Brace yourself the world is changing... fast !
We have entered an era of irreversible techno-scientific age. The way advances intechnology and innovation are gathering momentum seeing it optimistically as per leadingfuturist Ray Kurzweil in few decades both poverty and disease the world's two worstenemies could be eliminated.
Under this backdrop as an engineering and technology services provider we are livingin very interesting and challenging times. Now that disruption is a new constant everybusiness need to be digital to stay afloat.
Our industry continues to evolve. NASSCOM recently launched Future Skills a platformintended to train over two million IT professionals as well as two million potentialprofessionals and students in job-oriented skills. NASSCOM has recognized as many as 55new job roles spanning emerging technology areas including artificial intelligence (AI)big data analytics 3D Printing IOT social and mobile in line with the needs of theindustry. This sets the stage for what is popularly called a "fourth industrialrevolution" and with robotics connected to this cyber world of computer systemsbrings in the birth of "smart factories".
Digitalization of manufacturing from shop floor to the white collar offices is themajor trend. From early adoption of ERP in 90's to PLM for maximizing the Supply chain andManufacturing processes Industrial IOT with Analytics the manufacturing sector isexpected to commit quite a bit of funds for software and services over the next 10 to 20years. We seek to leverage the full capabilities of our offerings with broaderparticipation across the enterprise and product development ecosystem embeddingourselves more deeply at different steps of the value chain.
The way to survive and thrive in this wave of disruption is to collaborate more withyour customers and partner with leading engineering technology providers (CAD CAESimulation Digital Manufacturing). We are investing in next generation technologies ofDigital twins and software tools to facilitate factory automation. We continue to investin newer skills in re-skilling our work force to meet the demands of our customers to growtheir business. The start of the journey has been very encouraging as evidenced by theperformance during the last fiscal year both in quantitative and qualitative terms.
Looking at the performance of FY 2018 I stand satisfied with a consolidateddouble-digit growth of the Company together with 60% + improvement in our bottom line. Ourservice lines across Mechanical Engineering Design Services and IT services attracted manyinteresting projects (end to end program involving design analysis and prototyping)within our existing customer base which reflects our growing competence aligned withchanging market requirements. Company has renewed most of its annuity business from lastyear to this year which is again a reflection of our contribution and value partnershipswith all our active customers.
For our IT services business the current year is offering good potential for growthprimarily driven by need for automation robust spending by public and private sector andIndia being the most preferred IT destination globally.
We continue to operate with the highest level of commitment excellence integrity& corporate governance. I believe our core values are the pillars of our growth andare the way forward for continued success of the organization as well as enhancing brand"Onward". The strength of our culture is what makes us more capable and betterpositionedfor the future than it has been at any time in our history. As we head into2018-19 and beyond I am more excited than ever about the opportunity to demonstrate thatwhen we do right for our clients and put them first others stakeholders viz ourshareholders and our employees also win.
Thank you for your continued loyalty & support as we build the Onward Technologiesof the future.
From the Managing Director's Desk
FY 17-18 has been a year to celebrate in many ways. The company continued itsgrowth path with a 10.2% growth in top line and 64%+ growth in Profit After Tax (PAT)resulting in Earnings Per 60%. During the year Company expanded its infrastructure withopening of new offices in Pune (WTC) Chennai (OMR) & North America (Troy &Cleveland). All this is to ensure the "Quality" & "Quantity" ofbusiness at Onward Technologies remains healthy and sustainable while delivering good margins.At the May 2018 Board of Directors (BoD) meeting Company also proposes to pay Dividendfor third year in a row.
Further to my last year's note I am happy to share substantial progress which we havemade across various key identified areas which will drive further revenue growth &margin expansion towards doubling the revenue to Rs. 500 crore in the near future.
Our top strategic customers continue to be our focus. I'm pleased to share with youthat our revenues from the top 10 customers went up from 30% to 38% in FY 17-18. Thispercentage has a high probability to go up over 50% in the next 2 years which is our aimthrough the continued focused investments and efforts towards these customers. Theopportunity to scale with these customers both through current focused service lines ofproduct engineering manufacturing engineering and new areas like embeddedelectronics digital etc is more than 20 times their current outsourcing to us. Webelieve we are rightly positioned now more than ever before to achieve the above growth.
Earlier this year Onward Technologies was listed among the Asia Pacific's top 1000high growth companies by Financial Times. And again in Sep'17 Onward Technologies wasawarded & recognized as "Pride of Maharashtra" award at an event in Pune. Wealso received numerous recognition & awards from our customers across the regionswhich is evident with more than 90% annuity contract renewals.
Working towards our Net Zero Debt goal last year Company repaid close to Rs. 7 croresof external term loan debt with a balance consolidated debt of Rs. 14.98 crores on March2018. We are well on track to have net zero debt in the next 18- 24 months. Our(Days Sales Outstanding) DSO has also shown an improvement from average 75 days in past toaverage 65 days now due to the higher quality of customers that we serve today. We feelconfident that we will be able to bring it down further in next 24 months and maintain thesame at an average of 50 days.
Last year we also announced strategic Business Transformation partnership with Frenchglobal industry leader - Dassault Systemes and entered into services partnership withMichigan based - Altair Engineering to strengthen our capabilities in engineering servicesdomain. Company also made investments in embedded technical publications and PLM spacewhich will help us to enter into these new domains bid for larger enterprise deals andpartner with our customers better.
We continue to attract & retain exceptional talent with 2500+ employees todayserving customers from our various offices globally. I'm particularly pleased that ourNorth American Subsidiary Onward Technologies Inc (OTI) has more than 40% local Americanson its headcount. We have a clear vision of having over 50% local talent in all ourprimary markets (North America UK & Germany) to build stronger & deeper relationswith the customers. This year we will add more Sales & Client servicing depth in allour international offices to scale the business further.
Looking ahead Onward Technologies will continue to make the strategic investmentsneeded to serve our customers more effectively and deliver profitable growth for ourshareholders. I thank you for your continued support & interest.