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34th Annual General Meeting, 18th September, 2019
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Dear Shareholders, It is always a pleasure for me to communicate with you and share the progress made by your Company from time to time. At the outset, I wish to express my hope that in the current challenging circumstances caused by the pandemic and the national lockdown, you are all keeping good health and staying safe. The year in retrospect: The financial year 2020, has been a year of significant ups and downs globally. India being a major global player, has not been insulated from the waves of uncertainty that the global societies and economies have had to face. The extraordinary situation caused by the pandemic affected the global economies adversely, including India. Governments across the world have announced huge financial packages to help in reviving the economies, which have seen a significant downslide due to the lockdown situation. Having said this, the year has been a very eventful one for your Company, which, despite the various uncertainties faced by the Indian economy and the Media & Entertainment sector, in particular, has not only weathered the storm but has grown from strength to strength. I would like to take you through some of these highlights. On a consolidated basis, your Company has put up a stellar performance for the year ending March 31, 2020, with revenue growth of 65% over the previous year from Rs 704.60 crores to Rs 1162.10 crores, an Earnings before Interest, Depreciation, and Taxes (from continuing operations) of Rs 341.74 crores as against a loss of Rs 71.63 crores in the previous year and a Profit after Tax (from continuing operations) of Rs 109.68 crores as against a loss of Rs 303.85 crores in the last year. Your Company repositioned itself as a pure Digital Media & Entertainment Company by exiting its Treasury & Investment business and laying less emphasis on the Real Estate segment. To achieve this, your Company, along with its subsidiary IndusInd Media & Communications Limited (IMCL), filed a Scheme of Arrangement with the National Company Law Tribunal (NCLT) whereby the Cable TV and Headend In the Sky businesses of IMCL are de-merged into the Company. The NCLT has approved the Scheme, and hence your Company has now become a significant Digital Services Provider in the listed space focussed on the Media/ Entertainment/Broadband business. This year marks the 25th anniversary of our operations in this sector. The year saw the implementation of the New Tariff Order (NTO) issued by the Telecom Regulatory Authority of India (TRAI) and litigation challenges and the implementation arising out of it. This was a landmark regulation that positively changed the business economics for the Cable TV industry players such as your Company. I am proud to mention that your Company took up this challenge head-on and came out successfully and was identified as one of the best implementers of this Order by the Telecom and Media Regulator and the Industry. ONEOTT Intertainment Limited (OIL), a Company belonging to the Hinduja Group and a leading Internet Service Provider in the country, has become a subsidiary of your Company through the Scheme mentioned above. By virtue of this, your Company has become the 6th largest internet service provider in the country in the wired category. The sector saw some huge investments during the year, with both strategic and financial investors making significant investments in the largest players in the industry. Your Company believes that this is a positive development for all players in the sector as the sector has proved itself to be one which is poised for exponential growth. I can assure you that your Company will take advantage of this development and will aim to grow exponentially riding on the best of cutting-edge technology, which will help the Company to create new and profitable revenue streams. Your Company continues to be one of the forerunners in many areas, some of which are the following:
The Future: Expansion of the business by leveraging technology and partnerships will be a key focus of your Company. Your company believes that technology and innovation will be the key mantras for growth. Consumers are today exposed to sophisticated technology, and Companies such as yours, which leverage on technology, are surely to be the winners of the future. Technologies like OTT, IOT, and Artificial intelligence have started playing a significant role in the day to day lives of people, and companies such as yours are sure to satisfy customer needs through innovative solutions. Your company has always believed in one of the key mottos of the Hinduja Group – “Partnership for growth.” Its business model has always been “Inclusive,” wherein it looks to create value to all the stakeholders in the distribution chain by taking them along with itself on the path to growth. Since inception, we have always supported the local cable operators to grow and retain their businesses as entrepreneurs and remain long term partners with us. They all have done well. This concept of “Partnership for growth” is being taken one step further by your company by laying focus on “Managed Services.” The potential base for “Managed Services” stands at over 69 million cable TV customers today in semi-urban, semi-rural and rural markets, where NXTDIGITAL has a growing presence. Smaller independent and regional MSOs operate these markets. The company is partnering with them and even with competitors by allowing them to share the distribution infrastructure of the company, particularly the satellite footprint, and deliver high-quality digital services to any part of the country through its HITS platform in the future. NXTDIGITAL continues to focus on consolidating and growing its serviced subscriber base, expected to cross 10 million, including onboarding of more than 5 million of Managed Service customers. Infrastructure sharing is the stated policy guideline of the Government for the media and telecommunication industry. In this respect, we are ahead of the competition in fulfilling the objectives of the Hon’ble Prime Minister, which is focused on ‘Skill India,’ ‘Make in India, and a ‘Digital India.’ Corporate Social Responsibility Your Company is fulfilling all the necessary obligations in line with our Founder’s principle of “Work to Give” and remains fully compliant in terms of the CSR regulations. For the Financial Year 2019-2020, your company has further contributed Rs. 1.16 crores to the Hinduja Foundation for the Sustainable Rural Development Project- for rural development and education in the Jawahar Taluka in District Palghar, Maharashtra. Conclusion. I want to place on record my sincere appreciation of your unstinted support to the company all these years. I would also like to thank the Directors, Management, and Employees on the excellent performance registered in the past year. Also, my thanks go out to our Bankers, Auditors, and Advisors for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the Hinduja Group. I would conclude by wishing you all good health. Yours sincerely, | ||
Ashok P. Hinduja Date: September 4, 2020 | ||
Dear Shareholders, It gives me pleasure to communicate with you, our esteemed shareholder family, about the performance of your Company for the year and our journey going forward. A significant part of your Company’s investments is in the media sector through its investment in IndusInd Media & Communications Limited (IMCL), a subsidiary of your Company. IMCL is the only integrated digital platform operator (DPO) with delivery via digital cable, satellite (“HITS”). As this segment has seen a significant positive structural transformation, I would like to give you my thoughts on the immense opportunity in the media sector and how your Company intends growing in this segment and creating value for the Company and its shareholders. Media and Entertainment Sector As far as the Media & Entertainment sector in India is concerned in 2018, it reached a size of INR 1.67 trillion, witnessing a growth of 13.4% over 2017. As per the FICCI-EY Report for 2019, the sector is expected to cross INR 2.35 trillion by 2021 at a Compound Annual Growth Rate (“CAGR”) of 12%. In the distribution sector, Cable TV still dominates the distribution of TV channels in the country through MSOs and LCOs which increased from Rs. 91,810 Crore in 2013 to Rs. 1,67,500 Crore in 2018, a growth of 82.44%. New Tariff Order The Telecom Regulatory Authority of India (TRAI) notified a New Tariff Order (NTO) which is a new Regulatory Framework for the Pay TV industry in India which became effective from February 1, 2019 after a round of litigation right up to the Supreme Court. The NTO heralds a new era for the TV Channel Distribution Industry and brings in the much-needed transparency and equitable distribution of economic benefits in the Industry by:
IMCL Leader in NTO Implementation The successful implementation of the New Tariff Order by IMCL while simultaneously ensuring that there is least disruption to customer service has been very well recognized by the industry and all its stakeholders. In appreciation of this, IMCL has won two prestigious awards at the annual BCS Ratna Awards- “Best NTO Implementation by a DPO” and “Best LCO and Consumer management services.” TRAI the Regulator has also acknowledged the seminal role played by IMCL in successfully transitioning to the new consumer friendly regime. Stellar turnaround in IMCL performance During the year gone by in 2018-19, the NXT Digital and IN Digital – distribution platforms of IMCL have taken giant strides not only in terms of the subscriber base but also in terms of its subscription revenue. While the subscription revenue grew by 11%, there was an increase in the subscriber base by 10% over FY 2018. IMCL along with its subsidiary companies have an active subscriber base of 5.1 million. This is expected to grow substantially in the coming years. With all these positive developments, IMCL is expected to return a positive Profit after Tax in the years ahead. Impact of new Indian Accounting Standards (IND AS) Your Company has been facing challenges in the regulatory environment due to mandatory resort to IND AS. While operationally on a standalone basis your Company has not made any losses, the loss reported this year is due to the (new) method of accounting prescribed under the new Indian Accounting Standards (IND AS) whereby all the unrealized gains arising out of the ‘mark to market’ gain adjustments carried out on Financial Assets held by your Company as on the date of transition to IND AS have been added to “Reserves”. The subsequent ‘mark to market’ adjustments have necessarily been made to the Profit & Loss Account and not to the Reserves. Your Company continues to have a strong net worth, which as on March 31, 2019 was Rs. 1968.58 Crores. Future Outlook Increasing long term shareholder value continues to be a prime objective and your Company will keep evaluating assorted opportunities to invest and grow. Since the last 24 years, owing to regulatory headwinds, your Company did not get an opportunity to give commensurate value to the shareholders on the media investment. Now, with the successful implementation of the New Tariff Order, the Company is confident of significantly improved performance in the media business segment, which is substantiated by the operating results of the quarter ending March 31,2019 and will be maintained in future quarters. The Board of Directors of your Company at its meeting held on August 12, 2019 have accorded in principle approval for reorganization of the Media and Communications undertaking of IndusInd Media & Communications Limited (“IMCL”) into NXTDIGITAL Limited (formerly known as Hinduja Ventures Limited) subject to all statutory/regulatory approvals and approval of the esteemed shareholders. Expansion of the business by leveraging technology and partnerships will be a key focus of the media business. On Completion of reorganisation, HVL will transit from a holding Company to an operating Media Company, resulting in substantial value unlocking. In view of the above, your Company’s name will be suitably changed to reflect the focus on the Media business. There will be an emphasis on debt reduction by dilution of its non-Media investments with the aim of the Company becoming debt free in the near future. Corporate Social Responsibility The Hinduja Foundation is the implementing agency for Rural Development Projects and programs mandated by the Company as part of its CSR projects under section 135 of the Companies Act 2013. Hinduja Foundation’s Sustainable Rural Development Project in Jawahar taluka, District Palghar of North West Maharashtra was awarded ‘Project of the Year 2017-18’ at the ‘India CSR Summit 2018’ in New Delhi on September 24, 2018. The awards were presented by Shri Anant Kumar Hegde, Minister of State for Skill Development and Entrepreneurship, Government of India and by Dr. Satya Pal Singh, Minister of State for Human Resource Development and Minister of State for Water Resources, River Development and Ganga Rejuvenation, Government of India. Ambassador Prakash Shah, Honorary President, Hinduja Foundation was present at the occasion and he addressed the Summit. The CSR initiative has improved the quality of life through income generation and by transforming the villages with enhanced healthcare facilities, livelihood interventions, water resource management, purposeful educational upliftment, empowerment of women and development of the village infrastructure. Over 6,000 tribal households with 30,000 people will benefit from this program and nearly 4,000 school children are gaining enhanced educational inputs. For the financial year 2018-19, your Company has further contributed Rs. 2.04 Crores to Hinduja Foundation towards its Rural Development and Rural Educational Programme in Jawahar Taluka, Palghar District, Maharashtra. Conclusion. I would like to place on record my sincere appreciation of your unstinted support to the Company. I would also like to thank the Directors, Management and Employees for the good performance registered. Also, my thanks go out to our Bankers, Auditors and Advisors for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the group. | |
