Investors >> Chairman's Speech

  19th Annual General Meeting, 28th September, 2004
'Linking intangible assets to strategy & performances'

Dear Shareholders,

The year 2003-04 was exciting and eventful for your Company, which was consistent in delivering solid performance. The total revenue for the year increased 42% to Rs. 163 crores from Rs. 114 crores in the last fiscal.

The net profit at Rs. 76 crores showed an increase of 22% over the previous year. The Company's main ITES-BPO business grew 52% outpacing the Indian industry performance of 46% in that segment during the year.

The consolidated revenues of HTMT and its subsidiaries rose 32% from Rs. 217 crores last year to Rs. 285 crores. The consolidated net profit for the year at Rs. 84 crores represented an increase of 44% over the previous year.

Business Environment

The market and opportunities for your Company's core business of IT and ITES continue to be very good. Potential customers for HTMT's services operate in tough competitive environments and our value addition through outsourced work in terms of cost arbitrage, quality process flow and response time is crucial for their competitive positioning and in some cases, survival. This has been an enduring driver of business even in the face of visible constraints such as backlash against outsourcing, slow growth and non tariff business in our major market, USA.

Another positive factor evident as well as espoused by experts, Industry Associations such as Nasscom and leading research firms such as Gartner, is the widening spread of services being offered and performed by Indian Companies across Industry sectors, practices and geographies. Besides, Companies such as HTMT have also enhanced the depth of their expertise and knowledge from domain, technology and process viewpoints.

These positive drivers enable us to look forward to the future with great optimism even though it will be tempered by short term setbacks and constraints. Our over dependence on North America as a market is an area of concern which we are addressing through stepping up our marketing efforts in Europe and elsewhere.

From a delivery viewpoint, India is expected to be the key offshore outsourcing hub in Asia as compared to other countries, notably Philippines and China in 2004-2005. For instance, India's large pool of highly skilled, English speaking work-force with about 2.1 million graduates each year compares very favourably (vs Philippines of 380,000 per year).

Domain knowledge, process expertise and clients' perception of dependability of the service provider are the key selection criteria of BPO customers and India has excelled in these aspects.

It must however be said that in purely Voice related work, Philippines has been doing well and today represents a smart alternative to the customers.

Customers also look for diversification of global outsourcing locations to increase cost competitiveness and ensure business continuity. Your Company will continue to fare well in meeting the selection criteria.

Acquisition of Call Center at Philippines

Your Company has now acquired the controlling interest of Customer Contact Center Inc. (c3) in Manila, Philippines which operates a high quality Call Centre of 600 seats for global Fortune 500 customers. c3 has excellent infrastructure facilities to ramp up its seating capacity from 600 seats to 1100 seats. This company's financials will be consolidated with that of HTMT from the current year onwards. HTMT has now become one of the select few BPO companies having service delivery capabilities outside India.

The domain expertise of the c3 in banking and financial services, consumer electronics and energy sectors will be a shot in the arm of HTMT to jointly market their services to a wide range of clients looking for business derisking through geographical diversity. The combination of transaction based services from India and voice work proficiency from Philippines could be a potential winning strategy for your Company.

Capacity Expansion

Your Company has taken on lease additional 80,000 sq. ft. premises at Bangalore close to the existing state-of-the-art 62,000 sq. ft. offshore development center to increase the capacity from 1050 to 2500 seats to meet the ever-growing requirements of clients. The filling up of the additional 1450 seats is expected to be completed by March 2005.

As per the requirement of US based healthcare insurance client, 200 seat Disaster Recovery Center (DRC) has been set up at In-Center, Andheri, Mumbai.

Your Company has sufficient cash resources to meet its expansion needs.

HTMT’s Subsidiaries

HTMT, alongwith its subsidiaries, operates in all three areas of Information Technology, Media and Telecommunication leading to real convergence play. While the Company is well on its way to achieve its vision of becoming a scale player in its core business of IT, the Media subsidiaries of the company are yet to perform to their potential. This is due to the unorganized structure and unprofessional nature of the industry and not because of any lack of efforts or commitment of resources or its employees.

