Tutis Technologies Ltd Management Discussions

Industry Overview:

The new and renewed threats globally in regard to personal security, transaction frauds such as illegal transaction at the ATMs, security breaches, unauthorized infiltration across the borders, unauthorized immigration etc., give rise to biometric technology market and which encourages software development company like Tutis to develop new products to arrest such threats reoccurring.

The biometric industry is further driven by the factors like low ownership costs, simplicity in usage, easy compatibility with the network system or infrastructure, easy integration with the updated IT security solutions, and increasing involvement of established corporations. One of the major drivers for this market is government funding for biometric technology for deployment across the globe. Biometric technology is mostly used in applications like government, travel, immigration, banking and finance, and defense etc.

Considering the trends in the global security threats, Tutis has developed and continue to develop new solutions which can be used in many fields and improve the security.

Opportunities & Threats:

Tutis is a pioneer in Biometric technology especially in biometric finger print and we understand our clients needs better than the others

Tutis is actively participating in the proof of concept launched by UIDAI for the next stage on finger print authentication after the end of current enrollment process. This will have great impact on Tutis topline and bottom lines.

There is great opportunity in the offing for the company in terms of end to end services which can be offered in capturing finger prints of individuals for maintaining and updating Government data bases.

Tutis also has shown expression of interest in the authentication process by investing in servers and will earn revenue as SAS model.

Adoption of multi-factor authentication will provide stronger security by collectively overcoming the limitations of individual technologies and contributing to the long-term growth of the biometrics market.

Major threat will be competition from foreign players especially after the announcement of UID project by the government. To mitigate intensifying competition and ensure progress, small-scale companies should form strategic alliances with large companies to ensure growth in their business.

Risks & Concerns:

Government-backed projects typically have long sales cycles and can sometimes stretch over a year before completion, depending on the complexity of the project. Budgetary constraints and delayed testing have also contributed to long sales cycles.

Availability of skilled resources is matter of concern especially in biometrics as it requires very specific and highly skilled resources and company may have to incur higher cost to retain them.

Though good communication infrastructure is considered vital for the continued growth of the industry the data communication infrastructure in India is expensive and in limited supply which is a cause for concern.

Tutis is embarking on revenue sharing model with enrollment agencies and hence there are slight risks on the success of such model.

Segment-wise performance:

The company comes under one segment of providing IT Services and Solutions.

Future Outlook:

Please see the discussion on operations in the Directors Report.

Internal Control Systems and their adequacy:

The Company has in place adequate system of internal control commensurate with its size and nature of its operations. The Company has budgetary control system to monitor all expenditure against approved budgets on an ongoing basis. The Companys accounting process is based on uniform accounting guidelines that sets out accounting policies and significant processes.

The Company has well established policy towards maintaining the highest standard of health, safety and environmental norms while maintaining operational integrity.

The Company has an internal audit function which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of Risk management, Control and Governance process.

The Company has an Audit Committee, the details of which have been provided in Corporate Governance Report. The Committee considers and takes appropriate action on the recommendation made by the Statutory Auditors and keep the Board of Directors informed of its major observations from time to time.

Share Capital:

As at the end of March, 2012, the Companys Issued and Paid-up Share Capital stood at Rs. 16,74,69,750/-(Previous year Rs. 16,74,69,750/-). There is no ESOP plan offered to the employees and accordingly there are no shares allotted under ESOP Scheme.

Reserves and Surplus:

The Reserve and Surplus of the Company as at March 31, 2012 amounted to Rs. - 8,89,28,595/-as against Rs. 26,44,27,525/-as at March 31, 2011.

Fixed Assets:

During the year under report, the Company has made the following additions to its Fixed

There was no sale of Fixed Assets during the financial year.

The company has credit limits with various banks to take care of regular working capital expenses. Since company is a net earner in foreign exchange & so it is vulnerable to foreign exchange appreciation/depreciation. Company does not speculate on foreign currency exchange rates.

Operating Expenses:

Operating expenditure for the year ended 31st March, 2012 has increased by 87.63% over the same period last year. The increased /decreased in expenditure is primarily on account of reduction in the scale of operations.

EBIDT:

The EBIDT was at 97.42% for the year ended 31st March, 2012 as compared to 77.66% for the same period last year.

Profit After Tax:

The Company had a loss of Rs. 3533.56 Lakhs for the year ended 31st March, 2012 as compared to a profit of Rs. 65.72 Lakhs for the same period last year.

Human Resources:

Development of human resources is the key to progress. In IT industry, good human resources policy ensures a sure success to growth & profitability. Tutis follows open door policy and employees have access to anyone in the senior management team to voice their opinions. During the year, the Company had made substantial addition to human resources. The total number of employees as on 31st March, 2012 was 52 (55 as on 31st March, 2011)

Cautionary Statement:

Statements in this "Management Discussion and Analysis Report" describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include changes in government regulations, rupee appreciation, non availability of working capital, tax regimes, economic developments in India and the countries in which the Company conducts business and other incidental factors