors regarding the application of the US information reporting and
backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited
against your US federal income tax liability, and you may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS
and furnishing any required information.
Newly enacted legislation requires certain US Holders who are individuals, estates or trusts to pay
a 3.8% tax on, among other things, dividends and capital gains from the sale or other disposition
of ADSs or ordinary shares for taxable years beginning after December 31, 2012. In addition, for
taxable years beginning after March 18, 2010, new legislation requires certain US Holders who are
individuals to report information relating to an interest in our ADSs or ordinary shares, subject
to certain exceptions. US Holders should consult their tax advisers regarding the effect, if any,
of new US federal income tax legislation on their ownership and disposition of ADS or ordinary
shares.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
Publicly filed documents concerning our company which are referred to in this annual report may be
inspected and copied at the public reference facilities maintained by the Commission at 100 F
Street, N.E., Washington, D.C. 20549. Copies of these materials can also be obtained from the
Public Reference Room at the Commissions principal office, 100 F Street, N.E., Washington D.C.
20549, after payment of fees at prescribed rates.
The Commission maintains a website at www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that make electronic filings
through its Electronic Data Gathering, Analysis, and Retrieval, or EDGAR, system. We have made all
our filings with the Commission using the EDGAR system.
I. Subsidiary Information
For more information on our subsidiaries, please see Item 4. Information on the Company C.
Organizational Structure.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A. General
Market risk is attributable to all market sensitive financial instruments including foreign
currency receivables and payables. The value of a financial instrument may change as a result of
changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and
other market changes that affect market risk sensitive instruments.
Our exposure to market risk is primarily a function of our revenue generating activities and any
future borrowings in foreign currency. The objective of market risk management is to avoid
excessive exposure of our earnings to loss. Most of our exposure to market risk arises from our
revenue and expenses that are denominated in different currencies.
Page 133
The following risk management discussion and the estimated amounts generated from analytical
techniques are forward-looking statements of market risk assuming certain market conditions occur.
Our actual results in the future may differ materially from these projected results due to actual
developments in the global financial markets.
B. Risk Management Procedures
We manage market risk through our treasury operations. Our senior management and our Board of
Directors approve our treasury operations objectives and policies. The activities of our treasury
operations include management of cash resources, implementation of hedging strategies for foreign
currency exposures, implementation of borrowing strategies and monitoring compliance with market
risk limits and policies. Our foreign exchange committee, comprising the Chairman of the Board, our
Group Chief Executive Officer and our Group Chief Financial Officer, is the approving authority for
all our hedging transactions.
Components of Market Risk
Exchange Rate Risk
Our exposure to market risk arises principally from exchange rate risk. Although substantially all
of our revenue less repair payments is denominated in pound sterling, US dollars and Euros,
approximately 56.4% of our expenses (net of payments to repair centers made as part of our WNS Auto
Claims BPO segment) in fiscal 2011 were incurred and paid in Indian rupees. The exchange rates
among the Indian rupee, the pound sterling and the US dollar have changed substantially in recent
years and may fluctuate substantially in the future. We hedge a portion of our foreign currency
exposures. See Item 5. Operating and Financial Review Prospects Foreign Exchange Exchange
Rates.
Our exchange rate risk primarily arises from our foreign currency-denominated receivables. Based
upon our level of operations in fiscal 2011, a sensitivity analysis shows that a 10.0% appreciation
in the pound sterling against the US dollar would have increased revenue in fiscal 2011 by
approximately $49.6 million. Similarly, a 10.0% appreciation in the Indian rupee against the US
dollar would have increased our expenses incurred and paid in Indian rupee in fiscal 2011 by
approximately $26.3 million. Based upon our level of operations in fiscal 2011, a sensitivity
analysis shows that a 10.0% appreciation in the pound sterling against the US dollar would have
increased revenue less repair payments in fiscal 2011 by approximately $24.9 million. Similarly, a
10.0% appreciation in the Indian rupee against the US dollar would have increased our expenses
incurred and paid in Indian rupee in fiscal 2011 by approximately $26.3 million.
To protect against exchange gains (losses) on forecasted revenue/inter-company revenue, we have
instituted a foreign currency cash flow hedging program. Our operating entities hedge a part of
their forecast revenue/inter-company revenue denominated in foreign currencies with forward
contracts and options.
Interest Rate Risk
Our exposure to interest rate risk arises principally from our borrowings which have a floating
rate of interest, a portion of which is linked to the US dollar LIBOR and the remainder is linked
to the Bank of England base rate. The costs of floating rate borrowings may be affected by the
fluctuations in the interest rates. In connection with the term loan facility entered into in 2008,
which we refinanced in 2010, we entered into interest rate swap agreements with banks in fiscal
2009. These swap agreements effectively converted the term loan from a variable US dollar LIBOR
interest rate to a fixed rate, thereby managing our exposure to changes in market interest rates
under the term loan. The outstanding swap agreements as at March 31, 2011 aggregated $74 million.
Our use of derivative instruments is limited to effective fixed and floating interest rate swap
agreements used to manage well-defined interest rate risk exposures.
We monitor our positions and do not anticipate non-performance by the counterparties. We intend to
selectively use interest rate swaps, options and other derivative instruments to manage our
exposure to interest rate movements. These exposures are reviewed by appropriate levels of
management on a periodic basis. We do not enter into hedging agreements for speculative purposes.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
D. American Depositary Shares
Our ADR facility is maintained with Deutsche Bank Trust Company Americas, or the Depositary,
pursuant to a Deposit Agreement, dated as of July 18, 2006, among us, our Depositary and the
holders and beneficial owners of ADSs. We use the term holder in this discussion to refer to the
person in whose name an ADR is registered on the books of the Depositary.
Page 134
In accordance with the Deposit Agreement, the Depositary may charge fees up to the amounts
described below:
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Type of Service |
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Fees |
1.
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Issuance of ADSs, including upon the
deposit of ordinary shares or to any person
to whom an ADS distribution is made
pursuant to share dividends or other free
distributions of shares, bonus
distributions, share splits or other
distributions (except where converted to
cash)
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$5.00 per 100 ADSs
(or any portion
thereof) |
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2.
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Surrender of ADSs for cancellation and
withdrawal of ordinary shares underlying
such ADSs (including cash distributions
made pursuant to a cancellation or
withdrawal)
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$5.00 per 100 ADSs
(or any portion
thereof) |
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3.
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Distribution of cash proceeds, including
cash dividends or sale of rights and other
entitlements, not made pursuant to a
cancellation or withdrawal)
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$2.00 per 100 ADSs
(or any portion
thereof) |
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4.
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Issuance of ADSs upon the exercise of rights
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$5.00 per 100 ADSs
(or any portion
thereof) |
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5.
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Operations and maintenance costs in
administering the ADSs (provided that the
total fees assessed under this item,
combined with the total fees assessed under
item 3 above, should not exceed $0.02 per
ADS in any calendar year)
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$0.02 per ADS per
calendar year |
In addition, holders or beneficial owners of our ADS, persons depositing ordinary shares for
deposit and persons surrendering ADSs for cancellation and withdrawal of deposited securities will
be required to pay the following charges:
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taxes (including applicable interest and penalties) and other
governmental charges; |
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registration fees for the registration of ordinary shares or other
deposited securities with applicable registrar and applicable to
transfers of ordinary shares or other deposited securities in
connection with the deposit or withdrawal of ordinary shares or other
deposited securities; |
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certain cable, telex, facsimile and electronic transmission and
delivery expenses; |
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expenses and charges incurred by the Depositary in the conversion of
foreign currency into US dollars; |
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fees and expenses incurred by the Depositary in connection with
compliance with exchange control regulations and other regulatory
requirements applicable to ordinary shares, deposited securities, ADSs
and ADRs; |
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fees and expenses incurred by the Depositary in connection with the
delivery of deposited securities; and |
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any additional fees, charges, costs or expenses that may be incurred
by the Depositary from time to time. |
In the case of cash distributions, the applicable fees, charges, expenses and taxes will be
deducted from the cash being distributed. In the case of distributions other than cash, such as
share dividends, the distribution generally will be subject to appropriate adjustments for the
deduction of the applicable fees, charges, expenses and taxes. In certain circumstances, the
Depositary may dispose of all or a portion of such distribution and distribute the net proceeds of
such sale to the holders of ADS, after deduction of applicable fees, charges, expenses and taxes.
If the Depositary determines that any distribution in property is subject to any tax or other
governmental charge which the Depositary is obligated to withhold, the Depositary may withhold the
amount required to be withheld and may dispose of all or a portion of such property in such amounts
and in such manner as the Depositary deems necessary and appropriate to pay such taxes or charges
and the Depositary will distribute the net proceeds of any such sale after deduction of such taxes
or charges to the holders of ADSs entitled to the distribution.
Page 135
During fiscal 2011, the Depository has made a payment of $5,500 to IPREO (Hemscott Holdings
Limited) on behalf of our company in consideration for our access to Bigdough investor relations
tool.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, management has evaluated, with the
participation of our Group Chief Executive Officer and Group Chief Financial Officer, the
effectiveness of our disclosure controls and procedures as of the end of the period covered by this
report. Disclosure controls and procedures refer to controls and other procedures designed to
ensure that information required to be disclosed in the reports we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time periods specified in
the rules and forms of the Commission. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be disclosed by
us in our reports that we file or submit under the Exchange Act is accumulated and communicated to
management, including our Group Chief Executive Officer and Group Chief Financial Officer, as
appropriate to allow timely decisions regarding our required disclosure.
As disclosed in our annual report on Form 20-F for the fiscal year ended March 31, 2010, we had
concluded that our internal control over financial reporting was not effective as of that date due
to a material weakness identified in the design and operating effectiveness of our controls over
the recognition and accrual of repair payments to garages and related
fees in our WNS Auto Claims BPO
segment.
In response to the above material weakness, we have implemented the corrective actions described
below to remediate the material weakness.
Following the implementation of these measures, our management, including our Group Chief Executive
Officer and Group Chief Financial Officer, have concluded that, as at March 31, 2011, the material
weakness identified as at March 31, 2010 have been remediated and that our disclosure controls and
procedures were effective and provide a reasonable level of assurance.
Page 136
Managements Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal controls over
financial reporting.
Internal controls over financial reporting refers to a process designed by, or under the
supervision of, our Group Chief Executive Officer and Group Chief Financial Officer and effected by
our Board of Directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies
and procedures that:
|
|
pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of
our assets; |
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|
|
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
our receipts and expenditures are being made only in accordance
with authorizations of our management and members of our Board of
Directors; and |
|
|
|
provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of our
assets that could have a material effect on our financial
statements. |
Management recognizes that there are inherent limitations in the effectiveness of any system of
internal control over financial reporting, including the possibility of human error and the
circumvention or override of internal control. Accordingly, even effective internal control over
financial reporting can provide only reasonable assurance with respect to financial statement
preparation, and may not prevent or detect all misstatements.
Management assessed the effectiveness of internal control over financial reporting as at March 31,
2011 based on the criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on the above criteria, and
as a result of this assessment, management concluded that, as at March 31, 2011, our internal
control over financial reporting was effective in providing reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
The effectiveness of our internal control over financial reporting as at March 31, 2011 has been
audited by Grant Thornton, an independent registered public accounting firm, as stated in their
report set out below.
Remediation of Fiscal 2010 Material Weakness
As disclosed in our annual report on Form 20-F for the fiscal year ended March 31, 2010, we had
concluded that our internal control over financial reporting was not effective as of that date,
which during fiscal 2011 has been remediated. The material weakness identified in the design and operating
effectiveness of our controls over the recognition and accrual of repair payments to garages and
related fees in our Auto Claims BPO segment.
To remediate the material weakness described above, we have:
|
|
|
augmented the US GAAP expertise of our accounting team in the area of revenue
recognition; |
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|
|
|
enhanced the monitoring controls and documentation for the revenue recognition process
in the WNS Auto Claims BPO segment; and |
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|
|
performed a thorough review of all the contracts in the WNS Auto Claims BPO segment to check
for implication and adherence with US GAAP. |
Page 137
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
WNS (Holdings) Limited
We have audited WNS (Holdings) Limited and Subsidiaries (the Company) internal control over
financial reporting as of March 31, 2011, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Companys management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Managements Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on the Companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the Company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, WNS (Holdings) Limited and Subsidiaries maintained, in all material respects,
effective internal control over financial reporting as of March 31, 2011, based on criteria
established in Internal ControlIntegrated Framework issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheet of WNS (Holdings) Limited and Subsidiaries as
of March 31, 2011, and the related consolidated statement of income, equity and comprehensive
income and cash flows for the year then ended, and our report dated April 29, 2011 expressed an
unqualified opinion on those financial statements.
/s/ Grant Thornton
Mumbai, India
April 29, 2011
Page 138
Changes in Internal Control over Financial Reporting
Management has evaluated, with the participation of our Group Chief Executive Officer and Group
Chief Financial Officer, whether any changes in our internal control over financial reporting that
occurred during our last fiscal year have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting. Based on the evaluation we
conducted, management has concluded that no such changes have occurred.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Audit
Committee members are Messrs. Albert Aboody (Chairman),
Eric B. Herr, Richard O. Bernays and
Sir Anthony A. Greener. Each of Messrs. Aboody, Herr, Bernays and Sir Anthony A. Greener is an
independent director pursuant to the applicable rules of the Commission and the NYSE. See Item 6.
Directors, Senior Management and Employees A. Directors and Executive Officers for the
experience and qualifications of the members of the Audit Committee. Our Board of Directors has
determined that Messrs. Aboody and Herr each qualifies as an audit committee financial expert as defined in Item
16A of Form 20-F.
ITEM 16B. CODE OF ETHICS
We have adopted a written Code of Business Ethics and Conduct that is applicable to all of our
directors, senior management and employees. We have posted the code on our website at
www.wns.com . Information contained in our website does not constitute a part of this
annual report. We will also make available a copy of the Code of Business Ethics and Conduct to any
person, without charge, if a written request is made to our General Counsel at our principal
executive offices at Gate 4, Godrej & Boyce Complex, Pirojshanagar, Vikhroli (W), Mumbai 400 079,
India.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Principal Accountant Fees and Services
Grant Thornton has served as our independent public accountant for the fiscal year ended March 31,
2011. Prior to this year, Ernst & Young served as our independent public accountant for fiscal year
ended March 31, 2010 and the subsequent interim reporting period through August 31, 2010. The
following table shows the fees we paid or accrued for the audit and other services provided by
Grant Thornton for the year ended March 31, 2011, and the fees we paid or accrued for the audit and
other services provided by our former independent auditor, Ernst & Young for the year ended March
31, 2010 and a portion of the subsequent interim reporting period through August 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal |
|
|
2011(1) |
|
2011(2) |
|
2010(2) |
Audit fees |
|
$ |
499,000 |
|
|
$ |
200,000 |
|
|
$ |
822,000 |
|
Audit-related fees |
|
|
28,250 |
|
|
|
101,000 |
|
|
|
48,200 |
|
Tax fees |
|
|
6,000 |
|
|
|
|
|
|
|
27,000 |
|
All other fees |
|
|
|
|
|
|
|
|
|
|
17,600 |
|
|
|
|
Notes: |
|
(1) |
|
Fees of Grant Thornton. |
|
(2) |
|
Fees of Ernst & Young. |
Audit fees. This category consists of fees billed for the audit of financial statements, quarterly
review of financial statements and other audit services, which are normally provided by the
independent auditors in connection with statutory and accounting matters that arose during, or as a
result of, the audit or the review of interim financial statements and include the group audit;
statutory audits required by non-US jurisdictions; comfort letters and consents; attest services;
and assistance with and review of documents filed with the Commission.
Audit-related fees. This category consists of fees billed for assurance and related services that
are reasonably related to the performance of the audit or review of our financial statements or
that are traditionally performed by the external auditor, and include service tax certifications,
advisory services relating to financial reporting in interactive data format (XBRL) and SAS 70
audits.
Tax fees. This category includes fees billed for tax compliance services, including tax
consultations, such as assistance and representation in connection with tax audits and appeals, tax
advice related to mergers and acquisitions, and requests for rulings or technical advice from
taxing authorities and tax planning services.
All other fees. This category includes fees billed for advisory services in relation with STPI and
SEZ set ups.
Audit Committee Pre-approval Process
Our Audit Committee reviews and pre-approves the scope and the cost of all audit and permissible
non-audit services performed by the independent auditors. All of the services provided by Grant
Thornton and Ernst & Young during the last fiscal year have been
approved by our Audit Committee.
Page 139
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Neither we, nor any affiliated purchaser, made any purchase of our equity securities in fiscal
2011.
Item 16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
On August 25, 2010, our Audit Committee decided not to recommend the firm of Ernst & Young for
re-appointment as our independent auditor and appointed the firm of Grant Thornton to serve
as our independent auditor until our next annual general meeting to be held in respect of the
fiscal year ended March 31, 2011. The decision was made by our Audit Committee following a tender
process undertaken by our Audit Committee. On September 4, 2010, we received a letter dated August
31, 2010 from Ernst & Young confirming that the client-auditor relationship between us and Ernst &
Young has ceased. Our change in auditor from Ernst & Young to Grant Thornton and the appointment
of Grant Thornton as our independent auditor until our next annual general meeting was
ratified by our shareholders at our annual general meeting held on October 20, 2010.
Ernst & Youngs reports on our consolidated financial statements for the fiscal years ended March
31, 2010 and 2009 did not contain an adverse opinion or a disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles, except that the
audit report for the consolidated financial statements as at March 31, 2010 and 2009 and for each
of the three years in the period ended March 31, 2010 indicated that (i) the consolidated financial
statements for the fiscal years ended March 31, 2009 and 2008 have been restated as discussed in
Note 2 to the consolidated financial statements and (ii) as discussed in Note 3 to the consolidated
financial statements, effective April 1, 2009 we adopted Financial Accounting Standards Board
Statement (FASB) No. 160 Non-controlling interests in consolidated financial statements, as an
amendment to ARB No. 51 (codified in FASB Accounting Standard Codification Topic 810 Consolidation)
in respect of the redeemable noncontrolling interests of a subsidiary.
During the fiscal years ended March 31, 2010 and 2009, and the subsequent interim period through
August 31, 2010, there were no disagreements (as such term is defined in Item 16F(a)(1)(iv) of Form
20-F under the Securities Act (Form 20-F), and the related instructions to Item 16F) with Ernst &
Young on any matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Ernst &
Young, would have caused Ernst & Young to make reference to the subject matter of the disagreements
in its reports on our consolidated financial statements for such years.
During the fiscal years ended March 31, 2010 and 2009, and the subsequent interim period through
August 31, 2010, there have been no reportable events (as such term is defined in Item
16F(a)(1)(v) of Form 20-F) except as described below.
As reported in our annual report on Form 20-F for the fiscal year ended March 31, 2010 (the FY2010
Form 20-F), we, in consultation with our Audit Committee, concluded that (i) our previously issued
financial statements for the fiscal years ended March 31, 2009, 2008, 2007 and 2006 and for the
first, second and third quarters of the year ended March 31, 2010 and each of the quarters of the
year ended March 31, 2009 should be restated to correct our prior accounting treatment for referral
fees earned from garages, and revenue and costs on completed but unbilled repairs, in its auto
claims business, as described therein, (ii) the financial information included in the reports
previously filed or furnished by us for periods from April 1, 2005 through December 31, 2009 should
no longer be relied upon and are superseded by the information contained in the FY2010 Form 20-F,
and (iii) as at March 31, 2010, our internal control over financial reporting was not effective due
to a material weakness identified in the design and operating effectiveness of our controls over
the recognition and accrual of repair payments to garages and related fees in its auto claims
business, as a result of which we have restated our audited consolidated financial statements as
summarized above and described in detail in the FY2010 Form 20-F. Ernst & Youngs report on
internal control over financial reporting stated that we did not maintain effective internal
control over financial reporting as at March 31, 2010. We have authorized Ernst & Young to respond
fully to any inquiries of Grant Thornton regarding the reportable events discussed above.
We have implemented certain corrective actions to remediate the material weakness, following which,
our management, including our Group Chief Executive Officer and Group Chief Financial Officer,
concluded that, as at March 31, 2011, the material weakness identified as at March 31, 2010 have
been remediated and that our internal control over financial reporting was effective and provided a
reasonable level of assurance. Please see Item 15. Controls and Procedures.
During the fiscal years ended March 31, 2010 and 2009, and the subsequent interim period through
August 31, 2010, we did not, nor did anyone on our behalf, consult with Grant Thornton
regarding (i) the application of accounting principles to a specified transaction, either completed
or proposed, or the type of audit opinion that might be rendered on its financial statements, and
neither a written report nor oral advice was provided to us that Grant Thornton concluded
was an important factor considered by us in reaching a decision as to the accounting, auditing or
financial reporting issue; or (ii) any matter that was the subject of a disagreement (as defined in
Item 16F(a)(1)(iv) of Form 20-F and the related instructions to Item 16F) or a reportable event (as defined in Item 16F(a)(1)(v) of Form 20-F).
In March 2010, we engaged Grant Thornton to carry out an independent goodwill impairment
test analyses regarding the recorded goodwill of (i) Chang Limited (that was acquired by us in
April 2008), the holding company of AHA which is the key operating entity, and (ii) Business
Applications Associates Limited (BizAps) (that was acquired by us in June 2008). In May 2010,
Grant Thornton issued valuation reports concluding that in its view, subject to the caveats
set forth in the reports, the fair value of AHA and BizAps was significantly higher than the
carrying value of businesses as at March 31, 2010, respectively, and accordingly, the goodwill
relating to the acquisition of AHA and BizAps, respectively, was not impaired. We considered Grant
Thorntons valuation reports on AHA and BizAps and concluded that the fair value of AHA and
BizAps was significantly higher than the carrying value of businesses as at March 31, 2010,
respectively, and accordingly, the goodwill relating to the acquisition of AHA and BizAps,
respectively, was not impaired. Grant Thornton has confirmed to us that these services do not
impair Grant Thorntons independence for being appointed as independent auditor for the
fiscal year ended March 31, 2011.
We have provided both Ernst & Young and Grant Thornton with a copy of the foregoing
disclosures. We have requested Ernst & Young, and provided Grant Thornton the opportunity,
to furnish us with a letter addressed to the Commission stating whether it agrees with the statements made
by us in response to this Item 16(F), and if not, stating the respects in which it does not agree.
A copy of the letter from Ernst & Young addressed to the
Commission, dated April 29, 2011, is filed as Exhibit
15.3 to this annual report.
Page 140
ITEM 16G. CORPORATE GOVERNANCE
We have posted our Corporate Governance Guidelines on our website at www.wns.com.
Messrs. Eric B. Herr, Richard O. Bernays, Deepak S. Parekh, and Sir Anthony A. Greener are members
of our Board of Directors and they serve on each of our Compensation Committee and Nominating and
Corporate Governance Committee. Messrs. Albert Aboody, Eric B. Herr, Richard O. Bernays and Sir
Anthony A. Greener serve on our Audit Committee. Each of Messrs. Aboody, Herr, Bernays and Sir
Anthony A. Greener satisfies the independence requirements of the NYSE listing standards and the
independence requirements of Rule 10A-3 of the Exchange Act.
As our ADSs are listed on the NYSE, we are subject to the NYSE listing standards. We believe that
our corporate governance practices do not differ in any significant way from those required to be
followed by issuers incorporated in the United States, or US companies, under the NYSE listing
standards. The NYSE listing standards provide that US companies must have a majority independent
Board of Directors and a nominating/corporate governance committee and a compensation committee
each composed entirely of independent directors. From June 1,
2010 (when Mr. Parekh entered into a
consulting arrangement with another party) to June 28, 2010 (when Mr. Albert Aboody was appointed as
a director as described below), our Board of Directors decided that
it was not majority independent and effective June 1, 2010, our
Nominating and Corporate Governance Committee and our Compensation
Committee are no longer fully
independent.
On June 28, 2010, our Board of Directors appointed Mr. Albert Aboody as an independent director and
Chairman of our Audit Committee. Upon the appointment of Mr. Aboody as an additional independent
director and the chairman of our Audit Committee, our Board has become majority independent and the
Audit Committee consists of four independent directors.
Page 141
PART III
ITEM 17. FINANCIAL STATEMENTS
See Item 18 for a list of our consolidated financial statements included elsewhere in this annual
report.
ITEM 18. FINANCIAL STATEMENTS
The following statements are filed as part of this annual report, together with the report of the
independent registered public accounting firm:
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Report of Independent Registered Public Accounting Firm Grant
Thornton |
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Report of Independent Registered Public Accounting Firm Ernst
& Young |
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Consolidated Balance Sheets as at March 31, 2011 and 2010 |
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Consolidated Statements of Income for the years ended March 31, 2011,
2010 and 2009 |
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Consolidated Statements of Equity and Comprehensive Income for the
years ended March 31, 2011, 2010 and 2009 |
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Consolidated Statements of Cash Flows for the years ended March 31,
2011, 2010 and 2009 |
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Notes to Consolidated Financial Statements |
ITEM 19. EXHIBITS
The following exhibits are filed as part of this annual report:
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1.1
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Memorandum of Association of WNS (Holdings) Limited, as amended
incorporated by reference to Exhibit 3.1 of the Registration Statement
on Form F-1 (File No. 333-135590) of WNS (Holdings) Limited, as filed
with the Commission on July 3, 2006. |
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1.2
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Articles of Association of WNS (Holdings) Limited, as amended
incorporated by reference to Exhibit 3.2 of the Registration Statement
on Form F-1 (File No. 333-135590) of WNS (Holdings) Limited, as filed
with the Commission on July 3, 2006. |
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2.1
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Form of Deposit Agreement among WNS (Holdings) Limited, Deutsche Bank
Trust Company Americas, as Depositary, and the holders and beneficial
owners of American Depositary Shares evidenced by American Depositary
Receipts, or ADR, issued thereunder (including the Form of ADR)
incorporated by reference to Exhibit 4.1 of the Registration Statement
on Form F-1 (File No. 333-135590) of WNS (Holdings) Limited, as filed
with the Commission on July 3, 2006. |
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2.2
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Specimen Ordinary Share Certificate of WNS (Holdings) Limited
incorporated by reference to Exhibit 4.4 of the Registration Statement
on Form 8-A (File No. 001-32945) of WNS (Holdings) Limited, as filed
with the Commission on July 14, 2006. |
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4.1
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Lease Deed dated January 25, 2006 between DLF Cyber City and WNS
Global Services Private Limited incorporated by reference to
Exhibit 4.2 of the Annual Report on Form 20-F for fiscal 2007 (File
No. 001-32945) of WNS (Holdings) Limited, as filed with the Commission
on June 26, 2007. |
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4.2
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Lease Deed dated March 10, 2005 between DLF Cyber City and WNS Global
Services Private Limited incorporated by reference to Exhibit 10.2
of the Registration Statement on Form F-1 (File No. 333-135590) of WNS
(Holdings) Limited, as filed with the Commission on July 3, 2006. |
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4.3
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Leave and Licence Agreement dated November 10, 2005 between Godrej &
Boyce Manufacturing Company Limited and WNS Global Services Private
Limited with respect to the lease of office premises with an aggregate |
Page 142
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area of 59,202 square feet at Plant 10 incorporated by reference to
Exhibit 10.5 of the Registration Statement on Form F-1 (File No.
333-135590) of WNS (Holdings) Limited, as filed with the Commission on
July 3, 2006. |
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4.4
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Leave and Licence Agreement dated November 10, 2005 between Godrej &
Boyce Manufacturing Company Limited and WNS Global Services Private
Limited with respect to the lease of office premises with an area of
4,867 square feet at Plant 10 incorporated by reference to Exhibit
4.5 of the Annual Report on Form 20-F for fiscal 2007 (File No.
001-32945) of WNS (Holdings) Limited, as filed with the Commission on
June 26, 2007. |
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4.5
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Leave and Licence Agreement dated November 10, 2005 between Godrej &
Boyce Manufacturing Company Limited and WNS Global Services Private
Limited with respect to the lease of office premises with an aggregate
area of 20,360 square feet at Plant 10 incorporated by reference to
Exhibit 4.6 of the Annual Report on Form 20-F for fiscal 2007 (File
No. 001-32945) of WNS (Holdings) Limited, as filed with the Commission
on June 26, 2007. |
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4.6
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Leave and Licence Agreement dated May 31, 2006 between Godrej & Boyce
Manufacturing Company Limited and WNS Global Services Private Limited
with respect to Plant 11 incorporated by reference to Exhibit 10.12
of the Registration Statement on Form F-1 (File No. 333-135590) of WNS
(Holdings) Limited, as filed with the Commission on July 3, 2006. |
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4.7
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Lease Deed dated December 6, 2010 between DLF Assets Private Limited
and WNS Global Services Private Limited with respect to lease of
office premises. ** |
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4.8
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Lease Deed dated January 28, 2011 between BCR Real Estate Fund and WNS
BPO Services Costa Rica, S.A. with respect to Lease premises. ** |
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4.9
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WNS (Holdings) Limited 2002 Stock Incentive Plan incorporated by
reference to Exhibit 10.10 of the Registration Statement on Form F-1
(File No. 333-135590) of WNS (Holdings) Limited, as filed with the
Commission on July 3, 2006. |
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4.10
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Form of the Amended and Restated WNS (Holdings) Limited 2006
Incentive Award Plan incorporated by reference to Appendix A to
WNS (Holdings) Limiteds Proxy Statement which was furnished as
Exhibit 99.3 of its Report on Form 6-K (File No. 001-32945), as
furnished to the Commission on January 12, 2009. |
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4.11
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Share Sale and Purchase Agreement, dated July 11, 2008, relating to
the sale and purchase of shares in Aviva Global Services Singapore
Pte. Ltd. between Aviva International Holdings Limited and WNS
Capital Investment Limited incorporated by reference to Exhibit
4.15 of the Annual Report on Form 20-F for fiscal 2008 (File No.
001-32945) of WNS (Holdings) Limited, as filed with the Commission on
August 1, 2008. # |
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4.12
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Master Services Agreement, dated July 11, 2008, between Aviva Global
Services (Management Services) Private Ltd. and WNS Capital
Investment Limited incorporated by reference to Exhibit 4.16 of
the Annual Report on Form 20-F for fiscal 2008 (File No. 001-32945)
of WNS (Holdings) Limited, as filed with the Commission on August 1,
2008. # |
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4.13
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Variation Agreement dated
August 3, 2009 between Aviva Global Services (Management
Services) Private Ltd. and WNS Capital Investment Limited. ** |
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4.14
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Novation and Agreement of Amendment dated March 24, 2011 between Aviva Global Services
(Management Services) Private Ltd., WNS Capital Investment Limited
and WNS Global Services Private Limited to assign the Master Services
Agreement, dated July 11, 2008, between Aviva Global Services
(Management Services) Private Ltd. and WNS Capital Investment
Limited which was incorporated by reference to Exhibit 4.16 of the
Annual Report on Form 20-F for fiscal 2008 (File No. 001-32945) of
WNS (Holdings) Limited, as filed with the Commission on August 1,
2008. ** |
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4.15
|
|
Facility Agreement dated July 2, 2010 between WNS (Mauritius)
Limited, as borrower, WNS (Holdings) Limited and subsidiary
guarantors named there in, the Hongkong and Shanghai Banking
Coropration Limited, DBS Bank Ltd and BNP Paribas, as lead arrangers,
and others incorporated by reference to Exhibit 99.1 of
the Report
on Form 6-K (File No. 001-32945) of WNS (Holdings) Limited, as
furnished to the Commission on July 30, 2010. |
Page 143
|
|
|
8.1
|
|
List of subsidiaries of WNS (Holdings) Limited.** |
|
|
|
12.1
|
|
Certification by the Chief Executive Officer to 17 CFR 240,
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. ** |
|
|
|
12.2
|
|
Certification by the Chief Financial Officer to 17 CFR 240,
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. ** |
|
|
|
13.1
|
|
Certification by the Chief Executive Officer to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. ** |
|
|
|
13.2
|
|
Certification by the Chief Financial Officer to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. ** |
|
|
|
15.1
|
|
Consent of Ernst & Young, independent registered public accounting firm. ** |
|
|
|
15.2
|
|
Consent of Grant Thornton, independent registered public accounting firm. ** |
|
|
|
15.3
|
|
Auditor letter of Ernst & Young, independent registered public accounting firm, pertaining to Item 16F. ** |
|
|
|
** |
|
Filed herewith. |
|
# |
|
Certain portions of this exhibit have been omitted pursuant to a confidential treatment order of the Commission. The
omitted portions have been separately filed with the Commission. |
Page 144
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and
that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
Date:
April 29, 2011
|
|
|
|
|
|
WNS (HOLDINGS) LIMITED
|
|
|
By: |
/s/ Keshav R. Murugesh
|
|
|
Name: |
Keshav R. Murugesh |
|
|
Title: |
Group Chief Executive Officer |
|
|
Page 145
INDEX TO WNS (HOLDINGS) LIMITEDS CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
F-2 |
|
|
|
|
F-3 |
|
|
|
|
F-4 |
|
|
|
|
F-5 |
|
|
|
|
F-6 |
|
|
|
|
F-8 |
|
|
|
|
F-9 |
|
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of
WNS (Holdings) Limited
We have audited the accompanying consolidated balance sheet of WNS (Holdings)
Limited and Subsidiaries (the Company) as of March 31, 2011 and the related consolidated statement of income, equity and comprehensive
income and cash flows for the year then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of WNS (Holdings) Limited and Subsidiaries as of March 31, 2011, and
the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), WNS (Holdings)
Limited and Subsidiaries internal control over financial reporting as
of March 31, 2011, based on criteria established in Internal Control Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), and our
report dated April 29, 2011 expressed an unqualified opinion thereon.
/s/ Grant Thornton
Mumbai, India
April 29, 2011
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of
WNS (Holdings) Limited
We have audited the accompanying consolidated balance sheet of WNS (Holdings) Limited (the Company) as of
March 31, 2010 and the related consolidated statements of income, equity and comprehensive income and cash
flows for each of the two years in the period ended March 31, 2010. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of WNS (Holdings) Limited at March 31, 2010, and the consolidated results of its operations and
its cash flows for each of the two years in the period ended March 31, 2010, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst and Young
Mumbai, India
June 15, 2010
F-3
WNS (HOLDINGS) LIMITED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
As at March 31, |
|
|
2011 |
|
2010 |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
27,090 |
|
|
$ |
32,311 |
|
Bank deposits and marketable securities |
|
|
12 |
|
|
|
45 |
|
Accounts receivable, net of allowance of $4,397 and $3,152, respectively |
|
|
78,030 |
|
|
|
44,082 |
|
Accounts receivable related parties |
|
|
556 |
|
|
|
739 |
|
Unbilled revenue |
|
|
30,837 |
|
|
|
40,892 |
|
Funds held for clients |
|
|
8,799 |
|
|
|
11,372 |
|
Employee receivables |
|
|
1,232 |
|
|
|
1,526 |
|
Prepaid expenses |
|
|
2,307 |
|
|
|
2,101 |
|
Prepaid income taxes |
|
|
8,502 |
|
|
|
5,602 |
|
Deferred tax assets |
|
|
3,078 |
|
|
|
1,959 |
|
Other current assets |
|
|
24,322 |
|
|
|
36,308 |
|
|
|
|
Total current assets |
|
|
184,765 |
|
|
|
176,937 |
|
Investments |
|
|
2 |
|
|
|
|
|
Goodwill |
|
|
94,036 |
|
|
|
90,662 |
|
Intangible assets, net |
|
|
156,587 |
|
|
|
188,079 |
|
Property and equipment, net |
|
|
48,592 |
|
|
|
51,700 |
|
Other assets |
|
|
3,350 |
|
|
|
10,242 |
|
Deposits |
|
|
7,345 |
|
|
|
7,086 |
|
Deferred tax assets |
|
|
33,742 |
|
|
|
25,184 |
|
|
|
|
TOTAL ASSETS |
|
$ |
528,419 |
|
|
$ |
549,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
43,748 |
|
|
$ |
27,900 |
|
Current portion of long term debt |
|
|
50,000 |
|
|
|
40,000 |
|
Short term borrowings |
|
|
14,593 |
|
|
|
|
|
Accrued employee cost |
|
|
31,034 |
|
|
|
30,977 |
|
Deferred revenue |
|
|
6,962 |
|
|
|
4,891 |
|
Income taxes payable |
|
|
3,088 |
|
|
|
2,550 |
|
Other current liabilities |
|
|
45,255 |
|
|
|
67,585 |
|
|
|
|
Total current liabilities |
|
|
194,680 |
|
|
|
173,903 |
|
Long term debt |
|
|
43,095 |
|
|
|
95,000 |
|
Deferred revenue |
|
|
5,976 |
|
|
|
3,515 |
|
Other liabilities |
|
|
2,978 |
|
|
|
3,727 |
|
Accrued pension liability |
|
|
4,087 |
|
|
|
3,921 |
|
Deferred tax liabilities |
|
|
5,953 |
|
|
|
8,343 |
|
Derivatives |
|
|
431 |
|
|
|
7,600 |
|
|
|
|
TOTAL LIABILITIES |
|
|
257,200 |
|
|
|
296,009 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
|
|
|
|
|
278 |
|
WNS (Holdings) Limited shareholders equity: |
|
|
|
|
|
|
|
|
Ordinary shares, $0.16 (10 pence) par value, authorized:
50,000,000
shares; Issued and outstanding: 44,443,726 and 43,743,953 shares, respectively |
|
|
6,955 |
|
|
|
6,848 |
|
Additional paid-in-capital |
|
|
208,050 |
|
|
|
203,531 |
|
Retained earnings |
|
|
60,259 |
|
|
|
50,797 |
|
Accumulated other comprehensive loss |
|
|
(4,045 |
) |
|
|
(7,573 |
) |
|
|
|
Total WNS (Holdings) Limited shareholders equity |
|
|
271,219 |
|
|
|
253,603 |
|
|
|
|
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY |
|
$ |
528,419 |
|
|
$ |
549,890 |
|
|
|
|
See accompanying notes.
F-4
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Revenue (a) |
|
$ |
616,251 |
|
|
$ |
582,461 |
|
|
$ |
520,901 |
|
Cost of revenue (a) |
|
|
491,847 |
|
|
|
439,248 |
|
|
|
391,808 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
124,404 |
|
|
|
143,213 |
|
|
|
129,093 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses (a) |
|
|
80,543 |
|
|
|
86,231 |
|
|
|
75,522 |
|
Amortization of intangible assets |
|
|
31,810 |
|
|
|
32,422 |
|
|
|
24,912 |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
12,051 |
|
|
|
24,560 |
|
|
|
28,659 |
|
Other (income) expenses, net |
|
|
(6,106 |
) |
|
|
7,052 |
|
|
|
5,639 |
|
Interest expense (a) |
|
|
8,018 |
|
|
|
13,823 |
|
|
|
11,782 |
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
10,139 |
|
|
|
3,685 |
|
|
|
11,238 |
|
Provision for income taxes |
|
|
1,052 |
|
|
|
998 |
|
|
|
3,343 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
9,087 |
|
|
|
2,687 |
|
|
|
7,895 |
|
Less: Net loss attributable to redeemable noncontrolling interest |
|
|
(730 |
) |
|
|
(1,023 |
) |
|
|
(287 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to WNS (Holdings) Limited shareholders |
|
$ |
9,817 |
|
|
$ |
3,710 |
|
|
$ |
8,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share of ordinary share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.21 |
|
|
$ |
0.09 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.21 |
|
|
$ |
0.08 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes the following related party amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
3,752 |
|
|
$ |
2,625 |
|
|
$ |
3,242 |
|
Cost of revenue |
|
|
182 |
|
|
|
319 |
|
|
|
280 |
|
Selling, general and administrative expenses |
|
|
55 |
|
|
|
9 |
|
|
|
137 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
269 |
|
See accompanying notes.
F-5
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED MARCH 31, 2011, 2010 AND 2009
(Amounts in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares |
|
|
|
|
|
|
Ordinary |
|
|
|
|
|
|
other |
|
|
Total WNS (Holdings) |
|
|
Redeemable |
|
|
|
|
|
|
|
|
|
|
Par |
|
|
Additional |
|
|
shares |
|
|
Retained |
|
|
comprehensive |
|
|
Limited |
|
|
noncontrolling |
|
|
Comprehensive |
|
|
|
Number |
|
|
value |
|
|
paid-in capital |
|
|
subscribed |
|
|
earnings |
|
|
Income (loss) |
|
|
shareholders equity |
|
|
interest |
|
|
income |
|
Balance at March
31, 2008 |
|
|
42,363,100 |
|
|
$ |
6,622 |
|
|
$ |
167,459 |
|
|
$ |
10 |
|
|
$ |
38,905 |
|
|
$ |
14,222 |
|
|
$ |
227,218 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for
exercised options
and restricted
share units
(RSUs) |
|
|
244,303 |
|
|
|
45 |
|
|
|
953 |
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
988 |
|
|
|
|
|
|
|
|
|
Share-based
compensation
charge |
|
|
|
|
|
|
|
|
|
|
13,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,484 |
|
|
|
|
|
|
|
|
|
Excess tax
benefits (tax
deficiencies) from
exercise of
share-based
options and RSUs,
net |
|
|
|
|
|
|
|
|
|
|
2,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of shares by
subsidiary to
redeemable
noncontrolling
interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 |
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,182 |
|
|
|
|
|
|
|
8,182 |
|
|
|
(287 |
) |
|
$ |
7,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
(50 |
) |
Change in fair
value of cash
flow hedges* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,667 |
) |
|
|
(12,667 |
) |
|
|
|
|
|
|
(12,667 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency
translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(51,255 |
) |
|
|
(51,255 |
) |
|
|
|
|
|
|
(51,255 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55,790 |
) |
|
|
(287 |
) |
|
$ |
(56,077 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March
31, 2009 |
|
|
42,607,403 |
|
|
$ |
6,667 |
|
|
$ |
184,122 |
|
|
$ |
|
|
|
$ |
47,087 |
|
|
$ |
(49,750 |
) |
|
$ |
188,126 |
|
|
$ |
13 |
|
|
|
|
|
See accompanying notes.
