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Kellton Tech Solutions Ltd.

BSE: 519602 Sector: IT
NSE: KELLTONTEC ISIN Code: INE164B01022
BSE LIVE 19:40 | 19 Oct 97.80 0.85
(0.88%)
OPEN

98.00

HIGH

98.40

LOW

95.15

NSE 19:41 | 19 Oct 97.50 0.10
(0.10%)
OPEN

98.50

HIGH

98.90

LOW

96.40

OPEN 98.00
PREVIOUS CLOSE 96.95
VOLUME 10053
52-Week high 149.45
52-Week low 80.00
P/E 56.86
Mkt Cap.(Rs cr) 463
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 98.00
CLOSE 96.95
VOLUME 10053
52-Week high 149.45
52-Week low 80.00
P/E 56.86
Mkt Cap.(Rs cr) 463
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kellton Tech Solutions Ltd. (KELLTONTEC) - Chairman Speech

Company chairman speech

Dear Shareholders

The journey of Kellton Tech so far is a story of future-driven organisationcontinuously scaling newer heights of growth and accomplishment with an expert footing.The year 2015-16 will be remembered as a year in which your company emerged as a globalleader in digital transformation arena earning prestigious recognitions along the way.

Fourth Industrial Revolution - Capitalising on the Digital Revolution

Well before it was manifest your company foresaw the digital-driven era the fourthrevolution as many are calling itand invested in the digital technologies ahead of thecurve. The first industrial revolution used steam engine to mechanise production thesecond ushered an era of mass production through electric power and the third lead toautomation of business processes using information technology. The fourth revolution isnow upon us: the digital revolution that would unleash the rapid digitisation of industrysystems and aims towards universal digital convergence.

The possibilities emerging from this digital wave are enormous and path-breaking as itallows for unlimited computing power at your fingertips. Despite the upsurge in use ofmobile devices the mobile applications often used to hit the performance wall due totheir intrinsic constraints. Digital technologies break through this wall and help tapunlimited resources from the cloud storage without imposing any device-based constraints.Our digital evangelism efforts opened many CIOs to the opportunities derived fromunlimited computing. The pay-as-you-go model afforded by these technologies enables one topay only for what they use (popularly known as "everything as a service" - XaaSmodel). We educated enterprises to avoid heavy in-house investment on implementing andmaintaining solutions (such as traditional data centers) and instead utilise the morecost-effective Kellton Tech's on-demand services (such as cloud). The shift from capitalexpenditure (Capex) towards operating expenses (Opex) prompted by efficiency andcost-cutting concerns is driving the opportunities for Kellton Tech. Your company hassuccessfully addressed the reservations of many businesses and enabled them to make thedigital leap.

Further we have successfully allayed the reigning apprehension among many businessesthat digital transformation requires ground-up efforts from scratch; we used our pastprojects to demonstrate that the implementation can be enabled by strategicre-apportioning of existing resources too. Thus your company is best-positioned to affectdigital transformation for both greenfield and brownfield projects i.e. where system needsto be built from ground-up and wherein legacy systems must be incorporated respectively.We make the existing systems in brownfield projects digital-ready by arming them with'wrappers' that bring digital capabilities while enabling a digitised front-end forapplications.

Digital Goes Mainstream

When we started this journey much of the digital revolution was mostly thriving innew-age companies. Today digital transformation has moved from the margins to themainstream as many fence-sitting traditional companies have jumped the digital bandwagon.As a pioneering enabler of digital transformation your company is playing an integralrole in educating businesses to adopt digital.

In tandem we are continuously investing in these high-yielding digital technologiesand are acquiring companies that bring new capabilities and give access to new customers.In retrospect our plans have panned out perfectly. The acquisition of ProSoft TechnologyGroup turned prescient as it afforded us advanced enterprise digital capabilities in timeto exploit the exploding digital market. In a similar vein your company acquired US-basedBokanyi Consulting this year strengthening its ISMAC (Internet of things Social MobileAnalytics Cloud) stack and adding niche expertise in the in-memory analytics space to itsalready comprehensive set of digital capabilities.

Though increasingly serving large enterprises your company has always been true to itsroots and has a mandate of having at least 20% of our customers from the start-upcommunity. As these companies are on the cusp of innovation working with them affords usa bird's eye view of the emerging forces at play. As the innovation matures and mainstreamcompanies start adopting them your company being one among the very few companies to bewell-versed in them emerges as a go-to partner for implementation. Thus working withstart-ups is enabling us to discern signs of the coming technological wave and capitaliseon the emergent opportunities.

Digital is our DNA

Your company is poised to grow at this accelerated rate as digital transformation isone continuous metamorphosis with no end-state defined. Being a pioneer in digitaltransformation which has become a part of organisational DNA our customers recognise theevolutionary edge we bring in this regard and have reposed their complete faith in ourcapabilities. In terms of head-to-head technology bake-off your company has leapfroggedthe competition and dominates the domains in which it is operating.

