MIRA
INFORM REPORT
|
Report Date : |
15.01.2008 |
IDENTIFICATION
DETAILS
|
Name : |
MPHASIS LIMITED |
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Formerly Known As : |
MPHASIS BFL LIMITED |
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Registered Office : |
45/3, Gopalakrishna Complex, Residency Road Cross, Bangalore – 560025, Karnataka |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
03.06.1999 |
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Com. Reg. No.: |
25294 |
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CIN No.: [Company Identification No.] |
L30007KA1992PLC025294 |
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TAN No. |
BLRMO5590E |
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PAN No.: |
AAACB682OC |
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Legal Form : |
Subject is a public limited liability company. The company’s shares are listed on the Stock Exchanges. |
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Line of Business : |
Providing a suite of information technology solutions and services specifically tailored to meet the requirements of the financial services, retail, logistics & transportation and technology. |
RATING &
COMMENTS
|
MIRA’s Rating : |
A |
RATING
|
STATUS |
PROPOSED
CREDIT LINE |
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|
56-70 |
A |
Financial & operational base are regarded healthy.
General unfavourable factors will not cause fatal effect. Satisfactory
capability for payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 33200000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well established company having fine track. Available information indicates high financial responsibility of the company. Financial position is good. Payments are usually correct and as per commitments. The company can be considered good for any normal business dealings.Given telephone nos. are residential address. |
LOCATIONS
|
Registered Office : |
45/3, Gopalakrishna Complex, Residency Road Cross, Bangalore – 560025, Karnataka, India |
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Tel. No.: |
91-80-25522713/25522714 |
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Fax No.: |
91-80-25522719 |
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E-Mail : |
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Website : |
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Corporate Office : |
139/1, Hosur Road, Koramangala, Bangalore – 560095, Karnataka, India |
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Tel. No.: |
91-80--25522713/25522714 |
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Fax No.: |
91-80-25522719 |
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E-Mail : |
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Website: |
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Branches : |
Level 67, MLC Center, Martin Place, Sydney, NSW 2000, Australia Tel : [61]-2-9238-6139 Fax : [61]-2-9238-7633 21F, Pidemco Tower, 318 Fuzhou Road, Shanghai PRC 200001, China Tel : 86-21-330 44530 Fax : 86-21-639 12818 Koblenzer, Str 34, Post Fsh 12-21, D-56130, Bad Ems, Germany Tel : [49]-26-03750-4151 Fax : [49]-26-03750-4151 #1/1A, 7th Main, 18th Cross, BTM Layout 2nd Stage, Bangalore – 560076, Karnataka, India Tel. No. 91-80-26680126 Fax No. 91-80-26681057 #8/1, Balaji Mansion, Bannerghatta Main Road, J. P. Nagar Industrial Estate, Bangalore – 560084, Karnataka, India Tel. No. 91-80-26581672 Fax No. 91-80-26583140 The Millenia, Tower A & B, No. 1 & 2, Murphy Road, Ulsoor, Bangalore – 560008, Karnataka, India Tel. No. 91-80-25567500 Fax No. 91-80-25567515 Advanced Infotech Park, 4B, Tardeo Road, Mumbai – 400034, Maharashtra, India Tel. No. 91-22-24914901 Fax No. 91-22-24961059 A/2, Jitendra Industrial Estate, 1st Floor, M.V. Road, Andheri [East], Mumbai – 400034, Maharashtra, India Tel. No. 91-22-26969200 Fax No. 91-22-26969208 Leela Business Park, 2nd Floor, Andheri-Kurla Road, Sahar, Andheri [East], Mumbai – 400059, Maharashtra, India Tel. No. 91-22-56777777 Fax No. 91-22-56777700 Sharada Arcade, 2nd Floor, Bibwewadi, Pune-Satara Road, Pune – 411037, Maharashtra, India Tel. No. 91-20-24028080 Fax No. 91-20-24028697 1st Floor, Marisoft, Marigold Premises, Survey No. 15/1 to 15/6, Vadgon, Near Kumar City, Pune – 411006, Maharashtra, India Tel. No. 91-20-24125555 Fax No. 91-20-24125556 3rd Floor, Sakar – 10, Pune – 411001, Maharashtra, India Tel. No. 91-20-26051192 Fax No. 91-20-26051179 Prime Squate # 205, 1-1-7 Hiroo, Shibuya-Ku, Tokyo 150-0012, Japan Tel : [81]-3-3499-2388 Fax : [81]-3-5778-4884 10 Frere Felix De Valois St, Port Louis, Mauritius Tel : [230]-202-3015 Fax : [230]-212-5265 Seccion I, S.A De C. V Blvd Insurgentes No. 6101, Fracc. Guaycura, Tijuana B.C, Mexico Tel : 52-664-6609345 Planetenweg 69, 2131 HM Hoofddrorp, Netherlands Tel : [31]-23-5541410 Fax : [31]-23-5655132 138 Cecil Street, #12-02/03, Cecil Court, Singapore - 069538 Tel : 65-63721737 Fax : 65-63721739 Regent House Business Centre, 24-25 Nutford Place, London W1H 5YN, United Kingdom Tel : [44]-20-7569-3260 Fax : [44]-20-7569-3001 11600 Jones Road, Cypress Center, Suite # 108/14, Houston, TX 77070, U.S.A. Tel : [1]-281-517-5108 Fax : [1]-281-517-5107 18400 Von Karman Avenue, Suite 550, Irvine, CA 92612, U.S.A. Tel : 949-757-1456 1355, B Lynnfield Road, Suite # 245, Memphis, TN 38119, U.S.A. Tel : [1]-901-818-5455 Fax : [1]-901-818-1182 444 Park Avenue South, Suite # 503, New York, NY 10016, U.S.A. Tel : [1]-212-686-6655 Fax : [1]-212-6862422 |
DIRECTORS
|
Name : |
Mr. Stephen Heidt |
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Designation : |
Chairman |
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Name : |
Mr. Jaithirth Rao |
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Designation : |
CEO and Managing Director |
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Name : |
Mr. Narayanan Subramaniam |
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Designation : |
Vice Chairman |
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Name : |
Mr. Rahul Bhasin |
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Designation : |
Director |
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Name : |
Mr. Ashish Dhawan |
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Designation : |
Director |
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Name : |
Mr. B. R. Menon |
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Designation : |
Director |
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Name : |
Mr. Richard S. Braddock |
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Designation : |
Director |
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Name : |
Dr. Jose de la Torre |
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Designation : |
Director |
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Name : |
Mr. Jeroen Tas |
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Designation : |
Director |
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Name : |
Mr. Arthur Flew |
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Designation : |
Director |
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Name : |
Mr. Nawshir H Mirza |
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Designation : |
Director |
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Name : |
Mr. Davinder Singh Brar |
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Designation : |
Director |
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Name : |
Mr. Thomas Haubenstricker |
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Designation : |
Director |
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Name : |
Mr. Ronald Vargo |
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Designation : |
Director |
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Name : |
Mr. Douglas W. Davis |
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Designation : |
Director |
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Name : |
Mr. Paul W. Currie |
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Designation : |
Director |
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Name : |
Mr. Joseph Eazor |
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Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Mr. A Sivaram
Nair |
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Designation : |
Company Secretary |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
|
Names of Shareholders |
No. of Shares |
Percentage of
Holding |
|
Promoter |
83002201 |
50.59 |
|
Bodies Corporate |
24359357 |
14.84 |
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Foreign Institutional Investors |
18826571 |
11.47 |
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Financial Institutions |
569060 |
0.35 |
|
Resident Indians |
13688322 |
8.34 |
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Mutual Funds and Banks |
15645476 |
9.54 |
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Non Resident Indians |
3804915 |
2.32 |
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Directors and Relatives |
4175851 |
2.55 |
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TOTAL |
164071753 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Providing a suite of information technology solutions and services specifically tailored to meet the requirements of the financial services, retail, logistics & transportation and technology. |
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Product : |
Software Services : 85249009.10 |
GENERAL
INFORMATION
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Bankers : |
Ř Citibank NA Ř Deutsche Bank Ř Bank of America Ř ABN Amro Bank Ř HDFC Bank Limited |
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Facilities : |
Secured Loan : Other Loan [Secured by Hypothecation of the vehicles] – Rs. 28.419 millions (consolidated) |
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Banking Relations
: |
Satisfactory |
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Auditors : |
Bharat S. Raut & Company Chartered Accountants |
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Associates : |
Mphasis BFL Group |
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Subsidiaries: |