F-6
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
(contd)
YEARS ENDED MARCH 31, 2011, 2010 AND 2009
(Amounts in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total WNS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
(Holdings) |
|
|
|
|
|
|
|
|
|
Ordinary shares |
|
|
Additional |
|
|
Ordinary |
|
|
|
|
|
|
other |
|
|
Limited |
|
|
Redeemable |
|
|
|
|
|
|
|
|
|
|
Par |
|
|
paid-in |
|
|
shares |
|
|
Retained |
|
|
comprehensive |
|
|
shareholders |
|
|
noncontrolling |
|
|
Comprehensive |
|
|
|
Number |
|
|
value |
|
|
capital |
|
|
subscribed |
|
|
earnings |
|
|
Income (loss) |
|
|
equity |
|
|
interest |
|
|
income |
|
Shares issued
for exercised
options and
restricted
share units |
|
|
1,136,550 |
|
|
|
181 |
|
|
|
3,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,933 |
|
|
|
|
|
|
|
|
|
Share-based
compensation
charge |
|
|
|
|
|
|
|
|
|
|
15,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,119 |
|
|
|
|
|
|
|
|
|
Excess tax
benefits (tax
deficiencies)
from exercise
of share-based
options and
RSUs, net |
|
|
|
|
|
|
|
|
|
|
538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
538 |
|
|
|
|
|
|
|
|
|
Issue of shares
by subsidiary
to redeemable
noncontrolling
interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,332 |
|
|
|
|
|
Comprehensive
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,710 |
|
|
|
|
|
|
|
3,710 |
|
|
|
(1,023 |
) |
|
$ |
2,687 |
|
Pension
adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221 |
|
|
|
221 |
|
|
|
(30 |
) |
|
|
191 |
|
Change in
fair value
of cash
flow
hedges, net
of tax of
$92* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,845 |
|
|
|
20,845 |
|
|
|
|
|
|
|
20,845 |
|
Foreign
currency
translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,111 |
|
|
|
21,111 |
|
|
|
(14 |
) |
|
|
21,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive
income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,887 |
|
|
|
(1,067 |
) |
|
$ |
44,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
March 31, 2010 |
|
|
43,743,953 |
|
|
$ |
6,848 |
|
|
$ |
203,531 |
|
|
$ |
|
|
|
$ |
50,797 |
|
|
$ |
(7,573 |
) |
|
$ |
253,603 |
|
|
$ |
278 |
|
|
|
|
|
Shares issued
for exercised
options and
restricted
share units |
|
|
699,773 |
|
|
|
107 |
|
|
|
672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
779 |
|
|
|
|
|
|
|
|
|
Share-based
compensation
charge |
|
|
|
|
|
|
|
|
|
|
4,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,017 |
|
|
|
|
|
|
|
|
|
Excess tax
benefits (tax
deficiencies)
from exercise
of share-based
options and
RSUs, net |
|
|
|
|
|
|
|
|
|
|
(170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(170 |
) |
|
|
|
|
|
|
|
|
Accretion to
redeemable
noncontrolling
interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(355 |
) |
|
|
|
|
|
|
(355 |
) |
|
|
355 |
|
|
|
|
|
Comprehensive
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,817 |
|
|
|
|
|
|
|
9,817 |
|
|
|
(730 |
) |
|
$ |
9,087 |
|
Pension
adjustment,
net of tax
of $33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
748 |
|
|
|
748 |
|
|
|
40 |
|
|
|
788 |
|
Change in
fair value
of cash
flow
hedges, net
of tax of
$36* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,770 |
) |
|
|
(4,770 |
) |
|
|
63 |
|
|
|
(4,707 |
) |
Foreign
currency
translations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,550 |
|
|
|
7,550 |
|
|
|
(6 |
) |
|
|
7,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive
income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,345 |
|
|
|
(633 |
) |
|
$ |
12,712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
March 31, 2011 |
|
|
44,443,726 |
|
|
$ |
6,955 |
|
|
$ |
208,050 |
|
|
$ |
|
|
|
$ |
60,259 |
|
|
$ |
(4,045 |
) |
|
$ |
271,219 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
net of reclassification adjustment of gain of $4,505, and loss of $3,584 and $2,680 for the
years ended March 31, 2011, 2010 and 2009, respectively. |
F-7
WNS (HOLDINGS) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,087 |
|
|
$ |
2,687 |
|
|
$ |
7,895 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
51,169 |
|
|
|
53,574 |
|
|
|
46,701 |
|
Share-based compensation |
|
|
4,014 |
|
|
|
15,127 |
|
|
|
13,422 |
|
Amortization of debt issue cost |
|
|
1,501 |
|
|
|
671 |
|
|
|
450 |
|
Allowance for doubtful accounts |
|
|
1,249 |
|
|
|
1,238 |
|
|
|
458 |
|
(Gain) loss on sale of property and equipment |
|
|
(19 |
) |
|
|
19 |
|
|
|
18 |
|
Deferred rent |
|
|
(16 |
) |
|
|
1,016 |
|
|
|
312 |
|
Unrealized gain on marketable securities |
|
|
|
|
|
|
|
|
|
|
(58 |
) |
Unrealized loss (gain) on derivative instruments |
|
|
4,612 |
|
|
|
(33 |
) |
|
|
313 |
|
Deferred income taxes |
|
|
(12,006 |
) |
|
|
(11,251 |
) |
|
|
(8,690 |
) |
Excess tax benefits from share-based compensation |
|
|
(569 |
) |
|
|
(1,825 |
) |
|
|
(2,226 |
) |
Other, net |
|
|
56 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable and unbilled revenue |
|
|
(20,414 |
) |
|
|
(13,196 |
) |
|
|
1,914 |
|
Other current assets |
|
|
8,102 |
|
|
|
5,613 |
|
|
|
8,046 |
|
Accounts payable |
|
|
13,643 |
|
|
|
(3,830 |
) |
|
|
3,628 |
|
Deferred revenue |
|
|
4,381 |
|
|
|
(1,051 |
) |
|
|
1,010 |
|
Other liabilities |
|
|
(28,984 |
) |
|
|
5,496 |
|
|
|
5,778 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
35,806 |
|
|
|
54,275 |
|
|
|
62,879 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired (See Note 3) |
|
|
(494 |
) |
|
|
(1,461 |
) |
|
|
(290,994 |
) |
Subscription of shares in a non-profit organization |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
Facility and property cost |
|
|
(15,263 |
) |
|
|
(13,257 |
) |
|
|
(22,693 |
) |
Proceeds from sale of property and equipment, net |
|
|
309 |
|
|
|
660 |
|
|
|
342 |
|
Marketable securities and deposits sold (purchased), net |
|
|
34 |
|
|
|
9,548 |
|
|
|
(2,273 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(15,416 |
) |
|
|
(4,510 |
) |
|
|
(315,618 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
779 |
|
|
|
3,933 |
|
|
|
988 |
|
Excess tax benefits from share-based compensation |
|
|
569 |
|
|
|
1,825 |
|
|
|
2,226 |
|
Proceeds from issue of shares by subsidiary to redeemable noncontrolling interest |
|
|
|
|
|
|
1,348 |
|
|
|
300 |
|
Repayment of long term debt |
|
|
(107,750 |
) |
|
|
(65,000 |
) |
|
|
|
|
Payment of debt issuance cost |
|
|
(1,093 |
) |
|
|
(87 |
) |
|
|
(1,197 |
) |
Proceeds from long term debt |
|
|
64,895 |
|
|
|
|
|
|
|
200,000 |
|
Proceeds from (repayments of) short term borrowings, net |
|
|
13,608 |
|
|
|
(4,128 |
) |
|
|
(2,894 |
) |
Principal payments under capital leases |
|
|
|
|
|
|
(57 |
) |
|
|
(183 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(28,992 |
) |
|
|
(62,166 |
) |
|
|
199,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
3,381 |
|
|
|
5,781 |
|
|
|
(10,268 |
) |
Net change in cash and cash equivalents |
|
|
(5,221 |
) |
|
|
(6,620 |
) |
|
|
(63,767 |
) |
Cash and cash equivalents at beginning of year |
|
|
32,311 |
|
|
|
38,931 |
|
|
|
102,698 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
$ |
27,090 |
|
|
$ |
32,311 |
|
|
$ |
38,931 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
11,392 |
|
|
$ |
10,447 |
|
|
$ |
7,856 |
|
Cash paid for income taxes |
|
|
13,711 |
|
|
|
9,864 |
|
|
|
8,932 |
|
Assets acquired under capital lease |
|
|
|
|
|
|
|
|
|
|
52 |
|
Cash flows from related parties |
|
|
3,580 |
|
|
|
2,106 |
|
|
|
(267 |
) |
See accompanying notes
F-8
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
WNS (Holdings) Limited (WNS Holdings), along with its subsidiaries, is a global business process
outsourcing (BPO) company with client service offices in Australia, London (UK), New York (US),
Singapore and delivery centers in Costa Rica, India, the Philippines, Romania, Sri Lanka, and the
UK. The Companys clients are primarily in the travel, banking, financial services, insurance,
healthcare and utilities, retail and consumer product industries. WNS Holdings is incorporated in
Jersey, Channel Islands.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The accompanying consolidated financial statements include the accounts of WNS Holdings and its
subsidiaries (collectively, the Company or WNS) and are prepared in accordance with United
States generally accepted accounting principles (US GAAP). All significant inter-company balances
and transactions have been eliminated upon consolidation. An acquired business is included in the
Companys consolidated statement of income with effect from the date of the acquisition.
The Company uses the United States Dollar ($ or USD) as its reporting currency.
Consolidation
The Company consolidates all the subsidiaries where it holds, directly or indirectly, more than 50%
of the total voting power or where it exercises control.
Use of estimates
The preparation of financial statements in accordance with US GAAP requires management to make
estimates and assumptions that affect the amounts reported in the consolidated financial statements
and accompanying notes. The Company bases its estimates and judgments on historical experience and
on various other assumptions that it believes are reasonable under the circumstances. The amount of
assets and liabilities reported on the Companys balance sheets and the amounts of revenue and
expenses reported for each of its periods presented are affected by estimates and assumptions,
which are used for, but not limited to, the accounting for revenue recognition, allowance for
doubtful accounts, determining the useful life of long lived assets, income taxes, determining
impairment on long-lived assets, intangibles and goodwill, valuation of currency and interest rate
hedges, share-based compensation and accounting for defined benefit plans. Actual results could
differ from those estimates.
Foreign currency translation
The Companys foreign subsidiaries use their respective local currency as their functional
currency, except for subsidiaries in Mauritius and Singapore, which use $ as their functional
currency. Accordingly, assets and liabilities of subsidiaries using their local currency as their
functional currency are translated into $ at exchange rates in effect at the balance sheet date,
while revenue and expenses are translated at average exchange rates prevailing during the year.
Translation adjustments are reported as a component of accumulated other comprehensive income
(loss) in equity.
Foreign currency denominated assets and liabilities are re-measured into the functional currency at
exchange rates in effect at the balance sheet date. Foreign currency transaction gains and losses
are recorded in the consolidated statement of income within other (income) expenses, net.
Revenue recognition
BPO services comprise back office administration, data management, contact center management and
auto claims handling services. Depending on the terms of the arrangement, revenue from back office
administration, data management and contact center management is recognized on a per employee, per
transaction or cost-plus basis. Revenue is only recognized when persuasive evidence of an
arrangement exists, services have been rendered, the fee is determinable and collectability is
reasonably assured.
F-9
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Amounts billed or payments received, where all the conditions for revenue recognition have not been
met, are recorded as deferred revenue and are recognized as revenue when all the recognition
criteria have been met. However, the costs related to the performance of BPO services unrelated to
transition services (see discussion below) are recognized in the period in which the services are
rendered. An upfront payment received towards future services is recognized ratably over the period
when such services are provided.
The Company has certain minimum commitment arrangements that provide for a minimum revenue
commitment on an annual basis or a cumulative basis over multiple years, stated in terms of annual
minimum amounts. Where a minimum commitment is specific to an annual period, any revenue shortfall
is invoiced and recognized at the end of this period. When the shortfall in a particular year can
be offset with revenue received in excess of minimum commitments in a subsequent year, the Company
recognizes deferred revenue for the shortfall which has been invoiced and received. To the extent
the Company has sufficient experience to conclude that the shortfall will not be satisfied by
excess revenue in a subsequent period, the deferred revenue will be recorded as revenue in that
period. In order to determine whether the Company has sufficient experience, the Company considers
several factors which include (i) the historical volume of business done with a client as compared
with initial projections of volume as agreed to by the client and the Company, (ii) the length of
time for which the Company has such historical experience, (iii) future volume expected based on
projections received from the client, and (iv) the Companys internal expectations of ongoing
volume with the client. Otherwise, the deferred revenue will remain until such time, when the
Company can conclude that it will not receive revenue in excess of the minimum commitment.
Revenue is net of value-added tax and includes reimbursements of out-of-pocket expenses, with the
corresponding out-of-pocket expenses included in cost of revenue.
For certain BPO customers, the Company performs transition activities at the outset of entering
into a new contract. The Company has determined these transition activities do not meet the
criteria in Accounting Standards Codification (ASC) 605-25, Multiple Element Arrangements,
to be accounted for as a separate unit of accounting with stand-alone value separate from the
ongoing BPO contract. Accordingly, transition revenue and costs are subsequently recognized ratably
over the period in which the BPO services are performed. Further, the deferral of costs is limited
to the amount of the deferred revenue. Any costs in excess of the deferred transition revenue are
recognized in the period incurred.
Auto claims handling services include claims handling and administration (Claims Handling), car
hire and arranging for repairs with repair centers across the United Kingdom and the related
payment processing for such repairs (Accident Management).With respect to Claims Handling, the
Company receives either a per-claim fee or a fixed fee. Revenue for per claim fee is recognized
over the estimated processing period of the claim, which currently ranges from one to two months
and for fixed fee it is recognized on a straight line basis over the period of the contract. In
certain cases, the fee is contingent upon the successful recovery of a claim on behalf of the
customer. In these circumstances, the revenue is deferred until the contingency is resolved.
Revenue in respect of car hire is recognized over the car hire term.
In order to provide Accident Management services, the Company arranges for the repair through a
network of repair centers. The repair costs are invoiced to customers. In determining whether the
receipt from the customers related to payments to repair centers should be recognized as revenue,
the Company considers the criteria established by ASC 605-45, Principal Agent Consideration. When
the Company determines that it is the principal in providing Accident Management services, amounts
received from customers are recognized and presented as third party revenue and the payments to
repair centers are recognized as cost of revenue in the consolidated statement of income. Factors
considered in determining whether the Company is the principal in the transaction include whether
(i) the Company is the primary obligor, (ii) the Company negotiates labour rates with repair
centers, (iii) the Company determines which repair center should be used, (iv) the Company is
responsible for timely and satisfactory completion of repairs, and (v) the Company bears the risk
that the customer may not pay for the services provided (credit risk). If there are circumstances
where the above criteria are not met and therefore the Company is not the principal in providing
Accident Management services, amounts received from customers are recognized and presented net of
payments to repair centers in the consolidated statement of income. Revenue from Accident
Management services is recorded net of the repairer referral fees passed onto customers.
F-10
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Cost of revenue
Cost of revenue includes payments to repair centers, salaries and related expenses, facilities
costs including depreciation and amortization on leasehold improvements, communication expenses and
out-of-pocket expenses. Cost of revenue during a transfer period, which includes process set up,
training, systems transfer and other personnel costs, are recognized as incurred except in respect
of transition activities.
Payments to repair centers represent the cost of repair in the Accident Management services and are
net of the referral fee earned from the repair centers.
Cash and cash equivalents
The Company considers all highly liquid investments with an initial maturity of up to three months
to be cash equivalents. The components of cash and cash equivalents are as follows:
|
|
|
|
|
|
|
|
|
|
|
As at March 31, |
|
|
|
2011 |
|
|
2010 |
|
Fixed deposits with banks |
|
$ |
5,459 |
|
|
$ |
6,991 |
|
Other cash and bank balances |
|
|
21,631 |
|
|
|
25,320 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
27,090 |
|
|
$ |
32,311 |
|
|
|
|
|
|
|
|
Bank deposits and marketable securities
Bank deposits consist of term deposits with an original maturity of more than three months. The
Companys marketable securities represent highly liquid investments and are acquired principally
for the purpose of generating a profit from short-term fluctuation in prices. All purchases and
sales of such investments are recognized on the trade date. Investments are initially measured at
cost, which is the fair value of the consideration paid, including transaction costs. All
marketable securities are classified and accounted as trading investments and accordingly, reported
at fair value, with changes in fair value recognized in the consolidated statement of income.
Interest and dividend income is recognized when earned.
Funds held for clients
Some of the Companys agreements in the Auto Claims handling services allow the Company to
temporarily hold funds on behalf of the client. The funds are segregated from the Companys funds
and there is usually a short period of time between when the Company receives these funds from the
client and when the payments are made on their behalf.
Accounts receivable
Accounts receivable represent trade receivables, net of an allowance for doubtful accounts. The
allowance for doubtful accounts represents the Companys best estimate of receivables that are
doubtful of recovery based on a specific identification basis.
The changes in the allowance for doubtful accounts for the years ended March 31, 2011, 2010 and
2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Balance at the beginning of the year |
|
$ |
3,152 |
|
|
$ |
1,935 |
|
|
$ |
1,784 |
|
Charged to operations |
|
|
1,794 |
|
|
|
1,666 |
|
|
|
535 |
|
Write-off, net of collections |
|
|
(183 |
) |
|
|
(20 |
) |
|
|
(218 |
) |
Reversal |
|
|
(510 |
) |
|
|
(428 |
) |
|
|
(77 |
) |
Translation adjustment |
|
|
144 |
|
|
|
(1 |
) |
|
|
(89 |
) |
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
$ |
4,397 |
|
|
$ |
3,152 |
|
|
$ |
1,935 |
|
|
|
|
|
|
|
|
|
|
|
F-11
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Property and equipment
Property and equipment are stated at historical cost and depreciation and amortization is computed
using the straight-line method over the estimated useful lives of the assets, which are as follows:
|
|
|
|
|
Asset description |
|
Asset life (in years) |
Buildings |
|
|
20 |
|
Computers and software |
|
|
3-4 |
|
Furniture, fixtures and office equipment |
|
|
4-5 |
|
Vehicles |
|
|
3 |
|
Leasehold improvements |
|
Lesser of estimated useful life or lease term |
Assets acquired under capital leases are capitalized as assets by the Company at the lower of the
fair value of the leased property or the present value of the related lease payments or where
applicable, the estimated fair value of such assets. Assets under capital leases and leasehold
improvements are depreciated over the shorter of the lease term or the estimated useful life of the
assets.
Advances paid towards the acquisition of property and equipment and the cost of property and
equipment not put to use before the balance sheet date are disclosed under the caption capital
work-in-progress (See Note 4).
Property and equipment are reviewed for impairment, if indicators of impairment arise. The
evaluation of impairment is based upon a comparison of the carrying amount of the property and
equipment to the estimated future undiscounted net cash flows expected to be generated by the
property and equipment. If estimated future undiscounted cash flows are less than the carrying
amount of the property and equipment, the asset is considered impaired. The impairment expense is
determined by comparing the estimated fair value of the property and equipment to its carrying
value, with any shortfall from fair value recognized as an expense in the current period. The fair
value is determined based on valuation techniques such as discounted cash flows or comparison to
fair values of similar assets. There were no impairment charges related to property and equipment
recognized during the years ended March 31, 2011, 2010 and 2009.
Software capitalization
Software that has been purchased is included in property and equipment and is amortized using the
straight-line method over three years. The cost of internally developed software and product
enhancements is capitalized in accordance with ASC 350-40 Internal-Use Software The estimated
useful lives of such assets vary between three and four years.
Accounting for leases
The Company leases most of its delivery centers and office facilities under operating lease
agreements that are renewable on a periodic basis at the option of the lessor and the lessee. The
lease agreements contain rent free periods and rent escalation clauses. Rental expenses for
operating leases with step rents are recognized on a straight-line basis over the minimum lease
term.
Goodwill and intangible assets
Goodwill is not amortized but is reviewed for impairment annually or more frequently if indicators
arise. In accordance with ASC 350, Intangibles Goodwill and Other", all assets and liabilities
of the acquired businesses including goodwill are assigned to reporting units. The evaluation is
based upon a comparison of the estimated fair value of the reporting unit to which the goodwill has
been assigned to the sum of the carrying value of the assets and liabilities for that reporting
unit. The fair value used in this evaluation is estimated based upon discounted future cash flow
projections for the reporting unit. These cash flow projections are based upon a number of
estimates and assumptions.
Intangible assets are initially valued at fair market value using generally accepted valuation
methods appropriate for the type of intangible asset. Intangible assets with definite lives are
amortized over the estimated useful lives and are reviewed for impairment, if indicators of
impairment arise. The evaluation of impairment is based upon a comparison of the carrying amount of
the intangible asset to the estimated future undiscounted net cash flows expected to be generated
by the asset.
F-12
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
If estimated future undiscounted cash flows are less than the carrying amount of the asset, the
asset is considered impaired. The impairment expense is determined by comparing the estimated fair
value of the intangible asset to its carrying value, with any shortfall from fair value recognized
as an expense in the current period. The Companys definite lived intangible assets are amortized
over the estimated useful life of the assets:
|
|
|
|
|
|
|
Weighted average |
|
|
amortization period (in |
Asset description |
|
months) |
Customer contracts |
|
|
100 |
|
Customer relationship |
|
|
90 |
|
Intellectual property rights |
|
|
36 |
|
Leasehold benefits |
|
|
48 |
|
Covenant not-to-compete |
|
|
48 |
|
Income taxes
The Company applies the asset and liability method of accounting for income taxes as described in
ASC 740, Income Taxes". Under this method, deferred tax assets and liabilities are recognized for
future tax consequences attributable to differences between the financial statements carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured using tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. Valuation allowances are
recognized to reduce the deferred tax assets to an amount that is more likely than not to be
realized. In assessing the likelihood of realization, management considers estimates of future
taxable income and the effect of temporary differences. Further ASC 740-10 requires the Company to
recognize a provision for uncertainty in income taxes based on minimum recognition threshold. The
Company applies a two-step approach for recognizing and measuring uncertain tax positions. The
first step is to evaluate the tax position for recognition by determining, based on the technical
merits, that the position will be more likely than not sustained upon examination. The second step
is to measure the tax benefit as the largest amount of the tax benefit that is greater than 50%
likely of being realized upon settlement. The Company includes interest and/or penalties related to
unrecognized tax benefits within its provision for income tax expense.
Employee benefits
Defined contribution plans
Eligible employees of the Company in the United States participate in a savings plan (the Plan)
under Section 401(k) of the United States Internal Revenue Code (the Code). The Plan allows for
employees to defer a portion of their annual earnings on a pre-tax basis through voluntary
contributions to the Plan. The Plan provides that the Company can make optional contributions up to
the maximum allowable limit under the Code.
Eligible employees of the Company in India, the Philippines, Sri Lanka and United Kingdom
participate in a defined contribution fund in accordance with the regulatory requirements in the
respective jurisdictions. Both the employee and the Company contribute an equal amount to the fund
which is equal to a specified percentage of the employees salary.
The Company has no further obligation under defined contribution plans beyond the contributions
made under these plans. Contributions are charged to income in the year in which they accrue and
are included in the consolidated statement of income (See Note 9).
F-13
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Defined benefit plan
Employees in India, the Philippines and Sri Lanka are entitled to benefits under the Gratuity Act,
a defined benefit retirement plan covering eligible employees of the Company. The plan provides for
a lump-sum payment to eligible employees at retirement, death, incapacitation or on termination of
employment, of an amount based on the respective employees salary and tenure of employment
(subject to a maximum of approximately $22 per employee in India). In India contributions are made
to funds administered and managed by the Life Insurance Corporation of India (LIC) and AVIVA Life
Insurance Company Private Limited (ALICPL) (together fund administrators) to fund the gratuity
liability of an Indian subsidiary. Under this scheme, the obligation to pay gratuity remains with
the Company, although the Fund Administrators administer the scheme. The Companys Sri Lanka
subsidiary, Philippines subsidiary and one Indian subsidiary have unfunded gratuity obligations.
Advertising costs
Advertising costs are expensed as incurred and are included in selling, general and administrative
expenses. Advertising costs for the years ended March 31, 2011, 2010 and 2009 were $1,673, $2,006
and $1,760, respectively.
Derivative financial instruments
In accordance with ASC 815-10 Derivatives and Hedging, the Company recognizes all of its
derivative instruments as either assets or liabilities in the statement of financial position at
fair value. Derivative instruments qualify for hedge accounting when the instrument is designated
as a hedge; the hedged item is specifically identifiable and exposes
the Company to risk; and it is
F-14
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
expected that a change in fair value of the derivative instrument and an opposite change in the
fair value of the hedged item will have a high degree of correlation. For derivative instruments
where hedge accounting is applied, the Company records the effective portion of derivative
instruments that are designated as cash flow hedges in accumulated other comprehensive income
(loss) in the statement of equity and comprehensive income, which is reclassified into earnings
in the same period during which the hedged
item affects earnings. The remaining gain or loss on the derivative instrument in excess of the
cumulative change in the present value of future cash flows of the hedged item, if any (i.e., the
ineffectiveness portion) or hedge components excluded from the assessment of effectiveness, and
changes in fair value of other derivative instruments not designated as qualifying hedges is
recorded in other (income) expenses, net in the statement of income. Cash flows from the
derivative instruments are classified within cash flows from operating activities in the statement
of cash flows.
The Company provides additional disclosure in accordance with ASC 815, Derivative and Hedging.
ASC 815 requires additional disclosures about the Companys objectives in using derivative
instruments and hedging activities, the method of accounting for such instruments under ASC 815 and
its related interpretations, and tabular disclosures of the effects of such instruments and related
hedged items on the Companys financial position, financial performance, and cash flows.
Earnings per share
Basic income per share is computed using the weighted-average number of ordinary shares outstanding
during the year. Diluted income per share is computed by considering the impact of the potential
issuance of ordinary shares, using the treasury stock method, on the weighted average number of
shares outstanding.
The following table sets forth the computation of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to WNS (Holdings) Limited shareholders |
|
$ |
9,817 |
|
|
$ |
3,710 |
|
|
$ |
8,182 |
|
Impact on net income attributable to WNS (Holdings) Limited
shareholders through changes in redeemable noncontrolling
interest |
|
|
(355 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,462 |
|
|
|
3,710 |
|
|
|
8,182 |
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average ordinary shares outstanding |
|
|
44,260,713 |
|
|
|
43,093,316 |
|
|
|
42,520,404 |
|
Dilutive impact of stock options and Restricted Share Units |
|
|
760,120 |
|
|
|
1,080,812 |
|
|
|
588,195 |
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average ordinary shares outstanding |
|
|
45,020,833 |
|
|
|
44,174,128 |
|
|
|
43,108,599 |
|
|
|
|
|
|
|
|
|
|
|
The Company excludes options with exercise price that are greater than the average market price
from the calculation of diluted EPS because their effect would be anti-dilutive. In the years ended
March 31, 2011, 2010 and 2009, the Company excluded from the calculation of diluted EPS options to
purchase 893,548 shares, 1,135,332 shares and 2,559,367 shares, respectively, whose combined
exercise price, unamortized fair value and excess tax benefits were greater in each of those
periods than the average market price for the Companys shares because their effect would be
anti-dilutive.
F-15
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Share-based compensation
The Company accounts for share based compensation in accordance with ASC 718, Stock Compensation".
ASC 718 addresses the accounting for share-based payment transactions in which an enterprise
receives employee services in exchange for equity instruments of the enterprise or liabilities that
are based on the fair value of the enterprises equity instruments or that may be settled by the
issuance of such equity instruments.
In accordance with the provisions of ASC 718, share based compensation for all awards granted,
modified or settled on or after April 1, 2006, that the Company expects to vest, is recognized on a
straight line basis over the requisite service period, which is generally the vesting period of the
award.
ASC 718 requires the use of a valuation model to calculate the fair value of share-based awards.
The Company elected to use the Black-Scholes-Merton pricing model to determine the fair value of
share-based awards on the date of grant. RSUs are measured based on the fair market value of the
underlying shares on the date of grant. The Company has elected to use the with and without
approach as described in ASC 740-20 Intraperiod tax allocation in determining the order in which
tax attributes are utilized. As a result, the Company only recognizes tax benefit from share-based
awards in additional paid-in capital if an incremental tax benefit is realized after all other tax
attributes currently available to the Company have been utilized.
Concentration of risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist
principally of cash and cash equivalents, bank deposits, marketable securities, funds held for
clients and accounts receivable. By their nature, all such instruments involve risks including
credit risks of non-performance by counterparties. A substantial portion of the Companys cash and
cash equivalents are invested with financial institutions and banks located in India, the United
States and the United Kingdom. A portion of surplus funds are also invested in marketable
securities and deposits with banks in India.
Accounts receivable are unsecured and are derived from revenue earned from customers in the travel,
banking, financial services, insurance, healthcare and utilities, retail and consumer product
industries based primarily in the United States and Europe (including the United Kingdom). The
Company monitors the credit worthiness of its customers to whom it grants credit terms in the
normal course of its business. Management believes there is no significant risk of loss in the
event of non-performance of the counter parties to these financial instruments, other than the
amounts already provided for in the consolidated financial statements.
New accounting pronouncements
Beginning with the fiscal year ending March 31, 2012, we intend to report our financial results
under International Financial Reporting Standards, or IFRS, as issued by the International
Accounting Standards Board, or IASB. We do not expect the adoption of
IFRS as issued by the IASB to
have a material impact on our results of operations, financial position and cash flows.
F-16
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
3. ACQUISITIONS
AVIVA Global Services Singapore Pte. Ltd. (Aviva Global)
On July 11, 2008, the Company entered into a transaction with Aviva International Holdings Limited
(AVIVA), comprising a share sale and purchase agreement (SSPA) and a master services agreement
with Aviva Global Services (Management Services) Private Ltd. (AVIVA MSA). Pursuant to the
SSPA with AVIVA, the Company acquired all the shares of Aviva Global Services Singapore Pte. Ltd. (Aviva Global) in July 2008. The final purchase price paid to AVIVA for the acquisition
of Aviva Global and its subsidiaries was $249,093, including direct transaction costs of $8,200.
On August 3, 2009, the Company completed the final settlement and agreed to pay AVIVA approximately
£3,177 ($5,282) for certain liabilities of Aviva Global that existed as of the date of its
acquisition and the net asset value settlement for Customer Operational Solutions (Chennai) Private
Limited (COSC), Noida Customer Operation Private Limited (NCOP) and Ntrance Global Services
Private Limited (Ntrance) arising out of the sale and
purchase agreements relating to the acquisitions of these entities by
Aviva Global. The payment of this
liability is being made in 18 equal monthly installments commencing December 2009.
Pursuant to the final settlement, the allocation of total cost of acquisition to the assets
acquired and liabilities assumed has been finalized based on a determination of their fair values.
The liability assumed on final settlement has been recorded at present value, discounted using
appropriate interest rates. The purchase price allocation resulted in a negative goodwill amounting
to $1,004 which was adjusted on a pro-rata basis to intangible assets and property and equipment.
The following table summarizes the allocation:
|
|
|
|
|
|
|
Amount |
|
Cash |
|
$ |
17,118 |
|
Accounts receivable |
|
|
16,172 |
|
Other assets |
|
|
12,076 |
|
Property and equipment |
|
|
15,912 |
|
Intangible assets |
|
|
|
|
Customer relationships |
|
|
46,301 |
|
Customer contracts |
|
|
177,247 |
|
Leasehold benefits |
|
|
1,835 |
|
Current liabilities |
|
|
(25,472 |
) |
Other liabilities |
|
|
(3,128 |
) |
Deferred tax liability |
|
|
(8,968 |
) |
|
|
|
|
Total purchase consideration |
|
$ |
249,093 |
|
|
|
|
|
F-17
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The
Company has valued intangible assets for customer contracts and customer relationships using the
income approach by discounting future cash flows and tax amortization benefit. The customer
relationships and customer contracts are being amortized over the duration of the AVIVA MSA, being
a period of eight years and four months. The AVIVA MSA, which was
initially entered into by the Companys Mauritian
subsidiary WNS Capital Investment Limited has been novated to the Companys Indian subsidiary
WNS Global Services Private Limited (WNS Global), being the primary entity serving this master
services agreement, effective March 31, 2011.
Chang Limited (together with its subsidiary Call 24-7 Limited, Call 24-7)
On April 7, 2008, the Company completed the acquisition of the entire share capital of Chang
Limited, UK along with its subsidiary, Accidents Happen Assistance Limited (AHA) (formerly known
as Call 24-7 Limited), the key operating entity (collectively referred to as AHA). AHA provides a
consolidated suite of services towards accident management, including credit hire and credit repair
for Non-fault repairs business. Non-fault services are mainly credit hire and credit repair
services provided when an individual has an accident where they are not at fault but have a damaged
car which needs repairing. The car is repaired at no cost to the customer, with the bill being paid
for by the insurance company of the at-fault party. The results of operations of AHA have been
included in the Companys consolidated statement of income from April 1, 2008.
The purchase consideration of $15,071 was allocated as intangible assets of $7,519 and net
liabilities of $6,131 based on a determination of their fair value, with the residual $13,683
allocated to goodwill.
Business Applications Associates Limited (BizAps)
On June 12, 2008, the Company acquired all outstanding shares of BizAps, a provider of systems
applications and products solutions to optimize enterprise resource planning functionality for
finance and accounting processes. The purchase price for the acquisition was a cash payment of
£5,000 ($9,749) plus direct transaction costs of $469. The consideration also included a contingent
earn-out consideration of up to £4,500 ($9,000) based on satisfaction of certain performance
obligation over a two-year period up to June 2010 as set out in the share purchase agreement.
Consequent to the satisfaction of certain performance obligations for the 12 month period ended
June 30, 2009, the Company paid an earn-out consideration of $1,111. Such amount was recorded as an
addition to goodwill. On June 6, 2010, the Company entered into an amendment to the acquisition
agreement with the sellers, pursuant to which, the Company settled the earn-out consideration for
performance obligations for the period ended on June 30, 2010 at $471. Such amount is recorded as
an addition to goodwill.
The purchase consideration of $11,800 was allocated as intangible assets of $5,927 and net
liabilities of $624 based on a determination of their fair value, with the residual $5,249
allocated to goodwill.
F-18
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
4. PROPERTY AND EQUIPMENT
The major classes of property and equipment are as follows:
|
|
|
|
|
|
|
|
|
|
|
As at March 31, |
|
|
|
2011 |
|
|
2010 |
|
Building |
|
$ |
12,673 |
|
|
$ |
12,424 |
|
Computers and software |
|
|
66,482 |
|
|
|
59,828 |
|
Furniture, fixtures and office equipment |
|
|
56,717 |
|
|
|
51,269 |
|
Vehicles |
|
|
2,327 |
|
|
|
2,299 |
|
Leasehold improvements |
|
|
44,443 |
|
|
|
40,193 |
|
Capital work-in-progress |
|
|
5,592 |
|
|
|
5,492 |
|
|
|
|
|
|
|
|
|
|
|
188,234 |
|
|
|
171,505 |
|
Accumulated depreciation and amortization |
|
|
(139,642 |
) |
|
|
(119,805 |
) |
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
48,592 |
|
|
$ |
51,700 |
|
|
|
|
|
|
|
|
Depreciation expense, including amortization of assets recorded under capital leases, amounted to
$19,359, $21,152 and $21,789 for the years ended March 31, 2011, 2010 and 2009, respectively.
Capital work-in-progress includes advances for property and equipment of $1,799 and $650 as at
March 31, 2011 and 2010, respectively.
F-19
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
5. GOODWILL AND INTANGIBLES
The components of intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Gross |
|
|
amortization |
|
|
Net |
|
Customer contracts |
|
$ |
190,211 |
|
|
$ |
70,819 |
|
|
$ |
119,392 |
|
Customer relationships |
|
|
65,508 |
|
|
|
29,135 |
|
|
|
36,373 |
|
Intellectual property rights |
|
|
4,974 |
|
|
|
4,812 |
|
|
|
162 |
|
Leasehold benefits |
|
|
1,835 |
|
|
|
1,248 |
|
|
|
587 |
|
Covenant not-to-compete |
|
|
353 |
|
|
|
280 |
|
|
|
73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
262,881 |
|
|
$ |
106,294 |
|
|
$ |
156,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010 |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Gross |
|
|
amortization |
|
|
Net |
|
Customer contracts |
|
$ |
189,961 |
|
|
$ |
49,300 |
|
|
$ |
140,661 |
|
Customer relationships |
|
|
64,891 |
|
|
|
19,962 |
|
|
|
44,929 |
|
Intellectual property rights |
|
|
4,660 |
|
|
|
3,344 |
|
|
|
1,316 |
|
Leasehold benefits |
|
|
1,835 |
|
|
|
789 |
|
|
|
1,046 |
|
Covenant not-to-compete |
|
|
337 |
|
|
|
210 |
|
|
|
127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
261,684 |
|
|
$ |
73,605 |
|
|
$ |
188,079 |
|
|
|
|
|
|
|
|
|
|
|
The amortization expenses amounted to $31,810, $32,422 and $24,912 for the years ended March 31,
2011, 2010 and 2009, respectively.
The estimated annual amortization expense based on intangible balances and
exchange rates, each as at March 31, 2011, are as follows:
|
|
|
|
|
Year ending March 31, |
|
Amount |
|
|
2012 |
|
$ |
30,864 |
|
2013 |
|
|
28,729 |
|
2014 |
|
|
26,892 |
|
2015 |
|
|
26,826 |
|
2016 |
|
|
26,826 |
|
Thereafter |
|
|
16,450 |
|
|
|
|
|
|
|
$ |
156,587 |
|
|
|
|
|
F-20
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The changes in the carrying value of goodwill by segment (refer to note 15) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WNS |
|
|
|
|
|
|
WNS |
|
|
Auto |
|
|
|
|
|
|
Global |
|
|
Claims |
|
|
Total |
|
Balance as at March 31, 2009 |
|
$ |
52,063 |
|
|
$ |
29,616 |
|
|
$ |
81,679 |
|
Goodwill
arising from earn-out paid for BizAps acquisition |
|
|
1,111 |
|
|
|
|
|
|
|
1,111 |
|
Foreign currency translation |
|
|
6,341 |
|
|
|
1,531 |
|
|
|
7,872 |
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2010 |
|
$ |
59,515 |
|
|
$ |
31,147 |
|
|
$ |
90,662 |
|
Goodwill arising from earn-out paid for BizAps acquisition |
|
|
471 |
|
|
|
|
|
|
|
471 |
|
Foreign currency translation |
|
|
806 |
|
|
|
2,097 |
|
|
|
2,903 |
|
|
|
|
|
|
|
|
|
|
|
Balance as at March 31, 2011 |
|
$ |
60,792 |
|
|
$ |
33,244 |
|
|
$ |
94,036 |
|
|
|
|
|
|
|
|
|
|
|
6. LOSS OF CLIENT
In September 2007, pursuant to the bankruptcy of First Magnus Financial Corporation (FMFC), a US
mortgage service company which was a client acquired in connection with the acquisition of Trinity
Partners, Inc. (Trinity) and the continuing weakness and uncertainty in the US mortgage market,
the Company tested the goodwill and intangible assets related to the acquisition of Trinity. The
Company concluded that the entire goodwill and intangibles acquired in the purchase of Trinity were
impaired. Accordingly, the Company recorded an impairment charge of $8,889 for the goodwill, $6,359
for the intangibles and $216 for other assets in the WNS Global BPO segment during the year ended
March 31, 2008. The amount of the claims filed by the Company in FMFCs Chapter 11 case total
$15,575. In a judgment passed by the bankruptcy court in 2009, the claim filed by WNS amounting to
$11,679 on account of loss of profit from the remainder of the minimum revenue commitment has been
denied. The Company appealed against this order before the Bankruptcy Appellate Court, Tucson,
Arizona. On August 31, 2010, the appellate Court passed judgment in the Companys favor thereby
reversing the orders passed by the Bankruptcy Court and remanded the matter back to the Bankruptcy
Court. In the same matter, the liquidating trustee, appointed by the bankruptcy court, filed a
petition against the Company claiming a refund of payments made by FMFC to the Company during the
90 days period immediately prior to its filing of the bankruptcy petition. FMFC paid a sum of
$4,000 during the period from May 22, 2007 through August 21, 2007. All these payments were made in
the ordinary course of business and were against the undisputed invoices of the services provided
by the Company to FMFC during the relevant period.
On August 31, 2010, the Company entered into a settlement
agreement with the liquidating trustee pursuant to which the
liquidating trustee agreed to
allow the Companys claims to the extent of $11,679 and dismissal of the liquidating trustees
claim of $4,000 for payments made by FMFC to the Company and the
Company agreed to make a settlement payment of $50 to the liquidating trustee. On October 3, 2010, the Bankruptcy Court approved the
settlement agreement and on October 13, 2010 the Company made the settlement payment of $50 to the
liquidating trustee. At this stage the Company cannot confirm the amount which it can realize from
the allowed claims. In fiscal 2008, the Company had provided for the entire amount due from FMFC.
7. INCOME TAXES
The domestic and foreign source component of income (loss) before income taxes is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Domestic |
|
$ |
(868 |
) |
|
$ |
(2,515 |
) |
|
$ |
(5,729 |
) |
Foreign |
|
|
11,007 |
|
|
|
6,200 |
|
|
|
16,967 |
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
10,139 |
|
|
$ |
3,685 |
|
|
$ |
11,238 |
|
|
|
|
|
|
|
|
|
|
|
F-21
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The Companys provision (benefit) for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Current taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic taxes |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Foreign taxes |
|
|
13,058 |
|
|
|
12,249 |
|
|
|
12,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,058 |
|
|
|
12,249 |
|
|
|
12,033 |
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic taxes |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign taxes |
|
|
(12,006 |
) |
|
|
(11,251 |
) |
|
|
(8,690 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,052 |
|
|
$ |
998 |
|
|
$ |
3,343 |
|
|
|
|
|
|
|
|
|
|
|
Domestic taxes are nil as there are no statutory taxes applicable in Jersey, Channel Islands.
