Chairman's Remarks

Chairman's Remarks

 Back to Investors

Dear Analyst,

It is my pleasure to highlight the business performance of the Sasken Group for the second quarter ended 30th September, 2016.

We must point out that certain statements made here or those we make subsequently in response to your queries concerning our future growth prospects are forward-looking statements. Please read the Safe Harbor clause in the second slide of our presentation for full details.

Let me begin by presenting our financials for the Second Quarter Fiscal 2017. In the Second Quarter of Fiscal ‘17 the consolidated revenues for Sasken Group decreased by 2.8% over the previous quarter to Rs. 118.40 crores. Consolidated Earnings before Interest, Depreciation, Taxes and Amortization cost for the second quarter fiscal ‘17 were Rs. 8.06 crores, a decrease of 57.5 % sequentially. Overall EBITDA in percentage for the quarter stood at 6.8%. Consolidated PAT for Q2 fiscal ‘17 was at Rs. 9.58 crores, down by 38.6% over the previous quarter. PAT margins for the quarter were 8.1%. Consolidated earnings per share for the 2nd quarter were approximately Rs. 5.40. Cash and cash equivalents including treasury investments were approximately Rs. 383.56 crores as of September 30, 2016.

I will now provide key highlights related to our services business. Software Services revenue for the quarter were at Rs. 113.97 crores, down by 3.6% over the previous quarter. Services EBITDA margin for the quarter was 5.70%.

Business operations

We continue to strengthen our leadership position in the Product Engineering Service space.  The technology churn and changing industry landscape bring with it both challenges and opportunities. We see a strong demand for product engineering services but sales cycles are somewhat protracted.

In the Semiconductor segment, we have expanded our footprint and engage with our longstanding customers in newer areas. The automotive electronics segment has emerged as a key focus area for many silicon players.  We continue to win business from silicon vendors for building products based on Android and Linux platforms.  We provide development and testing services for silicon platforms addressing mobile devices.

In the automotive electronics arena, we are executing pioneering work in helping our customers build next generation infotainment platforms based on Auto Grade Linux and Android. We have expanded our range of offerings to include V2X solutions. V2X is one of the core components that will enable autonomous driving. We have achieved a breakthrough in this area and are engaged with a Tier 1 OEM and provide services for their V2X platform. Spurred by the market traction and growth opportunities, we have pro-actively begun work on building solutions for ADAS and have invested to deepen our expertise in QNX.  

Our Smart Devices business is mature and addresses both the consumer, industrial and ruggedized device spaces.  In this space, we profit from the demand from OEMs to support them in launching new products and upgrading their existing platforms built on Android. We have completed several projects that have helped OEMs upgrade existing product lines to the latest Android version “Nougat”. Often these projects have to be executed on platforms for which support is unavailable or limited. Our ability to execute these programs is a testimony to our ability to solve complex engineering problems.  We have won business from one of the largest provider of solutions in the industrial automation segment and expect that this will turn into a scalable business in the near term. 

We are building on the success that we have seen in the IoT market and are engaged with a Tier 1 semiconductor vendor. We are building solutions that will address the growing market for Smart Home solutions. This market is at the interstice of our product engineering and digital practice. We are one of the few companies with expertise in both areas.

In the Physical to Digital (P2D) domain, we are building a cloud-based Internet of Things platform. This platform among other things, offers a toolkit that will catalyze the development of end-to-end IoT based solutions.  Our conviction is that IoT will continue to transform processes and drive operational efficiencies across industry verticals and boundaries. IoT will also help brands create novel models to engage with customer and create more stickiness by enhancing the touch points.

We have continued to enable newer functionality in the Intelligent Transportation space as part of our strategic engagement with a large European conglomerate. Our suite of mobility apps targeting the commuter has generated a high level of interest at a flagship global transportation conference in Berlin this quarter.

Our cloud-based Actionable Insights Platform has been deployed by a leading European virtual operator (MVNO) and is now live in five countries. The set of insights provided by this platform has enabled key stakeholders across enterprise functions such as Finance and Marketing with data driven decision making.

We are continuing to make steady progress in the Digital Transformation space and strongly believe we will scale business in this area in the near term.

On the people front, the headcount for the Sasken Group stood at 1,983 as of September 30, 2016. We continue to attract talent both lateral and freshmen to cater to our business growth. We are investing in deepening our employee engagement through a repertoire of well-orchestrated programs. We have a number of on-going initiatives to increase the technology and leadership quotient of our employees by providing a spectrum of technical and behavioral training. We have strengthened our leadership team especially in our customer facing organization.  Attrition for the Sasken group it stood at 22.9% for trailing twelve months. We believe that our recently strengthened HR strategies and policies will help stem attrition and attract new talent. We are monitoring these initiatives intensely and are committed to ensuring that we continue to have a talent pool that is amongst the best in the industry.

Utilization for the services business for the quarter averaged 79.6% and is expected to move in a narrow range around the same percentage in the coming quarters.

We have successfully added 8 new customers during the quarter taking the total number of active customers to 142.

Buyback

We are proposing to make an offer for buy back of shares through the ‘Tender Offer’ route, at a maximum price of Rs 425/- per share (Rupees  Four Hundred and Twenty five Only) per Equity Share for an aggregate amount of 12,004.31 lakhs.

Name Change

The Board has approved the proposal for changing the name of the Company to “Sasken Technologies Limited” or “Sasken Limited” subject to the approval of the members of the Company and other regulatory authorities. 

Incentive plan 2016

The Board has approved the proposal for creating Sasken Employees’ Share Based Incentive Plan 2016 not exceeding 5% of the paid-up capital of the Company as of March 31, 2016, subject to approval of the members of the Company and other regulatory authorities.

ConnectM

The board has decided to exit from M/s. ConnectM Technology Solutions Private Limited, the joint venture company by disinvesting its holding of 46.29%. 

On behalf of my management team, I wish to thank you for your continued interest in Sasken.

Rajiv C Mody
Chairman, Managing Director and CEO
Sasken Communication Technologies Limited