MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW With maturing business models and advancing technological innovations, there is a gradual shift towards nimble vendors who focus on delivering solutions to address complex problems. Technologies such as Cognitive Computing, Big Data Analytics, Natural Language processing, Cloud Computing, Mobility and Bots (also known as web robot) are gaining inroads into the enterprise applications market in a large way. Traditional enterprise vendors are playing a catch up game as Disruptive Innovators take the center stage. During the year 2016, Ramco Systems set up a Co-Innovation lab - The MRO Lab in Singapore, with Air France Industries KLM Engineering & Maintenance ("AFI KLM E&M") as the i rst anchor partner. Supported by the Singapore Economic Development Board ("EDB"), the MRO Lab combines engineering and research talent from Ramco. Being chosen as the Tech Innovation partner by market leading MRO was a true testament to the capabilities and strength Ramco and its offerings had to offer. Not just partners, even customers have been heaping praises. The winning of ISG Paragon Awards for Innovation for implementing record digital transformation at Norske Skog Australasia, was an icing on the cake. Our home-grown solutions have been witnessing good uptake across all markets with the addition of clients like Australia based Coffee pioneer, manufacturer and supplier - FreshFood Management Services, Aviation & Defence major - Cobham Aviation Services, Philippines based AAI Worldwide Logistics, Malaysia headquartered Luxury retailer Valiram Group, Taipei-based Far Eastern Air Transport, among others. Apart from new order wins, we created history with record time implementation and go-live of Ramco Aviation Suite at Malaysia Airlines. Our geographical revenue sbrad continues to be a healthy mix, with 74% coming from markets outside India. Newer markets such as Australia have shown good uptake contributing 11% to the overall revenue. APAC (including ANZ) leads the pack with 29% revenue. In addition to the ISG Paragon Awards, we also bagged some brstigious global accolades and awards like HR Vendors of the Year 2015 in Singapore, Malaysia and Hong Kong; CIO Choice Awards in India, and recognition by ARSA (Aeronautical Repair Station Association) as Preferred Next-Gen MRO IT Vendor. The net profit after tax for the year stood at USD 6.03m (Rs 39.2cr) recording a 189% growth over the brvious year. The revenue showed a healthy growth of 25.4% in constant currency terms. (Constant Currency is measured by applying the exchange rates of the corresponding periods of the last financial year). The overall revenue of USD 68.94 mn for FY 201516 from various regions is depicted as below: On the domestic front, we continued to strengthen our foothold and have been adding marquee customers for ERP and HCM offerings. In India we added names like Sify Technologies, DHFL Pramerica Life Insurance (DPLI), MakeMyTrip among others. Regional Implementation teams were created to focus on delivering customer delight across projects. Thrust on partners to play a critical role continued with business being driven through the partner ecosystem. ASEAN showcased strongest growth across regions clocking 25% YoY growth in revenue... From one of the largest conglomerate of luxury and lifestyle brand retailers, Valiram Group, to Taipei's regional carrier, Far Eastern Air Transport, the region has garnered wins across product lines. The ability to cover most parts of APAC Payroll on a single platform with Mobility and future-ready Innovations (such as Mail it) has been a game changer in attracting global organizations who are looking at consolidating their multi-country payroll on a single, scalable cloud platform. With uber-cool features, Ramco's complete, yet refreshingly simple HCM has been the poster child of APAC HCM market winning 6 awards for Best HR Management Software, Talent Management Software and Payroll Software. On ERP front, Logistics ruled the way adding marquee names in Malaysia, Indonesia and Philippines. Middle East & Africa on the other hand, showed great progression contributing 17% to the overall revenue. This year, we acquired some very brstigious clients in the region including GE, Global Indian International School, JumboForce, RSA Logistics, amongst others. We soft launched Ramco HCM, for the US market, at the HR Tech Show in Las Vegas in October, last year. With this, all three offerings from Ramco are marketed and sold, globally. Americas contributed 18% to the overall revenue. The initial focus has been on getting onboard local advisors and partners to help sbrad the brand message wider. The key is to get a foothold in the market which will then feed further growth. On Aviation front, last year witnessed us further strengthening our portfolio when we entered into partnership with technology leaders like GAINSystems and Aeroxchange. Some of our long-standing customers like Ornge, AMGH, Air Methods also chose to upgrade to the latest version of Aviation's next-gen solution. With the addition of Europe's leading MRO operator, Ingenierfa Semasa, and Scandinavia's leading Helicopter MRO provider, Patria Helicopters AB (PHAB), the