Foreign taxes are based on enacted tax rates in each subsidiarys jurisdiction.
A majority of the Companys Indian operations are eligible to claim income-tax exemption with
respect to profits earned from export revenue from operating units registered under the Software
Technology Parks of India (STPI). The benefit is available for a period of 10 years from the date
of commencement of operations, but not beyond March 31, 2011. The Company had 13 delivery centers
for the year ended March 31, 2011 eligible for the income tax exemption, which expired on April 1,
2011 for all the units. The Company also has a delivery center located in Gurgaon, India registered
under the Special Economic Zone (SEZ) scheme and eligible for 100% income tax exemption until
fiscal 2012, and 50% income tax exemption from fiscal 2013 till fiscal 2022. The Companys
operations in Costa Rica and the Philippines are also eligible for tax exemptions which expire in
fiscal 2017 and fiscal 2013 respectively. The Companys
operations in Sri Lanka were also eligible
for tax exemptions which expired on April 1, 2011. However, recently
the Government of Sri Lanka has exempted the profit earned
from export revenue from tax. This will enable our Sri Lankan subsidiary to continue to claim tax exemption under Sri Lankan Inland
Revenue Act following the expiry of the tax holiday.
If the income tax exemption was not available, the additional income tax expense at the statutory
rate of the respective jurisdiction in India and Sri Lanka would have been approximately $14,029,
$15,569 and $16,077 for the years ended March 31, 2011, 2010 and 2009, respectively. Such
additional tax would have decreased the basic and diluted income per share for the year ended March
31, 2011 by $0.32 and $0.31, respectively ($0.36 and $0.35, respectively, for the year ended March
31, 2010 and $0.38 and $0.37, respectively, for the year ended March 31, 2009).
The following is a reconciliation of the Jersey statutory income tax rate with the effective tax
rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Net income before taxes |
|
$ |
10,139 |
|
|
$ |
3,685 |
|
|
$ |
11,238 |
|
Enacted tax rates in Jersey |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
Statutory income tax |
|
|
|
|
|
|
|
|
|
|
|
|
Provision due to: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign minimum alternative taxes and state taxes |
|
|
57 |
|
|
|
107 |
|
|
|
213 |
|
Differential foreign tax rates |
|
|
958 |
|
|
|
853 |
|
|
|
3,086 |
|
Others (permanent differences) |
|
|
37 |
|
|
|
38 |
|
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
$ |
1,052 |
|
|
$ |
998 |
|
|
$ |
3,343 |
|
|
|
|
|
|
|
|
|
|
|
F-22
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The components of deferred tax assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
Property and equipment |
|
$ |
11,254 |
|
|
$ |
9,552 |
|
Net operating loss carry forward |
|
|
6,380 |
|
|
|
6,290 |
|
Accruals deductible on actual payment |
|
|
3,325 |
|
|
|
1,260 |
|
Share-based compensation |
|
|
1,773 |
|
|
|
3,418 |
|
Minimum alternate tax |
|
|
20,398 |
|
|
|
12,904 |
|
Others |
|
|
603 |
|
|
|
250 |
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
|
43,733 |
|
|
|
33,674 |
|
Less: Valuation allowances (a) |
|
|
(5,782 |
) |
|
|
(5,073 |
) |
|
|
|
|
|
|
|
Deferred tax assets, net of valuation allowances |
|
|
37,951 |
|
|
|
28,601 |
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Property and equipment |
|
|
(26 |
) |
|
|
(26 |
) |
Intangibles |
|
|
(6,674 |
) |
|
|
(9,718 |
) |
Others |
|
|
(384 |
) |
|
|
(57 |
) |
|
|
|
|
|
|
|
Total deferred tax liabilities |
|
|
(7,084 |
) |
|
|
(9,801 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets |
|
$ |
30,867 |
|
|
$ |
18,800 |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The change in valuation allowance of $709 is the result of valuation
allowance recognized on deferred tax assets on net operating losses of a
foreign jurisdiction for the year ended March 31, 2011, where the Company
believes that based on available evidence, it is more likely than not,
that the asset will not be realized. |
F-23
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The following table summarizes the activities related to the Companys unrecognized tax benefits
for uncertain tax positions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Opening balance |
|
$ |
19,970 |
|
|
$ |
16,953 |
|
|
$ |
17,038 |
|
(Decrease) increase related to prior year tax positions |
|
|
(614 |
) |
|
|
147 |
|
|
|
81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase on account of business combinations |
|
|
|
|
|
|
|
|
|
|
106 |
|
Increase related to current year tax positions |
|
|
100 |
|
|
|
2,296 |
|
|
|
4,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
126 |
|
|
|
574 |
|
|
|
(4,791 |
) |
|
|
|
|
|
|
|
|
|
|
Closing balance |
|
$ |
19,582 |
|
|
$ |
19,970 |
|
|
$ |
16,953 |
|
|
|
|
|
|
|
|
|
|
|
The total unrecognized tax benefits that, if recognized, would affect the Companys effective tax
rate, were $19,476, $19,864 and $16,847 as at March 31, 2011, 2010 and 2009, respectively. During
the year ended March 31, 2011, the Company has reversed interest of $65 since it is no longer
required to record such interest on its balance sheet and recognized $48 as interest on tax obligations for prior year tax positions. For the
years ended March 31, 2010 and 2009, the Company recognized $147 and $81, respectively, as
interest on tax obligations. As at March 31, 2011, 2010 and 2009, the Company has accrued $569,
$586 and $439, respectively as interest on tax obligations. As at March 31, 2011, corporate tax
returns for years ended March 31, 2007 and onwards remain subject to examination by tax authorities
in India.
As at March 31, 2011, the Company had net operating loss carry forward aggregating to $19,953 in
India which expires between 2012 and 2014 and unabsorbed depreciation carry forward aggregating to
$22,351 which does not have any expiration. The Company has not recorded deferred tax assets on
losses and unabsorbed depreciation aggregating to $42,304 as there is uncertainty regarding the
availability of such amounts to offset taxable income in subsequent years. As at March 31, 2011,
the Company had $2,550 of tax benefits carried forward in the US which expires in 2027, these
pertains to exercise of options. As at March 31, 2011, the Company had net operating loss carry
forward aggregating to $3,716 in UK, which does not have any expiration.
Deferred income taxes on undistributed earnings of foreign subsidiaries have not been provided as
such earnings are deemed to be permanently reinvested.
In August 2009, the Government of India passed the Indian Finance (No. 2) Act, 2009, which extended
the tax holiday period by an additional year through fiscal 2011. Further, the Act also abolished
the levy of fringe benefit tax (FBT) and increased the minimum alternate tax (MAT) rate from
11.33% to 16.995%. Consequent to such amendments, the Company recorded a net deferred tax benefit
of $442 in the year ended March 31, 2010 towards deferred tax assets and liabilities expected to
reverse during the extended tax holiday period. The Government of India vide Finance Act, 2011 has
increase the MAT rate to 20.01% in the case of profits exceeding
10 million ($0.2 million) and
19.06% in the case of profits not exceeding
10 million ($0.2 million) in fiscal 2012 and also
levied MAT on the profits earned by the SEZ units. The Finance Act, 2011 has been enacted on April
8, 2011 but has no impact on deferred tax computations, as the change in tax rates are effective
from April 1, 2011.
Under a restructuring plan, the Companys seven Indian subsidiaries, Ntrance, Marketics
Technologies India Private Limited, WNS Workflow Technologies (India) Private Limited, WNS Customer
Solutions Private Limited, WNS Customer Solutions Shared Services Private Limited, COSC and NCOP,
amalgamated with its Indian subsidiary WNS Global. The amalgamation order has been approved by the
High Court of Bombay vide an order dated August 27, 2009 and the amalgamation is effective April 1,
2007. Further under another restructuring plan, the Companys three Indian subsidiaries, First
Offshoring Technologies Private Limited, Servicesource Offshore Technologies Private Limited and
Hitech Offshoring Services Private Limited, amalgamated with its Indian subsidiary WNS Global. The
amalgamation order has been approved by the High Court of Bombay vide an order dated March 25, 2010
and the amalgamation is effective April 1, 2008. The Company believes that these amalgamations
would streamline its administrative operations, help achieve operational and financial synergies,
and reduce its costs and expenses relating to regulatory compliance. The amalgamation did not have
a significant impact on the consolidated financial statements of the Company, except for income
taxes. As a result of the amalgamation, the amalgamated entities, which prior to the amalgamation
were individually assessable for income taxes, effective April 1, 2007, are assessable as one
amalgamated entity, resulting in a reduction of income taxes by $261 for fiscal 2010.
F-24
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
In January 2009, the Company received an order of assessment from the Indian tax authorities that
it believes could be material to the Company given the magnitude of the claim. The order assessed
additional taxable income for fiscal 2005 on WNS Global, that could give rise to an estimated
$16,291 in additional taxes, including interest of $5,054. The assessment order alleges that the
transfer price the Company applied to international transactions between WNS Global and its other
wholly-owned subsidiaries was not appropriate, disallows certain expenses claimed as tax deductible
by WNS Global and disallows a tax holiday benefit claimed by the Company. In March 2009, the
Company deposited $224 with the Indian tax authorities pending resolution of the dispute. The first
level Indian appellate authorities have ruled in the Companys favor in its dispute against an
assessment order assessing additional taxable income for fiscal 2004 on WNS Global based on similar
allegations on transfer pricing and tax deductibility of similar expenses and overturned the
assessment. The Indian tax authorities contested the first level
Indian appellate authorities ruling before the second
level appellate authorities and resolution of the
dispute is pending. The Company disputed the order of assessment for fiscal 2005 before first level Indian appellate
authorities. In November 2010, the Company received the order from first level Indian appellate
authorities in respect of the assessment order for fiscal 2005 deciding the issues in the Companys
favor. However, the order may be contested before higher appellate authorities by the Indian tax
authorities.
On November 30, 2009, the Company received a draft order of assessment for fiscal 2006 from the
Indian tax authorities (incorporating the transfer pricing order received on October 31, 2009). The
Company had disputed the draft order of assessment before the Dispute Resolution Panel, or DRP, a panel
set up by the Government of India as alternate first level
appellate authorities. In September 2010, the
Company received the DRP order as well as the order of assessment
giving effect to the DRP order that
assessed additional taxable income for fiscal 2006 on WNS Global that could give rise to an estimated $10,233 in
additional taxes, including interest of $3,588. The assessment order
involves issues similar to that alleged in the order for fiscal 2005. Further, in September
2010, the Company has also received the DRP orders as well as the orders of assessment giving
effect to the DRP orders, relating to certain other Indian subsidiaries of the Company assessed for tax in India,
that assessed additional taxable income for fiscal 2006 that could give rise to an estimated $6,113
in additional taxes, including interest of $2,135. In March 2011, the Company deposited $179 with
the Indian tax authorities pending resolution of the dispute. The DRP orders as well as assessment
orders allege that the transfer price the Company applied to
international transactions with its
related parties were not appropriate and taxed certain receipts claimed by the Company as not
taxable. The Company has disputed these orders before higher
appellate tax authorities.
In February 2011, the Company received the order of assessment for fiscal 2007 from the Indian tax
authorities (incorporating a transfer pricing order received in November 2010) that assessed
additional taxable income on WNS Global that could give rise to an estimated $19,116 in additional
taxes, including interest of $6,204. Further, in February 2011, the Company has also received the
orders of assessment, relating to certain other subsidiaries of the
Company assessed for tax in India, that
assessed additional taxable income for fiscal 2007 that could give rise to an estimated $10,352 in
additional taxes, including interest of $3,258. In March 2011, the Company deposited $671 and $905
with the Indian tax authorities pending resolution of the dispute for WNS Global and other
subsidiaries respectively. The orders of assessment involve issues similar to that alleged in the
orders for fiscal 2005 and 2006. The Company has disputed the said orders of assessment before first
level Indian appellate authorities.
Based on
certain favorable decision from appellate authorities in previous years,
certain legal opinions from
counsel and after consultation with the Indian tax advisors, the Company believes the chances that
the above assessments would be upheld are remote.
In March 2009, the Company received from the Indian service tax authority an assessment order
demanding payment of $7,746 of service tax and related interest and penalty for the period from
March 1, 2003 to January 31, 2005. The assessment order alleges that service tax is payable in
India on BPO services provided by WNS Global to clients. The Company has filed an appeal to the
appellate tribunal against the assessment order and appeal is currently pending. After consultation
with Indian tax advisors, the Company believes the chances that the assessment would be upheld are
remote. The Company intends to continue to vigorously dispute the assessment.
8. DEFERRED REVENUE
Deferred revenue comprises of:
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Payments in advance of services |
|
$ |
4,356 |
|
|
$ |
5,234 |
|
Advance billings |
|
|
6,546 |
|
|
|
1,615 |
|
Claims handling |
|
|
1,399 |
|
|
|
862 |
|
Other |
|
|
637 |
|
|
|
695 |
|
|
|
|
|
|
|
|
|
|
$ |
12,938 |
|
|
$ |
8,406 |
|
|
|
|
|
|
|
|
F-25
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
9. EMPLOYEE BENEFITS
Defined contribution plans
During the years ended March 31, 2011, 2010 and 2009, the Company contributed the following amounts
to defined contribution plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
India |
|
$ |
5,292 |
|
|
$ |
5,326 |
|
|
$ |
5,361 |
|
Philippines |
|
|
37 |
|
|
|
25 |
|
|
|
|
|
Sri Lanka |
|
|
324 |
|
|
|
350 |
|
|
|
339 |
|
United Kingdom |
|
|
781 |
|
|
|
515 |
|
|
|
609 |
|
United States |
|
|
328 |
|
|
|
492 |
|
|
|
519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,762 |
|
|
$ |
6,708 |
|
|
$ |
6,828 |
|
|
|
|
|
|
|
|
|
|
|
Defined benefit plan gratuity
The reconciliation of the beginning and ending balances of the projected benefit obligation and the
fair value of plans assets for the years ended March 31, 2011 and 2010, and the accumulated benefit
obligation at March 31, 2011 and 2010, as follows:
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Change in projected benefit obligations |
|
|
|
|
|
|
|
|
Obligation at beginning of the year |
|
$ |
4,988 |
|
|
$ |
3,505 |
|
Foreign currency translation |
|
|
75 |
|
|
|
473 |
|
Service cost |
|
|
1,405 |
|
|
|
1,128 |
|
Interest cost |
|
|
447 |
|
|
|
349 |
|
Benefits paid |
|
|
(780 |
) |
|
|
(278 |
) |
Plan Amendments |
|
|
262 |
|
|
|
|
|
Actuarial (gain) loss |
|
|
(830 |
) |
|
|
(189 |
) |
|
|
|
|
|
|
|
Benefit obligation at end of the year |
|
$ |
5,567 |
|
|
$ |
4,988 |
|
|
|
|
|
|
|
|
Change in plan assets |
|
|
|
|
|
|
|
|
Plan assets at beginning of the year |
|
$ |
231 |
|
|
$ |
355 |
|
Foreign currency translation |
|
|
|
|
|
|
37 |
|
Actual return |
|
|
(9 |
) |
|
|
9 |
|
Actual contributions |
|
|
673 |
|
|
|
108 |
|
Benefits paid |
|
|
(780 |
) |
|
|
(278 |
) |
|
|
|
|
|
|
|
Plan assets at end of the year |
|
$ |
115 |
|
|
$ |
231 |
|
|
|
|
|
|
|
|
Accrued pension liability |
|
$ |
(5,452 |
) |
|
$ |
(4,757 |
) |
Current |
|
|
(1,365 |
) |
|
|
(836 |
) |
Non-current |
|
|
(4,087 |
) |
|
|
(3,921 |
) |
|
|
|
|
|
|
|
Net amount recognized |
|
|
(5,452 |
) |
|
|
(4,757 |
) |
|
|
|
|
|
|
|
Accumulated benefit obligation at end of the year |
|
$ |
3,806 |
|
|
$ |
3,317 |
|
|
|
|
|
|
|
|
F-26
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The net periodic gratuity costs for the years ended March 31, 2011, 2010 and 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Service cost |
|
$ |
1,405 |
|
|
$ |
1,128 |
|
|
$ |
838 |
|
Interest cost |
|
|
447 |
|
|
|
349 |
|
|
|
277 |
|
Expected return on plan assets |
|
|
(17 |
) |
|
|
(77 |
) |
|
|
(51 |
) |
Amortization of prior service cost |
|
|
78 |
|
|
|
|
|
|
|
|
|
Actuarial loss |
|
|
92 |
|
|
|
205 |
|
|
|
238 |
|
|
|
|
|
|
|
|
|
|
|
Net periodic gratuity cost for the year |
|
$ |
2,005 |
|
|
$ |
1,605 |
|
|
$ |
1,302 |
|
|
|
|
|
|
|
|
|
|
|
Changes in
net actuarial loss recognized in accumulated other comprehensive loss
during the years
ended March 31, 2011, 2010 and 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Net actuarial gain (loss) |
|
$ |
721 |
|
|
$ |
109 |
|
|
$ |
(435 |
) |
Amortization of net actuarial loss |
|
|
88 |
|
|
|
205 |
|
|
|
235 |
|
Foreign currency translation |
|
|
18 |
|
|
|
(93 |
) |
|
|
150 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
827 |
|
|
$ |
221 |
|
|
$ |
(50 |
) |
|
|
|
|
|
|
|
|
|
|
The assumptions used in accounting for the gratuity plan are set out as below:
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
2011 |
|
2010 |
|
2009 |
Discount rate |
|
9%-10.42% |
|
7%-10.57% |
|
7%-9.95% |
Rate of increase in compensation levels |
|
8%-10% |
|
7%-15% for 5 years
and 7%-
10%
thereafter |
|
10%-15%
for
5 years
and 9%
thereafter |
Rate of return on plan assets |
|
7.5% |
|
7.5% |
|
7.5% |
The Company evaluates these assumptions annually based on its long-term plans of growth and
industry standards. The discount rates are based on current market yields on government securities
adjusted for a suitable risk premium to reflect the additional risk for high quality corporate
bonds.
As at March 31, 2011, $35 and $80 ($187 and $45, respectively as at March 31, 2010) of the fund
assets are invested with LIC and ALICPL, respectively. Of the funds invested with LIC,
approximately 40% and 60% of the funds are invested in government securities and money market
instruments, respectively. Of the funds invested with ALICPL, approximately 14%, 17%, 16% and 53%
are invested in cash and money market instruments, equity, government securities and corporate
bonds, respectively. Since the Companys plan assets are managed by third party fund
administrators, the contributions made by the Company are pooled with the corpus of the funds
managed by such fund administrators and invested in accordance with the regulatory guidelines.
Accordingly, data related to the fair value of the assets for the various categories of plan asset
held and the classification of level of fair value under ASC 820-10 Fair Value Measurements and
Disclosure specific to the funds contributed by the Company is not available.
F-27
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The
Company expects to contribute $650 for the year ending March 31, 2012. The expected benefit
payments from the fund as at March 31, 2011 are as follows:
|
|
|
|
|
Year ending March 31, |
|
Amount |
|
2012 |
|
$ |
1,479 |
|
2013 |
|
|
1,593 |
|
2014 |
|
|
1,645 |
|
2015 |
|
|
1,652 |
|
2016 |
|
|
1,720 |
|
2017-2021 |
|
|
6,209 |
|
|
|
|
|
|
|
$ |
14,298 |
|
|
|
|
|
The amount included in accumulated other comprehensive loss and expected to be recognized in net
periodic pension cost during the year ending March 31, 2012 is a gain of $116. No plan assets are
expected to be returned to the Company during the year ending March 31, 2012.
F-28
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The classification of accumulated other comprehensive income (loss) for the years ended March 31,
2011 and 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
Cumulative translation adjustments |
|
$ |
(3,984 |
) |
|
$ |
(11,534 |
) |
Unrealized gain (loss) on cash flow hedges, net of tax |
|
|
(355 |
) |
|
|
4,415 |
|
Net actuarial gain (loss) on pension plans, net of tax |
|
|
294 |
|
|
|
(454 |
) |
|
|
|
|
|
|
|
Total |
|
$ |
(4,045 |
) |
|
$ |
(7,573 |
) |
|
|
|
|
|
|
|
11. EQUITY
WNS Holdings has one class of ordinary shares and the holder of each share is entitled to one vote
per share.
F-29
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
12. SHARE BASED COMPENSATION
Share-based compensation expense recognized during the years ended March 31, 2011, 2010 and 2009
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Share-based compensation recorded in |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
$ |
938 |
|
|
$ |
3,730 |
|
|
$ |
3,647 |
|
Selling, general and administrative expenses |
|
|
3,076 |
|
|
|
11,397 |
|
|
|
9,775 |
|
|
|
|
|
|
|
|
|
|
|
Total share-based compensation |
|
$ |
4,014 |
|
|
$ |
15,127 |
|
|
$ |
13,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized income tax benefit |
|
$ |
(478 |
) |
|
$ |
(2,563 |
) |
|
$ |
(3,002 |
) |
|
|
|
|
|
|
|
|
|
|
In May 2007, the Indian Government extended FBT to include stock options and RSUs issued to
employees in India. Under this legislation, on exercise of an option or RSU, employers were
responsible for a tax equal to the intrinsic value at its vesting date multiplied by the applicable
tax rate. The employer could seek reimbursement of the tax from the optionee, but could not
transfer the obligation to the optionee. The Company recovered the FBT from the optionees in India.
The options and RSUs issued subsequent to the introduction of the FBT were fair valued after
considering the FBT recovered from the optionees as an additional component of the exercise price
at the grant date. The FBT on options and RSUs payable to the Government of India is recorded as an
operating expense and the recovery from the employees is treated as additional exercise price and
recorded in equity. In August 2009, the Government of India passed the Indian Finance (No.2) Act,
2009 which withdrew the levy of FBT with effect from April 1, 2009. For the years ended March 31,
2011, 2010 and 2009, the Company recorded $nil, $459 and $446, respectively, as FBT charge to
operating expenses.
Consequent to the withdrawal of the levy of FBT, no FBT is recovered for options and RSUs issued to
Indian optionees, resulting in a reduction in the exercise price of the options and RSUs. The
Company considered the change in exercise price as a modification. As a result of that
modification, the Company recognized additional compensation expense of $601 and $2,473 for the
years ended March 31, 2011 and 2010, respectively. As at March 31, 2011, $586 of unrecognized
compensation cost arising from such modification, pertaining to unvested outstanding RSUs, net of
estimated forfeitures is expected to be recognized over a weighted average period of 0.9 years.
Share-based options
The Company has two share-based incentive plans, the 2002 Stock Incentive Plan adopted on July 1,
2002 and the 2006 Incentive Award Plan adopted on June 1, 2006, as amended and restated in February
2009 (collectively referred to as the Plans). Under the Plans, share based options may be granted
to eligible participants. Options are generally granted for a term of ten years and have a graded
vesting period of up to four years. The Company settles employee share-based option exercises with
newly issued ordinary shares. As at March 31, 2011, the Company had 685,035 ordinary shares
available for future grants. A summary of option activity under the Plans as at March 31, 2011, and
changes during the year then ended is presented below:
F-30
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average |
|
|
Weighted
average
remaining
contract |
|
|
Aggregate |
|
|
|
|
|
|
|
exercise |
|
|
term (in |
|
|
intrinsic |
|
|
|
Shares |
|
|
price |
|
|
years) |
|
|
value |
|
Outstanding at April 1, 2010 |
|
|
1,198,271 |
|
|
$ |
17.71 |
|
|
|
6.02 |
|
|
$ |
1,785 |
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(127,904 |
) |
|
|
5.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(3,381 |
) |
|
|
23.48 |
|
|
|
|
|
|
|
|
|
Lapsed |
|
|
(51,736 |
) |
|
|
6.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2011 |
|
|
1,015,250 |
|
|
$ |
19.84 |
|
|
|
5.24 |
|
|
$ |
796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options vested and expected to vest |
|
|
1,015,250 |
|
|
$ |
19.84 |
|
|
|
5.24 |
|
|
$ |
796 |
|
Options exercisable |
|
|
1,015,250 |
|
|
$ |
19.84 |
|
|
|
5.24 |
|
|
$ |
796 |
|
The aggregate intrinsic value of options exercised during the years ended March 31, 2011, 2010 and
2009 was $728, $5,914 and $652 respectively. The total grant date fair value of options vested
during the years ended March 31, 2011, 2010 and 2009 was $316, $2,677 and $3,840, respectively.
Total cash received as a result of option exercises during the year ended March 31, 2011 was
approximately $779.
As at March 31, 2011, there was $nil unrecognized compensation cost, including modification charge
related to unvested outstanding share options.
The fair value of options granted is estimated on the date of grant using the Black-Scholes-Merton
option-pricing model. No options were granted during the years ended March 31, 2011, 2010 and 2009.
The expected term of options is based on the historic exercise pattern of the Companys employees.
The volatility was calculated based on the volatility of the Companys share price. The risk free
rate is based on the United States Federal Reserve rates. Forfeitures are estimated based on the
Companys historical analysis of actual stock option forfeitures. The Company does not currently
pay cash dividends on its ordinary shares and does not anticipate doing so in the foreseeable
future. Accordingly, the expected dividend yield is zero.
F-31
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Restricted Share Units
The 2006 Incentive Award Plan also allows for grant of RSUs. Each RSU represents the right to
receive one ordinary share and vests over a period of up to three years.
A summary of RSU activity under the 2006 Incentive Award Plan as at March 31, 2011, and changes
during the year then ended is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Weighted
average
remaining
contract |
|
|
Aggregate |
|
|
|
|
|
|
|
average |
|
|
term (in |
|
|
intrinsic |
|
|
|
Shares |
|
|
fair value |
|
|
years) |
|
|
value |
|
Outstanding as at April 1, 2010 |
|
|
1,853,597 |
|
|
$ |
12.81 |
|
|
|
7.50 |
|
|
$ |
19,889 |
|
Granted |
|
|
433,872 |
|
|
|
9.17 |
|
|
|
|
|
|
|
|
|
Vested/exercised |
|
|
(534,465 |
) |
|
|
15.26 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(414,779 |
) |
|
|
10.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as at March 31, 2011 |
|
|
1,338,225 |
|
|
$ |
11.22 |
|
|
|
8.37 |
|
|
$ |
14,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs expected to vest |
|
|
1,178,763 |
|
|
$ |
11.22 |
|
|
|
8.37 |
|
|
$ |
12,436 |
|
RSUs exercisable |
|
|
291,201 |
|
|
$ |
13.08 |
|
|
|
7.47 |
|
|
$ |
3,072 |
|
The fair value of RSUs is generally the market price of the Companys shares on the date of grant.
For grants to employees based in India, the recovery of FBT, was considered as the exercise price
of the grants. Accordingly, the fair value of such RSUs was estimated on the date of grant using
the Black-Scholes -Merton option pricing model. The following table presents the weighted average
assumptions for estimating the fair value of RSUs granted to employees. The basis of these
assumptions is similar to the basis of assumptions used for estimating the fair value of options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
2011 |
|
2010 |
|
2009 |
Expected life |
|
2.0 years |
|
2.3 years |
|
2.4 years |
Risk free interest rates |
|
|
0.5 |
% |
|
|
1.3 |
% |
|
|
2.2 |
% |
Volatility |
|
|
68.8 |
% |
|
|
57.4 |
% |
|
|
33.7 |
% |
Dividend yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
As at March 31, 2011, there was $7,383 of unrecognized compensation cost related to unvested RSU,
net of forfeitures, including modification charge. This amount is expected to be recognized over a
weighted average period of 2.2 years. To the extent the actual forfeiture rate is different than
what the Company has anticipated, share based compensation related to these RSUs will be different
from the Companys expectations.
The
weighted average grant date fair value of RSUs granted during the years ended March 31, 2011,
2010 and 2009 was $9.17, $10.28 and $13.39 per ADS, respectively. The aggregate intrinsic value of
RSUs exercised during the years ended March 31, 2011 and 2010 was $5,870 and $5,621, respectively.
The total grant date fair value of RSUs vested during the years ended March 31, 2011, 2010 and 2009
was $7,378, $12,234 and 4,811, respectively.
F-32
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Performance Share Units
The 2006 Incentive Award Plan also allows for grant of performance share units (PSUs). Each PSU
represents the right to receive one ordinary share based on the Companys performance against
specified targets and vests over a period of up to four years.
A summary of PSU activity under the 2006 Incentive Award Plan as at March 31, 2011, and changes
during the year then ended is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Weighted
average
remaining
contract |
|
|
Aggregate |
|
|
|
|
|
|
|
average |
|
|
term (in |
|
|
intrinsic |
|
|
|
Shares |
|
|
fair value |
|
|
years) |
|
|
value |
|
Outstanding at April 1, 2010 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
Granted |
|
|
316,409 |
|
|
|
8.98 |
|
|
|
|
|
|
|
|
|
Vested/exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(31,250 |
) |
|
|
8.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2011 |
|
|
285,159 |
|
|
$ |
9.00 |
|
|
|
9.42 |
|
|
$ |
3,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSUs expected to vest |
|
|
241,729 |
|
|
$ |
9.00 |
|
|
|
9.42 |
|
|
$ |
2,550 |
|
PSUs exercisable |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
The fair value of PSUs is generally the market price of the Companys shares on the date of grant,
and assumes that performance targets will be achieved. The fair value of PSUs was estimated on the
date of grant using the Black-Scholes -Merton option pricing model. The following table presents
the weighted average assumptions for estimating the fair value of PSUs granted to employees. The
basis of these assumptions is similar to the basis of assumptions used for estimating the fair
value of options.
|
|
|
|
|
|
|
Year ended |
|
|
March 31, |
|
|
2011 |
Expected life |
|
3.2 years |
Risk free interest rates |
|
|
0.8 |
% |
Volatility |
|
|
69.3 |
% |
Dividend yield |
|
|
0.0 |
% |
As at March 31, 2011, there was $2,176 of unrecognized compensation cost related to unvested PSU,
net of forfeitures. This amount is expected to be recognized over a weighted average period of 2.6
years. Over the performance period, the number of shares that will be issued will be adjusted
upward or downward based upon the probability of achievement of the performance targets. The
ultimate number of shares issued and the related compensation cost recognized as expense will be
based on a comparison of the final performance metrics to the specified targets.
The weighted average grant date fair value of PSUs granted during the year ended March 31, 2011 was
$8.98 per ADS. The aggregate intrinsic value of PSUs exercised during the year ended March 31, 2011
was $nil. The total grant date fair value of RSUs vested during the year ended March 31, 2011 was
$nil.
In connection with the exercises of options and vesting of RSUs, the Company receives tax benefits
in the US and the UK tax jurisdiction, which is equal to the difference between the exercise price
and the market price on the date of exercise. Such tax benefit realized by the Company for the
years ended March 31, 2011, 2010 and 2009 were $62, $1,264 and $2,378, respectively. Of the net tax
benefits realized, the excess tax benefits from share-based compensation of $569, $1,825 and $2,226
were reclassified in the consolidated statements of cash flows from cash flows from operating
activities to cash flows from financing activities, for the years ended March 31, 2011, 2010 and
2009, respectively.
F-33
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
13. RELATED PARTY TRANSACTIONS
|
|
|
Name of the related party |
|
Relationship |
Warburg Pincus and its affiliates
|
|
Principal shareholder |
The Indian Hotels Co Limited (Indian Hotels)
|
|
A company having a director in common with WNS Holdings |
Datacap Software Private Limited (Datacap)
|
|
A company of which a member of management is a principal shareholder |
HDFC Limited
|
|
A company having a director in common with WNS Holdings |
Mahindra & Mahindra Limited
|
|
A company having a director in common with WNS Holdings |
Singapore Telecommunications Limited (Singtel) (up to July 30, 2010)
|
|
A company having a director in common with WNS Holdings |
Students in free Enterprise (SIFE)
|
|
A company having a director in common with WNS Holdings |
The transactions and the balance outstanding with these parties are described below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount receivable (payable) |
|
|
Year ended March 31, |
|
at March 31, |
Nature of transaction/related party |
|
2011 |
|
2010 |
|
2009 |
|
2011 |
|
2010 |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warburg Pincus and its affiliates |
|
|
3,752 |
|
|
|
2,625 |
|
|
|
3,242 |
|
|
|
556 |
|
|
|
739 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warburg Pincus and its affiliates |
|
|
20 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Datacap |
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Singtel |
|
|
161 |
|
|
|
319 |
|
|
|
274 |
|
|
|
|
|
|
|
|
|
Mahindra & Mahindra Limited |
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warburg Pincus and its affiliates |
|
|
|
|
|
|
|
|
|
|
108 |
|
|
|
|
|
|
|
|
|
SIFE |
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indian Hotels |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Datacap |
|
|
|
|
|
|
5 |
|
|
|
29 |
|
|
|
|
|
|
|
|
|
Property and equipment additions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warburg Pincus and its affiliates |
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
Datacap |
|
|
|
|
|
|
2 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warburg Pincus and its affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HDFC Limited |
|
|
|
|
|
|
|
|
|
|
269 |
|
|
|
|
|
|
|
|
|
F-34
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
14. OTHER (INCOME) EXPENSE, NET
The following are the details of other (income) expense, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Foreign exchange loss (gain) , net |
|
$ |
2,444 |
|
|
$ |
5,098 |
|
|
$ |
(1,697 |
) |
Interest income |
|
|
(331 |
) |
|
|
(452 |
) |
|
|
(2,048 |
) |
Ineffective portion of interest rate swap |
|
|
3,229 |
|
|
|
|
|
|
|
|
|
Forward/ option contract (gain) loss |
|
|
(11,096 |
) |
|
|
3,652 |
|
|
|
10,007 |
|
Others |
|
|
(352 |
) |
|
|
(1,246 |
) |
|
|
(623 |
) |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
(6,106 |
) |
|
$ |
7,052 |
|
|
$ |
5,639 |
|
|
|
|
|
|
|
|
|
|
|
15. SEGMENTS
The Company has several operating segments based on a mix of industry and the types of services.
The composition and organization of these operating segments currently is designed in such a
way that the back office shared processes, i.e. the horizontal structure, delivers service to
industry specific back office and front office processes i.e. the vertical structure. Vertical
structure fulfills all of the characteristics laid in paragraphs ASC 280-10-50-1 and ASC
280-10-50-3 and hence constitutes as an operating segment as per the guidance of Segmental
Reporting (ASC 280). These operating segments include travel, insurance, banking and financial
services, healthcare and utilities, retail and consumer products groups, auto claims and others.
The Company believes that the business process outsourcing services that it provides to customers
in industries other than auto claims such as travel, insurance, banking and financial services,
healthcare and utilities, retail and consumer products groups and others are similar in terms of
services, service delivery methods, use of technology, and long-term gross profit and hence meet
the aggregation criteria under ASC 280. WNS Assistance and AHA (WNS Auto Claims BPO), which
provide automobile claims handling services, do not meet the aggregation criteria under ASC 280.
Accordingly, the Company has determined that it has two reportable segments WNS Global BPO and
WNS Auto Claims BPO.
In order to provide accident management services, the Company arranges for the repair through a
network of repair centers. Repair costs paid to automobile repair centers are invoiced to customers
and recognized as revenue. The Company uses revenue less repair payments for Fault repairs as a
primary measure to allocate resources and measure segment performance. Revenue less repair payments
is a non-GAAP measure which is calculated as revenue less payments to repair centers. For
Non-fault repairs, revenue including repair payments is used as a primary measure. As the Company
provides a consolidated suite of accident management services including credit hire and credit
repair for its Non-fault repairs business, the Company believes that measurement of that line of
business has to be on a basis that includes repair payments in revenue. The Company believes that
the presentation of this non-GAAP measure in the segmental information provides useful information
for investors regarding the segments financial performance. The presentation of this non-GAAP
information is not meant to be considered in isolation or as a substitute for the Companys
financial results prepared in accordance with US GAAP.
F-35
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, 2011 |
|
|
|
WNS
Global |
|
|
WNS Auto
Claims |
|
|
Inter |
|
|
|
|
|
|
BPO |
|
|
BPO |
|
|
segments(a) |
|
|
Total |
|
Revenue from external customers |
|
$ |
331,822 |
|
|
$ |
284,429 |
|
|
$ |
|
|
|
$ |
616,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment revenue |
|
$ |
332,647 |
|
|
$ |
284,429 |
|
|
$ |
(825 |
) |
|
$ |
616,251 |
|
Payments to repair centers |
|
|
|
|
|
|
246,850 |
|
|
|
|
|
|
|
246,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue less repair payments |
|
|
332,647 |
|
|
|
37,579 |
|
|
|
(825 |
) |
|
|
369,401 |
|
Depreciation |
|
|
18,043 |
|
|
|
1,316 |
|
|
|
|
|
|
|
19,359 |
|
Other costs |
|
|
275,694 |
|
|
|
27,298 |
|
|
|
(825 |
) |
|
|
302,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income |
|
|
38,910 |
|
|
|
8,965 |
|
|
|
|
|
|
|
47,875 |
|
Other income, net |
|
|
(5,758 |
) |
|
|
(348 |
) |
|
|
|
|
|
|
(6,106 |
) |
Interest expense |
|
|
8,016 |
|
|
|
2 |
|
|
|
|
|
|
|
8,018 |
|
|
|
|
Segment income before income taxes |
|
|
36,652 |
|
|
|
9,311 |
|
|
|
|
|
|
|
45,963 |
|
(Benefit) provision for income taxes |
|
|
(547 |
) |
|
|
1,599 |
|
|
|
|
|
|
|
1,052 |
|
|
|
|
Segment income |
|
|
37,199 |
|
|
|
7,712 |
|
|
|
|
|
|
|
44,911 |
|
Unallocated share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,014 |
|
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,087 |
|
Less: Net loss attributable to redeemable noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(730 |
) |
Net income attributable to WNS (Holdings) Limited shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
13,222 |
|
|
$ |
2,041 |
|
|
$ |
|
|
|
$ |
15,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets, net of eliminations |
|
$ |
405,411 |
|
|
$ |
123,008 |
|
|
$ |
|
|
|
$ |
528,419 |
|
|
|
|
Two customers in the WNS Auto Claims BPO segment and one customer in WNS Global BPO accounted for
16.4%, 13.2% and 12.2%, respectively, of the Companys total revenue for the year ended March 31,
2011. The receivables from these three customers comprised nil, 7.6% and 10.3% of the Companys
total accounts receivables, respectively, as at March 31, 2011. |
(a) |
|
This represents invoices raised by WNS Global BPO on WNS Auto
Claims BPO on an arms length basis for business process outsourcing services rendered by the former to the latter. |
F-36
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, 2010 |
|
|
|
WNS
Global |
|
|
WNS Auto
Claims |
|
|
Inter |
|
|
|
|
|
|
BPO |
|
|
BPO |
|
|
segments(a) |
|
|
Total |
|
Revenue from external customers |
|
$ |
340,411 |
|
|
$ |
242,050 |
|
|
$ |
|
|
|
$ |
582,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment revenue |
|
$ |
341,477 |
|
|
$ |
242,050 |
|
|
$ |
(1,066 |
) |
|
$ |
582,461 |
|
Payments to repair centers |
|
|
|
|
|
|
191,923 |
|
|
|
|
|
|
|
191,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue less repair payments |
|
|
341,477 |
|
|
|
50,127 |
|
|
|
(1,066 |
) |
|
|
390,538 |
|
Depreciation |
|
|
20,094 |
|
|
|
1,058 |
|
|
|
|
|
|
|
21,152 |
|
Other costs |
|
|
258,850 |
|
|
|
39,034 |
|
|
|
(1,066 |
) |
|
|
296,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating income |
|
|
62,533 |
|
|
|
10,035 |
|
|
|
|
|
|
|
72,568 |
|
Other expense (income),net |
|
|
9,106 |
|
|
|
(2,054 |
) |
|
|
|
|
|
|
7,052 |
|
Interest expense |
|
|
13,759 |
|
|
|
64 |
|
|
|
|
|
|
|
13,823 |
|
|
|
|
Segment income before income taxes |
|
|
39,668 |
|
|
|
12,025 |
|
|
|
|
|
|
|
51,693 |
|
(Benefit) provision for income taxes |
|
|
(1,857 |
) |
|
|
2,855 |
|
|
|
|
|
|
|
998 |
|
|
|
|
Segment income |
|
|
41,525 |
|
|
|
9,170 |
|
|
|
|
|
|
|
50,695 |
|
Unallocated share-based compensation expense (Including related
fringe benefit taxes $459) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,586 |
|
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,687 |
|
Less: Net loss attributable to redeemable noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,023 |
) |
Net income attributable to WNS (Holdings) Limited shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
11,974 |
|
|
$ |
1,283 |
|
|
$ |
|
|
|
$ |
13,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets, net of eliminations |
|
$ |
443,575 |
|
|
$ |
106,315 |
|
|
$ |
|
|
|
$ |
549,890 |
|
|
|
|
Two customers in the WNS Auto Claims BPO segment and one customer in WNS Global BPO accounted for
13.4%, 12.6% and 15.5%, respectively, of the Companys total revenue for the year ended March 31,
2010. The receivables from these three customers comprised 10.4%, 7.8% and 9.2% of the Companys
total accounts receivables, respectively, as at March 31, 2010. |
(a) |
|
This represents invoices raised by WNS Global BPO on WNS Auto
Claims BPO on an arms length basis for business process outsourcing services rendered by the former to the latter. |
F-37
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, 2009 |
|
|
|
WNS |
|
|
WNS Auto |
|
|
|
|
|
|
|
|
|
Global |
|
|
Claims |
|
|
Inter |
|
|
|
|
|
|
BPO |
|
|
BPO |
|
|
segments(a) |
|
|
Total |
|
Revenue from external customers |
|
$ |
322,176 |
|
|
$ |
198,725 |
|
|
$ |
|
|
|
$ |
520,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment revenue |
|
$ |
322,917 |
|
|
$ |
198,725 |
|
|
$ |
(741 |
) |
|
$ |
520,901 |
|
Payments to repair centers |
|
|
|
|
|
|
135,874 |
|
|
|
|
|
|
|
135,874 |
|
|
|
|
Revenue less repair payments |
|
|
322,917 |
|
|
|
62,851 |
|
|
|
(741 |
) |
|
|
385,027 |
|
Depreciation |
|
|
20,930 |
|
|
|
859 |
|
|
|
|
|
|
|
21,789 |
|
Other costs |
|
|
251,044 |
|
|
|
45,496 |
|
|
|
(741 |
) |
|
|
295,799 |
|
|
|
|
Segment operating income |
|
|
50,943 |
|
|
|
16,496 |
|
|
|
|
|
|
|
67,439 |
|
Other expense (income), net |
|
|
6,099 |
|
|
|
(460 |
) |
|
|
|
|
|
|
5,639 |
|
Interest expense |
|
|
11,192 |
|
|
|
590 |
|
|
|
|
|
|
|
11,782 |
|
|
|
|
Segment income before income taxes |
|
|
33,652 |
|
|
|
16,366 |
|
|
|
|
|
|
|
50,018 |
|
(Benefit) provision for income taxes |
|
|
(305 |
) |
|
|
3,648 |
|
|
|
|
|
|
|
3,343 |
|
|
|
|
Segment income |
|
|
33,957 |
|
|
|
12,718 |
|
|
|
|
|
|
|
46,675 |
|
Unallocated share-based compensation expense (Including related fringe benefit taxes $446) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,868 |
|
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to redeemable noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(287 |
) |
Net income attributable to WNS (Holdings) Limited shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
21,227 |
|
|
$ |
1,466 |
|
|
$ |
|
|
|
$ |
22,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets, net of eliminations |
|
$ |
471,258 |
|
|
$ |
90,569 |
|
|
$ |
|
|
|
$ |
561,827 |
|
|
|
|
Two customers in the WNS Auto Claims BPO segment and one customer in WNS Global BPO accounted for
15.3%, 11.0% and 15.5%, respectively, of the Companys total revenue for the year ended March 31,
2009. The receivables from these three customers comprised 8.7%, 4.9% and 12.1% of the Companys
total accounts receivables, respectively, as at March 31, 2009. |
(a) |
|
This represents invoices raised by WNS Global BPO on WNS Auto
Claims BPO at an arms length basis for business process outsourcing services rendered by the former to the latter. |
F-38
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The Companys revenue by geographic area is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
UK |
|
$ |
375,046 |
|
|
$ |
339,219 |
|
|
$ |
291,218 |
|
North America |
|
|
136,772 |
|
|
|
142,699 |
|
|
|
130,469 |
|
Europe (excludes UK) |
|
|
98,073 |
|
|
|
97,297 |
|
|
|
97,713 |
|
Other |
|
|
6,360 |
|
|
|
3,246 |
|
|
|
1,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
616,251 |
|
|
$ |
582,461 |
|
|
$ |
520,901 |
|
|
|
|
|
|
|
|
|
|
|
The Companys long-lived assets (excluding goodwill and intangibles) by geographic area are as
follows:
|
|
|
|
|
|
|
|
|
|
|
As at March 31, |
|
|
|
2011 |
|
|
2010 |
|
UK |
|
$ |
3,653 |
|
|
$ |
2,352 |
|
India |
|
|
36,654 |
|
|
|
43,479 |
|
US |
|
|
387 |
|
|
|
674 |
|
Other |
|
|
7,898 |
|
|
|
5,195 |
|
|
|
|
|
|
|
|
|
|
$ |
48,592 |
|
|
$ |
51,700 |
|
|
|
|
|
|
|
|
16. FAIR VALUE DISCLOSURES
Fair value represents the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants after the measurement date. As
such, fair value is a market based measurement that should be determined based on assumption that
market participant would use in pricing an asset or a liability. A three tier fair value hierarchy
is established as a basis for considering such assumptions and for inputs used in the valuation
methodologies in measuring fair value:
|
|
|
Level 1
|
|
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets |
|
|
|
Level 2
|
|
Includes other inputs that are directly or indirectly observable in the market price |
|
|
|
Level 3
|
|
Unobservable inputs which are supported by little or no market activity |
The fair value hierarchy also requires an entity to maximize the use of observable inputs and
minimize the use unobservable inputs when measuring fair value. The Company measures cash
equivalents, marketable securities and derivative instruments at fair value. Cash equivalents and
marketable securities are primarily classified within Level 1 or Level 2. This is because the cash
equivalents and marketable securities are valued primarily using quoted market prices or
alternative pricing sources and models utilizing market observable inputs. The derivative
instruments are classified within Level 2 as the valuation inputs are based on quoted prices and
market observable data of similar instruments in inactive markets. The Company mainly holds non
speculative forwards, options and swaps to hedge certain foreign currency and interest rate
exposures. When active quotes are not available, the Company uses industry standard valuation
models. Where applicable, these models project future cash flows and discount the future amounts to
a present value using market-based observable inputs including interest rate curves, credit risk,
foreign exchange rates, and forward and spot prices for currencies.
