Ontrack Systems Ltd Management Discussions

• OVERVIEW

ECONOMIC OVERVIEW

The Global business environment during the calendar year 2012 remained uncertain with Europe continuing to be in negative growth and North America showing slight signs of improvement in slow growth of just about 1 %. In the emerging markets like Asia-Pacific the growth is at a faster pace than the mature geographies on account of Government and big corporation spending to bring the IT on par with the global standards.

INDUSTRY OVERVIEW

According to the NASSCOM Performance Review 2013, IT-BPM exports (IT services and Business Process Management) from India are estimated to grow in fiscal 2014 by 12-14% to US$ 85 billion. According to the Global Tech Market Outlook for 2013 and 2014 an independent report published by Forrester Research Inc in January 2013, purchases of IT consulting, system integration services and IT outsourcing by Global businesses and government are estimated to grow by 4% in the calendar year 2013 when calculated in US dollars.

There are several factors contributing to the growth of IT and IT enabled services (ITES) in India and by Indian Companies. The nature of technology outsourcing is changing. Historically enterprises either outsourced their technology requirements entirely or on a standalone, project-project basis. In an environment of rapid technological change, globalization and regulatory changes, the complete outsourcing model is often perceived to limit a company’s operational flexibility and not fully deliver potential cost savings and efficiency benefits. To address these issues, companies are looking at outsourcing approach that require their technology service providers to develop specialized systems, processes and solutions along cost effective delivery capabilities for both domestic and global markets.

The companies major offering in the industry are broadly divided into four groups:

1. Technology Solution Group

2. Flagship portal tendertimes.com and Indiaonestop.com

3. IT service , support and networking

4. ERP implementation as Business associate of Microsoft , SAP and Open Bravo (details review of each division is given separately elsewhere in the report).

Technology Solution Group provides technical consultancies and advise the clients to upgrade their IT infrastructure with technical and hard ware support to face up to the challenges in the competitive business arena. We use in-house tools for project management for software delivery.

Tendertimes.com continues to hold a key position in the market by giving solution like reverse auction, e-tendering to major Government and Quasi Govt. appearing across the length and breadth of the country. Indiaone-stop continues to grow offering online business project report across the globe.

3. The Networking and Systems integration verticals has been the Company’s first unit of business and has consistently been growing. This division has been rendering support to various e-governance within the locality in the state of West Bengal apart from continuing to focus on small and medium stage business segment by offering one stop solution.

4. Specialized Team delivers ERP solution on various packaged software platform like Microsoft Dynamics, SAP B1 based on the customers requirement across the country.

• FINANCIAL CONDITION

Share Capital:

The Company’s paid up capital remained at Rs. 1934.20 Lakhs and there were no fresh issue of any capital.

Revenue:

The Company earned total revenue of Rs. 10539.02 Lakhs in the fiscal 2012-13 compared to Rs. 10368.81 Lakhs in fiscal 2011-12

Share Premium A/c.

There was no change in the share premium account and the present Share Premium a/c stood at Rs. 772.48 Lakhs.

Shareholders Fund:

The total shareholders fund increased to Rs. 2923.76 Lakhs as at 31^st March, 2013 as against Rs. 2803.24 Lakhs in the previous year.

Net Worth	:	2923.76 Lakhs
Application of Fund:
Gross Block	:	1467.31 Lakhs
Addition	:	6.22 Lakhs
Deduction	:	Nil
Investments:
Subsidiary	:	657.05 Lakhs
Associates	:	30.72 Lakhs
Deferred Tax Assets/(Liabilities)	:	32.99 Lakhs
Sundry Debtors	:	7307.44 Lakhs
Loans & Advances	:	48.20 Lakhs
Current Liabilities	:	7136.07 Lakhs
Provisions	:	10.21 Lakhs

Segment-wise performance:

Separately given

Risk & Concerns:

Revenue and expenses are difficult to predict and can vary significantly from period to period. Profit margin may be affected either positively or negatively as per circumstances. Revenue are dependent on a very small pool of clients, loss of any one or more client may affect the bottom line. Ability to retain highly paid skilled power in a competitive business environment for a small company like us. Competition from large national and international companies always with new crop up technologically superior to small & medium size companies would affect climatically new orders book position.

Risk Management:

The global economic slowdown continues to be cause of worry. Macro economic development in the Euro zone with possibility of sovereign default is an area of concern since our company is has greater exposure to currencies from this zone. The Middle East business environment also remains bleak to the unstable political situation. Australia is stable but not much new business is

At the macro level the Company has devised a mechanism for identification and prioritization of risks to include risk survey, business risk, introductory risk, financial risk, scanning and focused on the prospective client’s business activities.

Identified risks are used as one of the key inputs to the marketing team for formulating the business development plan.

Outlook:

We seek to further strengthen our presence both domestically and internationally by offering repertoires .of service in our basket.

Details outlook for each verticals are separately given under the revised of operating group.

Human Capital:

The total employees’ strength as on 31st March, 2013 is 145. The company has created a performance driven environment where innovation is encouraged and performance is recognized and employees motivated to realize their potential. The company encourages both external and in-house training program to upgrade the skill sets of the existing pool of executive to the new challenges in the technological field. Employee’s health and safety are of crucial importance. All the employees are covered under the group medical insurance and time to time health checks up is undertaken in consultation with the medical insurance company.

Quality:

The ISO 9001-2008 certification includes Company’s state-of-the art Global Delivery Centre at Salt Lake, Kolkata, Enterprise Solutions Group, Service & Support Division, Human Resource Department, Accounts Department, Tendertimes.com, IndiaOneStop.com. Internal audit checks are conducted once every quarter for all the units. The software division of the Company is continuing its efforts to be CMM level 4/5 compliant and to implement ISMS (Information Security Management System) in its salt lake facility.

Disaster Management & Recovery:

The Company has established an independent data center to mitigate against any type of disaster against loss of any live data. The Company has also laid out a disaster recovery and prevention plan. The Company can replicate and maintain within shortest possible time.