CORAL HUB LIMITED
(FORMERLY KNOWN AS VISHAL INFORMATION TECHNOLOGIES LIMITED)
ANNUAL REPORT 2009-2010
To: The members of
Coral Hub Limited
(Earlier known as Vishal Information Technologies Limited)
Your Board of Directors ('Board') have pleasure in presenting the Sixteenth
Annual Report along with the Audited Accounts for the period ended on 30th
June, 2010 ('the period under review' 'the period').
FINANCIAL PERFORMANCE: (Amount in Rupees)
Particulars 30.06.2010 31.03.2009 30.06.2010 31.03.2009
15 months 12 months 15 months 12 months
Total Revenue 99,01,44,690 66,56,53,585 89,11,85,506 61,73,94,267
Total Expenditure 78,45,47,210 47,32,63,773 62,11,46,147 44,09,05,276
PBDT 20,55,97,480 19,23,89,812 27,00,39,363 17,64,88,991
Interest 2,26,89,989 10,67,652 2,14,37,777 8,18,547
Depreciation 2,24,47,122 1,25,03,072 1,37,80,573 99,17,166
Profit before Tax 25,07,34,591 17,88,19,088 23,48,21,013 16,57,53,278
Income Tax 4,10,90,953 2,05,55,702 3,34,72,582 1,87,79,847
Fringe Benefit Tax 0 4,41,770 0.00 2,72,123
against tax 3,24,322 6,87,983 2,02,135 1,34,273
Profit after Tax 20,93,19,316 15,71,33,633 20,11,46,296 14,65,67,035
brought forward 52,98,17,276 41,02,78,216 50,86,61,008 39,96,79,984
from previous year
Amount available 73,91,36,592 56,74,11,849 70,98,07,304 54,62,47,019
Proposed Dividend 1,45,18,788 1,95,98,536 1,45,18,788 1,95,98,536
Dividend 0.01% 8,562 8,562 0 0
to General Reserve 2,01,14,630 1,46,56,705 2,01,14,630 1,46,56,704
Corporate Dividend 24,11,389 33,30,771 24,11,389 33,30,771
forward to Balance
Sheet 68,96,52,088 52,98,17,276 66,03,31,362 50,86,61,008
EPS 0.85 1.39 0.92 1.41
Your Directors are pleased to recommend a final dividend @6% i.e. Rs.0.06
per Equity Share, subject to the approval of Shareholders in the Annual
During the period under the review, as per the Consolidated Accounts, the
Company has achieved Sales income for the period ended 30th June, 2010
Rs.99,01,44,690/- as against Rs.66,56,53,585/-forthe year ended 31st March,
2009 registering a marginal growth of 48.75 %. The Consolidated profit
after tax for the current period is Rs.20,93,19,316/- as compared to
Rs.15,71,33,633/-for the previous year registering a raise of 33.21%. The
profit before Interest, Depreciation and Tax for the current period is
Rs.20,55,97,480 as compared to Rs. 19,23,89,812/-for the previous year
registering a raise of 6.87%.
ACTIVITIES DURING THE PERIOD:
Company's digitization activity has been stable through out the period and
has added new services in its conversion activity especially in the E
Publishing arena. The Company is now converting the data with current
readable popular devices like iPad, Kindle & sony readers. More and more
publishers are looking at the opportunity to convert their back titles
compatible to these devices. The Company finds this as huge opportunity and
actively pursuing with its existing clients and also expanded its horizon
in marketing to other non-English speaking European publishers.
With opening of its subsidiary in UAE, Company is planning to shift the
scanning and indexing business to subsidiary as it requires more and more
on site support and logistically UAE will be able to support this activity
much more easier.
The Company has also proposed to diversify its business through its
Subsidiary, to start an e commerce platform called Coral Hub Online
shopping. This e commerce portal has been floated by the subsidiary of the
Company, very recently and caters to only Indian market. It has variety of
products and made a soft launch to test the market. The real marketing of
this portal would start from the New Year once we have many more products
to offer. So far the response to this e commerce platform from Indian
public is very encouraging.
Company's subsidiary Basiz Fund Accounting services continue to show very
high profit margin and have won many more hedge funds accounts. It is
expected to cross 5 mn USD turnover very shortly. It is also looking for
acquisition abroad to expand its market reach.