F-39
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The assets and liabilities measured at fair value on a recurring basis are summarized below:-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurement at reporting date using |
|
|
|
|
|
|
|
Quoted prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
in |
|
|
|
|
|
|
|
|
|
|
|
|
|
active |
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
markets |
|
|
other |
|
|
Significant |
|
|
|
|
|
|
|
for identical |
|
|
observable |
|
|
unobservable |
|
|
|
March 31, |
|
|
assets |
|
|
inputs |
|
|
inputs |
|
Description |
|
2011 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
current |
|
$ |
11,182 |
|
|
$ |
|
|
|
$ |
11,182 |
|
|
$ |
|
|
non current |
|
|
2,282 |
|
|
|
|
|
|
|
2,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
13,464 |
|
|
$ |
|
|
|
$ |
13,464 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
current |
|
$ |
4,323 |
|
|
$ |
|
|
|
$ |
4,323 |
|
|
$ |
|
|
non current |
|
|
431 |
|
|
|
|
|
|
|
431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
4,754 |
|
|
$ |
|
|
|
$ |
4,754 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurement at reporting date using |
|
|
|
|
|
|
|
Quoted prices in |
|
|
Significant |
|
|
|
|
|
|
|
|
|
|
active markets |
|
|
other |
|
|
Significant |
|
|
|
|
|
|
|
for identical |
|
|
observable |
|
|
unobservable |
|
|
|
March 31, |
|
|
assets |
|
|
inputs |
|
|
inputs |
|
Description |
|
2010 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
current |
|
$ |
22,808 |
|
|
$ |
|
|
|
$ |
22,808 |
|
|
$ |
|
|
non current |
|
|
8,374 |
|
|
|
|
|
|
|
8,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
31,182 |
|
|
$ |
|
|
|
$ |
31,182 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
current |
|
$ |
6,750 |
|
|
$ |
|
|
|
$ |
6,750 |
|
|
$ |
|
|
non current |
|
|
1,992 |
|
|
|
|
|
|
|
1,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
8,742 |
|
|
$ |
|
|
|
$ |
8,742 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of cash equivalents, funds held for clients, bank deposits and marketable securities,
accounts receivable, employee receivables, other current assets, accounts payables, short term
loan, accrued expenses and other current liabilities appropriate their fair values due to short
term maturity of these items. The fair value of deposits and long term debt is $5,736 and $41,728,
respectively, at March 31, 2011 and $7,073 and $91,192,
respectively, at March 31, 2010. The fair
value is estimated using the discounted cash flow approach and market rates of interest. The
valuation technique involves assumption and judgments regarding risk characteristics of the
instruments, discount rates, future cash flows and other factors.
As at March 31, 2011, the Company did not have any significant non-recurring measurements of
nonfinancial assets and nonfinancial liabilities.
F-40
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
17. DEBT
Long term debt
On July 11, 2008, the Company entered into a term loan facility agreement to provide for a secured
term loan of $200,000 which was fully utilized by the Company to finance the acquisition of Aviva
Global transaction as described in note 3. In connection with the financing, the Company incurred $1,891 as debt issuance
costs, which was deferred and amortized as an adjustment to interest expense over the term of the
loan using the effective interest method.
The term loan bore interest at three month US dollar LIBOR plus a margin of 3.5% per annum (3%
through January 9, 2009), payable on a quarterly basis. Effective October 10, 2008, the Company
entered into interest rate swap agreements with the notional amount totaling $200,000, to
effectively convert the term loan into a fixed-rate debt. The Company had an option to prepay the
whole or a part of the debt without any prepayment penalty by giving ten days prior notice to the
lenders. Pursuant to the prepayment option, the Company made a prepayment of $5,000 on April 14,
2009, $5,000 on July 10, 2009 and $15,000 on January 11, 2010. The Company also repaid the
scheduled repayment installments of the loan of $20,000 each on July 10, 2009, January 11, 2010 and
July 12, 2010.
On July 12, 2010 the balance of $115,000 was prepaid with cash on hand and proceeds from a new term
loan facility for $94,000 obtained pursuant to a facility agreement dated July 2, 2010.
The new facility provides for a term loan of $94,000 with interest equal to the three month US
dollar LIBOR plus a margin of 2% per annum. The variable interest rate as at March 31, 2011 was
2.30%. As at March 31, 2011 the Companys interest rate swap agreement converts the floating rate
loan to weighted average effective fixed rate of 5.84%. This term loan is repayable in semi-annual
installments of $20,000 on each of January 10, 2011 and July 11, 2011 and $30,000 on January 10,
2012 with the final installment of $24,000 payable on July 10, 2012. The facility is secured by,
among other things, guarantees and pledges of shares provided by the Company and certain of its
subsidiaries, a pari-passu fixed and floating charge over the assets of a UK subsidiary of the
Company and charges over certain bank accounts. The facility agreement contains certain restrictive
covenants on the indebtedness of the Company, total borrowings to tangible net worth ratio, total
borrowings to EBITDA ratio and a
minimum interest coverage ratio, each as defined in the facility agreement. As at March 31, 2011 the Company was in compliance with all of its
financial covenants. On January 10, 2011, the Company made a scheduled installment repayment of
$20,000 and the amount outstanding under the facility as at
March 31, 2011 was $74,000.
The Company has also established a £19,760 line of credit in UK pursuant to a facility agreement
dated June 30, 2010. This facility consists of a two year term loan facility of £9,880 at the Bank
of England base rate plus a margin of 1.95% per annum and a working capital facility of £9,880 at
the Bank of England base rate plus a margin of 2.45% per annum. This facility is secured by, among
other things, guarantees and pledges of shares provided by the Company and certain of its
subsidiaries, a pari-passu fixed and floating charge over the assets of the Companys UK
subsidiaries and a charge over a bank account. This facility agreement contains certain restrictive
covenants on the indebtedness of the Company, total borrowings to tangible net worth ratio, total
borrowings to EBITDA ratio, a minimum interest coverage ratio and a
minimum current ratio, each as defined in the facility agreement. As at
March 31, 2011 the Company was in compliance with all of its financial covenants and the amount
outstanding under the term loan facility was £9,880.
In connection with the refinancing of the debt, the Company has incurred an upfront fees and debt
issuance cost totaling $1,278 a portion of which is amortized as an adjustment to interest expense
over the remaining term of the new loan. As both the old and the new loan are syndicated loan, to
the extent that the loan was refinanced by the old lenders, the Company has determined that the new
loan is not substantially different from the old loan under the guidance provided by ASC
470-50Modifications and Extinguishments, and accordingly the unamortized costs of $228 of the old
loan pertaining to old lenders continuing as new lenders has been recorded as an adjustment to
interest expense over the remaining term of the new loan and the debt issuance cost for the new
loan of $419 pertaining to old lenders continuing as new lenders is charged to the income
statement. Under ASC 860 Transfers and Servicing, the Company determined that since the
outstanding amount from one of the old lenders not continuing as a new lender is fully repaid, it
is an extinguishment of a loan, and thus the balance of unamortized debt cost of $424 of the old
loan was charged to the income statement. The balance of unamortized cost as at March 31, 2011
after the above adjustment was $482.
F-41
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The Company has also established a $3,200 line of credit in the Philippines pursuant to a facility
agreement dated September 8, 2010. This facility consists of a three year term loan facility at the
three-month US dollar LIBOR plus a margin of 3% per annum. This facility is secured by, among other
things, a guarantee provided by the Company and contains certain restrictive covenants on the
indebtedness of the Company, total borrowings to tangible net worth ratio, total borrowings to
EBITDA ratio and a minimum interest coverage ratio, each as defined in the
facility agreement. As at March 31, 2011 the Company was in
compliance with all of its financial covenants and the amount outstanding under the facility was
$3,200.
Minimum principal amount due for repayment subsequent to March 31, 2011 is as follows:
|
|
|
|
|
For fiscal year ending March 31 |
|
Amount |
2012 |
|
$ |
50,000 |
|
2013 |
|
|
42,028 |
|
2014 |
|
|
1,067 |
|
Short-term line of credit
As at March 31, 2011, the Companys Indian subsidiary had an unsecured line of credit for $15,516,
interest on which is determined on the date of borrowing. As at March 31, 2011 $5,000 of short term
debt from this facility was utilized for working capital facility and $318 and $245 was utilized
from this facility for obtaining the bank guarantees and letter of
credit, respectively. The short
term debt was incurred at an interest rate of 1.91% per annum.
As at March 31, 2011, the Companys UK subsidiary had a secured working capital line of credit for
£9,880, interest on which is at the Bank of England base rate plus a margin of 2.45% per annum. As
at March 31, 2011 the amount outstanding under this facility was £5,528.
As at March 31, 2011 the Companys Sri Lankan subsidiary had an unsecured line of credit of $150
for availing the bank guarantees.
F-42
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
18. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to certain risks relating to its ongoing business operations. The primary
risks managed by using derivative instruments are foreign currency exchange risk and interest rate
risk. Forward and option contracts on various foreign currencies are entered into to manage the
foreign currency exchange rate risk on forecasted revenue denominated in foreign currencies.
Interest rate swaps are entered into to manage interest rate risk associated with the Companys
floating rate borrowings.
Cash flow hedges
The Company has instituted a foreign currency cash flow hedging program to protect against the
reduction in value of the forecasted foreign currency cash flows resulting from forecasted revenue
of up to two years denominated in foreign currencies. The Companys subsidiaries in the UK and the
US use foreign currency forward and option contracts designated as cash flow hedges to hedge its
forecasted revenue transactions denominated in a currency other than its functional currency. The
operating subsidiaries in India, the Philippines and Sri Lanka also hedge a part of their
forecasted inter-company revenue denominated in US dollar and pound sterling, with foreign currency
forward and option contracts. These hedges mature on a monthly basis and the hedging contracts have
a term of up to two years. When the functional currency of the subsidiary strengthens against a
currency other than its functional currency, the decline in value of future foreign currency
revenue is offset by gains in the value of the derivative contracts designated as hedges.
Conversely, when the functional currency of the subsidiary weakens, the increase in the value of
future foreign currency cash flows is offset by losses in the value of the forward contracts. The
fair value of both the foreign currency forward contracts and options are reflected in other assets
or other liabilities as appropriate. The forecasted inter-company revenue relates to cost of
revenue of certain subsidiaries and is recorded by those subsidiaries in their functional currency
at the time services are provided. The resulting difference upon the elimination of inter-company
revenue with the related cost of revenue is recorded in other income.
The
Company has entered into interest rate swap agreements to manage interest rate risk exposure.
The swap agreements cover the outstanding amount of the $74,000 term loan described in note 17. The
swaps convert the floating rate of three month US dollar LIBOR rate under the loan to an average
fixed rate of 3.84% per annum. The cash flows under the swap cover the entire tenor of the original
loan and exactly match the interest payouts under the original loan. The interest rate swap
effectively modified the Companys exposure to interest rate risk by converting the Companys
floating rate debt to a fixed rate basis for the entire term of the debt, thus reducing the impact
of interest rate changes on future interest expense. This agreement involves the receipt of
floating rate amounts in exchange for fixed rate interest payments over the life of the agreement
without an exchange of the underlying principal amount.
Pursuant to the refinancing described in note 17, in accordance with the guidance in ASC 815-20-55
Derivative and Hedging Implementation Guidance and Illustrations the Company had discontinued
the hedge relationship as it was probable that the forecasted transactions on the specific loan
identified in the hedge documentation would not occur by the end of the date originally specified.
Hence as at June 30, 2010, the date of the refinancing, the mark-to-market loss on the interest
rate swap was reclassified from other comprehensive income into
earnings. As at July 12, 2010, in
accordance with the guidance in ASC 815-20-55-88 Derivative and Hedging Implementation Guidance
and Illustrations and ASC 815-30-40-1 Derivative and Hedging De-recognition the Company has
redesignated this hedge as cash flow hedge and mark-to-market loss/gain on this contract is
recorded in other comprehensive income.
Pursuant to transfer of AVIVA MSA as discussed in note 3, in accordance with the guidance in ASC
815-30-40-5 Derivative and Hedging Implementation
Guidance and Illustrations the Company has
discontinued the hedge relationship on the hedges entered by one of its subsidiary in Mauritius as
it was probable that the forecasted transaction would not occur by the end of the date originally
specified. Hence, as at March 31, 2011 the entire mark to market loss pertaining to these hedges
are reclassified from other comprehensive income into earnings. Further in accordance with the
guidance in ASC 815-30-40-4 Derivative and Hedging Implementation Guidance and Illustrations
the Company has discontinued the hedge relationship on the hedges entered by one of its subsidiary
in India, however the mark to market gain or loss relating to discontinued hedges will continue to
be reported in other comprehensive income as it is probable that the forecasted transaction is
still expected to occur and will be reclassified into earnings in the same period or periods during
which the hedged forecasted transaction affects earnings.
F-43
\
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
Other
The Company has entered in to foreign currency average rate option contracts to cover the foreign
currency risk associated with the translation of the forecasted profits of up to 12 months of a
subsidiary, functional currency of which is not US dollars. The Company has also entered in to
foreign currency forward contract to cover the foreign currency risk associated with revaluation of
monetary assets and liabilities. The Companys subsidiary in the UK has also entered into a foreign
currency forward and option contracts of up to 24 months to hedge a part of the US dollar /Romanian
leu risk associated with the forecasted inter-company revenue of one of the Companys subsidiaries
in Romania. These contracts do not qualify for hedge accounting and have not been designated as
hedging instruments under ASC 815-10. The Company does not use derivative instruments for trading
purposes.
The fair values of derivative instruments are reflected in the consolidated balance sheet as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
Foreign |
|
|
|
|
|
|
|
|
exchange |
|
Foreign |
|
Interest |
|
|
|
|
forward |
|
exchange |
|
rate |
|
Total |
|
|
contracts |
|
option contracts |
|
contracts |
|
derivatives |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
|
$ |
2,586 |
|
|
$ |
1,206 |
|
|
|
|
|
|
$ |
3,792 |
|
Other assets non current |
|
|
13 |
|
|
|
920 |
|
|
|
|
|
|
|
933 |
|
|
|
|
Total |
|
$ |
2,599 |
|
|
$ |
2,126 |
|
|
|
|
|
|
$ |
4,725 |
|
|
|
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
|
$ |
3,186 |
|
|
$ |
4,204 |
|
|
|
|
|
|
$ |
7,390 |
|
Other assets non current |
|
|
123 |
|
|
|
1,226 |
|
|
|
|
|
|
|
1,349 |
|
|
|
|
Total |
|
$ |
3,309 |
|
|
$ |
5,430 |
|
|
|
|
|
|
$ |
8,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,908 |
|
|
$ |
7,556 |
|
|
|
|
|
|
$ |
13,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
1,802 |
|
|
|
|
|
|
|
|
|
|
$ |
1,802 |
|
Derivative contracts |
|
|
73 |
|
|
|
|
|
|
|
|
|
|
|
73 |
|
|
|
|
Total |
|
$ |
1,875 |
|
|
|
|
|
|
|
|
|
|
$ |
1,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
813 |
|
|
|
|
|
|
$ |
1,708 |
|
|
$ |
2,521 |
|
Derivative contracts |
|
|
166 |
|
|
|
|
|
|
|
192 |
|
|
|
358 |
|
|
|
|
Total |
|
$ |
979 |
|
|
|
|
|
|
$ |
1,900 |
|
|
$ |
2,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
2,854 |
|
|
|
|
|
|
$ |
1,900 |
|
|
$ |
4,754 |
|
|
|
|
F-44
\
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2010 |
|
|
Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
exchange |
|
|
Foreign |
|
|
Interest |
|
|
|
|
|
|
forward |
|
|
exchange |
|
|
rate |
|
|
Total |
|
|
|
contracts |
|
|
option contracts |
|
|
contracts |
|
|
derivatives |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
|
$ |
1,501 |
|
|
$ |
550 |
|
|
|
|
|
|
$ |
2,051 |
|
Other assets non current |
|
|
28 |
|
|
|
76 |
|
|
|
|
|
|
|
104 |
|
|
|
|
Total |
|
$ |
1,529 |
|
|
$ |
626 |
|
|
|
|
|
|
$ |
2,155 |
|
|
|
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
|
$ |
11,281 |
|
|
$ |
9,476 |
|
|
|
|
|
|
$ |
20,757 |
|
Other assets non current |
|
|
642 |
|
|
|
7,628 |
|
|
|
|
|
|
|
8,270 |
|
|
|
|
Total |
|
$ |
11,923 |
|
|
$ |
17,104 |
|
|
|
|
|
|
$ |
29,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
13,452 |
|
|
$ |
17,730 |
|
|
|
|
|
|
$ |
31,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
415 |
|
|
|
|
|
|
|
|
|
|
$ |
415 |
|
Derivative contracts |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
11 |
|
|
|
|
Total |
|
$ |
426 |
|
|
|
|
|
|
|
|
|
|
$ |
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
1,836 |
|
|
|
|
|
|
$ |
4,499 |
|
|
$ |
6,335 |
|
Derivative contracts |
|
|
86 |
|
|
|
|
|
|
|
1,895 |
|
|
|
1,981 |
|
|
|
|
Total |
|
$ |
1,922 |
|
|
|
|
|
|
$ |
6,394 |
|
|
$ |
8,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
2,348 |
|
|
|
|
|
|
$ |
6,394 |
|
|
$ |
8,742 |
|
|
|
|
F-45
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The following tables summarize activities in the consolidated statement of income for the year
ended March 31, 2011 related to derivative instruments that are classified as cash flow hedges in
accordance with ASC 815-10:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of gain (loss) |
|
Amount of gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
recognized in |
|
recognized in income on |
|
|
|
Amount of gain (loss) |
|
|
Location of gain (loss) |
|
Amount of gain (loss) |
|
|
income on derivative |
|
derivative (ineffective |
|
|
|
recognized |
|
|
reclassified from AOCI |
|
reclassified from |
|
|
(ineffective portion and |
|
portion and amount |
|
|
|
in AOCI on derivatives |
|
|
into income (effective |
|
AOCI into income |
|
|
amount excluded from |
|
excluded from |
|
|
|
(effective portion) |
|
|
portion) |
|
(effective portion) |
|
|
effectiveness testing) |
|
effectiveness testing) |
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
|
Year ended |
|
|
|
As at March 31, 2011 |
|
|
|
|
March 31, 2011 |
|
|
|
|
March 31, 2011 |
|
Derivatives designated as hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
$ |
2,331 |
|
|
Revenue |
|
$ |
(2,613 |
) |
|
|
|
$ |
|
|
|
|
|
|
|
|
Other (income) expense, net |
|
|
11,248 |
|
|
Other (income) expense, net* |
|
|
(1,314 |
) |
Foreign exchange option contracts |
|
|
(2,409 |
) |
|
Revenue |
|
|
(3,429 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense, net |
|
|
158 |
|
|
Other (income) expense, net* |
|
|
(2,652 |
) |
Interest rate swaps |
|
|
(250 |
) |
|
Interest expense |
|
|
(3,563 |
) |
|
Other (income) expense, net* |
|
|
(3,229 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(328 |
) |
|
|
|
$ |
1,801 |
|
|
|
|
$ |
(7,195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of gain or (loss) |
|
Amount of gain
(loss) |
|
|
|
recognized in
income on |
|
recognized in
income on |
|
|
|
derivatives |
|
Derivatives |
|
|
|
|
|
Year ended |
|
|
|
|
|
March 31, 2011 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
Foreign exchange forward contracts |
|
Other (income) expense, net |
|
$ |
3,890 |
|
Foreign exchange option contracts |
|
Other (income) expense, net |
|
|
(234 |
) |
|
|
|
|
|
|
|
|
|
|
$ |
3,656 |
|
|
|
|
|
|
|
|
|
|
* |
|
The foreign exchange forward contracts and foreign exchange option contracts include
loss of $1,265 and $2,438, respectively, which is reclassified into earnings as a result
of the discontinuance of cash flow hedge due to the non-occurrence of original
forecasted transactions by the end of the originally specified time period. The
interest rate swap includes a net loss of $3,229 on account of re-designation of
interest rate swap. |
F-46
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
The following tables summarize activities in the consolidated statement of income for the year
ended March 31, 2010 related to derivative instruments that are classified as cash flow hedges in
accordance with ASC 815-10:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of gain (loss) |
|
Amount of gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
recognized in |
|
recognized in income on |
|
|
|
Amount of gain (loss) |
|
|
Location of gain (loss) |
|
Amount of gain (loss) |
|
|
income on derivative |
|
derivative (ineffective |
|
|
|
recognized |
|
|
reclassified from AOCI |
|
reclassified from |
|
|
(ineffective portion and |
|
portion and amount |
|
|
|
in AOCI on derivatives |
|
|
into income (effective |
|
AOCI into income |
|
|
amount excluded from |
|
excluded from |
|
|
|
(effective portion) |
|
|
portion) |
|
(effective portion) |
|
|
effectiveness testing) |
|
effectiveness testing) |
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
|
Year ended |
|
|
|
As at March 31, 2010 |
|
|
|
|
March 31, 2010 |
|
|
|
|
March 31, 2010 |
|
Derivatives designated as hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
$ |
10,001 |
|
|
Revenue |
|
$ |
2,404 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
Other (income) expense, net |
|
|
(4,084 |
) |
|
Other (income) expense, net* |
|
|
779 |
|
Foreign exchange option contracts |
|
|
(324 |
) |
|
Revenue |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense, net |
|
|
(671 |
) |
|
Other (income) expense, net* |
|
|
374 |
|
Interest rate swaps |
|
|
(5,354 |
) |
|
Interest expense |
|
|
(5,477 |
) |
|
Other (income) expense, net* |
|
|
(869 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,323 |
|
|
|
|
$ |
(7,822 |
) |
|
|
|
$ |
284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of gain or (loss) |
|
Amount of gain (loss) |
|
|
|
recognised in
income |
|
recognised in
income |
|
|
|
on derivatives |
|
on derivatives |
|
|
|
|
|
Year ended |
|
|
|
|
|
March 31, 2010 |
|
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
Foreign exchange forward contracts |
|
Other (income)
expense, net |
|
$ |
425 |
|
Foreign exchange option contracts |
|
Other (income)
expense, net |
|
|
(476 |
) |
|
|
|
|
|
|
|
|
|
|
$ |
(51 |
) |
|
|
|
|
|
|
|
|
|
* |
|
The foreign exchange forward contracts and foreign exchange option contracts include gains of
$286 and $328, respectively, which is reclassified into earnings as a result of the
discontinuance of cash flow hedge due to the non-occurrence of original forecasted
transactions by the end of the originally specified time period. The interest rate swap
includes a net loss of $869 on account of re-designation of interest rate swap. |
|
|
|
At March 31, 2011, an unrealized gain of $874 on derivative instruments included in other
comprehensive income is expected to be reclassified to earnings during the next 12 months.
(Unrealized gain of $4,505 as at March 31, 2010) |
|
|
|
As at March 31, 2011 the notional values of outstanding foreign exchange forward contracts and
foreign exchange option contracts designated as hedges amounted to $188,560 and $248,044, respectively ($185,089 and
$224,981, respectively as at March 31, 2010). |
F-47
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
19. COMMITMENTS AND CONTINGENCIES
Leases
The Company has entered into various non-cancelable operating lease agreements for certain delivery
centers and offices with original lease periods expiring between 2011 and 2019.
The details of future minimum lease payments under non-cancelable operating leases as at March 31,
2011 are as follows:
|
|
|
|
|
|
|
Operating |
|
Year ending March 31, |
|
leases |
|
2012 |
|
$ |
12,770 |
|
2013 |
|
|
13,978 |
|
2014 |
|
|
13,380 |
|
2015 |
|
|
10,303 |
|
2016 |
|
|
7,766 |
|
Thereafter |
|
|
19,762 |
|
|
|
|
|
Total minimum lease payments |
|
$ |
77,959 |
|
|
|
|
|
Rental expense for the years ended March 31, 2011, 2010 and 2009 was $20,632, $21,175 and $17,981,
respectively.
Bank guarantees and other
Certain subsidiaries in India, Romania and the UK hold bank guarantees aggregating $483 and $366 as
at March 31, 2011 and 2010, respectively. These guarantees have a remaining expiry term ranging
from one to five years.
Restricted time deposits placed with bankers as security for guarantees given by them to regulatory
authorities in India and lessors in Romania, aggregating to $194 and $358 at March 31, 2011 and
2010, respectively, are included in other current assets. These deposits represent cash collateral
against bank guarantees issued by the banks on behalf of the Company to third parties.
Amounts payable for commitments to purchase property and equipment (net of advances), aggregated to
$8,238 and $2,673 as at March 31, 2011 and 2010, respectively.
Contingencies
In the ordinary course of business, the Company is involved in lawsuits, claims and administrative
proceedings. While uncertainties are inherent in the final outcome of these matters, the Company
believes, after consultation with counsel, that the disposition of these proceedings will not have
a material adverse effect on the Companys financial position, results of operations or cash flows.
F-48
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
20. JOINT VENTURE WITH ACS
In April 2008, the Company formed a joint venture, WNS Philippines, with Advanced Contact
Solutions, Inc. (ACS), a BPO services and customer care provider, in the Philippines. ACS has
assigned its rights and obligations under the joint venture agreement in favour of its holding
company Paxys Inc. Philippines (Paxys). This joint venture is majority owned by the Company (65%)
and the balance by Paxys. This joint venture offers contact center services to global clients
across industries. This joint venture enables the Company to bring a large scale talent pool to
help solve the business challenges of its clients while diversifying the geographic concentration
of delivery. Pursuant to the joint venture agreement, the Company has a call option to acquire from
Paxys the remaining shares owned by Paxys and Paxys has a put option to sell all of its
shareholding in the joint venture to the Company, upon the occurrence of certain conditions, as set
forth in the joint venture agreement, or after August 6, 2012. The Company accounts for securities
with redemption features that are not solely within its control in accordance with ASC 480-10
Distinguishing Liabilities from Equity. Accordingly, as certain of the conditions of the put
option and call option are not within the control of the Company, this redeemable noncontrolling
interest has been classified as temporary equity. The Company recognizes changes in the redemption
value of the redeemable noncontrolling interest immediately and adjusts the carrying value of the
security to equal the redemption value at the end of each reporting period. Reductions in the
carrying amount are only recorded to the extent that increases in the carrying amount had been
previously recorded. The redeemable noncontrolling interest is first adjusted with its share of
profits/losses in WNS Philippines and, to the extent that this is less than the redemption amount
determined in accordance with ASC 480-10, the difference is charged to retained earnings. The
charge to retained earnings does not affect net income attributable to WNS (Holdings) Limited
shareholders in the Companys income statement, but reduces the numerator in the calculation of
earnings per share. The redeemable noncontrolling interest has been valued based on the terms of
the call option, because the Companys call option has priority over the put option. If, in the
future, the redemption amount under the call option (which is based on a multiple of WNS
Philippines net income) is greater than the put option (which is based on Paxys initial
investment in WNS Philippines), the redeemable noncontrolling interest will be valued at the
redemption amount under the put option.
As at March 31, 2011 the carrying amount of the redeemable noncontrolling interest adjusted for its
share of losses is less than the redemption amount by $355, which is charged to retained earnings.
As at March 31, 2010 the carrying amount of the redeemable noncontrolling interest adjusted for its
share of losses exceeds the redemption amount, and accordingly, no amount is charged to retained
earnings.
F-49
WNS (HOLDINGS) LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd)
MARCH 31, 2011
(Amounts in thousands, except share and per share data)
21. OTHER CURRENT ASSETS
Other
current assets comprises the following:
|
|
|
|
|
|
|
|
|
|
|
As at March 31, |
|
|
|
2011 |
|
|
2010 |
|
Derivative instruments |
|
$ |
11,182 |
|
|
$ |
22,808 |
|
VAT receivables |
|
|
10,103 |
|
|
|
8,644 |
|
Deferred cost |
|
|
1,659 |
|
|
|
1,340 |
|
Advances |
|
|
1,006 |
|
|
|
1,035 |
|
Other current assets |
|
|
372 |
|
|
|
2,481 |
|
|
|
|
|
|
|
|
Total |
|
$ |
24,322 |
|
|
$ |
36,308 |
|
|
|
|
|
|
|
|
22. OTHER ASSETS
Other
assets comprises the following:
|
|
|
|
|
|
|
|
|
|
|
As at March 31, |
|
|
|
2011 |
|
|
2010 |
|
Derivative instruments |
|
$ |
2,282 |
|
|
$ |
8,375 |
|
Deferred cost |
|
|
823 |
|
|
|
1,566 |
|
Transition premium |
|
|
246 |
|
|
|
301 |
|
|
|
|
|
|
|
|
Total |
|
$ |
3,351 |
|
|
$ |
10,242 |
|
|
|
|
|
|
|
|
23. OTHER CURRENT LIABILITIES
Other
current liabilities comprises the following:
|
|
|
|
|
|
|
|
|
|
|
As at March 31, |
|
|
|
2011 |
|
|
2010 |
|
Accrued expenses |
|
$ |
30,273 |
|
|
$ |
40,702 |
|
Withholding taxes and VAT payables |
|
|
2,513 |
|
|
|
2,728 |
|
Derivative instruments |
|
|
9,963 |
|
|
|
17,597 |
|
Interest payable on long term debt |
|
|
1,152 |
|
|
|
2,217 |
|
Other liabilities |
|
|
1,354 |
|
|
|
4,341 |
|
|
|
|
|
|
|
|
Total |
|
$ |
45,255 |
|
|
$ |
67,585 |
|
|
|
|
|
|
|
|
F-50
Ex-4.7
Exhibit 4.7
LEASE DEED
THIS LEASE DEED (Lease Deed) is made at Chennai on this 6th day of December, 2010.
BY AND BETWEEN
M/s DLF Assets Private Limited, a Company incorporated under the Companies Act, 1956 and having its
registered office at
10th Floor, DLF Gateway Tower, R Block, DLF City Phase-III,
Gurgaon-122002 (hereinafter referred to as THE LESSOR which expression shall, unless it be
repugnant to the context or meaning thereof, be deemed to mean and include M/s DLF Assets Private
Limited and its successors and assigns) acting through its authorized signatory, Mr. A.C. Sachdev
vide Board Resolution dated 16.04.2009 of the First Part.
AND
M/s WNS Global Services Private Limited, a company incorporated under the Companies Act, 1956 , and
presently having its registered office in India at Gate 4, Godrej & Boyce Complex, Pirojshanagar,
Vikhroli (W), Mumbai 400 079 (hereinafter referred to as THE LESSEE which expression shall,
unless it be repugnant to the context or meaning thereof, be deemed to mean and include M/s WNS
Global Services Private Limited and its successors) having Permanent Account Number AAACW2598L and
Tax Collection and Deduction Account Number MUMW01007G acting through its authorized signatory Mr.
Ronald DMello vide Board Resolution dated 30.11.2010 of the Second Part.
(Both THE LESSOR and THE LESSEE are collectively referred to as the Parties).