Yours sincerely, | |
Ashok P. Hinduja Date: August 12, 2019 | |
32nd Annual General Meeting, 27th September, 2017 Dear Members, It gives me immense pleasure to communicate with you, our esteemed shareholder family, about the performance of your Company for the year and our journey going forward. Your Company continues to strive to create value for our shareholders through a prudent management of the Treasury assets and ensuring business strategies of companies in which it has invested. We are focused towards creating long term shareholder value along with good steady dividends. As a responsible corporate citizen it continues to carry out its responsibility to the society at large by supporting projects which improve the living conditions of the underprivileged. India continues to remain a high growth economy, giving tremendous opportunities to dynamic companies such as ours to diversify and grow. The fiscal year 2016-17 saw the economy consolidating the gains from steps taken by the Government to ensure macroeconomic stability. The year saw two major policy decisions – Demonetisation and introduction of Goods and Service Tax (GST). Both the steps involve major structural changes and are expected to deliver value in the long term. The smooth implementation of both initiatives is testimony to the Governments’ planning and execution skills. With respect to your Company’s subsidiaries’ operations, it remains focused on the Media and Entertainment Industry. I am happy to inform you that with the necessary approvals having been received from the National Company Law Tribunal (NCLT), the Headend-in-the-Sky (“HITS”) business of Grant Investrade Limited, a wholly owned subsidiary of your Company has been merged with the Cable TV business of IndusInd Media & Communications Limited (“IMCL”), another subsidiary of your Company. This arrangement will enhance shareholders value by consolidating the Digital Media distribution businesses and will help to rationalise the group structure by optimizing the resources and integrating operational synergies both in revenue and costs. The combined entity will also be able to venture and grow in the newer areas and many upcoming linked digital technology value adds that would be relevant for this business and same set of customers. With the successful leveraging of both the Cable and the HITS delivery platforms, IMCL today has:
The Indian Media and Entertainment industry on the back of strong economic fundamentals and steady growth in domestic consumption coupled with growing contribution of rural markets across key segments was able to sustain a stable growth in 2016. Several factors like growing rural demand, increase in digital access and the expected culmination of digitization process will contribute to the positive long-term outlook for the Media and Entertainment industry. During the year, the total Consolidated income of the Company increased to Rs. 826 Crores as against Rs. 679.98 Crores during the previous year 2015-16 and the total Standalone income of the Company was at Rs. 203.39 Crores as against Rs. 332.48 Crores during the previous year 2015-16. Corporate Social Responsibility Primary Health Care Centers During the financial year 2014-15, the Company in consonance with its CSR objective to promote community healthcare, contributed to implement the CSR project of “Up-gradation of Primary Health Centre” at village Nandgaon, Taluka Jawhar, Palghar District Maharashtra with a view to improve quality, availability and efficiency of healthcare services in tribal areas. During the financial year 2015-16, for providing access to basic healthcare facilitation to poor and under privileged people, the Company made contributions to Hinduja Foundation for its Primary Healthcare Project for Up-gradation of Primary Health Centers and Sub-Centers in Jawahar Taluka, Palghar District, Maharashtra. The said contributions made by the Company was utilized by Hinduja Foundation during the year under review to develop inter alia the Primary Health Centres (PHCs), old and new toilet blocks, maternity wards so as to provide medical treatments to the population residing in the Jawahar Taluka, Maharashtra. With this the Company’s CSR objective to promote community healthcare by way of up-gradation of PHCs in Jawahar Taluka was satisfactorily attained. During the financial year 2016-17, the Company has contributed Rs. 60 Lakhs to Hinduja Foundation towards Rural Development in Jawahar Taluka, Maharashtra for implementing a project on livelihood, sanitation and providing drinking water. Way forward Increasing long term shareholders’ value continues to be the prime objective and your Company will keep evaluating emerging opportunities to invest and grow. I would like to place on record my sincere appreciation of your unstinted support to the Company. I would also like to thank the Directors, Management and Employees for the good performance registered. Also, my thanks to our Bankers, Auditors and Advisors for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the group. | |
Yours sincerely, | |
Ashok P. Hinduja Date: August 23, 2017 | |
31st Annual General Meeting, 22nd September, 2016 Dear Members, It gives me immense pleasure to communicate with our esteemed shareholder family about the performance of the Company for the year and our journey going forward. The fiscal year 2015-16 has been a year of consolidation for the Indian economy. The economy has had its share of hiccups with a weak monsoon, rising Non-Performing Assets (NPAs) of banks and other short term factors. Despite these short term problems, the inherent strength in the economy will ensure that in the long term there is a huge sustainable growth potential. As per estimates by the Asian Development Bank (ADB), growth is expected to pick up a bit to 7.80% in financial year 2016-17, helped by the Government’s strengthening of public sector bank’s capital and operations, private investment benefiting from corporate deleveraging, the financing of stalled projects, and an uptick in bank credit. The confidence in the growth potential of the Indian economy is very strong and it is this factor which influences our decision on investment in the various sectors your Company is engaged in. Digital India Programme was launched by the Prime Minister of India, Shri Narendra Modi on 2nd July 2015 with an objective of connecting rural areas with high-speed Internet networks and improving digital literacy.The vision of Digital India Programme is inclusive growth in areas of electronic services, products, manufacturing and job opportunities etc. and it is centered on three key areas Digital Infrastructure as a Utility to Every Citizen, Governance and Services on Demand and Digital Empowerment of Citizens. On a Standalone basis, the total income of the Company for the financial year 2015-16 at Rs. 332.48 Crores was higher by 201% over last year (Rs. 110.45 Crores in 2014-15). On a Consolidated basis, total income for the financial year 2015-16 at Rs. 679.98 Crores was lower by 13.50% over last year (Rs. 786.11 Crores in 2014-15). Overview and Sectorial Performance of Company’s Investments Media Technology disruption is a factor which will influence the media sector significantly in the next decade. Nimble organizations which keep themselves abreast to newer technologies and adapt to newer technologies are more likely to grow exponentially in the coming years. Media and Entertainment Industry in India is estimated at Rs. 1.15 Lakhs Crores, which will grow to Rs. 2.26 Lakhs Crores by 2020, growing at a rate of 14.30% Compound Annual Growth Rate (CAGR). Television continues to remain the largest component of the size of the media industry, constituting almost 50% of the size. It is expected to continue maintaining this proportion, growing at a CAGR of 15.10% by 2020. Your Company, through its subsidiaries IndusInd Media & Communications Limited addressing the Cable TV business and Grant Investrade Limited addressing the distribution of TV signals through the Headend-in-the-Sky (HITS) platform addresses directly the growing TV industry and is therefore positioned rightly to participate in this growth. IndusInd Media & Communications Limited (IMCL) During the year, IMCL focused on continued strengthening of its backend processes, improving consumer viewership experience and simultaneously expanding in the Phase III digitalization programme of the Government of India. The consolidation process has significantly improved the technology backbone for delivery of signals through the cable network, the subscriber management system and the collection processes. With respect to Phase III expansion while the initial push resulted in Set Top Boxes being seeded in the market as per plan, the multiple court cases filed by different cable operators seeking a stay in Phase III digitalization have delayed the expansion process. The Supreme Court has transferred all pending cases to Delhi High Court. With hearings scheduled in September 2016, an early solution to the roadblocks is possible. The benefits of this expansion are therefore expected to accrue over a longer period as compared to what was earlier anticipated. Grant Investrade Limited (GIL) The Headend-in-the-Sky (HITS) project of Grant Investrade Limited (GIL), a wholly owned subsidiary of the Company under the brand name “NXT Digital” was formally launched by Shri Arun Jaitely, Minister of Information and Broadcasting, Government of India in September 2015. At the launch Shri Arun Jaitely said “multiple carriage technologies will provide customers a choice”. All the application development for the NXT Digital platform has been designed and built fully in India. GIL successfully set up the Earth Station and other infrastructure required for launch of the HITS operations ensuring that world class quality of service is ensured for the consumers. The Economic Survey report for 2016 has stated that HITS has a major role to play in ensuring hundred percent digitalization in the country. HITS is a satellite multiplex service that provides cable channels to cable television operations. The HITS service effectively replaces the more complex traditional Headend. HITS as a concept was developed to deliver signals to small cable headends that did not find it viable to install their own Conditional Access Systems (CAS) and centralized services like Subscriber Management System (SMS) and billing. While Grant was on schedule to launch the HITS platform as per the timelines prescribed by the Government of India for Phase III of the digitalization programme, multiple court cases filed by cable operators has somewhat delayed the whole process of digitalization. This has a direct bearing on the GIL’s operations since the success of the HITS platform depends entirely on a successful implementation of digitalization by the Government of India. Hinduja Energy (India) Limited (HEIL) Your Company remains invested in the power sector through its stake of 15.57% for Rs. 187.10 Crores in HEIL – holding company of Power Assets of Hinduja Group. This translates in to 8.59% effective holding in the SPV- Hinduja National Power Corporation Limited. Hinduja National Power Corporation Limited (HNPCL), a subsidiary of HEIL recently commissioned a 1,040 MW Greenfield Power Project at Palavalasa village in Visakhapatnam district of Andhra Pradesh. The project has 2 x 520 MW coal-based thermal power generation units with technology offered by EPC contractor Bharat Heavy Electricals Limited (BHEL). HNPCL has recently commenced commercial operations thereby fully mitigating the construction risks. The operating risks have been mitigated by entering into an O & M Agreement with Steag O & M Company Limited, a subsidiary of a German power major, Steag Energy Services GmbH. HNPCL has entered into a long term power purchase agreement with AP Discoms for sale of 100% of energy generated by the power station with an assured return on cost plus basis in accordance with