Anil Singhvi Chairman of the Board
The global pandemic caused by COVID-19 has resulted in 'the newnormal' which has led to a disruption in lives livelihoods and businesses worldwide.Despite the challenges posed by the pandemic I am pleased to say that the managementthrough active guidance and support from the Board was able to navigate through theuncertainty adeptly. Today we are a zero-debt Company with a strong balance sheet and anet cash balance of over Rs. 140 crores giving considerable scope to invest in manyexciting areas even in this challenging environment
I have always valued how Subexians rise to meet every challenge andopportunity. On behalf of the Board I thank them for taking the company to new heightsduring the last year. Their determination and passion symbolize our values and visionstatement in adapting to unforeseen challenges to ensure that all our customer projectswere uninterrupted especially at a time when our customers needed us the most.
A look back at our journey over the last 10 years.
Overall during the period FY10 to FY17 Company went through a verydifficult period; one marked by a failed acquisition losses declining revenues negativecash flow and above all a deteriorated reputation. It was a tumultuous period for allstakeholders during which the world expected the Company to declare bankruptcy andcustomers too were concerned over their ongoing projects with Subex. Despite thehardships Company had to face in the last decade none of its customers left us.
The Board steered the company through this difficult period and handledintense negotiations with the bondholders to convert the majority of the FCCB debt intoequity. This helped in resolving a major issue of the long-term debt overhang and was asignificant milestone in the journey of Subex.
Without the overhanging challenge of debt the Company now has theflexibility and resources to look towards new areas of investment and innovation.
In the year 2018 Company extended into new areas outside the coreproducts of revenue management. This required inviting strategic partners and talent togrow in these areas. The board also made changes to the management who relooked at thestrategic focus of the business and identified a 3-Florizon framework of growth for thebusiness in close discussions with the board.
The Company's performance and cash position have consistently beenimproving since FY19 onwards. Today we are a zero-debt Company with a strong balancesheet and a net cash balance of over K 140 crores giving considerable scope to invest inmany exciting areas.
Retaining Key Talent - Launch of ESOP Scheme
While the focus shifted entirely towards sustainability and growth ofthe business it was equally important to invest and retain the best of talent being thecore asset within the Company. The equity base of the Company is widely held with noPromoter shareholding. The launch of the Subex Employees Stock Option Scheme-2018 enabledthe Company to buy up to 5% of the Equity Shares from the Secondary Market therebystrengthening the management and creating an opportunity for Subex to be one of the largeremployee-owned Indian Listed Companies. This also helps the Company in providing stabilityand retaining key talent.
Right sizing the Balance Sheet - Capital reduction Scheme
As we addressed the issue of the debt overhang due to the FCCB loan andconverted them to equity the board realized that there was a need to address and resolvethe issue of the Company's large equity capital base and accumulated losses to createvalue for the shareholders.
To serve the purpose the Company underwent a scheme of capitalreduction. As part of the exercise the capital reduction was carried out by writing offthe accumulated losses against the share capital and share premium of the company andreducing the face value of the equity shares from K 10/- to K 5/- each. After its fullimplementation in FY21 the capital reduction resulted in making the balance sheet leanerand downsized.
The restructuring of the financials today enables the Company to have arational structure that is commensurate with the current business allowing it to servethe equity better.
Financial highlights FY21
The Company performed well in FY21 and closed the year with growth andprofitability. The revenue for the year stood at K 372 crores as against K 365 crores inFY20 which translates to a 2% growth. EBITDA margins ended at K 98.5 crores as against K94.2 crores in FY20. Profit after tax was at K 51.7 crores as against a loss of K 269.2crores in FY20.
Rewarding your patience - Shareholder's Dividend
The Company's performance and cash position have consistently beenimproving since FY19 onwards. The Company today has a cash balance of over K 140 crores asagainst peak debt of K 602 crores in the past.
Given the overall improvement in the business performance and healthycash balances your board felt it was time to reward the shareholders for their immensepatience and support to the company over the years. It is a matter of great satisfactionto me that the board announced a dividend of 15% after a long gap of 14 years.
Business update - FY22 Outlook
We are making good progress in the new areas and I am also excited tosee the early interest for HyperSense our new augmented analytics platform and a pathtowards a successful transition to a SaaS-based business. As the industry continues tofocus on enhanced efficiency and reduced capital expenditure the prospects of Subexcontinue to be brighter than ever indicating better performance ahead with the clarity ofpurpose and mission of stability. Further with Digital Trust gaining more prominence bothat a business and societal level Subex's offerings will continue to increase theirrelevance in the digital era and look forward to the future with more excitement. You willfind more detailed information in further sections of this annual report on Subex'sjourney towards enabling Trust in the digital ecosystem.
I take this opportunity to thank all the stakeholders once again forstanding by the Company. The Company remains resolutely committed to deliver enhancedvalue to all stakeholders and feels confident to achieve results through our focus on coreand growth areas.