EXTENSION OF FINANCIAL YEAR:
The Company has extended its financial year for a further period of three
months, that is the Company's financial year commencing from 1st April,
2009 and ending on 31st March, 2010 be extended upto and inclusive of 30th
June, 2010 and that the accounts be prepared for the said financial year
comprised of 15 months from 1st April, 2009 to 30,h June, 2010.
CHANGE OF NAME AND OBJECTS OF THE COMPANY:
The name of the Company has been changed to Coral Hub Limited w.e.f. 9th
July, 2010 subsequent to the approval of members obtained through Postal
Further subsequent to the approval of Shareholders through Postal Ballot
the Company has also altered its main objects and the other objects under
the Object Clause no. Ill of the Memorandum of Association of the Company.
The Company would like to concentrate more in the arena of xml conversion
and typesetting as publishing industry is going in that direction. The
Company is planning to revamp its production infrastructure with investment
in high performance hardware and will also add its software suites, as this
is required in order to face the competition.
Since the delivery model of the books is slowly changing from print model
to digital model and that too with introduction of multi functional devices
the publishers are very keen to step up the availability of their books
compatible to these devices. Your company finds this as a major opportunity
to exploit and it has geared itself to take these challenges.
In order to exploit the growing on line shopping market, your company has
diversified into this as major activity , through its Subsidiary and has
opened up on line shopping plaza to cater to Indian market. The rationale
behind starting this activity is that Indian online shopping market is
estimated at Rs.100 billion and it is growing at the rate of 30% every
year. Out of 60 million Internet users, about 10% shop online. With
broadband & 3G penetration into interiors of India that would increase
online shopping. According to Nielsen Report Online Shopping 2010,8 out of
10 Indian in metros shop online and out of this more than a quarter spend
11 % of their monthly purchases in online shopping. Your Company is all set
to have a share in this market and can increase the shareholders value, as
we would start the brand building exercise from the ensuing New Year.
The future prospects of all our subsidiaries are very exciting as they have
great plans to expand their activity and market reach. Our subsidiaries in
India and UAE are expected to post good results in the coming years.
In the month of November, 2009, the Company has invested in Ambition
Clothing Private Limited (Earlier known as Ambition Industries Pvt. Ltd.)
situated in MEPZ Special Economic Zone at Chennai, which is dealing in
readymade Garments. The Company holds 91% Equity Shares of Ambition
Clothing Private Limited .
During the period, the Company has also formed a Wholly Owned Subsidiary
with the name VITL FZE, at Sharjah Airport International Free Zone (SAIF),
UAE to carry on general trading activities.
The Company has three Indian subsidiaries namely Coral Hub Publishing
Private Limited, (Earlier known as Coral Hub Online Services Pvt. Ltd.)
Basiz Fund Service Private Limited, Ambition Clothing Private Limited,
(Earlier known as Ambition Industries Pvt. Ltd.) and two foreign
subsidiaries namely Digital Content Solutions Limited, United Kingdom and
VITL FZE, UAE and three step down subsidiaries, namely Basiz India Fund
Services Private Limited, Basiz Fa Services Singapore Pte. Limited,
Singapore and Basiz Investment Accounting (UK) Limited, United Kingdom
which are subsidiaries of Basiz Fund Service Private Limited.
As required under Section 212 of the Companies Act, 1956, the audited
statement of accounts along with the Report of the Board of Directors and
respective Auditors' Report thereon of all the subsidiary companies for the
period ended on respective financial year are annexed and forms part of
this Annual Report.
Mr. D. M. Shirodkar and Mr. Ghanshyam Joshi, Directors of the Company,
retire by rotation and being eligible, offers themselves for re-appointment
at the ensuing Annual General Meeting (AGM). Pursuant to Clause 49 of the
Listing Agreement, the detailed profile of the Directors retiring by
rotation is provided in the Notice convening the Annual General Meeting.