the guidelines issued by the Andhra Pradesh state regulator. HNPCL also has the benefit of pass through of fuel cost. This will enhance the value of your Company’s stake significantly. Corporate Social Responsibility Primary Health Care Centers Your Company is continuously associated with Hinduja Foundation for providing access to basic healthcare facilities to poor and underprivileged people. In order to achieve this objective, your Company has been generously funding Hinduja Foundation for its Primary Healthcare Project which commenced in June, 2015 for Up-gradation of Primary Health Centers and Sub-Centers in Jawahar Taluka, Palghar District, Maharashtra. This envisages the Company’s continuous efforts to serve the society especially the underprivileged sections of the society. Way forward Your Company’s subsidiaries in the media sector believe that going forward, the challenges of digitalization can best be addressed by consolidating delivery platform catering to both the end consumers and more importantly the cable operators. This will lead to content consolidation, offering of value added services over a wider base of customers and take advantage of economies of scale. In line with this thought, the Boards of both IMCL and GIL have debated and evaluated in detail the benefits of both the Community Antenna Television (CATV) business of IMCL and the HITS business of GIL operating as a single entity. Considering the long term benefits like rationalization of costs, improving revenue per subscriber and achieving operational efficiencies thereby enhancing shareholder value, the Boards of respective subsidiaries have recommended that, subject to the regulatory and other approvals, the HITS business of GIL be demerged into IMCL. The demerger will create a unique, one of a kind Digital Distribution Platform that will provide digital TV on multiple devices – home TV set, tablets, desktops, and hand phones. I believe that this is a step in the right direction and will help in more efficient of resources, improve productivity and synergize the strength of both the platforms (digital television distribution and cable). Your Company through IMCL expects to help the cable digitization required to cover Phase III and Phase IV markets of over 7,000 towns and another over 6,00,000 villages. As a single integrated company, IMCL is expected to be in a position to fulfill the needs of local cable operators (as B2B) and provide high quality digital services (B2C) to end customers. It will be after mergers are in place uniquely in a position to offer digital services through satellite and conventional headends. As per estimates the total homes to be digitized across the country is around 160 million. Phase I and II of the digitization is almost complete and IMCL caters to around 3 million digital subscribers in these areas. In addition, IMCL has analogue subscribers in the Phase III and IV markets. With digitazion program having been announced for these markets, IMCL is expected to cover minimum 7 million digital subscribers out of an estimated market size of 120 million homes. Following the arrangement of demerger of HITS business undertaking of GIL in to IMCL, your Company looks forward to a higher valuation for the Company consequent on expedited breakeven and better financial performance of the media subsidiary. Also, your Company will keep evaluating various business opportunities towards increasing stakeholder’s value. I would like to place on record my sincere appreciation of your unstinted support to the Company. I would also like to thank the Directors, Management, Employees and all other Stakeholders for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the group. | |
Yours sincerely, | |
Ashok P. Hinduja Date : 16th August, 2016 | |
30th Annual General Meeting, 23rd September, 2015 Dear Shareholders, It gives me immense pleasure to communicate with our esteemed shareholder family about the performance of the Company for the year and our journey going forward. The fiscal year 2014-15 has been a year of change, a year of high expectations and a year of mixed results for the Indian economy. Initial estimates by the Government show that economic growth accelerated to 7.4%. A more robust economic performance as compared to earlier estimates emerged from revised data based on an updated base year, wider coverage of goods and services, and the inclusion of tax data to estimate economic activity. Monthly industrial production estimates indicate a more modest upturn. The production of capital goods expanded after three years in the red. However, consumer durables continued to decline. The financial sector also got a fillip, due to government’s financial inclusion schemes and the issuance of new banking licenses by RBI would further strengthen the financial sector. International Monetary Fund projected that India will overtake China as the fastest growing emerging economy in 2015-16 by clocking a growth rate of 7.5%, helped by its recent policy initiatives, pick-up in investments and lower oil prices. World Bank too has similar GDP growth forecast for India for the current fiscal year. These estimates are largely based on India’s economy now being on a cyclical upswing and forward-looking indicators suggest domestic demand is gathering momentum. The government’s initiative for Make in India, Digital India, enhancing the foreign investment limit in defence, railways and insurance sectors; fuel subsidy reforms in terms of deregulation of diesel prices, review of gas pricing and direct transfer of LPG subsidies into the beneficiaries accounts; improving access to long-term financing for infrastructure projects; and auction of coal mines and spectrum; Radio FM frequencies and other ease of doing business measures have boosted overall confidence of the Investors. Low inflation has enabled the Reserve Bank of India to cut interest rates easing pressure on the private sector. Lower rates as well as the government’s infrastructure and disinvestment programs should provide a boost to domestic-oriented industries. The dampener to these growth expectations could be the monsoons and the global economic scenario prevailing at present. During the year, the total consolidated and standalone income of the Company increased by 1.63% to Rs. 786.11 Crores and 3.67% to Rs. 110.45 Crores respectively. Considering the present economic scenario, your Company strives to grow its business in the following sectors viz. Media, Investment, Treasury and Real Estate. Overview and sectorial performance of Company’s investments Media Media and Entertainment Industry in India is worth R 1.02 Lakhs Crores, which will grow to Rs. 1.9 Lakh Crores by 2018, growing at a rate of 13.9% CAGR. The big challenge for the Entertainment Media Industry is the Government mandated deadline for digitisation of over 70 million homes in Phase III by December 31, 2015 and another 30 million homes are due to be digitised by December 31, 2016 in rural areas. With the significant presence in Phase I and II of DAS through IMCL, your Company is well poised through its subsidiaries viz. IndusInd Media and Communications Limited (IMCL) and Grant Investrade Limited (GIL) to take significant stake in the digitisation of thousands of towns and cities in Phase III. 2014 has been a turning point for the Media and Entertainment Industry in India in many ways. With the current Government’s optimistic outlook, business sentiment has been positive and strengthened by a number of growth promoting policies. The Media & Entertainment Industry is clearly at a point where your Company’s exponential growth is expected to grow which will be driven largely through digitisation in Phase III and IV which will enable enhanced broadband and TV everywhere promoting multi screen distribution potential. IndusInd Media & Communications Limited (IMCL) Last year, your Company’s principal subsidiary i.e. IMCL has successfully managed digitalisation in the Phase I and II. IMCL is now taking steps to expand in the Phase III & IV digitalisation program. Phase III digitalisation deadline is December 2015 and Phase IV is December 2016. This expansion will have very little investment requirement as IMCL will rely on the HITS platform provided by Grant Investrade Limited, a fellow subsidiary Company for the launch, both with respect to the headend equipment and the set top boxes. For this purpose, IMCL has entered into a MoU with GIL for provision of passive white label infrastructure services. This will enable IMCL to upgrade its consumer base to a very high level of sophisticated digital video services at very minimum cost. Grant Investrade Limited (Grant) Grant Investrade Limited (GIL), a wholly owned subsidiary of the Company has last year embarked on a project for setting up infrastructure to provide services under the Headend-in-the-Sky (HITS) platform to the Cable TV industry. GIL has been granted permission by Ministry of Information and Broadcasting (MIB) to launch HITS. GIL believes that the entire expansion in the Phase III & IV cities for digitalisation can best be addressed through the HITS technology owing to the superior technology, cost effectiveness as compared to the traditional methods of transmitting signals through fibre, low investment in capital equipment by the cable operators and at the same time ensuring that world class quality of service is ensured for the consumers. The brand name of the “Headend-in-the-Sky” (HITS) services to be provided by GIL is ‘NXT Digital’. HITS is a satellite multiplex service that provides cable channels to cable television operations. The HITS service effectively replaces the more complex traditional headend. HITS as a concept was developed to deliver signals to small cable headends that did not find it viable to install their own Conditional Access Systems (CAS) and centralized services like SMS and billing. There are approximately 60,000 cable operators and over 6,000 Independent Cable Operators (ICO’s) functioning in analog networks. Of the 6,000 ICO’s very few have applied for DAS license for Phase III. These operators are going to greatly benefit from the state-of-art digital satellite multiplex service of NXT Digital. It is fully expected that by March 31, 2016, NXT Digital will serve million of customers through hundreds of operators giving them a superior technology at a value for money affordable cost. IDL Speciality Chemicals Limited (IDL) Your Company has approved the Scheme of Amalgamation of IDL Speciality Chemicals Limited, wholly owned subsidiary with your Company. The Scheme envisages resulting in consolidation of the business in one entity and strengthening the position of merged entity by enabling it to harness and optimize the synergies of the two companies. Once the scheme is approved, there will be an increase in the trading stock of a listed share in the banking sphere and a significant increase in the land bank for the two metros of Hyderabad and Bengaluru. Corporate Social Responsibility Primary Health Care Centers This year also, your Company has generously funded the Hinduja Foundation in implementing its Primary Health Care project for up-gradation of Primary Health Centers and Sub Centers in Jawahar Taluka, Palghar District, Maharashtra. The project focuses on providing access to basic health care facilities to poor people. This envisages the Company’s continuous efforts to serve the society especially the underprivileged sections of the Society. Hinduja Foundation is collaborating with Additional Collector at Jawahar for Upgrading Primary Health Centers (PHCs) and Basic Health Centers (BHCs) there by strengthening health services in the rural and tribal communities, thus creating a role model project for public private partnership. These PHCs and BHCs are being strengthened in collaboration with the Govt. Health Department. Way forward Your Company will keep evaluating various business opportunities towards increasing stakeholder’s value. Your Company fully expects that the tremendous opportunities available in Phase III of digitising over 70 million homes will be fully seized by its two subsidiaries IMCL and GIL and it is expected that these opportunities will be monetized due to the adoption of the prepaid model and will be value accretive to the shareholders, thereby unlocking the value of subsidiaries of your Company. Similarly the other investments made by your Company have continued to grow year-on- year adding value to investors wealth. I would like to place on record my sincere appreciation of your unstinted support to the Company. I would also like to thank the Directors, Management and Employees for the good performance registered. Also my thanks go out to our Bankers, Auditors and Advisors for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the group. | |
Yours sincerely, | |
Ashok P. Hinduja Place : Mumbai | |
29th Annual General Meeting, 22nd September, 2014
