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THE WORLD IS TRANSFORMING 2017
The world is transforming and we are in the middle of the single largest transformation the world has even seen since the Industrial Revolution nearly 250 years ago. Big Data powered by Artificial Intelligence (AI) and Machine Learning is the next natural resource, like air, oil, water, and the convergence of Big Data and Cloud with AI and Machine Learning is a potential multi-trillion-dollar opportunity.
AI is transforming the way businesses are defined, designed and delivered and enterprise value is captured. The trend is accelerating as a recent research from Gartner estimates that customers will be able to manage 85 percent of the interactions with an enterprise without human intervention by 2020. In the years to come, enterprises will adopt a differentiated IT strategy by implementing AI and exploring the potential of Big Data.
TOP STRATEGIC IT INDUSTRY FORECASTS
According to a new research by Salesforce State of the Connected Customer, 57 percent of consumers expect voice-activated smart assistants to have a major or moderate impact on their daily lives by 2020.
Gartner predicts that 30% of all companies will employ AI to augment at least one of their primary sales processes by 2020.
According to Gartner, 20% of companies will dedicate workers to monitor and guide neural networks by 2020.
As per McKinsey, the total annual external investment in AI was between $8B-$12B in 2016, with ML attracting nearly 60% of that investment.
IBM Watson forecasts a $2 trillion opportunity in the ML market over the next decade.
IDC estimates that by 2020, transactions on the internet will reach 450 billion per day and enterprise-generated content will exceed 240 exabytes i.e. 240 billion gigabytes daily.
A survey by Veritas states that over 70 percent of enterprises has the opinion that cloud is no more optional for companies to remain competitive. According to IDC, 60 percent of ML will run on Amazon, Google, IBM, or Microsoft by 2020.
IDC predicts that the Cognitive Systems and AI market will grow from $8 Billion in 2016 to $47 Billion in 2020. Forrester predicts a 300% increase in AI investments in 2017 compared to 2016.
"We are entering a new world. The technologies of machine learning, speech recognition, and natural language understanding are reaching a nexus of capability." Amy Stapleton, Independent Industry Analyst : Opus Research
Information and communications, Manufacturing and Financial Services are the early adopters of AI and will see the highest growth rates driven by AI in 2035. (Source McKinsey and Accenture Research).
AI can make immediate contributions towards critical business decisions leading to increased profitability for the organizations. Some of the areas where the impact of AI can be felt almost immediately are supply chain management, forecasting, inventory optimization and production scheduling in Manufacturing, improving efficiencies by reducing the errors in repetitive, manual tasks including credit scoring and first-level customer inquiries for financial services. AI drives significant cost, time and process-related savings rapidly for all the industries. Availability of high-speed bandwidth, computing resources and growth in Big Data are the three key drivers for Artificial Intelligence and will continue to fuel AI implementation by enterprises for long term benefits.
The current AI wave is poised to finally break through
Investment in AI is growing at a high rate, but adoption in 2017 remains low
AI is a broad term that encompasses a lot of technologies with different capabilities to support decision making. One such technology is Machine Learning. Machine Learning implementation will grow as Machine Learning as a Service (MLaaS) and is estimated to grow from USD 613.4 Million in 2016 to USD 3,755.0 Million by 2021, at a CAGR of 43.7% from 2016 to 2021.
ML contributions across industries cover range of functions like customer services, sales & marketing, production challenges, data analysis and predictive analysis for decision making. The data rich organizations have a clear advantage because of MLs ability to learn and improve continuously.
Exponential Data Growth in terms of unstructured data and real-time data from IoT networks, and economics of digital storage and cloud computing are growth drivers for ML across industries. According to Gartner, 80% of enterprise data is unstructured and critical for strategic business decisions, further adding to an inevitable need for ML implementation.
IDC estimates that worldwide revenues for Big Data and Business Analytics will grow from $130 Billion in 2016 to more than $203 Billion in 2020, at a CAGR of 11.7%. Large companies will be the primary adopters of the Big Data opportunity, expected to generate revenues exceeding $154 Billion in 2020.