Mr. G. S. Vishwanathan has resigned from position of Whole Time Director
w.e.f. 1st August, 2010 and from directorship of the Company w.e.f. 30th
August, 2010. The Board wishes to place record its appreciation for the
service provided by him during the tenure as Director as well as Whole Time
EMPLOYEE STOCK OPTION SCHEME 2008:
In pursuance of shareholders approval obtained on 23rd November, 2007 your
Company formulated and implemented an Employee Stock Option Scheme (the
ESOS 2008) for grant of Stock Options to all permanent employees and Whole
Time Directors of the Company. The Remuneration Committee of the Board of
Directors is entrusted with the responsibility of administering the Scheme
and in pursuance thereof. The Remuneration Committee had granted Stock
Options equivalent to 5,15,450 Equity Shares of Rs. 10/- each on 12th June
2008 to Employees and Whole Time Directors of the Company. Due to Sub-
division of Equity Shares, all the employees and Whole Time Directors were
entitled for 10 Equity Shares of Re.1/- each on exercise of each Option of
the ESOS 2008.Thus Stock Options were increased from 5,15,450 to 51,54,500
Out of 51,54,500 Stock Options, 44,05,800 Stock Options has been exercised
at the exercised price of Rs. 5/- each by the employees and Whole Time
Directors of the Company in April and May, 2009.
During the period under review, 1,88,660 Stock Options have been exercised
at the exercised price of Rs. 5/- each by the employees the Company and the
Company had allotted 1,88,660 Equity Shares of Re. 1/- each in the Meeting
of Board of Directors held on 11th June, 2010 to the employees who have
exercised options granted to them. Pursuant to the aforesaid allotment of
Shares under ESOS, Paid Up Share Capital of the Company is increased to
Additional information on ESOS as required by Securities and Exchange Board
of India (Employees Stock Option Scheme and Employees Stock Purchase
Scheme) Guidelines, 1999 is as Annexure I and forms part of this Report.
The Company's Auditors, M/s. K. P. Joshi & Co., Chartered Accountants,
Mumbai have certified that the Scheme has been implemented in accordance
with the SEBI Guidelines and the resolution passed by the members at the
Extra-Ordinary General Meeting held on 23rd November, 2007.
The period between grant of option and vesting is not less than 12 months
as per the SEBI guidelines. The vested options can be exercised by the
grantee by communicating to the Company in writing to exercise.
The Company has not accepted any Public Deposits under Section 58Aof the
Companies Act, 1956 during the period under review.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies Act,
1956 with respect to the Directors' Responsibility Statement, it is hereby
(i) that in the preparation of the annual accounts for the financial period
ended 30th June, 2010, the applicable accounting standards had been
followed along with proper explanation relating to material departures.
(ii) that the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial period and of the profit or loss of the
company for the period under review.
(iii) that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities.
(iv) that the Directors had prepared the accounts for the period under
review on a 'going concern' basis.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUT GO:
The information relating to conservation of energy, technology absorption,
foreign exchange earnings and outgo required under Section 217 (1) (e) of
the Companies Act, 1956 read with Companies (Disclosure of Particulars in
the Report of Board of Directors) rules 1998 are detailed below.
Conservation of Energies: The operations of your Company are not energy
intensive, therefore impact of energy saving devices are insignificant.
Adequate measures have however, been taken to reduce energy consumption by
using energy efficient Computer terminals and by the purchase of energy
efficient equipment of latest technology.
Research & Development (R&D): Your Company continues to make investment in
research and development which is crucial to its continued success.
Technologies absorption: Your Company continues to use the latest
technologies for improving the productivity and quality of its services.
Your Company has continued to invest in the latest services and
Foreign Exchange earnings and outgoings: During the period under review,
earning in Foreign Exchange is Rs. 88,36,78,263/- (Previous year was Rs.
61,08,57,165/-) and Foreign Exchange Remittance is Rs.22,14,185/-(Previous
yearwas Rs. 10,45,325/-).
PARTICULARS OF EMPLOYEES:
Statement pursuant to sub section 2A of Section 217 of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 and
forming part of this Report is given in Annexure II.
M/s. K.P. Joshi & Co., Chartered Accountants, Mumbai, who are the Statutory
Auditors of the Company hold office upto the conclusion of the forthcoming
Annual General Meeting. They have expressed their willingness to continue
as Statutory Auditors for the financial period 201011 and accordingly, a
resolution proposing their appointment is being submitted to the ensuing
Annual General Meeting. The members are requested to consider their re-
appointment for the current financial period 2010-11 and authorize the
Board of Directors to fix their remuneration.
