The fundamental shift in the way businesses operate that came about in
2008-09, has taken more solid shape in 2010-11.The business environment
has become more complex and uncertain, forcing organizations around the
world to become more nimble, outcome-focused, and to do more with less.
The business need to collaborate better within the ecosystem and
respond faster in the marketplace is increasing demand for
transformational IT solutions. On the other hand, IT services companies
need to align their operating protocols and offerings in line with this
scenario, and offer services that enable their customers to achieve
their business goals. Your Company has focused on doing exactly this,
and is investing in the required resources, and developing solutions
that cater to select verticals such as manufacturing, media &
entertainment, health sciences, travel & hospitality, and technology.
Our objective in the year 2010-11 was to understand certain
domain-specific business challenges in-depth and define our service
offerings accordingly. We are also fine-tuning some of our existing
service offerings in-line with this objective and are enhancing our
value proposition for existing as well as new customers. Understanding
our customers business challenges is a core focus for us.
Dynamic Business Environment
The export demand for IT, and particularly for product engineering
services, is slowly returning to normalcy after nearly two years of
sluggishness, even though protectionism-led problems are still very
strong in western markets. Furthermore, margin related pressures
continue to exist and are expected to grow further, primarily due to
commoditization of traditional service lines, increase in wages and the
sunset of the STPI scheme. To counter this, we are adopting new
engagement models that are based on business outcomes and are also
developing solutions that can be rapidly customized and deployed for
customers. Such services have the potential to become one of our key
differentiators. This will also be a testimony to the fact that we
understand the domains we operate in.
To become more competitive, your Company continues to invest in
capabilities that will help us deliver business transformation
solutions in service-lines such as enterprise collaboration, cloud
computing, software as a service, social business and mobility. These
services will enable us to offer next generation solutions to clients
in India and our core markets i.e. USA and the UK. We have also entered
into strategic partnerships with other technology companies such as IBM
and QlikTech to expand the breadth of our solution offerings in niche
areas.
Business Overview
The aftereffects of the recession considerably elongated the customer
acquisition cycle, especially in our core markets. This resulted in
our overall revenue dropping by 5% to Rs. 129.16 Crores compared to Rs.
136.17 Crores during the previous year. We reported a lower profit
after tax & exceptional item of Rs. 8.39 Crores last year as compared
to Rs. 13.78 Crores in 2009-10. While our export business has been slow
to pick up, our India business has been consistent over the years.
Domestic revenue grew by 21% from Rs. 24.63 Crores in FY10 to Rs. 29.71
Crores in FY11. During the year, we also earned the distinction of
crossing 200 customers in India. We have achieved this milestone within
the first five years of entering the Indian market. It is a significant
achievement, which showcases the trust Indian enterprises are placing
in your Company.
On the project execution front, we are taking several steps to control
costs and ensure optimum resource utilization. We continue to train our
employees on technical and non-technical fronts, including
next-generation technologies to ensure that we meet the highest
delivery expectations of our global and Indian customers and improve
productivity constantly. We recognize that the next phase of growth
will demand subtle, yet critical, modifications to our front-end
operations. We are working on adding a consulting layer to our
customer-facing processes for increasing the depth of our existing
relationships as well as to accelerate new client acquisition.
A major development is that we appointed Sunil Bhatia as CEO & Managing
Director of Blue Star Infotech Ltd. on April 15th, 2011. Sunil will
also be a Member of the Board of Directors of the Company. Sunil has
over 22 years of experience in building and growing businesses with
revenues exceeding USD 200 million, and has worked for leading
companies such as Accenture, IBM, Satyam, and in multiple countries
across Asia and in the US. He has deep exposure across industries such
as Communications, High-Tech, Financial Services, Industrial, Retail
and the Public sector.
His rich experience, combined with a proven track record with customers
and a consultative approach, creates strong synergies with our
strategic goals and current focus areas, and makes me believe that he
will successfully lead the company through its next growth phase and
the era of globalization we are now in.
In Conclusion
Although the global economy is recovering and discretionary IT and R&D
spends are expected to grow in the near-term, we believe that the
business environment in FY12 will be far more challenging for mid-sized
IT service companies. However, we are confident that our verticalized
approach to enable global enterprises derive measurable business
outcomes will pay back rich dividends. We continue to put into place
key elements which will enable us to capitalize when demand from our
core markets returns during FY12. The expected demand uptake, coupled
with our strategy to de-risk our business through effective foreign
exchange management, better resource utilization and cost
rationalization, makes us confident that your Company will be able to
meet expectations of its customers, employees and shareholders.
We thank you for your continued support.
Sincerely,
Suneel M Advani
Chairman & Managing Director
Mumbai, June 20, 2011
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