Chairman's Remarks

Chairman's Remarks

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Dear Analyst,

It is my pleasure to highlight the business performance of the Sasken Group for the third quarter ended 31st December 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 walking you through our financials for the Third Quarter for Fiscal 2017. In the Third Quarter of Fiscal ‘17 the consolidated revenues for the Sasken Group decreased by 6.2% over the previous quarter to Rs. 111.11 crores. Consolidated Earnings before Interest, Depreciation, Taxes and Amortization cost for the third quarter fiscal ‘17 were Rs. 4.37 crores, a decrease of 45.8% sequentially. In percentage terms, the consolidated EBIDTA margin stood at 3.9%. Consolidated PAT for Q3 fiscal ‘17 was at Rs. 12.93 crores, up by 35% over the previous quarter. PAT margins for the quarter were 11.6%. Consolidated earnings per share for the 3rd quarter were Rs. 7.30. Cash and cash equivalents were Rs. 401.96 crores as of December 31st, 2016.

Business operations

This quarter has been a defining one for us on several counts. On the business front while there are sufficient opportunities our work is inherently both complex and on leading edge technology platforms. We have faced some challenges in a few ‘fixed price programs’, as well as ramp downs from a few key customers which has muted our growth this quarter. We are confident that our resilient and robust management will tide over this. We have made significant investments to bolster our sales and customer facing teams in the United States. We have on-boarded several people who are well respected in the industry to lead our 5X5 vision which will set us on the path of scalable and profitable growth.

I will now provide key highlights related to our services business.

Our combined strength in semiconductors and the Android ecosystem has established us a leader in providing a suite of product engineering services for smart & rugged devices. A testimony to that is evident in our successful execution of several First Of A Kind (FOAK) upgrades. Our knowledge of semiconductor platforms is a key differentiator as we are able to execute programs with little or no support from the semiconductor vendors.

In the Connected & Smart Home space we are engaged in a number of projects to build state of the art products and services. We are combining our expertise in software and hardware to help customers build product reference designs that are ready for commercialization. Some of the products developed by us with Voice based recognition have been showcased by our customers in CES, Las Vegas, which is the premier show for Consumer Electronics.

In the industrial automation space, we are strengthening our existing engagements while continuing to win business from new customers. We are engaged with a leading industrial equipment manufacturer to enhance the communication efficiency of a master-daisy chained slave robotic assembly system.

In the automotive space, we continue to widen both our customer base and repertoire of offerings. We have expanded our footprint in Japan with a new win from a leading Japanese/German Automotive Tier1. Our software comprising multimedia codecs and other components will be deployed on their core platform and be an Integral part of all products launched from MY19 (Model Year) onwards.

We are enhancing our Solutions including Android based IVI which is now set to become an integral part of high-end automobiles. Our solutions will help OEMs achieve significant reduction in time to market and de-risk their product development efforts. Additionally, we have solutions that address the need for ECU Consolidation especially those targeting the cockpit. These solutions will help OEMs reduce cost and complexity using an optimal mix of proprietary and open-source platforms.

On the IOT front our solutions target growth areas such as telematics, trace and track, industrial IoT and home automation. Our work helps customers build home gateway incorporating advanced Voice activation features, cloud & sensor based track and trace solutions for logistics, vehicle monitoring telematics solutions supporting Long Term Evolution or 4G networks.

Our continued ability to win and execute projects in the ‘product engineering space’ and panache to solve complex engineering problems for marquee customers worldwide is a clear differentiator and is valued in the markets in which we operate.

In the Digital Transformation domain, Digital Platform Engineering is emerging as a critical component as enterprises invest in building out new platforms to support their foray into Digital. This quarter, we won a large engagement to develop a ‘digital platform’ for the North America market; this platform will bring together service providers (or sellers) and match them to buyers (or consumers) through the convenience of a mobile app, based on location.

We continued to build out a mobile app suite for the urban commuter, improving user convenience and adding support for sophisticated fare models, for a European conglomerate.

In the Physical to Digital (P2D) space, we were active participants at the Internet of Things World conference in Dublin this quarter; This was an opportunity to showcase a variety of Sasken’s solutions for IoT and Digital, and Sasken leaders were invited as speakers to share learnings with a global audience in the area of data analytics and connected cars.

People

On the people front, the headcount for the Sasken Group stood at 1,976 as of December 31st, 2016. We continue to attract and add talent comprising both freshers and laterals in keeping with our business needs. Our people initiatives include programs for enhancing employee engagement, retention and development. While our trailing twelve month attrition is lower at 21.98%, our quarterly annualized attrition has seen a sharp drop from 24% to 19.2%. In other words, we had significantly lower exits in this quarter. We will continue to make progress to further stem our attrition in the coming quarters.

Utilization for the quarter averaged 78.7% and is expected to be around the same percentage in the coming quarters.

Customers

We have successfully added 6 customers during the quarter taking the active number of customers to 138.

We thank you for your interest in Sasken and your continued support. My team and I are committed to always hold all our stakeholders in trust.

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