Cranes Software International Ltd Management Discussions.
(Note: This discussion covers the consolidated financial performance of Cranes Software International Limited and its subsidiaries)
Cranes Software International Limited (NSE: CRANESSOFT, BSE: 512093), is a global scientific & engineering products and solutions provider. The Companys business interests have focused on software products (proprietary products and product alliances), Solutions (Business Data Analytics & Engineering Services) and Services (training in niche domain areas). The company is dedicated to excellence and recognized leadership in technical software products and training services and will remain focused on product development, consulting, distribution and training.
Global Business Environment:
Gartner Report for IT Services Worldwide forecasts showed the market reaching $1.1 trillion in 2019 in significant reliance on outsourcing growth. Over the past year, global economic forecasts have been revised down based on certainty due to trade tensions, political upheavals, and associated decline in business and consumer confidence. Indias current market conditions indicate weakness in the performance of the industrial sector and slowdown in manufacturing and contraction in services. In the IT sector, the wait-and-see game for IT & related outsourcing companies continues as a result of regional and global uncertainties. Yet, fundamental aspects of the business landscape continue to be favorable, especially for companies which anticipate and prepare for changes in the rapidly evolving arenas of cloud computing, analytics, AI and digital transformation, as well as associated expansion of IT services.
Cranes Software: Business Initiatives & Structure:
Over the year under review, the Company has sharpened its focus on stability\and growth of its core businesses with business transformation processes which leverage its legacy recognition, strengths, core competencies and global presence. The Company continues improving operational effectiveness, optimizing costs and increasing market reach across its core business areas. Favorable impact on business revenues and operating margins have been achieved with targeted resource infusion and strategic leadership support, and we strongly believe the Company is positioned for significant evolution and growth.
As reported over past few years, your Company Management has dedicated itself to redressing Cranes financial difficulties stemming from the 2007-2008 global crisis. We have single-mindedly strived to protect the interests of our stakeholders (including shareholders, employees and business partners) at all cost, by way of a range of debt-freeing and litigation-freeing actions on your behalf including negotiated settlements to clear up extensive institutional debts and financial liabilities to employees, vendors and partners, as well as careful resolution of critical legal, statutory and compliance cases. While the downside from the final remaining legal actions remains of serious concern, Cranes Management is gratified to have saved the overall Cranes parent business for its valued stakeholders so far through these continuing crises. We remain fully dedicated to and cautiously optimistic about the stability, revival and expansive growth arising from our core businesses by strategically evolving from its heavy-duty Enterprise Software, Business Intelligence & Engineering Technology structure and manpower staffing orientation to a nimble, Assets-Lite and IP-rich business targeting its core strengths in the Technology/ Industry education and training arenas.
On a standalone basis, the Companys Cranes Varsity division has reinforced its position in the training and education market and is positioning itself for new growth by i) expanding the scope and reach of its legacy training strengths, ii) developing offerings in cutting-edge technologies such as Analytics, IoT, Cloud Computing and AI, and iii) targeting the expansive on-line training business in reliance upon expanded internal resources and expertise while also launching strategic collaborations with recognized market players. Some of the highlights this year are as follows:
Details - FY 2018-19: Corporate:
1. Added new clients:
- Royal Enfield, Allegion, Integra Micro, Collins Aerospace, SDSC.
2. Delivered training to existing Corporate & Defence:
- Infinera, Autoliv, NPOL, Indian Naval Academy, Sharp.
3. Major client:
- BEL Academy of Excellence - Delivered 12 trainings, for all BEL units, PAN India, majority of the trainings were on FPGA, DSP &Matlab. Trained 250 participants of BEL India.
- DIAT - For the second year of our Training Contract, Varsity has delivered trainings to 5 batches of 267 participants.
4. Over all delivered training to 828 participants across India.
5. Explored new technology trainings on Machine Learning, Deep Learning, CAN Protocols, Autosar.
1. Technical Workshop/ Value added training - More than 1200+ students got trained and enhanced their technical skills. We have established good relationship with more than 20+ potential colleges, to name a few - SIT-Tumkur, Satyabhama University - Chennai, PES-Mandya, NitteMinakshi-Bangalore, BMS- Bangalore, Gopalan college, T. John and many more.
2. Internship program- 180+ students across Karnataka enrolled for paid internship which set a new business line and new benchmark for us, as university has made it mandatory to do Internship.
3. Placement Oriented Program (POP) - Successfully Executed POP for Chitkara University -Chandigarh, Nagarjuna College of Engineering-Bangalore, Cambridge-Bangalore, Centurion University - Odisha, & Techno India NJR - Udaipur. We are expecting a recurring order in FY-2019-20.