I am delighted and privileged to communicate with our esteemed shareholder family for the year in retrospect and our journey going forward. Year 2014 has reserved its place in our Country’s history books as the year of definitive change and transition. The election ushered in a new leadership with a mission to reboot the economy, deliver stability and efficient governance and proved vibrancy of Indian democracy, much essential for economic development. Priorities have been scripted as a 10 point agenda that includes being people oriented, building confidence in the bureaucracy, increasing investment, particularly in infrastructure, and implementing policy in time bound manner. Within this environment of hope and enthusiasm your company has held on to the theme of capital preservation. Your Company continued to hold its investment in the following sectors viz., Media, Power, Banking, Non-Banking Finance Company and Real Estate. Overview and Sectorial Performance of Investments Media Your Company believes that it is well poised to take advantage of the major changes taking place in the cable and broadcasting industry. The lead position held by the Company’s subsidiary in the cable industry, coupled with the HITS (Headend in The Sky) project that the media business of the Company is embarking on, will in the years to come ensure that your Company emerges as the ‘best in class’ content delivery platform that would reach a diverse pan-India TV audience. IndusInd Media & Communications Limited (IMCL) During the year, your Company’s principal subsidiary i.e IMCL has successfully managed digitalization in the Phase I and II. IMCL has converted over 2.5 million analogue homes into digital homes .IMCL is present in over 36 cities in India including metro and major cities. The industry is now shifting focus to areas of value added services, collection processes, etc. It has been now focussing on providing customer delight through provision of value added services, customer choice in viewership through packaging and bundling, ease in payments etc. On the operational side, introduce of pre-paid, online payment and similar mechanisms will eventually deliver higher ARPU and improve collection efficiencies. Grant Investrade Limited (Grant) The Company is also undertaking content delivery through an alternate technology with launch of HITS. Grant Investrade Limited, a wholly owned subsidiary of the Company has been granted permission by Ministry of Information and Broadcasting (MIB) to launch HITS. This would enable Grant Investrade Limited to reach through the entire geography of India. HITS would principally offer Infrastructure services of retransmission and backend services to hundreds of Local Cable Operators (LCOs) without disturbing their current status. HITS will be a cost effective platform for many LCOs. HITS project is expected to live by the fourth quarter of this fiscal and have a full year’s operation in FY 16. Corporate Social Responsibility Mobile Medical Units This year also, your Company has generously funded the Hinduja Foundation in implementing its mobile health care project targeting the rural poor in the tribal areas of Thane district. The project focuses on providing access to basic health care facilities for tribal people.This marks the continuation of our efforts to help the society at large in a tangible manner specially the underprivileged sections of the Society. Way forward Your Company remains committed to creating content shareholder value through selective and judicious approach. The green-field coal based 1040 MW (2 x 520 MW) Thermal Power Project in Visakhapatnam is at the advanced stage of construction. Both Unit-I and Unit-II of the project have achieved Boiler Light-Up milestone and is expected to get commissioned this year. Power generated from the project shall be sold to state distribution companies at regulated tariff with assured returns, translating into value accretion for its investors. It continues to hold a 10% economic interest in the Project Company. Similarly, the other investments made in Non-Banking Finance Company and Banking space have continued to grow year on-year adding value to investor wealth. The Company would pursue attaining a leadership position in content delivery no sooner the transition phase is complete and stability in business case improves. The Company would seek alternative modes of delivery through HITS platform to bring about disruptive change, the way business is done today. Combination of these strategies would bring it desired results and the Company would use its decades of experience to smooth transition through effective use of strategy and technology. With the advent of digital addressability, the Company would also seek to monetise its Media Investments by listing them bring value creation for its shareholders. I would like to place on record my sincere appreciation of your unstinted support to the Company. I would also like to thank the Directors, Management and Employees for the good performance registered. Also my thanks go out to our Bankers, Auditors and Advisors for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the group. | |
Yours sincerely, | |
Ashok P. Hinduja Place : Mumbai | |
28th Annual General Meeting, 16th May, 2013
It is indeed my privilege to be presenting to you the highlights of the investments of your Company during the Financial Year 2012-13. Your Company remained resilient in the back drop of slowing GDP and a tough global economic environment. The global economy remained sluggish. Structural bottlenecks, widening of the Current Account Deficit (CAD), inflation and uncertainty in the political environment hampered the growth of GDP in India. According to the first advance estimates of national income for the year 2012-13 of the Central Statistics Office (CSO), the Indian economy is expected grew at its slowest pace in a decade at a mere 5% in 2012-13, on the back of dismal performance of the farm, manufacturing and services sectors. In late 2012-13, the Indian Government announced a new round of reforms and deficit reduction measures to reverse India’s slowdown. The outlook of India’s medium-term growth is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates and increasing integration into the global economy. The greatest risk to the Indian economy continues to be the extremely high CAD. In the light of this scenario, while RBI has taken certain monetary measures to stimulate the economy, industrial revival will require greater facilitation in terms of effective policy measures to stimulate private investment. Your Company adopted a wait and watch methodology for its investment as capital preservation remained the theme for this year. Your Company continued to hold its investments in the following sectors viz., Media, Power, Non-Banking Financial Institution, Banking and Real Estate besides holding a robust Treasury. The Book Value of the shares of your Company stood at Rs. 398 per share as at the end of the financial year. The Net Worth grew from Rs. 734.39 crores in the previous year to Rs. 818.84 crores in the year under review. The investments clocked a steady growth from Rs. 225.96 crores in the previous year to Rs. 320.19 crores in financial year 2013. The performance of its investments Media – IndusInd Media & Communications Limited (IMCL) – During the year, your Company’s principal subsidiary – IMCL – successfully managed the first phase of digitalization, converting all analogue homes into digital homes in Mumbai, Delhi and Kolkata. Having received an All India Digital Addressable Cable license, IMCL converted around 2.5 million homes to digital in Phase I and Phase II cities as mandated by Government. IMCL continues to be one of the leading Multi-System Operators having pan-India presence with a reach of around 8.5 million subscribers in 36 locations. IMCL infrastructure is adequately geared up to meet the opportunity presented by mandatory Digital Addressable System (DAS) and is currently supported by 10,000 km of hybrid fibre optic cable network, which includes 2,000 km of underground fibre. There are plans to introduce Value Added Services (VAS) in digital cable. During the year, your Company applied for a HITS (Head-end in the sky) license, through its wholly owned subsidiary, with the Ministry of Information & Broadcasting. HITS is expected to provide white label services to over millions of customer in phase III and phase IV. This will results in substantial revenue to your company and handsome rewards to its shareholders by way of dividend. Power – Hinduja Energy (India) Limited (HEIL) – Your Company remains invested in the Power Sector through its stake of 15.74% for Rs. 187 crores (fully invested) in HEIL – holding company of Power Assets of Hinduja Group. This translates into a 10% effective holding in the SPV – Hinduja National Power Corporation Ltd. The project of 1040 MW under the SPV is progressing well and will be commissioned during this financial year. Non-Banking Finance Company – Hinduja Leyland Finance Limited (HLFL) – Your Company purchased 2,00,00,000 shares i.e. a stake of 8.9% in HLFL an Asset Financing Company (mainly Vehicles and Construction Equipments) – at par in early 2011. It further acquired 88,88,890 shares at par under the Rights issuance of the Company. As of the end of financial year 2013, it retained a stake of around 6.7%, after having divested a small portion (2.15%) of it to an overseas investor. The sale took place at Rs. 40 per share, clocking a return of 4 times in about two years. The prospects of HLFL look positive; the Company registered a Profit After Tax (PAT) of Rs. 91.38 crores at the end of financial year 2013 vis-a-vis Rs. 83.69 crores in the previous year. This was despite the tough business environment that the Automobile industry faced during the last year. NBFCs, especially vehicle financing, has seen a lot of investor appetite in the last year. HLFL is also close to finalising an equity infusion by a Private Equity investor of Rs. 200 crores in the coming year for funding its growth plans. This will bring down the percentage holding for your Company in HLFL to a tad below 5%. The possibility of listing HLFL in the future remains high. Banking – IndusInd Bank Limited (IBL) – Your Company, directly and indirectly through its subsidiaries, holds 1,82,37,383 Shares, a stake of 3.49% in IBL as of March 31, 2013 as against 1,51,32,383 Shares a stake of 3.01% as of March 31, 2012. Post the management change in 2008, IBL has smoothly turned around the business with an improvement across various business parameters viz. efficiency, productivity and profitability. Its superior franchise, well experienced employee base, operational expertise and an understanding of the market environment has catapulted the Bank in the Top 3 league of new generation Private Sector Banks in India. The confidence of the investor community in the stock was evident from the response IBL received on its Qualified Institutional Placement (QIP) from high quality FIIs as well as domestic investors. The subscription happened at a premium to the market price wherein the Bank raised around Rs. 2,000 crores. This capital increase will meet the growth plans that Bank has set for itself for the next planning cycle where it will focus on building ‘Scale with Profitability’. The stock has appreciated around 53%, since the last year. Real Estate – The Company continues to pursue its efforts in seeking clearance for the development of its real estate in Bengaluru including attending the legal suits related to title in respect of 47.2 acres land. The land was purchased at Rs. 0.14 crores per acre and today the market value stands at Rs. 3.08 crores per acre. Post clearance of all the issues, the Company will take up development of the property. Your Company through its wholly owned subsidiary had acquired 4.75 acres of land in Hyderabad at a price of Rs. 5 crores per acre. As of March 31, 2013, the reckoner rate of land stands as Rs. 12.1 crores per acre, registering an unrealised gain of 142%. Corporate Social Responsibility Mobile Medical Units – Your Company has generously funded the Hinduja Foundation in implementing its mobile health care project targeting the rural poor in the tribal areas of Thane district. The contributions have been made u/s 35 AC which is 100% tax exempt. The project focuses on providing access to basic health care facilities for tribal people, who, due to a variety of reasons ranging from financial to geographical constraints, remain largely neglected. This marks the beginning of our contribution to the society in a tangible manner. We will continue to pursue our efforts in giving back to the society and contributing in making lives of people better. Way forward – Whilst the above initiatives will take shape during the coming year, your Company’s management will remain committed to evaluating the most lucrative opportunities for value creation for its stakeholders. We would broaden our horizons to include new sectors to the boutique that are most promising. I would like to place on record my sincere appreciation of your unstinted support to the Company. I would also like to thank the Directors, Management and Employees for the good performance registered. Also my thanks go out to our Bankers, Auditors and Advisors for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the Group.