CONSOLIDATED FINANCIAL STATEMENTS:
As required under Clause 41 of the Listing Agreements with the Stock
Exchanges, the Consolidated Financial Statements have been prepared in
accordance with the requirements of Accounting Standards 21 Issued by the
Institute of Chartered Accountants of India. The audited Consolidated
Financial Statements form part of the Annual Report. The consolidated
financial statements presented by the Company include the financial
information of its subsidiary. The information for each subsidiary company
is also in disclosure in a separate annexure with consolidated Balance
MANAGEMENT DISCUSSION AND ANALYSIS REPORT AND REPORT ON CORPORATE
Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges,
the Management Discussion and Analysis Report, the Report on Corporate
Governance and the certificate from the Auditor of the Company regarding
compliance of conditions of Corporate Governance are annexed to this Report
and forms part of this Annual Report.
With a view to strengthening the Corporate Governance framework, the
Ministry of Corporate Affairs has incorporated certain provisions in the
Companies Bill, 2009. The Ministry has issued a set of voluntary guidelines
in the second half of December, 2009 for adoption by the Companies. The
Guidelines broadly provide for appointment of directors (including
independent directors),guiding principles to remunerate directors,
responsibilities of the Board, risk management, the enhanced role of Audit
Committee, rotation of audit partners and firms and conduct of secretarial
audit. Your Company while already complying by and large with these various
requirements has already initiated appropriate action for compliance.
The Directors take the opportunity to thank ail investors, business
partners, clients, vendors, bankers and advisors for their continuous
support during the period.
Your Directors also wish to place on record their appreciation for the
dedication with which the employees at all levels performed their duties
and for their cooperation and support during the period.
By order of the Board of Directors
(G.S. Chandrashekar) (Dilip Parekh)
Chairman and Director Whole Time Director
DATE : 28.10.2010
ANNEXURE I TO DIRECTOR REPORT:
DISCLOSURES PURSUANT TO THE PROVISION OF SEBI (ESOS AND ESPS) GUIDELINES
Sr. Particulars ESOP 2008
No. 1st April 2009 to 30th June, 2010
Grant I Grand II
1. Details of Meeting Extra Ordinary Meeting held on November 23,2007
2. Option Granted 44,05,800 7,48,700
3. Exercise Price Rs.5/- Rs.5/-
3. Pricing Formula At fair Market Value At fair Market Value
4. Option Vested 44,05,800 2,47,070
5. Option Exercised 44,05,800 1,88,660
6. Total Number of 44,05,800 1,88,660
shares arising as
a result of exercise
7. Option lapsed* None 58,410
8. Variation of
terms of Option None None
9. Money realized Rs. 2,20,29,000 Rs.9,43,300
by exercise of
10. Total Number of None 5,01,620
Option In force
11. Details of Option Mr. G.S. Vishwanathan, Whole Time Director-
Granted to Senior 20,00,000 Options granted on 12.06.2008
Mr. Dilip Parekh, Whole Time Director -20,00,000
Options granted on 12.06.2008
12. Any other employee None
who receives a grant
in any one year of
option amounting to
5% or More of option
granted during the
13. Identified Employee Mr. G.S. Vishwanathan, Whole Time Director-
who were granted option, 20,00,000 Options
during the one year
equal to or exceeding Mr. Dilip Parekh, Whole Time Director-
1% of the Issued 20,00,000 Options
and conversion) of the
company at the time of
* Lapsed Options include options forfeited and options cancelled/lapsed.
** The Company had allotted the aforesaid Equity Shares of Rs. 1/- under
ESOS 2008 at the premium of Rs. 41- each on the above mentioned date.