v MphasiS Corporation ('MphasiS USA') v MphasiS Deutschland GmbH (formerly v BFL Software GmbH) ('MphasiS GmbH') v BFL Software Asia Pacific Pte Limited ('BFLAPAC') v MphasiS Australia Pty Limited ('MphasiS Australia') v MphasiS (Shanghai) Software & Services Company Limited v (Formerly Navion (Shanghai) Software Development Limited) ('MphasiS China') v MbrokeR Inc. ('MbrokeR') v Princeton Consulting Limited ('Princeton') v Eldorado Computing Inc., ('Eldorado') v MphasiS Ireland Limited (MphasiS Ireland) v MbrokeR (India) Private Limited. ('MbrokeR India') v MphasiS Europe BV ('MphasiS Europe') v MphasiS Pte Limited ('MphasiS Singapore') v MphasiS UK Limited ('MphasiS UK') v MphasiS Software and Services (India) Private Limited ('MphasiS India') v MsourcE Holdings BV, Netherlands ('MsourcE Netherlands') v MsourcE Mauritius Inc., Mauritius ('MsourcE Mauritius') v MsourcE (India) Private Limited. (‘MsourcE India’) |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
245000000 |
Equity Shares |
Rs. 10/- each |
Rs. 2450.000 millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
164085953 |
Equity Shares |
Rs. 10/- each |
Rs. 1640.860 millions |
|
Less : |
Face value of 14200 equity shares forfeited |
Rs. 10/- each |
Rs. 0.142 million |
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Add : |
Amount Originally paid-up on forfeited shares |
|
Rs. 0.071 million |
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Shares Pending Allotment pursuant the scheme of amalgamation 44,104,065 (31 March 2006: Nil) equity shares of Rs. 10/- each |
Rs. 441.041 |
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Total |
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Rs. 2081.830
millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES
OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS
FUNDS |
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1] Share Capital |
2081.800 |
1610.200 |
786.100 |
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3] Reserves &
Surplus |
6210.500 |
3643.100 |
4860.100 |
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NETWORTH
|
8292.300 |
5253.300 |
5646.200 |
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LOAN FUNDS |
|
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|
1] Secured Loans |
13.100 |
15.500 |
12.400 |
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2] Unsecured
Loans |
0.000 |
0.000 |
0.000 |
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TOTAL BORROWING
|
13.100 |
15.500 |
12.400 |
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TOTAL
|
8305.400 |
5268.800 |
5658.600 |
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APPLICATION OF FUNDS
|
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FIXED ASSETS [Net Block]
|
1224.100 |
177.300 |
123.000 |
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Capital work-in-progress
|
27.000 |
4.200 |
3.900 |
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INVESTMENT
|
4530.900 |
4597.400 |
5545.100 |
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CURRENT ASSETS, LOANS &
ADVANCES
|
|
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Sundry Debtors
|
3158.100
|
1414.800
|
1124.800
|
|
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Cash & Bank Balances
|
1193.000
|
199.300
|
100.200
|
|
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Loans & Advances
|
1301.200
|
1071.100
|
1101.700
|
Total Current Assets
|
5652.300
|
2685.200
|
2326.700
|
|
Less :
CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
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Current Liabilities
|
2276.700
|
1596.000
|
2048.000
|
|
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Provisions
|
852.200
|
599.300
|
292.100
|
Total Current Liabilities
|
3128.900
|
2195.300
|
2340.100
|
|
Net Current Assets
|
2523.400
|
489.900
|
(13.400)
|
|
|
|
|
|
|
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TOTAL
|
8305.400 |
5268.800 |
5658.600 |
|
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Sales Turnover |
11028.500 |
3806.700 |
2477.700 |
|
Other Income |
32.100 |
92.400 |
101.500 |
|
Total Income |
11060.600 |
3899.100 |
2579.200 |
|
|
|
|
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|
Profit/(Loss) Before Tax |
1405.900 |
789.000 |
491.900 |
|
Provision for Taxation |
90.600 |
26.700 |
(9.900) |
|
Profit/(Loss) After Tax |
1315.300 |
762.300 |
501.800 |
|
|
|
|
|
|
Export Value |
10.318 |
3657.005 |
NA |
|
|
|
|
|
|
Imports Value |
617.383 |
37.782 |
NA |
|
|
|
|
|
|
Expenditures: |
|
|
|
|
Power & Fuel |
120.700 |
25.800 |
13.900 |
|
Manufacturing Expenses |
3097.300 |
1704.900 |
1284.900 |
|
Employee Cost |
3848.200 |
800.100 |
370.500 |
|
Administrative Expenses |
1872.300 |
397.400 |
311.800 |
|
Miscellaneous Expenses |
189.300 |
47.200 |
59.300 |
|
Interest |
14.400 |
50.900 |
0.900 |
|
Depreciation & Amortization |
512.500 |
83.800 |
46.000 |
|
Other Expenditure |
1932.800 |
923.700 |
538.800 |
|
Total
Expenditure |
11587.500 |
4033.800 |
2626.100 |
QUARTERLY RESULTS
|
PARTICULARS |
|
30.09.2007 |
30.06.2007 |
|
Type |
|
2nd
Quarter |
1st
Quarter |
|
Sales Turnover |
|
4133.400 |
3568.400 |
|
Other Income |
|
0.100 |
2.300 |
|
Total Income |
|
4133.500 |
3570.700 |
|
Total Expediture |
|
3433.400 |
2908.600 |
|
Operating Profit |
|
700.100 |
662.100 |
|
Interest |
|
(12.900) |
(22.100) |
|
Gross Profit |
|
713.000 |
684.200 |
|
Depreciation |
|
208.800 |
170.900 |
|
Tax |
|
11.500 |
25.900 |
|
Reported PAT |
|
492.700 |
487.400 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt Equity Ratio |
0.00 |
0.00 |
0.00 |
|
Long Term Debt
Equity Ratio |
0.00 |
0.00 |
0.00 |
|
Current Ratio |
1.57 |
1.11 |
1.65 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
5.48 |
4.69 |
3.45 |
|
Inventory |
0.00 |
0.00 |
0.00 |
|
Debtors |
4.82 |
3.00 |
1.99 |
|
Interest Cover
Ratio |
98.63 |
16.50 |
547.56 |
|
Operating Profit
Margin (%) |
17.53 |
24.27 |
21.75 |
|
Profit Before
Interest and Tax Margin (%) |
12.88 |
22.06 |
19.89 |
|
Cash Profit
Margin (%) |
16.57 |
22.23 |
22.11 |
|
Adjusted Net
Profit Margin (%) |
11.93 |
20.03 |
20.25 |
|
Return on Capital
Employed (%) |
20.93 |
15.37 |
10.71 |
|
Return on Net
Worth (%) |
20.07 |
13.99 |
10.93 |
CONSOLIDATED BALANCE SHEET OF MPHASIS GROUP
|
SOURCES
OF FUNDS (CONSOLIDATED) |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS
FUNDS |
|
|
|
|
|
1] Share Capital |
2081.830 |
1610.183 |
786.070 |
|
|
2] Share
Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves &
Surplus |
7935.890 |
4921.889 |
5526.264 |
|
|
4] (Accumulated
Losses) |
0.000 |
0.000 |
0.000 |
|
NETWORTH
|
10017.720 |
6532.072 |
6312.334 |
|
|
|
|
|
|
|
|
Employee stock options outstanding |
67.235 |
73.808 |
85.773 |
|
|
Deferred employee stock compensation expense |
0.000 |
0.000 |
0.000 |
|
|
Minority Interest |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
28.419 |
36.912 |
46.297 |
|
|
2] Unsecured
Loans |
0.000 |
0.000 |
0.000 |
|
TOTAL BORROWING
|
28.419 |
36.912 |
46.297 |
|
|
DEFERRED TAX
LIABILITIES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
TOTAL
|
10113.374 |
6642.792 |
6444.404 |
|
|
|
|
|
|
|
APPLICATION OF FUNDS
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block]
|
2273.532 |
1341.273 |
1102.349 |
|
Capital work-in-progress
|
244.813 |
113.981 |
95.591 |
|
|
|
|
|
|
|
INVESTMENT
|
0.000 |
0.000 |
3491.759 |
|
DEFERREX TAX ASSETS
|
177.421 |
166.538 |
150.112 |
|
GOODWILL
|
2710.462 |
2676.461 |
0.000 |
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS &
ADVANCES
|
|
|
|
|
|
|
Inventories
|
0.000 |
0.000 |
0.000 |
|
|
Sundry Debtors
|
4210.120 |
2117.150 |
1834.785 |
|
|
Cash & Bank Balances
|
1892.557 |
988.505 |
954.711 |
|
|
Interest and Dividend Receivable
|
11.449 |
2.111 |
2.016 |
|
|
Loans & Advances
|
1508.256 |
711.173 |
805.527 |
Total Current Assets
|
7622.382 |
3818.939 |
3597.039 |
|
Less :
CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
1975.303 |
836.150 |
1602.373 |
|
|
Provisions
|
939.933 |
638.250 |
390.073 |
Total Current Liabilities
|
2915.236 |
1474.4 |
1992.446 |
|
Net Current Assets
|
4707.146 |
2344.539 |
1604.593 |
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES
|
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
TOTAL
|
10113.374 |
6642.792 |
6444.404 |
|
CONSOLIDATED PROFIT & LOSS ACCOUNT OF MPHASIS GROUP
|
PARTICULARS
(CONSOLIDATED) |
31.03.2007 |
31.03.2006 |
31.03.2005 |
Sales Turnover [including other
income]
|
30793.850 |
15896.158 |
2575.338 |
|
|
|
|
|
Profit/(Loss) Before Tax
|
1983.194 |
1556.781 |
1129.218 |
Provision for Taxation
|
182.470 |
58.206 |
116.944 |
Profit/(Loss) After Tax
|
1800.724 |
1498.575 |
1246.162 |
|
|
|
|
|
Import Value
|
NA |
NA |
22.338 |
|
|
|
|
|
Expenditures:
|
|
|
|
Selling Expenses
|
918.428 |
548.603 |
|
General and Administration Expenses
|
1442.008 |
854.142 |
2366.229 |
Total Expenditure
|
2360.436 |
1438.745 |
2366.229 |
LOCAL AGENCY
FURTHER INFORMATION
Directors' Profile
Stephen Heidt, Chairman
Stephen (Steve)
Heidt, Chairman of the Board, is a representative
of Electronic Data Systems Corporation (EDS), the majority shareholder holding
83 million shares (51.39% as on 30 June 2006) of the Company through its
investment arm, TH Holdings. He holds a Certificate in Business Programming
from the School of Computer Technology, Pittsburgh, PA. He joined the Board of
MphasiS in June 2006.
At EDS, Steve is
the Vice President of Business Workforce and Capacity Management, reporting
directly to the office of the COO. He has responsibility for all EDS Best
ShoreSM activities, providing one single, globally integrated plan for Best
ShoreSM across Information Technology Outsourcing, Business Process Outsourcing
and Applications.
Steve began his
career with EDS in the Operations Development Program and accepted his first
assignment in operations management at the Dallas Regional Data Center. Since
joining EDS in 1980, Steve has held numerous leadership roles directing both
technical and field teams. His previous roles with EDS - Vice President of BPO
Service Delivery, President of EDS Distributed Systems Services, and President
of Information Solutions for EMEA region, President of EDS Global Delivery, and
Director of the Technical Infrastructure group - reflect the diversity of his
experience.
