On a consolidated
basis, your Company has maintained steady growth with Total
income of ` 2361.10 Crore. The
Consolidated Profit after Taxation
was ` 237.53 Crore reflecting an increase of 36%. Global outsourcing market
grew by 8.5% and the company grew by 9.5%.
Profitability was more due to increased profit margins
Companies vertical focus is in Manufacturing, Retail, Banking, Financial
Services and Insurance. Company has restructured verticals very recently to
provide end to end solutions of the vertical and also to gain domain knowledge.
The company has built strong capabilities in core areas of Application
Development, Support, Maintenance, Testing and Modernisation; Business Process
Management; Infrastructure Management; Enterprise Solutions in Oracle and SAP;
Business Intelligence; CRM; and the new age technologies that make up the Digital
Enterprise. Zensar’s infrastructure management business is now integrated with
main business with infrastructure management driving significant larger deals for
the company. Zensar is one of the top
MVS providers worldwide and only one of three headquartered in
India who renders this service, making it a one stop shop for all
infrastructure management needs (What is
the margins in this business??). Application development, mgmt and testing
business is larger in the revenue pie and trend is moving away from traditional
pricing to managed business where the pricing is outcome based. Company is Oracle Platinum Partner and SAP
gold partner. Company has presence in
22 countries globally. It has around
400+ customers. Delivery centres are in India, China, US,UK, Africa and
Amsterdam. Company has expanded into
SMAC area which it expects to deliver results. It is in the top 3 IT players in
South Africa. US continues to be major
growth area (75%) followed by UK (9%).
Manufacturing and
Retail form 60% of Zensars business with insurance showing some good signs of
growth. Onsite contribution is 68% and offshore is 32%.
Company is
focusing on diversification into platforms and domain solutions in addition to
application services. Attrition is around 14%.
Critical talent base forms 10% of zensar total employees. Application
management services forms 66% of the revenue and the rest shared between IMS
and licences.
Around 50% of the
assets are tied in working capital (Receivables and other current assets), 11%
in fixed assets. Around 27% is in cash
and short term investments with the rest being in other assets. So, around 70% of
the capital is used in direct business.
Operating cash
flow situation improved this year which was at 158.75 cr. Margin improvement is
primarily due to lower employee benefit expense growth and negative growth in
other expenses. Not sure if it is
sustainable or there is some non-linearity effect due to outcome based model.
There is no comment on the same. So, going forward the profit growth is likely
to be in line with the revenue growth unless the nonlinear growth model is
sustainable. Employee cost has increased
by just 2% which also looks unsustainable. Either this cost is likely to
increase which will decrease margin or attrition would get higher.
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