I would like to start by thanking all our stakeholders for their support to thisCompany. This includes our shareholders employees customers and vendors.
The IT Industry continues to forge ahead even though its growth rate has reduced. Asper NASSCOM Indian Software Exports in FY2018 grew by over 8% and increased to USD 126billion comprising 25% of Indias total exports. Indias Software Exportsgrowth in FY2017 of over USD 116 billion is commendable given the increasingprotectionism.
I believe that the IT Industry in India and your Company is faced with severalchallenges and we need to address them.
First the western world our principal markets are getting protectionist and creatingbarriers to trade movement of our professionals and a free flow of both goods andservices.
Second India is facing margin pressure with MNCs having high captive utilisation andfinancial institutions still leading the way with around 24%. Conventional IT Services andBPO are gradually becoming a commodity with relatively low entry barriers resulting inlower margins.
Third there is a need to broaden our geographical reach and explore more markets.Today about 80% of our Software Exports are to the USA and UK who on a combined basisform only 6% of the world population and contribute about 25% of the worldsGDP.
Fourth to circumvent reducing margins in both BPO and Software Services we need tomove up the value chain through development of intellectual property and Softwareproducts. Traditionally Indian Software professionals had been accustomedto providing services against developing Software products. Today products needcreativity rigorous testing ergonomic orientation larger marketing / sales budgets andlonger gestation periods.
To address some of the easier points and enhance our growth visibility your Companymade two acquisitions during the year. We acquired 71% stake in TechJini (Now DatamaticsDigital Limited) in July 2017 with an option to buy the remaining equity by 2019.Datamatics Digital headquartered in Bengaluru is in the Mobility Software space whichis becoming immensely important worldwide. In April 2018 we also acquired RJGlobusSolutions Inc. a voice-based BPO company headquartered in Manila Philippines. Theobjective was to address the growing demands of our customers globally and furtherstrengthen our BPO offerings.
For FY2018 I am happy to report that the consolidated revenues were ` 9103 million(USD 141 mn) as compared to ` 8524 million (USD 131 mn) in the previous year reflectingan increase of 6.8% in rupee terms. Our consolidated EBITDA was 9.01% i.e. ` 820 million(USD 13 mn) against ` 830 million (USD 13 mn) in FY2017. Our net profit stood at `715 million (USD 11 mn) as against ` 640 million (USD 10 mn) last year.
Your Company derived 54% and 46% of its consolidated revenues from its IT SoftwareServices and BPO segments respectively.
Your Company has been developing several software products over the past decade. One ofthese is a Robotic Process Automation solution named "TruBot". This has beensuccessfully launched and has received good response from customers in India and the USA.In the long run software products have both better margins a brighter future and areless prone to both tariff and non-tariff barriers.
We attribute this success to our people who are our greatest asset. They havecontinued to play a pivotal role in your Companys progress. Our HR policies andTraining Programs continue to win accolades and awards. Significant among them are theBest HR Organisation of the Year" to Datamatics Global Services; Best HRStrategy in line with Business to Lumina Datamatics both by the World HRD Congress;and Best Employer Brand and Dream Employer of the Year to CIGNEXDatamatics at the Employer Brand Congress Awards. It is important to note that we wereonce again certified as a Great Place to Work by the Great Place to WorkInstitute.
Sectoral Opportunities and Outlook
The Software industry remains a beacon to the rest of our country. Our IT professionalscontinue to chart new paths and make significant contribution towards raising our GDP andPer Capita Income and providing employment. Even in the USA in Silicon Valley the hotbedof innovation one third of new start-ups are led by Indian Americans.
TheworldiswitnessingarisingimpactofDigitalTechnology.The market cap of just 4 of globaldigital giants Google Facebook Amazon and Apple is US$ 3 trillion which exceeds theGDP of India.
I would like to add that with an extensive suite of services and our focus ondeveloping intellectual property we are in a good position for growth and improvedmargins in future.
I would once again like to thank all our stakeholders for their valuable support.
Dr. Lalit Kanodia
Ph.D M.I.T (USA) Chairman