MANAGEMENT DISCUSSION ANALYSISBUSINESS OUTLOOK
(This review contains Management’s discussion of the Company’s operationalresults and financial condition, and should be read in conjunction with the accompanyingaudited financial statements and associated notes).
Industry Structure, Development and Outlook
As the broadband revolution continues, the ever increasing competition in the broadbandservice market is forcing broadband service suppliers to plan their strategies fordelivery of "triple play" services, with voice, data and video provided by asingle connection. Over recent years, as the internet and intranets have evolved,increasing requirements for bandwidth intensive applications such as peer to peer filesharing and tele-working have resulted in relentlessly increasing demands for higherbroadband bandwidth provisioning. However, it is the bandwidth required for nextgeneration TV and video services, such as Video on Demand (VoD) and more significantly,high definition TV which have recently begun to place the most pressure on bandwidthprovisioning in broadband networks.
There are a myriad of competing technologies which can provide the bandwidth requiredto deliver broadband services, but each technology has its limits in terms of bandwidth,reliability, cost or coverage. Optical fiber offers almost limitless bandwidthcapabilities, has excellent reliability and is becoming increasingly economical toinstall. Consequently, fiber seems to be unsurpassed in its superiority over the otherbroadband technologies. However, many competitive copper and wireless technologies aredeveloping at a significant pace and some technologies have so far managed to continuallymeet the ever increasing bandwidth requirements of the consumer.
In order to remain competitive as the broadband market evolves; broadband servicesuppliers must have a strategy to be able to offer a triple play service at some point inthe future; that is, voice, data and video.
Opportunities and Threats
Since 2005, when the first broadband services were launched in India, the number ofbroadband subscribers in the country has shown a steady growth. The broadband subscriberbase reached close to 10.52 million in October 2010 up from 7.40 million at the end ofOctober 2009, representing a YOY growth of approximately 30 per cent. The Indiangovernment is supporting broadband sector growth, as it has recognized its importance inthe economic and social development of the country. For the same purpose, the Indiangovernment is also supporting a number of wireless technologies like 3G and WiMAX.
However, intense competition and falling prices in maturing markets coupled with thechallenges presented by changing usage patterns and the adaptation of new technologies areall starting to threaten the viability of the current broadband business model.
Analysis of financial performance of the company
In continuation to the previous annual report, even during the year under report alsothe Company had very lean operations as the company was evaluating new businessopportunities. Thus, your company’s total income was Rs. 8.43 lakhs as against Rs.5.19 lakhs during the previous year and the net profit was Rs.3.76 lakhs as against a netprofit of Rs. 0.26 lakhs for the corresponding period.
Liquidity and capital resources
There is no change in Shareholders funds and loan funds during the financial year2010-11. Presently the Company is making efforts to take up new projects in Media andBroadband internet segments and is hopeful that efforts would turn into concrete proposalsduring the current financial year and improve its future business possibilities. Once thesaid proposals materialize, the company would explore various financing options to meetanticipated needs of the future projects.
Internal control systems and their adequacy
The internal audit and other internal controls and internal checks implemented in theCompany are adequate and commensurate with the size and nature of operations providingsufficient assurance and safe guarding all assets, authorizing all transactions and itsrecording and reporting properly and timely.
The Audit Committee constituted by the Board of Directors reviews regularly thefinancial and other related aspects as per the requirements of the Corporate Governance.
Human Resource Development and Industrial Relations
The Industrial relations during the year has been good and satisfactory. Due to limitedoperations, no new welfare measures were undertaken.
Cautionary Statement
Statements in the Management Discussion and Analysis describing the Company’sobjectives, projections, estimates, expectations, may be forward looking statements withinthe meaning of applicable securities laws and regulations. Actual results may differmaterially from those experienced or implied. Important factors that could make adifference to the company’s operations include economic conditions affecting demand,supply and price conditions in the domestic/overseas markets in which the Companyoperates, changes in the government regulations, tax laws and other statutes and otherincidental factors.