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बिरलासॉफ्ट लिमि&

बीएसई: 532400  |  NSE: KPIT  |  ISIN: INE836A01035  |  Computers - Software Medium & Small

खोजें बिरलासॉफ्ट लिमि& कनेक्शन Mar 17
अध्यक्षीय भाषण साल : Mar '18

Dear Fellow KPites,

We completed another year of transformation for the Company amidst the fast-changing industry scenario and geo-political environment. I would like to use this letter to explain the industry and KPIT performance, the world as we see it today and our actions and plans for the years to come.

The year that went by

Overall Financial Snapshot

In FY18, our revenues grew by 14.8% in $ terms and the bottom line depicted a growth of 6.02%. In '' terms, the overall revenue growth stood at 10.3%. The services revenue showed a growth of 13.4% in $ terms, while there was a growth of 50% in the products revenue, albeit on a smaller base.

Our operating profitability for FY18 was similar as compared with the previous year. Having said that, we started the year with lower profitability margin than last year and showed improvement in the operating profitability quarter on quarter, every quarter.

We continued our focus on the Strategic Customers and are witnessing early results of the investments made by us over the last couple of years in account management. We are seeing larger deals and larger pipeline buildup from the strategic customers. When we started the year, we had laid down a goal of achieving a 10% growth in revenue with zero growth in headcount. I am happy to state that we achieved a constant currency growth of 12% with only a 3% addition in headcount. As a result, we could improve on the utilization levels and thus improve on operating profitability every quarter.

At the beginning of the year, we had laid down 4 priority areas to focus on viz. Growth, Profitability, Delivery Excellence and People & Processes.

Growth: The focus on industry verticals, strategic customers, technology investments and targeted new accounts has yielded us good results. Engineering, Digital and PLM were the major growth areas for us during the year. We also laid emphasis on alignment of practice and pre-sales in these growth areas and geographies which gave us a good growth trajectory during the year. Our technology investments channelled through Practice Development Forums (PDFs) and the CTO Organization have helped us create best-in-class, vertical focused offerings for our customers, feeding growth in the strategic customers.

Profitability: As you would recollect we had excess people as compared to the revenues generated, when we started FY18. Our goal was to bring the alignment between headcount and revenues after considering various factors like skillsets, geography locations, non-billable headcount and employee pyramid. I am happy to state that we made good progress on this front during the year and our headcount addition during the year was substantially lower than the revenue growth achieved.

Another area of profitability improvement was productivity increase and automation. We have in-house developed best-in-class productivity improvement and automation platforms based on self-learning and artificial intelligence algorithms which have helped us win new AMS deals with better profitability. We continued the rigor in cash flow during the year and ended the year with a healthy Net Cash Balance. We realize the importance of boosting the share of offshore revenues and increasing onsite billing rates and are focusing even more sharply on these areas to expand profitability.

Delivery Excellence: Over the last two years, we have invested in delivery excellence to ensure flawless delivery and enhanced customer satisfaction, which has yielded positive results for us. We increased the rigor on Multi Level Reviews (MLRs) and weekly cadence with the customers. We focused on enriched Program Management and continued improving the Risk Management Framework with clear documentation and communication with the customers.

People and Processes: We continued our focus and investments on people development and enrichment. KPIT Continuous Improvement Training Program is our flagship Employee Training and Certification Program focusing on developing technical, domain, process, project management and leadership skills. Over 8,000 employees covered as part of this program, with over 5,000 employees certified with their yearly targets of credit points. We brought in most of the enabling functions under the purview of continuous education, achieving 75% certifications at closure of the year. PACE (Program for Academic Collaboration & Engagement) is our university collaboration program to engage, attract and nurture young talent from campuses. We launched the KPIT EDx Platform, an online platform to disseminate knowledge anytime & anywhere. This platform will help deliver online content to PACE partners, customers and internal & external stake holders. GENESIS is our flagship Graduate Engineer Trainee Program across SBUs. Through this program we ensure that freshers go through a rigorous technical and soft skill training before they join the projects. We have extended GENESIS to US locations and the same is gaining fast momentum. Our other initiatives include PMDP (Project and Program Management certifications) aligned with international standard such as PMI PMP®, LMP (Leaders in the Making Program) focused on middle management, Think Digital and Higher Education Initiatives. Under the Higher Education Initiatives, KPIT and Coventry University collaboration for two programs - M. Tech in Automotive Electronics and MBA in Strategic Engineering Management has been awarded one of the most prestigious awards under the category of Outstanding Course Team during the Annual Excellence Awards to celebrate the 175th year of the Coventry University''s formation. On the process side, we are working on making processes simple, clear, nimble and non-duplicate, which is an ongoing process.

