MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis of the financial condition and results of operations include forward-looking statements based on certain assumptions and expectations of future events. The Company cannot assure that these assumptions and expectations are accurate. Although the Management has considered future risks as part of the discussions, future uncertainties are not limited to Management perceptions. We encourage our shareholders to read the information brsented here in conjunction with additional information that we have furnished in the financial statements.FCS Software Solutions Limited ("FCS"), we develop and value critical business solutions that help organizations achieve optimal performance. A. Industry Structure and Developments The year 2014-15 has witnessed key policy reforms for the Indian economy, aimed at aiding growth revival and overcoming the structural constraints in the economy. We are a software Company and its various clients. Along with its subsidiaries, FCS provides IT services like e-learning, digital content services, IT consultancy and product engineering services. The industry structure in the IT sector has four major Categories. These are- • IT consulting services • Infra management • IT enabled services • Education IT Consulting Services Enterprises are increasingly outsourcing their technology and IT services requirements to global IT services providers who can deliver high quality service on a global scale and at competitive costs. FCS provides consulting services to various companies & corporations. Our Company provides information to in the area of technology consulting services, including software engineering, application development, network administration, client server design, business and systems analysis, database development and administration, network design and engineering, Web based solutions, software quality assurance, business process improvement, project management, and telecommunications. IT Enabled Services The services which make extensive use of information and telecommunication technologies are categorized as IT enabled services. The IT enabled services is the most important contributor to the growth of the IT industry of India. Some of the important services covered by the IT &ITES sector in India are - • Customer-interaction services • Including call-centers • Back-office services • Revenue accounting • Data entry and data conversion • HR services • Content development and animation • Data search • Market research Infra Management Infra Structure Management offers the full suite of tools and technologies across the value chain of data including Information Architecture & Strategy, Master Data Management (MDM), Information Life cycle Management, Data Quality, Data Migration and Data Integration. FCS offers a unique methodology for SAP projects, where clients have a full control of the projects. FCS runs a back office support system, with daily log reports on queries received from the customer, response time to attend to that, work done at our end, daily status reporting, version control, R&D efforts, etc. Education/ E- Learning E-learning helps employees to improve their performance and deal with fast-changing environments. At FCS, we develop and value critical business solutions that help organizations achieve optimal performance. As leaders in custom e-learning solutions, we deliver results to companies around the world and help them to achieve improved business performance through human capital management. We also apply our expertise to provide a suite of proven workforce solutions that improve our clients' productivity, efficiency and cost containment. B. Opportunities and Threats The global financial industry continues to pass through uncertainties. The tighter regulation to combat this uncertainty has led to protectionist tendencies in some of our markets. New projects continue to face budget constraints for IT investments as the focus is still on regulatory compliance. The volatility in currency exchange movements results in transaction and translation exposure. Increasing salary cost and escalating operation expenses creates brssure on margin. However for mitigating these risks FCS is trying to keep proper mechanisms at place. We believe that our strengths give us the competitive advantage to position ourselves as the leading global solutions and services company. We are able to undertake complex business and technology transformation initiatives that help our clients enhance their performance, increase agility and flexibility, reduce costs, and achieve measurable business value. We have continuously invested in broadening our offerings to span consulting, IT services and business process management. The operations and execution teams continuously watch for such developments and constraints to business strategy and plans. Strategy and operational plans are continuously recalibrated to minimize the impact of such threats to business objectives and goals. Evolution of Technology Outsourcing The nature of technology outsourcing is changing. Historically, enterprises either outsourced their technology requirements entirely, or on a standalone, project-by-project basis. In an environment of rapid technology change, globalization and regulatory changes, the complete outsourcing model is often perceived to limit a Company's flexibility and not fully deliver potential cost savings and efficiency benefits. Similarly, project-by-project outsourcing is also perceived to result in increased operational risk and coordination costs and as failing to leverage technology service providers' entire range of capabilities. To mitigate these issues, Companies are looking at outsourcing models that require their technology service providers to develop specialized systems, processes and solutions along with cost-effective delivery capabilities. C. Outlook The future is bright and we believe that with our vision for growth, we have the potential to achieve growth with our specialized software solutions. We have strong branding and an established customer base and need to market and sell more effectively to increase shareholder value. In order to increase our business we will strategize to increase business flow from existing customer and also tap new clients. We seek to provide value-added solutions by leveraging domain expertise and expanding the services offered to clients. D. Segment-wise / Product-wise Performance Due to global unrest and slowdown in the market, there is an adverse impact on company performance.The percentage wise revenue contribution of each segment is as below: 1. IT Consulting Services and BPO 2. Education/E -Learning 3. Infrastructure management IT Consulting and BPO This financial year IT consulting and BPO segment becomes major contributor in the revenue. 