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Yours sincerely, | |
Ashok P. Hinduja Place : Mumbai | |
27th Annual General Meeting, 30th April, 2012 Dear Shareholders, I am pleased to report that your Company has completed one more successful year. The Treasury and Media segments of your Company have registered steady growth. Before getting into the specifics of your Company’s performance, let me say a few words about the current economic scenario and business environment. While the rest of the world was grappling with the after-effects of the European debt crisis, the growth momentum of Indian economy has also slowed down considerably over the past year. Gross Domestic Product (GDP) growth in the financial year 2011-12 is estimated at 6.9% as against 8.4% a year ago, mainly due to weakening of industrial growth. High current account deficit, reduced foreign investments and delay in tax and fiscal reforms are some of the hindrances plaguing the Indian Economy. But despite the low growth of GDP, India remains one of the fastest growing economies of the world as all major countries including the fast growing emerging economies are witnessing a significant slowdown. The Reserve Bank of India (RBI) has partly succeeded in its efforts to tame inflation, which shows signs of moderating. With the monetary easing now expected in coming quarters, cost of money will touch lower levels and improve investment climate. This will make the country confident of bringing back the rhythm of high growth of 8-9% by pushing through further reforms, strengthening infrastructure and generating opportunities for investment and employment. Performance Treasury Operations – Your Company’s portfolio performed well. The market value of portfolio went up steadily from Rs. 435 crores in the opening of the year to Rs. 572 crores at the close of the year. The overall average gain in mark to market for the portfolio was 32% over last year. The Company booked a profit of Rs. 46.33 crores during the year. Investments – Your Company stayed on course in its core strategy of identifying and incubating new businesses for the benefit of our shareholders. During the year, your Company invested 8.9% of the equity of the newly formed Hinduja Leyland Finance Limited (HLFL) at par, a company engaged in providing finance for automotive and capital goods sectors. HLFL is expected to grow rapidly and your Company should reap rich dividends in the years ahead. Similarly, your Company has taken a decision to invest in the power generation sector, which is poised for medium and long-term growth. The Board has approved an investment of upto 10% effective stake in Hinduja National Power Corporation Limited (HNPCL) through a 16% stake in the Hinduja Energy India Limited (HEIL), the holding company of the Hinduja Group’s energy business. HEIL plans to create a portfolio of 10,000 MW of generation capacity in the next 5-7 years. HEIL also has plans for developing renewable energy assets such as Wind, Solar and Biomass. One thermal project of HEIL of 1,040 MW is being developed through its subsidiary Hinduja National Power Corporation Limited (HNPCL) at Vishakhapatnam, in Andhra Pradesh. Construction is in full swing and ahead of schedule. Your Company had invested Rs. 250 mn in HEIL through its wholly owned subsidiary Grant Investrade Limited (GIL). The investment in this sector will provide handsome returns to your company. Media – During the year, your Company’s principal subsidiary IndusInd Media and Communications Limited (IMCL) continued with its consolidation strategy by acquiring several small networks and entering into Joint Ventures with medium sized networks. Its present footprint extends to 34 cities. IMCL remains among the top three Multi System Operators (MSOs) in the country with the distinction of having the highest profitability in the Indian cable TV industry. IMCL is now on the cusp of the digital revolution being ushered in by Government’s mandated policy of digitizing the Cable Networks. The Digital Addressable System (DAS) now being introduced by Government from 1st November 2012 in four phases offers a unique opportunity to IMCL to make all its subscribers addressable and to improve its subscription revenues manifold. Digitisation will enable IMCL, to achieve triple play. The Company has crafted a strategic plan for next 4-5 years, when they would target to achieve industry leadership in the quality and range of services offered to the customers. With rapid digitalization and expansion, IMCL hopes to reach over two million digital homes in next six months and over ten million digital homes in next 4-5 years. The consolidation plans of IMCL will focus on the rich socio-economic areas to achieve higher revenue growth. New services for the digital cable foray will include HD Services, Hybrid STBs for Cable and Internet, Value added services for digital cable such as Voice on Demand (VoD), Pay Per View (PPV), Gaming, E-learning, Broadband and Voice Over Internet Protocol (VOIP)/ Internet Telephony services will be expanded through its national Internet Service Provider (ISP) license. The content side of the media sector is being driven by In Entertainment (India) Limited. IEIL is adopting an approach of focusing on development of own film projects rather than buying and acquiring distribution rights from other producers. IEIL recently produced movie titled “Billa 2” in Tamil, a prequel to the popular Hindi film “Don“. The Tamil film and its Telugu dubbed version are expected to be released mid July 2012. Real Estate – IDL Specialty Chemicals Limited (IDL), wholly owned subsidiary of your Company had acquired 4.75 acres of land at Kukatpally, in Hyderabad. crores. Plans are being drawn up to monetize this asset by developing the property. The plans for developing the 47.2 acres property in the BIAPPA zone near the Bengaluru Airport High-way are underway and would be taken up along with the Joint Developer once the registration of the title in the name of the Company is done and all the clearances are in place. I would like to conclude by thanking all of you for your unstinted support during the past year. My thanks to the Directors, Management and Staff for the good performance registered. Also my thanks to our Bankers, Auditors and Advisors for their help and guidance during the year to maintain the highest standards of corporate governance, a top priority for the Group.
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Thank you | |
Ashok P Hinduja Place : Mumbai | |
26th Annual General Meeting, 10th May, 2011 Dear Shareholders, I am pleased to report that your company has completed one more successful year of operations. The Treasury and Media segments of your Company have registered healthy growth. Before getting into the specifics of your company’s performance, let mesay a few words about the current economic scene and business environment. Although, the Indian economy continued to grow, and business outlook remained by and large buoyant, the rise in inflation has thrown challenges. The Reserve Bank of India, in an effort to contain the inflationary pressure had instituted several rounds of interest rate hikes as well as raising the Reserve Ratios of banks in a number of tranches. The Reserve Bank of India had as a policy measure cautioned that containing inflation is a priority over growth in the short term. Based on monetary measures taken by RBI cost of funds rose significantly during the year. Input costs have increased, both in services as well as in the manufacturing sectors. There is a possibility of a slow-down in the core sector in the coming months, if this trend persists. Inspite of this, the overall outlook for economic growth remains positive and GDP growth should not fall below 8% level during this year. Performance Treasury Operations- Your Company’s portfolio performed well. The market value of portfolio went up steadily from Investments – Your company stayed on course in its core strategy of identifying and incubating new businesses for the benefit of our shareholders. During the year your company invested at par 8.9% of the equity of the newly formed Hinduja Leyland Finance Limited (HLFL), a start-up company engaged in leasing & hire purchase for Automotive and Capital goods sectors. HLFL has grown very fast during its first year of operation, posting a turnover of Similarly, the company has taken a decision to invest in the power generation sector, which is poised for medium and long term growth. The Board has approved an investment of upto 10% in the equity of Hinduja Energy India Limited (HEIL) the holding company of the Hinduja Group’s energy business. HEIL plans to create a portfolio of 10,000 MW of generation capacity in the next 5 – 7 years. It also has plans for developing renewable energy assets such as Wind, Solar and Biomass. One thermal project of HEIL of 1040 MW is being developed through its subsidiary Hinduja National Power Corporation Limited (HNPCL) at Vishakhapatnam, in Andhra Pradesh. Construction is in full swing and ahead of schedule. The project comprises of two units of 520 MW each and is expected to commissioned in the year 2013 with the first unit of 520 MW expected to be commissioned in June 2013. India is chronically short of electric power. Given the expected rate of growth in the Indian economy and the demand for electricity in the next 10 – 15 years, investment in this sector will provide handsome returns to your company in the near future. Media –The media & entertainment sector continues to grow at around 13%. Your company’s principal subsidiary, IndusInd Media & Communications Limited, (IMCL) continued to report strong performance during the year. Itsconsolidated revenues crossed During the year, IMCL continued with its consolidation strategy by acquiring several small networks and entering into Joint Ventures with medium sized networks. It’s present footprint extends to 28 cities. IMCL remains among the top 3 MSOs in the country with the distinction of having the highest profitability in the Indian cable TV industry. For IMCL, this year marks an unbroken profit record extending over last 5 years. IMCL also strengthened its senior management team by inducting experienced executives in Operations, HR, Admin and Technical departments. During this year, IMCL will need to raise more capital to invest in digitization, network up-gradation, acquisition of subscribers & last mile operators and to launch a new initiative for improving its Broadband delivery. Customer service and the front-end of the business also need to be strengthened. The senior team of IMCL has been involved in leading the MSO Alliance and has been engaged in dialogue with the Regulatory Authorities for framing future regulations for the industry as it continues to evolve. There is a strong possibility that IMCL’s recommendation of increasing the FDI investment limits in the Cable TV sector to 74% will be accepted during this year. This will enable IMCL to attract private equity and strategic investors to come into the sector with growth capital and technology urgently needed in the industry. The Company is considering listing IMCL this year. The content side of the media sector is being driven by IN Entertainment (India) Limited (IEIL) which acquired the content business of IMCL last year in business restructuring. The work done during the last year and plans and investments made for the current year for creating TV and movie content, should fructify into significant profits during the next 2 – 3 years and position this media company as a content producer in the Indian entertainment market. Real Estate – IDL Speciality Chemicals Limited (IDL) had acquired 4.75 acres of land at Kukatpally, in Hyderabad for I would like to conclude by thanking all of you for your unstinted support during the past year. My thanks to the Directors, Management & Staff, for the good performance registered. Also my thanks to our Bankers, Auditors, Advisors for their help and guidance during the year to maintain the highest standards of the corporate governance which is of the highest priority for the Group. | |
Thank you
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| Ashok P Hinduja Executive Chairman | Place : Mumbai Date : 10th May, 2011 |
233 crores in the opening of the year to 
25th Annual General Meeting, 11th June, 2010 Dear Shareholders, The combination of stable and sound financial systems, appropriate and timely policy response coupled with a bold stimulus package from the Government, resulted in an uptrend in industrial activities which helped the Indian economy withstand much of the adverse effects of the global slowdown. Revival of the economic activity coupled with cautious governance provided by your Directors and the Management enabled NXTDIGITAL Limited (formerly known as Hinduja Ventures Limited) to post healthy working results for the year 2009-10, as reflected in the Annual Report in your hands. As you are aware, your company’s core strategy has been to act as an incubator for new businesses in those sectors of the economy, which have great potential for rapid growth. For example, our incubation of the media and entertainment subsidiary IndusInd Media and Communications Ltd (IMCL), which is now ready for value realization . During the year, IMCL has received court sanction to demerge its content business an associate company, IN Entertainment (India) Limited, which is being incubated for future value creation in the content space. Accordingly, your company has been looking for investment opportunities in the lucrative Power (both conventional as well as non-conventional), Real Estate and Healthcare sectors which have greatest potential for growth. I am confident that by this time next year we would have successfully closed on some of these initiatives. Your company will continue to seek for fresh investment avenues but with caution. Media Business IMCL, the flagship cable subsidiary of the Company, continued to deliver strong performance during the year. As you are aware, IMCL has outperformed this year by reporting net profits for the last few years in a challenging business environment. With the return of stability in markets, the media sector also witnessed growth momentum. The outlook for the media sector continued to be positive. The media sector is expected to grow by 13.8% and reach Rs.1,092 bn from the current levels of Rs. 587 bn. The pay TV sector reached a total turnover of US $ 6.5bn in 2009 which included revenues from cable broad, placement fees and affiliate fees etc. This is expected to reach US $ 12.1bn by 2014. The pay – TV subscribers are expected to reach 149 million homes by 2014 from current levels of 105 million. Our goal is to lead in the growing distribution industry by increasing both TV homes and Average Revenue Per Unit (ARPU). The Government of India is examining options of increasing digital penetration of Cable Television homes. These could include phasing out of analog cable, extending