MANAGEMENT DISCUSSIONS & ANALYSIS (MDA) Financial Review The operating income during the financial year ended 31st March, 2015 stood at Rs. 2,58,20,000/- as against the total operating income of Rs. 3,05,76,000 in the brvious financial year ended 31st March, 2014. During the Year the Company has earned a net profit of Rs. 36,16,919 /- as compared to the net profit of Rs. 42,25,793 in the brvious year. The drop in net profit was on account of marginal drop in revenue during the year ended March 31, 2015. SHARE CAPITAL During the financial year 2014 -2015 the paid up capital of the Company stood at Rs. 1,13,27,42,219 (Rupees One Hundred and Thirteen Crore Twenty Seven Lacs Forty Two Thousand Two Hundred Nineteen Only) Equity Shares of Re. 1/- each. Further during FY 2012-13, the Company came out with issue of 90,77,85,000 equity shares with a face value of Re.1/- each at a brmium of Rs. 0.20 per equity share for an amount aggregating Rs. 10893.42 Lacs on a rights basis to the equity shareholders of the Company in the ratio of 9 equity shares for every 1 fully paid-up equity share held by the equity shareholders on the record date, i.e. on March 19, 2013. The right issue was opened on March 30, 2013 and closed on April 27, 2013. As on March 31st, 2015, the Company has utilized the amount of Rs. 8928.93 Lacs for the objects of the issue as stated in the Letter of Offer. INDUSTRY OVERVIEW FOR THE COMPANY & ITS SUBSIDIARIES 1. Mobile Handsets Market in India One of the subsidiaries of the Company, nexG Devices Private Limited (NDPL), is engaged into trading of mobile handsets business in India respectively. Mobile Handset Market Overview According to CMR's India Monthly Mobile Handsets Market Review, 1Q CY 2015, May 2015 release, the India mobile handsets market declined 15% in terms of overall shipments over 4Q CY 2014. Of the total 53 million mobile handsets shipped during Q1CY2015, 37% (19.5 mn) were Smartphones. Although Smartphone shipments also declined quarter-on-quarter, the decline registered was only 7%, as compared to over 18% in the case of the Featurephones segment. The following is the snapshot for Q1CY2015: • Samsung retains leadership in the India market; leads Smartphone segment as well. • Against a Q-o-Q -18% decline in Feature phone shipments, Smartphones manage to limit the damage to -7% Q-o-Q. • Samsung improves its market share, Micromax declines while Microsoft remains more or less static. • While Samsung, Micromax and Microsoft lead the market in that order, the third position in Smartphones is maintained by Intex in this quarter. As per CMR, with major announcements of new handsets and entry of some new brands happening in a big way in 4Q CY 2014, there wasn't really something very exciting in the market for customers that could push up sales in 1Q CY 2015. At the same time, change in duty structure and the consequent impact on the supply chain due to the Chinese New Year festivities contributed to the market contraction. From the perspective of handset brands, the interesting point to note is that Samsung has been able to garner a higher market share in featurephones during 1Q CY 2015 as compared to the brvious quarter. Samsung's share also increased in the Smartphones segment at 27.9%, up from 23.7% in 4Q CY 2014. Samsung's ability to add to its portfolio in all the major price segments within Smartphones, by launching new models in each of the entry level, midrange and high end segments of the market contributed to this increase. Market Share Movements At the level of individual brands, the CMR report states that Micromax, at second spot, registered a decline to 12.1% in terms overall mobile handset shipments, while in the Smartphones segment its market share was 16.2% as compared to 14% and 17.8% in 4Q CY 2014, respectively. While in 4Q CY 2014, Micromax was just behind by 1.2% compared to Samsung in the overall mobile handsets market and in the Smartphones segment the gap was 5.9%, in 1Q CY 2015, these gaps have increased to 6.4% and 11.7%, respectively. The significant gap in market shares in the Smartphones segment is the most critical issue for Micromax to address in the coming quarters. Possible reasons for this could be very few new models being launched by Micromax in the past year, and attempts to focus on a number of simultaneous marketing campaigns such as online sales and the Yureka subbrand. The third player in the market, Microsoft, on the other hand has been able to consolidate its position with 9.6% share in 1Q CY 2015, compared to 10.8% in the brvious quarter for the overall mobile handsets market. Within the Smartphones segment, Intex that emerged at third spot during 4Q CY 2014 continued to strengthen its ranking with a 9.2% market share in 1Q CY 2015, an increase of 1.3%. (Source: CMR's India Mobile Handsets Market Review, May, 2015 release) 2. BPO Industry One of the subsidiaries of the Company, DigiCall Teleservices Private Limited along with step down subsidiary, DigiCall Global Private Limited of the Company, are engaged into domestic and international BPO services in India respectively. Domestic BPO Industry Overview The Business Process Outsourcing Services industry has undergone a rigorous transformation; it has effectively grown to provide strategic partnership for clients today. It has surely left an indelible impact on the Indian BPO industry. The sector has rapidly evolved, in terms of expanding its verticals and geographic markets, attracting new customers, transforming from a technology partner to a strategic partner, thus cementing India's position as the brmier global sourcing destination. The fact that the gamut of services has seen a significant change with BPOs managing end-to-end services indicates the growing maturity of the industry. The industry has already begun moving from enterprise services to providing 'enterprising solutions' incorporating SMAC (Social, Mobile, Analytics and the Cloud) to create client impact, not only on cost, but revenues, profit margins and cash flows. Key Trends in domestic BPO Industry Growing adoption of outsourcing services by companies to even manage their core management process is giving a new perspective to the global sourcing industry. Every BPO Services is going beyond customer satisfaction to value added services and delivering customer services 24x7 with the help of secured social media networking platforms. As business is evolving, BPO industry is evolving with it - and the changes in the business world