Jaithirth Rao, CEO and Managing Director
Jaithirth (Jerry)
Rao holds a Masters degree from the University of Chicago and a MBA from Indian
Institute of Management, Ahmedabad. Jerry joined the Board in January 2000.
Prior to founding
MphasiS, Jerry was with Citigroup, where he built and developed Citibank's
Consumer businesses as the Country/Regional Manager in India, Middle East,
Eastern Europe and UK. He earlier headed Citibank's Global Technology
Development Division and their Global Electronic Cards Division. Jerry is a
seasoned veteran in Consumer and Corporate Financial Services and in Technology
Management. With his vast experience on the subject, Jerry has testified before
the US Congress on e-commerce.
Currently, Jerry is
also on the Boards of Cadbury India Limited, The Arvind Mills Limited, IDFC
Asset Management Company Limited, Gabriel India Limited, Royal Orchids Hotels
Limited, Rao Properties Private Limited., Sanvijay Tours and Travels Private
Limited. and Bangalore Review and Magazines Co. Private Limited. He is the Founder
Member and Director of Development Gateway Foundation, USA, and a Trustee of
the NASSCOM Foundation, Sujay Foundation, India Foundation for the Arts and
Mathematical Sciences Foundation. He is also a Settlor and Executive Committee
Member in IIMA Alumni Association Trust.
Rahul Bhasin, Director
Rahul Bhasin is a
MBA from Indian Institute of Management, Ahmedabad. He joined the Board in June
1998. He is also the Managing Partner for Baring India Private Equity Fund. Previously
he was a Fund Manager with Citibank Global Asset Management in London.
Prior to moving to
London, he was based in Citibank's Delhi Office where he was in charge of
Treasury. Rahul was earlier the Chairman of MphasiS BFL Limited. Currently, he
is also on the boards of Siro Clinpharm Private Limited, Hindustan Oil
Exploration Company Limited, Secova eServices and Baring Private Equity
International.
Nawshir H Mirza, Director
Nawshir Mirza is a
Fellow of the Institute of Chartered Accountants of India having qualified in
the year 1973. He spent most of his career with Ernst Łt Young and its Indian
member firm, S.R.Batliboi & Co, Chartered Accountants, and its predecessor
firm, Arthur Young, being a Partner from 1974 to 2003. He joined the Board of
MphasiS in January 2004.
He has contributed
to the accounting profession, being a Speaker or the Chairperson at a large
number of professional conferences in India & abroad.
He is also a
Director on the boards of Esab India Limited, Tata Industries Limited, RPG
Guardian Private Limited and Foodworld Supermarkets Limited. As a
philanthropist, he is actively involved with Childline, an all-India NGO for
abused & distressed children.
Davinder Singh Brar, Director
D S Brar is a B.E. (Electrical)
from Thapar Institute of Engineering & Technology, Patiala, and a Masters
in Management from Faculty of Management Studies, University of Delhi (Gold
Medalist - 1974). He joined the Board in April 2004. Brar started his career
with Associated Cement Companies (ACC) and later joined Ranbaxy Laboratories
Limited where he rose to the position of CEO and Managing Director.
Currently, he is
also on the boards of Reserve Bank of India, Suraj Hotels (P) Limited,
Madhubani Investments (P) Limited, Suraj Overseas (P) Limited, Green Valley
Land and Development (P) Limited, Davix Management Services Private Limited,
GVK Bio Sciences Private Limited, GVK Davix Technologies Private Limited and
Inogent Laboratories Private Limited and Member of Board of Governors in Indian
Institute of Management, Lucknow. He is also a Special Advisor to the Board of
Directors of Codexis, a California based Company.
Dr. Jose de la Torre, Director
Dr. Jose de la
Torre is a Doctor in Business Administration from Harvard University and MBA
(Management) and B.S. (Aerospace Engineering) from the Pennsylvania State
University. He is the Dean of the Chapman Graduate School of Business at
Florida International University, Miami, Florida and holds the Byron Harless
Chair in Management.
He joined the Board
in June 2000. Dr. de la Torre was previously a professor of International
business strategy at the Anderson School at UCLA and at INSEAD in France. He is
also on the International Advisory Board of EDHEC in Lille and Nice, France.
Thomas Haubenstricker, Director
Thomas (Tom)
Haubenstricker is a representative of EDS on the Board of the Company and
joined the Board of MphasiS in June 2006. He holds a Bachelor's degree in
Business Administration from Central Michigan University.
At EDS, he is the
interim co-Chief Financial Officer and shares joint responsibility for the
controllership, treasury, tax, investor relations, audit, supply chain
management, corporate financial analysis, procurement finance and corporate
administration functions for EDS' worldwide operations. He reports directly to
the Chairman and CEO of EDS.
Tom joined EDS'
finance organization in 1985 and has held various financial accounting,
planning and reporting positions in the United States and EMEA (EDS' Europe, Middle
East and Africa region). Tom has been Vice President for Finance Administration
since January 2003 and has responsibility for EDS' corporate business
development, corporate planning and financial analysis organizations. He has
also served the roles of Vice President of Strategic Planning and Business
Development and Managing Director of Financial Planning and Reporting.
Ronald Vargo, Director
Ronald P (Ron)
Vargo is also a representative of EDS on the Board of the Company. He too
joined the Board in June 2006. Ron holds a MBA degree in Finance from Stanford
University and BA degree in Economics from Dartmouth College.
He joined EDS in
2004 and is currently the interim co-Chief Financial Officer and shares joint
responsibility for the controllership, treasury, tax, investor relations,
audit, supply chain management, corporate financial analysis, procurement
finance and corporate administration functions for EDS' worldwide operations.
He reports directly to the Chairman and CEO of EDS.
Before joining EDS,
Ron was Corporate Treasurer and Vice President of Investor Relations at TRW
Inc., now part of Northrop Grumman. Before TRW, Ron spent 10 years advancing
through assignments in finance and treasury, planning and development, and
general management at The Standard Oil Company (subsequently British
Petroleum).
Previously, he held
various auditing and financial positions at General Electric (GE) where he
graduated from GE's Financial Management Program.
Douglas W. Davis, Director
Douglas (Doug) Davis
is also a representative of EDS on the Board of the Company, since June 2006.
Doug holds a Bachelor's degree in both Accounting and Business Administration
from Evangel College and a MBA degree in finance from Southwest Missouri State
University. He has also completed Executive Development programs from the
London Business School, Duke University and Thunderbird University.
He is the Vice
President of Service Delivery for the Europe, Middle East and Africa (EMEA)
region with EDS. He is responsible for the end-to-end delivery to all clients
across the region, including service, contractual and financial performance, as
well as growing the existing business for EDS.
Before joining EDS,
Doug was Director for Strategy, Planning and Negotiations with General Motors
(GM) on a worldwide basis. He began his career with GM as an operations analyst
with the Packard Electric Division.
Paul W. Currie, Director
Paul W. Currie,
representative of EDS on the Board of the Company, also joined the Board in
June 2006. He is a Canadian Chartered Accountant and was honored as an Ontario
Institute silver medalist and named to the Canadian Institute honor roll.
At EDS, he is the
Executive Vice President responsible for Corporate Strategy and Business
Development. His responsibilities include oversight for developing EDS'
corporate strategies and developing growth plans to build the company's
business portfolio through related merger and acquisition activities. He
reports directly to the EDS Chairman and CEO and serves as a member of EDS'
Executive Committee.
Earlier, Paul
served as managing partner of Currie & Company, a consultancy providing
strategic, corporate development, financial and operational advice, and related
services primarily to large multinational corporations.
His previous
assignments include Chief Executive Officer of Symcor (a leading BPO services
provider in Canada) and Executive Vice President for Corporate Development and
Mergers and Acquisitions for Newcourt Credit Group (a global provider of
leasing and capital asset lending). He also served as a partner with Coopers
& Lybrand for more than a decade.
Paul currently
serves on the board of directors of CEI Corporation and is on the Dean's
Advisory Council for York University Business School.
Joseph Eazor, Director
Joseph (Joe) Eazor
is also a representative of EDS on the Board of the Company since June 2006. He
has a MBA degree from the University of Chicago and a BSc. Degree from the
Colorado School of Mines.
At EDS, he is the
President of EDS Asia and Chairman of EDS China. In this position, Joe leads
EDS' efforts in ASEAN, China, Hong Kong, India, Japan, Korea and Taiwan.
Previously, he was the Vice President and General Manager of the EDS' BPO unit.
As head of BPO, he was responsible for EDS' financial processing,
administrative processing, CRM, F&A and HR outsourcing businesses,
including ExcellerateHRO.
Before leading EDS'
BPO business, Joe was the head of Corporate Strategy and Operations
Improvement, working for the Chairman and CEO. A former A.T. Kearney Vice
President and global industry practices leader, Joe has also worked with Ernst
and Young as a partner and co-leader of its Strategic Advisory Services
Practice. He also served as a Principal with AlixPartners LLC, a management
turnaround and consulting firm, and as President and CEO of Springbow
Solutions, a business-to-business software solutions company.
CONSOLIDATED PERFORMANCE
The Company and its subsidiaries' (Group's) total revenue grew by 87% from Rs.9,401 million in the previous year to Rs.17,606 million for the year 2006-07, including on account of the merger of EDS Electronic Data Systems (India) Private Limited with retrospective effect from 1 April 2006. The profit before taxes for the same period increased by 27% from Rs.1,557 million to Rs.1,983 million. Basic earnings per share for the year ended 31 March 2007 was Rs.8.74.
OUTLOOK
The year has been one of great challenges and achievements. The Company has grown from strength to strength to record its highest ever profits as a Company and is looking at building on this solid foundation in the times to come, with the backing of Electronic Data Systems Corporation (EDS). The acquisition of Company by EDS has expanded opportunities for Company. It has enabled Company to broaden its offerings to customers by including infrastructure outsourcing in addition to the current applications services and BPO offerings. The acquisition has also given Company access to EDS' vast client base and its array of technologies, tools, knowledge and experience.
