Some of you may recall that your company began in 2000 as a division of Hinduja TMTLimited with the inspiration of S. P. Hinduja chairman of the Hinduja Group. Startingfrom a single self-funded contract it crossed $117 million in annualized revenue andaround 9500 employees in FY 2006-07 after its demerger effective October 1 2006. Yourcompany has grown this year to almost $600 million in revenue and over 44000 employeesoperating in 7 countries through 70 delivery centers.
The idea for your company has always been to be a trusted partner for the world'sleading corporations across industries to manage their mission critical functions. Underthe able leadership of the CEO Partha DeSarkar your company now handles annually 250million customer interactions in 37 languages and 50 million data interactions for 190Business Process Management (BPM) clients. Additionally it serves another 630 clients forHuman Resource Outsourcing (HRO) and Finance & Accounting (F&A) services.
The US remains by far the largest market served by your company contributing 68% ofits revenue of which 49% is from the Healthcare vertical. The US market continues to bethe growth engine of your company while investments for diversification have been made inCanada and the UK markets. To further diversify your management has made M&Ainvestments to expand the range of services provided to the existing customers and toacquire new ones. These investments are aimed at making significant longer-termcontribution to earnings.
Your company had $318m in total capital employed at the end of FY 2017-18. Of thisjust under $90m was funded by debt which amounted to less than trade receivables. Theremaining $228m represents a $75m increase in book value since demerger after paying $72min dividends. The opening book value of about $153m included $136m treasury cash from thesale of a non-core investment prior to the demerger.
Of the $318m in total capital employed about $40m was in treasury investments atyear-end. The ROCE (Return on Capital Employed which is pre-interest pre-tax incomereturn on average total capital) in the latest fiscal year was 17.4% excluding thetreasury investments and 15.4% including it.
The strategy of Right Shore One Experience and Collaborative Approach ('ROC strategy')has been the core driver for the growth of the business. It helped a customer for thefirst time to exceed $100m revenue this year. This customer started with offshoreservices leveraging the back-office capabilities from India then added Philippinesoff-shore delivery for customer contact services and followed it by on-shore deliveryfrom the US along with near-shore delivery. Your company delivered the One HGS'experience while optimizing value for the customer through its collaborative approach.
HGS recently launched a successful Work-at-Home capability with a high level ofcustomer satisfaction allowing its Customer Contact Management business in North Americato overcome geographical limitations of labour availability. Additionally the fastevolving digital and mobile channels are a great opportunity to differentiate ourselves aswe optimize customer satisfaction with our unified customer experience strategy throughthe DigiCX' offering. HGS's digital transformation disrupts the traditionalvoice-based services with the integration of online social media and self-service digitalcommunications with live person sales and support services. Along with analytics thisenhances business results for our clients and provides high service satisfaction for theircustomers.
Your company's financial performance is very much driven by the satisfaction of itsclients who appreciate the consistency with which innovative solutions are delivered in acost-effective manner to serve their strategic objectives. This is evidenced by thenumerous accolades and the client endorsements that your company has received and by thefact that 68% of our revenues come from clients who have tenures of 10 years or more; andby our ability to retain clients from the acquired businesses who now have tenure of upto 48 years.
The theme of this annual report Driving Results. Consistently. ThroughInnovative Customer Solutions' emphasizes that the central aspect of your Company's DNAis to constantly innovate to improve the outcome for the client as measured by theperformance matrices. This in turn requires employees who are happy
to be part of Team HGS' requiring critical people management skill in anindustry with annual attrition rate averaging around 100%. While doing so HGS has trainedaround a quarter of a million people since 2008 and helped many of them enter theorganized job market.
On behalf of the Board I would like to thank our customers for their confidence inHinduja Global Solutions as their partner of choice. The credit goes to our CEO ParthaDeSarkar who deserves to be congratulated along with his management team and each andevery member of Team HGS' for the hard work and dedication in making the HGSsuccess story a reality. This leadership team has a proven track record of navigating yourcompany through difficult economic times.
I remain grateful to the Group Chairman S. P. Hinduja for his continued support andguidance during the significant growth of your Company. Such growth would not have beenpossible without the dedication and commitment of the Co-Chairperson Shanu S. P. Hindujaand board member Vinoo S. Hinduja both of whom were a tremendous support during myabsence for medical reasons for part of the last year. I would like to thank Mr. Y. M.Kale member of the board for his contributions; as well as thank the other members ofthe Hinduja Group and family in particular the Chairman Emeritus A. P. Hinduja. Specialthanks to our esteemed independent board members for their invaluable guidance and timecommitment. I would like to express our gratitude to all our shareholders and otherstakeholders for their confidence in HGS.
|Ramkrishan P. Hinduja |
|August 24 2018 |