14. PROFORMA ADJUSTED NET INCOME AND EARNING PER SHARES:
Net Income as Reported (In Millions) 201.15
ADD. Intrinsic Value Compensation Cost 167.92
Less . Fair Value Compensation Cost (In Millions) 186.42
Adjusted Proforma Net Income (In Millions) 182.65
Basic Earning Per Shares:-
As Reported 0.83
Adjusted Proforma 0.79
Diluted Earnings per Shares As Reported 0.92
Adjusted Proforma 0.86
15. ASSUMTIONS USED TO ESTIMATED THE FAIR VALUE OF OPTIONS USING BLACK-
SCHOLES OPTION PRICING MODEL:
Sr. Particulars Grant I Grant II
1. Risk Free
Interest Rate 8.75% 8.90%
2. Expected Life 0.00 2.50
3. Expected Volatility 4.00% 4.50%
4. Expected Dividend
Yield 0.05% 0.06%
5. Price of the
in Market at the
Time of Option Grants 43.00 8.85
16.(i) WEIGHTED-AVERAGE EXERCISE PRICE OF OPTIONS GRANTED DURING THE YEAR:
Sr. Particulars Amount
1. Exercise Price equals Markets Price N.A.
2. Exercise Price is greater than Market Price N.A.
3. Exercise Price is less than Market Price 3.85
(ii) WEIGHTED-AVERAGED FAIR VALUE OF OPTIONS GRANTED DURING THE YEAR
Sr. Particulars Amount
1. Exercise Price equals Markets Price N.A.
2. Exercise Price is greater than Market Price N.A.
3. Exercise Price is less than Market Price 4.10
MANAGEMENT DISCUSSION & ANALYSIS REPORT
One word which epitomized the world in 2009 is courage, a quality of spirit
to pierce the darkness of challenging times and hope amid despair. 2009
ushered turbulence, with countries around the world plunging into the
recession. However, prompt action by governments across the world and
stimulus packages helped to contain this downfall and make way for revival
by the end of 2009.
Over the past decade, the Indian IT-BPO sector has become the country's
premier growth engine, crossing significant milestones in terms of revenue
growth, employment generation and value creation, in addition to becoming
the global brand ambassador for India. The changing demand outlook,
customer conversations and requirements have acted as a driver to build in
greater efficiencies and flexibility within the service delivery and the
business models - one which is here to stay. These measures, along with
India's game changing value proposition has helped India widen its
leadership position in the global sourcing market.
The advent of 2010 has signaled the revival of outsourcing within core
markets, along with the emerging markets increasingly adopting outsourcing
for enhanced competitiveness. Key demand indicators in the last two
quarters such as increased deal flow, volume growth, stable pricing, and
faster decision making has made the industry post good results. Though full
recovery is expected in another two quarters, development of new growth
levers, improved efficiency and changing demand outlook signifies early
signs of recovery.
Indian IT-BPO Performance:
The industry is estimated to aggregate revenues of USD 73.1 billion in
FY2010, with the IT software and services industry accounting for USD 63.7
billion of revenues. During this period, direct employment is expected to
reach nearly 2.3 million, an addition of 90,000 employees, while indirect
job creation is estimated at 8.2 million. Asa proportion of national GDP,
the sector revenues have grown from 1.2 per cent in FY1998 to an estimated
6.1 per cent in FY2010. Its share of total Indian exports (merchandise plus
services) increased from less than 4 percent in FY1998 to almost 26 per
cent in FY2010.
Exports market: Export revenues are estimated to gross USD 50.1 billion in
FY2010, growing by 5.4 per cent over FY2009, and contributing 69 per cent
of the total IT-BPO revenues. Software and services exports (including BPO)
are expected to account for over 99 per cent of total exports, employing
around 1.8 million employees.
Geographic focus: The year was characterized by a strong revival in the US,
which increased its share to61 percent. Emerging markets of Asia Pacific
also contributed significantly to overall growth.
Vertical markets: The industry's vertical market mix is well balanced
across several mature and emerging sectors. 2009 saw increased adoption of
outsourcing from not only our biggest segment i.e., the Banking, Financial
Services and Insurance (BFSI), but also new emerging verticals of retail,
healthcare and utilities.
Service lines: The IT Services segment aggregated export revenues of USD
27.3 billion, accounting for 55 per cent of total exports. Indian IT
service offerings have evolved from application development and
maintenance, to emerge as full service players providing testing services,
infrastructure services, consulting and system integration. Even though
growth in BPO was single digit for the first time, it still is the fastest
growing segment of the industry and is estimated to reach USD 12.4 billion
in FY2010, growing at6 percent. Increased acceptance of platform BPO
solutions was the key highlight, as Indian BPO providers increasingly
focused on transforming client businesses through a mix of re-engineering
skills, technology enablement, and new service delivery methods.
