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Dear Shareholders,
 I
have great pleasure in welcoming you to the 16th Annual
General Meeting of your Company.
In my letter dated 23rd June, 2001 addressed to you,
which has become a part of the Company's Annual Report
2000-2001, I have delineated the strategic initiatives
being launched by us for shareholder value enhancement
through greater focus and consolidation of TMT businesses
within the fold of your Company.
Since writing the above letter, certain important developments,
which may impact the business of your Company, have
taken place and I thought of sharing my views thereon
with you.
Attack on USA and aftermath
The foremost among the occurrences is the dastardly
attack on the world's financial nerve centre, which
has sent shock waves around the world. Although from
an international perspective India's numbers - GDP growth,
inflation, foreign exchange reserves, etc. - are still
good, portents like increase in oil prices, fall in
exports, weakening of rupee and sluggish industrial
growth could slow down the economy.
Nasscom and McKinsey are toning down their projections
for India's software business. Overall, the Indian IT
software industry was up by 55 per cent during 2000-01
and a growth of 30 to 35 per cent is now projected for
2001-2002.
The market research firm - International Data Corporation
(IDC) - a leading global technology intelligence, industry
analysis and market data provider, has said that there
will be no adverse impact on revenues from India's software
exports to the USA.
According to them, the demand for products and services
is likely to be low due to drop in consumer confidence
in the near future but revenues from software exports
are not likely to be affected in the long run.
Since more and more companies in the USA are likely
to outsource their back office work to cheaper locations
to reduce cost, we can expect good growth in the IT
enabled (also known as business process outsourcing)
services in India.
Your Company has already established a good name in
executing IT Enabled Services. After successfully operating
the claim processing business for a Fortune-50 US company
by meeting their stringent quality standards, your Company
has ventured into related areas like High End Call Centers
under IT Enabled Services.
New business in Information
Technology
Your Company has entered into an agreement with a marketing
company that has excellent contacts in USA to procure
IT enabled business (with a focus on Call/Contact Centers)
and IT services on its behalf. The first client brought
to us by the company is a US based US$ 2 billion telecom
company.
To start with, your Company proposes to service in-bound
calls from potential customers of the telecom company
and the initial capacity planned is 180 seats and over
360 call service representatives, which is proposed
to be increased in a phased manner.
Your Company has ambitious plans for the IT enabled
services with a target of setting up 2,000/3,000 seats
in 2/3 years. Moving up in the value chain in these
services, your Company is slated to emerge as a significant
player in such business.
Media Development
The Indian media scenario in 2000-01 was a mixed bag
of opportunities and concerns about its future growth.
The entertainment industry is expected to grow to US$
6.5 billion by 2005 from the present US$ 3.4 billion.
According to a Mckinsey study, the growth of 12% per
year in the last four years is expected to be doubled
in the next four years.
The subsidiaries of your Company in the media sector,
which have a national footprint, are well equipped to
exploit the growth potential of the business. During
the past one year, the television operations of IndusInd
Media & Communications Ltd. have been spun off to
another subsidiary company - IndusInd Entertainment
Ltd.
This company has revamped the 'IN Mumbai' city centric
channel into multilingual news and infotainment channel.
Its news bulletins titled 'IN Time' rival national news
channels and show TRPs that are higher than the satellite
news channels in the city of Mumbai in all time slots.
The Hindi Movie channel CVO of Cable Video India Ltd.
is also rated ahead of comparable satellite channels
in Mumbai and nationally on Sundays. Your Company is
thus well poised to take advantage of technological
and multimedia convergence.
Another important development is the introduction of
Communication Convergence Bill 2001 in the Lok Sabha.
The passage of this Act will have a far reaching impact
on orderly growth of the entertainment industry in India.
A preliminary reading of the bill shows that a sincere
effort is being made by the government to "establish
a structured mechanism to promote, facilitate and develop
carriage and content of communications in the emerging
scenario of convergence".
Your Company welcomes the Bill and expects to benefit
from government's desire to be a facilitator. No adverse
impact is anticipated. There is a welcome emphasis on
protecting consumer interests. The industry expects
a similar concern to let free market principles to prevail
in pricing of services so that costs of more and more
value added services can be recovered from customers.
Internet related issues
Your Company's subsidiary - IN2Cable India Ltd. is a
leading category "A" (all India) Internet
Service provider offering broadband via cable network
of IMC.
Some of the impediments to be removed for the growth
of broadband communication are :
- Wide divergence between the paid-for bandwidth and
the supplied bandwidth resulting in poor quality of
service.
- Cost of bandwidth continues to be high.
- Lack of standardization of hardware used for connectivity.
The subsidiary is in constant dialogue with VSNL, which
supplies the bandwidth for bringing about necessary improvement
and also is in the process of getting bandwidth from suppliers
in the private sector.
Confidence in using the Internet for business can only
come with good security. Viruses such as Code Red and
Nimda and self-promoting hackers, keen to tout their latest
exploits, have played havoc with internet services in
the recent past. In2Cable is well organized locally as
well as centrally from Mumbai to promptly neutralize the
effect of any virus or hacking.
Our associate company - IndusInd Information Technology
Limited - is specializing in providing a safe environment
for conducting banking business on internet. Our IT division
also will endeavour to take advantages of the expected
rise in the global IT spend on security products and services.
Knowledge Management
Our senior executives have been exposed to subjects like
corporate governance, new accounting standards and transfer
pricing regulations through workshops and seminars.
As reflected in the Annual Report, serious efforts have
been made, not only by your Company but also by the subsidiaries,
to improve corporate governance and foster equity in balancing
stakeholder interests.
Our objective will be to combine good performance with
good governance with greater transparency and more effective
oversight, which will enable your Company to attain global
standards.
We are also moving towards ensuring that accounting policies
for all entities within the group are consistent for similar
transactions and events and new norms are strictly followed.
Steps have also been taken to comply with transfer pricing
regulations in respect of international transactions with
associated enterprises.
Changes
in IT division
The entire staff of our IT division have now moved into
the spacious, state of the art new premises called 'HTMT
House' in Bangalore from different locations. This has
resulted in better control over operations of the division
and increased productivity.
It has been possible to carry out structural and systematic
changes in the division along with institutionalization
of behavioural changes. The division is now well equipped
to meet the challenges of its stretched growth objectives.
Inspite of a bleak economic outlook and tsunami in capital
market, barring unforeseen circumstances, your Company
is expected to maintain its profitability thanks to contracts
on hand and such performance coupled with synergies arising
from the convergence of TMT businesses will augment shareholder
value.
With this optimistic note, my colleagues at HTMT and I
thank you for the confidence you have reposed in us and
look forward to your continued encouragement in the years
to come. |