OTHER
DEVELOPMENTS:
(A) OPEN OFFER FOR SHARES BY EDS
CORPORATION:
Pursuant to the open offer for acquisition of shares made in April 2006, TH
Holdings, an unlisted company incorporated under the laws of Mauritius, as the
acquirer, acquired 83 million shares of Company. Electronic Data Systems
Corporation ('EDS'), a company incorporated in Delaware, USA which is the
ultimate parent company and the beneficial owner of TH Holdings, was a person
acting in concert with TH Holdings in terms of the SEBI (Substantial
Acquisition of Shares & Takeovers) Regulations, 1997, for the purposes of
the open offer. In October 2006, TH Holdings made a second open offer for
acquisition of up to 20% of the share capital on that date. The offer closed in
February 2007 and EDS, through TH Holdings, acquired further 2,201 shares.
EDS is the listed flagship entity of the EDS group of companies (the 'EDS
Group'). EDS, TH Holdings, EDS World Corporation (Far East), EDS World
Corporation (Netherlands), EDS Finance Partnership (Cayman), L.P., EDS Finance
(Cayman) Ltd., and other direct and indirect subsidiaries of EDS form the EDS
Group. This information is given pursuant to the SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations 1997, as amended up to date.
As on 31 March 2007, the EDS Group through TH Holdings held 83,002,201 shares
forming 50.59% of the share capital of their Company on that date.
(B) MERGER OF ELECTRONIC DATA SYSTEMS
(INDIA) PRIVATE LIMITED WITH MPHASIS LIMITED:
In terms of the approval of the Board of Directors of their Company vide resolution passed on 26 July
2006 and their approval accorded at the
court convened meeting held on 13 November 2006, their Company had filed an application before the
Hon'ble High Courts at Bombay and Karnataka seeking sanction for the Scheme of
Merger between EDS Electronic Data Systems (India) Private Limited ('EDS
India') and MphasiS Limited. The Hon'ble High Courts at Bombay and Karnataka,
vide orders dated 2 February 2007 and 19 June 2007, respectively, sanctioned
the Scheme of Amalgamation as prayed for and EDS India stands merged with their
Company with effect from 23 July 2007 on filing of the order with the Registrar
of Companies, Karnataka.
The merger is applicable with retrospective effect from 1 April 2006, from
which date the financials of both EDS India as well as MphasiS Limited have
been consolidated and are attached to this report for adoption at the Fifteenth
Annual General Meeting.
(C) CHANGE IN NAME AND REGISTERED OFFICE
OF THE COMPANY:
In terms of the approval of shareholders accorded at the extraordinary general
meeting held on 13 November 2006, their
Company changed its name from 'MphasiS BFL Limited' to 'MphasiS Limited'
with effect from 24 November 2006. Further, with effect from 30 April 2007,
their Company has shifted its registered office from 139/1, Hosur Road,
Koramangala, Bangalore 560 095 to Bagmane Technology Park, Byrasandra, C.V.
Raman Nagar, Bangalore 560 093.
SUBSIDIARIES
As on 31 March
2007, the Company had subsidiaries in Australia, Germany, India, Ireland,
Mauritius, Netherlands, Peoples Republic of China, Singapore, the United
Kingdom and the United States of America.
CONTINGENT
LIABILITIES AND COMMITMENTS
(a) Claims against the Group not acknowledged as debts amounting to Rs 561.140 million [31 March 2006: Rs 231.341 million];
(b) Income tax demand including interest in respect of the assessment year 2002-03 estimated at Rs 6.043 million (31 March 2006: Rs 6.043 million), net of provision made in the books, has been remanded for de novo adjudication to the Assessing Officer. Based on expert advice, the Company believes that it has a good case to defend and no further liability is expected to arise in this regard;
(c) Potential liability on account of provident fund contribution on leave encashment for the period October 1994 to April 2005, pending final decision by the appropriate authority is approximately Rs 7.60 Million (31 March 2006: Rs 7.60 Million); The contributions from May 2005 onwards have been remitted on a monthly basis.
(d) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for as at 31 March 2007: Rs 100.023 million (31 March 2006: Rs 50.766 million);
(e) Guarantees outstanding including those furnished to the Customs authorities as at 31 March 2007: Rs. 326.889 million (31 March 2006: Rs 98.672 million);
(f) Forward contracts outstanding as at 31 March 2007: Nil [31 March 2006: Rs 3066.296 million (US$ Rs. 68.728 million)]. Unamortized premium on forward exchange contracts as at 31 March 2007: Nil (31 March 2006: Rs 12.650 million).
(g) Income tax demand including interest in respect of the assessment year 2002-03 estimated at Rs 6.043 million (31 March 2006: Rs 6.043 million), net of provision made in the books, has been remanded for de novo adjudication to the Assessing Officer. Based on expert advice, the Company believes that it has a good case to defend and no further liability is expected to arise in this regard;
(h) The Group has issued performance guarantees to certain
clients for executed contracts.
WEBSITE DETAILS ARE ATTACHED HEREWITH:
Subject
supports G2000 companies around the world in the improvement of their business
processes. They focus on Financial Services, Retail, Logistics, Utilities,
Pharmaceuticals and Technology industries, building on a platform of
world-class IT and Business Process Outsourcing (BPO) capabilities. All their
solutions are driven by the highest quality standards (SEI CMMi Level 5, ISO
9000, Six-Sigma, BS 7799).
Their specific expertise is in the intersection of IT and BPO. They believe
that the new generation of business processes in the services industries will
be workflows that are tightly integrated and managed, but can be decomposed and
executed in the location, which offers the best price/ performance. The
convergence of technologies such as web services, workflow software and
business performance monitoring enables this services delivery revolution.
Subject is playing a leading role in the application of these technologies.
Subject - a global
IT and BPO service provider to G2000 companies around the globe, assists its
clients in innovating and streamlining their business processes by offering
custom solutions for technology and operations outsourcing.
The Company's expertise is focused on financial services, logistics and
technology verticals and spans across architecture, application development and
integration, application management and business process outsourcing, including
the operation of large-scale customer contact centers.
Subject specializes
in multi-channel solutions, which optimize sales and service processes from a
cost and quality perspective.
Besides an onsite presence at key locations, the Company has an extensive
offshore infrastructure for IT Development and Business Process Outsourcing
with centers in India, China and Mexico. Subject has a strong quality culture,
reflected in ISO 9000 and BS 7799 certifications, CMMi Level 5 rating and Six
Sigma quality initiatives. The company currently employs over 8500
professionals.
Led by Jerry (Jaithirth) Rao (Chairman and CEO) and Jeroen Tas (Vice Chairman),
both former Citibank executives, the Subject management team has a unique blend
of domain & technology leadership.
Message
from Jerry & Jeroen
The Subject vision
is to become the best-in-class service provider of offshore-based IT and BPO
services in select business processes and industries in the coming years.
As they continue to work closely with their clients to innovate, automate and
co-source their business processes they have found increasing synergies in
their IT and BPO businesses. Better understanding of their clients' business
processes allows them to deliver new solutions which combine IT and BPO. They
are positioning theirselves as an offshore services provider that specializes
in supporting their client's business processes through solutions that combine
IT and BPO capabilities.
At Subject they are striving to achieve deep process execution expertise, apply
world class IT skills and deliver leading edge tools. They are helping their
clients to innovate, automate and execute their business processes at lotheyr
cost with higher quality. In order to be effective in transitioning and
managing their client's business processes they will integrate their processes
and the underlying applications and systems. On top of this they will provide
their clients complete control, security and transparency of the execution of
the processes. IT plays an important role in quality management, workforce
management, business activity monitoring and business intelligence. BPO and IT
are closely related. Both require detailed understanding of their clients,
their domain, their processes and the way their clients make decisions, work
and operate. Only by closely associating with their clients can they be really
effective in servicing them.
At Subject’s BPO, they
provide high quality, value added contact center services and Business Process
Outsourcing (BPO) services to Fortune 500 companies. Their contact centers in
Bangalore and Pune. India offer English language support in an ISO 9001
certified environment. They also provide Spanish language solutions through
their Tijuana, Mexico contact center facility.
They offer the
satisfaction that comes from working with a technologically sound business
partner. They are committed to continually investing in their people,
processes, infrastructure and facilities. Their objective is to provide their
clients with the highest levels of performance. They are committed to building
scalable and repeatable business solutions that ensure their customer’s
success.
Subject
Technologies mission is to provide high quality, cost effective services and
solutions to organizations in the fields of R&D and product development. By
operating as virtual extensions, they align and deliver their services in line
with their customer’s business goals.
Their
offerings span 9 industries and sciences of Mobile, Networking and Telecom,
Industrial Automation, Computing Platforms, Automotive Telematics, Consumer
Electronics, Healthcare, Life Sciences and RFID (Retail).
They
deliver their services through their established and proven “Technology Rental
Lab” concept.
“Technology Rental Lab” is the single point aggregator that provides
accountability across multiple inputs and players in a R&D or product
development endeavor. It addresses the key requirements of process integration,
IP protection, technology partnerships, domain knowledge, and resource
scalability.
To
sharpen and deepen their domain focus, they are evolving to a practices based
organization. Mobile Technologies, Life Sciences and RFID (Retail) are their
first initiatives in this direction.
Princeton
Consulting is Subject’ Operational Consulting and Customer Management business
for Customer Care (Sales & Service Processes). Princeton focuses on
providing customer management solutions, through the pragmatic application of
process improvement techniques and technology. They help clients enhance
customer satisfaction, remove unnecessary cost and capitalize on revenue
opportunities.
They deliver a full
range of customer management products and services in the customer care space,
specifically for the financial services and telecommunication industries. Their
areas of expertise include customer relationship management (CRM),
multi-channel customer service and support, sales automation, marketing and
analytics, mobile and contact centre solutions.