mean that today's BPO players should pose ability to increase business responsibility and control. On account of the resurgence in ecommerce based consumer businesses recently, BPO companies are also more focused on the domestic market. The e-commerce companies are expected to outsource their call center and customer care services to BPO/KPOs for faster and cost effective solutions. The stiff competition in the domestic consumer market is pushing these companies to focus more on the technology driven business offering. The growing demand for goods particularly among the India middle class, rising incomes and standard of life has led to the growth in this sector. Tier II & III cities emerged as the new centers for delivery of services, in fact many new tier II & III cities are emerging as delivery locations. India's competitiveness as the foremost outsourcing destination is being threatened by wage inflation, the rise of other locations, particularly the Philippines and China as alternative sourcing destinations. The changing market trends created more and more challenges to the global BPM sectors. Companies looking to build a satisfied and loyal customer base need to realize that only customer satisfaction does not drive customer delight, but by satisfying customers, companies can nurture long-term relationships and customer loyalty. Industry Outlook for Domestic BPO Future growth is expected to come from a combination of high value services, increasing non-linear play and further extension of the sector's cost proposition. There will be increasing demand for domain based BPO services. A number of sectors in India are also expected to outsource higher percentage of their non-core work giving boost to the domestic sector. Growing talent pool of India has the ability to drive the R&D and innovation business in this space. The BPO industry is likely to be moved by two trends over the next few years. One is in the approach to outsourcing, with multi- sourcing becoming more brvalent, and the other is in technology where brviously specialist services are now becoming commodity based. The latter is especially noticeable in the current trend to cloud hosting. (Source: Infotechlead.com & <http://www.infotechlead.com/2013/12/19/outsourcing-trends-2014-bpo-companies-increase->focus-domestic-market-17407) 3. Mobile Television Or Mobile Video Streaming Business One of the subsidiaries of the Company, Digi Vive Services Private Limited is engaged into mobile video streaming services in India. Mobile Video Streaming Industry Overview Globally, video consumption has grown rapidly to make it one of the largest categories on PC-Internet. Mobile has also begun to play a significant role in video consumption across the world with over 15% of the total video consumption already moving towards mobile devices in countries like Japan and UK. In the US, most players in the top ten offer free ad-supported videos through varying business models. There are three types of business models which have been successful in the videos space - Ad-supported user generated content, Ad-supported brmium content and Paid brmium content. Fermium models also exist where a part of the content is offered for free (generally ad-supported), and the remaining part is offered for a fee. Key Players in Mobile Video Streaming Industry While players like YouTube and Vuclip have developed a strong position in the online video distribution market in India, a significant quantum of local Indian content still remains to be digitized. This brsents a large opportunity for local players who can build a differentiated position on the basis of their content catalogues. Paid brmium videos in India originated from telcos who offered mobile TV services to their consumers through a subscription model. The key players in the industry includes Apalya (a portfolio company of Kalaari Capital, IDG Ventures, Qualcomm Ventures and Cisco Ventures), nexGTv, Sony LIV, Hello Tv, Ditto TV, Hotstar (a venture by Star group) and Zenga TV. Key Trends in Mobile Video Streaming Industry While larger global technology platforms dominate the list of top video websites (globally), a top-10 ranking by the number of ads served has as many as five video ad networks/exchanges in it. Video ad networks improve targeting capabilities and enhance awareness among advertisers. Video advertising is rapidly emerging as a substitute for brand advertising on TV due to the similarity in consumption and delivery patterns of these advertisements (with the introduction of br-roll, in-roll and post- roll advertisements in online videos). While brmium content providers attract brand advertisers directly, ad networks play a significant role in helping publishers with semi-brmium and non-brmium video inventory (a segment that is growing at a rapid pace) monetize their content. Opportunities and Outlook The strategy of Company and/or its subsidiaries has been towards investing in the new application and/or technologies related to Mobile on account of rising demand for data services/solution in 3G/4G era, and making investments in next generation businesses including Contents, Telecom and Media businesses which are expected to have substantial growth over the next decade on account of rising demand from online and e-commerce businesses. The Company would be working either directly or through its subsidiaries to take up existing and/or new projects to achieve the above. Threat, Risks & Concern The Company and/or its subsidiaries operates in a competitive environment and faces competition from both the international as well as domestic players and within domestic industry, from both the organized and unorganized players. However, no player in the industry is an integrated player. Adequacy of Internal Control The Company has a well laid out internal control system for the various agencies. M/s. Oswal Sunil & Company, Chartered Accountants, Firm Registration No. 016520N are currently the Internal Auditors of the Company. The internal control system is so designed to ensure that there is adequate safeguard, maintenance and usage of assets of the Company. Human Resources The Company currently has a strong technical team of more than 40 employees with experience in developing new applications and technologies required for supporting the Mobile Content distribution platform and we would like to thank each and every member of the MMWL family for their role and continuous contribution towards the Company's performance. |