DIRECTORS
5.
Industry Structure & Analysis
The global economy, following two years of crisis, has begun to recover with worldgrowth bouncing back from negative territory in 2009 to about 3.9% during the year.However, the recovery is proceeding at different speeds around the world.
The Indian economy continues to be one of the fastest growing economies and therecovery from the slowdown witnessed in the aftermath of the global crisis has beensharper than what was generally anticipated. India is poised to be the world's engine ofeconomic growth in the coming decades, given that Indians will account for 22 per cent ofthe increase in world's workforce over the period of 2020-2050.
Yet, despite our country's impressive economic performance and its immense potentialthere are valid concerns that our growth process needs to be more inclusive andsustainable. In the medium term, per capita income cannot be increased without addressingthe twin issues of Education and Employability of the workforce. While the government isinvesting considerable resources in Education, the private sector needs to address thedisconnect between educational qualification and employability, or possession of requisiteskills by the workforce.
The creation of a skilled workforce is integral to the strategy for sustaining ourgrowth momentum and achieving double digit growth. According to the Confederation ofIndian Industry, one percentage increase in the GDP can translate into an additional 0.8 -1 million jobs. Enhancing the skill-sets of the nearly 10-12 million individuals who enterthe workforce every year is therefore essential to attaining and sustaining a 10 percentgrowth rate.
However, it is important to note that for education to contribute significantly toeconomic growth and development, it must be of high quality to meet the skill-demand needsof the economy. The massive expansion of higher and technical education sector in last fewyears in India has led to a major quality problem. There is a considerable difference inthe quality of students/engineers graduating and the kind of talent industry demands.Thus, we have huge supply of graduates but it is not aligned to the industry requirements.
Excellence in Education and Skill Development would not only improve the long termcompetitiveness of the firms but also improve the standard the living of the potentialworkforce with higher incomes. Thus, helping us strike a correct balance between equityand efficiency of the nation.
As regards the Corporate sector, after declining in the first two quarters of FY10,Indian industry has recorded a solid comeback in the second half, with double digitincrease in top-line and bottom-line. The corporate results available for 975 listedcompanies in March-10 quarter shows a Y-o-Y increase of 27.5% in Net Profit during theperiod. Salaries and wages also grew by 12.8% riding on company's plans to increase headcount and increment for existing employees.
Within the industry, the performance of Manufacturing sector was more robust than ofServices sector in the March-10 quarter. Though the economy showed clear signs of gainingmomentum, the increasing inflation emerged as a potential drag to the recovery process.
The overall positive impact on the Training sector will generally be witnessed with alag as most companies continued to withhold these budgets for the year. Yet there has beena palpable improvement in the overall business confidence.
Opportunities and Challenges
Around the fourth quarter of fiscal 2010, the stagnant job markets gradually began tosee movement as companies opened up to hiring again. While both campus recruitments andlateral Wring are expected to continue to gain momentum, there is a shift in trends postthe economic crisis. The downturn has cautioned companies against "anticipatoryhiring", lower productivity and expensive on-the-job training. Smart employers havedecided to filter their selections for life-skills - creativity, confidence, curiosity,learnability, and teamwork, rather than just technical skills. For freshers, employers nowrecognize that summer internships, extracurricular activities and non-academic coursesdemonstrate initiative, which is a strong predictor of workplace performance. OurFinishing School offers precisely such solutions to graduating students prior to enteringthe workforce. Your company has launched its Alliance Partnership Program to partner withvarious colleges and universities to offer skills development courses to their students.This is a key strategic focus for your company.
The major human capital trends in industry for the year 2010 offer significantopportunities for your company. One of the key thrusts of companies will be to mitigateturnover risk by restoring employee engagement. The skills shortage is far from over andan increasing demand for top talent will hit much quicker than realized. Re-engagingdemoralized employees who remain in the organization will be critical for restoring faithbefore they succumb to better opportunities. A range of talent engagement solutionscustomized to specific client priorities are offered by your company.
According to Mercer's most recent Market Issues Survey, organizations are alreadyshowing signs of placing a high priority on leadership development and were increasingtheir focus on investing for future growth. The survey found that while organization'swere reducing spend, they are also prioritizing areas for human capital investment, with82 per cent focused on building future capability in the critical areas of leadershipdevelopment, talent management and succession planning. They are reducing spend in otherhuman capital areas to help fund this shift. The top five areas in which organizationsindicated they planned to increase human capital expenditure over the next 12 months are :Leadership Development and Assessments, Talent Management and Succession Planning,Learning and Development, HRIS implementation, Work Lifestyle Benefits. Investment inleadership development will therefore continue to be a key component of any workforcestrategy that looks to a future of renewed profit and sustainable growth.
Outlook, Risks and Controls
The outlook for the coming quarters is positive, given the broad-based recovery that istaking place in the economy. However, the Greek debt crisis has dominated market sentimentrecently, reminding us that global economic uncertainty continues to be a reality. Oneimplication for India is that financial markets will remain volatile with no assurance ofsteady capital inflows to plug our current account deficit. Meanwhile, the good news onthe domestic front is that our economic recovery continues to remain robust whilecorporate results for the current financial year are predicted to hold up well.
Your company has completed the amalgamation of its subsidiary with itself and is nowmuch leaner and cost-efficient. With the positive outlook for the Indian economy, theindustry and employment we are optimistic about the short term and long term performanceof the company.
Cautionary Statement:
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.
Segmentwise Performance:
As per the Amalgamated Financial Statement, the revenue and results for the InvestmentDivision and the Training Division for the relevant period are reported in the notes toAccounts.
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.
Financial Performance with respect to Operational Performance:
As per the amalgamated financial statement, total income achieved during the year underreview is Rs. 1206.73 lakhs as against Rs. 1324.51 lakhs in the previous year (as per theconsolidated financial statement). Training income for the Company has been Rs. 1055.71lakhs as against Rs. 1168.06 lakhs in the previous year, showing a decrease of 9%. Afterproviding for taxation of Rs. 3.45 lakhs and recognition of deferred tax liability of Rs.48.49 lakhs, the results of the Company show a net loss of Rs. 127.84 lakhs as against theloss after tax of Rs. 353.13 lakhs in the previous year (as per the consolidated financialstatement). The operating loss of the previous year was Rs. 117.56 lakhs and its anoperating profit of Rs. 14.54 lakhs during the current year, aggregating to an improvementof 112%.
Human Resources:
Your Company considers its intellectual capital as its most valuable asset. Personnelpolicies of your Company are designed to ensure fairness to and growth of all individualsin the organization and continuously strives to provide a challenging work environment.The Company has developed a competency-based framework for growth with formalised careerpath in the organization. This provides a highly competent and aspirational careerenvironment to all our employees. The company has a comprehensive compensation andbenefits plan for all its employees. The Company also provides a strong learning culturewith an average 8 days of training per year for each employee. We have a strongPerformance Management System and code of conduct which reinforces our work ethics.