region continues to be a key market for Ramco Aviation Suite. Not to miss the strategic partnership inked with Europe's leading MRO, Air France Industries KLM E&M for setting up the i rst co-Innovation lab in Singapore. Australia has recorded 249% growth in revenue over the brvious year. The year witnessed the addition of industry leaders in the region, like PayPartners, FreshFoods Management, Cobham Aviation Services, a tier two 3PL company and the award-winning installation of Ramco ERP at Norske Skog Australasia. Challenges While the recurring revenue model of SaaS (Software as a Service) promises a good base in the long run, it also brings some challenges for vendor organizations. Customer maturity and longevity are critical factors which impact the success of the system in use. This continues to pose a challenge in the revenue model designed for cloud customers. The other issue impacting the enterprise market is the availability of quality talent at the right place and time. We have been investing in training Chartered Accountants and fresh graduates from Tier-1 B-Schools to combat the need to look at external talent to ill the talent gap. In addition to the Industry challenges, there are a few unique challenges we face as an organization. The force multiplier model we have developed is yet to mature and take off. We understand the importance and need to have a robust partner network. This is an area we are investing heavily in building capability and strength. The dependency on certain markets like ASEAN and MEIA is an area of concern in the long run. While we have all the ingredients for a successful run in US & Europe, we are yet to make a big dent in business in these markets. One of the key reasons for this is also the intense competition and high cost of marketing. Unlike Silicon Valley based cloud companies where 'being in debt' is a norm; we have tightly controlled spends in order to remain 'debt free'. Opportunities The year 2015-16 was yet another year of substantial growth. While our Cloud based HR software witnessed robust growth across geographies, the highlight was the launch of HCM solution for the US market. While features like Mobility are a given, our efforts around moving to a Zero UI has paid off well. Well before BOTS became a tech buzzword, Ramco launched its Mail it feature which enables users to transact with the application without requiring to Login. Our thrust on delivering Digital Disruption with our Innovation has helped us get desired attention in the market. Under the ERP umbrella, we identified two niche segments to proactively focus and build expertise on - Logistics Software and Enterprise Asset Management (EAM). Our market intelligence showed that there are umpteen Supply Chain software available in the market but not many built to address the Logistic Service Providers segment. The growth of the e-commerce and uberization of fl eet has led to this sector looking for technology to get better visibility and control over operations. Ramco Logistics Software is well positioned to address this market need. Also, as the Logistics industry functions with wafer thin margins, cloud technology is a great value differentiator. Innovation has been the buzzword on Aviation front, too. The aviation MRO industry has been taking major improvement steps in productivity, at a time when air travel continues to rise and costs are set to fall further, with the recent plunge in crude oil prices. To address this, Ramco Systems, with Air France Industries KLM Engineering & Maintenance as the first anchor partner, recently launched an engineering lab in Singapore - the first of its kind in Asia. Supported by the Singapore Economic Development Board, the MRO Lab combines engineering and innovative research talent from Ramco. The lab is an essential platform for the softer elements of the aviation industry, where employees can work on next-generation applications, to develop intellectual property that can solve major problems, in back-end aviation. Partnerships and Alliances We continue to invest time, effort and money in developing our partner ecosystem. This year, we invested in buying 18.93% stake in cloud startup SmartMegh Solutions Pvt Ltd., Chennai (a boutique cloud f l rm with operations in India, ASEAN and Middle East). SmartMegh has been a partner of Ramco and the investment was aimed at further cementing the relationship. We also entered into a technology partnership with Qlik, India to offer 'Uber Cool' User Interfaces to Ramco's Analytics engine. Human Resources Human talent has been a key ingredient in our transformational journey. To achieve the radical growth and ensure alignment of human resources to the business goals, during the year 2015-16, we brought in a fundamental shift in our HR practices. With increased emphasis on talent management and greater focus on leadership development, during the year we continued to foster great minds across the globe and recruit niche talent through Tier I Engineering Campuses, B-Schools and Lateral Hiring. 35% of the total recruitment in 2015-16 happened through campus hiring. The average age of the workforce stood at 29 years. The total number of employees stood at 1,675, as on 31st March 2016. |