They focus on
understanding their customers’ specific requirements and challenges. Customers
benefit from their broad experience in the customer care space, resulting in
shortened development and implementation time frames. They deliver on-time and
significantly reduce development costs, whilst maintaining the highest quality
standards. With their in-depth knowledge in customer management best practices,
strategies and technology, they are ideally positioned to help clients meet the
challenge of improving business performance.
Their customer
management solutions are based on leading CRM and e-business products. For
customized development, they have specialist groups experienced in industry
standard architectures and framework. Their expertise includes Siebel,
Microsoft CRM, Contact Central, Genesys
Group Strategy and Overview
Jerry Rao wants to
do the taxes.
Ah, you say, you've
never heard of Jerry Rao, but the name sounds vaguely Indian. Anyway, you
already have an accountant. Well, Jerry is Indian. He lives in Bangalore. And,
you may not know it, but he may already be the accountant. "They have tied
up with several small and medium-size C.P.A. firms in America," explained
Mr. Rao, whose company, Subject, has a team of Indian accountants able to do
outsourced accounting work from across the U.S.
All the necessary
tax data is scanned by U.S. firms into a database that can be viewed from
India. Then an Indian accountant, trained in U.S. tax practices, fills in all
the basics.
"This is
happening as they speak - they are doing several thousand returns," said
Mr. Rao. American C.P.A.'s don't even need to be in their offices. They can be
on a beach, said Mr. Rao, "and say, 'Jerry, you are particularly good at
doing New York returns, so you do Tom's returns." He adds," They have
taken the grunt work" so U.S. accountants can focus on customer service
and thinking creatively about client needs. Mr. Rao's ability to service U.S.
accounts this way is at the core of a business revolution that has happened
over the past few years. I confess: I missed this revolution. I was totally
focused on 9/11 and Iraq. But having now spent 10 days in Bangalore, India's
Silicon Valley, I realize that while I was sleeping, the world entered the
third great era of globalization.
The first era, from
the late 1800's to World War I, was driven by falling transportation costs,
thanks to the steamship and the railroad. That was Globalization 1.0, and it
shrank the world from a size large to a size medium. The second big era,
Globalization 2.0, lasted from the 1980's to 2000, was based on falling telecom
costs and the PC, and shrank the world from a size medium to a size small. Now
they've entered Globalization 3.0, and it is shrinking the world from size
small to a size tiny. That's what this outsourcing of white-collar jobs is
telling us — and it is going to require some wrenching adjustments for workers
and political systems.
Globalization 3.0
was produced by three forces: First is the massive installation of undersea
fiber-optic cable and bandwidth (thanks to the dot-corn bubble) that have made
it possible to globally transmit and store huge amounts of data for almost
nothing. Second is the diffusion of PC's around the world. And third (what I
missed most) is the convergence of a variety of software applications - from
e-mail, to Google, to Microsoft Office, to specially designed outsourcing
programs - that, when combined with all those PC's and bandwidth, made it
possible to create global "work-flow platforms."
These work-flow
platforms can chop up any service job - accounting, radiology, consulting,
software engineering - into different functions and then, thanks to scanning
and digitization, outsource each function to teams of skilled knowledge workers
around the globe, based on which team can do each function with the highest
skill at the lowest price. Then the project is reassembled back at headquarters
into a finished product. Thanks to this new work-flow network, knowledge
workers anywhere in the world can contribute their talents more than ever
before, spurring innovation and productivity. But these same knowledge workers
will be under more pressure than ever to constantly upgrade their skills in
this Darwinian environment.
Tom Friedman NY
Times, March 4, 2004 Copyright © 2005 by The New York Times Co. Reprinted with
permission. Emerging Client Needs In the last decade product companies have
successfully outsourced large parts of their supply chain overseas. China has
become the manufacturing base of the world. A similar shift is happening in the
services industries.
The global sourcing
of services is in full swing. India, with its large, well educated, English
speaking population, is actively positioning itself as the hub for offshore
services. US and UK companies have set up their own offshore centers or are
using external service providers to support their IT projects and increasingly
combining their back-office administrative processes with their front-office
customer interaction. IT services are starting to reach a level of maturity and
business process outsourcing (BPO) is rapidly emerging. There are tremendous
opportunities to reap the benefits of lower cost, flexible capacity, higher
quality and process improvements. Successful companies are continually
streamlining their business processes. They are breaking up processes into
components and leveraging partnerships with service providers to achieve the
optimal coverage of each link in the service supply chain. They extend their
enterprise by leveraging partners who can offer them innovation, flexibility,
cost reduction and quality improvement for their processes, such as customer
sales and service, case handling, tax and accounting, technology support and IT
application management.
Strong partnerships
between these companies and their service providers are based on alignment of
strategy, culture, processes and systems. These partnerships are governed by
robust security, performance management, risk management and relationship
management. Providers such as Subject need to show deep domain expertise and
world class execution capabilities for the processes they execute on their
client's behalf.
Subject adds value
to its clients on multiple levels:
v
At the base
level they seamlessly link with their client's organization to ensure that
processes are executed
v
and IT
projects delivered according to the client's detailed, custom specifications.
These types of engagements are task-based and rely on the service provider's
excellence in delivering the right skills, quality and cost.
v
On the next
level, clients are not just assessing the partner on delivery in accordance
with Service Level Agreements, but on the provider's ability to improve the
productivity and performance of their processes.
v
This involves
higher effectiveness by applying industry best practices and automation and
increased efficiency by applying six sigma methodologies and business
intelligence. Examples of performance measures on this level are improved
customer satisfaction, better cross selling ratios or reduced number of
defects.
v
At the highest
level the partner is delivering business results and is being measured on the
success of the outcomes, such as accounts opened, cents collected on the
dollar, claims handled. The service provider will completely manage these
outcomes using their proprietary platforms and processes.
Group Strategy and Overview
Subject Market Focus
Vertical Focus
Vertical focus and
depth in the Financial and Technology Verticals will drive the content of their
offerings. Given their reputation, knowledge and capabilities in the Financial
Vertical (Retail Financial Services, Investment/ Corporate Banking, Financial
Information-provision and Insurance), they will continue to invest in their
dominance in this vertical.
The Technologies
Vertical (M-Tec) will provide a complete portfolio of services -from R&D,
Development, Testing to Tech Support- for HW and SW Technology companies. This Vertical
builds on their strong position with leading companies in this industry. A
separate unit for Emerging Verticals (Transportation, Pharma, Telecoms) has
been established to manage their footprint and leverage the expertise built up
in their core verticals. Strategy They aspire to be a differentiated company-
their sole intent being to partner businesses in significantly improving the
performance of their critical business processes. They help their clients
achieve their business objectives by using leading edge tools to craft
innovative solutions that leverage the company's global sourcing capabilities,
its select domain and process expertise and backed by world class IT and BPO
delivery. They intend to deliver on their growth aspirations through their
"Six Box" strategy. This is their approach to achieving profitable
growth based on 3 foundation businesses and 3 emerging businesses. This implies
building their foundation businesses further-Voice-based BPO, Application life
cycle management capabilities, particularly in Financial Services and Embedded
Systems. These 3 foundation businesses have scale and brand recognition, and
they will invest further in growing them to achieve market dominance. They have
also identified 3 emerging businesses- Healthcare (particularly focus areas
such as claims processing), Platform-based BPO (to complement Customized BPOs)
and Consulting. These add strategic muscle to their game-plans- help us engage
with clients higher in the value chain and in their early stages of their
outsourcing journey, and provide us with opportunities to shape their destinies
more formidably.
They have engaged
with the pre-eminent management consulting firm, McKinsey & Co. extensively
and have developed with them both this strategy and an organizational construct
that they believe can help us over the next twenty-four months. Going forward
they will measure the width and depth of their relationships with their
Customers, irrespective of the business units (IT Services, BPO, Solutions)
serving them. To keep this focus, they will also report their financials by
Verticals and not by their Business Units. Subject Business Portfolio They are
addressing the market through 3 Business Units (BU), with Integrated client
relationship teams to ensure a common approach to building value for their
clients:
Business Process Outstheircing (MphasIS BPO)
The BPO unit
manages the execution of business process on behalf of their clients. Processes
covered Include sales 6t service, finance 6t accounting, content management,
claims-handling and technical support. Each of these businesses shows different
characteristics In terms of customer needs and delivery models. Given the
competitive landscape, the market dynamics, each of the business units exhibits
specific growth and contribution patterns. The following picture describes the
portfolio In terms of relative revenue, growth and contribution.
Group Strategy and Overview
Financial Services
Solutions (FSS) This BU manages IT services, Business Process Improvement Consulting
(Princeton Consulting) and Platformbased Solutions, including the Healthcare
Insurance Unit (Eldorado Computing Inc.). Technologies (M-Tec) This BU provides
solutions to the hi-tech industries, ranging from product R&D, maintenance
& support, quality assurance and technical help desk. Platforms In their
discussions with clients, they discover a major opportunity to link their
performance closer to their client's business as they convert their Solutions
into scalable Platforms. They will develop software platforms that allow us to
offer world class business services - "Platform-based BPO"- to their
clients. They consciousy seek to move to a transaction-based pricing rather
than a cost plus pricing model. They have booked initial success with their Virtual
Process Manager, which is now being used as a service by a few major financial
institutions. Consulting The Consulting practice will position Subject
uniquely- by enabling us to add value to their clients early on in their
outstheircing jtheirney. They are consolidating their Consulting skills under
the Princeton umbrella by combining their existing Business Analysis Group in
I.T. (BAG), the Business Intelligence and Data Warehousing Group in I.T.
(BI/DW) and the Business Excellence Group in BPO (B.E.). The Charter of this
Group is to assist their clients in improving their business processes. This
Consulting Unit with over 250 FTEs will operate under the Princeton Consulting
brand-name.
Princeton
Consulting will continue with its own CRM Practice under its brand name. The
MphasiS Architecture Community (MAC), with its deep expertise in architecting
technology, will also operate under the Consulting umbrella. Healthcare
Healthcare is a high growth Vertical with tremendous opportunities for improved
productivity using Platforms and skills that are specialized. They already have
experience in Claims-handling and Payments, areas that play to their strengths.