Big Data is making an impact across various business operations like customer sentiment analysis, hyper-personalized customer experiences, reducing churn rate of customers, understanding buying and media preference of customers, and fraud and risk management to mention a few. The major drivers for Big Data are business needs of innovation, potential for new insights and growth of data in various formats with huge potential to contribute to profitability of businesses.
As per Gartner, public cloud services market is poised to grow up from $209.2 Billion in 2016 to $246.8 Billion in 2017. Infrastructure as a service (IaaS) will continue to drive highest growth and is projected to grow 36.8 percent in 2017 to reach $34.6 Billion.
SaaS will continue to grow as second largest segment in cloud services market. Cloud services market will experience additional demand to migrate existing in-house infrastructure to the cloud because of Artificial Intelligence and Internet of Things (IoT).
THE CONVERGENCE IS REAL NOW
Data is growing faster than ever before. According to Marketing Cloud report by IBM, 90% of the data in the world today has been created in the last two years alone. Today, less than 1% of the worlds data is analysed, according to Digital Universe Study. Implementing AI technologies have the ability to harness the full potential of data.
AI and Machine Learning have been discussed for decades but the convergence of Big Data and Cloud with AI and Machine Learning is real now for three reasons:
a. Computing power: Computing resources available today are exceptional. With access to technologies like AWS, Microsoft Azure, computing power is no longer a constraint.
b. Bandwidth: Better availability of high bandwidth has positively impacted accessibility.
c. Data: Access to large volumes of unstructured and structured data is changing the information landscape at our disposal.
THE PARADIGM SHIFT
The last generation of trillion dollars were created out of traditional Indian IT technology businesses that were focused on back-end and costs. The next trillions of dollars will be created by front-end innovation driven technology companies focused on value.
AI is going to transform businesses faster than ever and the first signs of this transformation are seen in sectors like:
Energy: Advances in disruptive technologies will see potential challenges in Energy sector getting resolved. For instance, U.S. Energy Information Administration says that buildings account for 48.7 percent of overall energy consumption, more than any other industry. Powerful computation models built on Big Data and Cloud can help reduce dependency on energy, availability, costs and consumption.
Lifesciences & Pharmaceuticals: The use of transformative technologies to understand the complexities that arise from the combination of a variety of data from areas like clinical research, plants and animal genomics could reveal completely innovative approaches to treatment of diseases.
Data Infrastructure: There is a huge opportunity for Information Management in the areas like Data storage, Fraud Detection and Prevention, Compliance Reporting, Risk Management to name a few.
THE TECHNOLOGICAL DISRUPTION
AI will define industries both new ones and old leveraging Big Data, Cloud and Machine Learning to transform data into a valuable knowledge asset and a catalyst for disruption. Every human life and business in this world will be transformed with this disruption and millions of transformative businesses will be created. The result is a brave new world and a transformation of an old world.
The Opportunity - Discovering AI is the new normal
As the world transforms, businesses are going to end up with haves and have-nots in the AI space. There will be businesses with resources to implement AI solutions and use AI to get to decisions, and there will be businesses standing still in the have-not space. According to a Forrester report "Predictions 2017: Artificial Intelligence Will Drive The Insights Revolution", businesses adopting AI will take revenues worth $1.2 trillion per annum from their less informed peers by 2020. Discovering the power of AI for your business will be the new normal.
Your company solves the worlds complex and most interesting business challenges with AI, transforming organizations into "AI-first" leaders by enabling its customers to create AI solutions that transform their businesses and industries. Your companys products and services address all the transformational AI needs of an organization from strategic workshops and ready-to-deploy solutions, to implementation of transformative business solutions through its AI as a Service (AIaaS) leveraging Big Data, Cloud & Machine Learning experience.
Businesses need a lot of elements to implement AI. They need an element of Big Data and Cloud which is provided by Cambridge Bigdata where your company serves enterprise clients, then they need the elements of Cambridge Bizserve that allows to manage data, then they need elements of innovation offered by Cambridge Innovations that help businesses leapfrog and most importantly, draw insights to take the decisions, offered by Cambridge DataScience. Your companys offerings fit together because of its understanding towards the entire lifecycle of a business.
