MANAGEMENT DISCUSSION AND ANALYSIS REPORT (forming part of Directors' Report) a. Industry structure and Developments In 2015 the Information Technology Industry achieved a global revenue - US$3.7 trillion (Source: IDC). Top line companies with sustained focus on customers, rendering add on services using innovative technologies registered double digit growth. US market led a steady increase in the global IT Business Process Management (BPM) spend and vertical wise BFSI and manufacturing lead. The Indian IT sector aggregated US$ 131 billion in 2014 (Nasscom). Exports dominate the industry and constitute about 77% of the total industry revenue. According to the Economic Survey 2014-2015, IT and ITES make up the single largest contributor to India's Services exports. The Economic Survey 2014-15 says the IT and ITES sector including BPM, continues to be one of the largest employers in the country, directly employing nearly 35 lakh people. The year also witnessed hyper-growth in the technology start-up and product landscape and India is already ranked as the 4th largest startup hub in the world with over 3100 startups in the country. b. Opportunities, Threats Risks and Concerns Technologies in cloud, big data, analytics, mobility, social media and the Internet of Things (IoT) dominate the Industry scene. This compels the clients to look for more innovations to enhance delivery. Indian companies need to keep track of these trends and design products and services to accommodate these. With Technology continuing to expand globally, the democratisation of Technology creates many new opportunities for small Businesses. The push to simplify the things drive the IT workforce to come out with more innovations The SMAC (social, mobility, analytics, cloud) market is expected to grow to USD 225 Billion by 2020. The above has necessitated the IT companies to innovate, and move towards automation and artificial intelligence (AI). The Government has initiated, as part of its plan to accelerate growth in Indian Economy, various digitisation campaigns - Aadhar, smart cities and industrial corridors etc. To implement this, considerable IT hardware and software supports will be needed in the IT projects in sectors like education, healthcare, agriculture, financial services, logistics, infrastructure and manufacturing The Indian startups, driven by an extremely young and diverse entrebrneurs numbering more than 3000 are the fourth largest across the world. The easy access to capital through VCs, angel investment and seed funding, helps them to work on building tailor-made products for their customers and grow at a rapid pace. Compared to other global peers, Indian IT companies have been less innovative in bringing out products and services which are disruptive in nature. The industry continues to be affected by the economic slump globally and its effects on the cut in government expenditure. Europe continues to face economic challenges and oil-producing countries face a crunch Business outlook remains unchanged. The continually rising costs have eroded the cost advantage the Indian companies had over the Foreign players. Foreign players are making aggressive bids to grab a major portion of the domestic IT opportunities arising out of Government initiatives to accelerate growth in the economy. Customers continue to hold the reins. IT companies, now also function as technology startups in terms of testing new digital technologies or acquiring companies and people that specialize in new technologies like social, cloud, mobile and the so-called Internet of Things (IoT). It has become imperative that these companies plan for re-training or hiring people to focus on digital business, as businesses increasingly move towards digital transformation. c. Outlook Your company has been developing applications for the financial sector and building market data portals for financial institutions and brokerage firms in US. Your company with domain knowledge and experience is developing Data API for mutual funds and ETFs. This would enable the company to expand this segment for mutual funds and ET funds. Your company with a healthy cash reserve has also undertaken various initiatives in the following areas: • Collaborating with US based IT services firms to market Saven offshore development services in BPO, ITES, Quality Assurance and Application Development services to their clients. Building bench strength by hiring and training engineers in suitable technology stacks in open source software field. • Building resource pool to service Business Intelligence segment using Apache technology stack based Big Data Analytics eco system. Hiring and training on Data Cleansing, Data Mining, Data Science, and Data Visualization tools. Collaborating with various partners to offer domain specific consulting