Additionally, the engineering design and products development segments that
involve IP driven service capabilities command an exports revenue share of
20 per cent, generating total revenues of USD 10 billion in FY2010, growing
by 4.2 per cent.
Indian IT-BPO Value Proposition:
In a globally integrated economy, outsourcing is leading to overall
benefits for the source economies, providing significant monetary and
employment benefits. The silver lining of the economic downturn is the
opportunity for the industry to enhance its overall efficiency. Companies
are increasingly looking inwards and focusing on process benchmarking,
enhanced utilisation of infrastructure and talent, increasing productivity
and greater customer engagement. Coupled with wage moderation and lower
attrition, these measures will help industry sustain its margins and invest
in future growth.
Timely government policies and increased public-private participation have
played a key role in developing an enabling business environment for the
Indian IT-BPO industry. Establishment of Software Technology Parks of India
(STPI) stands out as a seminal policy action, specifically targeted towards
encouraging, promoting and boosting the export of software and services
The industry demonstrated process quality and expertise in service, a key
factor driving India's sustained leadership in global service delivery.
Since the inception of the industry in India, players in the country are
focusing on quality initiatives, to align themselves with international
standards. Over the years the industry has built astounding processes and
procedures to offer 'world class IT software and technology related
Availability of quality talent at cost effective rates, rapidly developing
infrastructure, an enabling innovation environment, supportive regulatory
policies, and a positive overall business environment are all central
pillars of India's value proposition.
Low cost of delivery- India offers the lowest cost of delivery as compared
to other off shore locations, with Tier-I locations offering savings of 70
per cent over source locations, Tier-ll/lll cities in India offer a still
High calibre talent pool- Availability of skilled talent has been India's
foremost attraction as a global sourcing country. India's graduate outturn
has more than doubled in the past decade, with addition of 3.7 million
graduates in FY2010, a scale unmatched by any other country. While some
gaps in talent suitability exist, they are being addressed through strong
provider-level initiatives and industry-led programmes.
Robust process delivery- The industry has been extremely quality focused,
with India based centres accounting for the largest number of quality
certifications achieved by any country. The industry has also set standards
in the establishment and maintenance of best practices in corporate
governance, and leads in customer satisfaction.
Business environment and infrastructure- Timely government policies and
increased public private participation have played a key role in developing
an enabling business environment for the Indian IT-BPO sector. India's
strong education framework ensured ample supply of technical and non
technical talent, while the establishment of Software Technology Parks of
India (STPI), and later SEZs provided an enabling ecosystem for the
industry to flourish. Infrastructure development has been addressed by both
public and private sector, leading to the development of world class
facilities in select cities.
Growing Indian market- India has become, in purchasing power parity terms,
the fourth largest economy in the world. India's economic growth since 1980
has been rapid. Real average household income has roughly doubled since
1985. With rising incomes, household consumption has soared and a new
middle class has emerged. It is expected that India will go through a major
transformation over the next decade and emerge as the fifth largest
consumer market provided it continues its high growth path.
Transformational capabilities- The industry has been enhancing its
abilities to transform client businesses through increased R&D spend, focus
on IP creation, development of new technologies incorporating process and
business model innovation and increased domain expertise.
Global footprint- Increased focus on global delivery has required the
industry to enhance its global footprint, which has in turn helped the
industry reach out to new customer segments and offer new services. Over
the last two years, there has been a 32 per cent increase in the number of
global delivery centres with outreach expanding to 12 new countries.
Focus on sustainable growth- Going green has become the motto of the
industry as it seeks to develop a business model that is not only
competitive but sustainable with minimum ecological impact.
THREATS/RISKS & CONCERNS:
The cost & wage arbitrage based on the FE factor can change drastically if
the $ to Re ratio marches on the current trend. This can affect the
profitability of the Company.
The anti-outsourcing legislation in the countries like USA & UK can have
direct effect on the sales. Workers in industries abroad e.g. British
Telecom protested against outsourcing work areas to India.
Other ITES destinations such as China, Philippines and South Africa could
have maintained an edge on the cost factor. Clients can consider other
outsourcing areas geographically other than the BRIC countries. Emerging
markets like South Africa, Eastern Europe & South American countries are
offering such service.
Countries like China, Philippines & South America are also possessing
qualified workforce making efforts to overcome the English language barrier
which was until now an advantage India was enjoying.
