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SOFTBPO GLOBAL SERVICES LIMITED
ANNUAL REPORT 2004-2005
MANAGEMENT DISCUSSION AND ANALYSIS
Overview
The financial statements have been prepared in compliance with the
requirements of the Companies Act, 1956 and Generally Accepted Accounting
Principles (GAAP) in India.
There are no material departures from the prescribed accounting standards
in the adoption of the accounting standards. The Board of the Company
accepts responsibility for tile integrity and objectivity of these
financial statements, as well as for various estimates and judgements used
therein.
A. Industry structure and developments
According to McKinsey & Co. the global market for IT-enabled services/BPO
is estimated to be over $140 billion by 2008, with Data Search, Integration
and Management accounting for over 31% of the total market. India is
expected to capture $17 billion of the $140 billion BPO market. (Source:
NASSCOM McKinsey Study -India IT Strategies). Further, while the Global BPO
market is estimated to grow at a CAGR of 9.45% from 2002 to 2007, the
Indian BPO market is estimated to grow at 69.35% CAGR in the same period.
(Source Gartner Dataquest (May 2003). The Indian ITES/BPO industry has
continued its aggressive growth path in fiscal year 2004-05, as industry
revenues are estimated to grow to 55.67 billion from $3.91 billion, taking
the share of BPO in the total Indian IT industry to 20.1% as depicted
below.
B. Opportunities and threats
Following are the significant threats to the Company's business:
a. Competitive pressures: Competitive pressures from various other
companies could have impact on the revenues and profitability.
b. Technological Developments: To sustain a reasonable growth rate and to
match ever growing customer requirements. the Company would have to invest
in research and development to keep pace with improvement in the
technology, processes and systems.
c. Human Resources: The Company recognises human resources as its most
valuable asset and constantly endeavours to retain and develop these
resources. The Company maintains excellent work environment provides
challenging opportunities for growth and offers competitive remuneration
package.
d. Exchange Rate Fluctuation : The Company expects to have substantial
revenues from the USA and Europe. Exchange rate fluctuation can impair the
revenues of the Company.
C. Segment-wise or product-wise performance
The detailed information about segment performance has been given in the
Consolidated Financial STatements.
D. Outlook
With the clear strategy and strong business model in place, the Company
continues to have positive outlook for the years to come. The business
alliances are also expected to contribute to the Company's revenue and
profitability growth. This outlook is subject to the risks and concerns
mentioned below.
E. Internal control systems and their adequacy
The Company has adequate internal control systems and procedures
commensurate with its size and nature of business. The sane ensures
reasonable internal checking of its financial and other records.
F. Discussion on financial performance with respect to operational
performance
Overview
The financial statements have been prepared in compliance with the
requirements of the Companies Act, 1956 and, Generally Accepted Accounting
Principles (GAAP) in India. The Company has complied with the provision of
the Accounting Standards issued by the Institute of Chartered Accountants
of India. The estimates and judgements relating to the financial statements
have been made on a prudent and reasonable basis, in order that the
financial statements reflect in a true and fair manner, the form and
substance of transactions, and reasonably present the Company's state of
affairs and profits for the year.
i. Financial condition
a. Share Capital
At present the Share Company of the Company consist of 15,000 equity shares
of Rs. 10/- amounting to Rs. 15,00,000/-.
b. Reserves & Surplus
During the year, the Company has not transferred any amount to reserve from
Profit & Loss Account.
c. Secured Loans
The Company did not have any secured loans during the year.
d. Fixed Assets
In view of restructuring the Company has disposed off its fixed assets.
e. Sundry Debtors
There were no Sundry Debtors as on March 31, 2005.
f. Cash and Bank Balances
As on March 31, 2005, the cash and bank balance was Rs. 3.21 Lakhs.
g. Loans and Advances
Loans and advances are primarily towards amounts paid in advance for value
and services to be received in future. Income tax payments represent tax
deducted at source from the sales invoices raised by the Company.
h. Current Liabilities
Sundry Creditors represent the amount payable to vendors for tile supply of
goods and services.
i. Provisions
Provision for taxation represents estimated income tax liability for the
previous,year. In view of loss during the year there is no provision for
tax.
ii. Financial Review
a. Income
A major portion of income during the year is from continued business. Other
income includes interest on deposits with banks and other sundry receipts.
h. Expenditure
Operating and other Expenses
Sr. No. Particulars 2004-2005 %
1 Payment to Auditors 58,150 17.68
2 Profession Tax 2,500 0.76
3 Telephone Expenses 4,670 1.42
4 Advertisement & Publicity 63,061 19.18
5 Legal & Professional 69,310 21.08
6 Listing Fees 10,000 3.04
7 Bank Charges 7,303 2.22
8 Stationery & Printing 3,750 1.14
9 Conveyance and travelling 690 0.21
10 Board sitting fees 87,000 26.45
11 Demat Service Charges 12,925 3.93
12 Insurance 972 0.30
13 Miscellaneous expenses 3,104 0.94
14 Loss oil Sale of Assets 5,175 1.57
15 Sales Tax 260 0.08
328,871 100.00
c. Operating Profits
During the year the Company has incurred loss.
d. Depreciation
The Company has provided Rs. 175,274 towards depreciation on fixed assets.
e. Provision for Tax
In view of loss the Company has not provided towards corporate tax on
operating income within India.
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