org informatics ltd Management discussions

ORG INFORMATICS LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS Annexure-I Introduction: ORG is currently engaged in the business of Telecom/IT Systems Integration, Managed Services, Satellite Communications, Software Services including AMC/FMS Services in IT and Telecom sector. The Company has been able to maintain its position as a major player in System Integration business in Government Domain with dominant market share for turnkey projects and make forays in satellite domain and content delivery. Major System Integration Projects have progressed to customers satisfaction resulting in Repeat business and extension of AMC and FMS contracts. While the impact of Global recession has been profound on domestic front, however ORG was insulated to some extent due to lower dependence on export business. However the company had to face severe cash crunch resulting in cash flow issues putting a strain on acquisition of new business. But ORG due to its resilience and dedicated staff managed to survive the crisis and focused on completing the ongoing contracts. Business Vertical REVIEW: Telecom/IT Systems Integration & Services: Industry structure and Developments: Indian economy was not insulated from the ramifications of Global meltdown, however Telecom vertical has been showing sustained growth and there is increased awareness that Telecom/IT are growth engines to boost productivity and competitiveness in the Industry. Government has realized rightfully and taken initiatives for using Technology to empower citizens through E- Governance, which has resulted in increased Telecom /IT spending by Corporate and Government sector alike. Governments E- Governance program has laid increased emphasis on the turnkey solution requirements, which has resulted in increased deployment of computing infrastructure and networks. A significant trend was increase in Data centers, Connectivity, and the last mile solutions. These have been historically the skill sets of ORG. Thankfully these initiatives of Government and Corporate sector together have opened up tremendous opportunities for System Integrators and Service provides. Opportunities and Threats: The initiatives taken by Government and Corporate sector and renewed emphasis on expanding IT/Telecom infrastructure to rural areas provide ideal target market for the company, which is historically established in the above space. The renewed emphasis and consolidation among its client base provides company an exciting opportunity to be able to expand its business and target higher profitability. Outlook: The Company had embarked on consolidating its position by focusing on acquiring in house skill sets ,solutions and service provision during the year which has resulted in acceptance of company as a one stop solution provided which is evident from the repeat business the company is able to attract and win. The new opportunities have promised a larger market share for the company. Risks and Concerns: Telecom/IT sector in ndia has multiple players both domestic and international operating in the market. There are continued competitive pressures on margins and sales. Additionally, cash flow remains a major constraint as ORGs ability to secure and execute large project profitably. Telecom: Industry Structure and Developments: Telecom sector in Indian Subcontinent, CIS, Africa and South East Asia continue to be under tremendous growth stage. With the Government initiative and Corporate emphasis has fuelled technological advances and newer service offerings there is a renewed growth in the systems requirement for servicing the growth. The main impetus is from the subscriber growth being witnessed in these markets which is driving the growth for equipments and services. Opportunity & Threats: Increasing public and private investment for satellite services in broad casting services (TV, Mobile Earth, Fixed Earth solution), Teleport Services (Carrier SCPC etc.) and SATCOM (Telecom conversion). Belgium Satellite Services SA (BSS) being among the top satellite service provides worldwide will be able to exploit these opportunities. Outlook: The Company has major projects under execution phase and is pitching for diversification in private sector with emphasis on scaling services business. Telecom segment and Services offering have shown tremendous growth and is on path to much higher numbers. Risk and Concerns: Increase in opportunities in Telecom/IT segment has attracted global solution provides and increased number of domestic players which has resulted in increase competition and lower margins. Additionally, cash flow remains a major constraint as ORGs ability to secure and execute large project profitably. Satellite Services: Industry Structure and Developments: Satellite services industry cover broadcast teleport services, SATCOM (Telecom conversions) and satellite teleport services. Satellite services market to reach amount USD14.8 billion by 2019 and more than 1200 satellites are expected to be lunched in next 10 years. With proliferation of HD and Digital TV the Broadcasting services as an area is looking up Europes industry is well placed to exploit these opportunities with numerous world cast broadcasters. Opportunity & Threats: Increasing public and private investment for satellite services in broad casting services (TV, Mobile Earth, Fixed Earth solution), Teleport Services (Carrier SCPC etc. ) and SATCOM (Telecom conversion). Belgium Satellite Services SA (BSS) being among the top satellite service provides worldwide will be able to exploit the opportunities. Outlook: The Company has plan for expansion and strengthen the penetration to increase the subscriber base within the Belgium and PAN Europe. The company has robust business plan to concentrate on customer satisfaction, explore business opportunities in Africa, strengthen tie with Asian Channels and market share maximization. BSS expects significant business growth with sustain profit margins. Risk and Concerns: The major concern for the company is completion on band with pricing and advancement in Technologies. Hence the Company is planning to concentrate on quality of services at competitive pricing. Software Services: Industry Structure and Developments: Software development and services has been and remains the key driving force in deploying IT services. It has gained impetus from the initiative taken by the Government for rolling out E-Governance solutions and Corporate initiative of increasing efficiency and productivity in business. The BFSI segment is gaining impetus with more and more financial solutions using IT domain to provide services to ever expanding customer base both in Urban and Rural India. Immense opportunities are opening up in Global markets by way of out soused software development. Opportunity & Threats: The Software services business of the company has being carried out through its wholly owned subsidiary Tech Unified, Which is a new venture for the company and started its operation in the third quarter of the fiscal year ended March, 2008. The company is making its strategy to grab the opportunities available within the Middle East and domestic markets focusing in BFSI segment. Outlook: The Company has plans for diversifying and building BPO business and providing managed services for software solutions. We envisage seeing some significant revenue growth and increasing in profit margin through this segment of business, as it compliments the Services business of ORG in Telecom/IT domain. The jobs which were outsource earlier can now be undertaken in house thereby providing one stop solution. Risk and Concerns: According to Industry reports new players are emerging in this segment both domestic and Global. There is increased pitch of developed countries not to outsource to ensure in house jobs is basically the risk and concern for the Companies business under the segment.