IT development concentrated in a few cities like Banglore, Hyderabad, Delhi
& Mumbai etc.
The beginning of the new decade heralds the slow, but steady end of the
worst recession in the past 60 years. Global GDP, after declining by 1.1
per cent in 2009, is expected to increase by 3.1 percent in 2010, and 4.2
percent in 2011, with developing economies growing thrice as fast as the
developed economies. Improving economic conditions signifying return of
consumer confidence and renewal of business growth, is expected to drive IT
spending going forward.
IT services is expected to grow by 2.4 percent in 2010, and 4.2 percent in
2011 as companies coming out of recession harness the need for information
technology to create competitive advantage. Organizations now recognize
IT's contribution to economic performance extending beyond managing
expenditures. They expect IT to play a role in reducing enterprise costs,
not merely with cost cutting but by changing business processes, workforce
practices and information use. Movement toward SaaS and cloud computing,
shared services, and more selective outsourcing will take firmer shape as
near-term priorities to address constrained IT budgets.
Government IT spending continues to rise across the world, focusing on
infrastructure, and security. Other areas of spending include BPM, data
management, on demand ERP, virtuaiisation, and efforts to increase and
deliver enterprise managed services on IP networks. Business process
outsourcing spending in 2010 is expected to be increasingly driven by F&A
segment and procurement, followed by HR outsourcing. Providers will
increase their focus on developing platform BPO solutions across verticals
Even though India has a 51 percent market share of the off-shoring market,
there is tremendous headroom for growth as current off shoring market is
still a small part of the outsourcing industry. Significant opportunities
exist in core vertical and geographic segments of BFSI and US, and emerging
geographies and vertical markets such as Asia Pacific, retail, healthcare
and government respectively. Development of these new opportunities can
triple the current addressable market, and can lead to Indian IT-BPO
revenues of USD 225 billion by 2020. The industry also has the potential to
transform India by harnessing technology for inclusive growth.
However, realisation of this potential will involve mitigation of several
challenges that India faces currently. Costs are expected to rise with wage
inflation and increased attrition. While India has ample supply of talent,
it is largely trainable in nature, not employable. This leads to
incremental training costs and increased downtime for the industry, which
is challenging keeping in mind quality talent availability in competing
countries. Currently, over 90 per cent of total revenues are generated from
the seven Tier-I locations, which are nearing peak capacities in terms of
infrastructure support. India has to quickly develop other delivery
locations to achieve its 2020 vision. There are concerns around security -
both physical and data related, in service delivery, which would need to be
addressed. Currency fluctuations have also dented India's competitiveness,
and steps need to be taken to address India's increased risk perception. A
key impact of the recession has been the rise of protectionist sentiments
in major markets for the industry. The impending discontinuation of fiscal
incentives and frequent changes in fiscal regulations are making the
business environment more challenging. Last but not the least, a number of
new outsourcing destinations seeking to emulate India's success have
emerged, offering multiple fiscal and training incentives, making them cost
Concerted action by all stakeholders around below parameters is required to
capture the opportunities and mitigate future risks. In doing so,
stakeholders (industry, NASSCOM and the government) will need to act
together in an unprecedented manner:
Catalysing growth beyond today's core markets: Breaking ground in new
markets (verticals, geographies, segments) through reinvented offerings and
Establishing India as a trusted global hub for professional services:
Building a conducive business environment (improved infrastructure, public
services, corporate governance, and security) and a strong global image.
Harnessing ICT for inclusive growth: Stimulating inclusion of citizens by
enabling technologyled solutions in healthcare, financial services,
education and public services, leading to increased connectivity, improved
soft infrastructure, and a balanced regional development.
Developing a high calibre talent pool: Bridging a crucial talent gap by
addressing gaps in tertiary education, at the same time fuelling efforts to
upgrade curriculum, faculty and training methodologies.
Building a pre-eminent innovation hub in India: Encouraging intellectual
property, establishing distinctive capabilities and fuelling
There are a handful of competitors that cover the target market segment for
Coral Hub group, but there are no companies who have the breadth of service
offerings of Coral Hub & its subsidiaries as a combined entity. Most of
these are large players such as TCS, HCL etc. There are very limited medium
sized competition such as Tricom and TNQ but even these do not cover the
entire width of our offerings.