A large part of the US citizen's healthcare dollar goes towards paying for
support processes such as health insurance claims. It is in this context that
the acquisition of El Dorado, a Healthcare Claims-handling and Payments BPO
fits perfectly to their plan. They are immediately leveraging the El Dorado
acquisition to launch in the U.S. a platform-based BPO offering based on a per
policy pricing, while exploring opportunities to lower TPA costs using the
India advantage.
MphasiS Business Process Outsourcing (BPO)
MphasiS BPO
Services (formerly known as MsourcE) was one of the early movers in the BPO space
in India. Over the last five years it has established a leadership position and
is privileged to have a client list that includes 14 Fortune 500 (US) and 3
FTSE 100 (UK) companies. It partners with clients to deliver high quality,
cost-effective services across the focus-industries Financial Services (Retail
banking, Investment Banking, Insurance) and Hitech industries. Other industries
like Telecoms, Utilities and Logistics are also serviced. As the leader in
offshore BPO, Subject has recognized the changing customer requirements and
competitive landscape. The labor arbitrage benefits of India are well
understood and companies are now starting to look for benefits beyond cost
savings. In order to provide sustainable cost and performance advantage to clients,
MphasiS BPO is moving from providing pure cost savings to providing sustained
performance enhancements. They call this high value-add offering BPO 2.0 and
this is witnessing an overwhelming response from their clients and marketplace.
Business process
expertise - BPO 2.0 MphasiS BPO 2.0 value proposition is characterized by
adding value to clients through process improvements and application of
technology to optimize the process chain. The key components of MphasiS'
value-added outsourcing include: Domain knowledge: A deep understanding of the
client and their industry for successful execution of business process
outsourcing arrangements. Best practices: MphasiS BPO provides value by
implementing best practices distilled out of operational experience in
executing client's business processes. Customer experience management and
process specific practices for sales 6t service, claims handling and technical
support are some of the areas covered. The HR best practices cover areas such
as hiring, training, operational metrics, day-to-day operations, and reward
programs. Process Integration & Automation: Analyzing the business process
and automating them through technology has obvious advantages. Further,
sustainable competitive advantage comes through the smart use of technology to
automate not only parts of the process, but to integrate the entire process and
supply chain. Examples include the use of workflow technology to not only
optimize the routing of information among the hierarchy of users spread in multiple
locations, but also to enable higher accuracy, better customer experience, and
faster turnaround. Scientific and engineering tools: Significant process
improvements are realized through the applications of tools and methodologies
such as Six Sigma and Total Quality Management. Examples include the
improvement of customer satisfaction in a technical support environment by
applying DMAIC (Define-Measure-Analyze-lmprove- Control) methodology from the
Six Sigma tool box. These techniques allow for pinpointing variations in
processes that cause a deviation from their expected outcome. Systematic
application of these tools can provide continuous improvement. The collection
and interpretation of statistical data from the processes, using Business
Intelligence technologies, support this analysis. Skills arbitrage: The
availability of highly specialized skills (at a fraction of the cost), allows
organizations to attain business goals, that are otherwise not possible or
economical in high cost locations. Examples include utilization of medical
doctors to analyze and determine the underwriting risk associated with
individual long term care plans or disability plans. Underwriting of such plans
is an expensive proposition and insurance companies typically utilize a combination
of experienced underwriters without medical degrees and part-time registered
nurses to perform this task. By utilizing medical doctors in India to perform
such a function, life insurance clients are starting to realize benefits such
as improved premium pricing. Another example is the use of certified
accountants to analyze 5K and 10K documents of public companies. MphasiS BPO
has organized its skill sets and experience across select business processes.
The customer contact center capabilities support inbound and outbound voice,
e-mail and correspondence handling, electronic messaging and web-site support
for generic processes such as:
v
Customer
service and Sales
v
Content and
Document management
v
Collections
v
Technical Help
Desk
v
Claims
handling and underwriting support
v
Research and
Analytics
v
Tax, Finance
and Accounting
v
Industry
specific processes
Amongst Industry
specific processes, MphasiS' Brokerage Practice provides brokerage services such
as trade execution, account opening and order processing to clients. It also
provides Fraud Early Warnings to Subject' financial services clients. In order
to make the transition of the client's processes to the MphasiS centers
seamless, a robust Transition Management methodology has been implemented.
Project teams comprises of specialists in areas of process analysis, quality
assurance, training, security, networking and systems integration. MphasiS
Technologies (M-Tec) M-Tec's charter is to support technology product companies
in the development, testing, deployment and support of their products, so that
they can get their products into the market-place at lower cost, faster and
with better customer support. M-Tec services and solutions are delivered through
"Technology Rental Lab" concept - a single point technology
aggregator and an extension of client's operations.
Technology Rental Lab
The
"Technology Rental Lab" (TRL) provides integrated accountability
across multiple inputs and players in the product life-cycle. It addresses the
key requirements of process integration, IP protection, technology partnership,
resource scalability and domain knowledge. The TRL and supporting teams combine
to provide flexible, innovative and cost-effective technology solutions to
Subject' customers.
TRL addresses key
challenges faced by organizations seeking services from third party service
providers:
v
Managing
multiple inputs, players and responsibilities
v
Technology and
Domain Knowledge
v
Ensuring
flexible processes to integrate processes with the service providers
v
Resource
scalability
v
IP protection
frameworks
v
Industry and
Technology affiliations/memberships
v
Frameworks,
Re-usable components
v
A governance
model that gives complete visibility and control across all delivery streams to
the client Industry Verticals M-Tec offers services and solutions to companies,
developing products for the following industry verticals: Networking, Telecom
& Mobile
They work with
product companies to provide solutions and services ranging from analysis,
design, development,
MphasiS in the Community
Each one of us
across Subject is aware of the presence of a larger community outside their
business structure that is underprivileged and neglected. That is why they make
a concerted effort to reach out and touch these lives in every way they can,
both as individuals and as a huge corporation. Their sentiments are driven by
the need to 'give back' to society what they draw from it. They contribute
their skills and expertise in a way that benefits the community in which they
live and work. They work with the voluntary sector in implementing social
projects in the cities in which they conduct their business - Mumbai, Pune and
Bangalore (India).
Tsunami
Subject joined
hands with several well-intentioned bodies towards alleviating the suffering of
the Tsunami victims. All employee contributions were channeled to GIVE India,
their long-term charity partner who is noted for their transparency and
accountability. In-kind donations were also accepted. Their clients were also
encouraged to contribute through Subject. In the months ahead, the affected
regions will enter a new phase of the crisis - one where technology, equipment
and infrastructure, as well as management time and talent, will be needed to
help rebuild communities devastated by the disaster. Subject intends to focus
on long-term rehabilitation efforts rather than short-term succor and relief.
In this regard, they are exploring ways with GIVE and grassroots NGOs in which
they can contribute money, people and technology using a focused,
result-oriented approach.
Children
Each One Teach One
(EOTO) Charitable Foundation works with economically deprived children between the
ages 13 and 16, studying in Government-run municipal schools in Mumbai. EOTO
provides everyday necessities like books, uniforms, and mid-day meals to the
children. The foundation takes on the responsibility of their overall physical,
emotional 6t intellectual development as well. Subject funds three EOTO
projects in Mumbai schools. In Mumbai, they bridged the gap further by
allotting a room the EOTO children in their workspace. The children come over
to their office once every week, interact with their employees who spend time
teaching them computers. As part of its commitment towards drawing and
employing physically challenged individuals into the productive workforce,
Subject works in partnership with VOICES. VOICES is a public charitable trust
in Bangalore. The project aims at providing gainful employment to the
disadvantaged in the burgeoning BPO sector. They support a
"preschool" for slum children between the ages 3 and 5, who do not
have access to the even the most basic education. Subject employees contribute
to the educational, medical and recreational activities of these children by
donating their skills 6t time.
Differently-abled
There is a
recruitment drive for the differently-abled, across all functions in MphasiS
BPO, Technologies and IT services. There is a partnership effort with the
National Association for the Blind to develop low-cost indigenous screen-reader
software for the visually-impaired. They have started a spoken English program
for children from an NGO called "Dream a Dream". Volunteers from
Subject deliver a 16-hour module spread over 4 weeks, and also train other
volunteers to help draw a larger number of slum children to be trainedin spoken
English. Their volunteers conducted computer classes for kids from the Ashwini
Charitable Trust (Bangalore). This trust is being supported by some of their
employees who make a monthly donation towards the education of these children.
A commonplace, yet highly effective program - The Newspaper Donation Drive - in
Bangalore is a substantial fundraiser. Proceeds from old newspapers and
magazines donated by the employees go a long way in supporting their charitable
projects. They have initiated a payroll-giving program in aid of the Parikrama
Humanity Foundation, Bangalore.
Management Discussion of Risks and Concerns
Any Group needs to
ensure that It has a proper continuous risk Identification and management
process. This process will generally Involve the following steps:
v
Identifying,
ranking and sourclng risks Inherent In the Group's strategy (Including Its
overall goals and appetite for risk);
v
Selecting the
appropriate risk management approaches and transferring or avoiding those risks
that the business Is not competent or willing to manage;
v
Implementing
controls to manage the remaining risks;
v
Monitoring the
effectiveness of risk management approaches and controls;
v
Learning from
experience and making Improvements.
Management has
Identified certain areas of risk where the Group Is vulnerable, listing them
below along with actions to deal with the same and thereby mitigate, If not
eliminate such risks. Management strives to ensure a policy of strong corporate
ethics that are more about the culture of the organisation rather than an
outcome of legal provisions. Thus, It maintains healthy Internal systems and
practices rather than being bound by legal limitations from without.
Business Risks
Client Concentration Risk
The Group derived
17% of Its total revenues during the quarter ended 31 March 2005 from a single
client.
The Group's
profitability and revenues would be affected In case of loss of this client or
a significant downsizing of projects given to the Group by this client.