A. |
|
WHEREAS DLF Info City Developers (Chennai) Limited, as owners of the said Plot described
below, has been granted approval for and notified as Developers at SEZ situated at Chennai
(SEZ unit) vide notification F-2/124/2006-SEZ dated 16th November, 2006 and
approval letter No. F-2/124/2005- EPZ dated 22nd June, 2006. |
|
B. |
|
AND WHEREAS subsequently DLF Info City Developers (Chennai) Limited has executed
Co-Development Agreement dated 29th November, 2006 for the purpose of development of the said
SEZ unit with THE LESSOR as well as a perpetual lease of the said Plot in favour of THE
LESSOR. |
|
C. |
|
AND WHEREAS the Govt. of India, Ministry of Commerce and Industry, Department of Commerce,
SEZ Section vide their letter No. F 2 / 124 / 2005 - EPZ dated 14th February, 2007 has also
approved THE LESSOR as a Co-Developer of the said SEZ unit. |
|
D. |
|
AND WHEREAS THE LESSOR is seized and possessed of the said Plot and the building to be
constructed thereon, as per the Master Plan to be approved by the Chennai Metropolitan
Development Authority (CMDA) and such other authorities as may be required and THE LESSOR
being competent to lease office spaces in the said Building on the said plot has agreed to
give on lease, office space in the said Building as per detailed terms stipulated in this
Lease Deed and Annexures from I to XII forming part of this Lease Deed. |
1
E. |
|
AND WHEREAS THE LESSOR is constructing multi-storeyed buildings comprising of approx. 10
blocks with basements and named as DLF IT Park @ Chennai (hereinafter referred to as the
said Complex) in accordance with the building plans as shall be approved by the CMDA or from
such other authorities as may be needed to form the same as a Special Economic Zone under the
rules framed by the Government of India from time to time for its approval. |
|
F. |
|
AND WHEREAS THE LESSEE has approached THE LESSOR to take on lease and THE LESSOR has agreed
to give on lease, for a period of Five (5) years commencing from the Lease Commencement
Date(s) as defined in and as per terms stipulated in this Lease Deed, office spaces in the
said Building, having an aggregate Super Built-up area of 70,657 sq.ft. (6,564.216 sq. mtrs.)
in two phases more or less at site (final area would be arrived only after completion of the
said Building) on entire 10th Floor, Block 10 (hereinafter referred to as the
Demised Premises) as per the terms of this Lease Deed. Block 10 is hereinafter referred to
as the said Building. |
|
G. |
|
AND WHEREAS based on the above representations made by THE LESSOR and after due inspection
and verification of the said Plot, said Building, approved building plans, ownership record of
the said Plot, said Building and other documents relating to the title, competency and all
other relevant details, THE LESSEE is satisfied in all respects with regard to the right,
title and authority of THE LESSOR to enter into this Lease Deed. |
|
H. |
|
AND WHEREAS as and when THE LESSOR permits THE LESSEE to carry out the interior works in the
Demised Premises, THE LESSEE hereby confirms that it shall carry out, implement and execute
all interior works/designs of the Demised Premises in compliance/adherence with the approval/
guidelines issued by THE LESSOR from time to time for carrying out such interior works in the
Demised Premises. THE LESSEE further confirms that it has obtained all pre-requisite
sanctions, approvals, licenses, from all the Statutory/Competent Authorities, which may be
necessary for commencement of its business operations in the Demised Premises. Upon
assurances of THE LESSEE that it shall strictly abide by the covenants contained in this
Lease Deed, THE LESSOR has agreed to give on lease to THE LESSEE the Demised Premises on the
terms and conditions recorded herein. |
|
|
|
THE LESSEE shall intimate, in writing, the completion of the interior works to THE LESSOR
and the Building Manager along with a certificate that the interior works have been carried
out by THE LESSEE as per the drawings approved by THE LESSOR. THE LESSOR shall have the
option and right to inspect and verify the same. |
|
I. |
|
AND WHEREAS THE LESSEE confirms that it is executing this Lease Deed
with full knowledge of all the laws, bye-laws, rules, regulations,
notification etc. which are applicable to the said Plot, said Building
and the Demised Premises. |
|
J. |
|
On THE LESSEEs behalf, the Lease Deed has been negotiated through Mr
Milind Ghule, Head Facilities. |
|
|
|
On THE LESSORs behalf, the Lease Deed has been negotiated through Mr. Amit Grover, Head
Corporate Marketing. |
|
K. |
|
AND WHEREAS both the Parties have agreed to enter into this Lease Deed on the terms and
conditions stipulated in this Lease Deed and Annexures I to XII annexed hereto: |
2
NOW THEREFORE IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
1. |
|
THE LESSOR hereby leases out to THE LESSEE and THE LESSEE takes on lease from the Lease
Commencement Date(s) as specified in Annexure-II, office space admeasuring an aggregate
super built up area of 6,564.216 sq. mtrs (70,657 sq. ft.) as two phases on entire
10th Floor, Block 10 (as shown in Annexure III(b) in DLF IT Park @ Chennai,
1/124, Shivaji Gardens, Moonlight Stop, Nandambakkam, Mount Poonamallee Road, Chennai
600086 as more detailed in Annexure - II (hereinafter referred to as the Demised
Premises), the area calculations for which are defined in
Annexure - IV to this Lease
Deed, and also obtains the right to use only the common areas in the said Building/said
Plot to be used by THE LESSEE together with other occupants in the said Building and the
right to park cars in terms of this Lease Deed, in the car /two wheeler parking spaces
earmarked in the basement(s)/ surface/ mechanical car /two wheeler parking spaces by THE
LESSOR. |
|
2. |
|
The rent, car/ two wheeler parking space charges, maintenance and other charges as
specified in this Lease Deed shall commence from the Date of Lease Commencement as
specified in Annexure -II. |
|
|
|
Façade signage charges shall commence from Date of Lease Commencement or the date on which
such façade signage has been taken up by THE LESSEE. |
|
|
|
The detailed calculations of rent, car /two wheeler parking space charges & security
deposits payable by THE LESSEE during the period of this lease are
given in Annexure - V to
this Lease Deed. |
|
3. |
|
THE LESSEE can terminate the Lease Deed, without cause, at any time during lease tenure
by giving prior notice in writing or payment of rent and other dues in lieu of the notice
to THE LESSOR as per the notice period mentioned in Annexure - II. |
|
|
|
THE LESSEE agrees not to terminate the lease till the expiry of 36 months (Lock-In Period)
from the respective Dates of Lease Commencement for Phase I and Phase II as mentioned in
Annexure II. THE LESSEE agrees that in case THE LESSEE terminates the Lease Deed prior to
the expiry of Lock -in period, then THE LESSEE hereby authorize THE LESSOR to deduct from
the deposits lying with THE LESSOR, the entire rent and any other sums due and payable under
the Lease Deed for the unexpired period of the Lock - in period. |
|
|
|
After the said Lock - in period, THE LESSEE may terminate the lease by giving three (03)
months prior notice in writing to THE LESSOR or by payment of proportionate equivalent rent
and all other charges / sums stipulated under this Lease Deed in lieu of the notice
period stipulated herein. Upon expiry of three (03) months from the date of notice, as
aforesaid, the lease shall stand terminated subject to THE LESSEE paying THE LESSOR till the
date of vacation of the Demised Premises, the entire rent, car parking charges, maintenance
charges, other charges, taxes etc. as set out in this Lease Deed and handing over vacant,
peaceful, physical possession of the Demised Premises. |
|
|
|
THE LESSEE agrees that if THE LESSOR is constrained by the acts of THE LESSEE which involve
breaches / defaults of the Lease Deed or if THE LESSEE or its bankers have dishonored the
cheques for 3 times in a year made in payment of various sums due under the Lease Deed and
THE LESSEE does not rectify the breach within 15 days of receipt of notice of such breach,
then in that event THE LESSEE authorizes and grants a specific right to THE LESSOR to
terminate this Lease Deed and claim outstanding arrears of rent, maintenance charges, car
/two wheeler parking charges, signage charges (if any), taxes and other charges payable
under the Lease Deed for the unexpired Lock-in period and THE LESSEE hereby undertakes to
pay the said sums without any demur or protest whatsoever and will not raise any claims or
disputes in this regard. |
|
|
|
THE LESSORs right of terminating this Lease Deed shall be as contained in this Clause and
Clause 55 of the Annexure - I appended to the Lease Deed. |
3
4. |
|
THE LESSEE agrees, that in consideration of THE LESSOR granting the right to use car/
two wheeler parking spaces as mentioned in Annexure - II earmarked in the
basement(s)/surface/mechanical car /two wheeler parking spaces (plan attached as Annexure
-VII to this Lease Deed) to perform all its obligations under this Lease Deed pertaining
to use of car/ two wheeler parking spaces. |
|
5. |
|
Simultaneous upon THE LESSEE paying all its dues under this Lease Deed and delivering
peaceful, vacant and physical possession of the Demised Premises on or before the last day
of the validity of the Lease Deed, THE LESSOR shall refund all the refundable security
deposits without any interest thereon under this Lease Deed deposited by THE LESSEE only
after adjusting outstanding dues, if any. |
|
|
|
In case of delay by THE LESSOR in refunding the refundable security deposits, THE
LESSOR shall pay interest to THE LESSEE at the rate of 15% p.a. for the period of delay and
THE LESSEE shall be entitled to retain possession of the Demised Premises without use and
without payment of rent and other charges for such period of delay |
|
6. |
|
The Lease Deed alongwith the Annexures annexed hereto constitutes the entire agreement
between the Parties and revokes and supersedes all previous discussions written or oral,
correspondence and/or any deeds between the Parties. This Lease Deed shall not be changed
or modified except by written amendment duly agreed and signed by the Parties. |
|
7. |
|
The original Lease Deed duly executed and registered in terms of this Lease Deed shall
be retained by THE LESSOR and copy of the same certified to be a true copy will be provided
to THE LESSEE by THE LESSOR. The original Lease Deed shall be produced by THE LESSOR as
and when required by THE LESSEE. |
4
8. |
|
Failure of either Party to enforce at any time or for any period of time the provisions
hereof shall not be construed to be waiver of any provisions or of the right thereafter to
enforce each and every provision hereof. |
|
9. |
|
THE LESSOR shall not be held responsible for any consequences or liabilities under this
Lease Deed if it is prevented in performing its obligations under the terms of this Lease
Deed by reason of laws or regulations, action by any local body or authority, local or
otherwise, riots, insurrection, war, terrorist action, acts of God and unforeseen
circumstances beyond its control. Subject to clause 11 and 55 of the Lease Deed, the
performance of THE LESSORs obligation under this Lease Deed shall be subject to the
regular payment of rent including other payments by THE LESSEE as stipulated in this Lease
Deed. |
|
10. |
|
The disputes or differences between THE LESSEE and THE LESSOR pertaining to performance
of the terms and conditions of this Agreement shall, so far as it is possible settled
amicably through consultation between authorized representatives of the parties. If after
15 days of consultation, the parties fail to reach an amicable settlement on the disputes
or differences pertaining to the performance of this Agreement, such disputes or
differences shall be submitted to Arbitration for final adjudication. |
|
|
|
Reference to arbitration shall be in accordance with the provisions of the Arbitration and
Conciliation Act 1996 and/or any statutory modifications thereto by an Arbitral Tribunal
consisting of three arbitrators. Each Party shall appoint its nominee arbitrator and both
the appointed nominee arbitrators shall appoint third arbitrator, who shall be the Presiding
Arbitrator. If the nominee arbitrators fail to reach a consensus on the Presiding
Arbitrator, the parties shall approach the Court for appointment of a Presiding Arbitrator. |
|
|
|
To invoke the arbitration clause, THE LESSEE must have paid all the pending rentals,
maintenance and other charges as per the Lease Deed. However, in case of dispute of
maintenance services which are not provided by THE LESSOR to THE LESSEE as per the Lease
Deed, in such an event, the payment of maintenance charges for only such period will be
withheld by THE LESSEE and THE LESSEE will continue to pay all rentals, maintenance charges
and other charges etc. as per Lease Deed. During the arbitration proceedings, both THE
LESSEE and THE LESSOR shall continue to fulfill their obligations under the Lease Deed. |
|
|
|
The Civil Courts and High Court at Chennai, alone shall have jurisdiction for the
purposes of this agreement. |
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11. |
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That this Lease Deed and the rights and obligations of the Parties under or arising out
of this Lease Deed be construed and enforced in accordance with the laws of India. |
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The terms and conditions agreed between THE LESSOR and THE LESSEE containing interalia a)
covenants and conditions to be observed and performed by THE LESSEE, and b) covenants and
conditions to be observed and performed by THE LESSOR, are as per Annexures I to XII of this
Lease Deed. These Annexures I to XII shall form an integral part of this Lease Deed and
shall be binding on THE LESSOR and THE LESSEE. |
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THE LESSOR M/s DLF Assets Private Limited through its Authorized Signatory Shri A.C. Sachdev
authorized to execute Lease Deeds etc. has executed this Lease Deed. This Lease Deed will be
presented for registration before the Registering Authority and got registered by Shri
Ernest David, who has been authorized vide Power of Attorney dated 18.03.2008 of THE LESSOR
to appear before the Registering Authority and present for registration, acknowledge and get
registered the Deed executed by Shri A.C. Sachdev on behalf of THE LESSOR. |
IN WITNESS WHEREOF the Parties hereto have set their hands to these presents on the day, month and
year first and above mentioned.
THE LESSOR:
SIGNED AND DELIVERED on behalf of the above named DLF Assets Private Limited acting through Mr.
A.C. Sachdev, its Authorized Signatory:
In the presence of:
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For and on behalf of |
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WITNESSES:
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DLF Assets Private Ltd. |
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s/d |
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(A.C. Sachdev) |
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AUTHORIZED SIGNATORY |
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2 |
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THE LESSEE:
SIGNED AND DELIVERED on behalf of the above named WNS Global Services Private Ltd. acting through
Mr. Ronald DMello, its Authorized Signatory:
In the presence of
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WITNESSES |
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For and on behalf of |
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1
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WNS Global Services Private Ltd |
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s/d |
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(Ronald DMello) |
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2.
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AUTHORIZED SIGNATORY |
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6
ANNEXURES
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I
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Detailed Terms and Conditions between
THE LESSOR and THE LESSEE |
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II
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Commercial Terms and Conditions |
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III (a)
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Description of the Plot |
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III (b)
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Floor Plan |
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IV (a) & (b)
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Super Built-up area calculations |
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V(a) & (b)
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Statement of rent, Interest Free Refundable Security Deposit, Interest Free Refundable
Maintenance Security Deposit and Car/ Two Wheeler parking space charges paid / payable
by THE LESSEE to THE LESSOR during the lease period. |
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VI
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Monthly Maintenance and service expenditure (Indicative) |
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VII
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Car/ Two Wheeler parking spaces
earmarked for use by THE LESSEE |
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VIII
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Tentative Building Specifications |
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IX
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THE LESSEEs responsibility during additional interior fit-outs work,
additions/modifications/alterations of interior works and during the Lease Tenure/Lease
renewal and operations during the lease period/ lease renewal |
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X (a)
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Charges for Power |
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X (b)
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Charges for Maintenance |
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XI
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Merger & Amalgamation Undertaking |
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XII
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Electronic Clearing System Activation Form |
7
ANNEXURE-I
Terms and conditions forming an integral part of the Lease Deed dated December 6, 2010 between
M/s DLF Assets Private Ltd. and M/s WNS Global Services Private Ltd., while not derogating from the
mutual promises set out therein:
TERMS AND CONDITIONS
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1. |
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THE LESSOR shall charge and THE LESSEE shall pay an initial bare shell rent of Rs.
39/-(Rupees Thirty Nine only) per sq. ft. per month as detailed in Annexure - II on the
super built - up area of the Demised Premises to be paid fully without any and all
deductions whatsoever save and except the deduction of tax at source, if applicable. The
liability towards payment of Service Tax and other taxes as applicable on monthly rents
shall be borne by THE LESSEE. |
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2. |
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THE LESSEE shall pay to THE LESSOR or its nominees/permitted assigns, by cheque / bank
draft/wire transfer payable as detailed in Annexure II of this Lease Deed the rent and all
other sums payable under this Lease Deed. Payments to be done as per Annexure XII. In case
the Rent Commencement Date is other than the first of the month, in such case THE LESSEE
shall pay Rent and other sum payable under the Lease Deed in advance for the portion of the
month i.e. from the Rent Commencement Date to last day of the month and also for the
following month. Thereafter, the rent and all other sums payable under this Lease Deed
shall be paid on the 1st day of each calendar month (due date) but not later
than the 7th day, in advance for the month in respect of which such sums are
payable. |
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3. |
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The rent is exclusive of all the taxes. In addition to the rent payable for the Demised
Premises as stipulated in this Lease Deed, THE LESSEE shall also be liable to bear and pay
on its sole account the entire part of any and all levies, duties, taxes on Demised
Premises, land and building, charges, rates, cesses, fees, wealth-tax, penalties thereof
etc. (excluding income tax) imposed/demanded by the Central or the State Government / any
local body and/or other authorities and all increases and/or fresh impositions thereof as
applicable and attributable to the said Plot / said Building / Demised Premises on and
from the date the Lease Commencement Date specified in Annexure II to this Lease Deed. |
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THE LESSEE shall also be liable to fulfill any and all procedural requirements as may be
prescribed by the Central or the State Government/any local body/all other authorities in
connection with the subject matter hereof. |
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4. |
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In the event, any such fresh imposition and/or increase as stated above in Clause 3
hereof is levied retrospectively, the liability of THE LESSEE shall relate only to the
period on and from the Lease Commencement Date. The said amount shall be paid separately by
THE LESSEE to THE LESSOR as indicated below in terms of this Lease Deed. All such fresh
impositions and/or increases as above stated shall be paid by THE LESSEE to THE LESSOR
within fifteen (15) days of written demand by THE LESSOR to THE LESSEE, giving details
thereof duly supported with copies of the relevant documents, if any, from the Central or
State Government/local body / any and all authorities, as the case may be. In the event any
and all such levies, duties, taxes on property, charges, rates, cesses, fees, wealth-tax,
penalties etc., referred to above and/or such fresh imposition and/or increase is
payable by THE LESSEE directly to the Central or State Government/local body/any and all
authorities as the case may be, THE LESSEE shall pay the same directly immediately upon the
same becoming due. Any default made by THE LESSEE in complying with the terms of the clause
under reference and clause 3, shall be entirely at the costs and consequences of THE LESSEE
and THE LESSEE shall be liable for payment/s of penalties, outstanding dues arising
therefrom. |
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5. |
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Power/ Electricity, Power back-up and Maintenance Charges: |
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THE LESSEE shall pay by due date the bills for consumption of power/ electricity in the
Demised Premises as recorded in the meters or as demanded by THE LESSOR or its nominees or
assigns supported by all the relevant documents. The power/electricity for the Demised
Premises during interior works/lease tenure shall be supplied from Grid/Utility Companies.
However, in case of non availability of power/ electricity from grid/utility companies, THE
LESSOR shall provide THE LESSEE with back up power from their diesel/gas based generators.
The charges for such power/ electricity and back-up power will be as per Annexure X (a). |
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A separate meter for recording power/ electricity consumption in the Demised Premises
shall be provided by THE LESSOR for the supply of power/ electricity from normal
grid/utility companies subject to availability of such power/ electricity. The cost of such
meter shall be borne by THE LESSEE. |
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A separate meter shall be provided by THE LESSOR for recording consumption of power in
the Demised Premises supplied through the back-up power. The cost of such meter shall be
borne by THE LESSEE. |
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Maintenance Charges: At present various maintenance services, facilities and amenities
within the said Plot / said Building/Demised Premises and civic amenities in the said
Complex where the Demised Premises/said Building are located are being maintained by THE
LESSOR. Maintenance services are as set out in Annexure - VI to this Lease Deed, charges
of which are payable to THE LESSOR or nominees / assigns of THE LESSOR by THE LESSEE as per
bills raised by THE LESSOR or its nominees/assigns. |
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The maintenance charges for office hours / 24*7 operations shall be calculated at 1.2 times
the actual expenditure being incurred payable from the Lease Commencement Date. The
maintenance charges will be as per Annexure X (b). |
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Maintenance services on National Holidays can only be provided if THE LESSEE gets the
requisite approval for their operations in Demised premises from the local administration/
competent authority(ies) and not otherwise. |
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The maintenance charges shall be subject to deduction of Income Tax at source as applicable,
from time to time. Additional charges towards Service Tax (es) and other taxes as applicable
on maintenance charges, shall also be payable by THE LESSEE. |
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On completion of the financial year, THE LESSOR/its nominees will provide THE LESSEE
audited statement of expenditure towards Maintenance Charges incurred during
the said financial year. Any under-recovery by THE LESSOR/its nominees shall become
payable by THE LESSEE to the LESSOR /its nominees and any over-recovery by THE LESSOR/its
nominees shall become refundable by LESSOR/its nominees to THE LESSEE. |
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6. |
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THE LESSEE agrees that, in consideration of THE LESSOR granting lease and THE LESSEE in
consideration of taking on lease the Demised Premises and due performance of all its
obligations stipulated in this Lease Deed, THE LESSEE shall always maintain with THE LESSOR
during the entire term of this Lease Deed, an Interest Free Refundable Security Deposit
(Interest Free Refundable Security Deposit) for an amount as mentioned in Annexure - II. |
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7. |
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From the security deposits already paid by THE LESSEE to THE LESSOR under the Lease
Deeds signed between THE LESSEE and THE LESSOR for THE LESSEEs space take up at Building
6B and 6C, Gurgaon, THE LESSEE has already paid by way of transfer, an amount as mentioned
in Annexure II, as the Interest Free Refundable Security Deposit. |
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8. |
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The entire amount paid by THE LESSEE, by way of transfer as mentioned in Clause 7
above, as Interest Free Refundable Security Deposit during the lease period shall be kept
by THE LESSOR which shall be refunded by THE LESSOR to THE LESSEE without any interest
simultaneously THE LESSEE surrendering peaceful, vacant and physical possession of the
Demised Premises in bare shell condition on expiry or earlier termination of this Lease
Deed, if any and subject to adjustment or deduction of arrears of rent, charges and any
other dues, if any, due and payable under this Lease Deed . |
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In case of delay by THE LESSOR in refunding the refundable security deposits, THE LESSOR
shall pay interest to THE LESSEE at the rate of 15% p.a. for the period of delay and THE
LESSEE shall be entitled to retain possession of the Demised Premises without use and
without payment of rent and other charges for such period of delay. |
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9. |
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THE LESSEE has already paid, by way of transfer as mentioned in Clause 7 above, to THE
LESSOR an amount as mentioned in Annexure - II as Interest Free Refundable Maintenance
Security Deposit. The Interest Free Maintenance Security Deposit shall be refunded to THE
LESSEE within simultaneous to THE LESSEE surrendering peaceful, vacant and physical
possession of the Demised Premises in bare shell condition and after adjustment of any
amount due from THE LESSEE on account of maintenance and other charges under this Lease
Deed and after making adjustments, deductions or reimbursement for any damages suffered by
THE LESSOR on account of any default or breach of any obligation by THE LESSEE under this
Lease Deed. |
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In case of delay by THE LESSOR in refunding the refundable security deposits, THE LESSOR
shall pay interest to THE LESSEE at the rate of 15% p.a. for the period of delay and THE
LESSEE shall be entitled to retain possession of the Demised Premises without use and
without payment of rent and other charges for such period of delay. |
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10. |
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Subject to clause 3, THE LESSEE may terminate the lease by giving three (3) months
prior notice in writing to THE LESSOR or by payment of proportionate equivalent rent, car/
two wheeler parking space charges, signage charges (if any), maintenance charges,
taxes and all other charges / sums stipulated under this Lease Deed in lieu of the notice
period stipulated herein. Upon the expiry of three (3) months from the date of notice, as
aforesaid, the lease shall stand terminated and THE LESSEE shall be liable to pay to THE
LESSOR the entire rent, car/ two wheeler parking charges (if any), maintenance charges,
other charges, taxes etc. as set out in this Lease Deed for the period upto the date of
vacation of the Demised Premises and handing over vacant, peaceful and physical possession
of the Demised Premises. |
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That upon the expiry of lease as mentioned in Annexure - II or upon expiry or earlier
termination during the lease period as stipulated above, this Lease Deed will expire and
come to an end and THE LESSEE shall pay to THE LESSOR for the period of occupation of the
Demised Premises till the date of vacation of the Demised Premises, the entire rent, car/
two wheeler parking space charges, maintenance charges, other charges, taxes etc. as set out
in this Lease Deed and till handing over vacant, peaceful and physical possession of the
Demised Premises. If THE LESSEE fails to pay as aforesaid and hand over vacant, peaceful and
physical possession of the Demised Premises on the date of expiry of the last day of lease
as contained in this paragraph or termination by THE LESSOR for breach of terms and
conditions contained in the Lease Deed, THE LESSEE agrees to pay to THE LESSOR additional
rent calculated @ Rs.2,75,562.30/- (Rupees Two Lakhs Seventy Five Thousand Five Hundred
Sixty Two and Paise Thirty only) per day for occupation of the Demised Premises by THE
LESSEE along with normal lease rentals and in such an event THE LESSEE hereby authorizes THE
LESSOR to withhold without any interest the refund of all the refundable security deposits
lying with THE LESSOR. THE LESSEE confirms that the payment of such additional rent is fair
and reasonable and undertakes not to call in question the same. THE LESSEE further agrees
and authorizes THE LESSOR, in the event of such occupation of the Demised Premises exceeding
a period of three (3) months beyond the expiry or last day of earlier termination of the
lease, to forfeit all the refundable security deposits lying with THE LESSOR and in addition
to continue to be liable and pay additional rent as given above in this para per day for the
number of days of such occupation beyond the expiry or earlier termination of the Lease Deed
along with normal lease rentals till all payments due under the Lease Deed and in this
clause are paid and THE LESSEE hands over peaceful, vacant and physical possession of the
Demised Premises to THE LESSOR. |
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The above shall be without prejudice to the rights and remedies available to THE LESSOR
under this Lease Deed and/ or under any law for the time being in force. |
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11. |
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THE LESSEE shall pay every month in advance, along with the rent, proportionate charges
for the operation / maintenance / service charges (more specifically detailed in Annexure
-VI) in respect of the central air-conditioning / heating plant, the cost of running,
maintenance and servicing of the service / utility lifts, generators, the cost of cleaning
the said Plot and said Building , maintenance of lawn/grounds/ cost of security services,
electricity charges, water charges and such other necessary/ancillary expenses of and
incidental to the preservation and maintenance of the said Building / Plot in which the
Demised Premises is located and for the adequate provision of common services and
facilities at a charge which shall be 1.2 times the actual expenditure on a calculation
based on pro rata basis corresponding to the super built-up area of the Demised Premises. |
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12. |
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Subject to all local laws applicable, THE LESSOR shall, through its architect identify
the location(s) and provide space for signage at the atrium/ floor occupied by THE LESSEE,
as approved by the architect free of any rental/ charges. THE LESSOR and THE LESSEE shall
agree the space for signage mutually in writing and THE LESSEE will be allowed to put
signage on such location. All taxes including service tax, duties, rates, cesses, costs
and charges relating to the signages payable to the authorities concerned shall be borne
and paid by THE LESSEE directly. |
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FAÇADE SIGNAGE |
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THE LESSOR shall, through its architect identify the location for THE LESSEE to put up its
signage at THE LESSEEs cost on the external façade of the building as and when requested by
THE LESSEE at an annual charge of Rs.5 Lakhs per signage for up to 3 (Three) signages
payable in advance, subject to availability at the time of exercising this option. This
above façade signage charge is applicable for one façade signage (one block). The Façade
signage space shall be mutually agreed between THE LESSOR and THE LESSEE in writing. The
annual charges, as per Annexure II, will be payable from the Lease Commencement date or the
date on which THE LESSEE takes up Façade Signage. These charges are on yearly basis and no
refund/ adjustment will be made, if any Lease expires earlier or lease is terminated before
the completion of the year for which the payment is made in advance. All taxes including
service tax, duties, rates, cesses, costs and charges relating to the signage, payable to
the authorities concerned shall be borne and paid by THE LESSEE directly. No signage of any
kind either inside or outside shall be allowed on the façade glass/ columns of the Demised
Premises. |
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THE LESSOR reserves the Building Naming rights inside and on the external façade of the said
Building. The façade of the said Building shall also be used by other Lessees for displaying
their name and advertisements as per THE LESSORs approval. THE LESSEE shall, at no point of
time, raise any objection on any ground whatsoever in relation to the same. |
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Upon naming the said Building, THE LESSOR and other Lessees of the said Building, shall use
such Building name in the business addresses for all purposes. THE LESSEE shall further
raise no objection if THE LESSOR is made to display some other number or name on the said
Building or in compliance of any court order, government order, order of the local body etc. |
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13. |
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THE LESSEE shall not pay any deposit for bulk supply of electricity for power load of
0.006 KVA per sq.ft, as mentioned in Annexure -II. THE LESSEE agrees to reimburse to THE
LESSOR or any authorized company /nominees / assigns of THE LESSOR, any costs, charges,
deposits, etc. as may be demanded by THE LESSOR or any authorized company/nominees /
assigns of THE LESSOR or any other agency supplying power to the Demised Premises from time
to time during the term of the Lease Deed for arranging bulk electricity supply to the said
Plot / said Building / Demised Premises and such deposits are to be payable on the basis of
proportionate electricity load provided to the Demised Premises and proportionate load
attributable to THE LESSEE in respect of common areas of the said Plot / said Building. Any
deposit to be refunded shall be refunded by THE LESSOR to THE LESSEE after adjusting
amounts, if any, due and payable by THE LESSEE to THE LESSOR on the expiry and / or earlier termination of this Lease Deed and on
handing over the peaceful physical and vacant possession of the Demised Premises by THE
LESSEE to THE LESSOR. |
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14. |
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The specifications and information as to the materials used in construction of the
Demised Premises are set out in Annexure - VIII and any change in the specifications as set
out in Annexure - VIII, if desired by THE LESSEE, shall be implemented by THE LESSOR
subject to feasibility and approvals at a rate which shall be 1.2 times the actual cost
which shall be paid by THE LESSEE to THE LESSOR. |
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The terms and conditions quoted above are for bare shell condition of the Demised Premises. |
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In case the Demised Premises is not contiguous with the AHU due to which the ducting is
required to pass through any other occupants premises on the same floor, then THE LESSEE
will provide FCU/AHU for the Demised Premises and will also bring chilled water piping upto
the Demised Premises. |
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The necessary electrical connection for the FCU/AHU to be done by THE LESSEE and connected
to THE LESSORs panel by doing the necessary modifications. Also, the cost of chilled water
piping/any electrical/plumbing/fire fighting modification shall be borne by THE LESSEE. |
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HVAC plenum and lowside ducting needs to be done by THE LESSEE at its own cost. In case, all
occupants of the floor have closed their false ceiling and no duct is left for future
clients, THE LESSEE occupying at later stage will have to install their own FCU and make the
necessary connections to chilled water lines. THE LESSEE is required to share the cost of
HVAC plenum/ ducting provisioning by the other clients for them. |
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Any dismantling of false ceiling of common areas for services provisioning by THE LESSEE is
to be made good (as per THE LESSORs specifications) by THE LESSEE at their own cost. |
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Sprinkler tap - off: THE LESSEE has to take tap - off for down type Sprinklers with
installation of valves under supervision of Building services. |
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15. |
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THE LESSOR has provided to THE LESSEE car/ two wheeler parking spaces in the
basement/surface/mechanical car parking/two wheeler spaces as earmarked in Annexure - VII
subject to payment of rent and maintenance charges as per details mentioned in Annexure
- II. In the event additional car /two wheeler parking spaces are required by THE LESSEE,
THE LESSEE shall pay to THE LESSOR additional car /two wheeler parking space charges as may
be mutually agreed between the Parties hereto for every additional car parking/two wheeler
parking space provided by THE LESSOR, if available, on the same terms and conditions
applicable to rent, interest free refundable security deposit, maintenance charges
stipulated in this Lease Deed. |
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In the event of THE LESSOR providing electro mechanical system for car /two wheeler parking
spaces, the car/two wheeler parking spaces as earmarked in Annexure -VII may be
re-allocated, provided, however, the number of car/two wheeler parking spaces shall remain
the same in terms of this Lease Deed. |
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The liability towards payment of Service Tax and other taxes as applicable shall be borne by
THE LESSEE. |
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16. |
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The use of car /two wheeler parking spaces in the basement(s)/surface/mechanical car/two
wheeler parking spaces in the said Building shall be allowed to THE LESSEE on 24*7 hours
basis. The above timings shall, however, be subject to such restrictions as may be imposed by
any statutory authority or for security reason. THE LESSEE shall use the parking spaces only
for the purposes of parking its cars and for no other use. THE LESSEE undertakes that it
shall not make any constructions on the car /two wheeler parking spaces or create obstruction
of any kind on it or around these spaces to hinder the movement of vehicles and persons. |
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17. |
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All costs, charges, expenses including penalties, payable on or in respect of execution and
registration of this Lease Deed and on all other instruments and deeds to be executed
pursuant to this Lease Deed, shall be borne and paid solely by THE LESSEE who shall be
responsible for compliance of the provisions of Indian Stamp Act, 1899. The stamp duty and
registration charges shall be paid by THE LESSEE to THE LESSOR at the time of signing of the
Lease Deed. |
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18. |
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To be liable to pay interest @ 15% per annum on all amounts due and payable by THE LESSEE
under this Lease Deed for the period of delay beyond the due date. This is in addition to
the rights of THE LESSOR under clause 10 and Clause 55 of this Annexure-I given herein. |
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19. |
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To pay all amounts agreed to be paid in the Lease Deed, provided, however, that the
liability of THE LESSEE for such payments shall be calculated proportionately to the super
built-up area of the Demised Premises and provided further that such liability shall
commence from the date such revision / imposition/increase is effective or any subsequent
date. |
COVENANTS AND CONDITIONS TO BE OBSERVED AND PERFORMED BY THE LESSEE:
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20. |
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THE LESSEE shall plan and distribute its electrical loads in conformity with the
electrical systems installed by THE LESSOR and get these works executed after due approval
in writing from THE LESSOR. Provided further that, should modifications, additions,
alterations be required in the fire-fighting, electrical and other systems already
installed, THE LESSOR shall, if feasible make such changes and be entitled to recover from
THE LESSEE, all additional cost incurred on this account at a charge which shall be 1.2
times of actual costs. |
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21. |
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To carry out day-to-day maintenance of the Demised Premises and the fixtures and
fittings installed therein and the normal maintenance, minor repairs, including painting
and distempering and polishing the interiors of the Demised Premises at its own cost. |
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22. |
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That if THE LESSEE fails to make full payments of rent, car/ two wheeler parking
charges, façade signage charges (if any), Maintenance Charges of any kind and actual
consumption charges of water (if any), power and electricity, air-conditioning (if any) or
discharge any rates, taxes, duties imposed upon the Demised Premises and payable by THE
LESSEE in terms of this Lease within 7 days of its due date, THE LESSOR shall be entitled,
in its sole discretion and by giving prior notice of 7 days, to stop supplying to THE
LESSEE electricity / air conditioning/ water and / or all other services in addition to any
other remedies/ actions THE LESSOR may take in its sole discretion. By doing so, THE LESSOR
shall have no responsibility or liability for any loss and damage, if any, suffered by THE
LESSEE and THE LESSEE shall not be entitled to lodge any claim whatsoever against THE
LESSOR as a result of such action. |
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23. |
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That the common areas, facilities and amenities within the said Building shall be
available for use only subject to the timely payment of maintenance charges and THE LESSEE
agrees, that in the event of failure to pay maintenance charges on or before the due date,
THE LESSEE shall not have the right to use or demand such common areas, facilities and
amenities. THE LESSEE shall have no ownership rights, title, interest or claim whatsoever
in the said Plot, common areas, facilities and amenities within the said Building. |
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24. |
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Not to do or permit to be done any act or thing which may render void or voidable any
insurance relating to or in respect of a part or the whole of the said Plot, the said
Building or the Demised Premises, or cause any increase in premium payable in respect
thereof. |
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25. |
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To permit THE LESSOR and its agents at all hours to enter into the Demised Premises for
the purpose of inspection or for any other purposes connected with or incidental to any
maintenance issues such as fire, safety and security of the Demised Premises and the said
Building including any emergency and/or unforeseen circumstances or in case of any
inspection by any Government agency or any inspection by THE LESSOR with the directions of
Government Agency. However, for periodic inspections, 2 days advance intimation will be
given in writing to THE LESSEE, except in case of emergency (ies). |
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To hand over the Demised Premises in bare shell condition together with THE LESSORs
fixtures and fittings therein, in good order and condition (reasonable wear and tear
excepted) on the expiry /earlier termination of the Lease, which ever is earlier. |
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26. |
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To use the Demised Premises as per zoning plan only and shall not carry on or permit
to be carried on in the Demised Premises or in any part thereof any activities which shall
be or are likely to be unlawful, obnoxious or of nuisance, annoyance or disturbance to
other tenants/occupants of the said Building wherein the Demised Premises are situated or
store any goods of hazardous or combustible nature or which are heavy so as to affect the
construction or the structure of the said Building or any part thereof or in any manner
interfere for common use. |
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27. |
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THE LESSEE shall get the Unit Approvals for the Demised Premises before handover of the
Demised Premises for interior fit-out works. |
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THE LESSEE shall arrange to get their Unit Approvals for the Demised Premises terminated and
complete all formalities with regards to such termination at its cost and expenses prior to
the expiry of the Lease term / or renewal term thereof. |
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In case of THE LESSEEs failure to get the unit approvals terminated within the aforesaid
period, it will be assumed that the peaceful, vacant and physical possession of the Demised
Premises have not been handed over by THE LESSEE to THE LESSOR on the expiry of the Lease
Term and THE LESSOR shall be entitled to claim damages, payments, dues in accordance with
the terms of the Lease Deed. |
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28. |
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The Demised Premises shall be used by THE LESSEE only and THE LESSEE shall not assign,
transfer, mortgage, sublease or grant leave & license or transfer or part with or share
possession in any manner whatsoever, of any portion of the Demised Premises. |
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In the event, THE LESSEE merges (except internal merger among group companies) / amalgamates
/ consolidates and transfer its assets with/to any entity on account of any
merger/amalgamation/consolidation, then a fresh Lease Deed shall be executed between THE
LESSOR and the new entity/ transferee, subject to the new entity/ transferee obtaining prior
SEZ approval. The new entity shall execute an undertaking as per the draft attached as per
the Annexure XI. In case of any outstanding dues payable by THE LESSEE to THE LESSOR as per
Lease Deed, such outstanding amounts should be included in the petition to the appropriate
court seeking permission for such merger/amalgamation/consolidation. THE LESSEE shall ensure
that before approval of the scheme of merger/ amalgamation by the court having jurisdiction,
the new entity executes an undertaking as per the format attached as the Annexure XI.
Pending approval of any merger/ amalgamation/ consolidation, THE LESSEE will continue to
make all payments payable as per the Lease Deed |
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All costs, charges, expenses including penalties, payable on or in respect of execution and
registration of the fresh Lease Deed and on all other instruments and deeds to be executed
pursuant to the fresh Lease Deed, shall be borne and paid solely by new entity/transferee
who shall be responsible for compliance of the provisions of Indian Stamp Act, 1899. |
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However, a fresh Lease Deed will not be executed by THE LESSOR till all dues are cleared and
related documents are given to THE LESSOR. |
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The aforesaid will be subject to SEZ act and rules but within the above procedure. |
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29. |
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Subject to clause 42, THE LESSEE shall not make any structural changes, additions or
alterations in the Demised Premises without prior consent of THE LESSOR in writing. |
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30. |
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Upon its taking possession of the Demised Premises from THE LESSOR, THE LESSEE is
satisfied that the construction work as also various installations like electrification
work, sanitary fittings, water, sewerage connections, fire fighting equipment and detection
systems etc. are in good working condition and any issues, if any with respect thereto,
have been resolved and rectified before its taking possession from THE LESSOR and that it
shall not require THE LESSOR to perform any construction work, installations, etc in the
Demised Premises (except structural repairs if any) and there shall be no obligation
whatsoever on the part of THE LESSOR to repair, renovate, improvise or to do anything
concerning the Demised Premises, the said Building and the said Plot in any manner
whatsoever. |
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31. |
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THE LESSOR has provided the fire fighting and fire detection system in accordance with
the Amendment no.3 to the National Building Code of 1983 (SP7):1983 Part IV on each floor,
common areas and basements of the building. |
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When the Demised Premises is handed over to THE LESSEE for the interior fit-out works or
when THE LESSEE carries any additional interior works/modifications/alterations during the
Lease period or renewed lease period, THE LESSEE agrees that it shall carry out such
work(s), without altering/ tampering with the fire fighting systems as installed therein.