Building the Foundation
In 2015, your company envisaged a two-year business plan for 2015-16 and 2016-17 to focus on three areas building partnerships, acquiring referenceable clients in its chosen verticals and acquiring relevant expertise in technologies. In 2016-17, your company achieved the revenues of INR 100 crores while serving marquee enterprise clients like Schneider Electric, Hills Pet Nutrition and Iron Mountain. In the last two years, your company has put together the foundation that allows it to be better prepared to take advantage of the market opportunity.
Through its partner network, your company gains access to the best technology framework and solutions, strengthening its delivery capabilities.
Amazon Web Services: Your company has developed deep relationship with AWS spanning all disciplines in the organization and has invested consistently in the AWS technology stack. Your company has successfully delivered several projects on AWSs technology, including; Redshift, SaaS applications, Dev/Test and QA environments, Architecture Design and Implementation, BI/BA, S3, Glacier and more. Your company is committed to continue building its AWS relationship and leveraging technology for the benefit of its customers. In 2017, your company has further strengthened its relationship with AWS by achieving Big Data Competency Status, Oracle Enterprise Applications Competency Status, DevOps Competency Status and Managed Service Provider Status.
Atlassian: As an Atlassian Solution Partner, your company will be consulting, implementing and delivering solutions to customers, enabling them to unleash their teams potential. By leveraging products like by JIRA Software, JIRA Service Desk, JIRA Core, Status Page, Confluence, Trello and HipChat, customers are able to quickly collaborate on various issues and experience better project transparency.
Apica: Apica is a leading provider of monitoring and load testing software. Your companys partnership with Apica will assist its customers to determine maximum capacity limits, monitor daily performance, establish performance benchmarks, reduce business risks and optimize infrastructure investments, resulting in lower bounce rates and higher revenues.
CA Technologies: Your company has joined CA Technologies partner program to leverage their broad array of leading edge solutions. Partnering with CA gives its customers access to technology and technology experts that expands and accelerates their technology adoption cycle personalized for their specific needs.
ForgeRock: Your company has joined ForgeRocks partner program to leverage ForgeRocks identity solutions.The partnership provides both existing and new customers with an added array of application migration, development and managed services offerings coupled with ForgeRocks Access Management, Identity Management, Identity Gateway and Directory Services. This will help customers that are looking for end-to-end solutions to take advantage of our full suite of offerings.
Microsoft Azure: Your company provides Microsoft Azure deployment and migration services to help clients reduce cost and rapidly build, deploy and manage applications across a global network of Microsoft-managed data centers. Your company specializes in Cloud Assessment, Cloud Roadmap & Strategy, Cloud Migration and Consulting, Analytics, Big Data on Cloud and IoT.
New Relic: Your company joined the New Relics partner program in 2014 and has been using New Relic technology since 2013. By incorporating New Relics solutions, your company benefits from an increased top line and critical product differentiation. Your company includes New Relics functionality in its offerings to provide monitoring capabilities to a large percentage of its customer base. Oracle Gold Partner: Your company has obtained Gold Partner status with Oracle making it eligible to develop, sell and implement the full stack of Oracle products and solutions.
Pentaho: Your company has partnered with Pentaho which allows it to apply Pentahos business intelligence offerings to meet its customers need for powerful business analytics and data integration. Pentaho, a Hitachi Group company, is a leading data integration and business analytics company with an enterprise-class, open source-based platform for diverse big data deployments.
Rackspace: Your company has joined the Rackspace Partner Network to provide its customers with a portfolio of Hybrid Cloud solutions. Rackspace is a leading provider of hybrid clouds, which enable businesses to run their workloads where they run most effectively whether on the public cloud, a private cloud, dedicated servers, or a combination of these platforms.
Tableau: Your company has obtained the status of Preferred Alliance Partner with Tableau making it eligible to integrate Tableaus software into its Cloud and Big Data solutions that it deploys to help clients unlock the power of data. The partnership will combine the global talent pool and client reach of your company with Tableaus breakthrough analytics technology.
Focused on verticals: Your company has added a referenceable client in each of its verticals - Energy and Utilities, Life Sciences & Pharmaceuticals, Industrials, BFSI and Data Infrastructure.
Certified Workforce: Your company is one of the few organizations in the world with 100 percent AWS certified Cloud Operations Center with the ability to provide 24/7 management of Public, Hybrid and Private cloud architectures.