Management Is aware of this risk and has undertaken measures to broaden Its
client base. However, the overall trend Is a declining client concentration and
the Group Is confident that this will continue.
Business concentration risk by vertical
The Group derived
61% Its revenues from the Financial Services vertical, which Include banks,
brokerages, Insurance companies and financial Institutions. A downturn In the
fortunes of clients In this group or a reduction In their IT spending /
budgets, would adversely affect the Group's own profitability. The Group Is
actively pursuing client acquisitions In other verticals.
Geographic concentration risk
The group derived
69% of It revenues from the US, which makes It susceptible to adverse market
conditions and events that might exist In the US and thus affect the Group's revenues.
To counter this, management Is actively pursuing clients In Europe, Japan, Asia
Pacific and Middle East regions and thereby reduce the dependence of the Group
on US based customers.
Competition risk
New competitors may
enter the markets the Group operates In or current competitors could decide to
focus more on these markets, and thereby Intensify the highly competitive
conditions that already exist. These new entrants and existing competitors
could offer or Introduce new technologies, offer a different service model, or
could treat the services to be provided by one of their businesses as a
component of a larger service offering. Such developments would enable these
new and existing competitors to offer similar services at reduced prices. Such developments
could harm the Group's business and results of operations. The market for
software development services Is highly competitive and subject to rapid
technological change, regulatory developments and emerging Industry standards
that the Group expects will continue. This could result In lower margins In
future for the Group and could also result In Increased pricing pressures.
Certain of the Group's competitors have substantially greater financial,
technical, marketing and other resources than the Group, and competitors of the
Group have made and continue to make significant Investments In the
construction of new facilities. To the extent the Group Is unable to compete
effectively against Its competitors, Its financial condition and results of operations
would be materially and adversely affected. Management expects competition to
persist and Increase In the future. Management cannot assure that the Group
will be able to compete successfully against these or future competitors.
Management expects that a portion of the Group's anticipated future revenue
growth in the various business segments will be derived from:
v
the continued
selling of services to their existing customers;
v
the planned
introduction of new or enhanced services;
v
the selling of
services to new customers; and
v
the selling of
services to their existing customers.
How successful the
Group will be in these efforts will depend on a variety of factors, including
the Group's:
v
service
offerings;
v
effective
sales and marketing efforts;
v
ability to
attract new as well as retention of new and existing customers;
v
market
acceptance and the avoidance of difficulties or delays in development or
introduction of new services.
Therefore
management has commenced the integration of the services provided by the
software solution services and the BPO capabilities of the Group to counter the
integrated offerings that the competition may provide.
However, there can
be no assurance that the Group will achieve revenue growth objectives from
cross-selling efforts, integrating services and selling new services. The
inability to cross-sell services, attract and retain new customers or
successfully develop new and enhanced services would harm the Group's business.
International operations risk
The Group has
international operations in Australia, Belgium, China, Germany, Hong Kong,
Japan, Mexico, Middle East, The Netherlands, Singapore, South Korea, Sri Lanka,
UK, and the US. International operations are subject to various risks which
could adversely affect those operations or the business as a whole, including:
v
costs of
customizing products and services for foreign customers;
v
difficulties
in managing and staffing international operations;
v
reduced
protection for intellectual property rights in some countries;
v
longer sales
and payment cycles;
v
the burdens of
complying with a wide variety of foreign laws; and
v
exposure to
local economic conditions.
Overseas tax obligation risk
The Group is also
required to comply with various state level legislation / statutes in the US
which is the largest market for the Group. Based on legal opinion the Group
provides for the Income / Sales taxes in the various states in the US, where it
has operations. In the event that there is a dispute with the state
authorities, the actual tax liability may be higher than that recognised
hitherto by the Group. The tax calculation and provision are suitably verified
by the Group's tax consultants and legal advisors in the US so as to mitigate
these risks.
Fixed price
contract risk The Group derived 10% of its total revenues from Fixed Price
contracts during the quarter ended 31 March 2005. Such projects require
continuous monitoring and as well as accurate estimation of overall efforts,
which directly affects the profitability of the group. If constant and adequate
control is not exercised, it will result in cost overruns and eventual losses
for the Group besides loss in client goodwill on account of delayed delivery,
quality and failure to meet contractual obligations. It also results in revenue
variability as it depends on new project wins once an existing project is
complete. Management minimises this risk through a process of periodic
monitoring of the profitability of fixed price contracts, including reviewing
the estimate of efforts to complete and appropriate corrective action being
undertaken by the concerned client management teams. These actions ensure that
the estimated profitability of these contracts is maintained. Management
Discussion of Risks and Concerns Termination of contracts by clients A
significant portion of the Group's contracts with its clients is on a
non-exclusive, project-by-project basis. The clients, with or without cause,
may terminate the contracts, including fixed-price contracts, by providing an
advance notice varying between zero to 90 days. Further, these contracts do not
carry a commitment of future volume of business. The Group's business is
therefore dependant on the decisions and actions of the client, which are
outside the Group's control, and could result in the termination of the said
contracts. These actions could include:
v
Financial
difficulties for the client;
v
A change in
strategic priorities;
v
A demand for
reduction in prices; and
v
A change in
outsourcing strategy by shifting work to in-house IT departments or to the
Group's competitors.
Delivery Disputes
As explained in the
preceding paragraph, a large proportion of the Group's revenues are derived
from Fixed Price projects. In many cases the specifications may be not
completely defined at the inception of the project, where for competitive
reasons the Group still needs to accept the project. This could lead to
differences in opinion with the client at the time of delivery of the project.
The Group's client relationships are sufficiently strong whereby such disputes
can be resolved to the mutual satisfaction of the client and the Group. But in
future if such disputes are not resolved, they could have an impact on the
operating results of the Group. These risks are heightened in cases where
clients face budgetary constraints or have internal management issues. The
Group also maintains adequate insurance for professional indemnity and errors
and omissions to cover such cases.
Onsite - Offshore proportion
Some clients insist
on onsite efforts to exercise better control and to monitor progress of the
project. The Group is moving towards offshore efforts over a period of time
once clients are convinced of the Group's ability to deliver and execute
projects as per plan or even ahead of such plans. However, requirements by the
customers to maintain a specified number of resources onsite could
significantly impact the results of operations of the Group.
Operational Results I Issues
The Group's ability
to improve profit margins will depend on factors that include the degree to
which and the speed with which the Group will be able to increase operational
efficiencies and reduce operating costs. Delays or difficulties in implementing
and consolidating process improvements, such as those designed to reduce
travel, telecommunication and customer service costs, or installing new
products and services and in consolidating various functions, including
administrative functions, eliminating duplicate operations and consolidating
facilities could adversely affect the timing or effectiveness of cost reduction
and margin improvement efforts. The Group has an effective system of
forecasting and budgeting for costs so as to ensure optimum utilisation of
resources. It is continuously in the process of reviewing its systems and
procedures to implement tighter controls. Customer retention is an important
factor in the amount and predictability of revenue and profits in the Group's
businesses. The Group's ability to retain existing customers depends on a
number of factors, including:
v
customer
satisfaction;
v
service
offerings by competitors;
v
customer
service levels; and
v
price.
In providing
services, the Group would incur installation and conversion costs in connection
with new customers that will need to be recovered before the contractual
relationship will provide incremental profit. Longer customer relationships are
likely to be more profitable.
As discussed under
the 'Competition risk', a significant portion of the Group's revenues is
generated from existing clients and the Group has also been successful in
adding new clients every year. However, there can be no assurance that the
Group would be able to retain all/significant proportion of its existing
clients
Mergers & Acquisitions
One of the Group's
growth strategies is to make acquisitions of and investments in complementary
businesses, technologies that will enable the Group to add services for the
Group's core customer base and for adjacent markets, and to expand geographically.
The Group's ability to make these acquisitions and investments will depend on:
v
the
availability of suitable acquisition candidates and investments at acceptable
costs;
v
ability to
compete effectively for these acquisition candidates and investments; and
v
the
availability of capital to complete these acquisitions and investments.
These risks could
be heightened if the Group completes several acquisitions or investments within
a relatively short period of time. The benefits of an acquisition or investment
may often take considerable time to develop, and management cannot guarantee
that any acquisition or investment will in fact produce the revenue, earnings
or business synergies earlier anticipated. In addition, implementation of this
strategy entails a number of risks, including:
v
inaccurate
assessment of undisclosed liabilities or recoverability of carrying value of
assets;
v
entry into
markets in which the Group has limited or no experience;
v
potential loss
of key employees or customers of the acquired businesses;
v
difficulties
in assimilating the operations and products of an acquired business or in
realizing projected efficiencies and cost savings;
v
reallocation
of significant amounts of capital from operating initiatives to acquisitions;
and
v
increase in
the Group's indebtedness and a limitation in ability to access additional
capital when needed.
Also, from an
accounting perspective, acquisitions and investments may involve non-recurring
charges that could affect operating results. Also given the financial
characteristics of the Group's businesses, it may be difficult for to avoid
making acquisitions that would be dilutive to earnings per share.
telecommunication infrastructure risk The use of strategically located software
development centres provides the Group with cost advantages, ability to attract
and retain highly skilled personnel and consequently the ability to provide the
clients with services 24 hours a day and 7 days a week. This delivery model
involves the maintenance of active voice and data communication links between
the Group's call centres, its software development centres and clients.
Although the Group maintains redundancy facilities and satellite communication
links, any loss in its ability to transmit voice and data through satellite and
telephone communication links could adversely affect the Group's ability to
complete client projects on a timely basis thereby affecting its revenues and
operational performance.
Financial Risks
Foreign exchange fluctuation risk
As over 98% of the
Group's billings are in foreign currency, it is exposed to currency
fluctuations and volatility against the Indian rupee. Principal currencies
dealt with by the Group include the US Dollar, British Pound, Euro, Singapore
Dollar, Japanese Yen and the Australian Dollar. To the extent that there is a
signficant appreciation of the rupee, it would affect their earnings
negatively. Such volatility would also affect their assets located at various
locations worldwide in terms of their carrying value. A rupee depreciation
would affect the Group's import policy especially covering capital items
thereby increasing their liability and cost. Conversely a rupee appreciation
affects the Group's revenue streams and also reduces the carrying value of current
assets especially accounts receivable. These risks are hedged by the purchase
of forward covers.
