Sonata Software Limited
On behalf of my colleagues on your Board and on my own behalf, I am pleased
to welcome you to this, the 6th Annual General Meeting of your company. We
meet at a time when the milieu is extremely disturbed. The largest economy
in the world, USA, has stumbled after an unprecedented growth of 8 years.
And yet the performance of your company during the financial year nder
review has been strong enough to provide cause for optimism for the
The year ended March 001 has seen your company maintaining its steady
organic growth with revenue growing by 38.41% and Operating Profit by
38.18% over the previous year (excluding the hived-off domestic operations
of SITL). Strong cash management continues to be the mainstay of the fiscal
discipline practice in your company, which augurs well for the challenging
We have recommended a final Dividend of 30%, which together with the
interim dividend of 20% raises the toal dividend for the year to 50%, the
highest dividend ever declared by your company.
During the year under review, your company hived off its Indiani operations
into a 100% subsidiary called Sonata Inforamtion Technology Limited with
effect from 1st July 2000. This was done in view of the fact that the
domestic business had shown strong revenue growth and required appropriate
management focus. The results of this subsidiary for the 9 months of this
year are attached and substantiate the validity of the decision.
In July, 2000 your company also decided to split the face value of shares
from Rs 10/- per share to Re 1/- per share. This with a view to provide
more liquidity in the market and widen the ratail base. The investments
have responded extremely with the number of shareholders shooting up from
pre-split level of 9000 to almost 25000 as of 31st March 2001 after the
In the 3rd quarter of the year under review, your company made a strategic
investment of $2 million to secure 26% in Spain Away e-business Inc., USA.
This provided ready access to Spain Aways's 30 strong Industry-Savvy
marketing set up. Spin Away also contracted with your company so that your
company is the sole purveyor of software to Spin Away and its clients.
In March 2001, Franklin Templeton, one of the giants in the Mutual Fund
business worldwide, decided to cement their 9-month business relationship
with Sonata by taking a 4.9% stake in yuor company at a price of Rs.53.40
per share. The shares were freshly issued so that the Capital of your
company has grown
If one were to list th economic factors that are influencing the business
of your company in a major way, one would have to start with the impact of
slowdown of the US economy and the effect on other countries, particulary
Europe and Japan. The simultaneous Telecom slowdown in US and Europe has
further exacerbated the sitution
The US conomy, which accounts for 70% of the worldls software market, has
resortecl to its traditonal reaction to a slowdown; freezing of budgets.
Thus new software initiatives are being placed on n the back burner at this
However, spending on software for core activities, would continue, albeit
at a slower pace. Your company has always believed in focusing its
offerings in core areas of the clientls information requirements. It is
believed therefre, that your company would. be able to withstand the
adverse factors and emerge fram these challenges with stronger customer
Corporate entities in the US tend to see the interest of their shareholders
as paramount; while, in Europe, the traditional belief is that the
stakeholders of the company occupy the premier position. In Sonata, my
colleagues on the Board and all our Sonatians have believed that the two
approaches need not be mutually exclusive. Our consistent commitment is
towards both, shareholers and stakeholders.
On behalf of my colleagues on the Board and myself, l would like to thank
all of you for consistently endorsing this corporate philosophy that makes
Sonata what it is.
S B Ghia