My notes from FY 17 annual report:
Industry Perspective: In terms of market potential, IDC forecasts that the worldwide market for IoT solutions will grow from $1.9 trillion in 2013 to $7.1 trillion in 2020. An IoT platform implies the integration of a set of different functionalities provided by individual Components. The functionalities involved can be broadly classified as data capture from sensors, transfer of the data over networks, storage of the data at various stages, analysis of this data, and applications that make use of this data. Each of these can be independent functions, but it is when they are integrated together that they provide those coveted “aha” moments and deliver the most value. Without integration, most of those functions are simply discrete components used individually. Applications make use of the analysis to improve functionality or provide rewarding end-user experience.
Major development in technology industry:
• Technology transformation is a continuous process
• Software is eating the world
• Iot driven digital experience Business models and monetization
• Data leading to actionable insights
• Data digital and iot are interwined
• Interacting through API
• Software force is inspired from industry 4
Business Performance Analysis:
• Recent initiatives have led to more than half of revenue coming from IP LED and digital transformation projects. Also the same is growing at a healthy rate
• In FY 17, the company ended with rupee 28784 million revenue and 3015 million profit.
• 22% of revenue growth in dollar and 24.5 percent in rupee. The revenue contribution of 4 verticals is as follow: Service - 45%, digital 16%, lines - 29 percent, accelerate - 9% . Revenue share of OPD reduced from 52% to 44% . Enterprise share increased from 27% to 29% . IP led revenue increased from 21% to 28% through contribution from IBM watson iot platform
• Coming to profitability, EBITDA was
Rs 4,653.47 Million as compared to Rs 3,915.08 Million in FY 2015-16, registering an increase of 18.9%. In terms of percentage of revenue, the above works out to 16.2% for FY 2016-17 as compared to 16.9% in FY 2015-16 8,159.98 Million as against
• PAT amounted to Rs3,014 Million as compared to Rs 2,773 Million in FY 2015-16, an increase of 8.7%. In terms of percentage of revenue, PAT was 10.5% of revenue as compared to 12% of revenue in FY 2015-16.
• As at March 31, 2017, your Company, on an unconsolidated basis, had cash and cash equivalents (including investments) amounting to
7,610.69 Million as at March 31, 2016. 19,826.63 Million against
• The total dividend for the financial year 2016-17 would be Rs 9 per share as compared to Rs 8 per share in the financial year 2015-16.
• Personnel Expenses for the year amounted to
15,654.23 Million for the previous year, showing an increase of 26.65%. However, as a percentage of revenue, these expenses increased to 68.88% during the year as compared to 67.70% in the previous year. The main reasons for increase in Personnel Expenses are as below:37.68 per share, compared to` 34.66 per share in the previous year, recording an increase of 8.7%.
• The personnel expenses have mainly increased due to the salary cost of the employees joined at the overseas locations through acquisitions.
• Pay-hike which is effective from July 1, 2016
• Increase in employee stock compensation. There was a new ESOP scheme introduced as a Silver Jubilee celebration of the Company during the year.
• Basic earnings per share went up to Rs 37.68 per share, compared to Rs 34.74 per share in the previous year, recording an increase of 8.5%. Diluted earnings per share was
Key Business points:
• Your Company successfully completed the integration of teams acquired from IBM, as part of the agreement entered into with IBM during last financial year, to support and extend the IBM Continuous lifecycle Management and Continuous Engineering product suite. New sites were established in Guadalajara, Mexico, Rehovot, Israel, Ottawa, Canada and Edinburgh, Scotland during the year
• Your Company’s strategy to build platform based solutions has seen very good growth in the Salesforce and Appian business. Your Company is now a platinum consulting partner for Salesforce. Continuing the focus on platform based approach, your Company has partnered with Google Cloud Platform, Amazon web Services, Dell Boomi and this should result in good growth in business in the coming year
• This year, your Company continued with the Technothon initiative, where the campus hires work on new technologies (IoT, Machine learning, Block Chain, Dev Ops, AWS, MEAN Stack, full stack). They build and exhibit end-to-end mini-projects. Around 80 such mini projects were exhibited after the ETP.
• Hosted very large databases conference in India after 20 years
• Partnered with 25 government Ministries to conduct a hackathon
• Company got recognition from Zinnov, Appian, Oracle, Forrestor, IBM.
Key business focus for future:
• Company will leverage our global footprint to address the opportunities in the digital and IoT space which require presence closer to the customers.
• Committed to increase the enterprise value with focus on efficient allocation of resources and increasing the share of solutions-led business, while continuing to invest in growth areas.