the Digital, Addressable regime beyond the existing select areas of Mumbai, Delhi and Kolkata. The Government and the Regulator are also working on a graded phase-wise digital addressability for all India cable homes. Digitizing the cable Television homes by installation of set top boxes would enable the customers to receive over 1000 television channels with additional benefits such as better picture quality, video-on-demand and other value added services. While the Cable TV industry has embarked on the path for large scale digital services, it faces competition and challenges posed by alternate delivery platforms such as DTH, IPTV, Mobile TV, etc., which are digital addressable ready. IMCL’s future plan for growth IMCL is among the top 3 MSOs with a pan-India footprint reaching around 8 mn (6.5 mn last year) subscribers in 27 cities as against 24 cities in the previous year. It provides more than 250 channels in its Digital Cable networks, which is currently the maximum number of channels provided in any distribution platform in India. IMCL plans to continue to expand into key Tier II cities for its analog and digital services and proposes to continue making its investments in intra city fibre networks in order to have a robust backbone for delivering its services. It is also examining alternate options such as building/leasing inter-city fibre and IP based connectivity. The gauntlet thrown down by alternate distribution platforms will be effectively taken up by IMCL through its ability to deliver services at competitive rates and to prompt customer care through efficient field staff & local cable operators. Your Company is evaluating all other options for shareholder value unlocking such as initial public offering or listing securities of this integrated media cable subsidiary. Investments The fiscal and monetary stimuli provided by the Government and return of institutional investment to the markets have lowered return on debt. Anticipating the shifting trends, your Company shifted its treasury investments to long term equity and derived good returns. However, with the philosophy of preserving capital, the Company will look for long term investments with ability to generate steady returns and value creation. The philosophy of growing steady returns and creating long term value will be the guiding force while investing in any sector. I take this opportunity to thank all stakeholders for the trust reposed on us and to all the employees for their commitment and co-operation | |
Thank you | |
Ashok P Hinduja Place : Mumbai | |
24th Annual General Meeting, 27th July, 2009 Dear Shareholders, One year ago it would have been difficult, if not impossible, to imagine or predict the systemic dislocation that rocked the global economy during the latter half of 2008. The precipitous decline in global manufacturing; the restructuring of the financial services industry; the reshaping of the global regulatory framework and markets with its unprecedented nature of volatility make it difficult to predict what residual 2009 holds in store. At Hinduja Ventures, we are happy to have provided cautious governance to protect our shareholders from the economic crisis, market collapses, downturn etc. At all times, but particularly in challenging and uncharted times, your Directors and the management have anticipated what lay round the corner to safeguard shareholder interest. I am happy to report that we have fulfilled this duty well as you can see from the results. I am happy to present the annual report and accounts for the year 2008-09. We look forward to continuing our collaborative efforts on behalf of our shareholders in the years to come. There is much to accomplish after the successful general elections and the Indian economy is poised to regain its growth trajectory. We stand ready to do our part. Media Sector Outlook The outlook for the media sector continues to be very positive. Media and Entertainment Industry in India stands today at INR 584 Billion and is projected to reach a size of INR 1,052 Billion in 2013 at a CAGR of 12.5%. Cable households today stand at around 83 Million with a penetration of cable to TV household at 64%. A KPMG-FICCI report estimates about 35 Million digital cable households by 2013. By comparison, the DTH operators are struggling to gather market share in this small segment suffering huge losses. The management of your company is following technological development like IPTV/VOIP/HITS to ensure that head start enjoyed by our company remains with us on a sustainable basis. The digitization of cable space is likely to pick up pace as recommendation of sector regulator, Telecom Regulatory Authority of India (TRAI), for implementation of CAS in 55 big cities is already in place. This, along with improved picture and sound quality for the consumers, will promote digitization independent of above recommendation. There is a clear growth visible in the number of pay channels. In 2003, out of 125 channels, 41 were pay channels. Today, out of 436 channels, around 150 are pay channels. Due to increased viewership and cable penetration, number of pay channels are on the rise and this trend may continue. IMCL performance IMCL has now reached approximately 6.5 Million homes in 24 cities, out of which 15 cities are major Television Rating Point (‘TRP’) cities. IMCL provides more than 250 channels in its Digital Cable networks, which is currently the maximum number of channels provided in any distribution platform in India. The industry has been undergoing rapid changes with more competition from existing and new players, consolidation and regulatory recommendations for an orderly and transparent system. All these industry dynamics are expected to benefit IMCL in the long run. And the benign effect on the Financials may flow from proposed initiative including Capex. IMCL has around 6300 km of hybrid fiber network including 1000 km of underground fiber which is a key differentiator and our unique competitive advantage. “Quad Play” proposition makes IMCL best positioned to capitalize on huge Cable & Satellite (C&S) opportunity delivering video, internet, voice and e-commerce through a single pipe. IMCL being a valuable asset, the Company is incubating IMCL and will strive to create wealth for its shareholders by listing IMCL at an appropriate time. Finally, your Company will continue to look for new opportunities to incubate new businesses with a cautious approach and will venture only when all the risk factors are taken into consideration and mitigated to appropriate levels. We will be able to announce plans for such new initiatives in the near future. We will ensure that no good opportunity will be missed and we will continue to maximize returns to our shareholders. | |
Thank you | |
Ashok P Hinduja Place : Mumbai | |
23rd Annual General Meeting, 27th September, 2008 Dear Shareholders, One more eventful year in the life of your company has been completed. The year began on a note of strong optimism. The first half saw great expansion in the capital markets overall. Domestic and international environment was very buoyant. The second half saw a marked decline in sentiment as a number of factors came together to transform the business mood from euphoria to one of bearish sentiment. First, the sub-prime crisis surfaced hitting financial institutions badly creating a negative impact on credit appetite. Close on its heels came the unprecedented increase in the cost of crude oil. Commodity prices saw unprecedented increase causing food riots in some parts of the world. India could not remain insulated from these global inflationary pressures. Inflation increased sharply, doubling & almost trebling in the last few months, Reserve Bank of India sought to bring inflation control. Interest rates increased, hitting investments. Coupled to this there was a fear of political instability at the Centre. The capital markets in India declined by around 35%. I am glad to report that because of the prudent and cautious approach adopted by your company we were not negatively impacted by this downturn. As I had promised in my last year’s report, the financial resources available with your company from the sale of our Telecom holding remain in tact and has been invested cautiously. Despite the temporary recessionary trend, the overall outlook remains positive. The fundamentals of Indian economy continue to be strong, even though GDP growth may slowdown to around 7%. However, the present credit crunch and decline in valuations, present an opportunity for your company to invest in new opportunities at attractive valuations. Fortunately our principal media subsidiary, Indusind Media and Communication Limited (IMCL), is in a business segment which continues to enjoy strong growth, bucking the negative trend in the rest of the sector. After being consolidated into a single media entity last year it has shown positive performance and continue to show good results in second year running. Media Sector Outlook The outlook for the media sector continues to be very positive. India remains the leading pay TV market in Asia with superior growth prospects indicating a huge upside for the future. But at the same time competition and increasing cost and slow implementation of regulations, present near term risks. Market analyst forecast the Indian TV market to grow from 78 million homes to 137 million homes by 2012 and 164 million homes by 2017 which represents a growth of 82 -85%. Cable subsidiary will have a share of 67% of all TV homes giving a very bright outlook for the future of IMCL whose core strength is in cable distribution. By comparison, the DTH operators are jostling for market share in a small segment of the TV market. This is causing them to incur huge losses. The management is following new technology that has IPTV /VOIP to ensure that we do not miss the bus in the new emerging opportunities. On the Regulating front there have been several positive developments. They will further strengthen IMCL’s position in the days to come. Some such are: TRAI’s recommendations to allow cable companies to enter IPTV services; to allow cable TV MSOs; to increase FDI cap to 74% from the existing 49%; to allow ISPs to provide internet telephony (IMCL holds a national ISP licence which will allow it to provide internet telephony nationally); National Long Distance providers are now permitted to connect to ISPs through public internet etc. There has been extensive consultations going on between TRAI, the Government and the cable industry through the MSO alliance in which IMCL played a leading role, for further liberalization to enable the MSO’s to provide triple play (voice, video and data). IMCL performance IMCL expanded its cable network to new cities and towns in the North, West and South. It also speeded up digitalization of its network in those cities and towns which falls under the Government’s digitalization program and to TRP towns. It has put renewed thrust in expanding its Broadband/Internet business by reorganizing its marketing and technical operations. It plans to take advantage of the latest liberalization by the Government to enter the new opportunities such as IPTV, Headend in the sky (HITS) etc. Its ultimate goal is to become a triple play service provider in voice, video and data. IMCL has the unique advantage of having extensive fibre optic networks in several cities like Delhi, Bangalore, Mumbai, Ahmedabad, Vadodara and has plan to expand to other cities. With this strong infrastructure that has been built, IMCL is positioned to provide a full suite of services to its customers and is ahead of competition in this regards. Real Estate During the year, your Company has entered into an option agreement with a Developer to develop the property at Bangalore Navaratna Agrahare in the BAIPPA Zone near the new Devanhali Airport.. Your Company intends to encash the present land Bank to create business propositions with strategic partnerships and to undertake new projects by identifying good opportunities in this sector. Finally, as I promised in my last year’s report, your company will continue to look for new opportunities to incubate new businesses but will do so judiciously, after weighing all the risks factors. We will be able to announce plans for new initiatives in the near future. However, we need to proceed with caution during the present turbulent times. But we will ensure that we do not miss any good opportunities that may come along so that we maximize returns to our shareholders. | |
Thank you | |
Ashok P Hinduja Place : Mumbai | |
22nd Annual General Meeting, 24th September, 2007 Dear Shareholders, You will recall that in June 2001, with your support and consent, we had transformed our erstwhile Hinduja Finance Corporation Limited, a finance and equity trading company, into a technology company by merging it with one of our group IT companies and hiving off the financial activities. With this, we had repositioned ourselves as a convergence company, bringing under one umbrella, ‘technology’, ‘media’ and ‘telecom’ activities to form Hinduja TMT Limited. It was a timely move that gave our company excellent positioning for growth and stability. In the process, we incubated a number of fledgling subsidiaries in the media and entertainment sector as well as our holding in the telecom sector. In retrospect, our decision was right and timely and has benefited our shareholders greatly. Having achieved the objectives of incubating and nurturing our holdings and the subsidiaries to maturity, last year, we felt that time was right to unlock the value we had created in them. Accordingly, we disposed off our telecom holdings in Hutch at a very good valuation. This has generated substantial cash reserves to fuel further growth of our company. At the same time, our IT/ITES business had reached a critical mass with a strong global footprint. It needed to be freed to pursue an independent growth trajectory. Accordingly, IT/ITES business was hived off as a separate company under the name and style of HTMT Global Solutions Limited (‘HGSL’). The move has enabled its management to concentrate on strong organic and inorganic growth in the IT/ITES space without being diverted by the challenge of managing the media subsidiaries. Part of the resources generated from the sale of the telecom holdings have been transferred to HGSL to make BPO acquisitions overseas as well as to invest in significant organic growth, both domestically as well as overseas. HGSL is now positioned for rapid growth. Post the de-merger of the IT/ITES part of your company, the media subsidiaries dealing in content, broadband internet and distribution have been merged into IndusInd Media & Communications Ltd (IMCL) for greater synergies and cost efficiencies. The opportunities in the media/entertainment space are growing tremendously as a result of better regulation as well as the advent of new digital technologies. There is keen investor interest, both from financial