Managing Director's Letter to the Shareholder
Dear Fellow Shareholder
India is the world's largest sourcing destination for the information technology (IT)industry accounting for approximately 67 per cent of the US$ 124-130 billion market. TheGartner world wide IT services market is forecast to grow 4.2percent in 2017. Buyerinvestments in digital business intelligent automation and services optimization andinnovation continue to drive growth in the market.
The Indian IT industry continues to develop capabilities around traditional andemerging markets verticals and customer segments expand global delivery presence andincrease focus on high value services including product development. Slowing growth inbanking and finance sector Britain`s decision to leave EU US elections weakerdiscretionary spending and growing pricing pressure in traditional business along withshift to wards newer business models such as digital and cloud have led Indian IT firms totemper down expectations.
Today the largest spenders on innovation are spearheading globalization of innovationin terms of both regions and sectors and Engineering Services Off shoring is being used toexpand global innovation capacity. India's USD 10 billion Engineering and R&D sector(ER&D) which employs over two lakh people has enabled the country to emerge as astrategic partner to global organizations requiring innovative high value engineeringsolutions. The engineering and embedded solutions segment currently accounts for over 15per cent of India's IT-BPO exports and is playing a pivotal role in acceleratinginnovation and establishing India as a cradle of design and engineering capabilities.
According to Nasscom Engineering services in India has definitely moved up the valuechain. ER&D companies are providing global engineering consultancy that can lay out aroadmap for rationalizing R&D activities change management and ramping up. They areproviding frugal engineering capabilities helping clients develop cost-competitiveproducts especially for emerging markets. India's value engineering capabilities alignedto product sustenance are helping in the optimization of design manufacturing andsourcing processes. India's share of global ER&D off shoring revenues is 22 per centER&D firms are leveraging engineering expertise to develop innovative product designsto drive lower costs and faster time-to-market. The Indian IT industry continues todevelop capabilities around traditional and emerging markets verticals and customersegments expand global delivery presence and increase focus on high value servicesincluding product development.
The commoditization of IT maturity of services adoption of new technology trends likeInternet of Things (IoT) analytics and sustainability-related technologies fuel growthin engineering services. Unlike in the past India-based global service providers (GSPs)have been considered for more strategic roles like co-innovation and joint developmentprojects which are based on a risk-sharing model.
On an overall basis on the standalone front your company registered a total revenue ofRs. 7396.79 lakhs for the year ended 31st March 2017. Domestic sales were Rs. 334.88 lakhswhile Export sales was Rs. 7061.91 lakhs. EBIDTA was at Rs. 1189.09 lakhs and Net profitafter tax was Rs. 668.09 lakhs.
The Consolidated total revenue for the year ended 31st March 2017 was Rs. 8119.75lakhs. EBIDTA was at Rs. 627.25 lakhs and Net Profit after tax at Rs. 116.25 lakhs.
During the year 2016-17 the company declared an Interim dividend of Rs. 2.50/- on 19thOctober 2016. With a view to augment resources for long term growth the Directors haverecommended for approval of the members a final dividend of 2.50/- per equity share of Rs10/- each for the financial year 2016-2017.The dividend amount paid out if approved bymembers will be Rs. 125.00 lakhs interim paid Rs. 125.00 lakhs while Rs. 52.25 lakhswill be paid by the company towards total dividend tax and surcharge thereon. The dividendpayout for the year under review has been formulated in accordance with the Company`spolicy to pay sustainable dividend linked to long term growth objectives of the company tobe met by internal cash accruals and the shareholders` aspirations.
With the maturity of "Globalization of Engineering" and "Digital &Mobile Technology" over the last few years there is an intense race to rapidlycreate new products across the world causing a "New Product
Revolution". The thrust areas are in the Semiconductor Equipment Medical DevicesHi Tech Consumer Electronics Automotive & Aerospace and telecom industries.
This "New Product Revolution" has opened opportunities for companies likeASM in the space of Engineering Services.
The IoT (Internet of Things) offers quality space for new product development and ASMis working on creating its own products as well as Co-Creation for customer's products.The next couple of years will be exciting in this space.
Cashing in on this opportunity ASM through the initiative of ARISE (ASM Research andInnovation Step for Excellence) has seen remarkable success in the "Co-Creation of IPled Product Innovation" and Platform Services for its clients. As a System DesignHouse ASM is fully equipped to handle complex Electronics Mechanical and Embeddedsoftware design and development to complete the product under one roof. Further workingprototype and manufacturing results in the entire product realization for the client.
The future looks exciting and upbeat in the R&D Products and Engineering ServicesOutsourcing (ESO) space. There are lot of drivers for the clients like Reducing ProductDevelopment Life Cycles Global Competition and getting a first mover advantage byring-fencing the IP. The clients are equally excited to collaborate with the EngineeringService providers like ASM to leverage their capability for global regional andadjacent markets thereby optimize the R&D Operations.
The company continued to sustain its profitability despite a volatile and challengingexternal environment during the year under review with the unstinted support of itsdedicated committed and competent employees. We attribute our success to an experiencedmanagement team and to a customer- oriented organization that is dedicated to excellence.Steered by the talent of our people and vesting faith in the resilience of our businessmodel we look forward to overcoming challenges that lie ahead of us.
On behalf of the management of the company and on my behalf I take this opportunity tothank
- Our esteemed customers shareholders vendors business partners advisors andconsultants for their support
- Employees of the company for their valuable contribution efforts and spirit ofdedication
- State Bank of India Overseas Branch Bangalore Axis Bank Bangalore and IndianBank Singapore for their support and guidance.
- Central and State Government Customs Reserve Bank of India Software TechnologyParks (STPI) and NASSCOM.
|Place : Bangalore ||Rabindra Srikantan |
|Date : 06.05.2017 ||Managing Director |