At a time when implementing Internet of Things (IoT)-based solution still seemsfuturistic your company prides itself incurrently deploying two IoT-based projects. Thisassumes significance in wake of reports forecasting that the global IoT market would growto $1.7 trillion by 2020. Thus Kellton Tech is well-qualified to seize the opportunitiesthat lie ahead in this arena and capture a sizeable pie of the IoT market.

Attaining Strategic Goals

In our last year's letter to shareholders we evinced interest in foraying into Europe.It gives me great pleasure to observe that we indeed did establish our EMEA (EuropeMiddle East and Africa) headquarters in Ireland this year. The Ireland office would serveas our springboard to make inroads into European market and beyond. This region is poisedto become next to US our largest revenue-contributor in the world.

Your company's significant growth and sustained momentum could not have been possiblewithout the yeoman contribution of our employees who elevated the company to its presentheights and continue to push it higher. These are the people who took the pioneering stepsin uncharted terrains armed with only the deep sense of commitment to excellence. Weencourage our employees to engage in continuous upskilling and reskilling setting timeaside for fully-dedicated learning periods. This enables them to be fully-equipped tonavigate through the coming digital disruptions. Simultaneously we are incubating Centersof Excellence in various technologies and are constantly innovating to keep ourselvesabreast with the technological momentum.

The year has also witnessed the unification of all corporate brands under single brandof Kellton Tech. Henceforth Kellton Tech will be the market-facing brand identity of theentire group. The brand consolidation will enable us to tap operational synergies andimprove our brand recognition and recall in the global market. This is an excitingmilestone for the organisation for it enables us to operate as one global team and helpsoffer compelling value proposition to customers.

Earning Prestigious Recognitions and Clients

Your company gained prominent recognitions for its achievements as a global leader indigital transformation. It won the category "Digital Innovation in Service ProviderIndustry" at the prestigious Digitizing India Awards a Cisco initiative incollaboration with CNBC. Kellton Tech also received dual recognition at the NationalAwards in IT Excellence - 2016 for 'Best e-governance Implementation' and as 'Emerging ITCompany of the Year'. Likewise investor optimism is best reflected in the naming ofKellton Tech as one among the top 5 growth stocks in India by Dalal Street a leadingcapital investment magazine.

Thanks to your confidence in us today your company has 40 customers from the Fortune500 list and is a proud enabler of digital transformation to three of the largesteCommerce players in India largest Indian airline India's leading leisure hospitalityprovider a global restaurant chain and two of the largest digital wallet providers amongmany similar companies.

At the end of this momentous year we would like to thank you for your ongoing trustand support which gives us the confidence to make these rapid strides. Your continuingfaith will enable us to embark upon more challenging business expeditions and march on theroad to digital success.

Thank you.

Niranjan Chintam Founder and Chairman

Industry Overview

In today's deeply interknitted global market developments elsewhere are bound toimpact the Indian IT industry too. The industry is closely watching developments likeBrexit anti-immigration stance acquiring popularity in US election discourse andimmigration crises in Europe especially in its economic powerhouse Germany among manyothers. Having deep stakes in these developments the industry cannot remain insulatedfrom their repercussions as US is a significant market alongside Europe which has beenjoining ranks in recent times. Political compulsions might force nations to mediate theline between open market and protectionism and in the process renegotiate prevailingtrade terms. The industry must now brace itself for these challenges.

The bright spot however is that many businesses are keen to attain enterprise-widedigital convergence having woken up to the infinite possibilities that these technologiesoffer. From the margins the digital story is now mainstream and the Indian IT industry iswell-placed to harness the global digital opportunities. Meanwhile the trade sentimentabout the Indian economy seems largely optimistic. The government's focus on missionDigital India continues to offer hope to masses and businesses. The IT industry is poisedto ride this digital wave to their advantage while improving government systems' abilityto serve the citizens.

BUSINESS

Overview

The acquisition of US-based Bokanyi Consulting afforded Kellton Tech a stronger grip ondigital technologies particularly in enterprise solutions and in-memory analytics space.Kellton Tech has enriched its ISMAC (Internet of things Social Mobile Analytics Cloud)through R&D efforts and acquisition of complementary competencies.

To extend its reach Kellton Tech has established its EMEA headquarters in Ireland.With this office as its base Kellton Tech intends to expand its presence in Europe andbeyond. Kellton Tech's achievements as a leader in digital transformation have earned itprestigious recognitions. The Hyderabad offices of Kellton Tech were consolidated underone single roof to improve intra-organizational communication and collective operationalefficiency.

Strategy

Kellton Tech's strategy has been two-fold: to acquire new customers & complementarycompetencies and to strengthen existing capabilities through in-house and R&Defforts.

With Ireland as its EMEA base Kellton Tech is poised to better serve its customers inEurope and beyond. Due to its edge in time-zone difference and language with respect toUS the new office can assist Kellton Tech's US operations by providing technical support& sales-enablement services. This will boost its US operations which is a majorrevenue-contributor. It is well-positioned to capitalize on the digital transformationopportunities in the region. With the process of localization applied to its IoT uptakeKLGAMETM Kellton Tech is better-equipped to promote this innovation to theemerging market in the region.

