MANAGEMENT DISCUSSION AND ANALYSIS
Industry Structure and Analysis
During the year 2012-13, Indian economic growth seemed to have bottomed in the final 3months of 2012 but edged up in the last quarter of fiscal 2013 with an upside inindustrial production and some recovery in exports taking the GDP growth to 5.6%. Recoverywas seen gradual in the Indian economy with monetary policy turning pro-growth and privateconsumption strengthening with some help from government spending. Weak demand for Indiangoods and services abroad have been a major contributor to the slowdown. Towards the endof 2012, the government has announced some long due reforms including the opening up ofthe Retail and Aviation sectors to overseas investors. These reforms brought back investorconfidence giving boost to greater portfolio inflows. However, concerns remain aroundkeeping the current account deficit under control as government spending is expected torise in the current fiscal as this will be an Election year.
Good jobs and labor reforms are a must for economic growth. More people will look forjobs because of the demographic dividend and also shift away from agriculture. It ispredicted that by the year 2025 approximately 25% of the global workforce will comprise ofIndians, a clear manifestation of the fact that India has a burgeoning talent pool,unparalleled in the history of humankind. As a country, India has registered the secondhighest GDP growth in the world after China in the last decade averaging about 8% perannum. India is also a remarkably young nation where a staggering 65% of our 1.2 billionpopulation are below 30 years of age. Paradoxically enough, despite high demand forskilled labor and a huge quantitative supply, the corporate sector and industry complainthat there is a shortage of appropriate talent, and rampant unemployment pervades. Whatprecisely plagues the Indian economy that could almost derail the big "Indiastory" which is expected to be along with USA and China as the triumvirate G3 of thefuture? The answer lies in "employable skills"; yes, the engineer may haveacademic qualifications but is he capable of delivering on the job? This is where DaleCarnegie Training India has come up with a unique offering to make it a win-win for boththe potential employers and aspirational students and job-seekers at all levels.
Opportunities and Challenges
In 2013 we complete ten years of our Dale Carnegie Training operations in India. Overthis decade we have had many achievements. About 150000 individuals in both corporate andeducational sectors have been trained by us. More than 2500 companies are our clients andwe have covered nearly 700 colleges across India. We have conducted training in 8languages in 150 towns and cities of the country. With this successful track record in thelast decade your Company has established its market leadership in the corporate sector.Going forward, we have identified two streams of growth for the business: 1) support thecorporate sector needs in managing attrition due to talent shortage as well as theirsuccession planning and leadership development which is a major vacuum today throughstrong professional development and engagement initiatives and 2) engage with governmentand education sector for the huge need for skilling and employability training ofgraduating students to support the growing trends in recruitment and talent acquisitionfor companies,
In the corporate sector, three key trends are seen in the learning and developmentarea; Leadership Development, Succession Planning and Employee Engagement. According to asurvey by SHRM India, the most effective Learning and Development practices for leadersare coaching by external practitioners and external conferences, workshops and events.Further two-fifths of the companies surveyed in India reported involvement of externalconsultants right from the responsibility of determining Learning and Development needs tofinal delivery and measurement. This fact may reflect a shortage of expert Learning andDevelopment people or the sheer scale of learning and talent development effort in agrowing economy. This is the gap that your Company addresses with its talented team ofexperts, body of knowledge and experience.
Indian organizations have already made significant strides in integrating ICT - basedlearning and talent development as evidenced by widespread adoption of such technologies.Organizations across all areas seem to be switching to less costly development practices.During 2012-13, Dale Carnegie Training India launched its digital training services. Thisaims to provide Live Online training using a web-based Learning System that helps conductinteractive real-time sessions to people logged in through their desktops without movingfrom their home or offices. This allows a group of people geographically distanced fromeach other to log on to a live training program conducted by a certified Dale Carnegietrainer. With companies having widespread locations in India and globally we see this asan important method to provide quality and consistent training to their employees thatenables our customers to not only save costs of time and travel but also provides them theconvenience of not moving out of their own environment without compromising on thelearning. Trends are showing that Live Online training is growing in demand much fasterthan self-paced e-learning due to its improved learning effectiveness.