Credit Risk
The Group's ability
to recover dues from a client is dependent on the credit terms given to the
client. With clients and operations all across the world, effective procedures
and recovery mechanism have to be in place to avoid excessive bad debts. The
Group constantly reviews credibility of existing customers and follows rigorous
credit checks on prospective clients before fixing credit limits and credit
periods.
(Rs in Millions)
With effect from 1
June 2004, the Group acquired control of Kshema Technologies Limited
("Kshema") in terms of a definitive Stock Swap and Purchase Agreement
("the Agreement") dated 2 April 2004 approved by the shareholders of
the Company at the Extraordinary General Meeting held on 12 May 2004. According
to the terms of this agreement and the shareholders' resolution, an amount of
Rs 288.366was paid in June 2004 in cash to a selling shareholder of Kshema.
During the quarter ended 30 September 2004, the Company issued 2.338 equity
shares valued at Rs 713.678 in terms of the SEBI formula for pricing of
preferential allotments, in discharge of the balance consideration payable
after obtaining the necessary regulatory approvals (refer note 17). During the
quarter ended 31 December 2004, the Company created a liability for the balance
consideration payable to erstwhile shareholders amounting to Rs 58.569of which
an amount of Rs 41.509 was paid during the quarter ended 31 March 2005. The
balance will be paid after necessary regulatory approvals (refer note 17). In
accordance with AS 21, the financial statements of Kshema have been
consolidated with effect from 1 June 2004. This acquisition has resulted in a
goodwill of Rs 923.892.
During the quarter
ended 30 September 2004, the Group acquired the minority interest in MsourcE
Corporation and merged MsourcE Corporation with and into MphasiS Corporation,
by way of an "Agreement and Plan of Merger" ('the Merger Agreement')
effective 20 September 2004 between MphasiS BFL Limited, MphasiS Corporation
and MsourcE Corporation. The shareholders of the Company approved this
acquisition of the minority interest in MsourcE Corporation including its
option holders, for a consideration consisting of cash, stock and options of
the Company at the Extraordinary General Meeting held on 12 May 2004.
The total cost of
acquisition of the minority interest including employee stock options is Rs
1,873.605. The acquisition of minority interest including options resulted in a
goodwill of Rs 1,476.145.
The Company
acquired control of Princeton Consulting Limited, UK ("Princeton") on
16 February 2005. According to the terms of the Share Purchase Agreement, an
amount of GBP 7,385,000) was paid in February 2005 in cash to the selling
shareholders of Princeton. The remaining consideration, amounting to GBP 0.600
is payable upon the satisfaction of certain conditions stipulated in the
aforesaid agreement and is held in escrow accounts in the interim. The acquisition
has resulted in a goodwill of Rs 340.106.
2 (d) The Company
acquired control of Eldorado Computing Inc., USA ("Eldorado") on 1
March 2005. According to the terms of the Share Purchase Agreement, an amount
of USD 16.500 is payable in cash to the
selling shareholders of Eldorado including an amount of USD 2.475to be
deposited in an escrow account which is payable upon the satisfaction of
certain conditions stipulated in the aforesaid agreement. Current liabilities
include an amount of Rs 721.792towards consideration payable to the selling
shareholders which has been paid on 5 April 2005. The acquisition has resulted
in a goodwill of Rs 662.797. In addition, as per the Share purchase agreement,
certain key executives of Eldorado Computing will be paid an earn out for three
years commencing from 1 March 2005 to 29 February 2008 if they are able to
exceed the agreed upon revenue and gross margin targets in each of these three
years. The maximum earn out payable over three years if both the revenue and gross
margin targets are met will be USD 5.000, with individual limits fixed for each
of the three years.
The Company Is
engaged In the business of software development services, projects and
professional services. Such services are not capable of being expressed In any
generic unit and hence, It Is not possible to give the quantitative details
required under paragraphs 3, 4C and 4D of Part II of Schedule VI to the
Companies Act, 1956.
The Company's
software development centres in India are 100% Export Oriented ('EOU') /
Software Technology Park ('STP') Units under the Software Technology Park
guidelines issued by the Government of India. They are exempted from customs
and central excise duties and levies on imported and indigenous capital goods
and stores and spares. The Company has executed legal undertakings to pay
customs duty, central excise duty, levies and liquidated damages, if any, in
respect of imported and indigenous capital goods and stores and spares consumed
duty free, in the event that certain terms and conditions are not fulfilled.
Bank guarantees aggregating to Rs. 2.565 millions as at 31 March 2005 have been
furnished to the Customs authorities in this regard.
Overview
Subject Is a
premier global IT (Information Technology) and BPO (Business Process
Outsourcing) Services Group ('the Group') formed In the year 2000 after the
merger of Bangalore, India, based BFL Software Limited (formed In 1993) and
California, US, based MphasIS Corporation (formed In 1998). The Group offers
solutions to the world's leading companies In selected Industries, such as
banking 6t financial services, logistics, technology and retail, based on a
portfolio of world-class IT and BPO capabilities.
The Group sees
tremendous opportunities to strengthen Its BPO business through technology In
the areas of Integration, automation, workflow management, business activity
monitoring and business Intelligence. At the same time, a deep understanding of
Its clients' business processes allows Subject to Identify focused solutions
for the IT services business.
IT and BPO are
closely related. Both require detailed understanding of the client
organization, their domain, their processes and the way clients make decisions,
work and operate. In order to be effective In transltlonlng and managing their
client's engagements, Subject Integrates their Internal processes and the
underlying applications and systems with the client's environment. On top of
this, they provide their clients complete control, security and transparency of
the execution of the processes. The Group Is endeavouring to combine Its
expertise In both IT and BPO as well as Its domain knowledge In specific
Industries like banking and financial services to develop platform based
solutions that are ready to market and where the Group owns the Intellectual
property (IPR).
The Group's
financial strength and ability to adapt to the current market and economic
onditions are dependent In part on the generation of cash flows, effective
management of working capital and other obligations, as well as the growth of
the business.
During the year
ended 31 March 2005 ('FY05') consolidated revenues were Rs 7,656.7 million, a
growth of Rs 1,851.0 million or 31.9% over the year ended 31 March 2004
('FY04'). This Increase Is primarily attributable to Increased operations of
MphasIS BPO ('BPO Services'), the revenues for which Increased by 52% during
the year.
The consolidated
net profit was Rs 1,246.2 million In FY05, an Increase of Rs 260.5 million or
26.4% over FY04.
As a percentage of
total revenues, In FY05 the net profit was 16.3% compared to 17% In FY04.
Further during
FY05, the Group generated cash flows from operations amounting to Rs 1,606.8
million, an Increase of Rs 812.5 million or 102%. The Group has also Invested,
Rs 556.5 million In fixed assets, Rs 7.5 million towards the remaining purchase
consideration for acquisition of the business of Onlda Infotech services,
China, Rs 336.6 million towards the cash component of the purchase
consideration of Kshema Technologies Limited, India, Rs 679.8 million towards
the cash component of the acquisition of the minority Interest In MsourcE
Corporation, USA, Rs 305.6 million towards acquisition of Princeton Consulting
Limited, UK,
News Release :
Jerry Rao Awarded ‘Distinguished
Alumni Award’ by Chicago Graduate School of Business Bangalore:
Jerry
Rao, CEO, MphasiS was awarded the ‘Distinguished Entrepreneurial Alumni Award’
by the University of Chicago Graduate School of Business (Chicago GSB). The
award was presented to Jerry Rao by Edward A.
Snyder,
Dean, Chicago GSB, on Friday, October 6, 2006. The award ceremony was part of
the annual Alumni Celebration dinner of Alumni Weekend 2006 and was attended by
distinguished corporate, academic and other personalities from around the
world.
These
awards presented by Chicago GSB seek to recognize outstanding professional
achievement among its alumni who, in the opinion of the selection committee,
have demonstrated admirable professionalism.
The
Entrepreneurial Award is presented to an individual who has demonstrated
professional achievement of the highest caliber in the management of an
entrepreneurial enterprise. Such achievement may include:
v
Creation
or significant involvement in the formation of a successful enterprise
v
Successful
creation of a new idea, new business, new product and/or private ownership
which can be directly attributed to the direction of the individual
v
Recognition
by colleagues and peers of outstanding leadership and administrative abilities
in an entrepreneurial area
Speaking
on the announcement, Edward A. Snyder, Dean, Chicago GSB said, “Chicago GSB has
a strong relationship with its alumni and the business community across the
world. Our goals include increasing opportunities for GSB students and alumni
as well as increasing the school’s influence so it can continue to help improve
business practices, increase performance, and strengthen the world’s
marketoriented economies. We congratulate Jerry and recognize his significant
achievements in taking such an active role in India’s historic economic boom
and building one of the world’s most dynamic entrepreneurial enterprises.”
Commenting
on his award, Jerry Rao, CEO, MphasiS said, “It gives me great pleasure to be
recognized by my alma mater. Chicago GSB truly infused the entrepreneurial
spirit in me and being awarded by the University gives me immense professional
and personal satisfaction and further reinforces the realization of my
achievements at MphasiS.”
About MphasiS
MphasiS
BFL Limited (Bombay Stock Exchange: 526299 and National Stock Exchange of
India: MPHASISBFL), an EDS company, is a leading applications and business
process outsourcing (BPO) services company based in Bangalore, India. It
currently has about 12,000 employees, including 11,000 in India. MphasiS serves
clients in multiple industries, including financial services, transportation,
technology and healthcare, and is particularly strong in the retail banking
sector serving the world’s top five banks.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions between
a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.29 |
|
UK Pound |
1 |
Rs.77.17 |
|
Euro |
1 |
Rs.57.60 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|