However, any modifications / additions / alterations to the existing fire fighting system
shall be made by THE LESSEE with the prior written approval of THE LESSOR and by providing
alternative and standby fire fighting system in the building. |
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THE LESSEE shall not, whether in the course of its interior fit-out works or as any thing
ancillary thereto or at any time for any purpose whatsoever, execute or permit to be
executed any works involving cutting/ chopping/ digging/ hacking/ dismantling in any manner
or form/ destroying in any manner or form of the floors or walls of the Demised Premises
without prior written permission of THE LESSOR. |
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Any lapse/violation/negligence on the part of THE LESSEE or its contractors / agents during
any such interior works or additions/modifications/alterations resulting in any kind of
hazard or fire in the Demised Premises/ the said Building, loss of life/ property including
third party, damage to the Demised Premises / said building structure etc. and all financial
and legal consequences arising there from shall be the sole responsibility of THE LESSEE and
THE LESSEE shall not impose any legal and financial liability on THE LESSOR. |
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THE LESSEES responsibility during additional interior fitouts work,
additions/modifications/alterations of interior works (referred hereinafter as interior
works) and during the Lease Tenure and during operations is more detailed in ANNEXURE IX to
this Lease Deed. |
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33. |
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THE LESSEE hereby represents to THE LESSOR that it is the owner of and has full right,
title and interest in and to all trade names, trademarks, service marks, brand name(s),
logos, symbols and other proprietary marks etc. (collectively IPR) and that any IPR if
used by it in Demised Premises and in the said Building/ Complex would not infringe the IPR
of any third party. THE LESSEE further covenants that it has not received any notice of any
claim against it involving any conflict or claim of conflicts. |
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THE LESSEE covenants to THE LESSOR and undertakes to hold THE LESSOR harmless from any
action brought about by any third party for any IPR infringement by THE LESSEE. THE LESSEE
further undertakes that it shall defend any and all such acts, suits, proceedings, claims,
judgments etc against THE LESSOR and any fees, costs, expenses of any kind related or
incidental to any of the foregoing (including but not limited to) any fee (whether
advocates, accountants or other professionals) costs and expenses of any kind
incurred by THE LESSOR in preparing for, defending or taking any action with respect to the
foregoing shall be borne by THE LESSEE, which THE LESSEE agrees to pay within fifteen (15)
days of demand by THE LESSOR. |
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34. |
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That THE LESSEE hereby agrees to comply with all the Laws, Rules, Regulations as may be
applicable to the Demised Premises and as applicable to THE LESSEEs operations, including
but not limited to the provisions of Environment (Protection) Act, 1986, Water (Prevention
and Control of Pollution) Act, 1974, Air (Prevention and Control of Pollution) Act, 1981,
Municipal Solid Wastes (Management and Handling) Rules, 2000, Hazardous Wastes (Management
and Handling) Rules, 1989 and Batteries (Management and Handling) Rules, 2001, Sales Tax,
Service Tax and other applicable taxes and the Rules, Notifications etc. and their
amendments made from time to time, and ascertain, in particular, compliance with the
Central and State regulations concerning safe handling, storage, treatment and disposal of
the wastes, and THE LESSEE shall always remain solely responsible for the consequences of
non-compliance of the aforesaid Acts/ Rules. THE LESSOR will endeavour to give necessary
assistance and all support to THE LESSEE for the compliance of these laws. However the laws
applicable to THE LESSOR for the provision of the services in the building shall be
complied by THE LESSOR. |
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35. |
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That THE LESSEE further agrees and as applicable to THE LESSEE operations, to install
and operate and keep at all times in operational condition, various equipments, machinery
etc. at its own cost and expenses in conformity with the provisions of Environment
(Protection) Act, 1986, Water (Prevention and Control of Pollution) Act, 1974, Air
(Prevention and Control of Pollution) Act, 1981, , Municipal Solid Wastes (Management and
Handling) Rules, 2000, Hazardous Wastes (Management and Handling) Rules, 1989 and Batteries
(Management and Handling) Rules, 2001 etc in the Demised Premises and it shall always
remain solely responsible to obtain and always keep valid and make available necessary
certificates from the Pollution Control Board and/or other appropriate authorities in this
regard. THE LESSOR will endeavour to give necessary assistance and all support to THE
LESSEE for the compliance of these laws. However the laws applicable to THE LESSOR for the
provision of the services in the building shall be complied with by THE LESSOR. |
COVENANTS AND CONDITIONS TO BE OBSERVED AND PERFORMED BY THE LESSOR:
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36. |
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During the term of the Lease Deed, THE LESSOR shall at its own cost, design and install
a continuous and proper air conditioning and shall use its best efforts to maintain the
same in good order and shall operate and run the same to ensure air-conditioning facilities
to the Demised Premises throughout the year and shall be entitled to recover from THE
LESSEE, charges on the basis as are stipulated in this Lease Deed. Provided, however, that
should THE LESSEE require any changes, additions, alterations, in the system, due to its
interior layouts, THE LESSOR may, if possible, make such changes and be entitled to recover
from THE LESSEE, all additional costs incurred on this account at a rate which shall be1.2
times of the actual costs incurred. |
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37. |
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Except in the event of a mechanical defect and / or electrical failure, THE LESSOR
shall provide air-conditioning facilities to the Demised Premises during the office hours
for 24*7 operations except on National Holidays. These timings shall, however, be subject to such
restrictions as may be imposed by any competent authority/ies in this behalf. Provided,
however, that on receiving twenty four (24) hours notice, in writing, should THE LESSEE so
desire, THE LESSOR, if possible and permissible, may at the exclusive cost of THE LESSEE,
provide air-conditioning facilities on National Holidays at a rate as mentioned in Annexure
X(b) of this Lease Deed. |
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38. |
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Except to the extent of a mechanical defect and /or electrical failure, THE LESSOR
shall maintain the lifts in the said Building serving the Demised Premises and operate and
run the same during the office hours for 24*7 operation as specified above, on all week
days except on National Holidays. These timings shall, however, be subject to such
restrictions as may be imposed by any competent authority/ies in this behalf. One of the
lifts in the said Building shall, however, operate even on National Holidays. |
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39. |
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To carry out at its own cost, all major and structural repairs to the Demised Premises
and also to the said Building. |
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40. |
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To supply and maintain regular supply of power/ electricity and water to the Demised
Premises. |
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41. |
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To keep the Demised Premises in wind and watertight condition. |
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42. |
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To permit to carry out at the cost of THE LESSEE, but without in any way damaging the
main structure of the Demised Premises or the said Building, erection of internal
partitions and other internal alterations and additions which are not visible from outside,
as may be necessary for the business of THE LESSEE provided THE LESSEE shall give prior
written intimation of thirty (30) days to THE LESSOR in writing and with prior written
approval of THE LESSORs architect, THE LESSEE shall commence such alteration(s) or
addition(s), provided, further that if any such additions or alterations, require the prior
approval or permission of any Municipality or any other local body or authority, local or
otherwise, or are governed by any rules or regulations. THE LESSEE shall not carry out such
additions or alterations or erections without obtaining the prior permission or approval
aforesaid and complying with such rules and regulations of such Municipal or local body or
Government Authority. Provided further, that THE LESSEE shall upon vacating the Demised
Premises remove such fixtures and fittings and restore the Demised Premises to THE LESSOR
in its original condition, excepting reasonable wear and tear. |
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43. |
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To allow during the term of the Lease Deed, peaceful enjoyment of the Demised Premises,
subject to THE LESSEE performing all its obligations under this Lease Deed. |
COVENANTS AND CONDITIONS TO BE OBSERVED AND PERFORMED BY THE PARTIES:
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44. |
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The super built - up area calculations are as provided in Annexure - IV hereto. All
payments by THE LESSEE towards rent, interest free security deposit, interest free maintenance
security deposit, maintenance and other charges etc. shall be payable by THE LESSEE in terms
of the final super built-up area. |
19
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45. |
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In the event any local body / authority takes over the maintenance of such services and
facilities / amenities and the payment for such services and facilities / amenities of said
Complex (more particularly set out in Annexure - VI) to the local body / authority is to be
made by THE LESSOR, then THE LESSEE agrees to reimburse all such costs and charges as may be
levied in respect of the Demised Premises to THE LESSOR as may be demanded by THE LESSOR duly
supported by relevant documents. |
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46. |
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THE LESSOR has provided electrical wiring only up to the main distribution board on each
floor in the said Building and shall not provide any electric wiring, fixtures and fans etc.,
inside the office spaces which shall be installed by THE LESSEE at its own cost. Similarly
air conditioning is provided by THE LESSOR up to air handling unit on each floor of the said
Building. The internal distribution system of air conditioning in the Demised Premises shall
be the sole responsibility of THE LESSEE. |
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47. |
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The fire fighting and fire detection system which is provided by THE LESSOR in accordance
with Amendment no.3 to the National Building Code of 1983 (SP7):1983 Part IV is limited to
installation of sprinklers and fire detection system in the basement(s) and common areas of
the said Building such as lobbies, staircases corridors, etc. and service shaft for fire
fighting and sprinkler services on each floor. |
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If, however, due to any subsequent legislation, Government orders, directives or guidelines
or due to any change in the National Building Code, additional fire safety measures are
undertaken, then THE LESSEE agrees to pay on demand additional expenditure incurred thereon
for installing additional fire safety measures as determined by THE LESSOR and duly
supported by relevant documents which shall be final and binding on THE LESSEE. THE LESSEE
agrees that, in case THE LESSEE so desires, it shall at its own cost and responsibility
install fire fighting equipment and systems within the Demised Premises which shall be in
compliance with the fire fighting regulations and safety systems as prevalent and approved
by the Competent Authorities. |
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However, it is made clear that any lapse on the part of THE LESSEE in installing safe and
adequate fire fighting systems within the Demised Premises or any fire, electrical or
otherwise, or any kind of hazard originating from the Demised Premises shall not impose any
legal and financial liability on THE LESSOR and THE LESSEE agrees to keep THE LESSOR
indemnified and harmless in this regard. Similarly THE LESSEE shall ensure that the
internal air-conditioning electrical systems and any other work done internally within the
Demised Premises shall not pose any fire, electrical, structural, pollution and health
hazards. THE LESSEE shall be solely responsible for all legal and financial consequences
arising there from and THE LESSEE agrees to keep THE LESSOR indemnified and harmless in this
regard. |
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48. |
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If THE LESSEE requires any extra fire fighting systems to be installed in the Demised
Premises, including but not limited to extending fire fighting system in the Demised
Premises, then the same shall be installed by THE LESSOR at a cost which shall be 1.2 times
the actual costs, to be payable by THE LESSEE to THE LESSOR. |
20
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49. |
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In the event THE LESSOR suggests additional fire safety measures, though not statutorily
required, for installation by THE LESSEE within the Demised Premises
and THE LESSEE fails to implement THE LESSORs suggestion either fully or in part, then THE LESSEE alone
shall be liable and responsible for all consequences arising from such inaction/decision on
its part. |
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50. |
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It is abundantly made clear to THE LESSEE that the cost incurred by THE LESSEE, during the
lease period, to install fire fighting and fire detection systems within the Demised
Premises, shall be to its account solely and shall not be borne or refunded by THE LESSOR or
deducted from the rent payable to THE LESSOR under any circumstances whatsoever. |
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51. |
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During the term of the Lease Deed and renewed lease deed if any, THE LESSOR shall
obtain fire and special peril insurance coverage of the entire said Building, including
third-party liability and shall make timely payment of all insurance premiums. |
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52. |
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During the term of the Lease Deed and renewed lease deed if any, THE LESSEE shall
obtain comprehensive insurance coverage, including third-party coverage, of all interior
works while carrying out interiors or thereafter from the time of takeover of possession
for interior fit-outs and lease term(s), renovations, furniture, equipment and/or other
items kept or stored in the Demised Premises, and shall make timely payments of all
insurance premia. THE LESSOR shall in no way be responsible for any loss occasioned by THE
LESSEE on account of not obtaining comprehensive insurance coverage of all renovations,
furniture, equipment and/or other items kept or stored in the Demised Premises. |
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53. |
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However, it is made clear that in the event of an accident or fire or damages for any
other reason resulting in any loss, financial or otherwise to either party or to third
parties, both Parties agree to take up the matter with their respective Insurance Companies
through the insurance cover including third party liability. |
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54. |
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That if at any time during the occupation by THE LESSEE of the Demised Premises, the
lifts or the air conditioning system fails to function or fails to maintain the required
temperature levels, THE LESSEE will be entitled to call upon and require THE LESSOR to
remedy and rectify the system within a reasonable time. Provided, however, that THE LESSOR
will ensure that there will not be total absence of lifts and air-conditioning for more
than one day at a time. |
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55. |
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THE LESSOR may forthwith re-enter upon the Demised Premises or upon any part thereof or
may terminate this Lease and this Lease Deed shall thereupon stand determined but without
prejudice to any claim which THE LESSOR may have against THE LESSEE in respect of any
breach, non - performance or non - observance of the covenants or conditions herein
contained in the following events: |
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a) |
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If any amount payable by THE LESSEE to THE LESSOR by way of rent and other
sums/ charges payable which are undisputed under this Lease Deed shall be in arrears
and unpaid for a period of thirty (30) days after the same has become due and THE
LESSEE fails to clear the payments within 10 Days of written notice therefor from THE
LESSOR. |
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b) |
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If THE LESSEE shall omit to perform, observe any covenant or condition to be
observed and performed on the part of THE LESSEE and shall continue to do so or
fails to remedy the breach within thirty (30) days of such breach or THE LESSEE is
adjudicated as insolvent |
21
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It is further agreed by THE LESSEE that THE LESSOR shall be entitled to adjust all and any
sums due to THE LESSOR including rent, car/two wheeler parking space charges, façade
signage charges, if any and maintenance charges of lease and to the extent of shortfall in
notice period, taxes, interests, damages etc., against all security deposits made by THE
LESSEE with THE LESSOR under this Lease Deed. In the event the aggregate of arrears of
rent, any other sum due and payable and the above mentioned costs exceed the amounts
deposited as security deposits with THE LESSOR, then THE LESSEE shall pay to THE LESSOR
such amounts due to THE LESSOR, over and above such sums deposited by THE LESSEE with THE
LESSOR. |
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55 |
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(a). |
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That if the Demised Premises or any part thereof be destroyed or damaged by fire (not
caused by any willful act or negligence of THE LESSEE), earthquake, tempest, flood,
lightning, violence of any army or mob or enemies of the country or by any other irresistible
force so as to render the Demised Premises unfit for the purpose for which the same was
leased, THE LESSEE may, temporarily vacate the whole or such portion of the Demised Premises
as may be required to enable THE LESSOR to carry out repairs in order to restore the Demised
Premises as it was then existing at the time of THE LESSEE entering into the Demised
Premises (reasonable wear and tear excepted) and in such event, the payment of rent, other
charges and maintenance/service charges till the affected area of the Demised Premises or
portion thereof are repaired and restored to the state as specified above shall abate. |
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56. |
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THE LESSEE undertakes that during the term of this Lease Deed or any renewal thereof,
it shall maintain its corporate existence and shall not dissolve or liquidate or enter into
an agreement with any party, including but not restricted to a compromise with its
creditor(s) such that its corporate existence is or may be questioned, in which event, this
Lease Deed shall automatically terminate. |
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In the event THE LESSEE has been adjudged insolvent or in the case of Company/ Firm having
been liquidated, the Lease shall stand automatically terminated and THE LESSOR shall enter
into the Demised Premises to assume the possession which shall be without prejudice to the
rights of THE LESSOR to claim/ recover its dues along with interest/ damages till the date
of termination. |
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56 |
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(a). |
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THE LESSOR shall have the right to install any displays of multimedia/visual
format in the common areas like lift lobbies, atrium(s), lifts etc. of the said Building. |
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57. |
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THE LESSEE agrees and consents that it would have no objection to THE LESSOR
mortgaging or creating a third party charge on the Demised Premises subject to, however,
that the creation of such mortgage / charge of the Demised Premises shall not affect the
rights of THE LESSEE to use the Demised Premises during the lease period. |
22
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58. |
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THE LESSEE agrees and consents that it would have no objection for transfer either by
way of sale, mortgage or in any other manner howsoever, of the Demised Premises and/or
the said Building, provided, the rights of THE LESSEE in the Demised Premises remain
unaffected vis-à-vis the transferee. |
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59. |
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THE LESSEE agrees and commits that THE LESSOR shall have sole and absolute right to
make additions, raise storeys or put up additional structures as may be permitted by
competent authorities and such additional structures and storeys shall be the sole property
of THE LESSOR, which THE LESSOR will be entitled to dispose of in any way it chooses
without any interference on the part of THE LESSEE by itself or with one or more of the
rest of occupants of the said Building. Further all the terraces of the said Building
including the parapet walls of the terraces shall always be the property of THE LESSOR and
THE LESSOR shall be entitled to use the same for any purpose as it may deem fit. |
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60. |
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That if during the term of the Lease Deed, the Demised Premises or any part thereof be
lawfully acquired or requisitioned by the Government or any local body or authority, local
or otherwise, THE LESSOR alone shall be entitled to any and all compensation payable and
THE LESSEE shall not raise any claim in respect thereof on THE LESSOR. |
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61. |
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That if any provision of this Lease Deed shall be determined to be void or
unenforceable under applicable law, such provisions shall be deemed amended or deleted to
the extent necessary to conform to applicable law and the remaining provisions of this
Lease Deed shall remain valid and enforceable. |
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62. |
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That THE LESSEE and THE LESSOR shall abide by the laws of the land and any and all
local enactments in respect of this Lease Deed of the Demised Premises. THE LESSOR may,
with intimation in writing to THE LESSEE, inspect the Demised Premises from time to time at
frequencies considered necessary by THE LESSOR and should there be any violations,
contraventions as are observed by THE LESSOR, THE LESSEE will ensure compliance with the
requirements as per applicable laws. |
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63. |
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Any penalties levied by the Government, State, Municipal Body etc. as a result of
non-compliance by either Party will be borne by the defaulting party in respect of the
Demised Premises. |
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64. |
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That the said Building wherein the Demised Premises are located is a strictly
no-smoking area. THE LESSEE shall ensure that no act in contravention of the provisions of
Prohibition of Smoking in Public Places Rules, 2008 is committed in the Demised Premises
or in the common spaces of the Building wherein the Demised Premises are located. In case
any offence under the Prohibition of Smoking in Public Places Rules, 2008 is committed in
the Demised Premises of the said Building wherein the Demised Premises are located, by any
employee/visitor of THE LESSEE, THE LESSEE shall be responsible for the same and any fine
payable in respect thereof shall be paid by THE LESSEE and THE LESSOR shall not be
responsible for the same. |
23
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65. |
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That any notice, letter or communication to be made, served or communicated unto THE
LESSOR under these presents shall be in writing and shall be deemed to be duly made, served
or communicated only if the notice, letter or communication is addressed to THE LESSOR at
the address given below or such other addresses as may be intimated in writing by THE
LESSOR in this behalf and sent by registered post/fax/email (given hereunder)/
speed post or delivered personally with acknowledgement. Similarly any notice, letter or
communication to THE LESSEE by THE LESSOR or other authorized representatives of THE LESSOR
shall be deemed to be made, served or communicated only if the same in writing is addressed
to the below mentioned address of THE LESSEE or to the address of the Demised Premises when
THE LESSEE has shifted to the same, by registered post/fax/email (given hereunder)/ speed
post or delivered personally with acknowledgement. The communication is to be addressed to
the following: |
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For THE LESSOR
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For THE LESSEE |
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Head Marketing (South & West)
10th Floor, DLF Gateway Tower,
R Block, DLF City Ph - III,
Gurgaon 122002
Phone 91-124- 4057410
Fax 91-124-4057414
E Mail: lease-chennai@dlf.in
|
|
Mr. Milind Ghule
Senior Vice President
Gate 4, Godrej & Boyce Complex,
Pirojshanagar, Vikhroli (W)
Mumbai 400 079
Phone: 022- 4095 2100
Fax: 022 - 2518 8308
E mail: milind.ghule@wns.com |
This Annexure forms an integral part of the Lease Deed.
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For and on behalf of
DLF Assets Private Ltd.
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For and on behalf of
WNS Global Services Private Ltd. |
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(A.C. Sachdev)
AUTHORIZED SIGNATORY
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(Ronald DMello)
AUTHORIZED SIGNATORY |
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24
ANNEXURE II
Commercial Terms and Conditions forming integral part of Lease Deed dated between DLF
Assets Pvt. Ltd. and M/s WNS Global Services Private Ltd.
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Description |
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(For |
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convenience |
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only) |
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Reference |
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Clause |
a) |
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Demised Premises |
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Location- 1/124, Shivaji Gardens, Moonlight Stop, Nandambakkam, Mount Poonamallee Road, Manapakkam, Chennai- 600 089 |
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1 of Lease Deed |
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Phase
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Area
(sq.ft.)
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Area
(sq.mtrs.)
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Block
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Floor |
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Phase I
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50,335 |
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4,676.243 |
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10 |
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Part of
10th |
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Phase II
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20,322 |
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1,887.973 |
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10 |
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Part of
10th |
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Total Area
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70,657 |
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6,564.216 |
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(Hereinafter collectively referred to as Demised Premises). |
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Phase I: THE LESSEE shall take an area of approx 50,335 sq. ft.
(4,676.243 sq.mtrs) on part of 10th Floor in Block 10. |
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Phase II: THE LESSEE shall take an area of approx. 20,322 sq.
ft. (1,887.973 sq.mtrs) on part of 10th Floor in Block 10. |
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The Efficiency of the Area shall be approximately 80% (+/- 2%)
for an entire floor which shall be the office area, as per the
area definitions given in Annexure IV(a) and (b) to this
Lease Deed. The Parties shall mutually confirm the area and
adjust the rent in case of any deviations. The final area shall
be subject to joint measurement by both parties. |
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b) |
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Aggregate super built up area under this Lease Deed |
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6,564.216 Sq.Mtr. |
|
1 of Lease Deed |
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70,657 Sq.ft.
(Seventy Thousand Six Hundred
and Fifty Seven Square ft.) |
|
1 of Lease Deed |
25
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S.N |
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Item |
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Description |
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Cross |
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Reference |
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(For |
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convenience |
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only) |
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Reference |
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Clause |
c) |
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Number of car/two
wheeler parks in
basement/surface/
mechanical car
parking spaces on
payment of Rs.
500/- per car park
per month. |
|
70 (Seventy) |
|
4 of Lease Deed &
15 of Annexure I |
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Additional Car /two
wheeler Parking
Spaces at the rate
of Rs. 2,000/- per
car park per month,
subject to
availability, and
the charges for the
same shall commence
from the date car
parks are taken by
THE LESSEE. The
Service Tax as
applicable shall be
additional. |
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NIL |
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TOTAL |
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70 (Seventy) |
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26
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S.N |
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Item |
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Description |
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(For |
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convenience |
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only) |
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Reference |
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Clause |
d)
|
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Date of Lease
Commencement
|
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Phase
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Lease Commencement Date |
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2 of Lease Deed |
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Phase I
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1st April, 2011
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Phase II
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3 months & 15 days from the date of confirmation of the space take up; but
not beyond
1st April, 2012
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In case of delay in handover of Demised Premises for occupation
as per Annexure IX of this Lease Deed, the Lease Commencement
Date of the respective phases shall be deferred by one day for
each day of delay. |
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e)
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Date of Rent
Commencement
|
|
Bare Shell Payment of Rent by THE LESSEE shall commence as per the following schedule:
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|
2 of Lease Deed |
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Phase
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Rent Commencement Date |
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Phase I
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1st April, 2011
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Phase II
|
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3 months & 15 days from the date of confirmation of the space take up; but
not beyond
1st April, 2012
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In case of delay in handover of Demised Premises for occupation
as per Annexure IX of this Lease Deed, the Rent Commencement Date
of the respective phases shall be deferred by one day for each
day of delay. |
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For Car /Two Wheeler Parking Rentals from the Lease Commencement Date. |
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For Façade Signage Charges from Lease Commencement Date or the date on which such façade signage has been taken up by THE LESSEE. |
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27
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S.N |
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Item |
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Description |
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Cross |
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Reference |
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(For |
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convenience |
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only) |
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Reference |
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Clause |
g) |
|
Monthly Bare Shell
Rent Payable on
super built up area
for initial 36
months of the lease
from the respective
Lease Commencement
Dates |
|
Rs. 39/-(Rupees Thirty Nine
only) Per Sq.Ft. Per Month
amounting to Rs.19,63,065/- for
Phase I and Rs. 7,92,558/- for
Phase II; aggregating to Rs.
27,55,623/- (Rupees Twenty Seven
Lacs Fifty Five Thousand Six
Hundred and Twenty Three only)
The Service Tax and other taxes
on monthly rents as applicable
shall be additional and shall be
borne by THE LESSEE. |
|
1 of Annexure I of
Lease Deed |
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|
h) |
|
Car parking space charges |
|
70 (Seventy) Car parking spaces
will be provided in basement/
surface/ mechanical car parking
spaces on payment of Rs. 500/-
per car park per month. |
|
15 of Annex I |
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The car parking spaces allotted
to THE LESSEE shall be as
contiguous as possible, subject
to availability. |
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Any additional car parks
required by THE LESSEE will be
given, subject to availability,
@ Rs.2,000/- per car park per
month and the charges for the
same shall commence from the
date car parks are taken by THE
LESSEE. |
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The Service Tax and any other
taxes on car parking charges as
applicable shall be additional
and shall be borne by THE
LESSEE. |
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Upon escalation in rent, there
shall be no escalation in the
car parking charges. |
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No separate two wheeler parking
will be provided but will be
part of the car parking spaces
allotted to THE LESSEE |
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i) |
|
Bulk Electricity
Supply Deposit
0.006 KVA per
sq.ft. of Power
Load. |
|
NIL
Any additional power load
required by THE LESSEE shall be
provided not exceeding 3% of
0.006 KVA per sq.ft. of leased
area, subject to availability
and on payment of a
non-refundable charge of Rs.
10,000/- per KVA of power load
in addition to the refundable
deposit of Rs. 4,000/- per KVA
of power load. However, any
additional infrastructure cost
required for supply of power
from the source of power to the
electrical tap off box on the
floor shall be borne by THE
LESSEE at Cost + 20% basis. Any
additional power load
requirement beyond 3% of 0.006
KVA per sq.ft. of leased area
shall be discussed separately
between the parties. |
|
13 of Annex-I |
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j)
|
|
Interest Free Refundable Security Deposit (IFS) always equivalent to rent of three
(03) months at any
given point of
lease.
|
|
Phase
|
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|
Amount (Rs.)
|
|
6, 7 & 8 of Annexure I of Lease Deed |
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|
Phase I
|
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|
58,89,195 |
|
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Phase II
|
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|
|
|
|
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|
23,77,674 |
|
|
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|
Total Amount (Rs.)
|
|
|
|
|
|
|
|
|
82,66,869
|
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|
THE LESSEE has already paid the entire amount of Interest Free
Refundable Security Deposit as
mentioned above, by way of
transfer of an equivalent amount
from the security deposits
already paid by THE LESSEE to
THE LESSOR under the Lease Deeds
signed between THE LESSEE and
THE LESSOR for THE LESSEEs
space take up at Building 6B and
6C, Gurgaon. |
|
|
28
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S.N |
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Item |
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Description |
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Cross |
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Reference |
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(For |
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convenience |
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only) |
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Reference |
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Clause |
k) |
|
Interest Free Refundable Maintenance Security Deposit (IFMS) @ Rs 25/-
per sq.ft. per
month for a period
of 3 months for
office hours i.e.
24*7 operations,
except on National
Holidays |
|
Phase
|
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|
Amount (Rs.)
|
|
9 of Annexure I of Lease Deed |
|
|
|
Phase I
|
|
|
|
|
|
|
|
|
|
|
|
34,73,115 |
|
|
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|
Phase II
|
|
|
|
|
|
|
|
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|
|
|
14,02,218 |
|
|
|
|
Total Amount (Rs.)
|
|
|
|
|
|
|
|
|
|
|
|
48,75,333
|
|
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|
Maintenance
services on
National Holidays
can only be
provided if THE
LESSEE gets the
requisite approvals
from the local
administration /
competent
authority(ies) and
not otherwise.
|
|
THE LESSEE has already paid the entire amount of Interest Free
Refundable Maintenance Security
Deposit as mentioned above, by
way of transfer of an equivalent
amount from the security
deposits already paid by THE
LESSEE to THE LESSOR under the
Lease Deeds signed between THE
LESSEE and THE LESSOR for THE
LESSEEs space take up at
Building 6B and 6C, Gurgaon. |
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|
The above rates are
estimations as on
1st
April 2009 and will
depend on the
relevant rates of
petroleum products,
taxes, electricity
rates, wages &
salaries during the
Lease Tenure/Renewed
Lease
Tenure. All
maintenance charges
are at cost + 20%
as given in Clause
5 Annexure I. |
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o) |
|
Façade signage
charges |
|
Rs. 5,00,000/- (Rupees Five Lacs
only) per signage per annum to
be paid in advance for upto
three (3) signages. |
|
Clause 12 of
Annexure I of Lease
Deed |
29
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S.N |
|
Item |
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Description |
|
Cross |
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Reference |
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(For |
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|
convenience |
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only) |
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Reference |
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Clause |
o) |
|
Notice period for
termination of
Lease Deed |
|
03 Months |
|
3 of Lease Deed |
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p) |
|
Place at which the
rent and all other
sums payable by THE
LESSEE to THE
LESSOR by Cheques/
Bank drafts/ wire
transfer. |
|
New Delhi |
|
2 of Annexure I |
|
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|
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|
|
|
|
|
|
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|
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|
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|
|
|
q) |
|
Charges for
Electricity/Power
for internal Usage |
|
As per Annexure X(a) |
|
|
This Annexure forms an integral part of the Lease Deed.
|
|
|
For and on behalf of
DLF Assets Private Limited
|
|
For and on behalf of
WNS Global Services Private Ltd. |
|
|
|
|
|
|
(A.C. Sachdev)
AUTHORIZED SIGNATORY
|
|
(Ronald DMello)
AUTHORIZED SIGNATORY |
30
ANNEXURE - III (a)
DESCRIPTION OF THE PLOT
Schedule A
All those pieces and parcels of lands admeasuring a total area of 12.3808 hectares comprised in
|
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Sl. |
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Survey |
|
Area in |
|
Sl. |
|
Survey |
|
Area in |
|
Sl. |
|
Survey |
|
Area in |
|
Sl. |
|
Survey |
|
Area in |
No. |
|
Number |
|
Hectares |
|
No. |
|
Number |
|
Hectares |
|
No. |
|
Number |
|
Hectares |
|
No. |
|
Number |
|
Hectares |
1.
|
|
58/5
|
|
0.3650
|
|
17.
|
|
59/3A2A
|
|
0.0600
|
|
33.
|
|
59/3A1
|
|
0.4050
|
|
49.
|
|
56/2C
|
|
0.1000 |
2.
|
|
58/2B
|
|
0.3050
|
|
18.
|
|
61/3B
|
|
0.1050
|
|
34.
|
|
58/9
|
|
0.0575
|
|
50.
|
|
56/2E
|
|
0.0280 |
3.
|
|
58/2A
|
|
0.2550
|
|
19.
|
|
61/3C
|
|
0.0250
|
|
35.
|
|
59/1
|
|
0.0636
|
|
51.
|
|
56/2F
|
|
0.0280 |
4.
|
|
58/6B
|
|
0.3400
|
|
20.
|
|
55/6A1
|
|
0.6397
|
|
36.
|
|
59/3B
|
|
0.5271
|
|
52.
|
|
56/2G
|
|
0.0490 |
5.
|
|
57/14
|
|
0.1039
|
|
21.
|
|
59/3A3
|
|
0.4050
|
|
37.
|
|
60/2
|
|
0.8950
|
|
53.
|
|
56/3
|
|
0.0210 |
6.
|
|
58/6A
|
|
0.1100
|
|
22.
|
|
59/3A4
|
|
0.4050
|
|
38.
|
|
60/1A
|
|
0.0250
|
|
54.
|
|
56/4
|
|
0.0320 |
7.
|
|
57/5C
|
|
0.0600
|
|
23.
|
|
59/3A2B
|
|
0.3168
|
|
39.
|
|
60/1B
|
|
0.0150
|
|
55.
|
|
57/6
|
|
0.0120 |
8.
|
|
57/2
|
|
0.3050
|
|
24.
|
|
59/3A2C
|
|
0.9450
|
|
40.
|
|
60/1D
|
|
0.5700
|
|
56.
|
|
57/7B
|
|
0.0890 |
9.
|
|
57/7B
|
|
0.0037
|
|
25.
|
|
57/15A
|
|
0.2450
|
|
41.
|
|
60/1E
|
|
0.3150
|
|
57.
|
|
57/10B
|
|
0.0890 |
10.
|
|
57/4
|
|
0.3350
|
|
26.
|
|
58/7B2
|
|
0.0300
|
|
42.
|
|
60/1F
|
|
0.3450
|
|
58.
|
|
57/13
|
|
0.0400 |
11.
|
|
57/6
|
|
0.0290
|
|
27.
|
|
58/8
|
|
0.0960
|
|
43.
|
|
58/7B2
|
|
0.0200
|
|
59.
|
|
57/14
|
|
0.0740 |
12.
|
|
57/5A
|
|
0.0600
|
|
28.
|
|
57/15B
|
|
0.4054
|
|
44.
|
|
58/8
|
|
0.0700
|
|
60.
|
|
57/15A
|
|
0.3130 |
13.
|
|
57/5B
|
|
0.0600
|
|
29.
|
|
58/7A1
|
|
0.0600
|
|
45.
|
|
58/9
|
|
0.0720
|
|
61.
|
|
57/15B
|
|
0.0890 |
14.
|
|
58/3
|
|
0.3400
|
|
30.
|
|
58/7B1
|
|
0.0300
|
|
46.
|
|
58/10
|
|
0.0810
|
|
62.
|
|
59/3A2B
|
|
0.0030 |
15.
|
|
58/4
|
|
0.3450
|
|
31.
|
|
56/2B2
|
|
0.0850
|
|
47.
|
|
59/1
|
|
0.4870 |
|
|
|
|
|
|
16.
|
|
59/2
|
|
0.2350
|
|
32.
|
|
56/2C
|
|
0.3011
|
|
48.
|
|
59/3B
|
|
0.0600 |
|
|
|
|
|
|
Mugalivakkam Village, Sriperumbudur Taluk, Kancheepuram District, and situated within the
sub-registration district of Kunrathur, and registration district of South Chennai.
Item II
All those pieces and parcels of lands admeasuring a total area of 4.35012 hectares comprised in
Survey Nos.55 (0.07500 Hec), 57 (0.10445 Hec), 58/1 (3.38925 Hec), 58/2 (0.19538 Hec) and 58/3
(0.58604 Hec). Manapakkam Village, Sriperumbudur Village, Kancheepuram District, and situated
within the sub-registration district of Joint-I, South Chennai and registration district of South
Chennai.
Item I and Item II in all measuring 16.73092 hectares
Situated in DLF IT PARK @ Chennai, 1/124 Shivaji Gardens, Moonlight Stop, Nandambakkam Post,
Ramapuram, Mount-Poonamallee Road, Chennai 600 089
SCHEDULE B (Description of leased Premises)
As defined in Annexure II of this Lease Deed.
DLF IT Park @ Chennai is a Special Economic Zone IT Park notified vide official gazette numbers F-
2/124/2006 dated 16th November 2006 and F-2/124/2005 dated 14th February,
2007 approved by Ministry of Commerce.
31
ANNEXURE - III(b)
DESCRIPTION OF THE FLOOR PLAN
Phase I (10FL / 1, 2 & 3) & Phase II (10FL/ 4)
32
ANNEXURE - IV(a)
Phase I
SUPER BUILT UP AREA CALCULATIONS
BLOCK- 10, OFFICE COMPLEX, MANAPAKKAM, CHENAI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLOOR/ |
|
OFFICE AREA |
|
SUPER AREA |
|
TERRACE AREA |
|
TOTAL
SUPER BUILT UP AREA |
OFFICE NO. |
|
(SQM) |
|
(SFT) |
|
(SQM) |
|
(SFT) |
|
(SQM) |
|
(SFT) |
|
(SQM) |
|
(SFT) |
TENTH/
10F/1
|
|
1533.449
|
|
16506
|
|
1916.811
|
|
20633
|
|
|
|
|
|
1916.811
|
|
20633 |
TENTH/
10F/2
|
|
1103.690
|
|
11880
|
|
1379.612
|
|
14850
|
|
|
|
|
|
1379.612
|
|
14850 |
TENTH/
10F/3
|
|
1103.856
|
|
11882
|
|
1379.820
|
|
14852
|
|
|
|
|
|
1379.820
|
|
14852 |
TOTAL
|
|
3740.995
|
|
40268
|
|
4676.243
|
|
50335
|
|
|
|
|
|
4676.243
|
|
50335 |
The Super built up area shall be the sum of Office areas, the Common areas in the entire said
building, i.e., Block-10 and usable terrace(s) area attached to Office area. The aforesaid areas
are tentative and are subject to change, the final Super built up areas shall be confirmed by the
DLF Assets Private Limited on the date of possession upon completion of construction of above said
building after accounting for changes, if any, during construction
Whereas the Office area on a floor shall mean the entire area enclosed by its periphery walls including area
under walls, wall cladding, columns, toilets, pantries, lift lobbies, AHU, Electrical rooms, which form integral
part of said office floor and the Common areas shall mean all such parts / areas in said building which the M/s WNS
Global Service (P) Limited / Occupants of one floor shall use by sharing with the Occupants of other floors, including
entrance canopy, corridors and passages, area of cooling towers and
chillers, security / fire control
room(s), lift shafts,
all electrical shafts, D.G. shafts, A.C shafts, pressurisation shafts, plumbing and fire shafts on all floors and rooms,
staircases, mumties, lift machine rooms, over head water tanks and services area on roof of said building. In addition
prorata share of common services area in the basement and on surface of the said plot, including but not limited to electric
sub-station, transformers, D.G. set rooms. Underground water and other storage tanks, A.C. Plant room, Pump rooms, Sewage
treatment plant, maintenance and service rooms, fan rooms, circulation areas etc. shall be counted towards common areas.
Office area to Super area ratio shall be 80%.
Area of terrace(s), attached to Office area, if any, shall be counted 50% and added to the total
Super built up area. However, lessee shall not be allowed to cover such terrace(s) and shall use
same as open areas only and in no other manner whatsoever.
33
Annexure - IV (b)
Phase II
SUPER BUILT UP AREA CALCULATIONS
BLOCK- 10, OFFICE COMPLEX, MANAPAKKAM, CHENNAI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLOOR/ |
|
OFFICE AREA |
|
SUPER AREA |
|
TERRACE AREA |
|
TOTAL
SUPER BUILT UP AREA |
OFFICE NO. |
|
(SQM) |
|
(SFT) |
|
(SQM) |
|
(SFT) |
|
(SQM) |
|
(SFT) |
|
(SQM) |
|
(SFT) |
TENTH/
10F/4
|
|
1510.378
|
|
16258
|
|
1887.973
|
|
20322
|
|
|
|
|
|
1887.973
|
|
20322 |
TOTAL
|
|
1510.378
|
|
16258
|
|
1887.973
|
|
20322
|
|
|
|
|
|
1887.973
|
|
20322 |
The Super built up area shall be the sum of Office areas, the Common areas in the entire said
building, i.e., Block-10 and usable terrace(s) area attached to Office area. The aforesaid areas
are tentative and are subject to change, the final Super built up areas shall be confirmed by the
DLF Assets Private Limited on the date of possession upon completion of construction of above said
building after accounting for changes, if any, during construction
Whereas the Office area on a floor shall mean the entire area enclosed by its periphery walls including area
under walls, wall cladding, columns, toilets, pantries, lift lobbies, AHU, Electrical rooms, which form integral
part of said office floor and the Common areas shall mean all such parts / areas in said building which the M/s WNS
Global Service (P) Limited / Occupants of one floor shall use by sharing with the Occupants of other floors, including
entrance canopy, corridors and passages, area of cooling towers and
chillers, security / fire control
room(s), lift shafts,
all electrical shafts, D.G. shafts, A.C shafts, pressurisation shafts, plumbing and fire shafts on all floors and rooms,
staircases, mumties, lift machine rooms, over head water tanks and services area on roof of said building. In addition
prorata share of common services area in the basement and on surface of the said plot, including but not limited to electric
sub-station, transformers, D.G. set rooms. Underground water and other storage tanks, A.C. Plant room, Pump rooms, Sewage
treatment plant, maintenance and service rooms, fan rooms, circulation areas etc. shall be counted towards common areas.
Office area to Super area ratio shall be 80%.
Area of terrace(s), attached to Office area, if any, shall be counted 50% and added to the total
Super built up area. However, lessee shall not be allowed to cover such terrace(s) and shall use
same as open areas only and in no other manner whatsoever.
34
ANNEXURE - V (a)
STATEMENT OF RENT, INTEREST FREE SECURITY DEPOSIT, INTEREST FREE MAINTENANCE SECURITY DEPOSIT & CAR PARKING CHARGES PAYABLE BY THE LESSEE TO THE LESSOR DURING THE PERIOD OF THE LEASE
FOR 50,335 SQ.FT. (4,676.243 SQ.MTRS.) AS PHASE I AT PART OF TENTHFLOOR, BLOCK 10, DLF IT PARK @ CHENNAI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAR PARKING |
|
INTEREST FREE |
|
|
|
|
|
|
|
|
MONTHLY |
|
|
|
CHARGES |
|
MAINTENANCE |
|
|
|
|
|
|
|
|
RENT |
|
INTEREST FREE |
|
50 (Fifty) Nos. of |
|
SECURITY |
|
|
|
|
|
|
|
|
PAYMENT OF |
|
SECURITY (IN RS) |
|
Car Parking spaces |
|
CALCULATED @ Rs. |
|
|
|
|
|
|
Rent (Rs |
|
THE SUPER |
|
EQUIVALENT TO 3 |
|
on payment of Rs. |
|
25/- PER SQ. FT. PER |
BEGINNING |
|
|
|
AREA (in |
|
per sq.ft. |
|
BUILT-UP AREA |
|
MONTHS |
|
500/- per car park |
|
MONTH FOR A PERIOD |
FROM |
|
ENDING ON |
|
Sq.ft.) |
|
per month) |
|
(Rs. Per month) |
|
PREVAILING RENT |
|
per month |
|
OF 3 MONTHS |
01.04.2011
|
|
31.03.2014
|
|
50,335
|
|
39.00
|
|
19,63,065.00
|
|
58,89,195.00
|
|
25,000
|
|
37,75,125.00 |
01.04.2014
|
|
31.03.2016
|
|
50,335
|
|
44.85
|
|
22,57,524.75
|
|
58,89,195.00
|
|
25,000
|
|
37,75,125.00 |
|
|
|
NOTE: |
|
All terms as per the Lease Deed shall be applicable. |
35
ANNEXURE - V (b)
STATEMENT OF RENT, INTEREST FREE SECURITY DEPOSIT, INTEREST FREE MAINTENANCE SECURITY DEPOSIT & CAR PARKING CHARGES PAYABLE BY THE LESSEE TO THE LESSOR DURING THE PERIOD OF THE LEASE FOR
20,322 SQ.FT. (1,887.973 SQ.MTRS.) AS PHASE II AT PART OF TENTH FLOOR, BLOCK 10, DLF IT PARK @ CHENNAI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAR PARKING |
|
INTEREST FREE |
|
|
|
|
|
|
|
|
MONTHLY |
|
|
|
CHARGES |
|
MAINTENANCE |
|
|
|
|
|
|
|
|
RENT |
|
INTEREST FREE |
|
20 (Twenty) Nos. of |
|
SECURITY |
|
|
|
|
|
|
|
|
PAYMENT OF |
|
SECURITY (IN RS) |
|
Car Parking on |
|
CALCULATED @ Rs. |
|
|
|
|
|
|
Rent (Rs |
|
THE SUPER |
|
EQUIVALENT TO 3 |
|
payment of Rs. |
|
25/- PER SQ. FT. PER |
BEGINNING |
|
|
|
AREA (in |
|
per sq.ft. |
|
BUILT-UP AREA |
|
MONTHS |
|
500/- per car park |
|
MONTH FOR A |
FROM |
|
ENDING ON |
|
Sq.ft.) |
|
per month) |
|
(Rs. Per month) |
|
PREVAILING RENT |
|
per month |
|
PERIOD OF 3 MONTHS |
01.04.2011
|
|
31.03.2014
|
|
20,322
|
|
39.00
|
|
7,92,558.00
|
|
23,77,674.00
|
|
10,000
|
|
15,24,150.00 |
01.04.2014
|
|
31.03.2016
|
|
20,322
|
|
44.85
|
|
9,11,441.70
|
|
23,77,674.00
|
|
10,000
|
|
15,24,150.00 |
|
|
|
NOTE: |
|
All terms as per the Lease Deed shall be applicable.
The Lease Commencement of Phase II shall be as defined in S.no (d) of Annexure II of this Lease Deed. |
36
ANNEXURE VI
MONTHLY MAINTENANCE AND SERVICE EXPENDITURE (INDICATIVE)
A. |
|
The expected monthly maintenance and service expenditure shall be 1.20 times the sum total of
the following expenditure calculated on sq.ft. of Super Built up area basis and shall be
charged every month. The expenditure shall include but shall not be limited to the following: |
|
1. |
|
Annual maintenance contracts, Service contract expenditure including taxes & statutory levies
as applicable, lease rental and other charges for operation and maintenance of all
electro-mechanical equipments and all equipment additionally installed by the
Lessor/maintenance agency. |
|
2. |
|
Cost of water for all purposes. |
|
3. |
|
Cost of electricity for central air-conditioning and all services provided including in the
parking, common and external areas. |
|
4. |
|
Cost of maintenance of landscaped areas, compound wall, tube well, electrification sewerage,
roads and paths and any other services within the boundary of the said plot. |
|
5. |
|
Cost of maintenance, cleaning, painting and necessary replacements of a revenue nature in
common areas including cost of maintenance of basements and common services therein. |
|
6. |
|
Cost of security services. |
|
7. |
|
Cost of administrative staff, maintenance staff of the building and the manager directly
related to the maintenance of the building. |
|
8. |
|
Cost of all consumables for all services in common areas. |
|
9. |
|
Annual fees of various authorities. |
|
10. |
|
Cost of diesel and lubricants for DG sets and cost of gas and lubricants etc. for gas
generators and air conditioning systems etc. |
|
11. |
|
Cost of all replacements / refurnishing of parts of various equipments used in maintenance
services. |
|
12. |
|
Cost of augmentation/upgradations/replacement/deployment of existing and additional
security/fire/other electromechanical systems acquired through leasing/ amortization/ rental
basis. |
|
13. |
|
Cost of expenses incurred on infrastructure in and around the Said Building. |
37
14. |
|
Cost of insurance of Building and fitouts when fitted out space is provided. |
|
15. |
|
Township maintenance charges till the services of the colony are handed over to a local body
or authority. |
|
16. |
|
Depreciation / sinking fund /lease rentals of all electro-mechanical equipments, including
but not limited to chillers, D.G. Sets and lifts. |
|
17. |
|
Maintenance Charges for Car Parking Space. |
|
18. |
|
Any expenditure incurred on personnel, administrative and any other related cost of the
custom/excise staff posted at SEZ operations. |
|
B. |
|
Cost of exclusive services, if any, provided to the occupant shall be extra. |
|
C. |
|
Service Tax, as applicable, shall be additional. |
38
ANNEXURE-VII
CAR PARKING SPACES EARMARKED FOR USE BY THE LESSEE
Number of car parking spaces earmarked in the basement surface/mechanical car/two wheeler parking
spaces for use by THE LESSEE
Seventy (70) Numbers
39
ANNEXURE VIII
TENTATIVE SPECIFICATIONS FOR BLOCK 10, DLF IT PARK @ CHENNAI
|
|
|
STRUCTURE |
|
RCC framed structure |
Finishes |
|
|
|
|
|
External Façade
|
|
Combination of Clear Float Glass and/or
Reflective floats glass with Granite / Metal
Cladding / Exterior paint / any other. |
|
|
|
Atrium, Lift Lobbies
Floors & Walls.
|
|
Combination of Indian marbles and / or granites. |
|
|
|
Main staircase(s) /Fire Escape staircase(s)
|
|
Terrazzo / Kota Stone / Good concrete. |
|
|
|
Elevators
|
|
High Speed Passenger Elevators.
Service Elevator |
|
|
|
Parking
|
|
Surface/Basements/Mechanical |
|
|
|
Amenities
|
|
Centrally Air Conditioned Building Provision
for office area Air Conditioning provided upto
AHU on each floor. The internal distribution
system of Air Conditioning shall be sole
responsibility of the tenant. |
|
|
|
Power Back up
|
|
100% power back-up including power back up for AC
system also. |
|
|
|
Fire Fighting
|
|
Sprinkler and fire detection system will be
provided in the basement area and common area
only as per NBC. For fire fighting & sprinkler
services in Office area, provisions will be made
upto service shaft on each floor. |
|
|
|
Wash room
|
|
Gents / Ladies Toilet on each floor as per
statutory norms, CI/GI piping will be provided,
but no CP fittings, Fixtures Wall / Floor
finishes. Door & shutters will be provided. |
|
|
|
Electricity/Telephone
|
|
Provision on each floor up to the shaft.
