icra management consulting services ltd Management discussions

ICRA MANAGEMENT CONSULTING SERVICES LIMITED ANNUAL REPORT 2006-2007 MANAGEMENT DISCUSSION AND ANALYSIS Review of Operations: A period of high growth: The financial year to the end of March 2007 has been another fruitful and high-growth period for your Company, as reflected in the favourable financial results and an increase in the market standing of your Company in the Consulting industry. Revenue growth, at 24% year-on-year, was strong, accompanied by a more-than-proportional increase in profitability (38% year-on-year increase in Net Profit). Your Company has performed well across its various domains and practice areas. Achievements-growth through entry into new areas/regions and repeat assignments: While IMaCS has hitherto cumulatively completed over 650 projects for about 350 clients, a mix of national and international organisations, Governments, regulators, banks, and corporate entities, 113 assignments were won in the last financial year alone. These represent repeat assignments from existing clients as also assignments from new clients in new geographies-a reflection of expansion along with consolidation. Government and Infrastructure Practice-significant growth in multilateral / bilateral agency funded work: There has been significant growth in your Companys Government and Infrastructure Practice, largely with bilateral and multilateral agencies. Such agencies include The World Bank, The World Bank Institute, or WBI (the capacity building arm of the World Bank), Asian Development Bank, Department for International Development (DfID), Kreditanstalt for Wiederaufbau (KfW), and Japan Bank for International Co-operation (JBIC). There has also been a significant increase in the size and complexity of mandates that your Company has been awarded in this practice. Examples include a five-year World Bank-funded project for the design and development of an Internet-based database for Public Private Partnership (PPP) projects in the infrastructure sector and a recently-won engagement for developing infrastructure for a region in Himachal Pradesh, a State in Northern India. Energy Practice-substantial growth driven by investment needs of the private sector: Your Companys Energy Practice, largely in the sectors of Electricity, Gas, and Renewables, has shown strong growth in revenue, besides improvement in market standing. While several new clients such as HSBC, Teesta Urja, Torrent Group, and the Indian Railways have been added, the repeat business obtained from several key clients such as NTPC Limited, Bharat Heavy Electricals Limited, GAIL (India) Limited, GMR Group, and CLP reflects the increased standing of your Company in the Energy Sector. Not only has the average size of mandates increased in this Practice, but concentration risks arising from over-dependence on a few high-value mandates have also reduced, with the revenue being distributed better across a larger number of clients. Banking and Financial Services-a period of growth with consolidation: The Banking and Financial Services Practice of your Company witnessed a period of continued consolidation with some major international projects being won or getting under execution. Your Company won or executed mandates from clients in Africa, Western Europe, Sri Lanka, West Asia, Canada, and the United States, besides of course India. During the year under consideration, your Company concentrated on building intellectual property and knowledge frameworks so as to equip itself for a faster scale-up of business in the coming years. Corporate Advisory Practice-a period of diversification into new sectors: The Corporate Advisory Practice of your Company added some new verticals to its repertoire during the year under review, and won some prestigious mandates across the Automotive, Engineering, Hospitality, Media & Entertainment, and Healthcare sectors. Besides obtaining mandates from certain blue chip corporate entities, your Company partnered some leading industry associations such as the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI), India Brand Equity Foundation (IBEF), Society of Indian Automobile Manufacturers (SIAM), and Automotive Component Manufacturers Association of India (ACMA) to carry out certain milestone projects at the pan-industry level. Establishment of IT and Research Divisions as a backbone to consulting: In line with the business growth achieved, your Company has set up two specialist divisions for Information Technology (IT) and Research activities. The two divisions would provide the required support to the Consulting division and also produce value-added products for their own clients, besides creating and managing knowledge, and bringing out publications/reports on various sectors/ industries. Both the IT and the Research Divisions will further enhance your Companys effectiveness, besides enabling smooth scale-up of operations. Investment for consolidation and growth: Your Company has made significant investments in technology and human resources, and in establishing new systems and processes, and branding. These investments are aimed at stepping up the pace of revenue growth via scale-up of operations and increase in the values of individual mandates. Your Company also stands to benefit from the continuing interest of international investors and businesses in the Indian growth story, and from the increasing efforts by Indian companies to go global. Infrastructure: During the year under review, your Company moved its Head Office from New Delhi to a spacious accommodation in DLF Cyber City, Gurgaon (Haryana). Similarly, in Mumbai, your Company has moved its office to a new and spacious accommodation. Both the premises are on lease. Your Company remains committed to providing the best working conditions to employees, and the shift to the new premises is a step in that direction. Transfer to Reserves: At the end of the current financial year your Company proposes to transfer Rs. 14.89 million to the General Reserves. Human Resource Development and Training: Human resource development continues to be accorded high priority by your Company with emphasis being placed on improving skills, competencies and knowledge through regular training and external development programmes. Periodically, discussions are held between the Senior Management and Members of staff on issues relating to skill improvement, enrichment of the work environment, and career progression. Your Company has also introduced new Personnel Policies with effect from January 1, 2007 and put in place a new Performance Management System. The Directors hereby wish to place on record their appreciation of the dedicated, committed and high-quality services rendered by all employees and advisors of the Company.