The strengths of Coral Hub Limited and Basiz complement each other, and are
able co-exist with relative seamless ease.
While the internal strengths and market insight from combined business
provides fodder to Coral Hub to optimally develop and exploit the right
market space, Coral Hub's group's strategy of combining its organic growth,
mixing it judiciously with carefully selected target companies for
acquisition will propel it for radical global growth moving itself head and
shoulders above the existing fragmented competitors and at par with large
players within the scope of offering.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has in place adequate system of internal control commensurate
with its size and nature of its operations. The Company has budgetary
control system to monitor all expenditure against approved budgets on an
ongoing basis. The Company's accounting process is based on uniform
accounting guidelines that sets out accounting policies and significant
The Company has well established policy towards maintaining the highest
standard of Management of Quality, Environment, Health/Safety & Data
Security norms while maintaining operational integrity. The following are
the standard of certification received by the company:
1. Quality Assured Company - ISO 9001:2008
2. Environment Management System - ISO 14001:2004
3. Healths Safety Management System - OHSAS 18001:2007
4. Security Management System - ISO 27001:2005
The Company has an internal audit function which is empowered to examine
the adequacy and compliance with policies, plans and statutory
requirements. It is also responsible for assessing and improving the
effectiveness of Risk management, Control and Governance process.
The Company has an Audit Committee, the details of which have been provided
in Corporate Governance Report. The Committee considers and takes
appropriate action on the recommendation made by the Statutory Auditors and
keep the Board of Directors informed of its major observations from time to
As at the end of June 30, 2010, the Company's Issued and Paid -up Share
Capital stood at Rs. 241,979,795/- (Previous year ended March 31,2009 Rs.
156,788,290/-). During the period, the Company has allotted 188,660 Equity
Shares of Re. 1 /- each to the employees of the Company who have exercised
options granted to them under ESOS 2008.
RESERVES AND SURPLUS:
The reserves and surplus of the Company as at June 30,2010 amounted to
Rs.2,593,288,551/-as against Rs. 2,483,722,772/- as at March 31,2009.
During the period under report, the Company has made the following
additions to its Fixed Assets:
Land & Buildings: Rs. 27,618,070/-, Computers H W & SW: Rs. 14,824,625/-
Motor Car :Rs. 2,408,146/-Office Equipments: Rs.71,500/-
During the period under report the Company has made the following deletion
to its Fixed Assets :
Land & Buildings: Rs. 21,800,000/-,
The Company has credit limits with banks to take care of regular working
capital expenses. Since the Company is a net earner in foreign exchange &
so it is vulnerable to foreign exchange appreciation/depreciation. The
Company does not speculate on foreign currency exchange rates.
The Income for the period ended June 30, 2010 was Rs. 891,185,506 /- as
compared to Rs. 617,394,267/-for the year ended March 31,2009.
Operating expenditure for the period ended June 30, 2010 has increased by
36.56 % as compared to the year ended March 31, 2009. The increase in
expenditure is primarily on account of increase in the scale of operations.
The EBIDT was at 22.40 % for the period ended June 30,2010 as compared to
28.58% for the year ended March 31,2009.
PROFIT AFTER TAX:
Profit After Tax was 22.57 % of Income for the period ended June 30, 2010
as compared to 23.74% forthe year ended March 31,2009.
Development of human resources is the key to progress. In IT industry, good
human resources policy ensures a sure success to growth and profitability.
We follow open door policy and employees have access to anyone in the
senior management team including Chairman and Whole Time Directors to voice
their opinions. During the period, the Company had made substantial
addition to human resources. The total number of employees as on June
30,2010 was 84 (103 as on March 31,2009)
Statements in this 'Management Discussion and Analysis Report' depicting
the Company's objectives, expectations or predictions may be forward
looking within the meaning of applicable laws and regulations. Actual
results may vary materially from those conveyed or connoted. Important
factors that could make a difference to the Company's operation include
changes in government regulations, rupee appreciation, non availability of
working capital, tax regimes, economic developments in India and the
countries in which the Company conducts business and other incidental
On behalf of the Board
Date : 28th October 2010 G.S. Chandrashekar
Place: Mumbai Chairman & Director