Ranklin Solutions Ltd Management Discussions

RANKLIN SOLUTIONS LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS Overview The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by the Securities and Exchange Board of India (SEBI) and the Generally Accepted Accounting Principles (GAAP) in India. Our Management accepts responsibility for the integrity and objectivity of these financial statements, as well as for the various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present our state of affairs, profits and cash flows for the year. Industry Structure and Developments Changing economic and business conditions and rapid technological innovation are creating an increasingly competitive market environment that is driving corporations to transform their operations. Consumers of products and services are increasingly demanding accelerated delivery times and lower prices. Companies are focusing on their core competencies and using outsourced technology service providers to adequately address these needs. The role of technology has evolved from supporting corporations to transforming their business. There is an increasing need for highly skilled technology professionals in the markets in which we operate. At the same time, corporations are reluctant to expand their internal IT departments and increase costs. These factors have increased the reliance of corporations on their outsourced technology service providers and are expected to continue to drive future growth for outsourced technology services Growth in Domestic Market:- India is widely recognized as the premier destination for offshore technology services. According to the NASSCOM Strategic Review 2011, IT services exports (excluding exports relating to business process outsourcing (BPO), hardware, engineering design and product development) from India are estimated to grow by 22.7% in fiscal 2011, to record revenues of US$ 33.5 billion. The same review also forecasts that BPO exports from India are estimated to grow by 14% in fiscal 2011 to record revenues of US$ 14.1 billion. There are several key factors contributing to the growth of IT and IT-enabled services (ITES) in India and by Indian companies. Some of these factors are high-quality delivery, significant cost benefits and abundant skilled resources. Opportunities and Threats Opportunities * Higher economic growth in developing markets Developing markets are growing faster than the developed nations. Sustaining such high growth would require increase in competitiveness of local players. IT would play an important role in increasing competitiveness. Markets such as India, Asia Pacific, Latin America are increasingly becoming important from the point of view of consumption of IT services. * Increased adoption of off-shoring The global economy which was on a recovery mode post the recession continued to face challenges like those stemming from the European debt crisis, Japan calamity and other such events. Simultaneously, the continued thrust of global organizations towards costs and improving efficiencies, reflected in the uptick in discretionary spending, offers sufficient opportunity for growth. The Company views this as a good opportunity to improve and strengthen its customer base. * Environment sustainability issues and emergence of new technologies Increased environmental consciousness coupled with the search for more cost effective IT solutions have brought in a greater emphasis on Green Technologies. Additionally, there is an increasing acceptance of cloud- based solutions that offer both flexibility and scalability. There is likely to be increasing interest in technology areas such as Cloud and Software as a Service (SaaS) which will offer new opportunities for growth. The Company views these as a focus area and is taking active interest in developing and providing services in partnership with established product vendors. Threats During the last financial year, the global economy was subject to great turmoil. The crisis in the financial sector led to a lower confidence in financial markets leading to a global credit crunch. The past year has been some of the fastest and sharpest falls in both the financial marketplace as well as the industrial economy. According to International Monetary Fund (IMF) World Economic Outlook 2011, the advanced economies declined by 6.5 percent in real Gross Domestic Product during the third quarter of the last financial year. Although the U.S. economy was among the hardest hit, the crisis also had its cascading effect on economies in both Western Europe and Asia. The cascading effect on the emerging economies was partially driven by low confidence on these economies resulting in capital flight from these economies to developed economies and contraction of global trade. This uncertainty in the markets led to significant volatility in exchange rates. Segment wise performance The company operates in a single segment business i.e. Information Technology Enabled Services, performance is explained elsewhere in this Annual Report. Internal Control systems and their adequacy Your Company has adequate internal control procedures commensurate with its size and nature of the business. The controls ensure optimum use and protection of data, resources and compliances with the policies, procedures and statutes. The Management periodically reviews the adequacy of the internal control systems. Financial Performance Financial performance of the Company is reviewed in Directors Report. The financial statements of the company have been prepared in compliance with the requirements of the Companies Act, 1956. There are no material departures from the adoption of the prescribed accounting standards. The Board of Directors of the Company accepts the responsibility for the integrity and objectivity of the financial statements as well as for various estimates and judgments used thereon. Material Developments in Human Resources/Industrial Relations Our Professionals are our most important assets. We believe that the quality and level of service that our professionals deliver are among the highest in the global technology services industry. Your Company has a team of qualified and dedicated personnel who have contributed to the growth and progress of the Company. Necessary training is being imparted to the employees and various seminars and workshops are being conducted to continuously hone their skills. To increase the deduction of Employee and to retain talanted man power in long term the Company as the attrition rate is very high in software industry Introduced Employee stock option scheme and granted 20,00,000 options. Outlook In view of the increasing opportunities, Management is expecting the sustained growth in the current year both in terms of volume and performance and ensuring the long term financial stability and simultaneously achieving its other objectives by improving its working and reducing un- necessary expenditures and paving the way for new opportunities. For and on behalf of the Board Sd/- (M.J.V.V.D.PRAKASH) Chairman & Managing Director Place: Hyderabad Date : 03-09-2011