and strategic investors in media today. At the same time, competition is growing by the day. Our management is fully geared up to focus on the changing environment to take advantage of the new growth opportunities as well as to maintain our leading position and first-mover advantage. We plan to expand and grow our distribution, content as well as broadband activities during the coming years. Finally, the financial resources available with our company from the sale of our telecom holding will be used to judiciously to invest in new growth opportunities, plans for which are in advanced stage of preparation. We will be soon announcing the launch of these new initiatives. We are confident your company will once again incubate and bring to maturity these new opportunities to greatly benefit our shareholders. Business Environment: Media With Indian economy growing at 9% in year 2006-07, the business scenario in the country could not have been better. Media and Entertainment (M&E) industry has shown tremendous growth with the rising purchasing power of the people. Adding to this positive outlook is the fact that the wallet share of average Indian is increasing for entertainment. The M & E industry is expected to grow at a cumulative growth of 18 per cent over the next five years. The industry is also witnessing a major shift in terms of technology and a redefinition of the way media is delivered and consumed. The introduction of CAS has brought about much needed transparency through the advent of addressability. TRAI has also made public the plans for digitization through CAS for the next 55 cities. Your company has a strong presence in areas notified and are geared up to meet the demand. The TV distribution market is also expected to grow at 26 percent CAGR with increase in both, number of pay TV homes and increased subscription rates. This will be a huge opportunity for tapping the market on the digitized platforms. As a result of increased viewer-ship, the market will witness launch of several new channels, some focusing on specific genre and class of viewers. Even after having close to 300 channels already, industry believes that there is space for existence of more such channels. With the merger of media entities into IMCL, a multi-dimensional business strategy will be employed to exploit content through existing cable distribution and through other channels. This has been a turnaround year as far as performance of our media subsidiary company is concerned. We produced better than expected results riding on the strength of overall business environment, introduction of CAS and divestment of telecom stake. With a strong technology backbone, a world-class infrastructure and dedicated highly skilled people, your company is ready to rise on this curve and emerge as a leading enterprise in all the aspects. With a vision to provide end-to-end solutions, your company completed the restructure of media business, providing opportunity to exploit value added services and triple play i.e. telephony, video and data. Incablenet’, the distribution arm of IMCL, has the distinction of offering the highest number of channels, hi-speed internet over cable, voice over internet protocol and other value added services. IMCL broadband business performance was better than last year and is expected to do much better in the coming years backed by a strong foundation of 6000 kms of fiber optics network and a national level ISP license. With the strong equity of the Company and substantial capital resource available the Company is prepared to fund further growth in technology and installation of highly sophisticated digital technology. This will be needed in view of Government plans to digitize the top 55 cities in next four years. I take this opportunity to thank all stakeholders and our customers for the trust reposed on us and to all the employees for their cooperation and commitment. | |
Yours sincerely, | |
Ashok P Hinduja Place : Mumbai | |
21st Annual General Meeting, 25th September, 2006 Dear Shareholders, Emerging as a Global Enterprise The year 2005-06 was exciting and eventful for your Company, which, by enlarging its global delivery footprint and blending its core competencies residing in its various units, transformed itself into a global enterprise in the IT/ITES-BPO space. In line with its vision of becoming a Global Player and leader in its core business, the Company grew in terms of number of clients, employee size and fortification of its delivery platforms in India, Philippines, USA, Canada and Mauritius. I had informed you in my last year’s message that we planned to make HTMT a Global Delivery IT/BPO Company. Helped by our acquisitions, we have largely achieved this aim by setting up delivery centers in USA, Canada, Philippines and a Business Continuity Centre in Mauritius. Our new business delivery model, creates value for our Global clients and also positions your Company as a truly Emerging Global Enterprise. Business Environment The Indian economy with a GDP growth of 8% in the year 2005-06 remained one f the fastest growing economies of the world, with virtually all sectors registering an all round growth. The ITES-BPO industry globally has grown at a robust pace and in India, the growth has been even more impressive. Independent research shows that the Global BPO market is expected to touch US$ 55 billion by 2010, with India expecting to garner at least US$ 25 billion. The Industry is also expected to witness substantial consolidation in the near future. This will be driven by the need to gain scale, consolidate service lines and acquire capabilities to move up the value chain. Your Company is also looking at this route to achieve its long-term growth plans-resources being less of a constraint in today’s scenario. The recent security lapses with a few players in the industry highlight the need for ramping up security measures to sustain client confidence. Security and quality continue to play a major role in your Company maintaining a leadership position in the BPO market and this has resulted in good client references and endorsements as also objective validation of its competitive strength. Your Company got accredited for US-HIPAA (Health Insurance Portability and Accountability Act) compliance during the year under review to meet the security requirement of its health insurance clients. The Company is also closely monitoring its compliance with the stringent security standard BS 7799. While India does not have specific laws on privacy and data protection, there are proxy laws and other indirect safeguards that provide adequate protection to companies offshoring work. The Government of India is proactively strengthening the existing legal system to cover data protection issues to enhance the confidence level of outsourcing foreign Companies. According to NASSCOM Strategic Review 2006, India has the single largest pool of suitable offshore talent-accounting for 28% of the total suitable pools available across all offshore destinations and outpacing the shares of the other destinations-making it as a premier destination for offshore technology services. It is essential that adequate regulations are in place for maintaining quality in our educational institutions so that the supply of skilled resources to the pool is not affected. The Government also needs to cope with the imbalance in geographical distribution of technical institutions, which are now concentrated in Southern India. Performance HTMT continued with its quest to be a global force in the BPO industry. We at HTMT believe that in order to continue to be a force to reckon with, your Company needs to have a low client concentration and enhance your Company’s depth in domains, technologies processes and talents. It is this strategy that guides HTMT in all activities and processes on a day-to-day basis. With this vision in place, your Company was able to achieve a top line growth of 53%, thanks mainly to Team HTMT with its innovative ideas and practices coupled with their determination to achieve. Your Company also leveraged its association with the Hinduja Group and their capabilities substantially during the year, as relevant. IndusInd Media and Communications Ltd. (IMCL), the media flagship arm of your Company, spearhead the reintroduction of Conditional Access System (CAS). CAS enables customers to pick and choose for individual channels of their own choice and involves installation of highly sophisticated digital technology and provision of Set Top Box to customers. The Government of India suspended the implementation of CAS and after a prolonged legal battle a notification has been introduced to ensure that CAS is reintroduced from January 1, 2007 compulsorily in certain metros. IMCL is working with other members of the MSO Alliance with TRAI/Government to ensure fair and transparent regulations enabling MSOs to compete with emerging new technologies on a level playing field. HR Policy The HR polices of your Company kept pace with the requirement of the industry. The stock option plan announced by your Company was a result of such positive HR initiatives. The newly introduced incentive plan also motivated employees to perform their best and surpass their targets. The pro-active policy has led to widening of the bandwidth of distributed leadership, growing nimbleness to manage change, deepening of insight into client businesses and rapid assimilation of their processes. Above all, it has helped to create a fair and meritocratic organization. Outlook The global BPO business is estimated to grow unabatedly in the years to come as the best Companies look to outsourcing as a tool to win, innovative faster and more cheaply in order to grow large and gain market share. The abundance of skilled resources, cost benefits and highly quality delivery will continue to be an advantage for countries like India and Philippines to attract the outsourcing business. The outsourcing opportunities are now extending beyond the lower and customer relationship management services and back office work into high-end knowledge process outsourcing. Companies like yours, with high management bandwidth, capability to invest significantly and ability to ensure consistent quality will capitalize on the emerging trend and enlarge their global delivery footprint. As already announced, your Company is shortly poised to start restructuring all its businesses initially by demerging its BPO/ITES division. Your Company has also during this year divested its valuable stake in Hutchison Essar Limited. This has unlocked shareholders value and will enable your Company to strengthen its existing core businesses and grow rapidly through organic and inorganic growth. In the circumstances stated, your Company possessing world-class infrastructure supported by deeply committed and highly skilled people will emerge as winning global enterprise with centers of excellence in different countries. I take this opportunity to thank all stakeholders and particularly our customers for the support extended to, and faith reposed in, the HTMT team. I also wish to thank all my colleagues for their relentless support and hard work throughout the year without which we would not have progressed so far in such challenging times. | |
Yours sincerely, | |
Ashok P Hinduja Place : Mumbai | |
20th Annual General Meeting, 27th September, 2005 “Unlocking world-wide growth’ potential and building a global brand Dear Shareholder, 2004-05 was a year of investments, scaling up, consolidation and structural metamorphosis for your Company. During the year, HTMT morphed into a Global Delivery IT/BPO Company with the inclusion of Philippines, USA, Canada and Mauritius in its delivery Platform.This was made possible by our all cash 100% acquisition of two companies at a cost of over US$ 22 million in phases (US $ 10 mn in 2005 – 06). As a result,HTMT’s global IT/BPO revenues increased by 43% to Rs. 201 crores from Rs. 141 crores in the previous year. IT/BPO business environment The industry is expected to get to US$ 50 bn in service exports by 2008 with 1.2 mn qualified people employed, the annual supply of people being 180,000.The domestic market will be US$ 20 bn and may require half-a-million people. Issues like Security,infrastructure and telecommunication should be focused on for the continued health of BPO industry in India. Transformation into a Global Company The acquisitions of Source One Communications Inc,USA and Customer Contact Centre Inc, Manila added many marquee clients to HTMT’s customer list,strengthened its front end in USA and expanded the Company’s canvas of domain expertise from just Telecom, Insurance and Discrete Manufacturing to now include BFSI, Pharmaceuticals, Consumer Electronics, Household Products, Energy and Utilities. Strategic entry into Domestic BPO space Investment in infrastructure and new acquisitions HTMT has also initiated implementation of prestigious project for creating an IT park named ‘HTMT Cyberpark’ in Manila, Philippines. HTMT Cyberpark is proposed to be operational by this year and will have a total capacity of over 2,500 seats. Your Company’s inorganic growth continued with the recent acquisition of Immaculate Interactions,a Bangalore based call center specializing in outbound/telemarketing space. Media subsidiaries and other investments HTMT’s 3.45% effective financial stake in the consolidated Hutch entity, Hutchison Essar Ltd, one of India’s most valuable telecom companies will unlock enormous wealth for the shareholders. Your Company is in talks with various financial / strategic investors in this regard. It will be the endeavor of your Company to maximize its returns from this investment and will divest the stake at an opportune moment. With the real estate market doing well, the value of your Company’s 47 acres land at Bangalore near the proposed international airport road has grown significantly. The construction of new international airport will give a further boost to the value of this property. HR Policy Continued Emphasis on Corporate Governance Outlook I take this opportunity to sincerely thank the shareholders and the clients for the trust reposed on us and the employees for their unstinted co-operation and commitment. | |
A. P. Hinduja Place : Mumbai | |
