Industry Structure and Development
The underlying theme of the year 2010 has been recovery of the Global economy from theunprecedented economic crisis of 2007-09. World GDP, which has declined by 0.6 percent in2009, grew at 5 percent in 2010 and is expected to grow at 8.6 percent in 2010-11 ascompared to 8 percent in 2009-10.
The Indian IT-BPO Industry has also witnessed robust recovery in 2010-11. The revenueaggregate of IT-BPO industry is expected to grow by 19.2 percent and reach US $ 88.1billion in 2010-11 as compared to US $ 73.9 billion in 2009-10.
The Indian software and services exports including ITeS-BPO exports is estimated at US$59 billion in 2010-11, as compared to US$ 50 billion in 2009-10, an increase of 18%. TheIT services exports is estimated to be US$ 33.5 billion in 2010-11 as compared to US$ 27.3billion in 2009-10, showing a growth of 14.5%.
The Indian domestic IT market continues to grow in 2010-11. The revenue from thedomestic market (IT services, software products and BPO) is expected to grow from US $14.2 billion in 200910 to US $17.1 billion in the year 2010-11, an anticipated growth ofabout 20.4%. IT services is one of the fastest growing segment in the Indian domestic ITmarket. It is driven by localized strategies designed by service providers.
India remains an integral part of the global sourcing strategy, and registered a growthrate twice that of other competitors in the global sourcing arena, to account forapproximately 55% of the addressable global sourcing market in 2010, up from 51% in 2009.It is estimated that India-based resources account for about 60-70% of the offshoredelivery capacities available across the leading multinational IT-BPO players.
This phenomenal growth of the Indian IT-ITeS sector had a multiplier effect on theIndian economy as a whole. The sector has grown to become the biggest employment generatorand has spawned the mushrooming of several ancillary industries such as transportation,real estate and catering.
(Source: Information Technology Annual Report 2010-11 Published by Ministry ofCommunication & Information Technology)
Opportunities & Threats
Availability of quality talent at cost effective rates, rapidly developinginfrastructure, an enabling innovation environment, supportive regulatory policies, and apositive overall business environment are all central pillars of India's valueproposition. Availability of skilled talent has been India's foremost attraction as aglobal sourcing country. Also, the industry has been extremely quality focused, with Indiabased centers accounting for the largest number of quality certifications achieved by anycountry. These are the growth drivers of the IT sector. The industry has been enhancingits abilities to transform client businesses through increased R&D spend, focus on IPcreation, development of new technologies incorporating process and business modelinnovation and increased domain expertise. Due to cost effectiveness, companies havestarted using ERP and other software packages to cater to their informational requirementsrelating to their production management, inventory management, human resource management,accounting etc., and thus increase the value for its customers. There is a demand growthfor more customer facing applications like SCM, CRM, and BI applications.
Still there are lots of things that we need to be concerned about. Along with India,Israel and Ireland carry most of the benefits for development of IT Sector. Thesecountries are now taking up the market share and posing threat to Indian IT sector.Moreover, software sector of Korea, Taiwan, Phihppines challenges India. China isgradually emerging as a tough competitor in offshore IT services. The fluctuating exchangerate brings volatility in operating margins for IT sector. As the Companies started theiroperations in view of cost effectiveness, there is tremendous increase in competition.Financial Constraints also poses a challenge for the operations of the Company.
NASSCOM Strategic review states that the IT-BPO sector has become one of the mostsignificant growth catalysts for the Indian economy. The IT-BPO industry has played a keyrole in putting India on the world Map. The Industry has attracted more than 10 percent oftotal FDI flowing into India. The spectacular growth performance in the IT-BPO industry inthe last decade has helped industry contribute substantially to India's GDP. In 2010-11,the IT-BPO industry's contribution to GDP is estimated to be 6.4 percent as compared to6.2 percent in 2009-10. The IT-BPO industry has enormous potential to grow in the years tocome. By 2015, the aggregate revenue is expected to reach US $ 130 billion, a CAGR ofabout 14 percent from the year 2010-11 and contribute about 7 percent to India's GDP. Inaddition to fuelling India's economy, this industry is also positively influencing livesof its people through an active direct and indirect contribution to the varioussocio-economic parameters such as employment, standard of living and diversity amongothers.
Product Development and R& D
The company has made improvements in the Customized Software (ERP) and also introducednew modules in the ERP software especially designed for Automotive Sector.
The Company was not in the position to carry out Product Development and MarketResearch & other Developmental activities for new business activities due to its ownfinancial limitations. However, the Company plans to foray into the development of ERPsoftware and other high value added activities in due course.
The Company is maintaining work standards and quality of work for various stages of itsactivity. It proposes to benchmark its products with SMB (Small Medium Business) industry.
The Company had not earned income by way of exports during the year under review.
Financial Review and Analysis
|Particulars ||2010-11 ||2009-10 ||% change |
|Total Income ||65.16 ||71.73 ||(9.16) |
|Profit/(Loss) before Depreciation & Provisions ||10.39 ||(53.34) || |
|Depreciation ||0.10 ||0.08 || |
|Provisions made ||73.40 ||0.00 || |
|Provisions write back ||0.00 ||23.66 || |
|Net Profh/(Loss) ||(63.11) ||(29.76) || |
|Balance brought forward from the previous year ||(580.97) ||(551.21) || |
|Balance carried forward to the Balance-sheet ||(644.08) ||(580.97) || |
Analysis of Financial Results
During the year under review, the Company earned total income of Rs. 65.16 Lacs ascompared to 71.73 Lacs during the year 2009-10. Further, the Net Loss for the year underreview was Rs. 63.11 Lacs as compared to a loss of Rs. 29.76 Lacs during the year 2009-10due to provision for diminution in value of investments and provision for doubtful debts.
Internal Control Systems
The Company has adequate internal control systems commensurate with the size andactivities of the organization.
Human Resource Policy
The Company has revamped its HR policy in line with current trends and the process ofrecruitment has already commenced.
Statements in the Management Discussion and Analysis describing the Company'sexpectations or predictions may be 'forward looking' within the meaning of applicable lawsor regulations. Actual results may differ materially from those expressed or implied.