Info Edge India

Dear Shareholders,
 
 As new age entrepreneurs, the single most important lesson that we
 learnt in 2008-09, was not to take growth for granted. In the last five
 years, the Indian economy had grown at a compound annual growth rate
 (CAGR) of over 8.5%. And, most companies focused on making the best of
 this stupendous growth. Info Edge was no exception.
 
 In those five years, driven primarily by the phenomenal growth of
 naukri.com, Info Edge registered:
 
 A CAGR in net sales of over 84%
 
 increasing from Rs. 196.51 million in 2003-04 to Rs. 2,189.39 million
 in 2007-08.
 
 A CAGR in EBIDTA of over 106%
 
 rising from Rs. 47.7 million in 2003-04 to Rs. 842.04 million in
 2007-08.
 
 A CAGR in PAT of over 119%
 
 growing from Rs. 24.36 million in 2003-04 to Rs. 554.87 million in
 2007-08.  EPS increasing from Rs. 1.18 in 2003-04 to Rs. 20.33 in
 2007-08.
 
 Things changed in 2008-09. After record levels of inflation in the
 first quarter, global eco- nomic growth reduced dramatically in the
 third quarter of 2008-09. Much of this has been a fallout of the
 international financial crisis. World output growth has reduced from
 5.2% in 2007 to 3.2% in 2008 and is estimated to be negative 1.3% in
 2009. Taking a cue from the global economy, India’s GDP growth also
 reduced from 9% in 2007-08 to 6.7% in 2008-09.
 
 Naturally, with a sharp reduction in growth, there was a slowdown in
 hiring activities across sectors. Our recruitment business was
 affected. Real estate listings, too, saw a dramatic col- lapse in India
 which made things difficult for our property search business. This was
 the worst year that we have seen in the history of your Company.
 
 However, to its credit, Info Edge has shown great resilience, and even
 managed to register moderate growth both in revenues and profits.
 
 The key results on a consolidated basis are:
 
 Net sales increased by 12.3% from Rs. 2,189.39 million in 2007-08 to
 Rs. 2,457.99 million in
 
 2008-09.
 
 Earnings before depreciation, interest, tax and amortisation (EBIDTA)
 grew by 1.6% to Rs. 644.85 million.
 
 Profi t after tax (PAT, after minority interest and profits from
 associate companies) increased by 2.8% to Rs.570.28 million in 2008-09.
 
 Over the last five years, the team has been pushing Info Edge to
 deliver higher and higher  growth year after year. The fundamental
 belief was that opportunities in our markets were going to keep on
 increasing. 2008-09 has made us introspect on this belief. Our optimism
 on Indias longer term growth opportunities remain undiminished. But
 2008-09 has taught us the need to calibrate our business models to deal
 with downturns, while keeping all en- gines running to accelerate on
 the upturn. It has been a great learning doing this task of how to
 conserve in lean times without sacrificing the strategic opportunities
 for longer term growth.
 
 OUR BELIEF IN THE LONG TERM PROSPECTS OF INFO EDGE IS FURTHER
 
 ESTABLISHED BY THE FACT THAT IN 2008-09, WE DIVERSIFIED OUR BUSINESS
 PORTFOLIO AND MADE INVESTMENTS IN ANOTHER BUSINESS SEGMENT THE
 EDUCATIONS CLASSIFIED PORTAL SHIKSHA.COM.
 
 There were three broad areas where we have refocused our energies.
 
 - First, across businesses, we have reoriented our sales processes for
 optimal resource utilisa- tion, including using tele-calling more
 effectively. While for some businesses this has meant reduction in
 promotional activities and stress on more cost efficient selling, for
 others it has meant increased training for better communication of our
 value proposition.
 
 - Second, based on our customer insights, we have revamped our
 websites. With the use of improved algorithms and analysis, we have
 improved the customer experience across differ- ent portals. There has
 been a concerted effort at improving the quality of traffic and content
 on our websites.
 
 - Third, our business is now focusing on penetrating deeper into
 markets. We are emphasising on making clients use more and more of our
 services, so that with increased usage they get used to our interfaces
 and navigation. The stress here is on increasing our market share and
 attracting clients away from competitors.
 
