prithvi information solutions ltd Management discussions

MANAGEMENT DISCUSSIONS AND ANALYSIS

Future Outlook

The Year 2012-13 has resulted in a positive development for the Company. The Company has progressed in the Onshore and Offshore business and has been able to establish as a reliable partner to the Indian Telecom operators. This enabled the Company to obtain good domestic business in the Telecom Engineering Services in the next two years and expected to be continued for another two years. The Company could establish itself as a Telecom Engineering Services provider. This enabled the Company to consolidate its Telecom Engineering Services business indigenously. The Company also successfully executed several Data Center Projects for the Union as well as State Government which in the days ahead is going to strengthen its domestic business further.

The global economy is stabilizing and the Companys performance in the Onsite and Offshore is also showing improvement and we expect that in the coming years shall be progressive for the IT business.

Industry Structure and Development

As was predicted in the last year, the focused area of the Organization shall be System Integration, Managed Services, Enterprise Performance Management, etc. We continue to lay a thrust in these areas as the seed sown in the last year has started giving results. The Company expects that this shall be the thrust areas in future.

IT Services

According to the NASSCOM Performance Review 2013, India is widely recognized as the premier destination for offshore technology services. IT BPM exports (IT services and Business Process Management) from India are estimated to grow in fiscal 2014 by 12-14% to US$ 85-87 billion. There are several key factors contributing to the growth of IT and IT enabled services (ITES) in India and by Indian Companies.

Focus Areas

Managed Services

Since 2000, Hi-tech industries have embraced the global delivery model as an important and necessary practice. Most businesses benefit even more from a combination of services, delivered locally and remotely to achieve the kind of operational flexibility they need.

Prithvis Managed Solutions organization works with many of the leading technology companies on large-scale programs that touch the full product lifecycle and would involve wide talent deployment. Our expertise allows us to work with clients to implement programs that meet their immediate business needs, and help them to transition to more leveraged solutions over time. Prithvi routinely handles onsite, offsite and offshore deployments all within a turn-key, SLA-driven model.

Managed Services is one of the fastest growing businesses at Prithvi.

System Integration

Prithvi offers a wide range of services for OSS (Operations Support System) and BSS (Business Support System) ranging from consulting, configuration, integration, migration, deployment, application/interface development and maintenance/support. Our system integration solutions are designed to bring accelerated results to Telecom Service providers.

Telecom

Engineering Services

Telecom industry is expected to overcome the hurdles it has faced over the last couple of years. The government is giving a new thrust to these segments which will improve the Telecom business indigenously. Further, there has been consolidation that has taken place and there would be stabilization shortly. This is a positive sign for the Company to improve its business in this segment as it is already earned the confidence as a reliable partner with many of the major Telecom players in the Country.

Telecom Equipment

However, one of the major areas, where the Telecom business got effected is in manufacturing of Telecom equipment as the major buyers have not been able to make payments for a considerably long period on account of their huge receivables which has become a serious concern causing strain on the companys resources.

Segment Wise Performance

The company is divided into two businesses, IT and Telecom. IT consists of all the businesses related to IT, while Telecom includes Telecom Engineering Services and Telecom Products.

Contribution to Revenue

Outlook

The key future growth business such as Systems Integration, Managed Services, Enterprise Performance Management and Telecom Engineering Services are showing positive signs of growth. The Company is confident that robust results will start to flow starting the next financial year.

Discussion on Financial performance with respect to operations:

The discussions on the financial performance as given below are carried on the basis of Consolidated Financials of the Company for the year 2012-13. The summary of the same is given hereunder:

Gross Revenue

The Gross Revenue has increased from Rs.1370.52 crores in 2011-12 to Rs.1644.61 crores in 2012-13 (increase of Rs.274.09 crores constituting 15.66%).

	Rs. in Crores
	Consolidated
	2012-13	2011-12
1 Revenue from Operations	1,644.61	1,370.52
2 Operating Expenditure	1,633.33	1,312.79
3 Depreciation & Amortization	8.41	10.51
4 Operating Profit	11.28	47.22
5 Interest Expenses	6.99	26.77
6 Other Income (net)	27.26	7.80
7 Profit Before Tax	23.14	28.24
8 Provision for Tax	• 4.96	8.14
9 Profit for the Year	18.18	20.10
10 Balance B/F from prev Year	339.70	320.47
11 Balance Carried to B/S	357.88	340.57

Operational Costs

The Operational cost of the Company was 99.31% in the year 2012-13 as compared to 95.79% in the year 2011-12.

Profit Before Tax

Profit Before Tax was Rs.23.14 crores in the year 2012-13 as compared to Rs.28.24 crores in the year 2011-12, a decreased in the profit by Rs. 5.10 crores.

Interest Costs

The interest costs were lower in the current year by Rs.l9.78crores as compared to the previous year. This was primarily due to adequate steps taken for timely payments and avoiding penal interests.

Profit After Tax

Profit After Tax for the period has been Rs.l8.18crores as compared to Rs.20.10crores in the previous year, thereby decreasing the net profit by Rs.l.92crores.

Other Income

There has been an increase of Rs.l9.46crores in other income during the year (Rs.27.26crores) as compared to previous year (Rs.7.80crores).

Additional Equity

During the year Rs.52.55crores was received towards Share application money against equity and Fully Compulsorily Convertible Warrants on preferential basis at a price of Rs.26/- (premium Rs.16/-).