41% of the revenue has been derived from this segment out which 11% comes from BPO segment. The Company analyzes clients' requirements, develops the scope and finally proposes a solution. Thereafter professional implementation plan is agreed upon. Sometimes projects are loosely defined and are done in an ad hoc manner or involve client's managers to manage day-to-day work, they are done in Time and Material model. Education This segment have slight parallel to last year around 28% of its total revenue has been comes from education segment. FCS also provides training and education services to big corporates. In today's era, training of resources has become an essential tool for every corporate to train its employees. FCS has developed over 10,000 learning hours of content for various Corporate, Educational Institutes, and universities across the Country. Infrastructure Management During the Financial Year 2014-15 around 31% of its total revenue has been derived from Infrastructure Management segment. FCS has developed its infrastructure accordingly to cope with the increased demand of its services. The infrastructure management division provides hardware solutions, networking solutions, data backup & recovery, etc. These services are offered to different verticals such as banks and financial institutions, insurance companies and healthcare companies. E. Internal control systems and their adequacy The Company has disclosure controls and procedures in place that are designed to provide reasonable assurance that material information relating to FCS is disclosed on a timely basis. Management has review the Company's disclosure controls and concluded that they were effective during the reporting period. The Company's management, with the participation of CFO, are also responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance the reliability of financial reporting and the brparation of financial statements for external purpose in accordance with Indian GAAP. The Company also has a robust financial control in place through a combination of internal control and processes. The controls ensure that transactions are recorded in timely manner; they are complete in all aspects, effectively utilizing the resources of the company and safeguarding the assets. The company has a well reputed firm as the Internal Auditor. The internal audit function has been outsourced to a firm of Chartered Accountants, namely Mahajan Rajeev & Co., Chartered Accountants, having address at 206, Pratap Chambers II, 15A/44, WEA, Saraswati Marg, Karol Bagh, New Delhi-110005. The Internal Audit scope includes review of the procedure and policies in place as designed by the management across all functional areas, and assessing the internal control strength in all areas. The Audit Committee reviews the Internal Audit reports and the status of implementation of the agreed action plan. Internal control system of the Company is an effective system and contributes to safeguarding the Company's assets as well as the efficiency and effectiveness of business transactions, the reliability of financial information and compliance with laws and regulations. Also the Internal Auditor findings are discussed with the process owners and corrective action is taken as necessary. In addition to above controls, the company also has a strong Internal Quality team that works on Delivery Quality Assurance increasing operational efficiency, reducing delivery related risk and optimization of process. F. Financial performance with respect to operational performance The Company's total revenue from operations has been reported for the year ended as on 31st March 2015 is Rs. 7655.55 Lakhs and operating loss of Rs. 124.43 Lakhs. G. Investment in Subsidiaries We made several strategic investments during the past years aimed at deriving business benefits and operational efficiencies in subsidiaries. Refer to Annexure A to the Board's report for the statement pursuant to section 129(3) of the Companies Act, 2013 for the summary of the financial performance of our subsidiaries. H. Material developments in Human Resources/ Industrial Relations Front, including number of people employed Our culture and reputation as a leader in consulting, technology, outsourcing and next-generation services enable us to attract and retain some of the best talent in India. Our Professionalsare the most valuable assets of the Company. We believe that the quality and level of service that our professionals deliver are among the highest in the global technology services industry. We are committed to remain among the industry's leading employees.We have built our global talent pool by recruiting new students from brmier universities, colleges and institute in India, and through the need-based hiring of project leaders and middle managers. FCS has inbuilt HR strategic planning in its overall business plan. We have also made significant investments in hardware and software assets to boost our infrastructure capabilities. All these changes were incorporated to create a unique learning experience for our employees. I. Compensation Our technology professionals receive competitive salaries and benefits. We have a performance-linked compensation program that links compensation to individual performance, as well as our Company's performance. J. Cautionary Note The statements in the "Management Discussion and Analysis Report" section describes the Company's objectives, projections, estimates, expectations and brdictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those exbrssed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors. For and on behalf of the Board of Directors For FCS Software Solutions Limited Sd/- Dalip Kumar Chairman & Managing Director Place : California USA Date : August 28, 2015 |