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 second quarter ended 30th September 2017.  

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 2018. In the Second Quarter of Fiscal ‘18, the consolidated revenues for Sasken Group increased by 6.20 % over the previous quarter to ₹124.84 crores. Consolidated Earnings before Interest, Depreciation, Taxes and Amortization cost for the second quarter fiscal ‘18 were ₹18.73 crores, an increase of 46.10 % sequentially. Overall EBITDA in percentage for the quarter stood at 15%. Consolidated PAT for Q2 fiscal ‘18 was at ₹18.77 crores, up by 8.5 % over the previous quarter. PAT margins for the quarter were 15%. Consolidated earnings per share for the 2nd quarter were approximately ₹10.97. Cash and cash equivalents including treasury investments were approximately ₹421.60 crores as of September 30, 2017.

Business operations

We continue to see opportunities and challenges in the ER&D space. Three key themes continue to play out across Sasken’s embedded businesses include Android, 4G evolution/5G technologies, and Satellite technologies.

Sasken has signed on a significant new deal in the Satellite segment. Sasken has complete ownership to develop terminals for a critical program scheduled for launch in 2020. This win is path-breaking and a testimony to our acknowledged leadership in providing the full complement of product engineering services.

Your company has made headway in partnerships with leading Semiconductor vendors who are targeting the automotive arena. We are building a team to enable a North America based global leader in semiconductors to accelerate IVI product development and commercial launches based on their newest silicon platforms. The Automobile IVI world continues to adopt Android as the preferred platform for new product development.  Our broad expertise in Android gives us a pole position to benefit from increased projects in the future.

Sasken’s investment in 5G and 4G (C-V2X and NB-IoT) evolution technologies reaffirms our position as a company that has always stayed ahead in the cellular communication space. C-V2X will be a key technology component to enable autonomous driving. Sasken has developed vital points-of-view that will allow customers to build solutions leveraging these new communication paradigms.

In the Automobile space, Sasken has seen wins in new In-Vehicle Infotainment (IVI) programs. The company has focused on latest platform that enables Android IVI implementations.  We have participated in two key semiconductor events in Japan aimed at the Japanese OEM and Tier-1 market. Sasken’s offerings in IVI and Telematics were very well received.

Finally, recognizing Sasken’s multifold contribution in the Android space, the company’s R&D teams will have “Early Access” to all new releases of Android from Google. This ‘Early Access’ enables the company to sharpen and invest ahead to leverage business opportunities across all segments.

Digital represents a high growth adjacency to our core product engineering business. We are continuing to invest in the Digital Technologies to create organization capabilities that will help us grow in this space.  We have bagged two strategic wins in the IoT and Mobile App development space. These deals are with one of our existing customers, who is a world-leading manufacturer of NFC tags and RFID inlays. The customer provides IoT solutions for making products “smart” by using NFC technology and enable customer experiences such as product authenticity check, new product intimations, offers, etc.

Sasken won a new engagement for deployment, installation, and support of its IoT solution at different factories of a world leader in consumer goods design, development, sourcing, and logistics. These solutions are intended to drive significant business benefits for high value and luxury brands. These solutions will help the brands garner customer loyalty through the digital interactions and provide insights on consumer interaction with products after they leave the point of sale.

Duplicate products tend to be one of the most significant challenges for high-value brands, and Sasken has been engaged with the customer to address this. Sasken won a project to develop product authentication apps for iOS 11 and Android by using NFC. The apps will target consumers looking to validate that the products that they purchased are authentic. The app will be customized for specific brands and deployed in North America and Europe.

In the Industrial segment, we have started seeing improved traction for the Digital business. We recently won a strategic engagement from a world leader in manufacturing and supply of heavy machinery and equipment. Sasken will be responsible for developing reusable, responsive widgets for enhancing data discovery through advanced visualization of machine data. Also, we will also develop a smartphone app that provides productivity metrics such as payload moved, fuel burnt, etc. of the selected machines, which will help our customer. The smartphone application and active widgets will help to improve operational efficiency and sales of heavy machinery.

We are pleased to share that we have achieved near perfect scores with several customers, which reiterates the commitment and competence of our global delivery team.

People

On the people front, the headcount for the Sasken Group stood at 2,018 as of September 30, 2017. Attrition for Q2 stands at 15.69% and is the lowest reported in recent quarters. We continue to attract key talent, and we have on-boarded highly accomplished leaders to head our Human Resources function and Digital Transformation Business. Additionally, we are adding to our engineering talent pool to help fuel our growth. We have completed the annual pay revision across all bands and continue to invest in enhancing the technical and leadership quotient of our employees. We believe that under the direction of our new HR head, we will continue to strengthen our HR strategies and policies to add momentum to our business growth.

Utilization for the services business for the quarter averaged 77.20% and is expected to be in the same band in the coming quarters.

Customers

We have successfully added 8 new customers during the quarter taking the total number of active customers to 126.

Sasken Network Engineering Limited Merger

The Petition that was filed with the Hon’ble High Court of Karnataka for the merger of Sasken Network Engineering Limited, a wholly owned subsidiary of Sasken Technologies Limited, with the holding company was transferred to National Company Law Tribunal, Bengaluru Bench (NCLT).  NCLT by its Order dated 31st August, 2017 has approved the said merger with the Appointed Date as 1st April, 2015.

Interim Dividend

The Board of Directors have declared an interim dividend of ₹.2.50 per equity share of ₹.10 each.  The Record Date to ascertain the list of shareholders who will be eligible for the dividend will be 26th October, 2017 and the same will be disbursed on or before 15th November, 2017

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 Technologies Limited
(formerly Sasken Communication Technologies Limited)