1. Trained 702 students for the year in professional Diploma in Embedded System & Embedded IOT.
2. Included new modules in Embedded course Automotive, Communication protocols which is the current demand of our industry.
3. Included new module in IOT course Machine Learning, AI as industry is looking for trained resources with these skills.
4. Launched trainings program on VLSI.
5. Procured hardware for providing it to our students. We are also provided note books, pen & bags to in house batch students.
Major clients for Placements Collins Aerospace, Mahindra Electric, L&T Technology Services, Nexteer Automotive, Tech Mahindra, HCL Technologies, Tektronix Inc., Harman, Accord Software, Invendis Technologies, SLN Technologies.
Employer Selected in large Numbers L&T Technology 45 Candidates; HCL Technologies 40 Candidates; Tech Mahindra 35 Candidates.
New Clients Great Wall Motors, Tektronix Inc., Mahindra Electric, Nexteer Automotive, Mando Software, EASi Engineering.
Sectors Hired the Most - Automotive, Aero, Electronics, Software & Hardware, Retail. Placement statistics 75% students placed.
Potentially Strong Area of Employment for 2020 - Big data Analytics, Machine Learning and Artificial Intelligence.
During the year, your Company, on standalone achieved a sales and operating revenue of Rs.1181.39 Million. The after-tax position was Loss of Rs.152.82 on standalone basis, as compared to loss of Rs.751.99 Million in the previous year. On a consolidated basis, during the year, your company together with its subsidiaries achieved a sale and operating Revenue of Rs.1360.94 Million, down from Rs.2633.83 million of the previous year. As noted above, the Company is also focused on improving its balance sheet position. Active discussions with secured and unsecured lenders for restructuring / closure of debts have yielded debt closure agreements with most of its institutional vendors as well as FCCB holders. We also continue to pursue various approaches to sustained operational profitability and reduced debt exposure.
Opportunities & Threats:
The impact from expected global and domestic economic downturns and business uncertainties remain a potential stumbling block for the planned business growth of your Company. However, we continue to see a significant upside to evolving from the complexity, bulk and market/geographic breadths of its prior Enterprise Software, Business Intelligence & Engineering Technology structure and orientation to a nimble, Assets-Lite and IP-rich business targeting its core strengths in the Technology/Industry education and training arenas.
Retaining our drive toward organization sustainability and operational efficiencies, the Company is leveraging its expertise, experience and domain knowledge in the fields of Vocational Training suited to the needs of emerging Technology, Digital Domains and Industry demands. The Companys balance sheet is fundamentally strengthened by clearing major secured and unsecured debts. With favorable settlement options secured over the past few years with a large set of secured lenders, the Company is optimistic about closing up one-time settlements with the last of such debtors. While there remains a high risk from pending Winding-Up litigation brought by CSILs FCCB holders, the Company has continued to sincerely and diligently engage the FCCB holders and expects to soon reaching a mutually-beneficial settlement which protects the business and interests of its stakeholders. The company also continues its active defense of the High Court proceeding and has recently obtained deferrals in support of a favorable legal and negotiated resolution. With some critical developments falling our way, we expect to deliver renewed value to our valued and trusting stakeholders by emerging in 2020 as a debt-free, litigation-free lean and focused new business.
The Company has developed and adopted a Risk Management Policy. This policy identifies all perceived risks which might impact the operations and on a more serious level also threaten the existence of the Company. The Company has laid down well-structured procedures for monitoring the risk management plan and implementing the risk mitigation measures. The strategic risks are taken into consideration in the annual planning process and these risks together with their mitigation plan are subject to review by the management on a regular basis. The business processes risks and the related controls would be subjected to internal audit and reviewed on a regular basis.
The Company continues to focus on business expansion while limiting the resources deployed to achieve such expansion. The mix of such members consists of Technology Experts, Sales and Marketing personnel manning the global offices.
Internal Control Systems:
Management recognizes the importance of strong internal control systems and processes to support further growth opportunities. We expect to benefit from and build upon the Companys certification under ISO 9001 standards in FY2002 and the subsequent achievements of SEICMM Level 5 during FY 2005, and ISO 27001 Information Security Management System in FY 2006 as well as SEI-CMMi Level 5 assessment for its processes.
Certain statements in this release concerning our growth prospects are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties, including government actions; local political or economic developments; technological risks; risks inherent in the Companys growth strategy; dependence on certain customers and business partners; dependence on availability of technical consultants and other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. The Company undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.