Technology and Innovation

Innovation has always been on the forefront of our business strategy. The KPIT CTO Function is our R&D arm and is responsible for Technology Incubation, Co-innovating with customers, fostering a culture of innovation not only within the organization but also in the business ecosystem and carrying out advanced research in collaboration with research labs and academia. We drive innovation by having a consolidated view of technologies across our organization and create innovative leadership offerings. In this regard, the CTO function focuses not only on turning ideas into viable offerings, but they work with delivery functions and customers to ensure first successful implementation of the incubated product, service or solution in the customer environment. KPIT''s Innovation Framework enables an environment conducive to free exchange of ideas and nurturing a culture of innovation within and outside the organization - among employees, academia, research labs, start-ups, etc. KPIT''s Innovation Council, a part of the Innovation Framework has on board, many experts from the industry and academia. The council is guided by Padma Vibhushan Shri Dr. R.A. Mashelkar and it serves as a forum to provide updates on the innovation related activities conducted by KPIT around the year. The KPIT CTO function is accredited as a research and development facility by the Department of Scientific and Industrial Research (DSIR) under the Ministry of Science and Technology. This recognition is a proof of our excellence in the research domain, successful technology demonstrations from time to time and strong connect with academia and research institutions.

The total number of patents filed by KPIT as at the end of FY18 stood at 58, including 53 patents with complete specifications. As at the year end, we have 40 granted patents across different geographies. Most of these patents are in the domain of electric and hybrid technologies, ADAS (Advanced Driver Assistance Systems), BMS (Battery Management Systems), Infotainment, VLSI (Very Large Scale Integration) and High Performance Computing.

FY2018 was the fourth year of KPIT Sparkle, a national design and development innovation contest for science and engineering students. The theme of the competition in this edition was ''Next Generation Energy and Transportation Solutions''. This year we received over 12,000 registrations from more than 600 engineering and science colleges. Highlight for this year was the increased participation from premier institutes (IITs, NITs) from 9 to 28. We also had participation from 63 of top 100 institutes across India, the list as published by the MHRD (NIRF rankings). Team Electrodes from Indian Institute of Technology, Kharagpur won the Platinum award of ''1 million, for their project Bacteria Powered Battery.

Digital @ KPIT

Over the last three years, we have been investing in digital technologies to create business solutions for our customers. With expertize and leadership in engineering, IOT is the leading area of digital for the Company. Today''s businesses function in real-time, integrated ecosystems, where quick decisions must be made based on a steady stream of information from sources like wearable devices, smart assets and intelligent machines. The complexity of integration has increased dramatically, but the expectations to provide access to intuitive, uninterrupted and safe technologies for operations, persist. KPIT is working with its customers to transform operational processes to deliver quick value, streamline operations, better manage assets and improve compliance with regulations.

Our digital approach to market concentrates on five major areas viz. Smart Factory, Asset Optimization, Supply Chain Management, Employee Experience and Digital Customer Experience. Business driven digital solutions are focused on connected manufacturing, intelligent supplier management, digital customer experience and digital marketing. The technology driven digital solutions mainly involve big data & analytics, middleware and integration services, cloud deployment, mobility solutions and testing & validation.

While we take these services to our customers, it is important that we change our own organization and help transform the way 12,000 employees perform their work. To spearhead our fast evolution as a digital organization, we created the role of the Chief Digital Officer (CDO) last year. It is important to create ''#Think Digital Culture'' amongst employees across all levels. For the concept of digital to be; ingrained into everyone''s minds within the organization, an overhaul in ideology, skill set and corporate ambiance is needed. To enable this, the CDO team has devised a well-constructed digital strategy that identifies and develops digital solutions to improve in-campus productivity, creates awareness of the power of digital using traditional branding techniques, partners with customers for key events that highlight our relevant digital competencies to the right target audience and enables up skilling of employees through focused workshops, trainings and expert talks. A digitally enabled workforce thus has set the tone towards improving people productivity.