Certifications and Accreditations: Your company is appraised at the Level 5 of the CMMI Institutes Capability Maturity Model Integration (CMMI) v1.3 for its services. This indicates that CTE is operating on highly "Optimized" processes. There are only~30 companies appraised at this level for services in India.Your company is also certified withISO 9001:2008, ISO 27001:2005 which affirms that your company is highly committed to business solutions and processes it follows in serving its clients.
Global Presence: In line with providing its global clients access to 24/7 development cycle, your company reinforced its U.S. presence and expanded its offshore delivery centers in India.
Your company is pleased to announce its Vision 2020. For our Vision 2020, your company will focus on the following: a. Organic Growth: Over the next three years, on an average, your company expects an annual revenue of $10M approximately from each of its four growth drivers i.e. Cambridge Bigdata, Cambridge Bizserve, Cambridge DataScience and Cambridge Innovations. b. Upside from equity: Your company believes it will take 3-5 years to generate liquidity from its investments.
c. Inorganic Growth: Your company has the potential to explore inorganic growth opportunities.
Your company expects that the above three revenue streams will yield results in the next three years to hopefully achieve $50M revenues with focus on profitability.
Your company gives organizations unparalleled access to cutting-edge technology by bringing together the best-in-industry using its years of expertise in building solutions for some of the worlds largest and most innovative enterprises. Your companys expertise across multiple domains makes it the preferred choice for organizations seeking an AI Partner to innovate and leapfrog the market.
THREATS, RISKS & CONCERNS
The potential threats and risks are usually aligned either to change in the external environment such as changes in the technology/customer preferences/business dynamics or finding the right talent and retaining them. Your company is well positioned to minimize the potential identified threats and risks, and the way it does is detailed below:
Changing Technological Trends
With the moving pace of technology and the way these variables change with time, it becomes imperative for the service provider to keep up with the pace and adopt the learning curve. We constantly endeavor to stay ahead of the technology curve by building capabilities to meet the current and future needs of our customers.
At CTE, all employees undergo relevant set of trainings imperative to serve the existing and future business needs. This helps greatly minimize the risk of change of technology.
Attracting and Retaining Talent
Finding the right kind of talent and retaining them could pose a challenge for any business like ours. The dynamic nature of technology, increasing demand from clients, etc., warrants the company to focus on finding the right kind of talent and their retention for its existence and delivering sustainable growth. Hiring the best of the breed talent forms the core belief at CTE.
Exchange rate risk
A substantial part of the CTEs revenues accrues in US dollars, therefore inevitably exposed to fluctuations in exchange rates of foreign currency. Any major change in foreign currency exchange rates will have an impact on the companys earnings.
The IT Services industry is intensely competitive with local and MNC players having a sizable presence. Competitive pressure could adversely affect pricing strategy for services impacting growth and profitability. Over the years, CTE has developed deep domain knowledge and delivery capabilities with skilled workforce which has made the organization to remain competitive.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Snapshot (In INR Lakhs)
|Tax Expense / (Tax Benefit)||376.17||(251.21)|
|Reserves & Surplus||2569.02||1915.82||34%|
Revenue increased by 53% to INR 10060.36 Lakhs for the year ended 31st March, 2017 as compared to INR 6582.49 Lakhs for the same period last year. b. Net Profit & Reserves and Surplus
Net Profit increased by 86% to INR 1688.30 Lakhs for the year ended 31st March, 2017 as compared to INR 905.69 Lakhs for the same period last year. As a result of increase in the consolidated profit, Reserves and Surplus have increased from INR 1915.82 Lakhs in FY 2015-16 to INR 2569.02 Lakhs in FY 2016-17. Accumulated losses and unamortised goodwill as on March 31, 2016 have been adjusted against balance of Securities Premium Account. c. Fixed Assets
Net fixed assets stood at INR 860.96 Lakhs as on 31st March, 2017 compared to INR 1900.45 Lakhs as on 31st March, 2016. d. EBIDTA
The EBITDA increased by 93% at INR 2205.42 Lakhs for the year ended 31st March, 2017 as compared to INR 1142.89 Lakhs for the same period last year. e. Expenditure
Total Expenditure increased to INR 7854.94 Lakhs for the year ended 31st March, 2017 as compared to INR 5439.60 Lakhs for the same period last year. Out of the above, Employee cost stood at INR 4186.42 Lakhs in FY 2016-17 as compared to INR 3407.25 Lakhs for the same period last year.