Its cumulative experience of successfully serving a wide range of companies frommid-cap to Fortune 500 enterprises gives Kellton Tech a distinctive edge in capitalizingon the digital opportunities. As it expands its offerings-range and global footprintKellton Tech is exceptionally well-equipped to further explore cross- and up-sellingopportunities with clients. Given its broad spectrum of its offerings this strategy ispoised to significantly contribute to the organic growth of the company.

Thanks to its accelerated growth Dalal Street has identified Kellton Tech as a top 5growth stock in India. The investor community has thus validated its growth story and iswilling to bet on the company's forward momentum.

Technology

Kellton Tech aims to extend its capabilities across the spectrum of digitalpossibilities. As a pioneer in ISMAC (Internet of things Social Mobile AnalyticsCloud) armed with acquisitions in ERP arena Kellton Tech is poised to capitalize on thecloud ERP space such as SAP HANA among others. Indeed the added strength in the in-memoryand streaming analytics space opens new windows of opportunity.

Today Kellton Tech is fully-equipped to enable businesses to make the digital leapsustain their forward thrust and help them acclimatize with the new digital landscape.With the emergence of Digital Systems Integration its traditional integration and BPMservices are being re-engineered and re-invented to integrate ISMAC constituents too.Kellton Tech is also at the forefront of capitalizing on the shift from traditional SOAand Webservices to APIs and Microservices.

IoT uptake KLGAMETM has been successfully implemented in various eventswhere Kellton Tech was a partner. The capability and capacity of the innovation is nowbeyond apprehension and its pilot projects reveal the same. Much like the digital wavewhich it was able to profitably ride thanks to its early focus KLGAMETM isanother arena where Kellton Tech has prepared the groundwork ahead of the curve andexpects to tap the emergent market.

While Kellton Tech takes pride in the fact that it drives 30% of the digital traffic inthe eCommerce market of India mSehat gives it a unique satisfaction of harnessing thepower of digital technologies to affect tangible change among the masses. As more projectsof this nature are undertaken with the same effectiveness and efficiency the missionDigital India will transform the very face of public systems and revolutionize citizenservices.

Outlook

The Government of India's thrust on mission Digital India will bring many opportunitiesto IT companies and Kellton Tech being a leading enabler of digital transformation standsto gain from these initiatives. Likewise the global IoT market is growing at a rapid paceand Kellton Tech armed with its IoT innovation KLGAMETM is well-placed tobenefit from this market upsurge. Having harnessed its digital prowess to improve thehealth outcomes of masses Kellton Tech will continue to use its cutting-edge technologyfor the betterment of masses and earn their goodwill.

Meanwhile as noted earlier the surge in nationalism appears to have become a globalphenomenon. "Glo- calization" may not be restricted to offerings portfolioalone and might extend to people practices given how politically charged the issue ofjobs creation is. However Kellton Tech is well-positioned in terms of its compliance withlocal employment stipulations and is poised to ride trends where necessary whether theseare driven by business needs financial sops or political compulsions.

Risks and Concerns

While the first-mover advantage of Kellton Tech with respect to digital transformationservices has enabled it to maintain an impressive lead more companies are trying theirhand in this business. The groundswell of digital opportunities has led to many businessesentering the fray swiftly.

The IoT technology is still considered relatively futuristic and an upswing for rapidshift in market focus is needed. The commodization of services will pose anotherchallenge. The technology cycle for new markets are short and therefore due diligencemust be applied to separate a fad from a trend. Kellton Tech is an old hand however asfar as these changes are concerned.

While Kellton Tech remains committed to its ongoing investment in latest technologiesit has continuously identified the outliers from the mainstream changes. It has devotedits focus selectively and has been able to spot the winning technologies.

Kellton Tech equipped with wide spectrum of digital technologies is best-placed toenable businesses make the digital leap and assist them in far-reaching endeavors. Thisedge is unlikely to be blunted soon because it takes years of consistent andever-sharpening focus to achieve it. Awake to its unique assortment of expertise KelltonTech is promoting cross-selling possibilities and clients are embracing them with openhands too.

Discussion on financial performance with respect to operational performance

During the year under review your company has earned an income of Rs. 359.7 crores andnet profit of Rs. 30.9 crores. Though the growth rates are significant they appearrelatively less impressive when compared to its momentum because Kellton Tech had atruncated nine-month fiscal year this time. When these numbers are annualized it becomesclear that the upswing in financial performance has been sustained through this year.

Material Developments in Human Resources

The accomplishments stem from the talent that Kellton Tech recruits and incubatesthrough its innovative work culture. There have been many workshops and training sessionsto keep the employees abreast of the latest innovation in technologies. Thegrowth-friendly environment for employees motivates them to undergo intensive training andenhance their professional standing.

In line with its plans to add tiers of middle and top management Kellton Tech hassteadily brought industry-veterans to the organization. The revamped structure is a hybridof bureaucratic discipline and entrepreneurial agility though further integration effortsare underway.

To maintain workforce operational efficiency the organization consolidated itsexisting offices in Hyderabad under one single roof. Now all teams work from the samebuilding block and can readily interact with one-another promptly resulting in fastersmoother decision-making. The unified communication infrastructure also provides employeesenhanced capacity to interact with clients in greater detail.