The Year Ahead

Our growth over the last 6 quarters has been at the top end of the industry. We are a growth oriented Company and thus we are happy to get back on the industry leading growth path, though we will be focused more on profitable growth going forward. We have guided for a constant currency revenue growth of 8% to 10% during FY19 as compared to the last year. We believe our operational EBITDA Margin will be in the range of 11.5% to 12.5%. The actual reported EBITDA will be lower due to one-time restructuring (merger-demerger) related expenses in FY18. In the MD&A section of this annual report, we have a detailed note on the proposed merger and demerger scheme announced during the year.

In the coming year, we have specific focus on Customers, People, Technology & Innovation and Delivery Excellence. These four areas of focus would help us achieve better growth and profitability. I would like to spend some time explaining the thought process and the 4 initiatives we would pursue:

Customers: Growth is important, equally important is the value we deliver to the customer and the quality of the revenues that we generate. Majority of actions in this regard are:

1. Growth from Strategic Accounts (T40)

2. Growth led by focused practices

3. Opening of Named New Accounts

4. Large Deals with SBU(practices)/IBU (Industry Vertical) collaboration

People: We will continue to focus on people development and retention via emphasis on:

1. Localized Global (Glocal) Delivery Model

2. People Development - Cross Skilling, Certification, Up Skilling

3. Focus on Internship and Apprenticeship in India and global delivery locations

4. Becoming a H1 independent Company.

5. Top Block Performers Attrition Control

Technology and Innovation: Technology is at the core of everything we do. Innovation is a way of life for us. To further on technology and innovation we would focus on the following:

1. Technology Leadership through focused investments

2. Technology roadmaps for every focus practice

3. Technology roadmap for every strategic account

4. Deep relationships with customer CTO/R&D Head

5. Technology mentoring

Delivery Excellence: Since the last 2 years, we have created a centralized delivery excellence function to ensure on-time and flawless delivery. Delivery excellence will be achieved through:

1. Identification of high risk programs and added rigor in monitoring these programs

2. Increased customer experience/satisfaction through delivery excellence

3. Focus on in-time and in-cost delivery

4. Delivery led growth in strategic accounts

5. Rigor on Multi Level Reviews, weekly cadence with customers

The Years Ahead

The IT industry has been witnessing sweeping changes in the last couple of years and the traditional IT services market is shrinking. At the same time, there are many opportunities created with the advent of newer technologies, led by digital. In such a scenario, it is important for IT firms to be nimble and proactive. This is especially true for mid-sized firms. We believe it is necessary for mid-sized IT firms to create a niche for themselves and seek leadership in the areas they operate. With this thought process, we announced the scheme of merger and demerger in January of this calendar year. While we have detailed on the same in the MD&A section of this report, post the regulatory approvals, we will have two focused companies (One 0 mn Digital Enterprise Company and the other a 0 mn Engineering company focused on the automotive vertical), with a potential to succeed in their respective domains. We believe there is significant potential for value creation in both these companies. I am happy to say, we are progressing well on the regulatory front as far as the time lines are concerned. We have initialized the business familiarization process and leadership interactions for the first two levels of leadership for both the companies. I am glad about the similarity and comfort in the culture and values of the two organizations. I believe, the whole process to be over by the end of this calendar and am excited with the prospects for both the companies, going forward.

KPIT Mission & Purpose

Our mission is to become a Technology Company that cares. Our Aspiration is to create Technologies for a Better World. We envision a cleaner, greener, intelligent world, a world that is selfsufficient, sustainable and efficient. We provide technologies that help our customers make high quality, less costly products that use less energy or fewer materials. We strive to improve the state of the industries we serve, by making customer operations efficient using technology and thus create value for both the customer and KPIT. It is our mission to provide Technologies for a Better World.

We have returned to the growth way, which is in our DNA. I am confident of maintaining sustainable, profitable growth momentum going forward, because of a core, committed team within KPIT and continued support from stakeholders like yourself, over the years. I regard this highly and appreciate it thoroughly.

Warm Regards,

Sincerely yours,

S. B.(Ravi) Pandit

Chairman & Group CEO

स्रोत: रेलीगरे टेचनोवा

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