19th Annual General Meeting, 28th September, 2004 ‘Linking intangible assets to strategy & performances’ Dear Shareholders, The year 2003-04 was exciting and eventful for your Company, which was consistent in delivering solid performance. The total revenue for the year increased 42% to Rs. 163 crores from Rs. 114 crores in the last fiscal. The net profit at Rs. 76 crores showed an increase of 22% over the previous year. The Company’s main ITES-BPO business grew 52% outpacing the Indian industry performance of 46% in that segment during the year. The consolidated revenues of HTMT and its subsidiaries rose 32% from Rs. 217 crores last year to Rs. 285 crores. The consolidated net profit for the year at Rs. 84 crores represented an increase of 44% over the previous year. Business Environment The market and opportunities for your Company’s core business of IT and ITES continue to be very good. Potential customers for HTMT’s services operate in tough competitive environments and our value addition through outsourced work in terms of cost arbitrage, quality process flow and response time is crucial for their competitive positioning and in some cases, survival. This has been an enduring driver of business even in the face of visible constraints such as backlash against outsourcing, slow growth and non tariff business in our major market, USA. Another positive factor evident as well as espoused by experts, Industry Associations such as Nasscom and leading research firms such as Gartner, is the widening spread of services being offered and performed by Indian Companies across Industry sectors, practices and geographies. Besides, Companies such as HTMT have also enhanced the depth of their expertise and knowledge from domain, technology and process viewpoints. These positive drivers enable us to look forward to the future with great optimism even though it will be tempered by short term setbacks and constraints. Our over dependence on North America as a market is an area of concern which we are addressing through stepping up our marketing efforts in Europe and elsewhere. From a delivery viewpoint, India is expected to be the key offshore outsourcing hub in Asia as compared to other countries, notably Philippines and China in 2004-2005. For instance, India’s large pool of highly skilled, English speaking work-force with about 2.1 million graduates each year compares very favourably (vs Philippines of 380,000 per year). Domain knowledge, process expertise and clients’ perception of dependability of the service provider are the key selection criteria of BPO customers and India has excelled in these aspects. It must however be said that in purely Voice related work, Philippines has been doing well and today represents a smart alternative to the customers. Customers also look for diversification of global outsourcing locations to increase cost competitiveness and ensure business continuity. Your Company will continue to fare well in meeting the selection criteria. Acquisition of Call Center at Philippines Your Company has now acquired the controlling interest of Customer Contact Center Inc. (c3) in Manila, Philippines which operates a high quality Call Centre of 600 seats for global Fortune 500 customers. c3 has excellent infrastructure facilities to ramp up its seating capacity from 600 seats to 1100 seats. This company’s financials will be consolidated with that of HTMT from the current year onwards. HTMT has now become one of the select few BPO companies having service delivery capabilities outside India. The domain expertise of the c3 in banking and financial services, consumer electronics and energy sectors will be a shot in the arm of HTMT to jointly market their services to a wide range of clients looking for business derisking through geographical diversity. The combination of transaction based services from India and voice work proficiency from Philippines could be a potential winning strategy for your Company. Capacity Expansion Your Company has taken on lease additional 80,000 sq. ft. premises at Bangalore close to the existing state-of-the-art 62,000 sq. ft. offshore development center to increase the capacity from 1050 to 2500 seats to meet the ever-growing requirements of clients. The filling up of the additional 1450 seats is expected to be completed by March 2005. As per the requirement of US based healthcare insurance client, 200 seat Disaster Recovery Center (DRC) has been set up at In-Center, Andheri, Mumbai. Your Company has sufficient cash resources to meet its expansion needs. HTMT’s Subsidiaries HTMT, alongwith its subsidiaries, operates in all three areas of Information Technology, Media and Telecommunication leading to real convergence play. While the Company is well on its way to achieve its vision of becoming a scale player in its core business of IT, the Media subsidiaries of the company are yet to perform to their potential. This is due to the unorganized structure and unprofessional nature of the industry and not because of any lack of efforts or commitment of resources or its employees. IndusInd Media & Communication Limited, a subsidiary of HTMT and India’s leading MSO (multiple system operator) has been making substantial investments in its business since 1996 for building extensive Hybrid Fibre Cable network and introducing high quality analog and digital delivery of Cable TV services and high-speed Internet connections in association with group company In2cable (India) Ltd. In the year under review, IMC invested in state of art equipment to make its network Conditional Access system (CAS) ready, based on a Central Law on CAS for metros. However, subsequent retractions on the implementation of CAS have meant this investment not yielding results in the year. It is hoped that the appointment of TRAI as a regulator will streamline the functioning of the industry thereby ensuring equitable returns to all stakeholders viz: broadcasters, MSOs, operators and subscribers in the business supply chain. While there is short term uncertainty in CAS implementation, we believe that over the long term, the digital delivery of Cable TV services through Set-Top-Boxes, which is superior in quality and broadband internet value added services at a reasonable cost should enable the subsidiaries to effectively meet the competition from new players and new technologies such as DTH and IPTV. The announcement of broadband policy by the Government is due shortly. It is expected that such a policy will stimulate the development of broadband products and services thereby improving the prospect of the subsidiary In2cable. Investment adding value to the shareholders The value of your Company’s investment in Fascel, the cellular partnership with Hutchison has received a big boost with the decision of Hutchison to consolidate its circle companies into one entity and go for an IPO. Their announced acquisition of Aircel will add further value to the investment. Your Company had invested in 47 acres of landed property in Bangalore off the proposed international airport road and the value thereof will also grow significantly with the airport now becoming a reality. Redefining Mission Mission and Vision statements set the general goals and direction for an organization. They help shareholders, customers and employees understand what the organization is about (Mission) and what it intends to achieve (Vision). While HTMT has set for itself the vision of becoming a scale player in IT business with focus on BPO space, a need was felt to redefine its mission after it became technology Convergence Corporation. Accordingly, a new mission statement has now been drafted in 3 inter-related parts service offerings, economic and social – for creating a new corporate concept of linked prosperity across the Company’s stakeholders and circulated among all concerned. You will find a detailed exposition of this in the Annual Report. Aligning intangibles with strategy The consistent growth in the Company’s revenue and profitability was the tangible outcome of the alignment of its three important intangible assets with its strategy viz: delivering differentiated value offerings to clients in the ITES-BPO segment supported by IT services. The three intangible assets are Human Capital represented by the Company’s people, Information Capital comprising its information systems, networks and technology infrastructure and Organization Capital encompassing its culture and leadership encouraging staff empowerment, knowledge sharing, teamwork and belief in its value system. In addition to solid financial performance, alignment of the intangibles with the Company’s strategic goals has enhanced its internal processes most critical to creating value for customers and shareholders. Outlook Gaining control of c3 will reinforce the capabilities of HTMT to increase scale and cost effectiveness, enter new markets, customer segments and regions and, above all, offer geographical diversity to clients. The combining and leveraging of resources – human resources (intellectual capital, for instance), brand names and technological, physical and financial resources will generate reciprocal synergies that will enable the two companies to work closer together, evolve joint marketing strategies and execute tasks through iterative knowledge sharing process, propelling HTMT closer to realization of its vision to become a scale player in IT business. The Company is on the look out for further opportunities of acquisition in BPO space and in IT services segment. HTMT is also keen to grow IT services business and enhance the share of the business in its total revenue and upgrade its intellectual capital through Research and Development. With innovation as a distributed capability across the Company and co-creation of value in partnership with clients as its goal, HTMT will continue to inspire the confidence of the clients for its getting steady flow of new business. I am sure that the challenges of business growth will spur the employees of the organization to organize and contribute the best of their energies and skills and help us win. With this confidence, I sincerely thank the shareholders and the customers for the trust reposed in us and the employees for their unstinted co-operation and commitment. | |
| A. P. Hinduja Chairman | |
| Place : Mumbai Date : 25th August, 2004 | |
18th Annual General Meeting, 29th September, 2003 ‘An obsession with winning across all levels & functions’ Dear Shareholders, HTMT delivered one of its best performances in 2002-03. It posted record growth in its total revenue, IT income and profits. The total revenue increased by 57% to Rs.115 Crores from Rs. 73 Crores and IT income by 82% to Rs. 100 Crores from Rs. 55 Crores in 2001-02. Our core values of customer focused service, quality, dependability and people empowerment constituted the underlying DNA that made us achieve these healthy results and propel us closer to realize our vision of becoming Scale Player and Leader in Information Technology. The Company has also attained success in developing differentiation finger prints that distinguish it in areas like strong process capability, cost effective delivery, innovation, infrastructure and execution. The consolidated revenues of the Company & its subsidiaries posted a growth of 32% from Rs. 164 Crores in 2001-02 to Rs. 217 Crores in 2002-03. The net profit rose by 86% from Rs. 31 Crores to Rs. 58 Crores. The growth in the businesses of the conglomerate was due to their being closely related and capturing synergy in operation. Business Environment The Indian ITES BPO industry has shown remarkable growth in capacity in the last two years. The setting up of captive centers by MNCS, emergence of venture funded third party ITES firms and established software companies getting into ITES arena are fundamentally changing the competitive landscape in the industry putting pressure on margins. Appreciation of Indian Rupee vis-à-vis US Dollar, continued downturn in the global economy, competition from countries like China and Philippines and geo-political risks and protectionism as also backlash against offshoring work to India are the other threats looming large on the horizon. However, worldwide spending on BPO services are projected to grow at an overall compounded annual growth rate of 11% to US$ 1.2 trillion by 2006. Since India has barely scratched the surface of the business on offer and the key driver for BPO activity has been cost reduction, the long-term potential of the industry in general and companies like HTMT in particular remains robust. HTMT also has made strides in securing fresh orders in the IT services space. Our IT enabled services capability supported by technology and domain expertise in IT services will enable us to extend new sets of service offerings and end-to-end solutions. Governmental Support India has made steady progress in the post liberalization period, thanks to several initiatives taken by the Government to strengthen the IT, communication and entertainment infrastructure. Business Environment Governmental Support Considering the ever increasing contribution of IT and ITES industry to the growth of Indian economy, the Government should create a conducive regulatory environment for exports and further strengthen the infrastructure and manpower base. The Conditional Access System (CAS), which has been made mandatory by the Government, will lead to the fostering of an equitable and transparent relationship between the four parties involved in television transmission and distribution process viz: broadcasters, MSOs, local cable operators and consumers. CATV industry has been demanding tax benefits available for telecom infrastructure providers to reduce the burden on consumers. The temporary reduction of import duty now granted on set-top-boxes to 5% till 30th September, 2003 is a step in the right direction. It is hoped that the reduction in duty would be made permanent in the interest of consumers. Subsidiaries and Associates The purpose of bringing the privately held media and telecommunication businesses under the umbrella of HTMT was to make the Company a real convergence play and unlock the value latent in the businesses to create wealth for its shareholders. Kudelski SA, Switzerland has recently agreed to take 2.41% in the equity of HTMT’s flagship subsidiary viz: IndusInd Media and Communications Limited (IMC) for about US$ 12 million, giving IMC a valuation of approximately US$ 500 million (Rs.2300 crores). Nagravision, Kudelski’s subsidiary, will become a technology partner with IMC and supply its state of the art conditional access system. HTMT holds 62.07% of IMC’s equity through its fully owned subsidiary InNetwork Entertainment Limited. The Company’s associate, Fascel Ltd., the largest cellular services provider in the Gujarat circle is growing from strength to strength. The recent sale of Kotak Mahindra’s 11% stake in Fascel at Rs. 92 crores reported some time back to provides a benchmark valuation of Rs. 169 crores for HTMT’s 20.2% effective stake in Fascel, which was acquired through share swap on merger of a privately held Hinduja Group company with itself in 2001-02. The recent improvement in prospects of cellular industry coupled with the revival of capital markets will further enhance the value of this investment. The Company’s fully owned internet subsidiary, In2cable (India) Ltd and IMC, are in the vanguard of the revolution of utilizing IMC’s broadband cable network and making high speed broadband internet connectivity an utility service like gas or electricity which, instead of delivering power, will deliver on-line entertainment such as music and movies. | |
A. P. Hinduja Place : Mumbai | |