IndusInd Media & Communication Limited, a subsidiary of HTMT and India's leading MSO (multiple system operator) has been making substantial investments in its business since 1996 for building extensive Hybrid Fibre Cable network and introducing high quality analog and digital delivery of Cable TV services and high-speed Internet connections in association with group company In2cable (India) Ltd.

In the year under review, IMC invested in state of art equipment to make its network Conditional Access system (CAS) ready, based on a Central Law on CAS for metros. However, subsequent retractions on the implementation of CAS have meant this investment not yielding results in the year. It is hoped that the appointment of TRAI as a regulator will streamline the functioning of the industry thereby ensuring equitable returns to all stakeholders viz: broadcasters, MSOs, operators and subscribers in the business supply chain. While there is short term uncertainty in CAS implementation, we believe that over the long term, the digital delivery of Cable TV services through Set-Top-Boxes, which is superior in quality and broadband internet value added services at a reasonable cost should enable the subsidiaries to effectively meet the competition from new players and new technologies such as DTH and IPTV.

The announcement of broadband policy by the Government is due shortly. It is expected that such a policy will stimulate the development of broadband products and services thereby improving the prospect of the subsidiary In2cable.

Investment adding value to the shareholders

The value of your Company's investment in Fascel, the cellular partnership with Hutchison has received a big boost with the decision of Hutchison to consolidate its circle companies into one entity and go for an IPO. Their announced acquisition of Aircel will add further value to the investment.

Your Company had invested in 47 acres of landed property in Bangalore off the proposed international airport road and the value thereof will also grow significantly with the airport now becoming a reality.

Redefining Mission

Mission and Vision statements set the general goals and direction for an organization. They help shareholders, customers and employees understand what the organization is about (Mission) and what it intends to achieve (Vision). While HTMT has set for itself the vision of becoming a scale player in IT business with focus on BPO space, a need was felt to redefine its mission after it became technology Convergence Corporation. Accordingly, a new mission statement has now been drafted in 3 inter-related parts service offerings, economic and social - for creating a new corporate concept of linked prosperity across the Company's stakeholders and circulated among all concerned. You will find a detailed exposition of this in the Annual Report.

Aligning intangibles with strategy

The consistent growth in the Company's revenue and profitability was the tangible outcome of the alignment of its three important intangible assets with its strategy viz: delivering differentiated value offerings to clients in the ITES-BPO segment supported by IT services.

The three intangible assets are Human Capital represented by the Company's people, Information Capital comprising its information systems, networks and technology infrastructure and Organization Capital encompassing its culture and leadership encouraging staff empowerment, knowledge sharing, teamwork and belief in its value system.

In addition to solid financial performance, alignment of the intangibles with the Company's strategic goals has enhanced its internal processes most critical to creating value for customers and shareholders.


HTMT's dependence on a narrow client base for its ITES-BPO business is changing for the better with addition of new clients in the telecom, health and general insurance space. The Company is planning to revamp its marketing strategy in USA and Europe to increase visibility and brand recall.

Gaining control of c3 will reinforce the capabilities of HTMT to increase scale and cost effectiveness, enter new markets, customer segments and regions and, above all, offer geographical diversity to clients.

The combining and leveraging of resources - human resources (intellectual capital, for instance), brand names and technological, physical and financial resources will generate reciprocal synergies that will enable the two companies to work closer together, evolve joint marketing strategies and execute tasks through iterative knowledge sharing process, propelling HTMT closer to realization of its vision to become a scale player in IT business.

The Company is on the look out for further opportunities of acquisition in BPO space and in IT services segment. HTMT is also keen to grow IT services business and enhance the share of the business in its total revenue and upgrade its intellectual capital through Research and Development.

With innovation as a distributed capability across the Company and co-creation of value in partnership with clients as its goal, HTMT will continue to inspire the confidence of the clients for its getting steady flow of new business.

I am sure that the challenges of business growth will spur the employees of the organization to organize and contribute the best of their energies and skills and help us win.

With this confidence, I sincerely thank the shareholders and the customers for the trust reposed in us and the employees for their unstinted co-operation and commitment.


A. P. Hinduja
Place : Mumbai
Date : 25th August, 2004