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Some of you may recall that your company began in 2000 as a division of Hinduja TMT Limited with the inspiration of S. P Hinduja, chairman of the Hinduja Group. Starting from a single self-funded contract, it crossed $117 million in annualized revenue and around 9,500 employees in FY 2006-07 after its demerger effective October 1, 2006. Your company has grown this year to almost $600 million in revenue and over 44,000 employees operating in 7 countries through 70 delivery centers.
The idea for your company has always been to be a trusted partner for the world''s leading corporations across industries to manage their mission critical functions. Under the able leadership of the CEO, Partha DeSarkar, your company now handles annually 250 million customer interactions in 37 languages and 50 million data interactions for 190 Business Process Management (BPM) clients. Additionally, it serves another 630 clients for Human Resource Outsourcing (HRO) and Finance & Accounting (F&A) services.
The US remains by far the largest market served by your company, contributing 68% of its revenue, of which 49% is from the Healthcare vertical. The US market continues to
be the growth engine of your company, while investments for diversification have been made in Canada and the UK markets. To further diversify, your management has made M&A investments to expand the range of services provided to the existing customers and to acquire new ones. These investments are aimed at making significant longer-term contribution to earnings.
Your company had $318m in total capital employed at the end of FY 2017-18. Of this, just under $90m was funded by debt which amounted to less than trade receivables. The remaining $228m represents a $75m increase in book value since demerger, after paying $72m in dividends. The opening book value of about $153m included $136m treasury cash from the sale of a non-core investment prior to the demerger.
Of the $318m in total capital employed, about $40m was in treasury investments at year-end. The ROCE (Return on Capital Employed, which is pre-interest pre-tax income return on average total capital) in the latest fiscal year was 17.4% excluding the treasury investments, and 15.4% including it.
The strategy of Right Shore, One Experience and Collaborative Approach (''ROC strategy'') has been the core driver for the growth of the business. It helped a customer, for the first time, to exceed $100m revenue this year. This customer started with offshore services, leveraging the back-office capabilities from India, then added Philippines off-shore delivery for customer contact services, and followed it by on-shore delivery from the US, along with near-shore delivery. Your company delivered the ‘One HGS’ experience while optimizing value for the customer through its collaborative approach.
HGS recently launched a successful Work-at-Home capability with a high level of customer satisfaction, allowing its Customer Contact Management business in North America to overcome geographical limitations of labour availability. Additionally, the fast evolving digital and mobile channels are a great opportunity to differentiate ourselves as we optimize customer satisfaction with our unified customer experience strategy through the ‘DigiCX’ offering. HGS’s digital transformation disrupts the traditional voice-based services with the integration of online, social media and self-service digital communications with live person sales and support services. Along with analytics, this enhances business results for our clients and provides high service satisfaction for their customers.
Your company’s financial performance is very much driven by the satisfaction of its clients, who appreciate the consistency with which innovative solutions are delivered in a cost-effective manner to serve their strategic objectives. This is evidenced by the numerous accolades and the client endorsements that your company has received, and by the fact that 68% of our revenues come from clients who have tenures of 10 years or more; and by our ability to retain clients from the acquired businesses, who now have tenure of up to 48 years.
The theme of this annual report, ‘Driving Results. Consistently. Through innovative Customer Solutions’, emphasizes that the central aspect of your Company’s DNA is to constantly innovate to improve the outcome for the client as measured by the performance matrices. This in turn requires employees who are happy to be part of ‘Team HGS’, requiring critical people management skill in an industry with annual attrition rate averaging around 100%. While doing so, HGS has trained around a quarter of a million people since 2008 and helped many of them enter the organized job market.
On behalf of the Board, I would like to thank our customers for their confidence in Hinduja Global Solutions as their partner of choice. The credit goes to our CEO, Partha DeSarkar who deserves to be congratulated, along with his management team and each and every member of ‘Team HGS’, for the hard work and dedication in making the HGS success story a reality. This leadership team has a proven track record of navigating your company through difficult economic times.
I remain grateful to the Group Chairman, S. P. Hinduja, for his continued support and guidance during the significant growth of your Company. Such growth would not have been possible without the dedication and commitment of the Co-Chairperson, Shanu S. P. Hinduja, and board member, Vinoo S. Hinduja, both of whom were a tremendous support during my absence for medical reasons for part of the last year. I would like to thank Mr. Y. M. Kale, member of the board, for his contributions; as well as thank the other members of the Hinduja Group and family, in particular the Chairman Emeritus,
A. P. Hinduja. Special thanks to our esteemed independent board members for their invaluable guidance and time commitment. I would like to express our gratitude to all our shareholders and other stakeholders for their confidence in HGS.
Ramkrishan P. Hinduja
August 24, 2018