Connections have to be arranged by respective
owners/users. No Electric conduits or wiring
shall be provided in the slab. |
NOTE:
a) |
|
Materials specially the imported ones are subject to availability as per prevalent
policies of Govt. of India. |
|
b) |
|
Wherever larger floor heights are provided due to architectural reasons, from the
viewpoint of air conditioning load, the height of false ceiling to be done by the
Occupants shall not exceed 3 mtrs. from the finished floor level. |
|
c) |
|
The above-mentioned specifications are for common area only. The office area will be
in BARE SHELL condition only i.e. cement flooring, no plaster on concrete columns, walls
or ceiling except on brick walls wherever provided. All fittings, A.C. Ducts, Electrical
distribution and Fire Fighting etc. shall be the sole responsibility of the Occupants. |
|
d) |
|
Plumbing provision for extra toilets may be provided at one / two different locations |
|
e) |
|
The above specifications are tentative and are subject to change at the sole
discretion of THE LESSOR. |
40
ANNEXURE IX
THE LESSEES RESPONSIBILITY DURING ADDITIONAL INTERIOR FITOUTS WORK, ADDITIONS/ MODIFICATIONS/
ALTERATIONS OF INTERIOR WORKS (REFERRED HEREINAFTER AS INTERIOR WORKS) AND DURING THE LEASE TENURE/
LEASE RENEWAL AND DURING OPERATIONS
THE LESSOR has provided the fire detection systems as elaborated in Part B. These systems are as
per NBC norm.
A |
|
THE LESSEE will be responsible to ensure the following elaborated under different sub heads: |
|
(I) |
|
FIRE DETECTION & FIRE FIGHTING |
|
1. |
|
The existing sprinkler systems provided is not to be isolated or closed at any point of time
during interior works. |
|
(a) |
|
For providing sprinklers below false ceiling a separate network of sprinklers to be
installed. |
|
|
(b) |
|
Before starting the interior/fitout works, THE LESSEE will also check for themselves
that the sprinkler systems in working condition. . |
|
|
(c) |
|
Upon completion of False Ceiling, the sprinkler below false ceiling is to be charged.
Only upon charging the sprinklers below false ceiling THE LESSEE can do other interior
works and can bring in the carpets / furniture / modular workstations/ chairs / wood for
partitions etc. into the premises for installation. |
2. |
|
Fire detection, alarm systems and fire fighting systems must not be closed or isolated during
the period when interior works are carried out or during the lease period. |
|
2(a) |
|
As and when there is Puja/ Havan in THE LESSEEs Premises the Building Manager to take
proper action for alarm system so that other occupants are not disturbed. THE LESSEE shall
send prior notice for the Puja/ Havan including the essential details like time, date and the
venue to the Building Manager. |
|
3. |
|
Before start of Interior works THE LESSEE to ensure 4 nos. Fire Extinguishers, 4 Nos. Sand
buckets & 4 nos. Water buckets are placed at different locations on each floor of the premises
when THE LESSEE is starting the interiors. |
|
4. |
|
Before doing any welding works, THE LESSEE to obtain hot works permit and ensure that the
site is clear, no paper/wood pieces/or any other combustible material is around and adequate
standby fire-fighting mechanism in place, which includes at least 2 nos of fire extinguishers,
1 nos of sand buckets, 1 nos of water bucket etc are in place. Once the welding is completed,
the site to be re-inspected for any welding spark. |
41
5. |
|
No gas of any kind to be used for welding purposes. Only arc/electrical welding to be used. |
|
6. |
|
Zonal fire detection panels are provided on all floors. THE LESSEE to ensure that at any
point of time there would be some smoke detectors spread over the Said Premises operational
and connected to the Zonal panel. |
|
7. |
|
During interior works, THE LESSEE to ensure proper signages and fire escape routes are
prominently displayed inside their premises. |
|
8. |
|
Security Guards professionally trained in fire fighting systems to be deployed on each floor
during all shifts round the clock. They should be capable of handling the fire-fighting
equipments provided on the floors such as fire hydrants etc. |
|
9. |
|
The entire building is a no smoking zone. THE LESSEE to ensure that even during interior
works no person smokes inside the building. Match Boxes & Cigarette Lighters are not allowed
at site in the building. |
|
10. |
|
No items of any nature to be stored in Electrical Control / Panel Room. A stray electrical
spark may result in such items catching fire; moreover, presence of such items may impede
access to Control Panel in times of emergency. |
|
11. |
|
THE LESSEE to refrain from use of cooking gas in their pantries / kitchens. |
|
12. |
|
THE LESSEEs Security Personnel should not remain inside the offices after they have been
closed for the day. Unauthorised smoking by such staff can also contribute to major fire.
After closing hours, your Security/Guard be stationed outside the office (and not within), and
the interiors of the offices can be monitored by then over closed circuit video cameras. |
|
(II) |
|
ELECTRICAL & MECHANICAL |
|
13. |
|
For the operational usage THE LESSOR has provided the electrical tap-off in electrical room
alongwith sub-meters installed for supply of power from grid/supplying agency and back-up
power. THE LESSEE to tap-off electricity through proper distribution panel / board properly
earthed. The distribution of electricity inside the premises during the interior works shall
be responsibility of THE LESSEE. |
|
14. |
|
All electrical installation shall be carried by authorised licensed contractor and client
shall submit installation test certificate issued by same contractor and certificate of
verification of these installation by a reputed electrical consultant. |
|
15. |
|
During interior works Electrical supply for fitout to be given through portable DG/Building
DG (if installed). In case power for fitouts is provided through temporary portable DG
installed outside, THE LESSEE will have to take the tapping though a cable of suitable rating
from outside the building. Lessee to take the electricity in a proper panel/fitted with MCB & ELCB with proper earthing. Cable of
proper rating to be used as per load. No loose connection & joints in wires will be
allowed. During interior works while using drilling/hammering machine or any other
electrical equipment, THE LESSEE shall ensure that proper 3 pin plugs are used. No over
loading of socket will be allowed. |
42
16. |
|
All outgoing feeders single phase & 3 phase in Panels & DBs outlets shall be suitable of
individual equipment rating and out going feeders must have a protection arrangement so that
it should trip in the event of overload, short circuit & earth fault. |
|
17. |
|
All material to be of IS Standard & from reputed manufacturer. No sub standard material to
be used. |
|
18. |
|
No aluminum cable to be used. Only copper cables of ISI make to be used. |
|
19. |
|
Under no circumstances during interiors / operations should the safety system in the circuit
/ MCB / ELCB be bypassed. THE LESSOR to ensure that this is adhered to under all
circumstances. |
|
20. |
|
Only CFL & tubes with electronics chokes to be used. No Aluminum / Copper chokes to be used. |
|
21. |
|
Compressors of Split AC/ Precision AC shall be serviced regularly to avoid overheating /
jamming of compressor / fan motor. Stabilizer sockets to be checked regularly for heating. |
|
22. |
|
Supply from one socket to be used for one source only and 3 wire cable to be used rather than
3 different cables. No overloading of sockets. |
|
23. |
|
Balancing of load should be proper in all 3 phases. |
|
24. |
|
Coffee machine / water cooler/ oven and any other Electrical appliances should be properly
earthed and to be used with a proper rating of cable through ELCB. |
|
25. |
|
For power output 15 amp plug; for lighting 5 amp plug and for AC industrial sockets to be
used. |
|
26. |
|
Small step down transformer on false ceiling for lighting to be properly secured. |
|
27. |
|
No PVC pipes to be used for Electrical wiring. |
|
28. |
|
Electrical panel wiring to be properly dressed and the gap between the phases to be proper. |
|
29. |
|
CT provided in the electrical panel should be of proper size and should have a proper gap
between the space and CT to be checked for any heating/ cracking. |
43
30. |
|
One circuit should not have more than eight light point or two power points. |
|
31. |
|
For neon signages transformer should be placed outside safe place or LED signages to be used. |
|
32. |
|
THE LESSEE to ensure that the electro-mechanical systems installed in the Said Premises is
properly maintained during their interior works and at the time of operations. THE LESSEE to
also ensure that no fire spreads from the premises. |
|
33. |
|
THE LESSEE to have the audit of their entire Electrical systems done on a quarterly basis by
a reputed Electrical consultant and provide a certificate certifying that all THE LESSEEs
installations including insulation resistance are in good and safe working condition and does
not have any possibility of short circuit and becoming a fire source. To be submitted to the
facility manager on quarterly basis. |
|
34. |
|
THE LESSEE to have the audit of their entire HVAC systems done on a quarterly basis by a
reputed HVAC consultant and provide a certificate certifying that all THE LESSEEs
installations are in good and safe working condition and does not have any possibility of
short circuit and becoming a fire source. To be submitted to the facility manager on quarterly
basis. |
|
(III) |
|
DRAWINGS & SPECIFICATIONS |
|
35. |
|
THE LESSEE shall ensure that the fitout works is done as per the drawings approved by THE
LESSORs architect. No deviation will be allowed. |
|
36. |
|
THE LESSEE to use fire retardant material in the design of their interior works. |
|
37. |
|
While designing of interior works, it should be kept in mind that the access to the fire
hydrants is not restricted in any way. |
|
38. |
|
For flushing of water closets only cisterns/concealed cisterns are to be used. No flushing
valves to be installed. |
|
39. |
|
THE LESSEE to install automatic gas flooding Fire Extinguishing System, FM 200 or equivalent,
in case THE LESSEE wants to remove the sprinkler system in the Server Room. The FM 200 will
not be kept on manual mode under any circumstances. |
|
(IV) |
|
WORK PROCEDURE |
|
40. |
|
THE LESSEE shall ensure that no structural damage takes place. |
|
41. |
|
Every day, on completion of work, THE LESSEE shall ensure that the site is cleaned all
combustible & non-combustible scrap including any wood/paper/lose paint /any other
material/scrap is remove from the premises. |
44
42. |
|
THE LESSEE shall ensure that the malba/scrap is disposed out of site every day. |
|
43. |
|
THE LESSEE shall ensure that the stair cases are not blocked with interior fitout material. |
|
44. |
|
No material shall be stocked in the lift lobby area. |
|
45. |
|
THE LESSEE shall not store paint and other combustible material at Demised Premises. The
material may be brought onto the floor for interior finishing as and when it is required. |
|
46. |
|
No storage of any material / records in basement, to enable free movement. However, for a
limited period of 10 days during interior works THE LESSEE with the permission of the facility
manager can use this earmarked car/two wheeler parking space as temporary storage for
fixture/furniture which is in the process of being installed. The same must be barricaded by
THE LESSEE and THE LESSEE must depute a security guard for the same. THE LESSEE must install a
Fire Fighting system such as extinguishers, sand buckets & water buckets to the satisfaction
of the facility manager for this temporary storage area. This furniture/fixture will be
allowed to be brought only 7 days in advance of installation. The storage area must be cleared
by THE LESSEE immediately after shifting the material in their premises. In case the
interiors are getting delayed beyond the targeted date, THE LESSEE will clear the temporary
store immediately and shift all material in their premises. When the material is shifted on
the floor the packing / covering to be removed the same day and all packing / covering
material to be shifted out of the premises and the building on the same day. |
|
47. |
|
During normal office hours, no noisy interior works such as drilling, hammering, cutting,
chisilling etc is to be carried out by THE LESSEE. The same can be done after normal office
hours. However, works other than the above can be carried on which cause no disturbance to the
occupied floors. |
|
(V) |
|
OTHER REQUIREMENTS |
|
48. |
|
No Parking of CNG / LPG powered cars in basements as the chances of occurrence of fire /
explosion in such vehicles are very high. |
|
|
|
However, Original Manufacturer company-fitted CNG / LPG vehicles will be allowed in car
parking spaces designated by THE LESSOR. |
|
49. |
|
Working Norms for Interior Works |
|
(a) |
|
In New Building where no client is operational the interior works can be done on 24
hrs. basis. |
|
|
(b) |
|
In a multi-tenanted building as soon as any client completes their interior works and
becomes operational; no noisy works to be done during office hours. |
|
|
(c) |
|
Noisy works such as drilling, hammering, cutting, chiseling etc. to be carrying out
by THE LESSEE after normal office hours. |
45
50. |
|
That before any machinery, equipment, safe or furniture, etc. is moved into or out of the
Demised Premises, due approval in writing must be taken by THE LESSEE from the Building
Manager or other authorized personnel appointed by THE LESSOR, in the absence of which the
movement thereof will not be permitted by THE LESSOR, provided, however, such movement will be
allowed during normal business hours only. |
|
51. |
|
Lifts/ elevators/ escalators of reputed makes have been provided in the said Building/ Building
Complex. |
THE LESSEE should educate its employees, visitors and customers with regard to the DOs and DONTs
of the safe usage of these items. These are self operating lifts/ elevators/ escalators. Dos and
Donts as recommended by the suppliers are as displayed therein.
The maintenance of these items is done by giving AMCs to suppliers/ third parties.
In the event of any mishap occurring, THE LESSOR or its employees shall not be held responsible for
any consequences arising from usage of these items.
B |
|
The following fire-detection and alarm system are provided as per NBC norms inside the
premises: |
|
|
|
Fire Detection & Alarm System: |
|
1. |
|
Main control / Alarm panel located in security room connected with the
floor-wise zonal panel located near the staircase. |
|
|
2. |
|
The Smoke / Heat Detectors installed by the floor occupant are connected to
the zonal panels located on the floors. |
|
|
3. |
|
The main panel has inbuilt zone-wise fire detector and automatic alarm on all
floors, through an amplifier. |
|
|
4. |
|
All AHUs and other ventilation / pressurization systems are operationally
hooked-up with fire alarm / detection system. |
|
|
Fire Fighting System |
|
|
|
The following fire fighting systems are provided along with: |
|
|
|
Fire Pumps (Hydrants & sprinkler) |
|
|
|
|
Jockey pumps |
|
|
|
|
Diesel Driven engine pump |
|
|
|
|
Fire Hydrants |
|
|
|
|
Hose reels |
|
|
|
|
Fire extinguishers in common areas |
|
|
|
|
Sprinkler systems |
|
|
|
|
Public address and Alarm System |
|
|
|
|
Automatic / manual Fire Alarm system |
The Fire Hydrant systems comprises of internal fire hydrant system available on all the floors and
the external hydrant system around the building.
Sprinkler system is provided in basement, Lift lobby and service area and office areas as per NBC
norms.
46
ANNEXURE X (a)
Charges for Usage of Power in the Demised Premises
f) |
|
Usage of power during interior fitouts: |
|
i) |
|
To the extent grid power is available and used To be charged as per grid rates |
|
|
ii) |
|
For supply of power from back up sources To be charged at Cost + 20% |
|
|
iii) |
|
When power taken from Utilities company is used To be charged at Cost + 20% |
g) |
|
Usage of power during lease tenure |
|
i) |
|
If grid power is available and used To be charged as per grid rates |
|
|
ii) |
|
For supply of power from back up sources To be charged at Cost + 20% |
|
|
iii) |
|
When power taken from Utilities company is used To be charged at Cost + 20% |
For power used for common areas from any source, along with other expenditure like security,
housekeeping etc, the total cost of above is charged in the overall maintenance charge at Cost +
20%.
47
ANNEXURE X (b)
MAINTENANCE CHARGES
|
|
The maintenance charges for Demised Premises shall be calculated at actual cost + 20%
payable from the Lease Commencement Date. |
|
|
|
The estimated maintenance charges as on 1.4.2009, subject to increase in prices of diesel,
gas and petroleum products, electricity rates, taxes, wages and salaries during the lease
tenure/ renewed lease tenure are as below: |
|
|
|
For normal office hours (8 am to 8 pm on Weekdays and 8 am to 2 pm on Saturdays except
Sundays, Public and National Holidays): Rs 12.50 psf per month |
|
|
|
For 24*7 operations (except National Holidays) is Rs 25/- psf per month |
|
|
|
For working on National Holidays: Rs 0.15/- per sq. ft. per hour on the super built up area
of the full floor even if the area of Demised Premises is less than the full floor area or
per hour for the Demised Premises to be intimated by the Building Manager when required. |
|
Note: |
|
In the event the building is already operational and THE LESSEE is carrying out the fit out
works but does not utilize the central air conditioning for the Demised Premises during the
fitout period; maintenance will be charged at 50% of the normal maintenance charges i.e. Rs.
5.75/- per sq.ft. per month. |
48
ANNEXURE XI
(Applicable in case THE LESSEE merges or amalgamates after the Lease Deed is signed) To be given by
transferee company
UNDERTAKING
TO,
DLF _____________________
_____________________
Ref : Lease Deed dated -_____________________
I, ......................................., the authorized representative, vide Board resolution/Power of attorney dated.......................................(Copy
enclosed), _____________________, do hereby declare that
|
1. |
|
We are fully aware with the Lease Deed dated_____________________executed between M/s
DLF_____________________ and M/s._____________________ contents thereof. |
|
|
2. |
|
We are fully aware with the terms and conditions of the abovementioned Lease Deed. We
are aware that as per the terms and conditions of the aforementioned Lease Deed, in case
of merger/consolidation or amalgamation of the Lessee with any other entity, a fresh Lease
Deed shall be executed between the Lessor and the other entity as provided in clause __- of
the Annexure I of the abovesaid Lease Deed. |
|
|
3. |
|
We undertake that as per the provisions of the Lease Deed we shall execute a fresh
lease deed on same terms and conditions within 30 days of passing of the order by the
Court approving the scheme of merger. |
|
|
4. |
|
We are aware that we will step into the shoes of _____________________ and that our
liability to make payments of rental and other charges as per the Lease Deed shall
commence from the date of passing of the final order approving the merger. Till then the
payments of rent and other charges payable under the Lease Deed shall be borne and paid
regularly by M/s._____________________. |
|
|
5. |
|
We unequivocally agree, confirm and acknowledge to the Lessor that we shall be
responsible for enforcement/compliance of all the terms and conditions of the Lease Deed
and that we bind ourselves with the terms and conditions of the aforementioned Lease Deed
and we shall also be liable for breach/non-compliance of the terms and conditions as per
the Lease Deed dated_____________________. |
_____________________
(Authorised Signatory)
_____________________
Confirmed by:
(_____________________)
THE LESSEE
49
ANNEXURE XII
ELECTRONIC CLEARING SYSTEM ACTIVATION FORM
|
|
|
|
|
1 |
|
Name of the Vendor : |
|
DLF Assets Private Limited |
2 |
|
Contact person : |
|
R. Ramgopal |
3 |
|
Designation : |
|
Senior Manager Accounts |
4 |
|
Address : |
|
Upper Basement, Block 1B,
DLF IT Park @ Chennai,
1/124 Shivaji Gardens, Moonlight
Stop, Nandambakkam Post,
Manapakkam,
Mount Poonamallee Road,
Chennai 600 089
|
5 |
|
Mobile No : |
|
+91 9962003099 |
6 |
|
Contact No : |
|
+91 - 44 - 45497601 |
7 |
|
Email ID : |
|
r-ramgopal@dlf.in
|
8 |
|
Fax : |
|
+91 - 44 - 42669802 |
9 |
|
Bank Name : |
|
CITI BANK |
10 |
|
Bank Address : |
|
CONNAUGHT PLACE, NEW DELHI |
11 |
|
Account No. : |
|
0028681224 |
12 |
|
Permanent Account Number |
|
AACCD4923A |
13 |
|
Tax Account Number |
|
DELD09632A |
14 |
|
NEFT Code : |
|
|
15 |
|
RTGS Code : |
|
IFSC: CITI0000002 |
16 |
|
Swift Code * : |
|
Not Applicable |
|
|
THE LESSEE to check with concerned bank for NEFT / RTGS / SWIFT Codes. |
|
|
|
Swift Code is required in case THE LESSEE has an account with HSBC bank. |
|
|
|
Bill-wise details against NEFT/RTGS payments by mail. |
50
Ex-4.8
Exhibit 4.8
[English translation of the executed Spanish lease agreement]
LEASE ENTERED INTO BETWEEN
BCR REAL ESTATE INVESTMENT FUND AND WNS BPO SERVICES CORPORATION COSTA RICA
ALVARO
CAMACHO DE LA O, major, divorced, BA in Economics, a resident of Pozos Santa Ana, bearer of
identity card number 447-457 in his capacity as manager with powers
of attorney without it limiting of
sum of the company , BCR INVESTMENT CORPORATION, with a judicial no,of 301240900051 contained in
the Mercantile Section of Public one personality contained in the Mercantile Section of Public
Record, volume 1731, , sheet 210 in lieu
of382 seat 686quiena its time is the which in turn is the
manager and the latter, the Legal Representative of Real Estate Investment Fund called BCR REAL
ESTATE INVESTMENT FUND, with offices in the Center The Business Uruca BANCO DE COSTA RICA, San
José, this investment fund certificate of legal person number3102077408, an investment fund duly
registered with the National Registry of Securities and Intermediaries Superintendent of Securities
by order number SGV-R-hundred forty four of the ten hours of September eleventh, two thousand,
hereinafter and collectively known as the owner, or real estate funds, or the Lease holder
and
SIBAJA ADRIAN SAENZ, who is a major, married his first wife, Business Manager, a resident of Santa
Ana, bearer of identity card number 1-913-786 in his capacity of attorney limited to the sum of
twenty thousand dollars of the United States of America, WNS BPO SERVICES CORPORATION COSTA RICA, S.A., a
company duly registered and operating in accordance with the laws of the Republic of Costa Rica,
bearer of identification number 301-55000-285 henceforth and for all purposes, known as lessee.
WHEREAS:
FIRST
The lessor owns the property, the property, or farms, which are described as follows:
1.1 Property is located in the Third District, Wells, of the Ninth Region, Santa Ana, in the
province of San Jose, BUSINESS PARK CONDOMINIUM STAGE FOUR GENERAL FORUM, THIRD STAGE OF
DEVELOPMENT, Farm Affiliates, LOCAL OFFICES: FF1-B2, FF2 -B2-B2 FF3, FF4-B2-B2 FF5, FF6-B2,-B3 FF1,
FF2-B3, FF3-B3-B3 FF4, FF5 and FF6-B3-B3, which are located in the second and third floor of
Building H, farms identified in the Public Registry of Property with the real folio number
25497F-000, 25498F-000, 25499F-000, 25500F-000, 25501F-000, 25502F-000, 39206F-000, 39207F
-000,-000 39208F, 39209F-000, 339210F-000 and 39211F-000.
1.2 For all purposes, the parties hereby indicate that the property has a total area of 2,339.64
m2 (two thousand three hundred thirty-nine meters with sixty-four square decimeters) which are
distributed at 2,016.12 m2 (two thousand and sixteen meters with twelve square decimeters), area
deprivation, but an area of three hundred twenty-three meters with fifty-two square decimetres
(323.52m2) that corresponds to area of corridors which, for all corresponding legal effects is
considered the Leased Area which the Lessee acknowledges and accepts.
.1 Property is located in the Third District, Wells, of the Ninth Region, Santa Ana, in the
province of San Jose, BUSINESS PARK CONDOMINIUM STAGE FOUR GENERAL FORUM, THIRD STAGE OF
DEVELOPMENT, Farm Affiliates, LOCAL OFFICES: FF1-B2, FF2 -B2-B2 FF3, FF4-B2-B2 FF5, FF6-B2,-B3 FF1,
FF2-B3, FF3-B3-B3 FF4, FF5 and FF6-B3-B3, which are located in the second and third floor of
Building H, farms identified in the Public Registry of Property with the real folio number
25497F-000, 25498F-000, 25499F-000, 25500F-000, 25501F-000, 25502F-000, 39206F-000, 39207F
-000,-000 39208F, 39209F-000, 339210F-000 and 39211F-000.
1.2 For all purposes, the parties hereby indicate that the property has a total area of 2,339.64
m2 (two thousand three hundred thirty-nine meters with sixty-four square decimeters) which are
distributed at 2,016.12 m2 (two thousand and sixteen meters with twelve square decimeters), area
deprivation, but an area of three hundred twenty-three meters with fifty-two square decimetres
(323.52m2) that corresponds to area of corridors which, for all corresponding legal effects is
considered the Leased Area which the Lessee acknowledges and accepts.
In this event, Tenant shall receive from the Owner, the property described above, finished,
suitable for occupancy, use and enjoyment.
All sufficient authority for this action, we agreed to sign this LEASE FOR LOCAL OFFICES, onwards
and for all purposes of this Agreement called the Contract, which is governed by the applicable
Costa Rican law and by the following terms and conditions that the parties approved by common
consent:
CLAUSE
1. INCOME:
1.1 RENT, RENT or LEASE FEE means the payment of the sum of $ 37,434.24 (thirty-seven
thousand four hundred thirty-four U.S. dollars twenty-four cents) to be the result of multiplying
the area of two thousand three hundred thirty-nine meters with sixty-four square decimeters
(2339.64 m2) for a square meter price of $ 16.00-(exact sixteen U.S. dollars), legal tender of
the United States of America. The rent is payable monthly in advance during the first seven days of
each months rent in the Administrative Office of the Owner located at the address set out in
section 26 of this AGREEMENT or by deposit in the account number 001 BCR 3021-0 on behalf of Real
Estate Investment Fund with the Bank of Costa Rica. The rent for the first month of the contract
will be paid by the Lessee to the Owner against the signing of this contract. For his part, for the
Security Deposit will be paid by the Lessee to the Owner no later than April 15, 2011.
1.2 The Tenant hereby expressly agrees to pay to the Owner, and shall do so throughout the term of
the Lease and without reduction or deduction, rent and any additional payment to be established in
this AGREEMENT or by law 7527.
The rent shall be increased by 3% (three percent) per annum by the parties at the end of each year
of the lease, after the third year of the lease to begin on the Commencement Date and so on every
day 1 of May the years 2013, 2014 and 2015, as shown in Exhibit A of this Agreement, which duly
signed by both parties is an integral part of this contract.
1.3 The RENT, along with any adjustments made to it, shall be due and payable in consecutive
monthly payments, payable in advance during the first seven days of each months rent during the
term of this AGREEMENT and any extension or renewal back of it. Tenant hereby expressly agrees to
pay all these sums, in advance, without collection management, to the Owner.
1.4 The Lessee shall pay such rent to the Owner and the agreed adjustments in its administrative
offices at the address indicated here or at any other address previously provided by the Owner in
writing.
1.5 If the Owner decides not to manage the termination of this Agreement or fails to initiate the
eviction for nonpayment of rent amount on the date agreed in this
contract, all lease payments, that
have not been done for the seven days from the date on which they had to be made, will be subject
to a default interest rate of around fifteen per cent per annum.
1.6 The Tenant hereby agrees to pay the rent in full, total and without any deduction, so the owner
always receives the full amount that corresponds under this AGREEMENT.
1.7 The
Tenant may pay the RENT option in colones (local currency of Costa Rica) at the rate of sale
established by the Banco de Costa Rica, on the date the payment is verified.
1.8 The amount of rent mentioned above does not include the amount of maintenance fee of the
condominium where he office space is located and this fee must be paid in full by the Lessee, in
addition to the above stated amount will be paid by it directly to the Administrator of the
Condominium, however, the same shall be deemed for all legal purposes the case, as an integral part
of the rent payment and not be separated from it. It is understood by both parties that the
maintenance fee is currently set at the sum of two dollars and thirty-six cents (USD $ 2.36)
legal tender of the United States of America, per square meter of office. This maintenance fee is
not subject to rent increases agreed in paragraph 1.2 of this contract. This amount will be borne
by the lessee from February 1, 2011.
1.9 The possible increases or decreases the maintenance fee that may be experiencing in the future,
which will be subject to adjustment of tariffs that apply to the Condominium Manager in the
condominium STAGE FOUR BUSINESS PARK GENERAL FORUM, THIRD STAGE OF DEVELOPMENT, and have the due
approval of the assembly of Condominium.
2. STARTING DATE OF LEASE:
2.1 Commencement Date means the lease of 1 May 2011.
3. LEASE TERM:
3.1 In LEASE TERM means the period between the Commencement Date and the expiration of this
contract is sixty months (60), or five (5) years, commencing from the Commencement Date. That
period may be extended for another five years if neither party notifies the other of its desire not
to want to renew the contract with at least one hundred eighty calendar days prior to the maturity
date at the address specified in contractual this contract unless the Lessee the Owner communicate
their desire not to renew the contract within the time aforesaid. The Owner agrees to give the
tenant the right of first refusal to rent office space in the same terms and conditions under which
the Owner provide that property to a third party in good faith. In such case, Lessee shall have a
period of fifteen calendar days from the date on which the Owner has notified the new terms and
conditions of the lease, to decide
whether to rent the property to the expiration of the contract. Failure to respond within fifteen
days before that will be considered a negative and therefore the owner is free to offer the
Property Office to third parties.
3.2 This lease will be valid during the period commencing on the Commencement Date, and will
continue until the expiration of the lease term, unless sooner terminated or settled in advance, or
extended under any terms, stipulations or conditions set in this AGREEMENT.
3.3 If the Tenant exercises the right to unilateral early termination set out in Article 72 of Law
7527, shall apply the penalties provided for in clause 18 of this contract.
3.4 The Tenant hereby agrees to take possession of the Property after the Commencement Date, either
when it is actually put to it by the Owner, and provided that taking of possession has been
properly coordinated and accepted by the Lessee.
4. THE PURPOSE OF LEASE:
4.1 The Owner gives Tenant leased property, on the terms and conditions outlined in this contract.
4.2 The Property Office is to really just, and it has provided all necessary to obtain public
services, whose installation will be paid by Tenant.
5. LOCAL DELIVERY AND STATE OFFICE:
5.1 The Owner delivered to Tenant at the Commencement Date the Property Office, and the latter
states receive it and accept it really just, suitable for occupancy, use and enjoyment.
6. THE FUTURE OF REAL ESTATE:
6.1 The Lessee shall use and occupy the property exclusively for the following purposes and shall
not give any other destination, including:
6.2 To establish and operate them LESSEE Administrative Offices.
6.3 In addition to the limitations on use set forth in Act 7527, and outlined above, the Lessee
shall not give the Real estate any other purpose than to serve as administrative offices, or for
Marketing and Sales of its products and services, all of this as widely understood, nor may another
use that may increase to the Owner, the cost of insurance policies on it, without the prior written
consent. You must comply with all local health regulations and established for that purpose.
6.4 The fate of the property, may not be altered without the express written consent of the Owner,
who reserves the right to grant or withhold such approval, without having to explain the motives or
reasons that justify such a decision.
7 MAKE IMPROVEMENTS BY TENANT:
7.1. All the improvements now or in the future, be laid or made by the tenants in the Property
Office, will be at the expense and cost of this and must have prior written authorization of the
owner who may not refuse to grant as unjustified and unreasonable. The duration of the construction
or installation of these improvements, the owner has the right to inspect the progress of the work
and demand a halt to verify if the same does not conform to the terms of approval. If the owner
fails to provide LESSEE their agreement or refusal to the proposed improvements within a period of
fifteen calendar days from the date of receipt of the request for formal approval in writing by the
tenant, those improvements have been approved .
7.2. LESSEE hereby understand and accept that each and every one of the improvements and changes to
the Real Property which are created in the future, will benefit from it, and become the property of
the owner to the termination of this contract at no cost for the owner, except by equipment or
furniture owned by Tenant or any modifications or improvements made by LESSEE that can be moved or
removed without causing damage, deterioration or impairment to the Property Office. In any case,
improvements and modifications are considered attached to the property, which may not be removed by
the tenant and not exhaustive and under a broad concept, the following: i) air-conditioning system, ii) Structure and Divisions, iii )
Sanitation, iv) Electrical and Lighting, v) Cabling, vi) Security and Emergency Equipment.
7.3. Notwithstanding the foregoing, the owner may require the tenant to remove, at your cost and
risk, each and every one of the apparatus, equipment, partitions and other improvements installed
on the property and to return them to the final approval condition by the parties. If required and
the landlord and tenant carry out no such improvements, the owner may do on behalf of LESSEE and
shall have to pay the Owner, at his request, the cost of restoring the Property Office to the last
condition adopted by the parties. It is up to the owner in accordance with Article 34 of the 7527
Act make necessary repairs.
8. REPAIRS AND ALTERATIONS BY TENANT:
8.1 In terms of maintenance and repair of office premises, the parties comply with the provisions
of Chapters V and VI of the 7527 Act as in force on the date hereof.
8.2 The Tenant hereby agrees not to make or permit alterations to the estate or place signs visible
from outside of it, without obtaining prior written consent of the Owner.
8.3 The LESSEE shall provide and install at your own expense charged to him, both the sign adjacent
to the front door of the office as well as the sign outside the building, the latter to install.
All letters and numerals used therein shall be in standard form approved for offices, and no other
will be used or allowed in the offices, without the prior written consent of the Owner as indicated
in paragraph 8.2 above. The Lessee shall approve the design and content as well as budgets.
9. PUBLIC SERVICES:
9.1 The Local Office must have all the facilities required for the provision of potable water
services, telephone and electricity. Tenant shall be responsible for prompt payment to the relevant
institutions of public services provided, such as electricity, water and telephone services
including but not limited so all charges, fines, connection, installation and security deposits,
which are and will be the exclusive Tenants responsibility. Tenant may not install electrical
equipment in the property that exceed the design capacity of it. The Owner will assist in whatever
is necessary with the lessee, so that the Lessee may have ready access to utilities and other
services specified in this clause.
10. OTHER SERVICES:
10.1 The Owner hereby agrees to ensure that the Lessee will provide services that are financed by
the condominium maintenance fee. Also ensure that the tenant has the following infrastructure to
support the aforementioned public services: An air conditioner (hydronym type system) for the
leased area. The payment for the regular review of maintenance to air conditioning equipment borne
by the Lessee, and the payment of electricity consumption required to operate the equipment.
10.2 The failure to provide the service indicated, either in whole or in part, whenever the facts
which are beyond the direct control of the Owner, does not imply liability of the Owner or a
reduction in the amount of income.
11. NOTIFICATION OF FAILURES AND ACCIDENTS TO THE OWNER:
11.1 The Lessee is obliged to notify the owners of those failures or accidents on the property. The
notification of such failures or accidents must be made by the Tenant within twenty-four hours
after the event.
11.2 The communication to the Owner will not take on more responsibilities than those specifically
provided for in this contract office, or that are required by law.
12. PAYMENT OF TAXES AND MUNICIPAL LICENSES:
12.1 The cancellation of municipal taxes and property on the leased property, shall be borne by the
Owner.
12.2 The cancellation of municipal taxes and patents that are required as part of commercial
business, or activity that develops Lessee will be in charge.
13. LAWS AND REGULATIONS:
13.1 In all matters not provided in this Agreement, the parties refer to their application and
interpretation of the rules contained in the Condominium Rules Forum Fourth Stage Business Park
General Development Stage, and 7527 ACT Act General Urban and Suburban Lease number 7527 of July
10, 1995 and its possible reform.
14. RIGHT OF INSPECTION OF PROPERTY:
14.1 The Owner, servants, officers or identified and authorized representatives may enter the day
and business hours to any part of the land, to inspect its condition, occupancy or use, show the
property to potential buyers or repairs, alterations or additions, in which case they must apply
for prior authorization of Tenant, with at least two days in advance, except in cases of emergency
that required immediate entry.
14.2 Both the monthly inspection and emergency inspection is conducted in the presence of Lessee or
any servant, officer or agent thereof, except in cases of emergency that is life threatening or
property of others, and or the Tenant, nor any representative of Lessee is available. The
inspections shall comply with the provisions of Article 51 of the General Law of Urban and Suburban
Leases, and in these the Owner shall endeavor to avoid affecting the operation of Tenant.
15. LIMITATIONS OF THE PARTIES TO LAW OF THE ASSIGNMENT AND SUBLETTING:
15.1 Tenant shall not change the use of the property without prior approval of the Owner, not in
the building can perform any activity that causes noise, odor or nuisance to the neighbors also
agree that activities in the Real Property may not produce fumes that can adversely affect the
environment or human health, nor use the premises for the storage of substances, materials or
flammable or hazardous chemicals.
15.2 The authority to assign or sublet to send the Article 78 of the 7527 Act should be applied to
the Owner with at least thirty days in advance, such approval may not be retained by the Owner of
an unjustified and unreasonable. Notwithstanding the foregoing, the owner may transfer all or part
of this contract at any time without prior authorization from the Lessor.
16. INSURANCE:
16.1 The Owner shall keep the property insured against all risks, coverage against earthquake,
earthquake, fire and other harm caused by nature to protect the latter and all related civil works.
16.2 Lessee shall be responsible, to ensure the furniture and belongings, as the owner is not
responsible for damage, loss, theft, or theft that occurs to the furniture and other belongings of
the Lessee, as a result of an accident occurring on or relates to the property.
16.3 Both parties must have a liability insurance policy for homeowners and renters and one for the
guards, if hired private security guards, which in the case of the Owner may be acquired by the
security company hired by the Owner to provide services BUSINESS PARK STAGE FOUR GENERAL FORUM,
THIRD STAGE OF DEVELOPMENT, covering civil liability attributable. The Owner shall be covered in
the immediate area and related to the leased area, and the Lessee shall have coverage to cover
liability attributable within the leased area. The amount of insurance coverage liability
attributable not be less than One hundred thousand dollars ($ 100,000.00), lawful money of the
United States of America.
17. RISK:
17.1 Tenant hereby expressly disclaims any responsibility for, or as a result of any injury,
fatality, injury or loss that occurs within the purpose and the immediacy of office space, so that
from and relieved of all responsibility to the Owner by or as a result of any injury, fatality,
injury or loss occur.
18. CASES OF TERMINATION, BREACH, REMEDIES AND PENALTY CLAUSE:
18.1Además as specified by the Act, the occurrence of any or several of the reasons listed below as
Cases of Termination and Default, shall constitute grounds for termination of this AGREEMENT:
18.1.1 Non-payment by Tenant of any sums of money to which it is obligated under the terms and
conditions of this AGREEMENT on the date on which it is payable.
18.1.2 Failure to comply in whole or in part, by either party of any obligation, term or condition
under this Contract or any other agreement between the landlord and tenant, breach of which is
maintained for a period of ten calendar days after that the party has failed to receive notice of
it.
18.1.3 The rights of lease the lessee are assigned to execution of sentence or other legal process.
18.2 Before the early termination of the Real Property, Tenant acknowledge and cancel the Owner as
compensation for damages caused, the following sums:
18.2.1 An amount equivalent to one months rent having complied with the notice of three months
provided for in Article 72 of the Act, for failure to comply with the notice of three months, the
penalty shall be established in three months rent.
18.2.2 The allowances referred to in section 18.2.1 above shall be immediately paid by Tenant to
Owner no later than within five calendar days from the date of unemployment and will be considered
as final compensation to which entitled the Owner.
18.3 In accordance with Article 95 of the Law of Securities Market Regulation and Article 86 of the
General Regulation on Management Companies and Investment Funds in effect at the time of signature
of this contract, Lessee declares that it owns and agrees not acquire shares of Real Estate
Investment Fund landlord subject of this tenancy, either directly, or through any person or entity
to form an interest group, as defined in Article 108 of the rules before . Failure of this is
grounds for termination of the contract with the tenants responsibility and must pay the penalty
specified in Clause 18.2 above.
19. NO IMPLIED WAIVER:
19.1 The failure by either party to require strict compliance at any time of any of the covenants
or agreements or to exercise any option, right, power or remedy contained in this CONTRACT, will
never be considered an implied waiver of the same for the future.
19.2 Neither the payment by Tenant of an amount less than the monthly rent due under this
AGREEMENT, nor the acceptance of such payment shall be considered as anything other than a credit
to the account of the rent due.
20. SECURITY DEPOSIT:
20.1 In ensuring compliance with contract obligations, Lessee agrees to deliver a DEPOSIT to the
Owner, for the sum of $ 37,434.24 (thirty-seven thousand four hundred thirty-four U.S. dollars
twenty-four cents), currency legal tender of the United States of America, in cash. Lessee shall
deposit such sum of money not later than April 15, 2011, as described in paragraph 1.2 of the said
contract.
20.2 This Escrow comes to answer for any kind of damage attributable to the LESSEE to occur in the
real estate as well as for any other end that involves financial responsibilities borne by the
tenant and in favor of LESSOR, under this AGREEMENT. Especially, not exclusively, at the failure of
the obligations arising from entitlement to public services referred to above.
20.3 The security deposit will be retained by the owner without liability for interest and as
security for the obligations of LESSEE under this AGREEMENT.
20.4 The Owner reserves in all cases, the right to the allocation of payments, so that the
existence of the deposit or payment complaint against it do not undermine the eviction action for
lack of timely payment of Rent, nor any other legal action by the OWNER against LESSEE. LESSOR opt
to apply the deposit in whole or in part, to meet any of the matters that warrant, the Lessee is
required to refund or completed within eight calendar days immediately following the date of
receipt of the request to that effect will make the LESSOR, in such a way that the tank is always
kept above the total sum originally agreed. The drawback of non-compliance with the terms agreed
shall entitle the LESSOR to deduct the amount paid as payment of the lease fee the following month,
the amount necessary to reinstate or fill the tank up to the amount agreed upon, pending payment In
this case, the rental price for that month.
20.5 If Tenant is not in default at the termination of this Contract, the balance of the deposit,
after making appropriate deductions will be returned to Lessee by the Owner within thirty calendar
days from the date that the tenant vacates the property.
21. Force Major
21.1 Subject to the limits and scope of the 7527 Act requires, any party shall be bound by
unforeseen circumstances or force major which are beyond its control, including but not limited to
delays caused by strikes, civil disturbances, shortages of material or workmanship, war,
governmental laws, regulations or restrictions of any kind.