The most commonly anticipated major change affecting corporate Learning and Developmentover the next two years is a greater integration between coaching, organizationaldevelopment and performance management. There will also be a greater emphasis inmeasurement of having effectiveness. With our unique training methodology based ontime-phased learning, in the moment coaching and practice, the effectiveness of ourtraining is easily measurable. We have been able to achieve 98% customer satisfaction andare reputed for quality training. Besides, our training delivery we also providevalue-added consulting in the area of organizational development, talent and performancemanagement. Our partnership with PerformanSe SAS for psychometric assessments gives us anedge in these services.
There is also growing interest towards the use of social media to deliver learning,training and development focused on delivery methods such as "bite sized"learning and using smartphone apps, and so on. Dale Carnegie Training India is activelypresent and hosts growing and engaged communities on social networks like Facebook,Twitter and Linkedln. Similarly Dale Carnegie mobile apps across major operating systemsare available in the areas of Human Relations, Leadership Development, SalesEffectiveness, etc.
In the area of Employability training, we are seeking to expand our partnerships witheducational institutions and other skills providers. While we will continue our activitiesin student development, we will build a stronger focus on faculty training. Anotherimportant factor is the sheer shortage of trainers to meet the vast demand for vocationaltraining of students in India. Apart from quantity the most acute deficiencies lie in theareas of curriculum development, methodology and quality of training. It will be ourendeavor to address this challenge through trainer capacity building and provide bothcontent and trainer training to our partners.
Outlook, Risks & Control:
India's economic growth is expected to remain subdued this year and any recovery willbe gradual as government spending and interest rate cuts from the RBI revive domesticdemand. GDP is predicted to increase to above 6% in the current fiscal to March 2014,after it grew at a decade low of 5.6% in the last fiscal.
We see that industry will continue to hire and expect their L&D budgets to bemaintained. With strong client relationships already in place we expect to build long termpartnerships. Further your Company has invested for growth and developed strong systemsfor internal efficiencies. We predict moderate business growth and have a positive outlookfor both short and medium term.
The statements made in this report describe the Company's objectives, expectations andprojections that may be forward looking statements. The actual results might differmaterially from those expressed or implied depending on the economic conditions,government policies and other incidental factors, which are beyond the control of theCompany and Management.
Internal Control Systems and their Adequacy:
The Company has adequate and effective control systems, commensurate with its size andnature of business, to ensure that assets are efficiently used and the interest of theCompany is safeguarded and the transactions are authorized, recorded and reportedcorrectly. Checks and balances are in place to determine the accuracy and reliability ofaccounting data. The preventive control systems provide for well-documented policy,guidelines, and authorization and approval procedures. The Company has a full-fledgedInternal Audit System to ensure that the policies and procedures laid down are adhered to.The Company has also developed a Risk Assessment policy and is reviewed by the Board ofDirectors/ Audit committee on a quarterly basis.
Total income achieved during the year under review is Rs. 1839.27 lakhs as against Rs.1973.34 lakhs in the previous year. Income from operations for the Company has been Rs.1718.00 lakhs against Rs. 1643.42 lakhs in the previous year, showing a increase of 5% .Notably, the income from Training business has increased by 23% for the year ended 31stMarch 2013, as compared to last year. For the year ended 31st March 2012, income fromoperations included fixed income from training centres amounting to Rs. 252 lakhs. Afterproviding for taxation of Rs. 64.84 lakhs and deferred tax asset of Rs. (8.20) lakhs, theresults of the Company show a net profit of Rs. 176.46 lakhs as against the profit aftertax of Rs.226.30 lakhs in the previous year. For the year ended 31st March 2012, otherincome includes interest received on income tax refunds amounting to Rs. 236 lakhs.Operating Profit (Income from operations less direct expenses) of the Company for thecurrent year is Rs. 488.58 lakhs as compared to Rs. 311.21 lakhs in the previous year,denoting a healthy growth of 57%.
Your Company considers its intellectual capital as its most valuable asset. Personnelpolicies of your Company are designated to ensure fairness to and growth of allindividuals in the organization and continuously strives to provide a challenging workenvironment. The Company has developed a competency-based framework for growth withformalized career paths in the organization. This provides a highly competent andaspirational career environment to all our employees. The company has a comprehensivecompensation and benefits plan for all its employees. The Company also provides a stronglearning culture with an average eight days of training per year for each employee. Wehave a strong Performance Management System and code of conduct which reinforces our workethics.