STANDALONE FINANCIAL HIGHLIGHTS
Snapshot (In INR Lakhs)
|Year||2016 17||2015 16||Growth|
|Tax Expense / (Tax Benefit)||269.86||(245.77)|
|Reserves & Surplus||756.43||1309.20||-42%|
Revenue increased by 31% to INR 3865.55 Lakhs for the year ended 31st March, 2017 as compared to INR 2945.33 Lakhs for the same period last year. b. Net Profit & Reserves and Surplus
Net Profit decreased by 24% to INR 424.36 Lakhs for the year ended 31st March, 2017 as compared to INR 558.50 Lakhs for the same period last year. As a result of decrease in profits, and due to adjustment of accumulated losses and unamortised goodwill as on March 31, 2016 against balance of Securities Premium Account, Reserves and Surplus have decreased from INR 1309.20 Lakhs in FY 2015-16 to INR 756.43 Lakhs in FY 2016-17. c. Fixed Assets
Net fixed assets stood at INR 118.86 Lakhs as on 31st March, 2017 compared to INR 836.19 Lakhs as on 31st March, 2016. d. EBIDTA
The EBITDA decreased by 3% at INR 469.34 Lakhs for the year ended 31st March, 2017 as compared to INR 482.17 Lakhs for the same period last year.
Total Expenditure increased to INR 3396.21 Lakhs for the year ended 31st March, 2017 as compared to INR 2463.16 Lakhs for the same period last year. Out of the above, Employee cost stood at INR 2063.19 Lakhs in FY 2016-17 as compared to INR 1613.70 Lakhs for the same period last year. The details of the financial performance of your company are appearing in the Balance Sheet, Profit & Loss Account and other financial statements forming part of this Annual report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your companys board and management team monitor and make enhancements to your companys systems for internal control and risk management on an ongoing basis. Your companys efforts towards this go beyond what is mandatorily required, with active monitoring and review to ensure adequacy of control systems and to identify potential risks as well as recommend or implement measures to mitigate them.
Your Company has a proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, reported and recorded correctly. Your companys internal control system is adequate considering the nature, size and complexity of its business. Your companys internal control systems provide, among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of company assets. These also enable your company to adhere to procedures, guidelines, and regulations as applicable in a transparent manner.
Your companys internal control systems are supplemented by an internal audit program and periodic reviews by the management. Your company has appointed an independent audit firm as its Internal Auditors and the Audit observations are periodically reviewed by the Audit Committee of the Board of Directors and necessary directions are issued, wherever required.The existing internal control systems and their adequacy have been reviewed extensively during the year by internal auditors and statutory auditors. They have expressed an opinion that the internal control system is adequate and functioning effectively.
HUMAN RESOURCES / INDUSTRIAL RELATIONS
Your company is committed to create an environment of learning and development, promote internal talent and build an appreciating culture. Your Company has created platforms for recognizing and motivating employees for the good work they do in the organization. Sound human resource development policies of your Company ensures that each employee grows as an individual and contributes to the performance of your Company. It also works towards building a work culture aimed at achieving higher performance orientation.
Our employees are our most important and valuable assets. All your Companys policies are focused towards a healthy, happy and prosperous work environment for its employees and thereby also fulfill the aspirations of the people at work. Your Company along with its subsidiaries ended the year with a headcount of 317. The key elements that define our culture include professional working environment, training and development, and compensation.
Certain statements in this report or elsewhere in the Annual Report may contain statements concerning Cambridge Technology Enterprises Limited and its growth prospects, expected financial position, business strategy, future development of the companys operations, general economy, industry structure and other developments that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of actual results, future performance or achievements and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, changes in government policies or regulations of India, changes relating to the administration of the company, the companys ability to successfully implement its strategy, the Companys future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Companys market preferences and its exposure to market risks, as well as other risks. The Companys actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this report. The Company assumes no obligation to update any forward-looking information contained in this report.