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Dear Fellow Shareholders,
I am pleased to provide you detailed information on the performance of our Company for the financial year April 2011 through March 2012.
CyberTech performed well in this financial year seeing a growth in both the total revenue and net profits for the company. For the year ending March 31, 2012, we achieved consolidated revenue of Rs. 573 million and net profit of Rs. 48 million. The consolidated top line revenue growth (+24%) and profit 243% compare positively to last fiscal year's (ending March 2011) of Rs. 463 million revenue and Rs.14 million profit respectively. On a standalone basis, our revenue from operations has seen an increase to Rs. 257 million from Rs. 168 million (March 11) representing a 53% increase in Indian Company revenues. On a standalone basis, our net profit was Rs. 51 million versus prior year's Rs. 48 million.
The year ending March 31, 2012 has seen modest rebound in the in the US business conditions. While the largest of the US companies have seen a full rebound of their revenues and profits, growth has been more muted in the mid tier and small business segments of the market. Majority of the company's revenues are generated in the United States and the slowdown of the US business conditions had adversely affected our performance in the prior 2 years. I am pleased to report that we have seen a rebound in our overall business. While the brunt of the US slow down occurred during the fiscal year ending March 2010, the Euro–zone continues to be in the eye of the storm. Europe has always been a lagging indicator of the overall market conditions, but majority of the clients of CyberTech tend to be mid–tier firms ($1–$4M range) and have significant European exposure. As I write this letter, I see belt tightening once again in the US with grave concerns that Euro–Zone will unwind. During the current fiscal period, stabilization and growth is seen in the IT markets across the US leading to increased revenues. We expect the market conditions to improve, but rather slowly.
While I cannot say that the business conditions will revert to 2008–2009 levels, I can assure that we are not seeing further downward pressure on our business. This is indicated by increased offshore revenues of the Company.
We have used this period of tough market conditions to invest our time in our Intellectual Property and Clients. Steve Jeske and I continue to reach all our clients and reaffirmed CyberTech's commitment to them. We have also refocused our IP, Solutions and Offerings, which are sharpened around client needs of OpEx reduction and a Zero Risk approach.
Most of the focus of the company during the current fiscal year has been spent on strengthening our business in all core areas.
Development of Deeper Partner Alliances. We have used the last one year to increase our strength beyond our direct client business by working on a deeper Alliances model. We have made substantial progress in our alliances with ESRI (www.esri.com), SAP (www.SAP.com) and Cisco Systems (www.Cisco.com). CyberTech is a Gold partner of ESRI. We are also working with Cisco Systems to help them in a variety of Public Safety and Service Provider markets.
Client Focus. I and Steve have invested our time personally by traveling extensively, building client relationship and developing executive relationships. The US subsidiary continues to be our primary front end providing sales and client partner management thereby driving deeper offshore focus in our company.
Development of Company Intellectual Property. We have made substantial progress in the area of IP Development and Solution building. We have won several Public Safety, Homeland Defense and Emergency Response implementations. Our GeoShield offering is being embraced by clients in US and India. We have also developed a SAP GIS Integration Architecture, CyberSERVE that has gained considerable market traction and excitement. We have started building several apps on mobile platforms and have a team dedicated to this effort.
Long Term Annuity Contracts. I can state that 90% of the company's offshore contracts are long term annuity oriented. This gives us visibility of the pipeline and has reduced revenue risk. It is our preference to build this book of annuity contracts over lumpy project business.
India Business. The Company has started winning several SAP and GIS projects in India. I expect this trend to continue leading to increased India revenues. We are targeting to grow Indian Domestic Business Operations to Rs. 300 Million in the next 18–24 months.
I have written for several years that one of my big focus areas was to resolve the complex income tax matter (10B applicability) that the company faced during 2002–03 timeframe. I am pleased to inform you that recently, the Mumbai Bench of the Income–tax Appellate Tribunal (the Tribunal), in the case of Cybertech Systems and Software Ltd held that customization of software amounts to 'production' of computer program and entitled for benefit under Section 10B of the Income–tax Act, 1961 (the Act). However, the Tribunal held that the interest income did not have direct nexus to the income derived by CyberTech from the business operations and therefore not liable for benefit available to Export Oriented Unit (EOU) under Section 10B of the Act. While this is good news and the company received refund order from the Income Tax, the Department is pursuing the same with superior courts. I cannot thank CyberTech's long list of well wishers that stood by the company during trying times to help us resolve this.
We continue to focus on the following long term objectives that I have laid out a few years back.
Keep the company debt free
Utilize the company's real estate assets to its fullest extent
Continue to focus on off shore oriented annuity engagements
Focus on business growth
Steven Jeske and I are fiscally conservative and consider CyberTech from a long term business holding perspective. As such the company is conservatively managed. The company's assets and liquidity, cash strength and zero debt give us great comfort during trying times.
Most of our India delivery leaders and many of the directors on the technical side of our business have all worked in the US for a decade. They understand US client needs and India delivery advantages. I take it as my primary goal for driving the sales and client satisfaction for the business.
I am pleased to inform you that your directors have recommended a dividend of Rs. one per share (10% of face value) for the sixth year in a row. We continue to enjoy the confidence of our customers resulting in opportunities that are adjacent in nature.
As I write this letter, there is Euro–Zone panic and uncertainty of growth in India with high inflation. While everyone agrees that this time around it will not be as bad as 2009, the general consensus is that the Indian market conditions will be slow. As a small company, our focus is unchanged. We will continue to deliver SAP Stabilization and Support Services, Public Safety and GeoSpatial Platform development and leverage our expertise as a core GIS player. I expect our revenues to trend upward in FY13. We have reworked the overall company strategy focused around Cloud Services, Location Analytics and Mobile Solutions and I expect to see significant growth in the next 2–4 years, subject to market conditions supporting us.
We have recently named Mr. Raman Subramanian as the Executive Director for the Company. Raman has worked with me for over a decade and stands for high ethics, exceptional work commitment and team building. I am excited about his new leadership position in the company. I am grateful to our Sales, Delivery Leaders of the company for their unstinted support to our efforts to enhance shareholder value. Our employees are our biggest asset and I wish to record my sincere appreciation to their dedicated efforts.
The company adheres to high level of transparency and corporate governance. We have an eminent roaster of Directors. I would like to thank my dedicated Board of Directors and our US Board representatives for their involvement, counsel and support. I thank Bansi S Mehta & Co, Chartered Accountants and Mr. Farook Irani Esq. for their valuable help. As always, I thank Mr. M.P. Bharucha of Bharucha & Partners for his friendship, help and counsel in many matters. I am grateful to Shri. B.V. Goud, Special Advisor to the Chairman for his substantial and tireless efforts to help our company. I thank all our clients for their continued support of your Company.
On behalf of the entire organization I thank you, my fellow shareholders, for your continued support.
August 4, 2012