5. PARTICULARS OF EMPLOYEES:
The provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies(Particulars of Employees) Rules, 1975 as amended vide Notification no. G.S.R 289 (E)dated March 31, 2011 require the disclosure of the names and particulars of the employeeswho are receipt of remuneration for the financial year under review which, in theaggregate, was not less than Rs. 60,00,000/- per annum or who was in receipt ofremuneration for any part of the financial year under review, at a rate which, in theaggregate, was not less than Rs. 5,00,000/-per month. The disclosure under the saidSection is not given as there are no such employees.
During the Financial Year under report, the outstanding position in the investment ofshares and debentures of various companies were to the tune of Rs. 69.04 lacs as comparedto the last Financial Year's investment of Rs. 111.16 lacs. The market value of the quotedinvestments was Rs. 7.00 lacs (previous year Rs. 13.51 lacs).
7. FIXED DEPOSIT:
The Company has not accepted any deposits from public under the Provisions of Section58A of the Companies Act, 1956 and rules framed thereunder during the Financial Year endedMarch 31, 2013. Accordingly, as at March 31, 2013, there is no outstanding liability tofixed depositors.
8. DIRECTORS' RESPONSIBILITY STATEMENT:
To the best of their knowledge and belief and according to the information andexplanation obtained by them, your Directors make the following statement in terms ofSection
217(2AA) of the Companies Act, 1956:
i) that in the preparation of the Annual Accounts for the financial yearended March 31,2013, the applicable accountingstandards have been followed along with properexplanationrelating to material departures, if any;
ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fairview of the state of affairs of the Company at the end of thefinancial year ended March 31, 2013 and of the Profit of theCompany for the said year;
iii) that the Directors have taken proper and sufficient care for themaintenance ofadequate accounting records in accordance withthe provisions of the Companies Act,1956,for safeguarding theassets of the Company and for preventing and detecting fraud and otherirregularities;
iv) that the Directors have prepared the Annual Accounts for the year ended March 31,2013 on a going concern basis.
In accordance with the Articles of Association of the Company and provisions of theCompanies Act, 1956 Mr. Madhukar Bhagwat and Dr. Satish Jha will retire by rotation at theensuing Annual General Meeting and being eligible, offer themselves for re-appointment.Your Directors recommend their re-appointment.
10. STATUTORY AUDITORS:
You are requested to appoint Auditors for the current year and fix their remuneration.The Auditors of the Company, M/s. K.S. Aiyar & Co., Chartered Accountants retire atensuing Annual General Meeting of the Company and have given their consent forre-appointment. The Company has also received a certificate from them under section224(1B) of the Companies Act, 1956.
11. COMPLIANCE CERTIFICATE:
As per Section 383A of the Companies Act, 1956 read with Notification No. G.S.R. 11(E), Dated 5-1-2010 issued by the Ministry of Corporate Affairs, a Company having the paidup Share Capital of Rs. 10 Lacs or more but less than Rs. 5 Crores must obtain aCompliance Certificate from a Company Secretary in whole time practice and suchCertificate must be annexed to the Report. A Compliance
Certificate obtained from M/s. Pramod S. Shah & Associates - Practicing CompanySecretaries is annexed as a part of the Directors' Report.
12. CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a ComplianceReport on Corporate Governance together with the Certificate from M/s. Pramod S. Shah& Associates - Practising Company Secretaries is annexed as a part of the AnnualReport.
13. COST AUDIT:
The Company is not required to undertake the cost audit as required under Section 233 Bof the Companies Act,
Your Directors take this opportunity to express their grateful appreciation for theexcellent assistance and co-operation received from all the shareholders, customers,suppliers, bankers, Government authorities and all other business associates and theirconfidence in the management. Your Directors also wish to place on record theirappreciation for the contribution made by the employees.
For and on behalf of the Board of Directors
PALLAVI JHA CHAIRPERSON & MANAGING DIRECTOR
Date: May 13, 2013 Place: Mumbai