• In line with the market demand and the need to focus on IoT, your Company brought together market-facing IoT groups from the Alliance and Accelerite as one unit. This will strengthen the IoT offering by leveraging the IP, solutions and device and sensor partnerships across a wider set of platform partners
• Your Company has signed a strategic collaboration with Partners Healthcare to develop a new industry-wide open source platform to bring digital transformation to clinical care. This four-year collaboration will bring together the world class clinicians and researchers at Partners HealthCare with your Company’s innovative healthcare technology and product engineering expertise. The co-developed digital platform will be based on SMART (open, standards-based Technology platform) along with FHIR (Fast Healthcare Interoperability Resources).
• Your Company has partnered with USAA, a financial services provider that serves members of the US military and their families. USAA has been an innovator in securing authentication and financial transactions through a process that extends beyond user passwords and security questions. The development and intellectual property rights granted to your Company stem from innovations that USAA uses to identify and verify members, while also protecting their privacy. Through this agreement, your Company will extend these technologies and address a growing market opportunity for digital security products and solutions in the financial services industry. Your Company will focus on authentication and security solutions based on concepts such as micro-trust, risk-aware, contextual and personalized, in conjunction with technologies related to biometrics, risk modeling and dynamic proofing.
• We will continue to build solutions for digital world using data at core of software driven business. We will invest in newer technology and pre-build solution for micro-verticals like healthcare, loan origination, KYC, Insurance claims, Digital media content distribution etc.
• Nonlinear growth through focus on IP continues to be a core part of our strategy. Accelerite has built a set of connected infrastructure products that help a modernizing enterprise realize its growth opportunities. We have developed Rovius, a private cloud that is available for use in hours instead of weeks and scale to support large ecosystems as big as public cloud with the same capabilities and ease of use
• Partnership with IBM is helping generate leads and your Company is setting up a center in IBM’s Watson IoT world Headquarters in Munich, Germany enabling better access to IoT Customers.
• We strongly believe that digital India will be significant transformation for India and has tremendous potential for us.
• Your Company recruited 2,310 employees on a consolidated basis consisting of regular employees, trainees / interns, consultants, business consultants, contract consultants consisting of (technical and non-technical) professionals.
• As on March 31, 2017, your Company employed 9,460 professionals (including trainees and associates) on a consolidated basis spread across 18 countries. The technical strength was 8,808 employees which comprised among others, 4,969 graduates (Engineers and Technicians), 2,043 post graduates and 26 Ph.D.s. Your Company is going global and there was a significant increase in the distribution of overseas employees which now constitutes 15.97% of the total work force as against 12.28% in the last year.
• The median remuneration of employees of the Company during the year 2016-17 was ` 865,300.
• In the year 2016-17, there was an increase of 7.6% in the median remuneration of employees.
• As on March 31, 2017, there were 7,790 permanent employees who were on the payroll
• The attrition rate during the year was 15.69% which was less than the attrition rate of 16.43% in the previous year.
• Protectionism is being discussed and witnessed in various countries and we are ready to address the same. Focus is on hiring of local talent and also enabling professional exchange programs for appropriate integration. Pursuing diverse opportunities also exposes the company to unfamiliar risks that many and difficult to evaluate. We have a robust model to handle Global Compliance and Regulatory requirements and an exhaustive risk management process to address operational risks those may prevail in any country or geography
• The Company derives a substantial part of its revenues in foreign currency while a major part of its expenses are incurred in Indian Rupees. This exposes the company to the risk of fluctuations in foreign currency rates. During the year, the Company has increased its global footprint whereby there is an increase in expenditure in foreign currency, which has resulted in a reduction in net foreign currency exposure. Accordingly, the Hedge Reserve (net of tax effects) as at March 31, 2017 stood at a credit balance of
208.44 Million as against a credit balance of 91.49 Million as at March 31, 2016. Please refer “Other Equity” under Statement of Changes in Equity in the consolidated financials for details. The balance in the foreign currency translation reserve was
73.65 Million as at March 31, 2017 as against 184.13 Million as at March 31, 2016, due to a translation loss of ` 110.48 Million on account of volatility in exchange rates of currencies in the financial year 2016-17. Please refer “Other Equity” under Statement of Changes in Equity in the
Consolidated financials for details.
• Customer Concentration: Dependency on few large customers can be a risk. Growth in the revenue from top customers further increases this risk. About 53% of company’s revenue is derived by top 10 customers.
• Mr Anand Deshpande is father donated 75% of his personal equity for charity