services to prospective clients. • Evaluating local startups and small and medium businesses in Retail B2B and B2C segments to acquire and augment growth opportunities. We believe growth opportunities are in software for academic institutes, e-commerce platforms, field staff tracking systems, social media aggregation, enterprise mobility, healthcare analytics, etc. d. internal Control Systems and their adequacy There are adequate internal control procedures and internal audit systems commensurate with the size of the company and nature of its business. The Management periodically reviews the internal control systems for further improvement. e. Discussion on financial performance with respect to operational performance The financial statements have been brpared under the historical cost convention, on the basis of a going concern. Financial Position as at March 31, 2015 Share Capital There has been no change in the authorized, issued, subscribed and paid up capital. The paid up capital stands at Rs.1087.87 lakhs. Reserves and Surplus An amount of Rs.550.00 lakhs was transferred to General Reserve from surplus in profit and loss account for the year ended March 31, 2015. Reserves and surplus as at March 31, 2015 stood at Rs.960.80 lakhs as compared to Rs.528.44 lakhs as at March 31, 2014. There has not been any charge in Share Premium account and Capital Reserve during the year and in the same stands at Rs.189.47 lakhs and Rs.46.86 lakhs respectively. Trade Payables Trade payables consist of payables towards purchase of goods and services and stood at Rs.13.29 lakhs as at March 31, 2015 (Rs.12.39 lakhs as at March 31, 2014). Fixed Assets There has been an addition of Rs.16.58 lakhs to the gross block of fixed assets. The additions are mainly towards computer software as well as infrastructure facilities. The entire capital expenditure was funded out of internal accruals. Investments The Company had, during the year 2001, made strategic investment amounting to Rs.194.69 lakhs in its Subsidiary, Saven Technologies Inc., USA and Rs.0.11 lakhs in Penrillian Limited, UK, a Joint Venture. The subsidiary Company has paid interim dividend of Rs.209.88 lakhs during the financial year. The company disinvested its entire holding in its subsidiary, Saven Technologies Inc., USA and has received an amount of Rs.485.09 lakhs towards the sale proceeds. Trade Receivables The trade receivables have decreased from Rs.272.42 lakhs to Rs.176.98 lakhs. These receivables are considered good and realizable. Cash and bank balances The cash and bank balances have increased from Rs.979.42 lakhs.to Rs.1304.92 lakhs. The breakup of cash and cash equivalents: Current Investments During the year, the company has deployed out of its cash surplus an amount of Rs.480 lakhs in Debt Mutual Funds. Long term loans and advances The Long term loans and advances have decreased from Rs.41.31 lakhs to Rs.23.59 lakhs. Other current assets Other current assets have increased from Rs.40.52 lakhs to Rs.90.91 lakhs. Results of Operations The total revenue for the year ended March 31, 2015 was Rs.1418.52 lakhs as compared to Rs.1135.36 lakhs for the brvious year. The Operating Profit (PBIDT) for the year under review was Rs.815.78 lakhs, as compared to Rs.513.83 lakhs for the brvious year. After considering debrciation, interest and Income tax the Net Profit was Rs.631.99 lakhs, as compared to Rs.359.85 lakhs for the brvious year. The Offshore Development & Services income for the year ended March 31, 2015 was Rs.751.19 lakhs as compared to Rs.834.19 lakhs for the brvious year. The other income includes fixed deposit interest income of Rs.137.96 lakhs as compared to Rs.74.64 lakhs in the brvious year. During the financial year ended March 31, 2015 unfavourable foreign exchange variance was Rs. 5.00 lakhs. During the financial year, the company received interim dividend amount to Rs.209.88 lakhs from its subsidiary, Saven Technologies Inc. USA. The company disinvested its entire holdings in its subsidiary, Saven Technologies Inc. USA during the year. The profit on sale of investments of Rs.285.89 lakhs is disclosed under other income. f. Material developments in Human Resources / Industrial Relations front, including number of people employed Being engaged in a people-oriented business, it has been the Company's endeavour to create and encourage talent by providing a good working environment, need based training, career growth plans and a competitive remuneration package. FORWARD-LOOKING STATEMENTS Some of the statements contained in the above discussion are of a forward-looking nature and it will be apbrciated that the Company cannot guarantee that these expectations will be realized. Actual results and outcome may, despite efforts on the part of the Company, differ materially from those discussed. |