Powersoft Global Solutions Ltd Management Discussions

POWERSOFT GLOBAL SOLUTIONS LIMITED ANNUAL REPORT 2009-2010 MANAGEMENT DISCUSSION AND ANALYSIS Industry Development: The fiscal year 2009-10 can be described as a year of economic turbulence. The mortgage and financial crisis took over the global economy, followed by unemployment, declining GDP and a weakened demand environment. The global IT industry was also affected adversely by this turmoil. Keeping this in mind, the Indian global sourcing industry is expected to reach $ 175 bn in revenues by 2020. This will imply a slightly lower CAGR of 13% and a decline in Indias share of global market from 51% to 40% in 2020. The India share decline may be reduced if substantial efforts are made to reform education, enhance capacity, improve the business environment, and reduce risks. The clients are looking to their Indian IT service providers, not only to reduce costs, but also to partner with them in these difficult times. Looking beyond labor cost arbitrage benefits, they are seeking transformative offerings with a stronger business case. The vendors are also making focused investments in capability building across domains, processes, and technologies to deliver enhanced value propositions to their customers. The Indian IT industry as whole is looking to diversify beyond its key offerings and markets, and has been defining new business and pricing models in order to ensure continued growth in revenues and net profitability. At the same time, we are witnessing rapidly changing. customer demands and expectations. Customers are also maintaining a cautious approach while spending money on their IT requirements which has resulted in drastically reduced technology related spending Our Business Your company operates in the following key disciplines: The companys RFID division delivers solutions that match real-time supply and demand to minimize waste and loss of productivity and maximize safety and security across the global supply chain. Our breakthrough wireless technology assures delivery of goods and services at the right time, right amount, right place, right cost and right quality. Our GIS division works with customers across the geospatial technology lifecycle. We help customers use geospatial technology to improve the way they do business. This division provide consulting, system design and solution architecting, application development, system implementation and integration to a global list of clients. For instance, we design, develop and integrate applications that enable utilities and telcos to optimize their network planning and provisioning, increase operational efficiency and enhance customer service quality. Our Engineering Services division represents more than four decades of knowledge, expertise and project management Skills. The broad range of experiences and knowledge we have provides us with an opportunity to help our customers transform their businesses - and all of these at cost effective prices. Our capabilities include: Computer Aided Design, Product Design, Conceptual design, component design, assembly design, Interference checks and tolerance analysis for components and assemblies, and 3D Modeling. Operations Review Considering the turbulent business situation, your Company has achieved stellar growth for the financial year ended March 31, 2010. Total revenues of the Company grew to Rs. 4479.63 lakhs for 15 months period ended March 31, 2010 as compared to Rs. 2359.94 lakhs for 15 months period ended December 31, 2008, a growth of 90%. Total net profit of the Company grew to Rs. 447.58 lakhs for 15 months period ended March 31, 2010 as compared to Rs. 325.81 lakhs for 15 months period ended December 31, 2008, a growth of 37%. In summary, all areas of the company recorded above average growth. All this has been due to our resolve to face the unfavorable business conditions with a strong business strategy and sharp focus on profitability, ensuring us such high growth rates. This past year, we have remained focused on retaining existing customers, increasing average revenue per engagement, reducing operational costs, and increasing client profitability. By improving internal business processes, investing in extensive training for our people, and investing in systems infrastructure, we have managed to reduce per employee cost as well as significantly increased average employee productivity. Your Company at the same time remained cautious with its capital expenditures to ensure optimum balance of profitability and liquidity. Subsidiary Companies The Consolidated Results includes Powersoft Global Solutions Limited and its Subsidiaries RFID Global Solutions Private Limited, PGSL Holdings Private Limited, Exclusive Luxury Group (India) Private Limited & Youngstars Media Private Limited. The accounts of the said subsidiary companies have not been attached with this Annual Report. As per the provisions of Section 212 of the Companies Act, 1956 (hereinafter referred to as the Act), your Company is required to attach the Directors Report, Balance Sheet, Profit and Loss Account and other information of the subsidiaries to its Balance sheet. Your Directors believe that the audited consolidated accounts present a full and fair picture of the state of affairs and financial conditions of the Company and its subsidiaries, as is done globally. Your Company had applied for an approval under Section 212(8) of the Companies Act, 1956 from the Department of Company Affairs, Ministry of Finance seeking exemption from attaching the Accounts of subsidiary companies with the Annual Report of Powersoft Global Solutions Limited and to provide the accounts in the same manner as certified by overseas auditors where the subsidiary is situated. The statement as required under Section 212 has been prepared on the assumption that the Company would receive the approval and the same is given as part of the consolidated accounts in the report. The consolidated financial statements of the subsidiaries duly audited are presented along with the accounts of your Company. The annual accounts of subsidiary companies are kept at the Companys registered office and also at the respective registered office of the subsidiaries for inspection and shall be made available to the members seeking such information. Technology and Quality Focus In todays world, technology is witnessing rapid change. Since our customers expect us to lead them through such change, we proactively & continuously invest in developing technology building blocks and solution frameworks which add value to our customers business. Your Company uses a multi-pronged strategy for developing technology assets and to promote highest quality focus. These technology initiatives are based on the trends that seen in the different markets. These efforts help us in two ways; gaining our customers trust & confidence; and attracting & retaining key talent who see us as a more exciting place to work in. Growth Strategy Your Companys strength revolves around our ability to understand the requirements of its clients and to continuously build the competencies and capabilities to provide integrated solutions unique to client specific needs and industry demands. Your Companys unique capabilities augmented by a clear understanding of industry trends and deep knowledge of global business models allows it to leverage strong partnerships,technology innovations and talent to deliver excellence through global delivery models. Recognizing the need for scale and capacity in competing for large contracts against larger players, your Company is making substantial investments in expanding its base of people and world class infrastructure facilities. Future Outlook The role of technology has evolved from support to transformation for global companies. The ability to design, develop, implement and maintain business and technology solutions, addressing the business and customer needs has become a competitive advantage and a priority. On the other hand, the prevalence of multiple technology platforms and a greater emphasis on network, data and information security and redundancy have increased the complexity and cost of IT systems, resulting in greater technological risks. Besides strengthening the existing core competencies of growth of your Company in the past, the Company expects to focus its energy on further growing its execution competency in new capabilities like new technology based delivery models, green energy technology, risk management systems etc. This is expected to result in scaling up customer access, improved margins and a wider global reach. Human Resource Development Your Company has been built on the foundations of people being the key drivers to growth of the organization. People are at the core of its Vision, which espouses mutual positive regard, career building and providing opportunities for learning, thinking, innovation and growth. The Company offers an environment where all-round development is as much of a goal as realization of career ambitions. During FY10, the Company continued to focus on improving people productivity through training and development of its people. Research and Development Our clients today face the challenge of reducing business costs with technology-based interventions. To assist in identifying and addressing this gap, the Company has developed several frameworks as part of its R&D initiatives this year. These frameworks address the gap by focusing on business KPIs to enhance business performance and places emphasis on business costs rather than IT costs. The primary business benefit has enhanced the business performance through improved KPIs. The direct benefits to our customers include quicker time to market, reduced cost, increased quality and increased efficiency of customer business processes. Our solutions like business aligned RFID solutions will result in enhanced business performance through improved KPIs, visibility, discovered landscape, stability, cost reduction and structured business future planning.