 By revisiting our business models and emphasising on internal processes
 and cost manage- ment in 2008-09, we believe Info Edge has emerged as
 an even stronger company.
 
 We operate in a nascent business. While the online classifieds business
 space in India has seen increased activity, it is far from realising
 its full potential. Moreover, most players do not have the managerial
 or financial bandwidth to sustain their businesses in adverse markets.
 We have reasons to believe that the downturn of 2008-09 affected our
 competition much worse than us. With the strength of our debt-free
 balance sheet and skill and commitment of our people, we are determined
 to fulfil our long term growth aspirations.
 
 Even under adverse market conditions, all our businesses continued to
 increase their cus- tomer base. Here are some facts:
 
 The number of résumés in naukri.com’s database increased by 31% to
 around 17 million at the end of 2008-09; the number of résumés added
 daily increased by 17% to 14,000; and the number of corporate customers
 increased by 5% to approximately 34,000
 
 Profile listings on jeevansathi.com increased from 2.14 million at the
 end of 2007-08 to 2.9 million at the end of 2008-09
 
 Property listings on 99acres.com grew from 200,000 at the end of
 2007-08 to 248,000 at the end of 2008-09; and the number of paid
 transactions rose from 7,500 in 2007-80 to 16,600 in 2008-09
 
 The fundamentals of our businesses are strong and, during 2008-09, we
 have worked on our products and processes to further strengthen them.
 This has helped prepare your Company for the next round of accelerated
 growth. We also believe that cash including liquid invest- ment on our
 balance sheet of over Rs 3200 million offers us a strategic advantage
 over our competitors.
 
 Our belief in the long term prospects of Info Edge is further
 established by the fact that in 2008-09, we diversified our business
 portfolio and made investments in another business seg- ment — the
 educations classified portal shiksha.com. Since its launch in May 2008,
 we have continued to invest in developing this business. It is in an
 incubation phase where stress is on product development and creating
 brand awareness.
 
 In 2008-09, Info Edge made strategic investments in Applect Learning
 Systems Private Lim- ited, which operates the kindergarten to Class 12
 (K-12) assessment based learning portal called www.meritnation.com; and
 Etechaces Marketing & Consulting Private Limited, which operates the
 insurance sales portal, www.policybazaar.com.
 
 Today, Info Edge is an entity with several different businesses
 operating within it. Many of these businesses have different
 organisation structures and business models. Some are operated through
 step down subsidiaries or associate companies. In an entrepreneurially
 driven company like Info Edge, these structures are strategically
 important. However, this also requires the Company to have a strong
 foundation of corporate governance systems in place that protects
 investor interests. Info Edge has laid considerable emphasis on this
 aspect, and let me share with you a few things that we have done.
 
 - The role of the Chairman is separated from that of the CEO Half the
 Board is independent, even though we have a non-executive Chairman
 Balance sheet and cash flow statements are disclosed every quarter even
 though these are not mandatory
 
 - Internal audit is performed by an external firm
 
 - The Audit Committee comprises only independent Directors
 
 The global economic conditions are far from good. We expect that it
 will be some time before the large economies of USA and EU recover.
 Growth in India will also be lower than in the past. Given that
 naukri.com accounts for over 80% of our business, in the near future,
 Info Edge will grow at a lower rate than what we witnessed in the last
 five years.
 
 Having said so, we also believe that with India even growing at over
 6.5% to 7%, there will be several opportunities in the market for Info
 Edge. Besides, some of our businesses like shiksha.com and
 jeevansathi.com are largely insulated from economic developments.
 Several of our businesses are in the incubation phase and we need to
 focus on their execution pro- cesses.
 
 2008-09 has been a learning experience. We have looked within and we
 believe much of our future will be determined by how we ideate; how we
 innovate; and how we execute. We have confidence that we can excel in
 all these fronts.
 
 We would like to take this opportunity to thank you for your continued
 support. Our busi- nesses continue to have huge growth opportunities.
 With the dedication of our employees and your encouragement, Info Edge
 will make the best of these opportunities.
 
 Regards
 
 Sanjeev Bhikchandani