22. HAZARDOUS MATERIALS:
22.1 The Tenant shall not be stored inside or outside the property, or use within it, any hazardous
material, as defined this term by any governmental entity or agency or to-government, whether
national or international law, or any other toxic material corrosive, reactive or flammable. In any
event Tenant will be responsible for any damage that may arise in connection with the handling of
samples and chemicals for their part, or others within the leased area.
23. RIGHT TO SEVENTY-SIX CAR PARKING SPACES:
23.1 During the term of this contract, the lessee has the right to use 76 parking spaces for
vehicles distributed as follows: i) 26 indoor space or basement (as detailed in Annex B) and ii) 50
spaces under the condition first come, first served outside the building.
24. OTHER PROVISIONS:
24.1 This AGREEMENT and the rights and obligations of the parties under it shall be governed under
the laws applicable in the Republic of Costa Rica.
24.2 Any amendment or addendum to this Contract shall be in writing and signed by both parties.
24.3 The parties agree that this AGREEMENT does not provide a basis for the claim of the right key,
or other intangible right and that by renting this property or in the event of termination of
Tenants, LESSEE will not charge any amount for key concept of law. So from now, both parties hereby
expressly waive a potential claim for this.
25. ANNEXES:
25.1 The Annex, which is listed below and is attached to this Contract, duly signed by both parties
is an integral part thereof for all purposes:
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ANNEX |
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DESCRIPTION |
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A
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The annual rent adjustment |
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B
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Detail of Parking |
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C
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Condominium Regulations |
26. NOTICES
26.1 LESSEE shall send any notice to the OWNER at the following address, or any other place as the
owner in the future for him by writing: The Business Center Uruca Bank of Costa Rica, Sociedad
Investment Fund Management SA to the attention of Carlos Gamboa Chaves, or Mauricio Ramirez.
26.2. The owner is required to any notice to the following address, or any other place that
prompted LESSEE written in the future: the office premises leased to the attention of Mr Adrian
Sibanda Saenz.
26.3 Unless otherwise stated, any notice under this AGREEMENT shall be in writing and be submitted
with written receipt of the above addresses. It is understood that if the communication is
personally delivered, the date of receipt is the date that appears on the receipt. If the notice is
delivered by courier mail, the delivery date will be that of the receipt of the courier company,
the same applies in the case to be delivered by any other mail. If the recipient of the
communication shall refuse to receive the same, the delivery date will be that recorded in the
report that raises the notifier stating the refusal to receive the communication.
As a sign of the foregoing, the Owner and Tenant have signed this Contract of any line, in two
originals in San José, at ten am on January 18th, two thousand eleven.
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Alvaro Camacho O. |
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BCR Real Estate Investment Fund
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sd/- |
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Lessor |
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Adrian Saenz Sibaja |
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WNS BPO Services Costa Rica SA
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sd/- |
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Lessee |
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They are authentic: |
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ANNEX A
Settings 3% Annual Income
Lease
First year $ 37,434.24
Second year $ 37,434.24
Third year $ 38,557.26
Fourth Year U.S. $ 39,713.98
Fifth Year U.S. $ 40,905.40
* The amounts described above do not include the amount established for the payment of maintenance
fee of the condominium where the premises are located. This fee must be paid by the tenant in
addition to the amounts set forth herein.
ANNEX B
Parking lots.
ANNEX C
RULES AND REGULATIONS
PARK BUSINESS FORUM
These rules and regulations have been adopted by the owner to enable, in the best of their
abilities, provide, maintain, manage and operate an orderly and clean rooms, buildings, surrounding
areas and parking facilities Tenants Forum Business Park in the most economical and efficient, and
to ensure the safety of tenants, regular behavior in the park and use of rooms, buildings and
parking areas and other facilities so that it is possible to minimize the interference of others in
the proper use thereof by the LESSEE, all within reasonable parameters possible.
1. LESSEE, its officers, agents, servants and employees shall not block or obstruct any entrances,
passageways, doors, elevators, hallways or stairways of Building or parking, or place, empty or
throw any waste, garbage or material of any kind in those areas, or permit such areas to be used at
any time for anything other than that the entrance to or exit from the building.
2. Moving furniture, equipment, goods or materials within, entering or leaving the premises,
buildings or parking is restricted at the time, method and route determined by the OWNER in
coordination with the lessee, the latter assuming responsibility and risk for the transfer. Lessee
shall not move furniture, machinery, equipment, merchandise or materials within, into or out of
buildings, premises, parking without having undertaken appropriate coordination with the owner.
LESSEE shall ensure that the workers responsible for this movement take the necessary steps the
owner tells you, in order to protect the building (especially glass, carpets, ceramics, walls,
doors and elevators) from harm.
3. Tenants should ensure that the furniture and equipment that can acquire easily enter the
elevator or stairs and pass through the doors of the Premises. Large pieces should be disassembled
into parts and reassembled in the Local. THE OWNER reserves the right to reject the location or
placement of any furniture or equipment within the building does not meet the above conditions.
4. The transfer of equipment should be done with the proper equipment to do no harm to the building
and its facilities. Prohibiting the use of trucks for hauling heavy boxes, except those equipped
with rubber tires and side guards.
5. No sign, plaque, advertisement or notice is exhibited, painted or affixed by the LESSEE, its
officers, agents, servants, employees, customers, licensees, visitors or guests or any part of the
exterior or interior of the building, or anywhere Park or parking without the prior written
permission of the owner.
6. LESSEE, its officers, agents, servants or employees shall not paint or decorate the offices or
areas accessible to them, or marking, painting, cutting, nailing or screwing or in any manner
destroy any part of the building without prior consent written permission of the owner. Nor can
install any sunscreen or other type of film to the inner or outer surface of the buildings
windows.
7. LESSEE shall not install any antenna or aerial wires, radio or television, or any other type of
equipment, inside or outside the building without the prior written approval of the Owner and upon
the terms and conditions it point in each specific case.
8. Any installation that affects the floors, walls, windows, doors, ceilings, equipment and other
physical attachment of the building or parking may be made by the LESSEE without obtaining prior
written approval of the owner.
9. LESSEE, its officers, agents, servants and employees shall not install or operate any apparatus
for cooling, heating or air conditioning, or perform any mechanical operation or bring into the
building or parking areas any flammable or explosive product without prior written approval of the
owner.
10. THE OWNER will provide security services in the Park with access control and patrol the clock,
in the manner and under the right conditions for the provision of that service. THE OWNER is not
responsible for loss or theft of property, equipment, money or other items removed from the
building or parking lot, unless this incident is a result of the negligence or willful misconduct
of the owner or security personnel.
11. THE OWNER will provide two keys for each lock the doors of offices and the main entrance to the
LESSEE, and shall provide additional duplicate at the expense of TENANT to the written request for
it. LESSEE shall at all times have a skeleton key to the office. All keys must be returned to THE
OWNER after the Lease ends.
12. THE OWNER reserves the right to:
12.1. Exercise entry control for safety reasons the park after 6:00 pm, subject however to the
staff entrance fee of LESSEE under the regulations stated by the owner as well as asking people
entering the park or Building to identify themselves and establish their right to enter or leave
it.
12.2. Close access to parking areas from 6:00 pm and 8: 00 a.m. during weekdays, unless LESSEE
staff required to maintain access without restriction, and
12.3. Close all parking areas on weekends and holidays, unless LESSEE staff required to maintain
access without restriction.
13. LESSEE, its officers, agents, servants and employees shall not permit the operation or
performance of a musical instrument or other device that produces noise, as well as any device that
can be heard outside the building or parking or which may emanate electromagnetic waves affecting
the receipt or transmission of radio or television and to the building.
14. LESSEE to immediately notify the owner of all accidents or defects in plumbing, electrical
services or any other part of the accessories that have been installed in the building by the
owner.
15. Except for the deterioration resulting from normal use and wear and tear, tenants will be
responsible for any damage to the offices or the Building including carpets and floors, resulting
from rust or corrosion of file cabinets, chairs with casters, metal objects or spill any type of
substance.
16. If the Premises leased to LESSEE see pest infested, LESSEE, for its own account, you must make
your Local and pests be fumigated periodically wiped out, all to the satisfaction of the owner, for
which it must use the service of fumigation and pest extermination approved by the owner.
17. Except in the commercial space indicates that the owner, offers, requests and sales are
prohibited in any part of the park and every one of the tenants must cooperate to prevent them. In
this regard, the LESSEE shall report as soon as these activities to the administration office.
18. LESSEE, its officers, agents, employees, servants, customers, licensees, guests and visitors
will not be able to offer any business in the Building parking areas or common areas LESSEE nor
will they have the right to distribute leaflets or other advertising material on cars parked in the
parking building.
19. LESSEE is expressly prohibited, its officers, employees, agents and servers, use the building,
common areas or parking areas as housing or accommodations, or cooking or preparing food, in an
unauthorized area without the prior written consent of the owner.
20. LESSEE is expressly prohibited, its officers, employees, agents, servants, customers,
licensees, visitors or guests to keep within the parking areas, building or common areas, fish,
birds, reptiles, insects or animals, or bikes or vehicles without the prior written permission of
the owner.
21. Lessee shall not conduct business in a way that causes annoyance, or interfere with, annoy or
disturb any other tenant of the building, the park or the owners in their operation of the
building, nor allow them to be dirty or soiled the offices, common areas of the Building or the
Park or the parking areas. In addition, LESSEE shall not allow its officers, employees, agents,
servants, customers, licensees and visitors to behave in a manner that causes nuisance, or
interfere with or disturb, any other occupant of the building, the park or OWNER in its operation
of the Building or permit to be soiled or dirty offices, building common areas or parking areas.
22. THE OWNER establish appropriate mechanisms to collect regular trash and debris deposited by the
tenant in the buildings general collectors. It is the responsibility of LESSEE to perform the
cleaning and general maintenance of offices, including but not limited to, miscellaneous work,
garbage collection and transportation of it to general collectors of the building, preventive and
corrective maintenance etc.
23. LESSEE is expressly prohibited, its officers, employees, agents, servants, customers,
licensees, visitors or guests up to the roof of the building without the prior written permission
of the owner.
24. In the event that the LESSEE must dispose of crates, cartons, etc.., That does not fit within
the dustbin of office or building products, will be the responsibility of LESSEE to get rid of
them. In no case shall the LESSEE to leave such items in hallways or in any other area of the
building, the Park or the parking lot, except in their own offices to dispose of them later. THE
OWNER will be responsible for managing the waste once deposited in the general receiver of the
building.
25. THE
OWNER will be responsible for maintenance of common areas, parks and gardens of the park,
and the maintenance and repair of exterior lighting systems and general equipment located in the
common areas or those installed by it in other areas of the Park he is representing the building.
Also will be responsible for external window cleaning, exterior painting and roof maintenance,
canoes and downspouts.
26. LESSEE shall not use the name of the building for any purpose other than giving the address of
your business, or for use on letterhead, envelopes, circulars, notices, advertisements, containers
or wrapping paper, without permission previous authorization from the owner.
27. THE OWNER reserves the right to modify or remove any of the above rules or regulations within
the parameters that will allow the Condominium Act, that are reasonable and necessary in the course
of time, to improve safety, maintenance, operation , Local administration and cleaning, building
and property of THE OWNER and for the maintenance and good order therein. THE OWNER shall not be
liable to any tenant for non-compliance or violation of other tenants of any of these rules and
regulations, however it is the obligation of the OWNER to ensure that they do.
Ex-4.13
Exhibit 4.13
THIS VARIATION AGREEMENT (Variation) is made on 3 August 2009 by and between
(1) |
|
AVIVA GLOBAL SERVICES (MANAGEMENT SERVICES) PRIVATE LIMITED, a company incorporated in
Singapore (company number 200812047E) whose registered office is situated at 3 Anson Road,
#07-O1 Springleaf Tower Singapore 079909 (Customer); and |
|
(2) |
|
WNS CAPITAL INVESTMENT LIMITED a company incorporated In Mauritius whose registered office is
situated at 10 Frere Felix de Valios Street, Port Louis. Mauritius (Supplier). |
each referred to in this Variation as a Party and collectively as the Parties
WHEREAS:
The Parties entered into a Master Services Agreement dated 11th July 2008 (the
Agreement). The Parties now wish to vary the terms of the Agreement as follow
NOW IT IS THEREFORE AGREED AS FOLLOWS:
|
1. |
|
The Agreements varied in accordance as set out in Annex 1 |
|
|
2. |
|
This Variation will take effect as from 3 August 2009. |
|
|
3. |
|
All other terms and conditions of the Agreement are unaffected by the terms of this
variation and therefore remain in full force and effect |
|
|
4. |
|
The Signatures of the Parties need not appear on the same copy of his Variation so long
as each party signs at least one copy of this Variation and the copies contain the same
terms and conditions. Each counterpart shall be regarded as an original, and all the
counterparts shall together constitute one and the same instrument. This Variation shall be
effective on execution by all parties and may be validly exchanged and delivered by fax. |
IN CONSIDERATION OF THE COVENANTS AND PROMISES IN THIS VARIATION THE PARTIES AGREE AS FOLLOWS;
Agreed for and on behalf of
|
|
|
AVIVA GLOBAL SERVICES
|
|
WNS CAPITAL INVESTMENT LIMITED |
(MANAGEMENT SERVICES) PRIVATE |
|
|
LIMITED |
|
|
|
|
|
S. Turpil
|
|
J.J. Selvadurai |
Director
|
|
Director |
July 30, 2009
|
|
August 3, 2009 |
ANNEX 1:
|
A. |
|
In paragraph 4.1 of Schedule 4 of the Agreement the following shall be added as a new
paragraph |
|
|
|
|
Notwithstanding the foregoing and subject to paragraphs 4.4 to 4.7 of this Schedule the
Minimum Commitment Level shall not fall below |
|
|
|
3300 Billable FTE for the period 1st March 2010 to 31 July 2011 |
|
|
|
|
3250 Billable FTE for the period 1st August 2011 to 31 January 2012 |
|
B. |
|
Clause 1.7(C) (ii) is replaced with the following new clause 1.7(C) (ii) |
|
(ii) |
|
the Noida Agreement. provided that the term of the Noida Agreement is not
extended beyond 1st May 2010 From 1st May 2010 the number of full
time employees under the Noida Agreement shall be zero, or |
Ex-4.14
Exhibit 4.14
DATED: 24th March, 2011
WNS GLOBAL SERVICES PRIVATE LIMITED
AND
AVIVA GLOBAL SERVICES (MANAGEMENT SERVICES) PRIVATE LIMITED
AND
WNS CAPITAL INVESTMENT LIMITED
NOVATION
AND
AGREEMENT OF AMENDMENT
1
THIS AGREEMENT is made on 24th March, 2011
BETWEEN:
(1) |
|
WNS GLOBAL SERVICES PRIVATE LIMITED, a company incorporated in India (registration no.
U72200MH1996PTC100196 whose registered office is at Gate #4, Plant 10, Godrej & Boyce Complex,
Pirojshanagar, L.B.S. Marg, Vikhroli (W), Mumbai 400 079 (WNS India); |
|
(2) |
|
AVIVA GLOBAL SERVICES (MANAGEMENT SERVICES) PRIVATE LIMITED, a company incorporated in
Singapore (company number 200812047E) whose registered office is situated at 3 Anson Road,
#07-01 Springleaf Tower Singapore 079909 (Customer); and |
|
(3) |
|
WNS CAPITAL INVESTMENT LIMITED, a company incorporated in Mauritius (company number 081866)
whose registered office is situated at C/o. Multiconsult Ltd., Rogers House, 5, President John
Kennedy Street, Port Louis, Mauritius (WNS Mauritius). |
Each a Party and jointly or collectively Parties
INTRODUCTION:
(A) |
|
Customer and WNS Mauritius are parties to a Master Services Agreement (MSA)dated
11th July 2008. |
|
(B) |
|
Customer and WNS Mauritius have agreed to amend the MSA in the manner set out in this
Novation and Agreement of Amendment. |
|
(C) |
|
WNS India has agreed to accept all of the obligations of WNS Mauritius under the MSA as
amended by this Novation and Agreement of Amendment. |
|
(D) |
|
Customer has agreed to release WNS Mauritius from all of its obligations under the MSA and
consequently agreed to WNS India assuming such obligations with effect from [31st
March 2011] (the Effective Date). |
|
(E) |
|
The Parties have entered into this Novation and Agreement of Amendment on the terms set out
below. |
|
(F) |
|
The deed of Novation and Agreement of Amendment would be effective as of the Effective Date. |
THE PARTIES AGREE as follows:
1. |
|
INTERPRETATION |
|
1.1 |
|
Capitalised terms not expressly defined in this Novation and Agreement of Amendment shall,
unless otherwise specified or inconsistent with the context have the meanings ascribed to them
in the MSA. |
|
1.2 |
|
The headings in this Agreement do not affect its interpretation. |
2. |
|
NOVATION |
|
|
|
With effect from the Effective Date: |
|
2.1 |
|
WNS India shall perform WNS Mauritiuss obligations under the MSA and is bound by the terms
of the MSA in every way as if WNS India had at all times been a party to the MSA in place of
WNS Mauritius; |
|
2.2 |
|
Customer releases and discharges WNS Mauritius from further performance of the MSA and all
liabilities, claims and demands howsoever arising under the MSA, whether in contract, tort or
otherwise, and accepts the liability of WNS India under the MSA in place of the liability of
WNS Mauritius;and |
1
2.3 |
|
Customer shall perform its obligations under the MSA and be bound by the terms of the MSA in
every way as if WNS India had at all times been a party to the MSA in place of WNS Mauritius. |
|
2.4 |
|
Customer and WNS India hereby agree to amend the MSA on such terms and conditions as set out
in Annex 1. The Parties agree that WNS Mauritius shall have no privity to such amendment. |
3. |
|
AMENDMENT |
|
3.1 |
|
The MSA is varied as set out in Annex 1. WNS India and Customer hereby agree that the terms
and conditions of Annex 1 shall be binding on them for all Services rendered by WNS India to
Customer on or after the Effective Date. |
|
3.2 |
|
Supplier and Customer hereby acknowledge and agree that the execution of this Novation and
Agreement of Amendment shall have no adverse impact directly or indirectly on any rights or
other benefits of the beneficiaries under Supplier Guarantee, as provided for in Clause 41.3
of the MSA. |
4. |
|
GENERAL |
|
4.1 |
|
Interpretation |
|
(A) |
|
The Parties hereby acknowledge and agree that all references to the MSA in this
Novation and Agreement of Amendment shall mean the MSA as amended by this Novation and
Agreement of Amendment. |
4.2 |
|
Governing Law and Jurisdiction |
|
(A) |
|
This Novation and Agreement of Amendment is governed by and shall be construed
in accordance with the laws of England and Wales. Each Party submits to the exclusive
jurisdiction of the English courts for all purposes relating to this Novation and
Agreement Amendment. |
|
(A) |
|
Waiver of any right arising from a breach of this Novation and Agreement of
Amendment or of any right, power, authority, discretion or remedy arising upon default
under this Novation and Agreement of Amendment must be in writing and duly executed by
the party granting the waiver. |
|
|
(B) |
|
A failure or delay in exercise, or partial exercise, of: |
|
(a) |
|
a right arising from a breach of this Novation and Agreement of
Amendment; or: |
|
|
(b) |
|
a right, power, authority, discretion or remedy created or
arising upon default under this Novation and Agreement of Amendment; |
|
|
|
does not result in a waiver of that right, power, authority, discretion or remedy. |
|
|
(C) |
|
None of the Parties are entitled to rely on a delay in the exercise or
non-exercise of a right, power, authority, discretion, or remedy arising from a breach
of this Novation and Agreement of Amendment or on a default under this Novation and
Agreement of Amendment as constituting a waiver of that right, power, authority,
discretion or remedy. |
|
|
(D) |
|
None of the parties shall rely on any conduct of another party as a defence to
the exercise of a right, power, authority, discretion or remedy by that other party. |
|
|
(E) |
|
This clause 4.3 may not itself be waived except by writing duly executed by the
party waiving its rights under such provisions. |
2
|
(A) |
|
A variation to any term of this Novation and Agreement of Amendment must be in
writing and duly executed by the parties. |
|
(A) |
|
Each Party shall do all things and execute all further documents necessary to
give full effect to this Novation and Agreement of Amendment. |
|
(A) |
|
All other terms and conditions of the MSA are unaffected by the terms of this
Novation and Agreement of Amendment and therefore remain in full force and effect. |
|
|
(B) |
|
A person who is not a Party to this Novation and Agreement of Amendment shall
have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of
its terms but this does not affect any right or remedy of a third party which exists or
is available apart from that Act. |
|
|
(C) |
|
This Novation and Agreement of Amendment may be entered into by the parties in
any number of counterparts. Each counterpart shall, when executed and delivered, be
regarded as an original, and all the counterparts shall together constitute one and the
same instrument. This Novation and Agreement of Amendment shall not take effect until
it has been executed by all the Parties. This Novation and Agreement of Amendment may
be validly exchanged and delivered by fax or email. |
5. |
|
GOVERNING LAW |
|
5.1 |
|
This Agreement and all matters arising from or in connection with it are governed by English
law. |
6. |
|
JURISDICTION |
|
6.1 |
|
The courts of England have exclusive jurisdiction to settle any dispute arising from or in
connection with this Agreement (a Dispute). |
|
6.2 |
|
The parties agree that the courts of England are the most appropriate and convenient courts
to settle any Dispute and, accordingly, that they will not argue to the contrary. |
EXECUTED by the parties
|
|
|
|
|
Signed by |
|
) |
|
Ravi Kulkarni, Director |
for and on behalf of |
|
) |
|
|
WNS India: |
|
) |
|
Sd/- |
|
|
|
|
Signature (Location : Mauritius) |
|
|
|
|
|
Signed by |
|
) |
|
Sonia Lutchmiah, Director |
for and on behalf of |
|
) |
|
|
WNS Mauritius: |
|
) |
|
Sd/- |
|
|
|
|
Signature (Location : Mauritius) |
|
|
|
|
|
Signed by |
|
) |
|
Anupam Sahay |
for and behalf of |
|
) |
|
|
Customer: |
|
) |
|
Sd/- |
|
|
|
|
Signature |
3
ANNEX 1:
Clause 4.3 and 4.13 are replaced with the following:
4.3 |
|
Without prejudice to any other rights or remedies of Customer under this Agreement (including
pursuant to Clauses 4.1 and 4.2 above), but subject to Clause 4.4, where: |
|
(A) |
|
Customer is entitled to terminate this Agreement pursuant to any of Clauses
23.5 to 23.9 (inclusive) or 23.11; |
|
|
(B) |
|
a Regulator has notified Customer that the exercise of Customers rights under
this Clause 4.3 is necessary as a result of Suppliers breach of this Agreement
(including a breach of Clause 2.2(E)) and Customer has provided sufficient evidence of
such a notification; |
|
|
(C) |
|
a Party is claiming an Event of Force Majeure in respect of receipt of (with
respect to Customer as Claiming Party) or supply of (with respect to Supplier as
Claiming Party) a Service (or part thereof) and such Event of Force Majeure continues
for a period of ten (10) consecutive Business Days; |
|
|
(D) |
|
Customer is entitled to terminate this Agreement pursuant to Clause 23.21(A) or
Clause 23.21(B); |
|
|
(E) |
|
Customer is entitled to terminate this Agreement pursuant to Clause 23.16
(Termination on Insolvency or Similar Event); or |
|
|
(F) |
|
Supplier is in material breach of this Agreement and the breach gives rise to,
or is reasonably likely to give rise to, the activation of the Business Continuity
Plan, |
|
|
(each a Service Event), Customer may (on its behalf and/or on behalf of any Service
Recipient) forthwith at its sole discretion and on written Notice containing the information
set out in Clause 4.5 (a Step-In Notice) to Supplier elect to: |
|
(A) |
|
receive services similar to the affected Services (and Services related
thereto) from a third party or a member of Customer Group and to suspend the receipt of
the same from Supplier; and/or |
|
|
(B) |
|
appoint officers and/or employees of Customer Group and/or external consultants
and advisers who are not a BPO Supplier or employed or engaged by any BPO Supplier (the
Supervisory Team) with a view to supervise (subject to Clause 4.4) the supply of the
Services to the standards set out in this Agreement and remedying the Service Event, |
|
|
(together, the Step-In Rights). |
|
4.13 |
|
Supplier shall pay Customer the Step-In Costs within thirty (30) days of receipt of a valid invoice from Customer for such amounts. |
Notwithstanding the expiry or early termination of this Agreement, the provisions of this Clause
4.13 shall continue to apply to each Party without limit in time.
4
Use of Office Space
Clause 15.12 15.15 are replaced with the following:
15.12 |
|
AGS India provides certain support services to Customer, which interalia includes
supervision of the activities of Supplier. Supplier shall provide AGS India with reasonable
office space at the Sites within thirty (30) days from the Effective Date sufficient to
accommodate a maximum of thirty (30) AGS India Personnel on a full-time basis at no cost to
Customer to carry out the supervision activities (the Supervision Office Space). |
|
15.13 |
|
The Supervision Office Space shall: |
|
(A) |
|
Include such individual offices and meeting rooms as may be reasonably required
by AGS India; |
|
|
(B) |
|
be of at least the same standard (in terms of office environment, area and
facilities) as the office space owned by Noida Customer Operations Private Limited and
used by Customer Personnel in Pune prior to the Effective Date; and |
|
|
(C) |
|
Include at least one telepresence room for the use of AGS India Personnel. |
15.14 |
|
The AGS India Personnel using the Supervision Office Space shall have access to all Common
areas of the Sites as are reasonably required in order for such AGS India Personnel to perform
the supervision activities , including reasonable use of normal incidental office facilities
such as parking, dining and bathroom facilities. |
|
15.15 |
|
Management, maintenance, repair and upkeep of the Supervision Office Space shall be the
responsibility of Supplier. Without limitation to the foregoing, Supplier shall be responsible
for the following in the Supervision Office Space: |
|
(A) |
|
provision and maintenance of all necessary furniture, fixtures and fittings; |
|
|
(B) |
|
provision and maintenance of all wiring and cabling; and |
|
|
(C) |
|
installation and maintenance of all necessary utilities and services. |
Clause 34.6(A) is replaced with the following
|
(A) |
|
in respect of Supplier to: |
|
(i) |
|
the indemnities given by Supplier pursuant to Clause
30.22(Intellectual Property Indemnities); |
|
|
(ii) |
|
Suppliers obligations to pay the Incentive Payment, to pay
Service Credits and to pay any sum pursuant to Schedule 4 (Pricing, Invoicing
and Payment) and any other sum in the nature of charges, costs or expenses in
accordance with this Agreement; |
|
|
(iii) |
|
the indemnities given by the Supplier pursuant to Clause 35
(Tax);and |
|
|
(iv) |
|
any damages or loss incurred by Customer or any other Service
Recipient due to the wilful or deliberate act or omission or dishonesty of
Supplier, any of its Sub-contractors or any Supplier Personnel; |
5
Clause 35 is replaced with the following
35.1 |
|
All sums payable under this Agreement, shall be paid free and clear of all tax deductions and
tax withholdings whatsoever, save where such deductions and tax withholdings are on account of
compliance of extant tax laws in India. Where any tax deductions or tax withholdings are
required by the extant tax laws in India to be made from payments of any such sums for
services rendered the Party liable to make the payment shall pay to the recipient such sums,
only after the required tax deduction or tax withholding is so made. |
|
35.2 |
|
Subject to clause 35.3, all sums payable under this Agreement are exclusive of any Specified
Sales Taxes and are inclusive of any amounts in respect of any Other Sales Tax properly
chargeable in respect of them. |
|
35.3 |
|
Notwithstanding clauses 35.1 and 35.2, |
|
(A) |
|
if any Indian Service Tax (other than Tax chargeable in respect of the One-off Charge as
defined in paragraph 5 of Schedule 4 (Pricing, Invoicing and Payment) or the Incentive
Payment) is chargeable in respect of the Services provided pursuant to this Agreement and a
Party (or a member of its Group) is liable to account for such Tax to the relevant tax
authority, Customer and Supplier shall each bear 50% of such Tax PROVIDED THAT if the total
Indian Service Tax (other than Tax chargeable in respect of the One-off Charge as defined in
paragraph 5 of Schedule 4 (Pricing, Invoicing and Payment)or the Incentive Payment) chargeable
in respect of the Services exceeds or could exceed GBP £2,000,000 in any twelve (12) month
period (which amounts shall be determined by reference to the spot rate(s) published in the
Financial Times on any date on which such a determination is made as the case may be),Supplier
and Customer shall use reasonable endeavours to mitigate such cost. If the Parties cannot
agree an effective method to mitigate such cost within three (3) months from the time such
taxes first become payable, Customer may terminate this Agreement by Notice to Supplier with
immediate effect; and |
|
(B) |
|
if any Services are held by a UK Tax authority to be a taxable supply in respect of which
Customer or a member of Customer Group is liable to account for VAT to the UK Tax authority,
Supplier shall not be liable under this Agreement to make any payment to Customer, and
Customer shall not be entitled to withhold or deduct any amount from any sums payable under
this Agreement, in respect of such VAT. |
For the avoidance of doubt this Clause 35.3 is not an Agreement to Agree for the purposes of
Clause 36.
35.4 |
|
If Customer is required to make a deduction or withholding on account of any Indian Income
Tax imposed by the Republic of India in respect of payments for the services rendered by
Supplier, Customer shall carry out the necessary withholding tax compliances as prescribed by
the Indian tax law prevailing at the time of making the payment. Customer shall also provide
Supplier with a withholding tax certificate at appropriate intervals as prescribed by law in
order to facilitate Supplier to claim the credit of the taxes so withheld. |
|
35.5 |
|
Supplier undertakes to indemnify Customer against all reasonable costs and expenses incurred
by Customer and any tax, interest, penalty or other damages levied on Customer as a result of
any tax proceedings or prosecution which may be initiated by the Indian revenue authorities
against Customer for any non-compliance with the tax regulations under the applicable extant
Indian tax laws in connection with this Agreement |
|
|
|
Further Supplier undertakes to provide full co-operation to Customer in the course of such
tax proceedings. |
|
35.6 |
|
Supplier undertakes to indemnify Customer against all reasonable costs and expenses incurred
by Customer and any interest, penalty or other damages levied on Customer as a result of any
proceedings or prosecution which may be initiated against Customer for any non-compliance by
Supplier with extant exchange control regulations in India applicable for services rendered
under this Agreement. |
|
35.7 |
|
Customer shall promptly co-operate with Supplier in completing any procedural formalities and
shall promptly take such action and give such information and assistance as Supplier may
reasonably request which are necessary, from time to time, for Customer or Supplier (as
appropriate) to obtain authorisation from Income Tax authorities to make or receive (as |
6
|
|
appropriate) any sums payable under this Agreement without any such deduction or withholding
on account of Indian Income Tax (including the filing of any relevant tax forms). |
Clause 18- New Services
The following is inserted as a new paragraph 18.5
18.5 |
|
Before any New Service is introduced, Supplier shall consider the Indian tax implications of
introducing such New Services. Further, Supplier shall intimate Customer highlighting any tax
exposures or risks arising to the parties, on the introduction of such New Services, in order
to discuss and mutually agree, before the implementation of such New Services. |
Clause 41 Assignment and Place of Business
Clause 41.4 shall no longer apply.
Definition
Schedule 1 is amended by the addition of the following new Definitions
|
|
|
AGS India
|
|
means A.G.S. Customer Services (India) Private Limited
a company registered in India and having its
registered office at F-40, NDSE Part-1, New Delhi 110
049, India (hereinafter referred to as AGS India) is
a wholly owned subsidiary of Customer. |
|
|
|
Indian Income Tax
|
|
means generally, income tax which is required to be
deducted or withheld from certain payments for
services rendered under this agreement pursuant to
extant laws in India and specifically, pursuant to any
lower rate of tax deduction certificate issued by the
Indian Revenue Authorities on such payments. |
7
Ex-8.1
Exhibit 8.1
WNS
(HOLDINGS) LIMITED
LIST OF SUBSIDIARIES
|
|
|
|
|
|
|
|
|
Place of |
S/No. |
|
Name of Subsidiary |
|
Incorporation |
|
|
|
|
|
1.
|
|
WNS Global Services Netherlands Cooperative U.A.
|
|
The Netherlands |
|
|
|
|
|
2.
|
|
WNS North America Inc.
|
|
Delaware, USA |
|
|
|
|
|
3.
|
|
WNS Global Services (UK) Limited
|
|
United Kingdom |
|
|
|
|
|
4.
|
|
Town & Country Assistance Limited(1)
|
|
United Kingdom |
|
|
|
|
|
5.
|
|
Business Applications Associates Limited(2)
|
|
United Kingdom |
|
|
|
|
|
6.
|
|
WNS (Mauritius) Limited
|
|
Mauritius |
|
|
|
|
|
7.
|
|
WNS Global Services (Romania) S.R.L.
|
|
Romania |
|
|
|
|
|
8.
|
|
WNS Philippines Inc.
|
|
Philippines |
|
|
|
|
|
9.
|
|
WNS Global Services Philippines, Inc.
|
|
Philippines |
|
|
|
|
|
10.
|
|
WNS Business Consulting Services Private Limited(3)
|
|
India |
|
|
|
|
|
11.
|
|
WNS Workflow Technologies Limited
|
|
United Kingdom |
|
|
|
|
|
12.
|
|
Chang Limited(1)
|
|
United Kingdom |
|
|
|
|
|
13.
|
|
Accidents Happen Assistance Limited
|
|
United Kingdom |
|
|
|
|
|
14.
|
|
Business Applications Associates, Inc.
|
|
Delaware, USA |
|
|
|
|
|
15.
|
|
Baizan International Software Technology (Beijing) Co. Limited.
|
|
China |
|
|
|
|
|
16.
|
|
WNS Capital Investment Limited
|
|
Mauritius |
|
|
|
|
|
17.
|
|
WNS Global Services (Private) Limited
|
|
Sri Lanka |
|
|
|
|
|
18.
|
|
WNS Customer Solutions (Singapore) Private Limited
|
|
Singapore |
|
|
|
|
|
19.
|
|
WNS Customer Solutions (Private) Limited
|
|
Sri Lanka |
|
|
|
|
|
20.
|
|
WNS Global Services Private Limited
|
|
India |
|
|
|
|
|
21.
|
|
WNS Customer Solutions North America, Inc.(4)
|
|
Delaware, USA |
|
|
|
|
|
22.
|
|
WNS BPO Services Costa Rica, S.A.
|
|
Costa Rica |
|
|
|
|
|
23.
|
|
WNS Global Services (Australia) Pty Limited
|
|
Australia |
|
|
|
|
|
24.
|
|
W.N.S Global FZE
|
|
United Arab Emirates |
|
|
|
|
|
25.
|
|
WNS Cares Foundation(5)
|
|
India |
|
|
|
Notes: |
|
(1) |
|
Pursuant to Section 1003 of the Companies Act 2006, UK, Chang Limited and Town & Country
Assistance Limited have applied for voluntary dissolution.
Notices for striking off were published in the London Gazette on
February 1, 2011 and effective 90 days from the date
of publication, the said entities will be struck-off from the UK companies register if the UK Companies
House does not receive any objection for the proposed striking
off. |
|
(2) |
|
Business Applications Associates Limited is in the process of voluntary dissolution. |
|
(3) |
|
Formerly known as WNS Mortgage Services Private Limited. |
|
(4) |
|
WNS Customer Solutions North America, Inc. has filed an application with
the Secretary of State of the State of Delaware for a merger with and
into WNS North America Inc. and the certificate of merger from
the Secretary of State of the State of Delaware is pending. |
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(5) |
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WNS Cares Foundation is a not-for-profit organization
registered under Section 25 of the Companies Act, 1956, India
formed for the purpose of promoting corporate social
responsibilities and not considered for the purpose of preparing our
consolidated financial statements. |
Ex-12.1
Exhibit 12.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
I, Keshav R. Murugesh, certify that:
1. |
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I have reviewed this annual report on Form 20-F of WNS (Holdings) Limited; |
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2. |
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Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report; |
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3. |
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Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report; |
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4. |
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The companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15(d)-15(f)) for the company and have: |
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(a) |
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designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the company, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this
report is being prepared; |
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(b) |
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designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles; |
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(c) |
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evaluated the effectiveness of the companys disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period
covered by this report based on such evaluation; and |
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(d) |
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disclosed in this report any change in the companys
internal control over financial reporting that occurred
during the period covered by the annual report that has
materially affected, or is reasonably likely to materially
affect, the companys internal control over financial
reporting; and |
5. |
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The companys other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial
reporting, to the companys auditors and the Audit Committee of the
companys Board of Directors (or persons performing the equivalent
functions): |
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(a) |
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all significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the companys ability to record, process, summarize and
report financial information; and |
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(b) |
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any fraud, whether or not material, that involves
management or other employees who have a significant role
in the companys internal control over financial reporting. |
Date:
April 29, 2011
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By: |
/s/ Keshav R. Murugesh
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Name: |
Keshav R. Murugesh |
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Title: |
Group Chief Executive Officer |
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Ex-12.2
Exhibit 12.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
I, Alok Misra, certify that:
1. |
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I have reviewed this annual report on Form 20-F of WNS (Holdings) Limited; |
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2. |
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Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report; |
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3. |
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Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the company as of, and for, the periods presented in this report; |
|
4. |
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The companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15(d)-15(f)) for the company and have: |
|
(a) |
|
designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the company, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this
report is being prepared; |
|
|
(b) |
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designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles; |
|
|
(c) |
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evaluated the effectiveness of the companys disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period
covered by this report based on such evaluation; and |
|
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(d) |
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disclosed in this report any change in the companys
internal control over financial reporting that occurred
during the period covered by the annual report that has
materially affected, or is reasonably likely to materially
affect, the companys internal control over financial
reporting; and |
5. |
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The companys other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial
reporting, to the companys auditors and the Audit Committee of the
companys Board of Directors (or persons performing the equivalent
functions): |
|
(a) |
|
all significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
the companys ability to record, process, summarize and
report financial information; and |
|
|
(b) |
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any fraud, whether or not material, that involves
management or other employees who have a significant role
in the companys internal control over financial reporting. |
Date:
April 29, 2011
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By: |
/s/ Alok Misra
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Name: |
Alok Misra |
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Title: |
Group Chief Financial Officer |
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Ex-13.1
Exhibit 13.1
Certification of Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of
2002, the undersigned officer of WNS (Holdings) Limited (the Company) hereby certifies, to such
officers knowledge, that:
|
(i) |
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the accompanying annual report on Form 20-F of the Company
for the year ended March 31, 2011 (the Report) fully
complies with the requirements of Section 13(a) or Section
15(d), as applicable, of the Securities Exchange Act of
1934, as amended; and |
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(ii) |
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the information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Company. |
Date:
April 29, 2011
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By: |
/s/ Keshav R. Murugesh
|
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Name: |
Keshav R. Murugesh |
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Title: |
Group Chief Executive Officer |
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The foregoing certification is being furnished solely to accompany the Report pursuant to 18
U.S.C. Section 1350, and is not being filed either as part of the Report or as a separate
disclosure statement, and is not to be incorporated by reference into the Report or any other
filing of the Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing. The foregoing certification shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of Section 18 or Sections 11 and 12(a)(2) of the Securities Act of 1933, as
amended.
Ex-13.2
Exhibit 13.2
Certification of Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of
2002, the undersigned officer of WNS (Holdings) Limited (the Company) hereby certifies, to such
officers knowledge, that:
|
(i) |
|
the accompanying annual report on Form 20-F of the Company
for the year ended March 31, 2011 (the Report) fully
complies with the requirements of Section 13(a) or Section
15(d), as applicable, of the Securities Exchange Act of
1934, as amended; and |
|
|
(ii) |
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the information contained in the Report fairly presents,
in all material respects, the financial condition and
results of operations of the Company. |
Date:
April 29, 2011
|
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By: |
/s/ Alok Misra
|
|
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Name: |
Alok Misra |
|
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Title: |
Group Chief Financial Officer |
|
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The foregoing certification is being furnished solely to accompany the Report pursuant to 18
U.S.C. Section 1350, and is not being filed either as part of the Report or as a separate
disclosure statement, and is not to be incorporated by reference into the Report or any other
filing of the Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing. The foregoing certification shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of Section 18 or Sections 11 and 12(a)(2) of the Securities Act of 1933, as
amended.
Ex-15.1
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements Form S-8 (No.
333-136168 and No. 333-157356) pertaining to the 2002 Stock Incentive Plan and the Amended and
Restated 2006 Incentive Award Plan of WNS (Holdings) Limited of our report dated June 15, 2010 with
respect to the consolidated financial statements as of March 31, 2010 and for each of the years
ended March 31, 2010 and 2009 of WNS (Holdings) Limited included in Form 20-F for the year ended
March 31, 2011.
/s/ Ernst & Young
Mumbai, India
April 29, 2011
Ex-15.2
Exhibit 15.2
Consent of Independent Registered Public Accounting Firm
We have
issued our reports dated April 29, 2011 with respect to the consolidated financial
statements and internal control over financial reporting included in the Annual Report of WNS
(Holdings) Limited on Form 20-F for the year ended March 31, 2011. We hereby
consent to the incorporation by reference of said reports in the Registration Statements of WNS
(Holdings) Limited on Form S-8 (File No. 333-136168 effective July 31, 2006 and
File No. 333-157356 effective February 17, 2009).
/s/ Grant Thornton
Mumbai, India
April 29, 2011
Ex-15.3
Exhibit 15.3
Auditor
letter of Ernst & Young, independent registered public accounting firm, pertaining
to Item 16F
April 29, 2011
Office of the Chief Accountant
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549-7561
Ladies and Gentlemen:
We have
read Item 16F Change in Registrants Certifying
Accountant of Form 20-F dated April 29,
2011 of WNS (Holdings) Limited and are in agreement with the statements contained in paragraphs 2,
3, 4 and 5 on page 140 therein. We have no basis to agree or disagree with other
statements of the registrant contained therein.
Very
Truly yours,
/s/ Ernst and Young